Document:

ACE SECURITIES CORP.
                                    Depositor

                             OCWEN FEDERAL BANK FSB
                                   a Servicer

                          SAXON MORTGAGE SERVICES, INC.
                                   a Servicer

                             WELLS FARGO BANK, N.A.
                  Master Servicer and Securities Administrator

                       HSBC BANK USA, NATIONAL ASSOCIATION
                                     Trustee

                         POOLING AND SERVICING AGREEMENT
                           Dated as of January 1, 2005

          ACE Securities Corp. Home Equity Loan Trust, Series 2005-HE1
                     Asset Backed Pass-Through Certificates

<PAGE>
                                TABLE OF CONTENTS

ARTICLE I DEFINITIONS                                                          4

   SECTION 1.01.           Defined Terms.......................................4
      Accepted Master Servicing Practices......................................4
      Accepted Servicing Practices.............................................4
      Account..................................................................4
      Accrued Certificate Interest.............................................4
      Adjustable Rate Mortgage Loan............................................4
      Adjustment Date..........................................................4
      Administration Fees......................................................5
      Administration Fee Rate..................................................5
      Advance Facility.........................................................5
      Advance Financing Person.................................................5
      Advance Reimbursement Amounts............................................5
      Affiliate................................................................5
      Aggregate Loss Severity Percentage.......................................5
      Agreement................................................................5
      Allocated Realized Loss Amount...........................................5
      Amounts Held for Future Distribution.....................................5
      Assignment...............................................................6
      Assignment Agreement.....................................................6
      Authorized Officers......................................................6
      Available Distribution Amount............................................6
      Balloon Mortgage Loan....................................................6
      Balloon Payment..........................................................6
      Bankruptcy Code..........................................................6
      Book-Entry Certificates..................................................7
      Book-Entry Custodian.....................................................7
      Business Day.............................................................7
      Cameron..................................................................7
      Cameron Assignment Agreement.............................................7
      Cameron Mortgage Loans...................................................7
      Cameron Servicing Agreement..............................................7
      Cap Contracts............................................................7
      Cash-Out Refinancing.....................................................7
      Certificate..............................................................7
      Certificate Factor.......................................................7
      Certificate Margin.......................................................8
      Certificateholder........................................................9
      Certificate Owner.......................................................10
      Certificate Principal Balance...........................................10
      Certificate Register....................................................10
      Class...................................................................10
      Class A Certificate.....................................................10
      Class A Principal Distribution Amount...................................10
      Class A-1 Allocation Percentage.........................................10

<PAGE>

      Class A-1 Certificate...................................................10
      Class A-1 Principal Distribution Amount.................................10
      Class A-1A Certificate..................................................11
      Class A-1B Certificate..................................................11
      Class A-2 Allocation Percentage.........................................11
      Class A-2 Certificate...................................................11
      Class A-2 Principal Distribution Amount.................................11
      Class A-2A Certificate..................................................11
      Class A-2B Certificate..................................................11
      Class A-2C Certificate..................................................12
      Class B Certificate.....................................................12
      Class B-1 Certificate...................................................12
      Class B-1 Principal Distribution Amount.................................12
      Class B-2 Certificate...................................................13
      Class B-2 Principal Distribution Amount.................................13
      Class CE Certificate....................................................13
      Class CE-1 Certificate..................................................14
      Class M Certificates....................................................14
      Class M-1 Certificate...................................................14
      Class M-1 Principal Distribution Amount.................................14
      Class M-2 Certificate...................................................14
      Class M-2 Principal Distribution Amount.................................14
      Class M-3 Certificate...................................................15
      Class M-3 Principal Distribution Amount.................................15
      Class M-4 Certificate...................................................15
      Class M-4 Principal Distribution Amount.................................15
      Class M-5 Certificate...................................................16
      Class M-5 Principal Distribution Amount.................................16
      Class M-6 Certificate...................................................16
      Class M-6 Principal Distribution Amount.................................16
      Class M-7 Certificate...................................................17
      Class M-7 Principal Distribution Amount.................................17
      Class M-8 Certificate...................................................18
      Class M-8 Principal Distribution Amount.................................18
      Class M-9 Certificate...................................................18
      Class M-9 Principal Distribution Amount.................................18
      Class P Certificate.....................................................19
      Class R Certificates....................................................19
      Class R-I Interest......................................................19
      Class R-II Interest.....................................................19
      Closing Date............................................................19
      Code....................................................................19
      Collection Account......................................................19
      Commission..............................................................20
      Corporate Trust Office..................................................20
      Corresponding Certificate...............................................20
      Credit Enhancement Percentage...........................................20
      Credit Risk Management Agreements.......................................20

                                       ii
<PAGE>

      Credit Risk Management Fee..............................................20
      Credit Risk Management Fee Rate.........................................21
      Credit Risk Manager.....................................................21
      Custodial Account.......................................................21
      Custodial Agreement.....................................................21
      Custodian...............................................................21
      Cut-off Date............................................................21
      DBRS....................................................................21
      Debt Service Reduction..................................................21
      Deficient Valuation.....................................................21
      Definitive Certificates.................................................21
      Deleted Mortgage Loan...................................................21
      Delinquency Percentage..................................................21
      Depositor...............................................................22
      Depository..............................................................22
      Depository Institution..................................................22
      Depository Participant..................................................22
      Determination Date......................................................22
      Directly Operate........................................................22
      Disqualified Organization...............................................22
      Distribution Account....................................................23
      Distribution Date.......................................................23
      Due Date................................................................23
      Due Period..............................................................23
      Eligible Account........................................................23
      ERISA...................................................................23
      Estate in Real Property.................................................23
      Excess Liquidation Proceeds.............................................23
      Expense Adjusted Mortgage Rate..........................................24
      Extraordinary Trust Fund Expense........................................24
      Extra Principal Distribution Amount.....................................24
      Fannie Mae..............................................................24
      FDIC....................................................................24
      Final Maturity Date.....................................................24
      Final Recovery Determination............................................24
      Freddie Mac.............................................................24
      Fremont.................................................................24
      Fremont Assignment Agreement............................................24
      Fremont Mortgage Loans..................................................24
      Fremont Servicing Agreement.............................................24
      Gross Margin............................................................25
      Group I Interest Remittance Amount......................................25
      Group I Mortgage Loans..................................................25
      Group I Principal Distribution Amount...................................25
      Group I Principal Remittance Amount.....................................25
      Group II Interest Remittance Amount.....................................25
      Group II Mortgage Loans.................................................26
      Group II Principal Distribution Amount..................................26

                                      iii
<PAGE>

      Group II Principal Remittance Amount....................................26
      Independent.............................................................26
      Independent Contractor..................................................26
      Index...................................................................27
      Institutional Accredited Investor.......................................27
      Insurance Proceeds......................................................27
      Interest Accrual Period.................................................27
      Interest Carry Forward Amount...........................................27
      Interest Determination Date.............................................27
      Interest Distribution Amount............................................28
      Interim Servicer........................................................28
      Interim Servicing Agreement.............................................28
      Interest Remittance Amount..............................................28
      Last Scheduled Distribution Date........................................28
      Late Collections........................................................28
      Liquidation Event.......................................................28
      Liquidation Proceeds....................................................28
      Loan-to-Value Ratio.....................................................28
      London Business Day.....................................................29
      Loss Severity Percentage................................................29
      Mandalay................................................................29
      Mandalay Assignment Agreement...........................................29
      Mandalay Mortgage Loans.................................................29
      Mandalay Servicing Agreement............................................29
      Marker Rate.............................................................29
      Master Servicer.........................................................29
      Master Servicer Certification...........................................29
      Master Servicer Event of Default........................................30
      Maximum I-LTZZ Uncertificated Interest Deferral Amount..................30
      Maximum Mortgage Rate...................................................30
      MERS....................................................................30
      MERS(R) System..........................................................30
      Metrocities.............................................................30
      Metrocities Assignment Agreement........................................31
      Metrocities Mortgage Loans..............................................31
      Metrocities Servicing Agreement.........................................31
      Mezzanine Certificate...................................................31
      MIN.....................................................................31
      Minimum Mortgage Rate...................................................31
      MOM Loan................................................................31
      Monthly Payment.........................................................31
      Moody's.................................................................31
      Mortgage................................................................31
      Mortgage File...........................................................31
      Mortgage Loan...........................................................31
      Mortgage Loan Documents.................................................32
      Mortgage Loan Purchase Agreement........................................32
      Mortgage Loan Schedule..................................................32

                                       iv
<PAGE>

      Mortgage Note...........................................................34
      Mortgage Rate...........................................................34
      Mortgaged Property......................................................34
      Mortgagor...............................................................34
      Net Monthly Excess Cashflow.............................................34
      Net Mortgage Rate.......................................................35
      Net WAC Pass-Through Rate...............................................35
      Net WAC Rate Carryover Amount...........................................36
      New Lease...............................................................36
      Nonrecoverable P&I Advance..............................................36
      Nonrecoverable Servicing Advance........................................36
      Non-United States Person................................................37
      Notional Amount.........................................................37
      Ocwen...................................................................37
      Ocwen Mortgage Loans....................................................37
      Ocwen Servicing Fee Rate................................................37
      Offered Certificates....................................................37
      Officer's Certificate...................................................37
      One-Month LIBOR.........................................................37
      One-Month LIBOR Pass-Through Rate.......................................38
      Opinion of Counsel......................................................39
      Optional Termination Date...............................................39
      Originators.............................................................39
      Overcollateralization Amount............................................39
      Overcollateralization Increase Amount...................................40
      Overcollateralization Reduction Amount..................................40
      Ownership Interest......................................................40
      Ownit...................................................................40
      Ownit Assignment Agreement..............................................40
      Ownit Mortgage Loans....................................................40
      Ownit Servicing Agreement...............................................40
      P&I Advance.............................................................40
      Pass-Through Rate.......................................................40
      Percentage Interest.....................................................46
      Periodic Rate...........................................................46
      Permitted Investments...................................................46
      Permitted Transferee....................................................48
      Person..................................................................48
      Plan....................................................................48
      Prepayment Assumption...................................................48
      Prepayment Charge.......................................................48
      Prepayment Charge Schedule..............................................48
      Prepayment Interest Excess..............................................49
      Prepayment Interest Shortfall...........................................49
      Prepayment Period.......................................................49
      Principal Prepayment....................................................49
      Principal Distribution Amount...........................................50
      Principal Remittance Amount.............................................50

                                       v
<PAGE>

      Purchase Price..........................................................50
      QIB.....................................................................50
      Qualified Substitute Mortgage Loan......................................50
      Rate/Term Refinancing...................................................51
      Rating Agency or Rating Agencies........................................51
      Realized Loss...........................................................51
      Record Date.............................................................53
      Reference Banks.........................................................53
      Refinanced Mortgage Loan................................................53
      Regular Certificate.....................................................53
      Regular Interest........................................................53
      Regulation S Temporary Global Certificate...............................53
      Regulation S Permanent Global...........................................53
      Release Date............................................................53
      Relief Act..............................................................53
      Relief Act Interest Shortfall...........................................53
      REMIC...................................................................53
      REMIC I.................................................................54
      REMIC I Interest Loss Allocation Amount.................................54
      REMIC I Marker Allocation Percentage....................................54
      REMIC I Overcollateralization...........................................54
      REMIC I Principal Loss Allocation Amount................................54
      REMIC I Regular Interest................................................55
      REMIC I Regular Interest I-LTAA.........................................55
      REMIC I Regular Interest I-LTA1A........................................55
      REMIC I Regular Interest I-LTA1B........................................55
      REMIC I Regular Interest I-LTA2A........................................55
      REMIC I Regular Interest I-LTA2B........................................56
      REMIC I Regular Interest I-LTA2C........................................56
      REMIC I Regular Interest I-LTB1.........................................56
      REMIC I Regular Interest I-LTB2.........................................56
      REMIC I Regular Interest I-LTM1.........................................56
      REMIC I Regular Interest I-LTM2.........................................56
      REMIC I Regular Interest I-LTM3.........................................57
      REMIC I Regular Interest I-LTM4.........................................57
      REMIC I Regular Interest I-LTM5.........................................57
      REMIC I Regular Interest I-LTM6.........................................57
      REMIC I Regular Interest I-LTM7.........................................57
      REMIC I Regular Interest I-LTM8.........................................57
      REMIC I Regular Interest I-LTM9.........................................57
      REMIC I Regular Interest I-LTP..........................................58
      REMIC I Regular Interest I-LTXX.........................................58
      REMIC I Regular Interest I-LTZZ.........................................58
      REMIC I Regular Interest I-LT1SUB.......................................58
      REMIC I Regular Interest I-LT1GRP.......................................58
      REMIC I Regular Interest I-LT2SUB.......................................58
      REMIC I Regular Interest I-LT2GRP.......................................58
      REMIC I Remittance Rate.................................................59

                                       vi
<PAGE>

      REMIC I Sub WAC Allocation Percentage...................................59
      REMIC I Subordinated Balance Ratio......................................59
      REMIC I Required Overcollateralization..................................59
      REMIC II................................................................59
      REMIC II Certificate....................................................59
      REMIC II Certificateholder..............................................59
      REMIC Provisions........................................................59
      REMIC Regular Interest..................................................59
      REMIC Remittance Rate...................................................59
      Remittance Report.......................................................60
      Rents from Real Property................................................60
      REO Account.............................................................60
      REO Disposition.........................................................60
      REO Imputed Interest....................................................60
      REO Principal Amortization..............................................60
      REO Property............................................................60
      Required Overcollateralization..........................................60
      Reserve Fund............................................................61
      Reserve Interest Rate...................................................61
      Residential Dwelling....................................................61
      Residual Certificate....................................................61
      Residual Interest.......................................................61
      Responsible Officer.....................................................61
      Rule....................................................................61
      Saxon...................................................................61
      Saxon Mortgage Loans....................................................61
      S&P.....................................................................61
      Scheduled Principal Balance.............................................61
      Securities..............................................................62
      Securities Administrator................................................62
      Seller..................................................................62
      Senior Interest Distribution Amount.....................................62
      Sequential Trigger Event................................................62
      Servicer................................................................62
      Servicer Event of Default...............................................63
      Servicer Remittance Date................................................63
      Servicer Report.........................................................63
      Servicing Advance.......................................................63
      Servicing Fee...........................................................63
      Servicing Fee Rate......................................................63
      Servicing Officer.......................................................63
      Servicing Transfer Date.................................................64
      Single Certificate......................................................64
      Startup Day.............................................................64
      Stated Principal Balance................................................64
      Stepdown Date...........................................................65
      Subordinate Certificates................................................65
      Subsequent Recoveries...................................................65

                                      vii
<PAGE>

<TABLE>
<S>                                                                                                             <C>
      Sub-Servicer...............................................................................................65
      Sub-Servicing Agreement....................................................................................65
      Substitution Shortfall Amount..............................................................................65
      Tax Returns................................................................................................65
      Telerate Page..............................................................................................65
      Termination Price..........................................................................................65
      Transfer...................................................................................................66
      Transferee.................................................................................................66
      Transferor.................................................................................................66
      Trigger Event..............................................................................................66
      Trust......................................................................................................66
      Trust Fund.................................................................................................66
      Trust REMIC................................................................................................66
      Trustee....................................................................................................66
      Uncertificated Balance.....................................................................................66
      Uncertificated Interest....................................................................................66
      Uninsured Cause............................................................................................67
      United States Person.......................................................................................67
      Value......................................................................................................67
      Verification Report........................................................................................68
      Voting Rights..............................................................................................68
      Wells Fargo................................................................................................68
   SECTION 1.02.           Allocation of Certain Interest Shortfalls.............................................68

ARTICLE II CONVEYANCE OF MORTGAGE LOANS; ORIGINAL ISSUANCE OF CERTIFICATES                                       70

   SECTION 2.01.           Conveyance of the Mortgage Loans......................................................70
   SECTION 2.02.           Acceptance of REMIC I by Trustee......................................................71
   SECTION 2.03.           Repurchase or Substitution of Mortgage Loans..........................................71
   SECTION 2.04.           Representations and Warranties of the Master Servicer.................................74
   SECTION 2.05.           Representations, Warranties and Covenants of Ocwen and Saxon..........................75
   SECTION 2.06.           Issuance of the REMIC I Regular Interests and the Class R-I Interest..................79
   SECTION 2.07.           Conveyance of the REMIC I Regular Interests; Acceptance of REMIC I by the Trustee.....79
   SECTION 2.08.           Issuance of Residual Certificates.....................................................79
   SECTION 2.09.           Establishment of the Trust............................................................80

ARTICLE III ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS; ACCOUNTS                                         81

   SECTION 3.01.           Servicers to Act as Servicers.........................................................81
   SECTION 3.02.           Sub-Servicing Agreements Between a Servicer and Sub-Servicers.........................83
   SECTION 3.03.           Successor Sub-Servicers...............................................................84
   SECTION 3.04.           No Contractual Relationship Between Sub-Servicer, Trustee or the Certificateholders...84
   SECTION 3.05.           Assumption or Termination of Sub-Servicing Agreement by Successor Servicer............84
</TABLE>

                                      viii
<PAGE>

<TABLE>
<S>                                                                                                             <C>
   SECTION 3.06.           Collection of Certain Mortgage Loan Payments..........................................85
   SECTION 3.07.           Collection of Taxes, Assessments and Similar Items; Servicing Accounts................85
   SECTION 3.08.           Collection Account and Distribution Account...........................................85
   SECTION 3.09.           Withdrawals from the Collection Accounts and Distribution Account.....................86
   SECTION 3.10.           Investment of Funds in the Investment Accounts........................................91
   SECTION 3.11.           Maintenance of Hazard Insurance, Errors and Omissions and Fidelity Coverage and
                           Primary Mortgage Insurance............................................................92
   SECTION 3.12.           Enforcement of Due-on-Sale Clauses; Assumption Agreements.............................94
   SECTION 3.13.           Realization Upon Defaulted Mortgage Loans.............................................95
   SECTION 3.14.           Trustee to Cooperate; Release of Mortgage Files...................................... 97
   SECTION 3.15.           Servicing Compensation................................................................98
   SECTION 3.16.           Collection Account Statements.........................................................99
   SECTION 3.17.           Statement as to Compliance............................................................99
   SECTION 3.18.           Independent Public Accountants' Servicing Report......................................99
   SECTION 3.19.           Annual Certification.................................................................100
   SECTION 3.20.           Access to Certain Documentation......................................................100
   SECTION 3.21.           Title, Management and Disposition of REO Property....................................101
   SECTION 3.22.           Obligations of the Servicer's in Respect of Prepayment Interest Shortfalls; Relief Act
                           Interest Shortfalls..................................................................104
   SECTION 3.23.           Obligations of the Servicers in Respect of Mortgage Rates and  Monthly Payments......104
   SECTION 3.24.           Reserve Fund.........................................................................104
   SECTION 3.25.           Advance Facility.....................................................................106
   SECTION 3.26.           The Servicer Indemnification.........................................................108

ARTICLE IV ADMINISTRATION AND MASTER SERVICING OF THE MORTGAGE LOANS BY THE MASTER SERVICER                     109

   SECTION 4.01.           Master Servicer......................................................................109
   SECTION 4.02.           REMIC-Related Covenants..............................................................110
   SECTION 4.03.           Monitoring of Servicer...............................................................110
   SECTION 4.04.           Fidelity Bond........................................................................111
   SECTION 4.05.           Power to Act; Procedures.............................................................112
   SECTION 4.06.           Due-on-Sale Clauses; Assumption Agreements...........................................113
   SECTION 4.07.           Documents, Records and Funds in Possession of Master Servicer To Be Held for Trustee.113
   SECTION 4.08.           Standard Hazard Insurance and Flood Insurance Policies...............................113
   SECTION 4.09.           Presentment of Claims and Collection of Proceeds.....................................114
   SECTION 4.10.           Maintenance of Primary Mortgage Insurance Policies...................................114
   SECTION 4.11.           Trustee to Retain Possession of Certain Insurance Policies and Documents.............114
   SECTION 4.12.           Realization Upon Defaulted Mortgage Loans............................................115
   SECTION 4.13.           Compensation for the Master Servicer.................................................115
   SECTION 4.14.           REO Property.........................................................................115
   SECTION 4.15.           Annual Officer's Certificate as to Compliance........................................116
   SECTION 4.16.           Annual Independent Accountant's Servicing Report.....................................116
   SECTION 4.17.           UCC..................................................................................117
</TABLE>

                                       ix
<PAGE>

<TABLE>
<S>                                                                                                             <C>
   SECTION 4.18.           Obligation of the Master Servicer in Respect of Prepayment Interest Shortfalls.......117
   SECTION 4.19.           Prepayment Penalty Verification......................................................117

ARTICLE V PAYMENTS TO CERTIFICATEHOLDERS                                                                        119

   SECTION 5.01.           Distributions........................................................................119
   SECTION 5.02.           Statements to Certificateholders.....................................................134
   SECTION 5.03.           Servicer Reports; P&I Advances.......................................................137
   SECTION 5.04.           Allocation of Realized Losses........................................................139
   SECTION 5.05.           Compliance with Withholding Requirements.............................................141
   SECTION 5.06.           Reports Filed with Securities and Exchange Commission................................142

ARTICLE VI THE CERTIFICATES                                                                                     143

   SECTION 6.01.           The Certificates.....................................................................143
   SECTION 6.02.           Registration of Transfer and Exchange of Certificates................................145
   SECTION 6.03.           Mutilated, Destroyed, Lost or Stolen Certificates....................................150
   SECTION 6.04.           Persons Deemed Owners................................................................151
   SECTION 6.05.           Certain Available Information........................................................151

ARTICLE VII THE DEPOSITOR, THE SERVICERS AND THE MASTER SERVICER                                                152

   SECTION 7.01.           Liability of the Depositor, the Servicers and the Master Servicer....................152
   SECTION 7.02.           Merger or Consolidation of the Depositor, the Servicers or the Master Servicer.......152
   SECTION 7.03.           Limitation on Liability of the Depositor, the Servicers, the Master Servicer and
                           Others...............................................................................152
   SECTION 7.04.           Limitation on Resignation of the Servicers...........................................153
   SECTION 7.05.           Limitation on Resignation of the Master Servicer.....................................154
   SECTION 7.06.           Assignment of Master Servicing.......................................................155
   SECTION 7.07.           Rights of the Depositor in Respect of the Servicers and the Master Servicer..........155
   SECTION 7.08.           Duties of the Credit Risk Manager....................................................156
   SECTION 7.09.           Limitation Upon Liability of the Credit Risk Manager.................................156
   SECTION 7.10.           Removal of the Credit Risk Manager...................................................157

ARTICLE VIII DEFAULT                                                                                            158

   SECTION 8.01.           Servicer Events of Default...........................................................158
   SECTION 8.02.           Master Servicer to Act; Appointment of Successor.....................................162
   SECTION 8.03.           Notification to Certificateholders...................................................163
   SECTION 8.04.           Waiver of Servicer Events of Default.................................................164

ARTICLE IX CONCERNING THE TRUSTEE AND THE SECURITIES ADMINISTRATOR                                              165

   SECTION 9.01.           Duties of Trustee and Securities Administrator.......................................165
   SECTION 9.02.           Certain Matters Affecting Trustee and Securities Administrator.......................166
</TABLE>

                                       x
<PAGE>

<TABLE>
<S>                                                                                                             <C>
   SECTION 9.03.           Trustee and Securities Administrator not Liable for Certificates or Mortgage Loans...168
   SECTION 9.04.           Trustee and Securities Administrator May Own Certificates............................168
   SECTION 9.05.           Fees and Expenses of Trustee and Securities Administrator............................168
   SECTION 9.06.           Eligibility Requirements for Trustee and Securities Administrator....................169
   SECTION 9.07.           Resignation and Removal of Trustee and Securities Administrator......................170
   SECTION 9.08.           Successor Trustee or Securities Administrator........................................171
   SECTION 9.09.           Merger or Consolidation of Trustee or Securities Administrator.......................171
   SECTION 9.10.           Appointment of Co-Trustee or Separate Trustee........................................172
   SECTION 9.11.           Appointment of Office or Agency......................................................172
   SECTION 9.12.           Representations and Warranties.......................................................173

ARTICLE X TERMINATION                                                                                           174

   SECTION 10.01.          Termination Upon Repurchase or Liquidation of All Mortgage Loans.....................174
   SECTION 10.02.          Additional Termination Requirements..................................................176

ARTICLE XI REMIC PROVISIONS                                                                                     177

   SECTION 11.01.          REMIC Administration.................................................................177
   SECTION 11.02.          Prohibited Transactions and Activities...............................................179
   SECTION 11.03.          Indemnification......................................................................180

ARTICLE XII MISCELLANEOUS PROVISIONS                                                                            181

   SECTION 12.01.          Amendment............................................................................181
   SECTION 12.02.          Recordation of Agreement; Counterparts...............................................182
   SECTION 12.03.          Limitation on Rights of Certificateholders...........................................182
   SECTION 12.04.          Governing Law........................................................................183
   SECTION 12.05.          Notices..............................................................................183
   SECTION 12.06.          Severability of Provisions...........................................................184
   SECTION 12.07.          Notice to Rating Agencies............................................................184
   SECTION 12.08.          Article and Section References.......................................................185
   SECTION 12.09.          Grant of Security Interest...........................................................185
   SECTION 12.10.          Survival of Indemnification..........................................................186
   SECTION 12.11.          Servicing Agreements.................................................................186
</TABLE>

EXHIBITS

Exhibit A-1       Form of Class A Certificate
Exhibit A-2       Form of Class M Certificate
Exhibit A-3       Form of Class B Certificate
Exhibit A-4       Form of Class CE Certificate and Class CE-1 Certificate
Exhibit A-5       Form of Class P Certificate
Exhibit A-6       Form of Class R Certificate
Exhibit B-1       Form  of   Transferor   Representation   Letter  and  Form  of
                  Transferee  Representation  Letter in Connection with Transfer
                  of the Class B Certificates, Class P

                                       xi
<PAGE>

                  Certificates,  Class CE Certificates,  Class CE-1 Certificates
                  and Residual Certificates Pursuant to Rule 144A Under the 1933
                  Act

Exhibit B-2       Form  of   Transferor   Representation   Letter  and  Form  of
                  Transferee  Representation  Letter in Connection with Transfer
                  of the Class B Certificates,  Class P  Certificates,  Class CE
                  Certificates,    Class   CE-1    Certificates   and   Residual
                  Certificates Pursuant to Rule 501 (a) Under the 1933 Act

Exhibit B-3       Form  of  Transfer   Affidavit   and  Agreement  and  Form  of
                  Transferor  Affidavit in Connection  with Transfer of Residual
                  Certificates

Exhibit C         Form of Servicer Certification
Exhibit D         Form of Power of  Attorney
Schedule 1        Mortgage Loan Schedule
Schedule 2        Prepayment Charge Schedule
Schedule 3        Reserved.
Schedule 4        Standard File Layout - Delinquency Reporting
Schedule 5        Standard File Layout - Scheduled/Scheduled
Schedule 6        Servicing Advances Incurred Prior to Cut-off Date

                                      xii
<PAGE>

                  This Pooling and Servicing  Agreement,  is dated and effective
as of January 1, 2005, among ACE SECURITIES  CORP., as Depositor,  OCWEN FEDERAL
BANK FSB, as a Servicer,  SAXON MORTGAGE  SERVICES,  INC., as a Servicer,  WELLS
FARGO BANK, N.A., as Master Servicer and Securities  Administrator and HSBC BANK
USA, NATIONAL ASSOCIATION, as Trustee.

                             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 of the Trust Fund created  hereunder.  The
Trust Fund will consist of a segregated pool of assets comprised 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 Cap Contracts and the
Reserve Fund) as a REMIC for federal  income tax purposes,  and such  segregated
pool of assets will be  designated  as "REMIC I". The Class R-I Interest will be
the sole class of  "residual  interests"  in REMIC I for  purposes  of the REMIC
Provisions (as defined herein).  The following table  irrevocably sets forth the
designation,  the REMIC I Remittance  Rate, the initial  Uncertificated  Balance
and, for purposes of satisfying Treasury regulation Section 1.860G-1(a)(4)(iii),
the "latest  possible  maturity date" for each of the REMIC I Regular  Interests
(as defined herein). None of the REMIC I Regular Interests will be certificated.

<PAGE>

<TABLE>
<CAPTION>
                                         REMIC I
                                       REMITTANCE                    INITIAL                  LATEST POSSIBLE
         DESIGNATION                      RATE                UNCERTIFICATED BALANCE         MATURITY DATE (1)
-------------------------            --------------          ------------------------       -------------------
<S>                                    <C>                       <C>                         <C>
I-LTAA                                 Variable(2)               $ 754,461,256.15            February 25, 2035
I-LTA1A                                Variable(2)               $   3,646,455.00            February 25, 2035
I-LTA1B                                Variable(2)               $     911,655.00            February 25, 2035
I-LTA2A                                Variable(2)               $     928,845.00            February 25, 2035
I-LTA2B                                Variable(2)               $     300,080.00            February 25, 2035
I-LTA2C                                Variable(2)               $     237,150.00            February 25, 2035
I-LTM1                                 Variable(2)               $     292,545.00            February 25, 2035
I-LTM2                                 Variable(2)               $     246,355.00            February 25, 2035
I-LTM3                                 Variable(2)               $     150,120.00            February 25, 2035
I-LTM4                                 Variable(2)               $     146,275.00            February 25, 2035
I-LTM5                                 Variable(2)               $     184,765.00            February 25, 2035
I-LTM6                                 Variable(2)               $     100,080.00            February 25, 2035
I-LTM7                                 Variable(2)               $      76,985.00            February 25, 2035
I-LTM8                                 Variable(2)               $      96,230.00            February 25, 2035
I-LTM9                                 Variable(2)               $      92,385.00            February 25, 2035
I-LTB1                                 Variable(2)               $     127,025.00            February 25, 2035
I-LTB2                                 Variable(2)               $     107,780.00            February 25, 2035
I-LTZZ                                 Variable(2)               $   7,752,478.49            February 25, 2035
I-LTP                                  Variable(2)               $         100.00            February 25, 2035
I-LT1SUB                               Variable(2)               $      25,338.74            February 25, 2035
I-LT1GRP                               Variable(2)               $     116,500.15            February 25, 2035
I-LT2SUB                               Variable(2)               $       8,150.04            February 25, 2035
I-LT2GRP                               Variable(2)               $      37,471.54            February 25, 2035
I-LTXX                                 Variable(2)               $ 769,670,964.16            February 25, 2035
</TABLE>

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

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

                                    REMIC II

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

                                       2
<PAGE>

<TABLE>
<CAPTION>
                                                    INITIAL AGGREGATE             LATEST POSSIBLE
                                                  CERTIFICATE PRINCIPAL          MATURITY DATE (1)
   DESIGNATION         PASS-THROUGH RATE                 BALANCE
                      -------------------        -----------------------        -------------------
<S>                       <C>                        <C>                         <C>
Class A-1A                Variable(2)                $729,291,000                February 25, 2035
Class A-1B                Variable(2)                $182,323,000                February 25, 2035
Class A-2A                Variable(2)                $185,769,000                February 25, 2035
Class A-2B                Variable(2)                 $60,016,000                February 25, 2035
Class A-2C                Variable(2)                 $47,430,000                February 25, 2035
Class M-1                 Variable(2)                 $58,509,000                February 25, 2035
Class M-2                 Variable(2)                 $49,271,000                February 25, 2035
Class M-3                 Variable(2)                 $30,024,000                February 25, 2035
Class M-4                 Variable(2)                 $29,255,000                February 25, 2035
Class M-5                 Variable(2)                 $36,953,000                February 25, 2035
Class M-6                 Variable(2)                 $20,016,000                February 25, 2035
Class M-7                 Variable(2)                 $15,397,000                February 25, 2035
Class M-8                 Variable(2)                 $19,246,000                February 25, 2035
Class M-9                 Variable(2)                 $18,477,000                February 25, 2035
Class B-1                 Variable(2)                 $25,405,000                February 25, 2035
Class B-2                 Variable(2)                 $21,556,000                February 25, 2035
Class P                     N/A(3)                           $100.00             February 25, 2035
Class CE                    N/A(4)                                               February 25, 2035
Class CE-1                  N/A(5)                          N/A(5)               February 25, 2035
</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 Loan with the latest maturity date has been designated as
      the "latest possible maturity date" for each Class of Certificates.

(2)   Calculated  in  accordance  with the  definition  of  "Pass-Through  Rate"
      herein. (3) The Class P Certificates will not accrue interest.

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

(5)   The  Class  CE-1  Certificates  will  accrue  interest  at their  variable
      Pass-Through  Rate on the Notional  Amount of the Class CE-1  Certificates
      which  shall  equal  the  Uncertificated  Balance  of the  REMIC I Regular
      Interests.  The  Class  CE-1  Certificates  will  not  have a  Certificate
      Principal Balance.

                  As of the  Cut-off  Date,  the Group I  Mortgage  Loans had an
aggregate Scheduled Principal Balance equal to approximately  $1,165,001,523 and
the Group II Mortgage Loans had an aggregate  Scheduled  Principal Balance equal
to approximately $374,715,426.

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

                                       3
<PAGE>

                                   ARTICLE I

                                   DEFINITIONS

                  SECTION 1.01.     Defined Terms.

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

                  "Accepted  Master  Servicing  Practices":  With respect to any
Mortgage  Loan,  as  applicable,  either  (x) those  customary  mortgage  master
servicing  practices  of prudent  mortgage  servicing  institutions  that master
service mortgage loans of the same type and quality as such Mortgage Loan in the
jurisdiction  where the related  Mortgaged  Property  is located,  to the extent
applicable  to the Master  Servicer  (except in its  capacity as  successor to a
Servicer),  or (y) as provided in Section 3.01 hereof, but in no event below the
standard set forth in clause (x).

                  "Accepted Servicing Practices": As defined in Section 3.01.

                  "Account":   The  Collection  Accounts  and  the  Distribution
Account as the context may require.

                  "Accrued  Certificate  Interest":  With respect to any Class A
Certificate, Mezzanine Certificate, Class B Certificate, Class CE Certificate or
Class CE-1 Certificate and each Distribution  Date,  interest accrued during the
related Interest  Accrual Period at the  Pass-Through  Rate for such Certificate
for such Distribution Date on the Certificate  Principal Balance, in the case of
the  Class  A  Certificates,   the  Mezzanine   Certificates  and  the  Class  B
Certificates, or on the Notional Amount in the case of the Class CE Certificates
and Class  CE-1  Certificates,  of such  Certificate  immediately  prior to such
Distribution Date. The Class P Certificates are not entitled to distributions in
respect  of  interest  and,   accordingly,   will  not  accrue   interest.   All
distributions   of  interest  on  the  Class  A   Certificates,   the  Mezzanine
Certificates  and the Class B Certificates  will be calculated on the basis of a
360-day year and the actual number of days in the  applicable  Interest  Accrual
Period.  All  distributions  of interest on the Class CE Certificates  and Class
CE-1  Certificates  will be based on a 360-day year  consisting of twelve 30-day
months.  Accrued Certificate Interest with respect to each Distribution Date, as
to any Class A Certificate,  Mezzanine Certificate, Class B Certificate or Class
CE Certificate  shall be reduced by an amount equal to the portion  allocable to
such Certificate  pursuant to Section 1.02 hereof, if any, 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  3.22 or Section 4.18 of
this  Agreement  or  pursuant to the Interim  Servicing  Agreements  and (b) the
aggregate  amount  of any  Relief  Act  Interest  Shortfall,  if any,  for  such
Distribution  Date. In addition,  Accrued  Certificate  Interest with respect to
each Distribution  Date, as to any Class CE Certificate,  shall be reduced by an
amount equal to the portion  allocable to such Class CE  Certificate of Realized
Losses, if any, pursuant to Section 1.02 and Section 5.04 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.

                                       4
<PAGE>

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

                  "Administration  Fees":  The sum of (i) the  Servicing Fee and
(ii) the Credit Risk Management Fee.

                  "Administration  Fee Rate":  The sum of (i) the  Servicing Fee
Rate and (ii) the Credit Risk Management Fee Rate.

                  "Advance Facility": As defined in Section 3.25(a).

                  "Advance Financing Person": As defined in Section 3.25(a).

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

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

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

                  "Agreement":  This Pooling and Servicing Agreement,  including
all exhibits and  schedules  hereto and all  amendments  hereof and  supplements
hereto.

                  "Allocated Realized Loss Amount": With respect to any Class of
Mezzanine  Certificates or Class B Certificates  and any  Distribution  Date, an
amount  equal  to the  sum of any  Realized  Loss  allocated  to that  Class  of
Certificates on the Distribution Date and any Allocated Realized Loss Amount for
that Class remaining unpaid from the previous Distribution Date.

                  "Amounts Held for Future Distribution": As to any Distribution
Date,  the aggregate  amount held in the Custodial  Accounts and the  Collection
Accounts  at the close of business on the  immediately  preceding  Determination
Date on account of (i) all  Monthly  Payments or  portions  thereof  received in
respect  of the  Mortgage  Loans due  after  the  related  Due  Period  and (ii)
Principal  Prepayments  and  Liquidation  Proceeds  received  in respect of such
Mortgage Loans after the last day of the related Prepayment Period.

                  "Assignment": An assignment of Mortgage, notice of transfer or
equivalent instrument, in recordable form, which is sufficient under the laws of
the jurisdiction wherein the related Mortgaged Property is located to reflect of
record  the sale of the  Mortgage,  which  assignment,  notice  of  transfer  or
equivalent instrument may be in the form of one or more

                                       5
<PAGE>

blanket assignments  covering Mortgages secured by Mortgaged  Properties located
in the same county, if permitted by law.

                  "Assignment Agreement":  Collectively,  the Cameron Assignment
Agreement,   Fremont  Assignment   Agreement,   Mandalay  Assignment  Agreement,
Metrocities Assignment Agreement and the Ownit Assignment Agreement.

                  "Authorized  Officers":  A managing director of the whole loan
trading desk and a managing director in global markets.

                  "Available   Distribution   Amount":   With   respect  to  any
Distribution  Date,  an amount equal to (1) the sum of (a) the  aggregate of the
amounts  on  deposit  in  the  Custodial   Accounts,   Collection  Accounts  and
Distribution  Account  as of the  close  of  business  on the  related  Servicer
Remittance Date, (b) the aggregate of any amounts  deposited in the Distribution
Account by the related  Servicer or the Master Servicer in respect of Prepayment
Interest  Shortfalls  for such  Distribution  Date  pursuant to Section  3.22 or
Section 4.18 of this Agreement or by the related  Interim  Servicer  pursuant to
the related Interim Servicing  Agreement,  (c) the aggregate of any P&I Advances
for such Distribution Date made by the related Servicer pursuant to Section 5.03
of this  Agreement or by the related  Interim  Servicer  pursuant to the related
Interim Servicing  Agreement and (d) the aggregate of any P&I Advances made by a
successor  Servicer  (including the Master Servicer) for such  Distribution Date
pursuant to Section 8.02 of this  Agreement  or pursuant to the related  Interim
Servicing  Agreement,  reduced (to not less than zero) by (2) the portion of the
amount  described in clause  (1)(a) above that  represents  (i) Amounts Held for
Future Distribution,  (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,  a Servicer,  the
Trustee,  the Master  Servicer,  the Securities  Administrator  or the Custodian
pursuant  to Section  3.09 or 9.05 of this  Agreement  or  otherwise  payable in
respect of  Extraordinary  Trust Fund Expenses or reimbursable or payable to the
related Interim Servicer under the related Interim Servicing Agreement,  (v) the
Credit Risk Management  Fee, (vi) amounts  deposited in a Custodial  Account,  a
Collection Account or the Distribution Account in error, (vii) the amount of any
Prepayment  Charges collected by a Servicer or an Interim Servicer in connection
with the Principal  Prepayment of any of the Mortgage  Loans and (viii)  amounts
reimbursable to a successor Servicer (including the Master Servicer) pursuant to
Section  8.02 of this  Agreement  or pursuant to the related  Interim  Servicing
Agreement.

                   "Balloon  Mortgage  Loan":  A Mortgage Loan that provides for
the payment of the  unamortized  principal  balance of such  Mortgage  Loan in a
single payment, that is substantially greater than the preceding monthly payment
at the maturity of such Mortgage Loan.

                  "Balloon  Payment":  A payment  of the  unamortized  principal
balance of a Mortgage Loan in a single payment,  that is  substantially  greater
than the preceding Monthly Payment at the maturity of such Mortgage Loan.

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

                                       6
<PAGE>

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

                  "Book-Entry  Custodian":  The custodian  appointed pursuant to
Section 6.01.

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

                  "Cameron": Cameron Financial Group, and any successor thereto.

                  "Cameron Assignment Agreement": The Assignment, Assumption and
Recognition  Agreement,  dated as of January 31, 2005,  by and among the Seller,
the Depositor and Cameron  evidencing  the  assignment of the Cameron  Servicing
Agreement to the Depositor.

                  "Cameron Mortgage Loans": The Mortgage Loans being serviced by
Cameron as of the Closing Date.

                  "Cameron  Servicing  Agreement":   The  Master  Mortgage  Loan
Purchase and Interim  Servicing  Agreement  dated as of January 1, 2005,  by and
among the Seller and Cameron, as modified by the Cameron Assignment Agreement.

                  "Cap  Contracts":  Shall mean (i) the Cap Contract between the
Trustee and the counterparty named thereunder, for the benefit of the Holders of
the  Class  A-1  Certificates,  the  Mezzanine  Certificates  and  the  Class  B
Certificates  (the "Group I Cap Contract") and (ii) the Cap Contract between the
Trustee  and the  counterparty  thereunder,  for the  benefit  of the  Class A-2
Certificates,  the  Mezzanine  Certificates  and the Class B  Certificates  (the
"Group II Cap Contract").

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

                  "Certificate":  Any one of ACE Securities Corp.,  Asset Backed
Pass-Through Certificates,  Series 2005-HE1, Class A-1A, Class A-1B, Class A-2A,
Class A-2B,  Class A-2C,  Class M-1, Class M-2, Class M-3, Class M-4, Class M-5,
Class M-6, Class M-7, Class M-8, Class M-9, Class B-1, Class B-2, Class P, Class
CE, Class CE-1 and Class R issued under this Agreement.

                  "Certificate   Factor":   With   respect   to  any   Class  of
Certificates (other than the Residual Certificates) as of any Distribution Date,
a fraction, expressed as a decimal carried to six places, the numerator of which
is the aggregate  Certificate Principal Balance (or Notional Amount, in the case
of the Class CE  Certificates  and Class  CE-1  Certificates)  of such  Class of
Certificates on such Distribution Date (after giving effect to any distributions
of principal and  allocations of Realized  Losses  resulting in reduction of the
Certificate  Principal  Balance (or Notional Amount, in the case of the Class CE
Certificates  and Class CE-1  Certificates)  of such Class of Certificates to be
made on such Distribution Date), and the denominator of which is the

                                       7
<PAGE>

initial aggregate Certificate Principal Balance (or Notional Amount, in the case
of the Class CE  Certificates  and Class  CE-1  Certificates)  of such  Class of
Certificates as of the Closing Date.

                  "Certificate   Margin":   With   respect  to  the  Class  A-1A
Certificates  and,  for purposes of the  definition  of "Marker  Rate",  REMIC I
Regular Interest  I-LTA1A,  0.24% in the case of each  Distribution Date through
and  including  the  Optional  Termination  Date  and  0.48% in the case of each
Distribution Date thereafter.

                  With respect to the Class A-1B  Certificates and, for purposes
of the definition of "Marker Rate",  REMIC I Regular Interest I-LTA1B,  0.29% in
the  case  of  each   Distribution  Date  through  and  including  the  Optional
Termination Date and 0.58% in the case of each Distribution Date thereafter.

                  With respect to the Class A-2A  Certificates and, for purposes
of the definition of "Marker Rate",  REMIC I Regular Interest I-LTA2A,  0.12% in
the  case  of  each   Distribution  Date  through  and  including  the  Optional
Termination Date and 0.24% in the case of each Distribution Date thereafter.

                  With respect to the Class A-2B  Certificates and, for purposes
of the definition of "Marker Rate",  REMIC I Regular Interest I-LTA2B,  0.23% in
the  case  of  each   Distribution  Date  through  and  including  the  Optional
Termination Date and 0.46% in the case of each Distribution Date thereafter.

                  With respect to the Class A-2C  Certificates and, for purposes
of the definition of "Marker Rate",  REMIC I Regular Interest I-LTA2C,  0.35% in
the  case  of  each   Distribution  Date  through  and  including  the  Optional
Termination Date and 0.70% in the case of each Distribution Date thereafter.

                  With respect to the Class M-1  Certificates  and, for purposes
of the definition of "Marker Rate",  REMIC I Regular Interest  I-LTM1,  0.48% in
the  case  of  each   Distribution  Date  through  and  including  the  Optional
Termination Date and 0.72% in the case of each Distribution Date thereafter.

                  With respect to the Class M-2  Certificates  and, for purposes
of the definition of "Marker Rate",  REMIC I Regular Interest  I-LTM2,  0.50% in
the  case  of  each   Distribution  Date  through  and  including  the  Optional
Termination Date and 0.75% in the case of each Distribution Date thereafter.

                  With respect to the Class M-3  Certificates  and, for purposes
of the definition of "Marker Rate",  REMIC I Regular Interest  I-LTM3,  0.55% in
the  case  of  each   Distribution  Date  through  and  including  the  Optional
Termination Date and 0.825% in the case of each Distribution Date thereafter.

                  With respect to the Class M-4  Certificates  and, for purposes
of the definition of "Marker Rate",  REMIC I Regular Interest  I-LTM4,  0.72% in
the  case  of  each   Distribution  Date  through  and  including  the  Optional
Termination Date and 1.08% in the case of each Distribution Date thereafter.

                                       8
<PAGE>

                  With respect to the Class M-5  Certificates  and, for purposes
of the definition of "Marker Rate",  REMIC I Regular Interest  I-LTM5,  0.78% in
the  case  of  each   Distribution  Date  through  and  including  the  Optional
Termination Date and 1.17% in the case of each Distribution Date thereafter.

                  With respect to the Class M-6  Certificates  and, for purposes
of the definition of "Marker Rate",  REMIC I Regular Interest  I-LTM6,  0.85% in
the  case  of  each   Distribution  Date  through  and  including  the  Optional
Termination Date and 1.275% in the case of each Distribution Date thereafter.

                  With respect to the Class M-7  Certificates  and, for purposes
of the definition of "Marker Rate",  REMIC I Regular Interest  I-LTM7,  1.28% in
the  case  of  each   Distribution  Date  through  and  including  the  Optional
Termination Date and 1.92% in the case of each Distribution Date thereafter.

                  With respect to the Class M-8  Certificates  and, for purposes
of the definition of "Marker Rate",  REMIC I Regular Interest  I-LTM8,  1.38% in
the  case  of  each   Distribution  Date  through  and  including  the  Optional
Termination Date and 2.07% in the case of each Distribution Date thereafter.

                  With respect to the Class M-9  Certificates  and, for purposes
of the definition of "Marker Rate",  REMIC I Regular Interest  I-LTM9,  2.20% in
the  case  of  each   Distribution  Date  through  and  including  the  Optional
Termination Date and 3.30% in the case of each Distribution Date thereafter.

                  With respect to the Class B-1  Certificates  and, for purposes
of the definition of "Marker Rate",  REMIC I Regular Interest  I-LTB1,  3.25% in
the  case  of  each   Distribution  Date  through  and  including  the  Optional
Termination Date and 4.875% in the case of each Distribution Date thereafter.

                  With respect to the Class B2 Certificates and, for purposes of
the definition of "Marker Rate",  REMIC I Regular Interest I-LTB2,  3.25% in the
case of each  Distribution  Date through and including the Optional  Termination
Date and 4.875% in the case of each Distribution Date thereafter.

                  "Certificateholder"  or  "Holder":  The Person in whose name a
Certificate  is  registered  in  the   Certificate   Register,   except  that  a
Disqualified Organization or a Non-United States Person shall not be a Holder of
a Residual  Certificate for any purposes hereof,  and solely for the purposes of
giving any consent pursuant to this Agreement, any Certificate registered in the
name of or  beneficially  owned by the Depositor,  the Seller,  a Servicer,  the
Master  Servicer,  the  Securities  Administrator,  the Trustee or any Affiliate
thereof shall be deemed not to be outstanding  and the Voting Rights to which it
is entitled shall not be taken into account in determining whether the requisite
percentage  of Voting  Rights  necessary  to effect  any such  consent  has been
obtained,  except as otherwise  provided in Section  12.01.  The Trustee and the
Securities  Administrator  may  conclusively  rely  upon  a  certificate  of the
Depositor,  the Seller, the Master Servicer,  the Securities  Administrator or a
Servicer in determining  whether a Certificate is held by an Affiliate  thereof.
All  references  herein to "Holders" or  "Certificateholders"  shall reflect the
rights of Certificate Owners as they may indirectly exercise such rights through
the Depository and participating members thereof,  except as otherwise specified
herein; provided,

                                       9
<PAGE>

however, that the Trustee and the Securities  Administrator shall be required to
recognize as a "Holder" or  "Certificateholder"  only the Person in whose name a
Certificate is registered in the Certificate Register.

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

                  "Certificate Principal Balance":  With respect to each Class A
Certificate,  Mezzanine Certificate,  Class B Certificate or Class P Certificate
as of any date of  determination,  the  Certificate  Principal  Balance  of such
Certificate  on  the  Distribution  Date  immediately  prior  to  such  date  of
determination plus any Subsequent  Recoveries added to the Certificate Principal
Balance of such Certificate  pursuant to Section 5.04,  minus all  distributions
allocable to principal made thereon and Realized Losses  allocated  thereto,  if
any, on such immediately prior Distribution Date (or, in the case of any date of
determination  up to and  including  the first  Distribution  Date,  the initial
Certificate  Principal  Balance  of such  Certificate,  as  stated  on the  face
thereof).  With  respect  to  each  Class  CE  Certificate  as of  any  date  of
determination,  an amount  equal to the  Percentage  Interest  evidenced by such
Certificate times the excess,  if any, of (A) the then aggregate  Uncertificated
Balances  of  the  REMIC  I  Regular  Interests  over  (B)  the  then  aggregate
Certificate  Principal  Balances  of the  Class A  Certificates,  the  Mezzanine
Certificates,  the  Class B  Certificates  and the  Class  P  Certificates  then
outstanding.  The aggregate initial Certificate  Principal Balance of each Class
of Regular Certificates is set forth in the Preliminary Statement hereto.

                  "Certificate  Register":  The register  maintained pursuant to
Section 6.02.

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

                  "Class A Certificate": Any Class A-1A, Class A-1B, Class A-2A,
Class A-2B or Class A-2C Certificate.

                  "Class A Principal Distribution Amount": The Class A Principal
Distribution  Amount  is an  amount  equal  to the sum of:  (i)  the  Class  A-1
Principal  Distribution  Amount  and (ii) the Class A-2  Principal  Distribution
Amount.

                  "Class  A-1  Allocation  Percentage":   With  respect  to  any
Distribution Date is the percentage  equivalent of a fraction,  the numerator of
which is (x) the Group I Principal  Remittance Amount for such Distribution Date
and the  denominator  of which is (y) the Principal  Remittance  Amount for such
Distribution Date.

                  "Class A-1  Certificate":  Any Class A-1A Certificate or Class
A-1B Certificate.

                  "Class A-1 Principal Distribution Amount": With respect to any
Distribution  Date on or after the Stepdown Date and on which a Trigger Event is
not in effect,  the excess of (x) the sum of the Certificate  Principal Balances
of the Class A-1A Certificates and Class A-1B Certificates  immediately prior to
such  Distribution Date over (y) the lesser of (A) the product of (i) 56.50% and
(ii) the aggregate Stated Principal  Balance of the Group I Mortgage Loans as of
the last day of the  related  Due  Period  (after  giving  effect  to  scheduled
payments of principal due

                                       10
<PAGE>

during  the  related  Due  Period,  to  the  extent  received  or  advanced  and
unscheduled  collections  of principal  received  during the related  Prepayment
Period) and (B) the aggregate Stated  Principal  Balance of the Group I Mortgage
Loans as of the last day of the  related  Due  Period  (after  giving  effect to
scheduled payments of principal due during the related Due Period, to the extent
received or advanced and  unscheduled  collections of principal  received during
the  related  Prepayment  Period)  minus the  product  of (i) 0.50% and (ii) the
aggregate  principal  balance  of the Group I Mortgage  Loans as of the  Cut-off
Date.

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

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

                  "Class  A-2  Allocation  Percentage":   With  respect  to  any
Distribution Date is the percentage  equivalent of a fraction,  the numerator of
which is (x) the Group II Principal Remittance Amount for such Distribution Date
and the  denominator  of which is (y) the Principal  Remittance  Amount for such
Distribution Date.

                  "Class A-2  Certificate":  Any Class A-2A, Class A-2B or Class
A-2C Certificate.

                   "Class A-2 Principal  Distribution  Amount":  With respect to
any Distribution Date on or after the Stepdown Date and on which a Trigger Event
is not in  effect,  the  excess  of (x)  the  sum of the  Certificate  Principal
Balances of the Class A-2A, Class A-2B and Class A-2C  Certificates  immediately
prior to such  Distribution  Date over (y) the lesser of (A) the  product of (i)
56.50% and (ii) the aggregate Stated Principal  Balance of the Group II Mortgage
Loans as of the last day of the  related  Due  Period  (after  giving  effect to
scheduled payments of principal due during the related Due Period, to the extent
received or advanced and  unscheduled  collections of principal  received during
the related Prepayment Period) and (B) the aggregate Stated Principal Balance of
the Group II Mortgage  Loans as of the last day of the related Due Period (after
giving  effect to  scheduled  payments of  principal  due during the related Due
Period,  to the extent  received  or advanced  and  unscheduled  collections  of
principal  received during the related  Prepayment  Period) minus the product of
(i) 0.50% and (ii) the  aggregate  principal  balance  of the Group II  Mortgage
Loans as of the Cut-off Date.

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

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

                                       11
<PAGE>

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

                  "Class B Certificate":  Any Class B-1 Certificate or Class B-2
Certificate.

                   "Class   B-1   Certificate":   Any  one  of  the   Class  B-1
Certificates  executed and  authenticated  by the Securities  Administrator  and
delivered by the Trustee,  substantially  in the form annexed  hereto as Exhibit
A-3 and  evidencing  a Regular  Interest  in REMIC II for  purposes of the REMIC
Provisions.

                  "Class B-1 Principal Distribution Amount": With respect to any
Distribution  Date on or after the Stepdown Date and on which a Trigger Event is
not in  effect,  the  excess  of (x) the sum of (i)  the  aggregate  Certificate
Principal  Balance of the Class A  Certificates  (after  taking into account the
payment of the Class A Principal Distribution Amount on such Distribution Date),
(ii) the  Certificate  Principal  Balance of the Class M-1  Certificates  (after
taking into account the payment of the Class M-1 Principal  Distribution  Amount
on such Distribution Date), (iii) the Certificate Principal Balance of the Class
M-2  Certificates  (after  taking  into  account  the  payment  of the Class M-2
Principal  Distribution  Amount on such Distribution Date), (iv) the Certificate
Principal  Balance of the Class M-3 Certificates  (after taking into account the
payment  of the Class M-3  Principal  Distribution  Amount on such  Distribution
Date),  (v) the  Certificate  Principal  Balance  of the Class M-4  Certificates
(after taking into account the payment of the Class M-4  Principal  Distribution
Amount on such Distribution Date), (vi) the Certificate Principal Balance of the
Class M-5  Certificates  (after taking into account the payment of the Class M-5
Principal  Distribution Amount on such Distribution Date), (vii) the Certificate
Principal  Balance of the Class M-6 Certificates  (after taking into account the
payment  of the Class M-6  Principal  Distribution  Amount on such  Distribution
Date),  (viii) the Certificate  Principal  Balance of the Class M-7 Certificates
(after taking into account the payment of the Class M-7  Principal  Distribution
Amount on such Distribution Date), (ix) the Certificate Principal Balance of the
Class M-8  Certificates  (after taking into account the payment of the Class M-8
Principal  Distribution  Amount on such Distribution  Date), (x) the Certificate
Principal  Balance of the Class M-9 Certificates  (after taking into account the
payment  of the Class M-9  Principal  Distribution  Amount on such  Distribution
Date) and (xi) the Certificate  Principal  Balance of the Class B-1 Certificates
immediately  prior to such  Distribution  Date  over (y) the  lesser  of (A) the
product of (i) 95.80% and (ii) the  aggregate  Stated  Principal  Balance of the
Mortgage Loans as of the last day of the related Due Period (after giving effect
to  scheduled  payments of principal  due during the related Due Period,  to the
extent  received or advanced and unscheduled  collections of principal  received
during the related  Prepayment  Period) and (B) the aggregate  Stated  Principal
Balance  of the  Mortgage  Loans as of the last day of the  related  Due  Period
(after giving  effect to scheduled  payments of principal due during the related
Due Period,  to the extent received or advanced and  unscheduled  collections of
principal  received during the related  Prepayment  Period) minus the product of
(i) 0.50% and (ii) the aggregate  principal  balance of the Mortgage Loans as of
the Cut-off Date.

                  "Class B-2 Certificate": Any one of the Class B-2 Certificates
executed and authenticated by the Securities  Administrator and delivered by the
Trustee,  substantially in the

                                       12
<PAGE>

form annexed hereto as Exhibit A-3 and evidencing a Regular Interest in REMIC II
for purposes of the REMIC Provisions.

                  "Class B-2 Principal Distribution Amount": With respect to any
Distribution  Date on or after the Stepdown Date and on which a Trigger Event is
not in  effect,  the  excess  of (x) the sum of (i)  the  aggregate  Certificate
Principal  Balance of the Class A  Certificates  (after  taking into account the
payment of the Class A Principal Distribution Amount on such Distribution Date),
(ii) the  Certificate  Principal  Balance of the Class M-1  Certificates  (after
taking into account the payment of the Class M-1 Principal  Distribution  Amount
on such Distribution Date), (iii) the Certificate Principal Balance of the Class
M-2  Certificates  (after  taking  into  account  the  payment  of the Class M-2
Principal  Distribution  Amount on such Distribution Date), (iv) the Certificate
Principal  Balance of the Class M-3 Certificates  (after taking into account the
payment  of the Class M-3  Principal  Distribution  Amount on such  Distribution
Date),  (v) the  Certificate  Principal  Balance  of the Class M-4  Certificates
(after taking into account the payment of the Class M-4  Principal  Distribution
Amount on such Distribution Date), (vi) the Certificate Principal Balance of the
Class M-5  Certificates  (after taking into account the payment of the Class M-5
Principal  Distribution Amount on such Distribution Date), (vii) the Certificate
Principal  Balance of the Class M-6 Certificates  (after taking into account the
payment  of the Class M-6  Principal  Distribution  Amount on such  Distribution
Date),  (viii) the Certificate  Principal  Balance of the Class M-7 Certificates
(after taking into account the payment of the Class M-7  Principal  Distribution
Amount on such Distribution Date), (ix) the Certificate Principal Balance of the
Class M-8  Certificates  (after taking into account the payment of the Class M-8
Principal  Distribution  Amount on such Distribution  Date), (x) the Certificate
Principal  Balance of the Class M-9 Certificates  (after taking into account the
payment  of the Class M-9  Principal  Distribution  Amount on such  Distribution
Date),  (xi) the  Certificate  Principal  Balance of the Class B-1  Certificates
(after taking into account the payment of the Class B-1  Principal  Distribution
Amount on such Distribution Date) and (xii) the Certificate Principal Balance of
the Class B-2 Certificates  immediately prior to such Distribution Date over (y)
the  lesser of (A) the  product  of (i)  98.60%  and (ii) the  aggregate  Stated
Principal  Balance of the  Mortgage  Loans as of the last day of the related Due
Period (after  giving  effect to scheduled  payments of principal due during the
related  Due  Period,  to  the  extent  received  or  advanced  and  unscheduled
collections of principal  received during the related Prepayment Period) and (B)
the aggregate Stated Principal  Balance of the Mortgage Loans as of the last day
of the  related  Due  Period  (after  giving  effect to  scheduled  payments  of
principal due during the related Due Period,  to the extent received or advanced
and unscheduled  collections of principal received during the related Prepayment
Period) minus the product of (i) 0.50% and (ii) the aggregate  principal balance
of the Mortgage Loans as of the Cut-off Date.

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

                  "Class   CE-1   Certificate":   Any  one  of  the  Class  CE-1
Certificates  executed and  authenticated  by the Securities  Administrator  and
delivered by the Trustee,  substantially  in the form annexed  hereto as Exhibit
A-4 and  evidencing  a Regular  Interest  in REMIC II for  purposes of the REMIC
Provisions.

                                       13
<PAGE>

                  "Class M  Certificates":  The Class M-1, Class M-2, Class M-3,
Class  M-4,   Class  M-5,  Class  M-6,  Class  M-7,  Class  M-8  and  Class  M-9
Certificates.

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

                  "Class M-1 Principal Distribution Amount": With respect to any
Distribution  Date on or after the Stepdown Date and on which a Trigger Event is
not in  effect,  the  excess  of (x) the sum of (i)  the  aggregate  Certificate
Principal  Balance of the Class A  Certificates  (after  taking into account the
payment of the Class A Principal  Distribution Amount on such Distribution Date)
and (ii)  the  Certificate  Principal  Balance  of the  Class  M-1  Certificates
immediately  prior to such  Distribution  Date  over (y) the  lesser  of (A) the
product of (i) 64.10% and (ii) the  aggregate  Stated  Principal  Balance of the
Mortgage Loans as of the last day of the related Due Period (after giving effect
to  scheduled  payments of principal  due during the related Due Period,  to the
extent  received or advanced and unscheduled  collections of principal  received
during the related  Prepayment  Period) and (B) the aggregate  Stated  Principal
Balance  of the  Mortgage  Loans as of the last day of the  related  Due  Period
(after giving  effect to scheduled  payments of principal due during the related
Due Period,  to the extent received or advanced and  unscheduled  collections of
principal  received during the related  Prepayment  Period) minus the product of
(i) 0.50% and (ii) the aggregate  principal  balance of the Mortgage Loans as of
the Cut-off Date.

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

                  "Class M-2 Principal Distribution Amount": With respect to any
Distribution  Date on or after the Stepdown Date and on which a Trigger Event is
not in  effect,  the  excess  of (x) the sum of (i)  the  aggregate  Certificate
Principal  Balance of the Class A  Certificates  (after  taking into account the
payment of the Class A Principal Distribution Amount on such Distribution Date),
(ii) the  Certificate  Principal  Balance of the Class M-1  Certificates  (after
taking into account the payment of the Class M-1 Principal  Distribution  Amount
on such  Distribution  Date) and (iii) the Certificate  Principal Balance of the
Class M-2 Certificates  immediately prior to such Distribution Date over (y) the
lesser of (A) the product of (i) 70.50% and (ii) the aggregate  Stated Principal
Balance  of the  Mortgage  Loans as of the last day of the  related  Due  Period
(after giving  effect to scheduled  payments of principal due during the related
Due Period,  to the extent received or advanced and  unscheduled  collections of
principal  received during the related  Prepayment Period) and (B) the aggregate
Stated Principal Balance of the Mortgage Loans as of the last day of the related
Due Period (after  giving  effect to scheduled  payments of principal due during
the related  Due Period,  to the extent  received  or advanced  and  unscheduled
collections of principal  received during the related  Prepayment  Period) minus
the  product  of (i)  0.50%  and (ii) the  aggregate  principal  balance  of the
Mortgage Loans as of the Cut-off Date.

                                       14
<PAGE>

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

                  "Class M-3 Principal Distribution Amount": With respect to any
Distribution  Date on or after the Stepdown Date and on which a Trigger Event is
not in  effect,  the  excess  of (x) the sum of (i)  the  aggregate  Certificate
Principal  Balance of the Class A  Certificates  (after  taking into account the
payment of the Class A Principal Distribution Amount on such Distribution Date),
(ii) the  Certificate  Principal  Balance of the Class M-1  Certificates  (after
taking into account the payment of the Class M-1 Principal  Distribution  Amount
on such Distribution Date), (iii) the Certificate Principal Balance of the Class
M-2  Certificates  (after  taking  into  account  the  payment  of the Class M-2
Principal   Distribution   Amount  on  such  Distribution  Date)  and  (iv)  the
Certificate Principal Balance of the Class M-3 Certificates immediately prior to
such  Distribution Date over (y) the lesser of (A) the product of (i) 74.40% and
(ii) the aggregate Stated Principal Balance of the Mortgage Loans as of the last
day of the related Due Period  (after  giving  effect to  scheduled  payments of
principal due during the related Due Period,  to the extent received or advanced
and unscheduled  collections of principal received during the related Prepayment
Period) and (B) the aggregate Stated Principal  Balance of the Mortgage Loans as
of the last day of the  related Due Period  (after  giving  effect to  scheduled
payments of principal due during the related Due Period,  to the extent received
or advanced and unscheduled collections of principal received during the related
Prepayment  Period)  minus  the  product  of (i)  0.50%  and (ii) the  aggregate
principal balance of the Mortgage Loans as of the Cut-off Date.

                  "Class M-4 Certificate": Any one of the Class M-4 Certificates
executed and authenticated by the Securities  Administrator and delivered by the
Trustee,  substantially in the form annexed hereto as Exhibit A-2 and evidencing
a Regular Interest in REMIC II for purposes of the REMIC Provisions.

                  "Class M-4 Principal Distribution Amount": With respect to any
Distribution  Date on or after the Stepdown Date and on which a Trigger Event is
not in  effect,  the  excess  of (x) the sum of (i)  the  aggregate  Certificate
Principal  Balance of the Class A  Certificates  (after  taking into account the
payment of the Class A Principal Distribution Amount on such Distribution Date),
(ii) the  Certificate  Principal  Balance of the Class M-1  Certificates  (after
taking into account the payment of the Class M-1 Principal  Distribution  Amount
on such Distribution Date), (iii) the Certificate Principal Balance of the Class
M-2  Certificates  (after  taking  into  account  the  payment  of the Class M-2
Principal  Distribution  Amount on such Distribution Date), (iv) the Certificate
Principal  Balance of the Class M-3 Certificates  (after taking into account the
payment  of the Class M-3  Principal  Distribution  Amount on such  Distribution
Date) and (v) the Certificate  Principal  Balance of the Class M-4  Certificates
immediately  prior to such  Distribution  Date  over (y) the  lesser  of (A) the
product of (i) 78.20% and (ii) the  aggregate  Stated  Principal  Balance of the
Mortgage Loans as of the last day of the related Due Period (after giving effect
to  scheduled  payments of principal  due during the related Due Period,  to the
extent  received or advanced and unscheduled  collections of principal  received
during the related  Prepayment  Period) and (B) the aggregate  Stated  Principal
Balance  of the  Mortgage  Loans as of the last day of the  related  Due  Period
(after giving  effect to scheduled  payments of principal due during the related
Due Period, to the extent received or advanced and

                                       15
<PAGE>

unscheduled  collections  of principal  received  during the related  Prepayment
Period) minus the product of (i) 0.50% and (ii) the aggregate  principal balance
of the Mortgage Loans as of the Cut-off Date.

                  "Class M-5 Certificate": Any one of the Class M-5 Certificates
executed and authenticated by the Securities  Administrator and delivered by the
Trustee,  substantially in the form annexed hereto as Exhibit A-2 and evidencing
a Regular Interest in REMIC II for purposes of the REMIC Provisions.

                  "Class M-5 Principal Distribution Amount": With respect to any
Distribution  Date on or after the Stepdown Date and on which a Trigger Event is
not in  effect,  the  excess  of (x) the sum of (i)  the  aggregate  Certificate
Principal  Balance of the Class A  Certificates  (after  taking into account the
payment of the Class A Principal Distribution Amount on such Distribution Date),
(ii) the  Certificate  Principal  Balance of the Class M-1  Certificates  (after
taking into account the payment of the Class M-1 Principal  Distribution  Amount
on such Distribution Date), (iii) the Certificate Principal Balance of the Class
M-2  Certificates  (after  taking  into  account  the  payment  of the Class M-2
Principal  Distribution  Amount on such Distribution Date), (iv) the Certificate
Principal  Balance of the Class M-3 Certificates  (after taking into account the
payment  of the Class M-3  Principal  Distribution  Amount on such  Distribution
Date),  (v) the  Certificate  Principal  Balance  of the Class M-4  Certificates
(after taking into account the payment of the Class M-4  Principal  Distribution
Amount on such Distribution Date) and (vi) the Certificate  Principal Balance of
the Class M-5 Certificates  immediately prior to such Distribution Date over (y)
the  lesser of (A) the  product  of (i)  83.00%  and (ii) the  aggregate  Stated
Principal  Balance of the  Mortgage  Loans as of the last day of the related Due
Period (after  giving  effect to scheduled  payments of principal due during the
related  Due  Period,  to  the  extent  received  or  advanced  and  unscheduled
collections of principal  received during the related Prepayment Period) and (B)
the aggregate Stated Principal  Balance of the Mortgage Loans as of the last day
of the  related  Due  Period  (after  giving  effect to  scheduled  payments  of
principal due during the related Due Period,  to the extent received or advanced
and unscheduled  collections of principal received during the related Prepayment
Period) minus the product of (i) 0.50% and (ii) the aggregate  principal balance
of the Mortgage Loans as of the Cut-off Date.

                  "Class M-6 Certificate": Any one of the Class M-6 Certificates
executed and authenticated by the Securities  Administrator and delivered by the
Trustee,  substantially in the form annexed hereto as Exhibit A-2 and evidencing
a Regular Interest in REMIC II for purposes of the REMIC Provisions.

                  "Class M-6 Principal Distribution Amount": With respect to any
Distribution  Date on or after the Stepdown Date and on which a Trigger Event is
not in  effect,  the  excess  of (x) the sum of (i)  the  aggregate  Certificate
Principal  Balance of the Class A  Certificates  (after  taking into account the
payment of the Class A Principal Distribution Amount on such Distribution Date),
(ii) the  Certificate  Principal  Balance of the Class M-1  Certificates  (after
taking into account the payment of the Class M-1 Principal  Distribution  Amount
on such Distribution Date), (iii) the Certificate Principal Balance of the Class
M-2  Certificates  (after  taking  into  account  the  payment  of the Class M-2
Principal  Distribution  Amount on such Distribution Date), (iv) the Certificate
Principal  Balance of the Class M-3 Certificates  (after taking into account the
payment of the Class M-3 Principal Distribution Amount on such

                                       16
<PAGE>

Distribution  Date),  (v) the  Certificate  Principal  Balance  of the Class M-4
Certificates  (after  taking into account the payment of the Class M-4 Principal
Distribution Amount on such Distribution  Date), (vi) the Certificate  Principal
Balance of the Class M-5 Certificates  (after taking into account the payment of
the Class M-5 Principal Distribution Amount on such Distribution Date) and (vii)
the  Certificate  Principal  Balance of the Class M-6  Certificates  immediately
prior to such  Distribution  Date over (y) the lesser of (A) the  product of (i)
85.60% and (ii) the aggregate Stated Principal  Balance of the Mortgage Loans as
of the last day of the  related Due Period  (after  giving  effect to  scheduled
payments of principal due during the related Due Period,  to the extent received
or advanced and unscheduled collections of principal received during the related
Prepayment  Period)  and (B)  the  aggregate  Stated  Principal  Balance  of the
Mortgage Loans as of the last day of the related Due Period (after giving effect
to  scheduled  payments of principal  due during the related Due Period,  to the
extent  received or advanced and unscheduled  collections of principal  received
during the related  Prepayment  Period)  minus the product of (i) 0.50% and (ii)
the aggregate principal balance of the Mortgage Loans as of the Cut-off Date.

                  "Class M-7 Certificate": Any one of the Class M-7 Certificates
executed and authenticated by the Securities  Administrator and delivered by the
Trustee,  substantially in the form annexed hereto as Exhibit A-2 and evidencing
a Regular Interest in REMIC II for purposes of the REMIC Provisions.

                  "Class M-7 Principal Distribution Amount": With respect to any
Distribution  Date on or after the Stepdown Date and on which a Trigger Event is
not in  effect,  the  excess  of (x) the sum of (i)  the  aggregate  Certificate
Principal  Balance of the Class A  Certificates  (after  taking into account the
payment of the Class A Principal Distribution Amount on such Distribution Date),
(ii) the  Certificate  Principal  Balance of the Class M-1  Certificates  (after
taking into account the payment of the Class M-1 Principal  Distribution  Amount
on such Distribution Date), (iii) the Certificate Principal Balance of the Class
M-2  Certificates  (after  taking  into  account  the  payment  of the Class M-2
Principal  Distribution  Amount on such Distribution Date), (iv) the Certificate
Principal  Balance of the Class M-3 Certificates  (after taking into account the
payment  of the Class M-3  Principal  Distribution  Amount on such  Distribution
Date),  (v) the  Certificate  Principal  Balance  of the Class M-4  Certificates
(after taking into account the payment of the Class M-4  Principal  Distribution
Amount on such Distribution Date), (vi) the Certificate Principal Balance of the
Class M-5  Certificates  (after taking into account the payment of the Class M-5
Principal  Distribution Amount on such Distribution Date), (vii) the Certificate
Principal  Balance of the Class M-6 Certificates  (after taking into account the
payment  of the Class M-6  Principal  Distribution  Amount on such  Distribution
Date) and (viii) the Certificate Principal Balance of the Class M-7 Certificates
immediately  prior to such  Distribution  Date  over (y) the  lesser  of (A) the
product of (i) 87.60% and (ii) the  aggregate  Stated  Principal  Balance of the
Mortgage Loans as of the last day of the related Due Period (after giving effect
to  scheduled  payments of principal  due during the related Due Period,  to the
extent  received or advanced and unscheduled  collections of principal  received
during the related  Prepayment  Period) and (B) the aggregate  Stated  Principal
Balance  of the  Mortgage  Loans as of the last day of the  related  Due  Period
(after giving  effect to scheduled  payments of principal due during the related
Due Period,  to the extent received or advanced and  unscheduled  collections of
principal  received during the related  Prepayment  Period) minus the product of
(i) 0.50% and (ii) the aggregate  principal  balance of the Mortgage Loans as of
the Cut-off Date.

                                       17
<PAGE>

                  "Class M-8 Certificate": Any one of the Class M-8 Certificates
executed and authenticated by the Securities  Administrator and delivered by the
Trustee,  substantially in the form annexed hereto as Exhibit A-2 and evidencing
a Regular Interest in REMIC II for purposes of the REMIC Provisions.

                  "Class M-8 Principal Distribution Amount": With respect to any
Distribution  Date on or after the Stepdown Date and on which a Trigger Event is
not in  effect,  the  excess  of (x) the sum of (i)  the  aggregate  Certificate
Principal  Balance of the Class A  Certificates  (after  taking into account the
payment of the Class A Principal Distribution Amount on such Distribution Date),
(ii) the  Certificate  Principal  Balance of the Class M-1  Certificates  (after
taking into account the payment of the Class M-1 Principal  Distribution  Amount
on such Distribution Date), (iii) the Certificate Principal Balance of the Class
M-2  Certificates  (after  taking  into  account  the  payment  of the Class M-2
Principal  Distribution  Amount on such Distribution Date), (iv) the Certificate
Principal  Balance of the Class M-3 Certificates  (after taking into account the
payment  of the Class M-3  Principal  Distribution  Amount on such  Distribution
Date),  (v) the  Certificate  Principal  Balance  of the Class M-4  Certificates
(after taking into account the payment of the Class M-4  Principal  Distribution
Amount on such Distribution Date), (vi) the Certificate Principal Balance of the
Class M-5  Certificates  (after taking into account the payment of the Class M-5
Principal  Distribution Amount on such Distribution Date), (vii) the Certificate
Principal  Balance of the Class M-6 Certificates  (after taking into account the
payment  of the Class M-6  Principal  Distribution  Amount on such  Distribution
Date),  (viii) the Certificate  Principal  Balance of the Class M-7 Certificates
(after taking into account the payment of the Class M-7  Principal  Distribution
Amount on such Distribution Date) and (ix) the Certificate  Principal Balance of
the Class M-8 Certificates  immediately prior to such Distribution Date over (y)
the  lesser of (A) the  product  of (i)  90.10%  and (ii) the  aggregate  Stated
Principal  Balance of the  Mortgage  Loans as of the last day of the related Due
Period (after  giving  effect to scheduled  payments of principal due during the
related  Due  Period,  to  the  extent  received  or  advanced  and  unscheduled
collections of principal  received during the related Prepayment Period) and (B)
the aggregate Stated Principal  Balance of the Mortgage Loans as of the last day
of the  related  Due  Period  (after  giving  effect to  scheduled  payments  of
principal due during the related Due Period,  to the extent received or advanced
and unscheduled  collections of principal received during the related Prepayment
Period) minus the product of (i) 0.50% and (ii) the aggregate  principal balance
of the Mortgage Loans as of the Cut-off Date.

                  "Class M-9 Certificate": Any one of the Class M-9 Certificates
executed and authenticated by the Securities  Administrator and delivered by the
Trustee,  substantially in the form annexed hereto as Exhibit A-2 and evidencing
a Regular Interest in REMIC II for purposes of the REMIC Provisions.

                  "Class M-9 Principal Distribution Amount": With respect to any
Distribution  Date on or after the Stepdown Date and on which a Trigger Event is
not in  effect,  the  excess  of (x) the sum of (i)  the  aggregate  Certificate
Principal  Balance of the Class A  Certificates  (after  taking into account the
payment of the Class A Principal Distribution Amount on such Distribution Date),
(ii) the  Certificate  Principal  Balance of the Class M-1  Certificates  (after
taking into account the payment of the Class M-1 Principal  Distribution  Amount
on such Distribution Date), (iii) the Certificate Principal Balance of the Class
M-2  Certificates  (after  taking  into  account  the  payment  of the Class M-2
Principal Distribution Amount on such

                                       18
<PAGE>

Distribution  Date),  (iv) the  Certificate  Principal  Balance of the Class M-3
Certificates  (after  taking into account the payment of the Class M-3 Principal
Distribution  Amount on such Distribution  Date), (v) the Certificate  Principal
Balance of the Class M-4 Certificates  (after taking into account the payment of
the Class M-4 Principal Distribution Amount on such Distribution Date), (vi) the
Certificate  Principal Balance of the Class M-5 Certificates  (after taking into
account  the  payment  of the Class M-5  Principal  Distribution  Amount on such
Distribution  Date),  (vii) the Certificate  Principal  Balance of the Class M-6
Certificates  (after  taking into account the payment of the Class M-6 Principal
Distribution Amount on such Distribution Date). (viii) the Certificate Principal
Balance of the Class M-7 Certificates  (after taking into account the payment of
the Class M-7 Principal Distribution Amount on such Distribution Date), (ix) the
Certificate  Principal Balance of the Class M-8 Certificates  (after taking into
account  the  payment  of the Class M-8  Principal  Distribution  Amount on such
Distribution Date) and (vii) the Certificate  Principal Balance of the Class M-9
Certificates  immediately prior to such Distribution Date over (y) the lesser of
(A) the product of (i) 92.50% and (ii) the aggregate Stated Principal Balance of
the Mortgage  Loans as of the last day of the related Due Period  (after  giving
effect to scheduled  payments of principal due during the related Due Period, to
the extent  received  or  advanced  and  unscheduled  collections  of  principal
received  during the related  Prepayment  Period) and (B) the  aggregate  Stated
Principal  Balance of the  Mortgage  Loans as of the last day of the related Due
Period (after  giving  effect to scheduled  payments of principal due during the
related  Due  Period,  to  the  extent  received  or  advanced  and  unscheduled
collections of principal  received during the related  Prepayment  Period) minus
the  product  of (i)  0.50%  and (ii) the  aggregate  principal  balance  of the
Mortgage Loans as of the Cut-off Date.

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

                  "Class R  Certificates":  Any one of the Class R  Certificates
executed and authenticated by the Securities  Administrator and delivered by the
Trustee, substantially in the form annexed hereto as Exhibit A-6, and evidencing
the Class R-I Interest and the Class R-II Interest.

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

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

                  "Closing Date": January 31, 2005.

                  "Code": The Internal Revenue Code of 1986 as amended from time
to time.

                  "Collection  Account":  The  account or  accounts  created and
maintained, or caused to be created and maintained, by the Servicers pursuant to
Section 3.08(a) of this  Agreement,  which shall be entitled "Ocwen Federal Bank
FSB, as Servicer for HSBC Bank USA,  National  Association as Trustee,  in trust
for the  registered  holders of ACE  Securities  Corp.,  Home Equity Loan Trust,
Series 2005-HE1,  Asset Backed  Pass-Through  Certificates"  and "Saxon Mortgage
Services,  Inc., as Servicer for HSBC Bank USA, National Association as Trustee,
in trust for the

                                       19
<PAGE>

registered  holders of ACE  Securities  Corp.,  Home Equity  Loan Trust,  Series
2005-HE1, Asset Backed Pass-Through Certificates".  The Collection Accounts must
be Eligible Accounts.

                  "Commission": The Securities and Exchange Commission.

                  "Corporate Trust Office": The principal corporate trust office
of the Trustee which office at the date of the  execution of this  instrument is
located at 452 Fifth Avenue, New York, New York 10018, Attention: ACE Securities
Corp., 2005-HE1, or at such other address as the Trustee may designate from time
to time by notice to the Certificateholders, the Depositor, the Master Servicer,
the Securities  Administrator  and the  Servicers.  The office of the Securities
Administrator,  which for purposes of  Certificate  transfers  and  surrender is
located  at  Wells  Fargo  Bank,  N.A.,  Sixth  Street  and  Marquette   Avenue,
Minneapolis, Minnesota 55479, Attention: Corporate Trust (ACE 2005-HE1), and for
all other purposes is located at Wells Fargo Bank,  N.A., P.O. Box 98, Columbia,
Maryland  21046,  Attention:  Corporate  Trust (ACE  2005-HE1) (or for overnight
deliveries,  at 9062 Old Annapolis Road,  Columbia,  Maryland 21045,  Attention:
Corporate Trust (ACE 2005-HE1)).

                  "Corresponding  Certificate":  With  respect  to each  REMIC I
Regular Interest, as follows:

                   REMIC I Regular Interest            Class
              -----------------------------------     --------
              REMIC I Regular Interest I-LTA1A          A-1A
              REMIC I Regular Interest I-LTA1B          A-1B
              REMIC I Regular Interest I-LTA2A          A-2A
              REMIC I Regular Interest I-LTA2B          A-2B
              REMIC I Regular Interest I-LTA2C          A-2C
              REMIC I Regular Interest I-LTM1            M-1
              REMIC I Regular Interest I-LTM2            M-2
              REMIC I Regular Interest I-LTM3            M-3
              REMIC I Regular Interest I-LTM4            M-4
              REMIC I Regular Interest I-LTM5            M-5
              REMIC I Regular Interest I-LTM6            M-6
              REMIC I Regular Interest I-LTM7            M-7
              REMIC I Regular Interest I-LTM8            M-8
              REMIC I Regular Interest I-LTM9            M-9
              REMIC I Regular Interest I-LTB1            B-1
              REMIC I Regular Interest I-LTB2            B-2
              REMIC I Regular Interest I-LTP              P

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

                  "Credit Risk Management  Agreements":  The agreements  between
the Credit Risk Manager and the Servicers and/or Master Servicer,  regarding the
loss mitigation and advisory services to be provided by the Credit Risk Manager.

                  "Credit Risk Management Fee": The amount payable to the Credit
Risk Manager on each Distribution Date as compensation for all services rendered
by it in the exercise and

                                       20
<PAGE>

performance  of any and all powers and duties of the Credit Risk  Manager  under
the Credit Risk Management  Agreements,  which amount shall equal one twelfth of
the product of (i) the Credit Risk  Management  Fee Rate  multiplied by (ii) the
Stated Principal Balance of the Mortgage Loans and any related REO Properties as
of the first day of the related Due Period.

                  "Credit Risk Management Fee Rate": 0.014% per annum.

                  "Credit Risk  Manager":  The  Murrayhill  Company,  a Colorado
corporation, and its successors and assigns.

                  "Custodial Account":  Shall mean each account maintained by an
Interim Servicer under the related Interim Servicing Agreement.

                  "Custodial  Agreement":  The Custodial  Agreement  dated as of
January 1, 2005,  among the Trustee,  the  Custodian  and the  Servicers as such
agreement  may be  amended  or  supplemented  from  time to time,  or any  other
custodial  agreement  entered  into after the date  hereof  with  respect to any
Mortgage Loan subject to this Agreement.

                  "Custodian":  Wells  Fargo or any  other  custodian  appointed
under any custodial agreement entered into after the date of this Agreement.

                  "Cut-off Date": With respect to each Mortgage Loan, January 1,
2005. With respect to all Qualified  Substitute Mortgage Loans, their respective
dates of substitution.  References  herein to the "Cut-off Date," when used with
respect to more than one Mortgage Loan, shall be to the respective Cut-off Dates
for such Mortgage Loans.

                  "DBRS":  Dominion  Bond Rating  Service,  or any  successor in
interest.

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

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

                  "Definitive Certificates": As defined in Section 6.01(b).

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

                  "Delinquency  Percentage":  As of the last day of the  related
Due Period, the percentage  equivalent of a fraction,  the numerator of which is
the aggregate  Stated  Principal  Balance of all Mortgage  Loans that, as of the
last day of the previous calendar month, are 60 or more days delinquent,  are in
foreclosure,  have been converted to REO  Properties or have been  discharged by
reason of  bankruptcy,  and the  denominator  of which is the  aggregate  Stated

                                       21
<PAGE>

Principal Balance of the Mortgage Loans and REO Properties as of the last day of
the previous calendar month.

                  "Depositor":  ACE Securities Corp., a Delaware corporation, or
its successor in interest.

                  "Depository":  The Depository Trust Company,  or any successor
Depository hereafter named. The nominee of the initial Depository,  for purposes
of registering  those  Certificates that are to be Book-Entry  Certificates,  is
CEDE & Co. The  Depository  shall at all times be a  "clearing  corporation"  as
defined in Section  8-102(3) of the Uniform  Commercial Code of the State of New
York and a "clearing  agency"  registered  pursuant to the provisions of Section
17A of the Securities Exchange Act of 1934, as amended.

                  "Depository Institution":  Any depository institution or trust
company,  including the Trustee,  that (a) is incorporated under the laws of the
United States of America or any State thereof, (b) is subject to supervision and
examination  by federal or state  banking  authorities  and (c) has  outstanding
unsecured  commercial paper or other short-term  unsecured debt obligations (or,
in the case of a depository  institution  that is the principal  subsidiary of a
holding  company,  such holding company has unsecured  commercial paper or other
short-term unsecured debt obligations) that are rated at least A-1+ by S&P, F-1+
by Fitch and P-1 by Moody's (or, if such Rating  Agencies  are no longer  rating
the Offered Certificates,  comparable ratings by any other nationally recognized
statistical rating agency then rating the Offered Certificates).

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

                  "Determination  Date":  With respect to each Distribution Date
and (i)  each  Servicer,  the  15th day of the  calendar  month  in  which  such
Distribution  Date  occurs,  or if such  15th  day is not a  Business  Day,  the
Business Day immediately  preceding such 15th day (ii) each Interim Servicer, as
set forth in the related Interim Servicing Agreement.

                  "Directly  Operate":  With  respect to any REO  Property,  the
furnishing or rendering of services to the tenants  thereof,  the  management or
operation of such REO Property,  the holding of such REO Property  primarily for
sale to customers,  the performance of any construction  work thereon or any use
of such REO  Property  in a trade or  business  conducted  by REMIC I other than
through an Independent Contractor; provided, however, that the related Servicer,
on behalf of the Trustee,  shall not be  considered  to Directly  Operate an REO
Property solely because the related Servicer  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

                                       22
<PAGE>

from the tax  imposed by  Chapter 1 of the Code  (including  the tax  imposed by
Section  511 of the Code on  unrelated  business  taxable  income),  (iv)  rural
electric and telephone  cooperatives  described in Section  1381(a)(2)(C) of the
Code,  (v) an  "electing  large  partnership"  and  (vi)  any  other  Person  so
designated  by the Trustee  based upon an Opinion of Counsel that the holding of
an  Ownership  Interest in a Residual  Certificate  by such Person may cause any
Trust  REMIC  or any  Person  having  an  Ownership  Interest  in any  Class  of
Certificates  (other than such Person) to incur a liability  for any federal tax
imposed  under the Code that would not otherwise be imposed but for the Transfer
of an Ownership  Interest in a Residual  Certificate  to such Person.  The terms
"United  States,"  "State"  and  "international  organization"  shall  have  the
meanings set forth in Section 7701 of the Code or successor provisions.

                  "Distribution  Account": The trust account or accounts created
and maintained by the Securities  Administrator  pursuant to Section  3.08(b) in
the   name   of  the   Securities   Administrator   for  the   benefit   of  the
Certificateholders  and  designated  "Wells  Fargo  Bank,  N.A.,  in  trust  for
registered  holders of ACE  Securities  Corp.  Home Equity  Loan  Trust,  Series
2005-HE1".  Funds in the  Distribution  Account  shall be held in trust  for the
Certificateholders  for the uses and purposes set forth in this  Agreement.  The
Distribution Account must be an Eligible Account.

                  "Distribution  Date":  The 25th day of any  month,  or if such
25th day is not a Business Day, the Business Day immediately following such 25th
day, commencing in February 2005.

                  "Due Date": With respect to each Distribution Date, the day of
the month on which the  Monthly  Payment  is due on a Mortgage  Loan  during the
related Due Period, exclusive of any days of grace.

                  "Due Period":  With respect to any  Distribution  Date and the
Ocwen  Mortgage  Loans and Saxon Mortgage  Loans,  the period  commencing on the
second  day  of  the  month  immediately  preceding  the  month  in  which  such
Distribution  Date occurs and ending on the first day of the month in which such
Distribution Date occurs. With respect to any Distribution Date and each Interim
Servicer, the period as set forth in the related Interim Servicing Agreement.

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

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

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

                  "Excess Liquidation Proceeds":  To the extent that such amount
is not required by law to be paid to the related mortgagor,  the amount, if any,
by which Liquidation  Proceeds with respect to a liquidated Mortgage Loan exceed
the sum of (i) the  outstanding  principal  balance  of such  Mortgage  Loan and
accrued but unpaid  interest at the related Net  Mortgage  Rate through the last
day of the  month in which  the  related  Liquidation  Event  occurs,  plus (ii)
related

                                       23
<PAGE>

liquidation  expenses  or other  amounts to which the  related  Servicer  or the
related Interim Servicer is entitled to be reimbursed from Liquidation  Proceeds
with respect to such  liquidated  Mortgage Loan pursuant to Section 3.09 of this
Agreement or pursuant to the related Interim Servicing Agreement.

                  "Expense Adjusted Mortgage Rate": With respect to any Mortgage
Loan or REO  Property,  the then  applicable  Mortgage  Rate  thereon  minus the
Administration Fee Rate.

                  "Extraordinary  Trust Fund  Expense":  Any amounts  payable or
reimbursable to the Trustee, the Master Servicer, the Securities  Administrator,
the  Custodian or any  director,  officer,  employee or agent of any such Person
from the Trust Fund  pursuant  to the terms of this  Agreement  and any  amounts
payable from the  Distribution  Account in respect of taxes  pursuant to Section
11.01(g)(v).

                  "Extra  Principal  Distribution  Amount":  With respect to any
Distribution  Date, the lesser of (i) the Net Monthly  Excess  Cashflow for such
Distribution  Date and (ii) the  Overcollateralization  Increase Amount for such
Distribution Date.

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

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

                  "Final  Maturity  Date":  The  Distribution  Date occurring in
February 2035.

                  "Final Recovery Determination":  With respect to any defaulted
Mortgage  Loan or any REO Property  (other than a Mortgage  Loan or REO Property
purchased by an Originator,  the Seller or the Master Servicer pursuant to or as
contemplated by Section 2.03, 3.13(c) or Section 10.01), a determination made by
the  related  Servicer  or the  related  Interim  Servicer  that  all  Insurance
Proceeds,  Liquidation  Proceeds  and other  payments  or  recoveries  which the
related  Servicer or related  Interim  Servicer,  in its  reasonable  good faith
judgment,  expects to be finally  recoverable  in respect  thereof  have been so
recovered,  which  determination  shall  be  evidenced  by  a  certificate  of a
Servicing  Officer  delivered  to the  Master  Servicer  and  maintained  in its
records.

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

                  "Fremont":  Fremont  Investment  &  Loan,  and  any  successor
thereto.

                  "Fremont Assignment Agreement": The Assignment, Assumption and
Recognition  Agreement,  dated as of January 31, 2005,  by and among the Seller,
the Depositor and Fremont  evidencing  the  assignment of the Fremont  Servicing
Agreement to the Depositor.

                  "Fremont Mortgage Loans": The Mortgage Loans being serviced by
Fremont as of the Closing Date.

                  "Fremont  Servicing  Agreement":   The  Master  Mortgage  Loan
Purchase and Interim Servicing Agreement,  dated as of May 1, 2004 as amended by
Amendment Number One

                                       24
<PAGE>

dated  September 29, 2004,  by and among the Seller and Fremont,  as modified by
the Fremont Assignment Agreement.

                  "Gross Margin":  With respect to each 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  Adjustable  Rate
Mortgage Loan.

                  "Group I  Interest  Remittance  Amount":  With  respect to any
Distribution Date is that portion of the Available  Distribution Amount for such
Distribution  Date that represents  interest received or advanced on the Group I
Mortgage Loans (net of the  Administration  Fees and any Prepayment  Charges and
after taking into account amounts  payable or  reimbursable to the Trustee,  the
Custodian,  the Securities  Administrator,  the Master Servicer or the Servicers
pursuant to this Agreement or the Custodial  Agreement or the Interim  Servicers
pursuant to the Interim Servicing Agreements).

                  "Group I Mortgage  Loans":  Those Mortgage Loans identified on
the Mortgage Loan Schedule as Group I Mortgage Loans.

                  "Group I Principal  Distribution  Amount": With respect to any
Distribution  Date will be the sum of (i) the  principal  portion of all Monthly
Payments  on the Group I  Mortgage  Loans due  during the  related  Due  Period,
whether or not received on or prior to the related  Determination Date; (ii) the
principal  portion of all proceeds  received in respect of the  repurchase  of a
Group I  Mortgage  Loan  or,  in the  case of a  substitution,  certain  amounts
representing  a  principal  adjustment,  during the  related  Prepayment  Period
pursuant to or as  contemplated  by Section  2.03,  Section  3.13(c) and Section
10.01 of this Agreement or the related Interim  Servicing  Agreement;  (iii) the
principal  portion of all other  unscheduled  collections,  including  Insurance
Proceeds,  Liquidation  Proceeds and all  Principal  Prepayments  in full and in
part,  received during the related  Prepayment  Period, to the extent applied as
recoveries  of  principal  on the Group I  Mortgage  Loans,  net in each case of
payments or reimbursements to the Trustee,  the Custodian,  the Master Servicer,
the Securities  Administrator,  the Servicers or the Interim  Servicers and (iv)
the Class A-1 Allocation  Percentage of the amount of any  Overcollateralization
Increase  Amount for such  Distribution  Date MINUS (v) the Class A-1 Allocation
Percentage of the amount of any Overcollateralization  Reduction Amount for such
Distribution Date.

                  "Group I Principal  Remittance  Amount":  With  respect to any
Distribution  Date  will be the sum of the  amounts  described  in  clauses  (i)
through (iii) of the definition of Group I Principal Distribution Amount.

                  "Group II Interest  Remittance  Amount":  With  respect to any
Distribution Date is that portion of the Available  Distribution Amount for such
Distribution Date that represents  interest received or advanced on the Group II
Mortgage Loans (net of the  Administration  Fees and any Prepayment  Charges and
after taking into account amounts  payable or  reimbursable to the Trustee,  the
Custodian,  the Securities  Administrator,  the Master Servicer or the Servicers
pursuant to this Agreement or the Custodial Agreement or payable or reimbursable
to the Interim Servicers pursuant to the Interim Servicing Agreements).

                                       25
<PAGE>

                  "Group II Mortgage Loans":  Those Mortgage Loans identified on
the Mortgage Loan Schedule as Group II Mortgage Loans.

                  "Group II Principal  Distribution Amount": With respect to any
Distribution  Date will be the sum of (i) the  principal  portion of all Monthly
Payments  on the Group II  Mortgage  Loans due during the  related  Due  Period,
whether or not received on or prior to the related  Determination Date; (ii) the
principal  portion of all proceeds  received in respect of the  repurchase  of a
Group II  Mortgage  Loan  or,  in the case of a  substitution,  certain  amounts
representing  a  principal  adjustment,  during the  related  Prepayment  Period
pursuant to or as  contemplated  by Section  2.03,  Section  3.13(c) and Section
10.01;  (iii)  the  principal  portion  of all  other  unscheduled  collections,
including Insurance Proceeds, Liquidation Proceeds and all Principal Prepayments
in full and in part,  received  during the  related  Prepayment  Period,  to the
extent applied as recoveries of principal on the Group II Mortgage Loans, net in
each case of payments or  reimbursements  to the  Trustee,  the  Custodian,  the
Master  Servicer,  the  Securities  Administrator,  the Servicers or the Interim
Servicers  and (iv) the Class A-2  Allocation  Percentage  of the  amount of any
Overcollateralization  Increase Amount for such  Distribution Date MINUS (v) the
Class A-2  Allocation  Percentage  of the  amount  of any  Overcollateralization
Reduction Amount for such Distribution Date.

                  "Group II Principal  Remittance  Amount":  With respect to any
Distribution  Date  will be the sum of the  amounts  described  in  clauses  (i)
through (iii) of the definition of Group II Principal Distribution Amount.

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

                  "Independent Contractor":  Either (i) any Person (other than a
Servicer)  that would be an  "independent  contractor"  with  respect to REMIC I
within  the  meaning  of  Section  856(d)(3)  of the Code if REMIC I were a real
estate  investment  trust  (except  that the  ownership  tests set forth in that
section  shall be  considered  to be met by any Person  that owns,  directly  or
indirectly,  35% or more of any Class of Certificates),  so long as REMIC I does
not  receive  or derive  any  income  from such  Person  and  provided  that the
relationship  between such Person and REMIC I is at arm's length, all within the
meaning of Treasury Regulation Section  1.856-4(b)(5),  or (ii) any other Person
(including  a Servicer) if the Trustee has 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

                                       26
<PAGE>

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":  As of any Adjustment  Date, the index  applicable to
the  determination  of the Mortgage Rate on each  Adjustable  Rate Mortgage Loan
will  generally  be 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  (a) as of the  first
Business  Day 45 days  prior  to  such  Adjustment  Date or (b) as of the  first
Business  Day of the month  preceding  the  month of such  Adjustment  Date,  as
specified in the related Mortgage Note.

                  "Institutional  Accredited  Investor":  As  defined in Section
6.01(c).

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

                  "Interest  Accrual  Period":  With respect to any Distribution
Date and the Class A  Certificates,  the Mezzanine  Certificate  and the Class B
Certificates,  the  period  commencing  on the  Distribution  Date of the  month
immediately  preceding the month in which such  Distribution Date occurs (or, in
the case of the first  Distribution  Date,  commencing  on the Closing Date) and
ending  on the  day  preceding  such  Distribution  Date.  With  respect  to any
Distribution Date and the Class CE Certificates, Class CE-1 Certificates and the
REMIC I Regular  Interests,  the one-month  period ending on the last day of the
calendar month  immediately  preceding the month in which such Distribution Date
occurs.

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

                  "Interest  Determination  Date":  With  respect to the Class A
Certificates,  the Mezzanine  Certificates,  the Class B  Certificates,  REMIC I
Regular  Interest I-LTA1 A, REMIC I Regular  Interest  I-LTA1B,  REMIC I Regular
Interest  I-LTA2A,  REMIC I Regular Interest  I-LTA2B,  REMIC I Regular Interest
I-LTA2C, REMIC I Regular Interest I-LTM1, REMIC I Regular Interest I-LTM2, REMIC
I Regular  Interest I-LTM3,  REMIC I Regular  Interest  I-LTM4,  REMIC I Regular
Interest  I-LTM5,  REMIC I Regular  Interest  I-LTM6,  REMIC I Regular  Interest
I-LTM7,  REMIC I Regular Interest I-LTM8, REMIC I Regular Interest I-LTM9, REMIC
I Regular  Interest I-LTB1,  REMIC I Regular  Interest I-LTB2,  and any Interest
Accrual  Period   therefor,   the  second  London  Business  Day  preceding  the
commencement of such Interest Accrual Period.

                                       27
<PAGE>

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

                  "Interim   Servicer"  Any  of  Cameron,   Fremont,   Mandalay,
Metrocities or Ownit.

                  "Interim   Servicing   Agreement":   The   Cameron   Servicing
Agreement,  the Fremont Servicing  Agreement,  the Mandalay Servicing Agreement,
the  Metrocities  Servicing  Agreement  and the Ownit  Servicing  Agreement,  as
applicable.

                  "Interest Remittance Amount": With respect to any Distribution
Date, the sum of: (i) the Group I Interest  Remittance Amount and (ii) the Group
II Interest Remittance Amount.

                   "Last Scheduled  Distribution Date": The Distribution Date in
February 2035, which is the Distribution Date immediately following the maturity
date for the Mortgage Loan with the latest maturity date.

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

                  "Liquidation Event": With respect to any Mortgage Loan, any of
the  following  events:  (i) such  Mortgage  Loan is paid in full;  (ii) a Final
Recovery  Determination  is made as to such Mortgage Loan or (iii) such Mortgage
Loan is removed from REMIC I by reason of its being purchased,  sold or replaced
pursuant  to or as  contemplated  by Section  2.03,  Section  3.13(c) or Section
10.01. With respect to any REO Property,  either of the following events:  (i) a
Final  Recovery  Determination  is made as to such REO Property or (ii) such REO
Property is removed  from REMIC I by reason of its being  purchased  pursuant to
Section 10.01.

                  "Liquidation  Proceeds":  The  amount  (other  than  Insurance
Proceeds, amounts received in respect of the rental of any REO Property prior to
REO  Disposition,  or  required  to  be  released  to a  Mortgagor  or a  senior
lienholder  in  accordance  with  applicable  law or the  terms  of the  related
Mortgage Loan Documents) received by the related Servicer or the related Interim
Servicer  in  connection  with (i) the  taking  of all or a part of a  Mortgaged
Property by exercise of the power of eminent domain or condemnation  (other than
amounts required to be released to the Mortgagor or a senior  lienholder),  (ii)
the  liquidation  of  a  defaulted  Mortgage  Loan  through  a  trustee's  sale,
foreclosure sale or otherwise,  (iii) the repurchase,  substitution or sale of a
Mortgage Loan or an REO Property pursuant to or as contemplated by Section 2.03,
Section  3.13(c),  Section 3.21 or Section  10.01 of this  Agreement or (iv) any
Subsequent Recoveries.

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

                                       28
<PAGE>

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

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

                  "Mandalay":  United Pacific Mortgage d/b/a Mandalay  Mortgage,
and any successor thereto.

                  "Mandalay Assignment  Agreement":  The Assignment,  Assumption
and  Recognition  Agreement,  dated as of  January  31,  2005,  by and among the
Seller,  the Depositor and Mandalay  evidencing  the  assignment of the Mandalay
Servicing Agreement to the Depositor.

                  "Mandalay  Mortgage Loans":  The Mortgage Loans being serviced
by Mandalay as of the Closing Date.

                  "Mandalay  Servicing  Agreement":  The  Master  Mortgage  Loan
Purchase and Interim  Servicing  Agreement dated January 1, 2005, by and between
the Seller and Mandalay, as modified by the Mandalay Assignment Agreement.

                  "Marker Rate":  With respect to the Class CE Certificates  and
any  Distribution  Date,  a per annum rate  equal to two (2) times the  weighted
average  of the REMIC I  Remittance  Rate for each of REMIC I  Regular  Interest
I-LTA1A,  REMIC I Regular Interest  I-LTA1B,  REMIC I Regular Interest  I-LTA2A,
REMIC I Regular  Interest  I-LTA2B,  REMIC I Regular Interest  I-LTA2C,  REMIC I
Regular  Interest  I-LTM1,  REMIC I  Regular  Interest  I-LTM2,  REMIC I Regular
Interest  I-LTM3,  REMIC I Regular  Interest  I-LTM4,  REMIC I Regular  Interest
I-LTM5,  REMIC I Regular Interest I-LTM6, REMIC I Regular Interest I-LTM7, REMIC
I Regular  Interest I-LTM8,  REMIC I Regular  Interest  I-LTM9,  REMIC I Regular
Interest  I-LTB1,REMIC I Regular  Interest  I-LTB2 and REMIC I Regular  Interest
I-LTZZ,  with the rate on each such REMIC I Regular Interest (other than REMIC I
Regular Interest I-LTZZ) subject to a cap equal to the lesser of (i) the related
One-Month LIBOR Pass-Through Rate and (ii) the related Net WAC Pass-Through Rate
for the  corresponding  Certificate for the purpose of this calculation for such
Distribution  Date and with the rate on REMIC I Regular  Interest I-LTZZ subject
to a cap of zero for the purpose of this  calculation;  provided  however,  each
such cap for each REMIC I Regular Interest shall be multiplied by a fraction the
numerator of which is the actual number of days in the related  Interest Accrual
Period and the denominator of which is 30.

                  "Master  Servicer":  As of the Closing Date, Wells Fargo Bank,
N.A.  and  thereafter,  its  respective  successors  in  interest  who  meet the
qualifications  of this  Agreement.  The  Master  Servicer  and  the  Securities
Administrator shall at all times be the same Person.

                  "Master  Servicer  Certification":   A  written  certification
covering  servicing of the Mortgage Loans by a Servicer and signed by an officer
of the Master Servicer that complies with (i) the Sarbanes-Oxley Act of 2002, as
amended from time to time, and (ii) the February 21, 2003 Statement by the Staff
of the Division of Corporation Finance of the Securities

                                       29
<PAGE>

and  Exchange  Commission  Regarding  Compliance  by  Asset-Backed  Issuers with
Exchange Act Rules 13a-14 and 15d-14,  as in effect from time to time;  provided
that if, after the Closing Date (a) the  Sarbanes-Oxley  Act of 2002 is amended,
(b) the  Statement  referred to in clause (ii) is modified or  superseded by any
subsequent  statement,  rule  or  regulation  of  the  Securities  and  Exchange
Commission or any statement of a division  thereof,  or (c) any future releases,
rules and  regulations  are published by the Securities and Exchange  Commission
from time to time pursuant to the  Sarbanes-Oxley Act of 2002, which in any such
case affects the form or substance of the required  certification and results in
the  required  certification  being,  in the  reasonable  judgment of the Master
Servicer, materially more onerous than the form of the required certification as
of the Closing Date, the Master Servicer  Certification shall be as agreed to by
the Master  Servicer,  the Depositor and the Seller  following a negotiation  in
good faith to determine how to comply with any such new requirements.

                  "Master Servicer Event of Default":  One or more of the events
described in Section 8.01(b).

                  "Maximum I-LTZZ Uncertificated Interest Deferral Amount": With
respect to any  Distribution  Date,  the excess of (i)  accrued  interest at the
REMIC I Remittance Rate  applicable to REMIC I Regular  Interest I-LTZZ for such
Distribution  Date on a balance equal to the  Uncertificated  Balance of REMIC I
Regular Interest I-LTZZ minus the REMIC I Overcollateralization  Amount, in each
case for such Distribution  Date, over (ii)  Uncertificated  Interest on REMIC I
Regular  Interest  I-LTA1A,  REMIC I Regular Interest  I-LTA1B,  REMIC I Regular
Interest  I-LTA2A,  REMIC I Regular Interest  I-LTA2B,  REMIC I Regular Interest
I-LTA2C, REMIC I Regular Interest I-LTM1, REMIC I Regular Interest I-LTM2, REMIC
I Regular  Interest I-LTM3,  REMIC I Regular  Interest  I-LTM4,  REMIC I Regular
Interest  I-LTM5,  REMIC I Regular  Interest  I-LTM6,  REMIC I Regular  Interest
I-LTM7,  REMIC I Regular Interest I-LTM8, REMIC I Regular Interest I-LTM9, REMIC
I  Regular  Interest  I-LTB1  and  REMIC I  Regular  Interest  I-LTB2  for  such
Distribution  Date, with the rate on each such REMIC I Regular  Interest subject
to a cap equal to the lesser of (i) the  related  One-Month  LIBOR  Pass-Through
Rate  and (ii)  the  related  Net WAC  Pass-Through  Rate for the  corresponding
Certificate  for the purpose of this  calculation  for such  Distribution  Date;
provided  however,  each  such cap for each  REMIC I Regular  Interest  shall be
multiplied  by a fraction the numerator of which is the actual number of days in
the related Interest Accrual Period and the denominator of which is 30.

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

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

                  "MERS(R)  System":   The  system  of  recording  transfers  of
mortgages electronically maintained by MERS.

                  "Metrocities":  Metrocities  Mortgage,  LLC, and any successor
thereto.

                  "Metrocities Assignment Agreement": The Assignment, Assumption
and  Recognition  Agreement,  dated as of  January  31,  2005,  by and among the
Seller,  the  Depositor

                                       30
<PAGE>

and Metrocities evidencing the assignment of the Metrocities Servicing Agreement
to the Depositor.

                  "Metrocities   Mortgage  Loans":   The  Mortgage  Loans  being
serviced by Metrocities as of the Closing Date.

                  "Metrocities  Servicing  Agreement":  The Amended and Restated
Master Mortgage Loan Purchase and Interim  Servicing  Agreement dated as of June
1, 2004 as amended  and  restated  to and  including  December  1, 2004,  by and
between the Seller and  Metrocities,  as modified by the Metrocities  Assignment
Agreement.

                  "Mezzanine Certificate":  Any Class M-1, Class M-2, Class M-3,
Class M-4, Class M-5, Class M-6, Class M-7, Class M-8 or Class M-9 Certificate.

                  "MIN": The Mortgage  Identification  Number for Mortgage Loans
registered with MERS on the MERS(R) System.

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

                  "MOM Loan":  With respect to any Mortgage Loan, MERS acting as
the mortgagee of such  Mortgage  Loan,  solely as nominee for the  originator of
such Mortgage Loan and its successors and assigns, at the origination thereof.

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

                  "Moody's":  Moody's Investors  Service,  Inc. or any successor
interest.

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

                  "Mortgage File":  The Mortgage Loan Documents  pertaining to a
particular Mortgage Loan.

                  "Mortgage  Loan":  Each mortgage loan transferred and assigned
to the Trustee and the Mortgage Loan  Documents for which have been delivered to
the  Custodian  pursuant to Section 2.01 of this  Agreement  and pursuant to the
Custodial Agreement,  as held from time to time as a part of the Trust Fund, the
Mortgage Loans so held being identified in the Mortgage Loan Schedule.

                                       31
<PAGE>

                  "Mortgage  Loan  Documents":   The  documents   evidencing  or
relating to each  Mortgage Loan  delivered to the Custodian  under the Custodial
Agreement on behalf of the Trustee.

                  "Mortgage  Loan Purchase  Agreement":  Shall mean the Mortgage
Loan Purchase  Agreement dated as of January 31, 2005, between the Depositor and
the Seller.

                  "Mortgage Loan Schedule": As of any date, the list of Mortgage
Loans  included  in REMIC I on such  date,  separately  identifying  the Group I
Mortgage Loans and the Group II Mortgage  Loans,  attached hereto as Schedule 1.
The Depositor  shall deliver or cause the delivery of the initial  Mortgage Loan
Schedule to the related  Servicer,  the Master  Servicer,  the Custodian and the
Trustee on the Closing  Date.  The Mortgage  Loan  Schedule  shall set forth the
following information with respect to each Mortgage Loan:

                     (i) the Mortgage Loan identifying number;

                     (ii) the Mortgagor's first and last name;

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

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

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

                     (vi) the original months to maturity;

                     (vii)  the  original  date  of the  Mortgage  Loan  and the
         remaining  months  to  maturity  from the  Cut-off  Date,  based on the
         original amortization schedule;

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

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

                     (x) the date on which the first Monthly  Payment was due on
         the Mortgage Loan;

                     (xi) the stated maturity date;

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

                     (xiii) the amount of the Monthly  Payment as of the Cut-off
         Date;

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

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

                                       32
<PAGE>

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

                     (xvii) with respect to each  Adjustable Rate Mortgage Loan,
         the first Adjustment Date;

                     (xviii) with respect to each Adjustable Rate Mortgage Loan,
         the Gross Margin;

                     (xix) a code  indicating  the  purpose  of the loan  (i.e.,
         purchase financing, rate/term refinancing, cash-out refinancing);

                     (xx) with respect to each  Adjustable  Rate Mortgage  Loan,
         the Maximum Mortgage Rate under the terms of the Mortgage Note;

                     (xxi) with respect to each  Adjustable  Rate Mortgage Loan,
         the Minimum Mortgage Rate under the terms of the Mortgage Note;

                     (xxii) the Mortgage Rate at origination;

                     (xxiii) with respect to each Adjustable Rate Mortgage Loan,
         the Periodic Rate Cap;

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

                     (xxv) with respect to each  Adjustable  Rate Mortgage Loan,
         the Index;

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

                     (xxvii) a code  indicating  whether the Mortgage Loan is an
         Adjustable Rate Mortgage Loan or a fixed rate Mortgage Loan;

                     (xxviii) a code indicating the  documentation  style (i.e.,
         full, stated or limited);

                     (xxix) a code indicating if the Mortgage Loan is subject to
         a primary insurance policy or lender paid mortgage insurance policy and
         the name of the insurer;

                     (xxx) the Appraised Value of the Mortgaged Property;

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

                     (xxxii) a code  indicating  whether  the  Mortgage  Loan is
         subject to a Prepayment  Charge, the term of such Prepayment Charge and
         the amount of such Prepayment Charge;

                                       33
<PAGE>

                     (xxxiii) the product type (e.g.,  2/28,  15 year fixed,  30
         year fixed, 15/30 balloon, etc.);

                     (xxxiv) the Mortgagor's debt to income ratio;

                     (xxxv) the FICO score at origination;

                     (xxxvi) the Servicer or Interim Servicer, if applicable.

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

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

                  "Mortgage  Rate":  With  respect to each  Mortgage  Loan,  the
annual rate at which interest accrues on such Mortgage Loan from time to time in
accordance  with the provisions of the related  Mortgage  Note,  which rate with
respect  to  each   Adjustable  Rate  Mortgage  Loan  (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  Adjustable  Rate
Mortgage Loan on any Adjustment  Date shall never be more than the lesser of (i)
the sum of the Mortgage Rate in effect  immediately prior to the Adjustment Date
plus the  related  Periodic  Rate  Cap,  if any,  and (ii) the  related  Maximum
Mortgage Rate, and shall never be less than the greater of (i) the Mortgage Rate
in effect  immediately  prior to the Adjustment Date less the Periodic Rate Cap,
if any,  and (ii) the  related  Minimum  Mortgage  Rate.  With  respect  to each
Mortgage Loan that becomes an REO Property, as of any date of determination, the
annual rate determined in accordance with the immediately  preceding sentence as
of the date such Mortgage Loan became an REO Property.

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

                  "Mortgagor": The obligor on a Mortgage Note.

                  "Net   Monthly   Excess   Cashflow":   With   respect  to  any
Distribution Date, the sum of (i) any Overcollateralization Reduction Amount for
such  Distribution  Date and (ii) the excess of (x) the  Available  Distribution
Amount for such Distribution Date over (y) the sum for such

                                       34
<PAGE>

Distribution  Date of (A) the aggregate  Senior  Interest  Distribution  Amounts
payable to the Holders of the Class A Certificates,  (B) the aggregate  Interest
Distribution  Amounts payable to the holders of the Mezzanine  Certificates  and
the Class B Certificates and (C) the Principal Remittance Amount.

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

                  "Net WAC  Pass-Through  Rate":  With  respect to the Class A-1
Certificates and any Distribution Date, a rate per annum equal to the product of
(x) the  weighted  average of the Expense  Adjusted  Mortgage  Rates on the then
outstanding  Group I Mortgage  Loans,  weighted based on their Stated  Principal
Balances as of the first day of the calendar month  preceding the month in which
the  Distribution  Date occurs and (y) a fraction,  the numerator of which is 30
and the denominator of which is the actual number of days elapsed in the related
Interest  Accrual  Period.  For  federal  income  tax  purposes,   the  economic
equivalent of such rate shall be expressed as the weighted  average of (adjusted
for the actual number of days elapsed in the related  Interest  Accrual  Period)
the REMIC I Remittance Rate on REMIC I Regular  Interest  I-LT1GRP,  weighted on
the  basis of the  Uncertificated  Balance  of such  REMIC I  Regular  Interest;
provided that for purposes of this  definition the REMIC I Remittance Rate shall
be calculated using a Servicing Fee Rate equal to 0.50%.

                  With   respect   to  the  Class  A-2   Certificates   and  any
Distribution  Date,  a rate per annum equal to the  product of (x) the  weighted
average of the Expense Adjusted  Mortgage Rates on the then outstanding Group II
Mortgage  Loans,  weighted  based on their Stated  Principal  Balances as of the
first day of the calendar  month  preceding the month in which the  Distribution
Date occurs and (y) a fraction, the numerator of which is 30 and the denominator
of which is the actual  number of days elapsed in the related  Interest  Accrual
Period.  For federal income tax purposes,  the economic  equivalent of such rate
shall be expressed as the weighted average of (adjusted for the actual number of
days elapsed in the related Interest Accrual Period) the REMIC I Remittance Rate
on  REMIC  I  Regular   Interest   I-LT2GRP,   weighted  on  the  basis  of  the
Uncertificated  Balance  of such  REMIC I Regular  Interest;  provided  that for
purposes of this  definition  the REMIC I  Remittance  Rate shall be  calculated
using a Servicing Fee Rate equal to 0.50%.

                  With   respect   to  the   Mezzanine   Certificates   and  any
Distribution  Date,  a rate per annum equal to the  product of (x) the  weighted
average of the Expense Adjusted Mortgage Rates on the then outstanding  Mortgage
Loans,  weighted in proporation to the results of subtracting from the aggregate
Stated Principal  Balance of each of the Group I Mortgage Loans and the Group II
Mortgage Loans, as of the first day of the calendar month preceding the month in
which the Distribution  Date occurs,  the Certificate  Principal  Balance of the
related Class A  Certificates  and (y) a fraction,  the numerator of which is 30
and the denominator of which is the actual number of days elapsed in the related
Interest  Accrual  Period.  For  federal  income  tax  purposes,   the  economic
equivalent of such rate shall be expressed as the weighted  average of (adjusted
for the actual number of days elapsed in the related  Interest  Accrual  Period)
the REMIC I Remittance Rates on (a) REMIC I Regular Interest  I-LT1SUB,  subject
to a cap and a floor  equal to the  REMIC I  Remittance  Rate

                                       35
<PAGE>

on REMIC I Regular Interest I-LT1GRP, and (b) REMIC I Regular Interest I-LT2SUB,
subject  to a cap and a floor  equal to the REMIC I  Remittance  Rate on REMIC I
Regular Interest I-LT2GRP,  weighted on the basis of the Uncertificated  Balance
of each such  REMIC I  Regular  Interest;  provided  that for  purposes  of this
definition the REMIC I Remittance Rate shall be calculated using a Servicing Fee
Rate equal to 0.50%.

                  With respect to the Class B Certificates  and any Distribution
Date, a rate per annum equal to the product of (x) the  weighted  average of the
Expense Adjusted Mortgage Rates on the then outstanding Mortgage Loans, weighted
in proporation to the results of subtracting from the aggregate Stated Principal
Balance of the Group I Mortgage Loans and the Group II Mortgage Loans, as of the
first day of the calendar  month  preceding the month in which the  Distribution
Date  occurs,  the  Certificate   Principal  Balance  of  the  related  Class  A
Certificates  and  (y)  a  fraction,  the  numerator  of  which  is 30  and  the
denominator  of  which is the  actual  number  of days  elapsed  in the  related
Interest  Accrual  Period.  For  federal  income  tax  purposes,   the  economic
equivalent of such rate shall be expressed as the weighted  average of (adjusted
for the actual number of days elapsed in the related  Interest  Accrual  Period)
the REMIC I Remittance Rates on (a) REMIC I Regular Interest  I-LT1SUB,  subject
to a cap and a floor  equal to the  REMIC I  Remittance  Rate on REMIC I Regular
Interest I-LT1GRP,  and (b) REMIC I Regular Interest I-LT2SUB,  subject to a cap
and a floor  equal to the REMIC I  Remittance  Rate on REMIC I Regular  Interest
I-LT2GRP, weighted on the basis of the Uncertificated Balance of each such REMIC
I Regular  Interest;  provided that for purposes of this  definition the REMIC I
Remittance Rate shall be calculated using a Servicing Fee Rate equal to 0.50%.

                  "Net WAC Rate Carryover  Amount" : With respect to any Class A
Certificate,  Mezzanine  Certificate or Class B Certificate and any Distribution
Date on  which  the  Pass-Through  Rate is  limited  to the  applicable  Net WAC
Pass-Through  Rate,  an  amount  equal to the sum of (i) the  excess  of (x) the
amount of  interest  such  Class  would  have been  entitled  to receive on such
Distribution  Date if the  applicable Net WAC  Pass-Through  Rate would not have
been applicable to such Class on such  Distribution  Date over (y) the amount of
interest paid to such Class on such  Distribution Date at the applicable Net WAC
Pass-Through  Rate plus (ii) the related Net WAC Rate  Carryover  Amount for the
previous  Distribution  Date not  previously  distributed to such Class together
with interest  thereon at a rate equal to the  Pass-Through  Rate for such Class
for the most recently ended Interest  Accrual Period without taking into account
the applicable Net WAC Pass-Through Rate.

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

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

                  "Nonrecoverable  Servicing  Advance":  Any  Servicing  Advance
previously  made or  proposed  to be made in respect  of a Mortgage  Loan or REO
Property  that, in the good faith business  judgment of the related  Servicer or
the related Interim Servicer,  will not or, in the case

                                       36
<PAGE>

of a  proposed  Servicing  Advance,  would not be  ultimately  recoverable  from
related Late  Collections,  Insurance  Proceeds or Liquidation  Proceeds on such
Mortgage Loan or REO Property as provided  herein or in the  applicable  Interim
Servicing Agreement.

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

                  "Notional  Amount":  With respect to the Class CE Certificates
and any  Distribution  Date, the  Uncertificated  Balance of the REMIC I Regular
Interests  (other  than REMIC I Regular  Interest  I-LTP) for such  Distribution
Date. As of the Closing Date, the Notional  Amount of the Class CE  Certificates
is equal to $1,539,716,949.28.

                  With   respect  to  the  Class  CE-1   Certificates   and  any
Distribution Date, the  Uncertificated  Balance of the REMIC I Regular Interests
for such  Distribution  Date. As of the Closing Date, the Notional Amount of the
Class CE-1 Certificates is equal to $1,539,716,949.28.

                  "Ocwen":  Ocwen Federal Bank FSB, and any successor thereto.

                  "Ocwen Mortgage Loans": Those Mortgage Loans serviced by Ocwen
pursuant  to the terms of this  Agreement  as  specified  on the  Mortgage  Loan
Schedule.

                  "Ocwen  Servicing Fee Rate":  The rate set forth in a separate
letter  agreement among Ocwen, the Depositor,  the Trustee,  the Master Servicer
and the Securities Administrator.

                  "Offered  Certificates":  The  Class  A  Certificates  and the
Mezzanine Certificates, collectively.

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

                  "One-Month  LIBOR" : With respect to the Class A Certificates,
the Mezzanine Certificates,  the Class B Certificates,  REMIC I Regular Interest
I-LTA1A,  REMIC I Regular Interest  I-LTA1B,  REMIC I Regular Interest  I-LTA2A,
REMIC I Regular  Interest  I-LTA2B,  REMIC I Regular Interest  I-LTA2C,  REMIC I
Regular  Interest  I-LTM1,  REMIC I  Regular  Interest  I-LTM2,  REMIC I Regular
Interest  I-LTM3,  REMIC I Regular  Interest  I-LTM4,  REMIC I Regular  Interest
I-LTM5,  REMIC I Regular Interest I-LTM6, REMIC I Regular Interest I-LTM7, REMIC
I Regular  Interest I-LTM8,  REMIC I Regular  Interest  I-LTM9,  REMIC I Regular
Interest  I-LTB1 and REMIC I Regular  Interest  I-LTB2 and any Interest  Accrual
Period  therefor,  the rate  determined by the Securities  Administrator  on the
related  Interest  Determination  Date on the  basis  of the  offered  rate  for
one-month U.S. dollar deposits, as such rate appears on Telerate Page 3750 as of
11:00 a.m. (London time) on such Interest  Determination  Date; provided that if
such rate does not appear on Telerate Page 3750,  the rate for such date will be
determined  on the  basis  of the  offered  rates  of the  Reference  Banks  for
one-month U.S. dollar deposits,  as of 11:00 a.m. (London time) on such Interest
Determination Date. In such event, the Securities Administrator will request the
principal London office of each of the Reference Banks to provide a quotation of
its rate. If on such Interest  Determination  Date, two or more Reference  Banks
provide  such  offered  quotations,  One-Month  LIBOR for the  related  Interest
Accrual Period shall be the arithmetic mean of such offered quotations  (rounded

                                       37
<PAGE>

upwards if necessary to the nearest whole multiple of 1/16). If on such Interest
Determination  Date,  fewer  than  two  Reference  Banks  provide  such  offered
quotations, One-Month LIBOR for the related Interest Accrual Period shall be the
higher of (i) LIBOR as determined on the previous  Interest  Determination  Date
and (ii) the Reserve Interest Rate. Notwithstanding the foregoing, if, under the
priorities  described above,  LIBOR for an Interest  Determination Date would be
based  on LIBOR  for the  previous  Interest  Determination  Date for the  third
consecutive  Interest  Determination  Date, the Securities  Administrator  shall
select an alternative comparable index (over which the Securities  Administrator
has no control), used for determining one-month Eurodollar lending rates that is
calculated and published (or otherwise made available) by an independent  party.
The  establishment  of One-Month LIBOR by the Securities  Administrator  and the
Securities   Administrator's  subsequent  calculation  of  the  One-Month  LIBOR
Pass-Through  Rates for the relevant  Interest  Accrual  Period,  shall,  in the
absence of manifest error, be final and binding.

                  "One-Month LIBOR Pass-Through Rate": With respect to the Class
A-1A Certificates and, for purposes of the definition of "Marker Rate",  REMIC I
Regular  Interest  I-LTA1A,  a per annum rate equal to One-Month  LIBOR plus the
related Certificate Margin.

                  With respect to the Class A-1B  Certificates and, for purposes
of the  definition of "Marker Rate",  REMIC I Regular  Interest  I-LTA1B,  a per
annum rate equal to One-Month LIBOR plus the related Certificate Margin.

                  With respect to the Class A-2A  Certificates and, for purposes
of the  definition of "Marker Rate",  REMIC I Regular  Interest  I-LTA2A,  a per
annum rate equal to One-Month LIBOR plus the related Certificate Margin.

                  With respect to the Class A-2B  Certificates and, for purposes
of the  definition of "Marker Rate",  REMIC I Regular  Interest  I-LTA2B,  a per
annum rate equal to One-Month LIBOR plus the related Certificate Margin.

                  With respect to the Class A-2C  Certificates and, for purposes
of the  definition of "Marker Rate",  REMIC I Regular  Interest  I-LTA2C,  a per
annum rate equal to One-Month LIBOR plus the related Certificate Margin.

                  With respect to the Class M-1  Certificates  and, for purposes
of the definition of "Marker Rate", REMIC I Regular Interest I-LTM1, a per annum
rate equal to One-Month LIBOR plus the related Certificate Margin.

                  With respect to the Class M-2  Certificates  and, for purposes
of the definition of "Marker Rate", REMIC I Regular Interest I-LTM2, a per annum
rate equal to One-Month LIBOR plus the related Certificate Margin.

                  With respect to the Class M-3  Certificates  and, for purposes
of the definition of "Marker Rate", REMIC I Regular Interest I-LTM3, a per annum
rate equal to One-Month LIBOR plus the related Certificate Margin.

                  With respect to the Class M-4  Certificates  and, for purposes
of the definition of "Marker Rate", REMIC I Regular Interest I-LTM4, a per annum
rate equal to One-Month LIBOR plus the related Certificate Margin.

                                       38
<PAGE>

                  With respect to the Class M-5  Certificates  and, for purposes
of the definition of "Marker Rate", REMIC I Regular Interest I-LTM5, a per annum
rate equal to One-Month LIBOR plus the related Certificate Margin.

                  With respect to the Class M-6  Certificates  and, for purposes
of the definition of "Marker Rate", REMIC I Regular Interest I-LTM6, a per annum
rate equal to One-Month LIBOR plus the related Certificate Margin.

                  With respect to the Class M-7  Certificates  and, for purposes
of the definition of "Marker Rate", REMIC I Regular Interest I-LTM7, a per annum
rate equal to One-Month LIBOR plus the related Certificate Margin.

                  With respect to the Class M-8  Certificates  and, for purposes
of the definition of "Marker Rate", REMIC I Regular Interest I-LTM8, a per annum
rate equal to One-Month LIBOR plus the related Certificate Margin.

                  With respect to the Class M-9  Certificates  and, for purposes
of the definition of "Marker Rate", REMIC I Regular Interest I-LTM9, a per annum
rate equal to One-Month LIBOR plus the related Certificate Margin.

                  With respect to the Class B-1  Certificates  and, for purposes
of the definition of "Marker Rate", REMIC I Regular Interest I-LTB1, a per annum
rate equal to One-Month LIBOR plus the related Certificate Margin.

                  With respect to the Class B-2  Certificates  and, for purposes
of the definition of "Marker Rate", REMIC I Regular Interest I-LTB2, a per annum
rate equal to One-Month LIBOR plus the related Certificate Margin.

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

                  "Optional  Termination  Date": The Distribution  Date on which
the aggregate  principal balance of the Mortgage Loans (and properties  acquired
in respect thereof) remaining in the Trust Fund is reduced to less than or equal
to 10% of the  aggregate  principal  balance  of the  Mortgage  Loans  as of the
Cut-off Date.

                  "Originators":  Fremont,  Ownit, and various other originators
(each, an "Originator").

                  "Overcollateralization    Amount":   With   respect   to   any
Distribution  Date, the excess,  if any, of (a) the aggregate  Stated  Principal
Balances of the Mortgage  Loans and REO  Properties  immediately  following such
Distribution  Date  over  (b) the  sum of the  aggregate  Certificate  Principal
Balances of the Class A Certificates,  the Mezzanine  Certificates,  the Class B
Certificates  and the Class P Certificates as of such  Distribution  Date (after
taking  into  account  the payment of the  Principal  Remittance  Amount on such
Distribution Date).

                                       39
<PAGE>

                  "Overcollateralization  Increase Amount":  With respect to the
Class A Certificates,  the Mezzanine  Certificates  and the Class B Certificates
and any Distribution  Date is any amount of Net Monthly Excess Cashflow actually
applied as an  accelerated  payment  of  principal  to the  extent the  Required
Overcollateralization Amount exceeds the Overcollateralization Amount.

                  "Overcollateralization  Reduction Amount": With respect to any
Distribution   Date,   is  the   lesser   of  (i)  the   amount   by  which  the
Overcollateralization  Amount exceeds the Required  Overcollateralization Amount
and  (ii)  the  Principal  Remittance  Amount;  provided  however  that  on  any
Distribution   Date   on   which   a   Trigger   Event   is   in   effect,   the
Overcollateralization Reduction Amount shall equal zero.

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

                  "Ownit":  Ownit  Mortgage  Solutions,  Inc. and any  successor
thereto.

                  "Ownit Assignment Agreement":  The Assignment,  Assumption and
Recognition  Agreement,  dated as of January 31, 2005,  by and among the Seller,
the  Depositor  and Ownit  evidencing  the  assignment  of the  Ownit  Servicing
Agreement to the Depositor.

                  "Ownit Mortgage  Loans":  The Mortgage Loans being serviced by
Ownit as of the Closing Date.

                  "Ownit Servicing Agreement": The Master Mortgage Loan Purchase
and Interim  Servicing  Agreement  dated  December  1, 2004,  by and between the
Seller and Ownit, as modified by the Ownit Assignment Agreement.

                  "P&I  Advance":  As to any Mortgage Loan or REO Property,  any
advance  made by the  related  Servicer  in  respect of any  Determination  Date
pursuant to Section 5.03 of this Agreement, an Advance Financing Person pursuant
to Section 3.25 of this  Agreement or in respect of any  Distribution  Date by a
successor  Servicer  (including the Master Servicer) pursuant to Section 8.02 of
this  Agreement,  or the related  Interim  Servicer  pursuant to the  applicable
Interim  Servicing  Agreement  (which  advances  shall not include  principal or
interest  shortfalls due to bankruptcy  proceedings or application of the Relief
Act or similar state or local laws.)

                  "Pass-Through Rate": With respect to the Class A Certificates,
the Mezzanine  Certificates  and the Class B Certificates,  and any Distribution
Date,  a rate per annum equal to the lesser of (i) the related  One-Month  LIBOR
Pass-Through  Rate for such  Distribution  Date  and  (ii) the  related  Net WAC
Pass-Through Rate for such Distribution Date.

                  With respect to the Class CE Certificates and any Distribution
Date, a rate per annum equal to the  percentage  equivalent  of a fraction,  the
numerator of which is the sum of the amounts calculated  pursuant to clauses (i)
through   (xix)  below,   and  the   denominator   of  which  is  the  aggregate
Uncertificated  Balances  of REMIC I Regular  Interest  I-LTAA,  REMIC I Regular
Interest  I-LTA1A,  REMIC I Regular Interest  I-LTA1B,  REMIC I Regular Interest
I-LTA2A,  REMIC I Regular Interest  I-LTA2B,  REMIC I Regular Interest  I-LTA2C,
REMIC I Regular  Interest  I-LTM1,  REMIC I  Regular  Interest  I-LTM2,  REMIC I
Regular  Interest  I-LTM3,

                                       40
<PAGE>

REMIC I Regular  Interest  I-LTM4,  REMIC I  Regular  Interest  I-LTM5,  REMIC I
Regular  Interest  I-LTM6,  REMIC I  Regular  Interest  I-LTM7,  REMIC I Regular
Interest  I-LTM8,  REMIC I Regular  Interest  I-LTM9,  REMIC I Regular  Interest
I-LTB1, REMIC I Regular Interest I-LTB2 and REMIC I Regular Interest I-LTZZ. For
purposes of calculating the Pass-Through Rate for the Class CE Certificates, the
numerator is equal to the sum of the following components:

                       (i) the  REMIC I  Remittance  Rate  for  REMIC I  Regular
         Interest  I-LTAA minus the Marker  Rate,  applied to an amount equal to
         the Uncertificated Balance of REMIC I Regular Interest I-LTAA;

                       (ii) the  REMIC I  Remittance  Rate for  REMIC I  Regular
         Interest  I-LTA1A minus the Marker Rate,  applied to an amount equal to
         the Uncertificated Balance of REMIC I Regular Interest I-LTA1A;

                       (iii)  the  REMIC I  Remittance  Rate for REMIC I Regular
         Interest  I-LTA1B minus the Marker Rate,  applied to an amount equal to
         the Uncertificated Balance of REMIC I Regular Interest I-LTA1B;

                       (iv) the  REMIC I  Remittance  Rate for  REMIC I  Regular
         Interest  I-LTA2A minus the Marker Rate,  applied to an amount equal to
         the Uncertificated Balance of REMIC I Regular Interest I-LTA2A;

                       (v) the  REMIC I  Remittance  Rate  for  REMIC I  Regular
         Interest  I-LTA2B minus the Marker Rate,  applied to an amount equal to
         the Uncertificated Balance of REMIC I Regular Interest I-LTA2B;

                       (vi) the  REMIC I  Remittance  Rate for  REMIC I  Regular
         Interest  I-LTA2C minus the Marker Rate,  applied to an amount equal to
         the Uncertificated Balance of REMIC I Regular Interest I-LTA2C;

                       (vii)  the  REMIC I  Remittance  Rate for REMIC I Regular
         Interest  I-LTM1 minus the Marker  Rate,  applied to an amount equal to
         the Uncertificated Balance of REMIC I Regular Interest I-LTM1;

                       (viii)  the REMIC I  Remittance  Rate for REMIC I Regular
         Interest  I-LTM2 minus the Marker  Rate,  applied to an amount equal to
         the Uncertificated Balance of REMIC I Regular Interest I-LTM2;

                       (ix) the  REMIC I  Remittance  Rate for  REMIC I  Regular
         Interest  I-LTM3 minus the Marker  Rate,  applied to an amount equal to
         the Uncertificated Balance of REMIC I Regular Interest I-LTM3;

                       (x) the  REMIC I  Remittance  Rate  for  REMIC I  Regular
         Interest  I-LTM4 minus the Marker  Rate,  applied to an amount equal to
         the Uncertificated Balance of REMIC I Regular Interest I-LTM4;

                                       41
<PAGE>

                       (xi) the  REMIC I  Remittance  Rate for  REMIC I  Regular
         Interest  I-LTM5 minus the Marker  Rate,  applied to an amount equal to
         the Uncertificated Balance of REMIC I Regular Interest I-LTM5;

                       (xii)  the  REMIC I  Remittance  Rate for REMIC I Regular
         Interest  I-LTM6 minus the Marker  Rate,  applied to an amount equal to
         the Uncertificated Balance of REMIC I Regular Interest I-LTM6;

                       (xiii)  the REMIC I  Remittance  Rate for REMIC I Regular
         Interest  I-LTM7 minus the Marker  Rate,  applied to an amount equal to
         the Uncertificated Balance of REMIC I Regular Interest I-LTM7;

                       (xiv)  the  REMIC I  Remittance  Rate for REMIC I Regular
         Interest  I-LTM8 minus the Marker  Rate,  applied to an amount equal to
         the Uncertificated Balance of REMIC I Regular Interest I-LTM8;

                       (xv) the  REMIC I  Remittance  Rate for  REMIC I  Regular
         Interest  I-LTM9 minus the Marker  Rate,  applied to an amount equal to
         the Uncertificated Balance of REMIC I Regular Interest I-LTM9;

                       (xvi)  the  REMIC I  Remittance  Rate for REMIC I Regular
         Interest  I-LTB1 minus the Marker  Rate,  applied to an amount equal to
         the Uncertificated Balance of REMIC I Regular Interest I-LTB1;

                       (xvii)  the REMIC I  Remittance  Rate for REMIC I Regular
         Interest  I-LTB2 minus the Marker  Rate,  applied to an amount equal to
         the Uncertificated Balance of REMIC I Regular Interest I-LTB2;

                       (xviii) the REMIC I  Remittance  Rate for REMIC I Regular
         Interest  I-LTZZ minus the Marker  Rate,  applied to an amount equal to
         the Uncertificated Balance of REMIC I Regular Interest I-LTZZ; and

                       (xix) 100% of the  interest  on REMIC I Regular  Interest
         I-LTP.

                  With   respect  to  the  Class  CE-1   Certificates   and  any
Distribution  Date,  a rate per annum equal to the  percentage  equivalent  of a
fraction,  the numerator of which is the sum of the amounts calculated  pursuant
to  clauses  (i)  through  (xxiv)  below,  and the  denominator  of which is the
aggregate Uncertificated Balances of the REMIC I Regular Interests. For purposes
of  calculating  the  Pass-Through  Rate for the Class  CE-1  Certificates,  the
numerator is equal to the sum of the following components:

                   (i)     the  excess  of (i) the REMIC I  Remittance  Rate for
                           REMIC I Regular Interest I-LTAA over (ii) the REMIC I
                           Remittance  Rate on REMIC I Regular  Interest  I-LTAA
                           (calculated  for  purposes  of  clause  (ii)  of this
                           definition  using a Servicing Fee Rate equal to 0.50%
                           per  annum),  applied  to  an  amount  equal  to  the
                           Uncertificated  Balance  of REMIC I Regular  Interest
                           I-LTAA;

                                       42
<PAGE>

                   (ii)    the  excess  of (i) the REMIC I  Remittance  Rate for
                           REMIC I Regular  Interest I-LTA1A over (ii) the REMIC
                           I Remittance Rate on REMIC I Regular Interest I-LTA1A
                           (calculated  for  purposes  of  clause  (ii)  of this
                           definition  using a Servicing Fee Rate equal to 0.50%
                           per  annum),  applied  to  an  amount  equal  to  the
                           Uncertificated  Balance  of REMIC I Regular  Interest
                           I-LTA1A;

                   (iii)   the  excess  of (i) the REMIC I  Remittance  Rate for
                           REMIC I Regular  Interest I-LTA1B over (ii) the REMIC
                           I Remittance Rate on REMIC I Regular Interest I-LTA1B
                           (calculated  for  purposes  of  clause  (ii)  of this
                           definition  using a Servicing Fee Rate equal to 0.50%
                           per  annum),  applied  to  an  amount  equal  to  the
                           Uncertificated  Balance  of REMIC I Regular  Interest
                           I-LTA1B;

                   (iv)    the  excess  of (i) the REMIC I  Remittance  Rate for
                           REMIC I Regular  Interest I-LTA2A over (ii) the REMIC
                           I Remittance Rate on REMIC I Regular Interest I-LTA2A
                           (calculated  for  purposes  of  clause  (ii)  of this
                           definition  using a Servicing Fee Rate equal to 0.50%
                           per  annum),  applied  to  an  amount  equal  to  the
                           Uncertificated  Balance  of REMIC I Regular  Interest
                           I-LTA2A;

                   (v)     the  excess  of (i) the REMIC I  Remittance  Rate for
                           REMIC I Regular  Interest I-LTA2B over (ii) the REMIC
                           I Remittance Rate on REMIC I Regular Interest I-LTA2B
                           (calculated  for  purposes  of  clause  (ii)  of this
                           definition  using a Servicing Fee Rate equal to 0.50%
                           per  annum),  applied  to  an  amount  equal  to  the
                           Uncertificated  Balance  of REMIC I Regular  Interest
                           I-LTA2B;

                   (vi)    the  excess  of (i) the REMIC I  Remittance  Rate for
                           REMIC I Regular  Interest I-LTA2C over (ii) the REMIC
                           I Remittance Rate on REMIC I Regular Interest I-LTA2C
                           (calculated  for  purposes  of  clause  (ii)  of this
                           definition  using a Servicing Fee Rate equal to 0.50%
                           per  annum),  applied  to  an  amount  equal  to  the
                           Uncertificated  Balance  of REMIC I Regular  Interest
                           I-LTA2C;

                   (vii)   the  excess  of (i) the REMIC I  Remittance  Rate for
                           REMIC I Regular Interest I-LTM1 over (ii) the REMIC I
                           Remittance  Rate on REMIC I Regular  Interest  I-LTM1
                           (calculated  for  purposes  of  clause  (ii)  of this
                           definition  using a Servicing Fee Rate equal to 0.50%
                           per  annum),  applied  to  an  amount  equal  to  the
                           Uncertificated  Balance  of REMIC I Regular  Interest
                           I-LTM1;

                   (viii)  the  excess  of (i) the REMIC I  Remittance  Rate for
                           REMIC I Regular Interest I-LTM2 over (ii) the REMIC I
                           Remittance  Rate on REMIC I Regular  Interest  I-LTM2
                           (calculated  for  purposes  of  clause  (ii)  of this
                           definition  using a Servicing Fee Rate equal to 0.50%
                           per  annum),  applied  to  an  amount  equal  to  the
                           Uncertificated  Balance  of REMIC I Regular  Interest
                           I-LTM2;

                                       43
<PAGE>

                   (ix)    the  excess  of (i) the REMIC I  Remittance  Rate for
                           REMIC I Regular Interest I-LTM3 over (ii) the REMIC I
                           Remittance  Rate on REMIC I Regular  Interest  I-LTM3
                           (calculated  for  purposes  of  clause  (ii)  of this
                           definition  using a Servicing Fee Rate equal to 0.50%
                           per  annum),  applied  to  an  amount  equal  to  the
                           Uncertificated  Balance  of REMIC I Regular  Interest
                           I-LTM3;

                   (x)     the  excess  of (i) the REMIC I  Remittance  Rate for
                           REMIC I Regular Interest I-LTM4 over (ii) the REMIC I
                           Remittance  Rate on REMIC I Regular  Interest  I-LTM4
                           (calculated  for  purposes  of  clause  (ii)  of this
                           definition  using a Servicing Fee Rate equal to 0.50%
                           per  annum),  applied  to  an  amount  equal  to  the
                           Uncertificated  Balance  of REMIC I Regular  Interest
                           I-LTM4;

                   (xi)    the  excess  of (i) the REMIC I  Remittance  Rate for
                           REMIC I Regular Interest I-LTM5 over (ii) the REMIC I
                           Remittance  Rate on REMIC I Regular  Interest  I-LTM5
                           (calculated  for  purposes  of  clause  (ii)  of this
                           definition  using a Servicing Fee Rate equal to 0.50%
                           per  annum),  applied  to  an  amount  equal  to  the
                           Uncertificated  Balance  of REMIC I Regular  Interest
                           I-LTM5;

                   (xii)   the  excess  of (i) the REMIC I  Remittance  Rate for
                           REMIC I Regular Interest I-LTM6 over (ii) the REMIC I
                           Remittance  Rate on REMIC I Regular  Interest  I-LTM6
                           (calculated  for  purposes  of  clause  (ii)  of this
                           definition  using a Servicing Fee Rate equal to 0.50%
                           per  annum),  applied  to  an  amount  equal  to  the
                           Uncertificated  Balance  of REMIC I Regular  Interest
                           I-LTM6;

                   (xiii)  the  excess  of (i) the REMIC I  Remittance  Rate for
                           REMIC I Regular Interest I-LTM7 over (ii) the REMIC I
                           Remittance  Rate on REMIC I Regular  Interest  I-LTM7
                           (calculated  for  purposes  of  clause  (ii)  of this
                           definition  using a Servicing Fee Rate equal to 0.50%
                           per  annum),  applied  to  an  amount  equal  to  the
                           Uncertificated  Balance  of REMIC I Regular  Interest
                           I-LTM7;

                   (xiv)   the  excess  of (i) the REMIC I  Remittance  Rate for
                           REMIC I Regular Interest I-LTM8 over (ii) the REMIC I
                           Remittance  Rate on REMIC I Regular  Interest  I-LTM8
                           (calculated  for  purposes  of  clause  (ii)  of this
                           definition  using a Servicing Fee Rate equal to 0.50%
                           per  annum),  applied  to  an  amount  equal  to  the
                           Uncertificated  Balance  of REMIC I Regular  Interest
                           I-LTM8;

                   (xv)    the  excess  of (i) the REMIC I  Remittance  Rate for
                           REMIC I Regular Interest I-LTM9 over (ii) the REMIC I
                           Remittance  Rate on REMIC I Regular  Interest  I-LTM9
                           (calculated  for  purposes  of  clause  (ii)  of this
                           definition  using a Servicing Fee Rate equal to 0.50%
                           per  annum),  applied  to  an  amount  equal  to  the
                           Uncertificated  Balance  of REMIC I Regular  Interest
                           I-LTM9;

                                       44
<PAGE>

                   (xvi)   the  excess  of (i) the REMIC I  Remittance  Rate for
                           REMIC I Regular Interest I-LTB1 over (ii) the REMIC I
                           Remittance  Rate on REMIC I Regular  Interest  I-LTB1
                           (calculated  for  purposes  of  clause  (ii)  of this
                           definition  using a Servicing Fee Rate equal to 0.50%
                           per  annum),  applied  to  an  amount  equal  to  the
                           Uncertificated  Balance  of REMIC I Regular  Interest
                           I-LTB1;

                   (xvii)  the  excess  of (i) the REMIC I  Remittance  Rate for
                           REMIC I Regular Interest I-LTB2 over (ii) the REMIC I
                           Remittance  Rate on REMIC I Regular  Interest  I-LTB2
                           (calculated  for  purposes  of  clause  (ii)  of this
                           definition  using a Servicing Fee Rate equal to 0.50%
                           per  annum),  applied  to  an  amount  equal  to  the
                           Uncertificated  Balance  of REMIC I Regular  Interest
                           I-LTB2;

                   (xviii) the  excess  of (i) the REMIC I  Remittance  Rate for
                           REMIC I Regular Interest I-LTZZ over (ii) the REMIC I
                           Remittance  Rate on REMIC I Regular  Interest  I-LTZZ
                           (calculated  for  purposes  of  clause  (ii)  of this
                           definition  using a Servicing Fee Rate equal to 0.50%
                           per  annum),  applied  to  an  amount  equal  to  the
                           Uncertificated  Balance  of REMIC I Regular  Interest
                           I-LTZZ;

                   (xix)   the  excess  of (i) the REMIC I  Remittance  Rate for
                           REMIC I Regular  Interest I-LTP over (ii) the REMIC I
                           Remittance  Rate on REMIC I  Regular  Interest  I-LTP
                           (calculated  for  purposes  of  clause  (ii)  of this
                           definition  using a Servicing Fee Rate equal to 0.50%
                           per  annum),  applied  to  an  amount  equal  to  the
                           Uncertificated  Balance  of REMIC I Regular  Interest
                           I-LTP;

                   (xx)    the  excess  of (i) the REMIC I  Remittance  Rate for
                           REMIC I Regular Interest I-LT1SUB over (ii) the REMIC
                           I  Remittance  Rate  on  REMIC  I  Regular   Interest
                           I-LT1SUB  (calculated  for purposes of clause (ii) of
                           this  definition  using a Servicing Fee Rate equal to
                           0.50% per annum),  applied to an amount  equal to the
                           Uncertificated  Balance  of REMIC I Regular  Interest
                           I-LT1SUB;

                   (xxi)   the  excess  of (i) the REMIC I  Remittance  Rate for
                           REMIC I Regular Interest I-LT1GRP over (ii) the REMIC
                           I  Remittance  Rate  on  REMIC  I  Regular   Interest
                           I-LT1GRP  (calculated  for purposes of clause (ii) of
                           this  definition  using a Servicing Fee Rate equal to
                           0.50% per annum),  applied to an amount  equal to the
                           Uncertificated  Balance  of REMIC I Regular  Interest
                           I-LT1GRP;

                   (xxii)  the  excess  of (i) the REMIC I  Remittance  Rate for
                           REMIC I Regular Interest I-LT2SUB over (ii) the REMIC
                           I  Remittance  Rate  on  REMIC  I  Regular   Interest
                           I-LT2SUB  (calculated  for purposes of clause (ii) of
                           this  definition  using a Servicing Fee Rate equal to
                           0.50% per annum),  applied to an amount  equal to the
                           Uncertificated  Balance  of REMIC I Regular  Interest
                           I-LT2SUB;

                                       45
<PAGE>

                   (xxiii) the  excess  of (i) the REMIC I  Remittance  Rate for
                           REMIC I Regular Interest I-LT2GRP over (ii) the REMIC
                           I  Remittance  Rate  on  REMIC  I  Regular   Interest
                           I-LT2GRP  (calculated  for purposes of clause (ii) of
                           this  definition  using a Servicing Fee Rate equal to
                           0.50% per annum),  applied to an amount  equal to the
                           Uncertificated  Balance  of REMIC I Regular  Interest
                           I-LT2GRP; and

                   (xxiv)  the  excess  of (i) the REMIC I  Remittance  Rate for
                           REMIC I Regular Interest I-LTXX over (ii) the REMIC I
                           Remittance  Rate on REMIC I Regular  Interest  I-LTXX
                           (calculated  for  purposes  of  clause  (ii)  of this
                           definition  using a Servicing Fee Rate equal to 0.50%
                           per  annum),  applied  to  an  amount  equal  to  the
                           Uncertificated  Balance  of REMIC I Regular  Interest
                           I-LTXX;

                  "Percentage   Interest":   With   respect   to  any  Class  of
Certificates (other than the Residual  Certificates),  the undivided  percentage
ownership  in  such  Class  evidenced  by  such  Certificate,   expressed  as  a
percentage,  the numerator of which is the initial Certificate Principal Balance
represented by such  Certificate  and the  denominator of which is the aggregate
initial  Certificate  Principal  Balance  or  Notional  Amount  of  all  of  the
Certificates of such Class. The Class A Certificates, the Mezzanine Certificates
and the Class B Certificates are issuable only in minimum  Percentage  Interests
corresponding to minimum initial  Certificate  Principal Balances of $25,000 and
integral  multiples of $1.00 in excess  thereof.  The Class P  Certificates  are
issuable  only in  Percentage  Interests  corresponding  to initial  Certificate
Principal  Balances  of  $20  and  integral  multiples  thereof.  The  Class  CE
Certificates and Class CE-1 Certificates are issuable only in minimum Percentage
Interests  corresponding  to minimum  initial  Notional  Balances of $10,000 and
integral multiples of $1.00 in excess thereof; provided,  however, that a single
Certificate of each such Class of Certificates may be issued having a Percentage
Interest  corresponding  to the  remainder  of the  aggregate  initial  Notional
Balance of such Class or to an otherwise authorized  denomination for such Class
plus such  remainder.  With respect to any Residual  Certificate,  the undivided
percentage  ownership in such Class evidenced by such Certificate,  as set forth
on the face of such  Certificate.  The  Residual  Certificates  are  issuable in
Percentage Interests of 20% and integral multiples of 5% in excess thereof.

                  "Periodic  Rate Cap":  With  respect to each  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  Adjustable  Rate Mortgage Loan may increase or decrease  (without
regard  to the  Maximum  Mortgage  Rate or the  Minimum  Mortgage  Rate) on such
Adjustment  Date  from the  Mortgage  Rate in effect  immediately  prior to such
Adjustment Date.

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

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

                                       46
<PAGE>

                       (ii) (A) demand and time  deposits  in,  certificates  of
         deposit of, bankers' acceptances issued by or federal funds sold by any
         depository  institution or trust company  (including the Trustee or its
         agent acting in their respective  commercial  capacities)  incorporated
         under the laws of the United States of America or any state thereof and
         subject  to  supervision   and  examination  by  federal  and/or  state
         authorities,  so long as, at the time of such investment or contractual
         commitment providing for such investment,  such depository  institution
         or trust  company (or, if the only Rating Agency is S&P, in the case of
         the  principal  depository  institution  in  a  depository  institution
         holding company, debt obligations of the depository institution holding
         company) or its ultimate parent has a short-term  uninsured debt rating
         in the highest available rating category of Moody's,  Fitch and S&P and
         provided that each such investment has an original  maturity of no more
         than 365 days; and provided  further that, if the only Rating Agency is
         S&P and if the depository or trust company is a principal subsidiary of
         a bank holding company and the debt  obligations of such subsidiary are
         not separately  rated, the applicable  rating shall be that of the bank
         holding company;  and,  provided further that, if the original maturity
         of such  short-term  obligations  of a  domestic  branch  of a  foreign
         depository  institution  or trust  company  shall  exceed 30 days,  the
         short-term  rating of such institution shall be A-1+ in the case of S&P
         if S&P is the Rating  Agency;  and (B) any other demand or time deposit
         or deposit which is fully insured by the FDIC;

                       (iii) repurchase obligations with a term not to exceed 30
         days with  respect to any  security  described  in clause (i) above and
         entered into with a depository  institution or trust company (acting as
         principal)  rated A-1+ or higher by S&P,  F-1 or higher by Fitch and A2
         or higher by Moody's,  provided,  however, that collateral  transferred
         pursuant to such repurchase obligation must be of the type described in
         clause (i) above and must (A) be valued daily at current  market prices
         plus accrued interest, (B) pursuant to such valuation, be equal, at all
         times, to 105% of the cash  transferred by a party in exchange for such
         collateral  and (C) be  delivered  to such  party or, if such  party is
         supplying the collateral,  an agent for such party, in such a manner as
         to accomplish  perfection of a security  interest in the  collateral by
         possession of certificated securities;

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

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

                       (vi)  units of money  market  funds  that have been rated
         "AAA" by Fitch (if rated by  Fitch),  "AAAm" by S&P or "Aaa" by Moody's
         including  any such money  market fund managed or advised by the Master
         Servicer, the Trustee or any of their Affiliates; and

                                       47
<PAGE>

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

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

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

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

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

                  "Prepayment Assumption":  A prepayment rate for the Adjustable
Rate Mortgage  Loans of 28% CPR and a prepayment  rate of 100% PPC for the fixed
rate Mortgage  Loans.  The Prepayment  Assumption is used solely for determining
the accrual of original  issue discount on the  Certificates  for federal income
tax  purposes.  A CPR (or Constant  Prepayment  Rate)  represents  an annualized
constant  assumed  rate of  prepayment  each month of a pool of  mortgage  loans
relative to its outstanding  principal balance for the life of such pool. A 100%
PPC represents  (i) a per annum  prepayment  rate of 4% of the then  outstanding
principal  balance of the fixed rate  Mortgage  Loans in the first  month of the
life of such Mortgage Loans, (ii) an additional 1.72727% per annum in each month
thereafter  through the eleventh month and (iii) a constant  prepayment  rate of
23% per annum beginning in the twelfth month and in each month thereafter during
the life of the fixed rate Mortgage Loans.

                  "Prepayment Charge": With respect to any Principal Prepayment,
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
Mortgage Loans  providing for a Prepayment  Charge included in the Trust Fund on
such date,  attached  hereto as  Schedule 2  (including  the  prepayment  charge
summary attached thereto).  The Depositor shall deliver or cause the delivery of
the Prepayment Charge Schedule to the related Servicer,  the Master Servicer and
the Trustee on the Closing Date. The Prepayment  Charge Schedule shall set forth
the following information with respect to each Prepayment Charge:

                       (i) the Mortgage Loan identifying number;

                                       48
<PAGE>

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

                       (iii) the date on which the first Monthly Payment was due
         on the related Mortgage Loan;

                       (iv) the term of the related Prepayment Charge;

                       (v) the original Stated Principal  Balance of the related
         Mortgage Loan; and

                       (vi) the Stated Principal Balance of the related Mortgage
         Loan as of the Cut-off Date.

                  "Prepayment  Interest  Excess":  With respect to each Mortgage
Loan that was the subject of a Principal  Prepayment  in full during the portion
of the related Prepayment Period occurring between the first day of the calendar
month in which such Distribution  Date occurs and the Determination  Date of the
calendar  month in which  such  Distribution  Date  occurs,  an amount  equal to
interest (to the extent  received) at the  applicable  Net Mortgage  Rate on the
amount of such  Principal  Prepayment  for the number of days  commencing on the
first day of the  calendar  month in which  such  Distribution  Date  occurs and
ending on the last date through  which  interest is  collected  from the related
Mortgagor.  The related  Servicer may withdraw such  Prepayment  Interest Excess
from the related Collection Account in accordance with Section 3.09(a)(x).

                  "Prepayment   Interest   Shortfall":   With   respect  to  any
Distribution  Date,  for each  such  Mortgage  Loan  that was the  subject  of a
Principal  Prepayment  in full or in part  during  the  portion  of the  related
Prepayment  Period  occurring  between the first day of the  related  Prepayment
Period and the last day of the calendar month  preceding the month in which such
Distribution Date occurs that was applied by the related Servicer or the related
Interim  Servicer to reduce the outstanding  principal  balance of such Mortgage
Loan on a date preceding the Due Date in the succeeding  Prepayment  Period,  an
amount equal to interest at the  applicable  Net Mortgage  Rate on the amount of
such Principal Prepayment for the number of days commencing on the date on which
the  prepayment  is  applied  and ending on the last day of the  calendar  month
preceding such  Distribution  Date. The obligations of the related  Servicer and
the Master  Servicer in respect of any  Prepayment  Interest  Shortfall  are set
forth in Section 3.22 and Section  4.18,  respectively  of this  Agreement.  The
obligations  of the  Interim  Servicers  in respect of any  Prepayment  Interest
Shortfalls are set forth in the Interim Servicing Agreements.

                  "Prepayment Period": (i) With respect to the Servicers and any
Distribution  Date, the calendar month  preceding the month in which the related
Distribution  Date occurs with respect to  prepayments  in part,  and the period
beginning on the 16th day of the month preceding the related  Distribution  Date
(or, the period  commencing on the Cut-off  Date,  in connection  with the first
Prepayment  Period)  and  ending  on the  15th day of the  month  in which  such
Distribution  Date  occurs  with  respect to  prepayments  in full and (ii) with
respect  to the  Interim  Servicers,  as set  forth  in  the  Interim  Servicing
Agreements.

                  "Principal  Prepayment":  Any  voluntary  payment of principal
made by the  Mortgagor  on a Mortgage  Loan which is  received in advance of its
scheduled  Due Date and

                                       49
<PAGE>

which is not accompanied by an amount of interest  representing  the full amount
of scheduled  interest due on any Due Date in any month or months  subsequent to
the month of prepayment.

                  "Principal   Distribution   Amount":   With   respect  to  any
Distribution  Date is the sum of the Group I Principal  Distribution  Amount and
the Group II Principal Distribution Amount.

                  "Principal   Remittance   Amount":   With   respect   to   any
Distribution Date is the sum of the Group I Principal  Remittance Amount and the
Group II Principal Remittance Amount.

                  "Purchase  Price":  With respect to any  Mortgage  Loan or REO
Property to be purchased pursuant to or as contemplated by Section 2.03, Section
3.13(c) or Section  10.01,  and as confirmed by a  certification  of a Servicing
Officer  to the  Trustee,  an amount  equal to the sum of (i) 100% of the Stated
Principal  Balance  thereof as of the date of  purchase  (or such other price as
provided in Section  10.01),  (ii) in the case of (x) a Mortgage  Loan,  accrued
interest on such Stated Principal Balance at the applicable Net Mortgage Rate in
effect from time to time from the Due Date as to which interest was last covered
by a payment by the  Mortgagor  or a P&I Advance by the related  Servicer or the
related  Interim  Servicer,  which  payment or P&I Advance had as of the date of
purchase  been  distributed  pursuant  to Section  5.01,  through the end of the
calendar  month in which the purchase is to be effected and (y) an REO Property,
the  sum of (1)  accrued  interest  on  such  Stated  Principal  Balance  at the
applicable Net Mortgage Rate in effect from time to time from the Due Date as to
which  interest was last covered by a payment by the  Mortgagor or a P&I Advance
by the related  Servicer or the related Interim  Servicer through the end of the
calendar  month  immediately  preceding  the  calendar  month in which  such REO
Property was acquired,  plus (2) REO Imputed  Interest for such REO Property for
each  calendar  month  commencing  with the  calendar  month  in which  such REO
Property was acquired and ending with the calendar  month in which such purchase
is to be  effected,  net of  the  total  of all  net  rental  income,  Insurance
Proceeds,  Liquidation Proceeds and P&I Advances that as of the date of purchase
had been  distributed  as or to cover REO Imputed  Interest  pursuant to Section
5.01,  (iii) any  unreimbursed  Servicing  Advances and P&I Advances  (including
Nonrecoverable  P&I  Advances and  Nonrecoverable  Servicing  Advances)  and any
unpaid Servicing Fees allocable to such Mortgage Loan or REO Property,  (iv) any
amounts  previously  withdrawn from the related  Collection  Account pursuant to
Section  3.09(a)(ix)  and Section 3.13(b) and (v) in the case of a Mortgage Loan
required to be purchased pursuant to Section 2.03,  expenses reasonably incurred
or to be incurred by the related Interim  Servicer,  the related Servicer or the
Trustee  in  respect  of the  breach  or  defect  giving  rise  to the  purchase
obligation and any costs and damages  incurred by the Trust Fund and the Trustee
in  connection  with any violation by any such Mortgage Loan of any predatory or
abusive lending law.

                  "QIB": As defined in Section 6.01(c).

                  "Qualified   Substitute   Mortgage   Loan":  A  mortgage  loan
substituted for a Deleted  Mortgage Loan pursuant to the terms of this Agreement
which must, on the date of such substitution,  (i) have an outstanding principal
balance,  after application of all scheduled  payments of principal and interest
due during or prior to the month of substitution, not in excess of the Scheduled
Principal  Balance  of the  Deleted  Mortgage  Loan  as of the  Due  Date in the
calendar month during which the substitution  occurs,  (ii) have a Mortgage Rate
not less than (and not more than one percentage point in excess of) the Mortgage
Rate of the Deleted

                                       50
<PAGE>

Mortgage Loan,  (iii) if the mortgage loan is an Adjustable  Rate Mortgage Loan,
have a Maximum  Mortgage  Rate not less than the  Maximum  Mortgage  Rate on the
Deleted  Mortgage Loan, (iv) if the mortgage loan is an Adjustable Rate Mortgage
Loan,  have a Minimum  Mortgage Rate not less than the Minimum  Mortgage Rate of
the Deleted  Mortgage  Loan,  (v) if the  mortgage  loan is an  Adjustable  Rate
Mortgage  Loan,  have a Gross  Margin  equal to the Gross  Margin of the Deleted
Mortgage  Loan,  (vi) if the mortgage loan 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  greater  than (and not more than one year less  than) that of the
Deleted  Mortgage  Loan,  (viii)  have  the same Due Date as the Due Date on the
Deleted  Mortgage  Loan,  (ix)  have a  Loan-to-Value  Ratio  as of the  date of
substitution  equal to or  lower  than the  Loan-to-Value  Ratio of the  Deleted
Mortgage  Loan as of such date,  (x) be secured by the same lien priority on the
related  Mortgaged  Property as the Deleted  Loan,  (xi) have a credit  grade at
least equal to the credit grading  assigned on the Deleted  Mortgage Loan, (xii)
be a "qualified  mortgage" as defined in the REMIC Provisions and (xiii) conform
to each  representation and warranty set forth in Section 6 of the Mortgage Loan
Purchase  Agreement  applicable to the Deleted  Mortgage Loan. In the event that
one or more  mortgage  loans are  substituted  for one or more Deleted  Mortgage
Loans,  the amounts  described in clause (i) hereof shall be  determined  on the
basis of aggregate  principal  balances,  the Mortgage Rates described in clause
(ii) hereof shall be determined on the basis of weighted average Mortgage Rates,
the terms  described in clause (vii) hereof shall be  determined on the basis of
weighted average remaining term to maturity,  the Loan-to-Value Ratios described
in clause (ix) hereof  shall be  satisfied as to each such  mortgage  loan,  the
credit grades  described in clause (x) hereof shall be satisfied as to each such
mortgage loan and, except to the extent otherwise provided in this sentence, the
representations  and  warranties  described  in  clause  (xii)  hereof  must  be
satisfied as to each Qualified Substitute Mortgage Loan or in the aggregate,  as
the case may be.

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

                  "Rating Agency or Rating Agencies":  Moody's,  DBRS and S&P or
their  successors.  If such  agencies  or  their  successors  are no  longer  in
existence,  "Rating  Agencies" shall be such nationally  recognized  statistical
rating  agencies,  or other  comparable  Persons,  designated by the  Depositor,
notice of which designation shall be given to the Trustee and the Servicers.

                  "Realized  Loss":  With  respect to each  Mortgage  Loan as to
which a Final  Recovery  Determination  has been made,  an amount (not less than
zero),  as  reported  by  the  related  Servicer  to  the  Master  Servicer  (in
substantially  the form of Schedule 4 hereto) or by the related Interim Servicer
to the Master Servicer pursuant to the applicable  Interim  Servicing  Agreement
equal  to (i) the  unpaid  principal  balance  of such  Mortgage  Loan as of the
commencement of the calendar month in which the Final Recovery Determination was
made, plus (ii) accrued interest from the Due Date as to which interest was last
paid by the Mortgagor  through the end of the calendar month in which such Final
Recovery  Determination was made,

                                       51
<PAGE>

calculated  in the case of each  calendar  month  during  such  period (A) at an
annual rate equal to the annual rate at which interest was then accruing on such
Mortgage  Loan  and (B) on a  principal  amount  equal to the  Stated  Principal
Balance of such  Mortgage  Loan as of the close of business on the  Distribution
Date during such calendar  month,  plus (iii) any amounts  previously  withdrawn
from the  related  Collection  Account or  Custodial  Account in respect of such
Mortgage  Loan  pursuant  to Section  3.09(a)(ix)  and  Section  3.13(b) of this
Agreement or pursuant to the related Interim Servicing Agreement, minus (iv) the
proceeds,  if any, received in respect of such Mortgage Loan during the calendar
month in which such Final Recovery  Determination  was made, net of amounts that
are payable  therefrom to the related  Servicer or the related Interim  Servicer
with respect to such  Mortgage  Loan  pursuant to Section  3.09(a)(iii)  of this
Agreement or pursuant to the related Interim Servicing Agreement.

                  With respect to any REO Property as to which a Final  Recovery
Determination  has been made,  an amount  (not less than zero)  equal to (i) the
unpaid  principal  balance  of the  related  Mortgage  Loan  as of the  date  of
acquisition  of such REO  Property  on  behalf  of REMIC I,  plus  (ii)  accrued
interest  from the Due Date as to which  interest was last paid by the Mortgagor
in respect of the related  Mortgage  Loan through the end of the calendar  month
immediately  preceding  the  calendar  month in  which  such  REO  Property  was
acquired,  calculated in the case of each calendar  month during such period (A)
at an annual rate equal to the annual rate at which  interest was then  accruing
on the related  Mortgage Loan and (B) on a principal  amount equal to the Stated
Principal  Balance of the related  Mortgage  Loan as of the close of business on
the  Distribution  Date  during  such  calendar  month,  plus (iii) REO  Imputed
Interest for such REO  Property  for each  calendar  month  commencing  with the
calendar  month in which such REO  Property  was  acquired  and ending  with the
calendar month in which such Final Recovery  Determination  was made,  plus (iv)
any  amounts  previously  withdrawn  from  the  related  Collection  Account  or
Custodial  Account in respect of the related  Mortgage  Loan pursuant to Section
3.09(a)(ix)  and Section  3.13(b) of this Agreement or pursuant to the Servicing
Agreements,  minus (v) the aggregate of all P&I Advances and Servicing  Advances
(in the case of Servicing Advances, without duplication of amounts netted out of
the rental income,  Insurance  Proceeds and  Liquidation  Proceeds  described in
clause (vi) below) made by the related  Servicer or the related Interim Servicer
in respect  of such REO  Property  or the  related  Mortgage  Loan for which the
related Servicer or the related Interim Servicer has been or, in connection with
such Final Recovery  Determination,  will be reimbursed pursuant to Section 3.21
of this Agreement or pursuant to the related Interim Servicing  Agreement out of
rental income,  Insurance Proceeds and Liquidation  Proceeds received in respect
of such REO Property,  minus (vi) the total of all net rental income,  Insurance
Proceeds and Liquidation  Proceeds received in respect of such REO Property that
has been,  or in  connection  with such Final  Recovery  Determination,  will be
transferred  to the  Distribution  Account  pursuant  to  Section  3.21  of this
Agreement or pursuant to the related Interim Servicing Agreement.

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

                  With  respect  to each  Mortgage  Loan  which has  become  the
subject of a Debt Service  Reduction,  the portion,  if any, of the reduction in
each affected  Monthly Payment  attributable to a reduction in the Mortgage Rate
imposed by a court of competent  jurisdiction.

                                       52
<PAGE>

Each such  Realized  Loss shall be deemed to have been  incurred on the Due Date
for each affected Monthly Payment.

                  To the extent the  related  Servicer  or the  related  Interim
Servicer receives Subsequent Recoveries,  with respect to any Mortgage Loan, the
amount of Realized  Loss with respect to that  Mortgage  Loan will be reduced to
the extent  such  recoveries  are  applied to reduce the  Certificate  Principal
Balance of any Class on any Distribution Date.

                  "Record Date":  With respect to each Distribution Date and the
Class A Certificates,  the Mezzanine  Certificates and the Class B Certificates,
the Business Day  immediately  preceding such  Distribution  Date for so long as
such Certificates are Book-Entry Certificates. With respect to each Distribution
Date and any other Class of Certificates, including any Definitive Certificates,
the last day of the calendar month immediately preceding the month in which such
Distribution Date occurs.

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

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

                  "Regular  Certificate":  Any  Class A  Certificate,  Mezzanine
Certificate,  Class B Certificate,  Class CE Certificate, Class CE-1 Certificate
or Class P Certificate.

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

                  "Regulation  S Temporary  Global  Certificate":  As defined in
Section 6.01(c).

                  "Regulation  S Permanent  Global  Certificate":  As defined in
Section 6.01(c).

                  "Release   Date":   The  40th  day  after  the  later  of  (i)
commencement  of the offering of the Class B  Certificates  and (ii) the Closing
Date.

                  "Relief Act": The Servicemembers Civil Relief Act, as amended,
or similar state or local laws.

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

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

                                       53
<PAGE>

                  "REMIC  I":  The  segregated  pool of assets  subject  hereto,
constituting the primary trust created hereby and to be administered  hereunder,
with respect to which a REMIC  election is to be made,  consisting  of: (i) such
Mortgage Loans and  Prepayment  Charges as from time to time are subject to this
Agreement,  together with the Mortgage Files relating thereto, and together with
all collections  thereon and proceeds thereof;  (ii) any REO Property,  together
with all collections  thereon and proceeds  thereof;  (iii) the Trustee's rights
with respect to the Mortgage Loans under all insurance  policies  required to be
maintained  pursuant  to this  Agreement  and any  proceeds  thereof;  (iv)  the
Depositor's  rights under the Mortgage Loan Purchase  Agreement  (including  any
security  interest created thereby),  the Assignment  Agreements and the Interim
Servicing  Agreements and (v) the Custodial Accounts,  Collection  Account,  the
Distribution  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; (ii) the Reserve Fund and any amounts
on deposit therein from time to time and any proceeds  thereof and (iii) the Cap
Contracts.

                  "REMIC I Interest  Loss  Allocation  Amount" : With respect to
any  Distribution  Date, an amount equal to (a) the product of (i) the aggregate
Stated  Principal  Balance  of  the  Mortgage  Loans  and  REO  Properties  then
outstanding  and (ii) the REMIC I Remittance  Rate for REMIC I Regular  Interest
I-LTAA minus the Marker Rate, divided by (b) 12.

                  "REMIC I Marker  Allocation  Percentage":  0.50% of any amount
payable or loss attributable  from the Mortgage Loans,  which shall be allocated
to REMIC I Regular Interest I-LTAA,  REMIC I Regular Interest  I-LTA1A,  REMIC I
Regular  Interest  I-LTA1B,  REMIC I Regular Interest  I-LTA2A,  REMIC I Regular
Interest  I-LTA2B,  REMIC I Regular Interest  I-LTA2C,  REMIC I Regular Interest
I-LTM1,  REMIC I Regular Interest I-LTM2, REMIC I Regular Interest I-LTM3, REMIC
I Regular  Interest I-LTM4,  REMIC I Regular  Interest  I-LTM5,  REMIC I Regular
Interest  I-LTM6,  REMIC I Regular  Interest  I-LTM7,  REMIC I Regular  Interest
I-LTM8,  REMIC I Regular Interest I-LTM9, REMIC I Regular Interest I-LTB1, REMIC
I Regular Interest  I-LTB2,  REMIC I Regular Interest I-LTZZ and REMIC I Regular
Interest I-LTP.

                  "REMIC I  Overcollateralization  Amount":  With respect to any
date of determination, (i) 0.50% of the aggregate Uncertificated Balances of the
REMIC I  Regular  Interests  minus  (ii)  the  aggregate  of the  Uncertificated
Balances of REMIC I Regular Interest I-LTA1A,  REMIC I Regular Interest I-LTA1B,
REMIC I Regular  Interest  I-LTA2A,  REMIC I Regular Interest  I-LTA2B,  REMIC I
Regular  Interest  I-LTA2C,  REMIC I Regular  Interest  I-LTM1,  REMIC I Regular
Interest  I-LTM2,  REMIC I Regular  Interest  I-LTM3,  REMIC I Regular  Interest
I-LTM4,  REMIC I Regular Interest I-LTM5, REMIC I Regular Interest I-LTM6, REMIC
I Regular  Interest I-LTM7,  REMIC I Regular  Interest  I-LTM8,  REMIC I Regular
Interest  I-LTM9,  REMIC I Regular  Interest  I-LTB1,  REMIC I Regular  Interest
I-LTB2  and  REMIC I  Regular  Interest  I-LTP,  in each case as of such date of
determination.

                  "REMIC I Principal Loss  Allocation  Amount" : With respect to
any  Distribution  Date,  an amount equal to (a) the product of (i) 0.50% of the
aggregate Stated Principal Balance

                                       54
<PAGE>

of the Mortgage Loans and REO  Properties  then  outstanding  and (ii) 1 minus a
fraction,   the   numerator  of  which  is  two  times  the   aggregate  of  the
Uncertificated  Balances of REMIC I Regular  Interest  I-LTA1A,  REMIC I Regular
Interest  I-LTA1B,  REMIC I Regular Interest  I-LTA2A,  REMIC I Regular Interest
I-LTA2B,  REMIC I Regular  Interest  I-LTA2C,  REMIC I Regular  Interest I-LTM1,
REMIC I Regular  Interest  I-LTM2,  REMIC I  Regular  Interest  I-LTM3,  REMIC I
Regular  Interest  I-LTM4,  REMIC I  Regular  Interest  I-LTM5,  REMIC I Regular
Interest  I-LTM6,  REMIC I Regular  Interest  I-LTM7,  REMIC I Regular  Interest
I-LTM8,  REMIC I Regular  Interest  I-LTM9,  REMIC I Regular Interest I-LTB1 and
REMIC I Regular Interest I-LTB2 and the denominator of which is the aggregate of
the Uncertificated Balances of REMIC I Regular Interest I-LTA1A, REMIC I Regular
Interest  I-LTA1B,  REMIC I Regular Interest  I-LTA2A,  REMIC I Regular Interest
I-LTA2B,  REMIC I Regular  Interest  I-LTA2C,  REMIC I Regular  Interest I-LTM1,
REMIC I Regular  Interest  I-LTM2,  REMIC I  Regular  Interest  I-LTM3,  REMIC I
Regular  Interest  I-LTM4,  REMIC I  Regular  Interest  I-LTM5,  REMIC I Regular
Interest  I-LTM6,  REMIC I Regular  Interest  I-LTM7,  REMIC I Regular  Interest
I-LTM8,  REMIC I Regular Interest I-LTM9, REMIC I Regular Interest I-LTB1, REMIC
I Regular Interest I-LTB2 and REMIC I Regular Interest I-LTZZ.

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

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

                  "REMIC  I  Regular  Interest  I-LTA1A":  One of  the  separate
non-certificated  beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular  Interest in REMIC I. REMIC I Regular  Interest  I-LTA1A
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time,  and shall be entitled to  distributions  of principal,  subject to the
terms  and  conditions  hereof,  in an  aggregate  amount  equal to its  initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

                  "REMIC  I  Regular  Interest  I-LTA1B":  One of  the  separate
non-certificated  beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular  Interest in REMIC I. REMIC I Regular  Interest  I-LTA1B
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time,  and shall be entitled to  distributions  of principal,  subject to the
terms  and  conditions  hereof,  in an  aggregate  amount  equal to its  initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

                  "REMIC  I  Regular  Interest  I-LTA2A":  One of  the  separate
non-certificated  beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular  Interest

                                       55
<PAGE>

in REMIC I.  REMIC I Regular  Interest  I-LTA2A  shall  accrue  interest  at the
related  REMIC I  Remittance  Rate in  effect  from  time to time,  and shall be
entitled to  distributions  of  principal,  subject to the terms and  conditions
hereof,  in an aggregate amount equal to its initial  Uncertificated  Balance as
set forth in the Preliminary Statement hereto.

                  "REMIC  I  Regular  Interest  I-LTA2B":  One of  the  separate
non-certificated  beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular  Interest in REMIC I. REMIC I Regular  Interest  I-LTA2B
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time,  and shall be entitled to  distributions  of principal,  subject to the
terms  and  conditions  hereof,  in an  aggregate  amount  equal to its  initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

                  "REMIC  I  Regular  Interest  I-LTA2C":  One of  the  separate
non-certificated  beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular  Interest in REMIC I. REMIC I Regular  Interest  I-LTA2C
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time,  and shall be entitled to  distributions  of principal,  subject to the
terms  and  conditions  hereof,  in an  aggregate  amount  equal to its  initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

                  "REMIC  I  Regular  Interest  I-LTB1":  One  of  the  separate
non-certificated  beneficial ownership interests in REMIC I issued hereunder and
designated  as a Regular  Interest in REMIC I. REMIC I Regular  Interest  I-LTB1
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time,  and shall be entitled to  distributions  of principal,  subject to the
terms  and  conditions  hereof,  in an  aggregate  amount  equal to its  initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

                  "REMIC  I  Regular  Interest  I-LTB2":  One  of  the  separate
non-certificated  beneficial ownership interests in REMIC I issued hereunder and
designated  as a Regular  Interest in REMIC I. REMIC I Regular  Interest  I-LTB2
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time,  and shall be entitled to  distributions  of principal,  subject to the
terms  and  conditions  hereof,  in an  aggregate  amount  equal to its  initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

                  "REMIC  I  Regular  Interest  I-LTM1":  One  of  the  separate
non-certificated  beneficial ownership interests in REMIC I issued hereunder and
designated  as a Regular  Interest in REMIC I. REMIC I Regular  Interest  I-LTM1
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time,  and shall be entitled to  distributions  of principal,  subject to the
terms  and  conditions  hereof,  in an  aggregate  amount  equal to its  initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

                  "REMIC  I  Regular  Interest  I-LTM2":  One  of  the  separate
non-certificated  beneficial ownership interests in REMIC I issued hereunder and
designated  as a Regular  Interest in REMIC I. REMIC I Regular  Interest  I-LTM2
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time,  and shall be entitled to  distributions  of principal,  subject to the
terms  and  conditions  hereof,  in an  aggregate  amount  equal to its  initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

                                       56
<PAGE>

                  "REMIC  I  Regular  Interest  I-LTM3":  One  of  the  separate
non-certificated  beneficial ownership interests in REMIC I issued hereunder and
designated  as a Regular  Interest in REMIC I. REMIC I Regular  Interest  I-LTM3
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time,  and shall be entitled to  distributions  of principal,  subject to the
terms  and  conditions  hereof,  in an  aggregate  amount  equal to its  initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

                  "REMIC  I  Regular  Interest  I-LTM4":  One  of  the  separate
non-certificated  beneficial ownership interests in REMIC I issued hereunder and
designated  as a Regular  Interest in REMIC I. REMIC I Regular  Interest  I-LTM4
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time,  and shall be entitled to  distributions  of principal,  subject to the
terms  and  conditions  hereof,  in an  aggregate  amount  equal to its  initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

                  "REMIC  I  Regular  Interest  I-LTM5":  One  of  the  separate
non-certificated  beneficial ownership interests in REMIC I issued hereunder and
designated  as a Regular  Interest in REMIC I. REMIC I Regular  Interest  I-LTM5
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time,  and shall be entitled to  distributions  of principal,  subject to the
terms  and  conditions  hereof,  in an  aggregate  amount  equal to its  initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

                  "REMIC  I  Regular  Interest  I-LTM6":  One  of  the  separate
non-certificated  beneficial ownership interests in REMIC I issued hereunder and
designated  as a Regular  Interest in REMIC I. REMIC I Regular  Interest  I-LTM6
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time,  and shall be entitled to  distributions  of principal,  subject to the
terms  and  conditions  hereof,  in an  aggregate  amount  equal to its  initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

                  "REMIC  I  Regular  Interest  I-LTM7":  One  of  the  separate
non-certificated  beneficial ownership interests in REMIC I issued hereunder and
designated  as a Regular  Interest in REMIC I. REMIC I Regular  Interest  I-LTM7
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time,  and shall be entitled to  distributions  of principal,  subject to the
terms  and  conditions  hereof,  in an  aggregate  amount  equal to its  initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

                  "REMIC  I  Regular  Interest  I-LTM8":  One  of  the  separate
non-certificated  beneficial ownership interests in REMIC I issued hereunder and
designated  as a Regular  Interest in REMIC I. REMIC I Regular  Interest  I-LTM8
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time,  and shall be entitled to  distributions  of principal,  subject to the
terms  and  conditions  hereof,  in an  aggregate  amount  equal to its  initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

                  "REMIC  I  Regular  Interest  I-LTM9":  One  of  the  separate
non-certificated  beneficial ownership interests in REMIC I issued hereunder and
designated  as a Regular  Interest in REMIC I. REMIC I Regular  Interest  I-LTM9
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time,  and shall be entitled to  distributions  of principal,  subject to the
terms  and  conditions  hereof,  in an  aggregate  amount  equal to its  initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

                                       57
<PAGE>

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

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

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

                  "REMIC  I  Regular  Interest  I-LT1SUB":  One of the  separate
non-certificated  beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular  Interest  I-LT1SUB
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time,  and shall be entitled to  distributions  of principal,  subject to the
terms  and  conditions  hereof,  in an  aggregate  amount  equal to its  initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

                  "REMIC  I  Regular  Interest  I-LT1GRP":  One of the  separate
non-certificated  beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular  Interest  I-LT1GRP
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time,  and shall be entitled to  distributions  of principal,  subject to the
terms  and  conditions  hereof,  in an  aggregate  amount  equal to its  initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

                  "REMIC  I  Regular  Interest  I-LT2SUB":  One of the  separate
non-certificated  beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular  Interest  I-LT2SUB
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time,  and shall be entitled to  distributions  of principal,  subject to the
terms  and  conditions  hereof,  in an  aggregate  amount  equal to its  initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

                  "REMIC  I  Regular  Interest  I-LT2GRP":  One of the  separate
non-certificated  beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular  Interest  I-LT2GRP
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time,  and shall be entitled to  distributions  of principal,  subject to the
terms  and  conditions  hereof,  in an  aggregate  amount  equal to its  initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

                                       58
<PAGE>

                  "REMIC I  Remittance  Rate":  With  respect to REMIC I Regular
Interest  I-LTAA,  REMIC I Regular  Interest  I-LTA1A,  REMIC I Regular Interest
I-LTA1B,  REMIC I Regular Interest  I-LTA2A,  REMIC I Regular Interest  I-LTA2B,
REMIC I Regular  Interest  I-LTA2C,  REMIC I Regular  Interest  I-LTM1,  REMIC I
Regular  Interest  I-LTM2,  REMIC I  Regular  Interest  I-LTM3,  REMIC I Regular
Interest  I-LTM4,  REMIC I Regular  Interest  I-LTM5,  REMIC I Regular  Interest
I-LTM6,  REMIC I Regular Interest I-LTM7, REMIC I Regular Interest I-LTM8, REMIC
I Regular  Interest I-LTM9,  REMIC I Regular  Interest  I-LTB1,  REMIC I Regular
Interest  I-LTB2,  REMIC I Regular  Interest  I-LTZZ,  REMIC I Regular  Interest
I-LTP, REMIC I Regular Interest I-LT1SUB,  REMIC I Regular Interest I-LT2SUB and
REMIC I Regular  Interest  I-LTXX,  the weighted average of the Expense Adjusted
Mortgage Rates of the Mortgage Loans.  With respect to REMIC I Regular  Interest
I-LT1GRP,  the weighted  average of the Expense  Adjusted  Mortgage Rates of the
Group I Mortgage Loans. With respect to REMIC I Regular Interest  I-LT2GRP,  the
weighted average of the Expense Adjusted Mortgage Rates of the Group II Mortgage
Loans.

                  "REMIC I Sub WAC Allocation  Percentage":  0.50% of any amount
payable or loss attributable  from the Mortgage Loans,  which shall be allocated
to REMIC I Regular Interest I-LT1SUB, REMIC I Regular Interest I-LT1GRP, REMIC I
Regular Interest I-LT2SUB, REMIC I Regular Interest I-LT2GRP and REMIC I Regular
Interest I-LTXX.

                  "REMIC I  Subordinated  Balance  Ratio":  The ratio  among the
Uncertificated  Balances  of each  REMIC I  Regular  Interest  ending  with  the
designation "SUB,", equal to the ratio between,  with respect to each such REMIC
I Regular Interest,  the excess of (x) the aggregate Stated Principal Balance of
the Group I Mortgage Loans or Group II Mortgage  Loans,  as applicable  over (y)
the current Certificate Principal Balance of related Class A Certificates.

                  "REMIC I  Required  Overcollateralization  Amount":  1% of the
Required Overcollateralization Amount.

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

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

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

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

                  "REMIC Regular Interest": Any REMIC I Regular Interest.

                  "REMIC Remittance Rate": The REMIC I Remittance Rate.

                                       59
<PAGE>

                  "Remittance Report": A report by the related Servicer pursuant
to Section 5.03(a) of this Agreement or the related Interim Servicer pursuant to
the related Interim Servicing Agreement.

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

                  "REO Account":  The account or accounts maintained,  or caused
to be maintained, by the related Servicer in respect of an REO Property pursuant
to Section 3.21 of this Agreement or by the related Interim Servicer pursuant to
the related Interim Servicing Agreement.

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

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

                  "REO  Principal   Amortization":   With  respect  to  any  REO
Property,  for any calendar month,  the excess,  if any, of (a) the aggregate of
all amounts received in respect of such REO Property during such calendar month,
whether  in the  form  of  rental  income,  sale  proceeds  (including,  without
limitation,  that portion of the  Termination  Price paid in  connection  with a
purchase of all of the  Mortgage  Loans and REO  Properties  pursuant to Section
10.01 of this  Agreement  that is allocable to such REO  Property) or otherwise,
net of any  portion  of such  amounts  (i)  payable  in  respect  of the  proper
operation,  management  and  maintenance of such REO Property or (ii) payable or
reimbursable  to the  related  Servicer  pursuant  to  Section  3.21(d)  of this
Agreement or related Interim Servicer  pursuant to the related Interim Servicing
Agreement for unpaid  Servicing Fees in respect of the related Mortgage Loan and
unreimbursed Servicing Advances and P&I Advances in respect of such REO Property
or the related  Mortgage Loan,  over (b) the REO Imputed  Interest in respect of
such REO Property for such calendar month.

                  "REO Property":  A Mortgaged  Property acquired by the related
Servicer or its nominee on behalf of REMIC I through foreclosure or deed-in-lieu
of  foreclosure,  as described in Section 3.21 of this  Agreement or the related
Interim Servicer pursuant to the related Interrim Servicing Agreement.

"Required  Overcollateralization Amount" : With respect to any Distribution Date
(i) prior to the Stepdown  Date,  the product of (A) 0.70% and (B) the aggregate
principal balance of the Mortgage Loans as of the Cut-off Date, (ii) on or after
the Stepdown Date provided a Trigger Event is not in effect,  the greater of (x)
1.40% of the aggregate Stated Principal  Balance of the Mortgage Loans as of the
last day of the related Due Period and (y) an amount equal to the product of (A)
0.50% and (B) the aggregate  principal  balance of the Mortgage  Loans as of the
Cut-off Date,  and (iii) on or after the Stepdown Date and a Trigger Event is in
effect, the Required  Overcollateralization Amount for the immediately preceding
Distribution Date.  Notwithstanding the foregoing, on and after any Distribution
Date following the reduction of the

                                       60
<PAGE>

aggregate Certificate  Principal Balance of the Class A Certificates,  Mezzanine
Certificates    and   Class   B    Certificates    to   zero,    the    Required
Overcollateralization Amount shall be zero.

                  "Reserve Fund": A fund created  pursuant to Section 3.24 which
shall be an asset of the Trust Fund but which shall not be an asset of any Trust
REMIC.

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

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

                  "Residual Certificate":  Any one of the Class R Certificates.

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

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

                  "Rule 144A": As defined in Section 6.01(c).

                  "Saxon":  Saxon  Mortgage  Services,  Inc.  or  any  successor
thereto appointed  hereunder in connection with the servicing and administration
of the Saxon Mortgage Loans.

                  "Saxon Mortgage Loans": Those Mortgage Loans serviced by Saxon
pursuant  to the terms of this  Agreement  as  specified  on the  Mortgage  Loan
Schedule  (which shall include the Mandalay  Mortgage  Loans) and from and after
the related  Servicing  Transfer  Date,  the  Cameron  Mortgage  Loans,  Fremont
Mortgage Loans,  Metrocities Mortgage Loans and Ownit Mortgage Loans transferred
to Saxon on such Servicing Transfer Date.

                  "S&P":  Standard  and Poor's,  a division  of the  McGraw-Hill
Companies, Inc.

                  "Scheduled  Principal  Balance":  With respect to any Mortgage
Loan:  (a) as of the Cut-off Date,  the  outstanding  principal  balance of such
Mortgage  Loan as of such  date,  net of the  principal  portion  of all  unpaid
Monthly  Payments,  if any,  due on or before such date;  (b) as of any Due Date
subsequent  to the Cut-off Date up to and including the Due Date in the calendar

                                       61
<PAGE>

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

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

                  "Securities  Administrator":  As of the  Closing  Date,  Wells
Fargo Bank, N.A. and thereafter, its respective successors in interest that meet
the  qualifications  of this  Agreement.  The Securities  Administrator  and the
Master Servicer shall at all times be the same Person.

                  "Seller":  DB  Structured  Products,  Inc. or its successor in
interest, in its capacity as seller under the Mortgage Loan Purchase Agreement.

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

                  "Sequential  Trigger Event":  With respect to any Distribution
Date, a Sequential  Trigger Event is in effect if, before the 37th  Distribution
Date, the aggregate  amount of Realized  Losses  incurred since the Cut-off Date
through the last day of the related Due Period (after giving effect to scheduled
payments  received or advanced on or before the related  Determination  Date and
principal  prepayments received during the related Prepayment Period) divided by
the sum of the  aggregate  principal  balance  of the  Mortgage  Loans as of the
Cut-off Date exceeds  3.50%,  or if, on or after the 37th  Distribution  Date, a
Trigger Event is in effect.

                  "Servicer": Ocwen or Saxon, or any successor thereto appointed
hereunder in connection  with the servicing  and  administration  of the related
Mortgage Loans (together, the "Servicers").

                  "Servicer  Event  of  Default":  One or  more  of  the  events
described in Section 8.01(a).

                                       62
<PAGE>

                  "Servicer  Remittance  Date": With respect to any Distribution
Date and (i) Ocwen, by 12:00 p.m. New York time three Business Days  immediately
preceding  the related  Distribution  Date and (ii) Saxon,  by 12:00 p.m. on the
21st day of each  month;  provided  that if the  21st day of a given  month is a
Saturday,  the  Servicer  Remittance  Date  shall be the  immediately  preceding
Business Day and if the 21st day of a given month is a Sunday or a Monday (which
is not a Business Day), the Servicer  Remittance Date shall be the next Business
Day.

                  "Servicer  Report":  A  report  (substantially  in the form of
Schedule 5 hereto) or otherwise in form and  substance  acceptable to the Master
Servicer  and  Securities  Administrator  on an  electronic  data  file  or tape
prepared by the related  Servicer or the related  Interim  Servicer  pursuant to
Section 5.03(a) of this Agreement or pursuant to the related  Interim  Servicing
Agreement,  as applicable,  with such additions,  deletions and modifications as
agreed to by the Master Servicer,  the Securities  Administrator and the related
Servicer or the related Interim Servicer.

                  "Servicing    Advances":    The   customary   and   reasonable
"out-of-pocket"  costs and expenses incurred prior to or on or after the Cut-off
Date (the amounts  incurred prior to the Cut-off Date are identified on Schedule
6 hereto) by the related  Servicer or the related Interim Servicer in connection
with a default, delinquency or other unanticipated event by such Servicer or the
related  Interim  Servicer  in the  performance  of its  servicing  obligations,
including, but not limited to, the cost of (i) the preservation, restoration and
protection  of  a  Mortgaged   Property,   (ii)  any   enforcement  or  judicial
proceedings,  including  but  not  limited  to  foreclosures,  in  respect  of a
particular  Mortgage  Loan,  including any expenses  incurred in relation to any
such  proceedings  that result from the Mortgage  Loan being  registered  on the
MERS(R) System,  (iii) the management  (including  reasonable fees in connection
therewith) and  liquidation of any REO Property and (iv) the  performance of its
obligations  under Section 3.01,  Section 3.07,  Section 3.11,  Section 3.13 and
Section  3.21 of this  Agreement  or  under  the  applicable  Interim  Servicing
Agreement.  Servicing Advances also include any reasonable  "out-of-pocket" cost
and  expenses  (including  legal fees)  incurred by the related  Servicer or the
related Interim Servicer in connection with executing and recording  instruments
of  satisfaction,  deeds  of  reconveyance  or  Assignments  to the  extent  not
recovered  from the Mortgagor or otherwise  payable under this  Agreement or the
related  Interim  Servicing  Agreement.  Neither  the related  Servicer  nor the
related Interim Servicer shall be required to make any Nonrecoverable  Servicing
Advances.

                  "Servicing  Fee":  With respect to each  Mortgage Loan and for
any  calendar  month,  an amount  equal to  one-twelfth  of the  product  of the
Servicing Fee Rate multiplied by the Scheduled Principal Balance of the Mortgage
Loans as of the Due Date in the preceding  calendar month.  The Servicing Fee is
payable  solely from  collections of interest on the Mortgage  Loans;  provided,
however,  that Ocwen shall only be entitled  to a portion of the  Servicing  Fee
calculated at the Ocwen Servicing Fee Rate.

                  "Servicing Fee Rate":  0.50% per annum.

                  "Servicing  Officer":  Any officer of the related  Servicer or
the related Interim Servicer involved in, or responsible for, the administration
and servicing of Mortgage Loans,

                                       63
<PAGE>

whose  name  and  specimen  signature  appear  on a list of  Servicing  Officers
furnished  by the  related  Servicer  or the  related  Interim  Servicer  to the
Trustee, the Master Servicer, the Securities  Administrator and the Depositor on
the Closing Date, as such list may from time to time be amended.

                  "Servicing   Transfer  Date":  With  respect  to  the  Cameron
Mortgage Loans, the Mandalay Mortgage Loans, the Metrocities  Mortgage Loans and
the Ownit  Mortgage  Loans,  February  28,  2005.  With  respect to the  Fremont
Mortgage  Loans,  March 31,  2005 and April 30,  2005 (a schedule of the Fremont
Mortgage  Loans  transferring  on each  such  Servicing  Transfer  Date  will be
provided to the Master  Servicer  by Fremont on or prior to each such  Servicing
Transfer Date).

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

                  "Startup  Day":  With  respect  to each Trust  REMIC,  the day
designated as such pursuant to Section 11.01(b) hereof.

"Stated  Principal  Balance":  With respect to any Mortgage  Loan: (a) as of any
date of determination up to but not including the Distribution Date on which the
proceeds,  if any, of a  Liquidation  Event with respect to such  Mortgage  Loan
would be distributed,  the Scheduled  Principal Balance of such Mortgage Loan as
of the Cut-off Date, as shown in the Mortgage  Loan  Schedule,  minus the sum of
(i) the principal  portion of each Monthly  Payment due on a Due Date subsequent
to the Cut-off  Date,  to the extent  received from the Mortgagor or advanced by
the  related  Servicer or the related  Interim  Servicer or a successor  to such
Servicer  or  such  Interim   Servicer   (including  the  Master  Servicer)  and
distributed pursuant to Section 5.01 of this Agreement on or before such date of
determination,  (ii) all Principal  Prepayments received after the Cut-off Date,
to the extent  distributed  pursuant  to Section  5.01 of this  Agreement  on or
before such date of determination,  (iii) all Liquidation Proceeds and Insurance
Proceeds  applied by the related  Servicer or the  related  Interim  Servicer as
recoveries  of principal in  accordance  with the  provisions of Section 3.13 of
this Agreement or pursuant to the related Interim  Servicing  Agreement,  to the
extent distributed  pursuant to Section 5.01 of this Agreement on or before such
date of determination,  and (iv) any Realized Loss incurred with respect thereto
as a result of a  Deficient  Valuation  made  during or prior to the  Prepayment
Period for the most recent  Distribution  Date coinciding with or preceding such
date of determination;  and (b) as of any date of determination  coinciding with
or  subsequent  to the  Distribution  Date on which the  proceeds,  if any, of a
Liquidation Event with respect to such Mortgage Loan would be distributed, zero.
With respect to any REO Property:  (a) as of any date of determination up to but
not  including  the  Distribution  Date on  which  the  proceeds,  if any,  of a
Liquidation  Event with respect to such REO Property  would be  distributed,  an
amount (not less than zero) equal to the Stated Principal Balance of the related
Mortgage  Loan as of the date on which such REO  Property was acquired on behalf
of REMIC I, minus the sum of (i) if such REO Property  was  acquired  before the
Distribution  Date in any calendar month,  the principal  portion of the Monthly
Payment due on the Due Date in the calendar month of acquisition,  to the extent
advanced by the related Servicer, the related Interim Servicer or a successor to
such Servicer or such Interim Servicer (including

                                       64
<PAGE>

the Master Servicer) and distributed pursuant to Section 5.01 of this Agreement,
on or before such date of  determination  and (ii) the  aggregate  amount of REO
Principal  Amortization in respect of such REO Property for all previously ended
calendar  months,  to the extent  distributed  pursuant to Section  4.01 of this
Agreement  on or before  such date of  determination;  and (b) as of any date of
determination  coinciding with or subsequent to the  Distribution  Date on which
the proceeds,  if any, of a Liquidation  Event with respect to such REO Property
would be distributed, zero.

                  "Stepdown  Date":  The  earlier  to occur of (i) the  later to
occur of (a) the Distribution  Date occurring in February 2008 and (b) the first
Distribution  Date on which the Credit  Enhancement  Percentage  (calculated for
this purpose only after  taking into account  distributions  of principal on the
Mortgage  Loans  but prior to any  distribution  of the  Principal  Distribution
Amount to the  Certificates  then entitled to distributions of principal on such
Distribution  Date)  is equal  to or  greater  than  43.50%  and (ii) the  first
Distribution  Date on which the aggregate  Certificate  Principal Balance of the
Class A Certificates has been reduced to zero.

                  "Subordinate  Certificates"  :  Collectively,   the  Mezzanine
Certificates, the Class B Certificates and the Class CE Certificates.

                  "Subsequent Recoveries":  As of any Distribution Date, amounts
received  during the related  Prepayment  Period by the related  Servicer or the
related Interim Servicer  specifically  related to a defaulted  Mortgage Loan or
disposition  of an REO  Property  prior to the  related  Prepayment  Period that
resulted  in a Realized  Loss,  after the  liquidation  or  disposition  of such
defaulted Mortgage Loan.

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

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

                  "Substitution Shortfall Amount": As defined in Section 2.03.

                  "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 REMICs under the REMIC  Provisions,  together
with any and all other information reports or returns that may be required to be
furnished to the  Certificateholders  or filed with the Internal Revenue Service
or any other  governmental  taxing authority under any applicable  provisions of
federal, state or local tax laws.

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

                  "Termination Price": As defined in Section 10.01.

                                       65
<PAGE>

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

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

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

                  "Trigger  Event": A Trigger Event has occurred with respect to
a Distribution Date if either (x) the Delinquency  Percentage  exceeds 37.00% of
the Credit Enhancement  Percentage with respect to such Distribution Date or (y)
the aggregate  amount of Realized Losses incurred since the Cut-off Date through
the last day of the  related  Due  Period  divided  by the  aggregate  principal
balance of the  Mortgage  Loans as of the Cut-off  Date  exceeds the  applicable
percentages set forth below with respect to such Distribution Date:

<TABLE>
<CAPTION>
   Distribution Date                      Percentage
   -----------------                      ----------
<S>                                       <C>
   February 2008 to January 2009          3.50%, plus 1/12 of 1.75% for each month thereafter
   February 2009 to January 2010          5.25%, plus 1/12 of 1.50% for each month thereafter
   February 2010 to January 201           6.75%, plus 1/12 of 0.75% for each month thereafter
   February 2011 and thereafter           7.50%
</TABLE>

                  "Trust":  ACE Securities Corp., Home Equity Loan Trust, Series
2005-HE1, the trust created hereunder.

                  "Trust  Fund":  Collectively,  all of the  assets  of REMIC I,
REMIC II and the  Reserve  Fund  and any  amounts  on  deposit  therein  and any
proceeds thereof and the Cap Contracts.

                  "Trust REMIC": REMIC I or REMIC II.

                  "Trustee":  HSBC Bank USA,  National  Association  a  national
banking  association,  or its successor in interest,  or any  successor  trustee
appointed as herein provided.

                  "Uncertificated  Balance":  The  amount of the REMIC I Regular
Interests  outstanding as of any date of determination.  As of the Closing Date,
the  Uncertificated  Balance of each REMIC I Regular  Interest  shall  equal the
amount  set  forth  in  the   Preliminary   Statement   hereto  as  its  initial
uncertificated balance. On each Distribution Date, the Uncertificated Balance of
the REMIC I Regular Interest shall be reduced by all  distributions of principal
made on such REMIC I Regular  Interest  on such  Distribution  Date  pursuant to
Section  5.01 and,  if and to the extent  necessary  and  appropriate,  shall be
further  reduced on such  Distribution  Date by  Realized  Losses as provided in
Section 5.04 and the  Uncertificated  Balance of REMIC I Regular Interest I-LTZZ
shall be increased by interest  deferrals as provided in Section  5.01(a)(1)(i).
The Uncertificated  Balance of each REMIC I Regular Interest shall never be less
than zero.

                  "Uncertificated Interest": With respect to any REMIC I Regular
Interest  for  any  Distribution  Date,  one  month's  interest  at the  REMIC I
Remittance  Rate   applicable  to  such  REMIC  I  Regular   Interest  for  such
Distribution  Date, accrued on the  Uncertificated  Balance thereof  immediately
prior to such Distribution Date. Uncertificated Interest in respect of the

                                       66
<PAGE>

REMIC I Regular Interests shall accrue on the basis of a 360-day year consisting
of  twelve  30-day  months.   Uncertificated   Interest  with  respect  to  each
Distribution  Date, as to any REMIC I Regular  Interest,  shall be reduced by an
amount equal to the sum of (a) the aggregate  Prepayment Interest Shortfall,  if
any, for such  Distribution  Date to the extent not covered by payments pursuant
to Section  3.22 or Section  4.18 of this  Agreement  or pursuant to the related
Interim  Servicing  Agreement  and (b) the  aggregate  amount of any  Relief Act
Interest  Shortfall,  if any  allocated,  in each case,  to such REMIC I Regular
Interest or REMIC I Regular  Interest  pursuant to Section  1.02.  In  addition,
Uncertificated  Interest  with  respect  to each  Distribution  Date,  as to any
Uncertificated  REMIC Regular Interest,  shall be reduced by Realized Losses, if
any, allocated to such Uncertificated REMIC Regular Interest pursuant to Section
1.02 and Section 5.04.

                  "Uninsured Cause": Any cause of damage to a Mortgaged Property
such that the complete restoration of such property is not fully reimbursable by
the hazard  insurance  policies  required to be  maintained  pursuant to Section
3.11.

                  "United  States  Person":  A citizen or resident of the United
States,  a corporation,  partnership or other entity created or organized in, or
under the laws of,  the  United  States  or any  political  subdivision  thereof
(except,  in the case of a partnership,  to the extent  provided in regulations)
provided that, for purposes  solely of the  restrictions  on the transfer of any
Class R Certificate, no partnership or other entity treated as a partnership for
United States  federal  income tax purposes  shall be treated as a United States
Person  unless all  persons  that own an  interest  in such  partnership  either
directly  or through  any entity  that is not a  corporation  for United  States
federal  income tax  purposes are required to be United  States  Persons,  or an
estate whose income is subject to United States federal income tax regardless of
its source,  or a trust if a court within the United  States is able to exercise
primary  supervision over the administration of the trust and one or more United
States  persons have the authority to control all  substantial  decisions of the
trust. To the extent prescribed in regulations by the Secretary of the Treasury,
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 I of
the Code),  and which was treated as a United  States  person on August 20, 1996
may elect to continue to be treated as a United  States  person  notwithstanding
the previous sentence. The term "United States" shall have the meaning set forth
in Section 7701 of the Code.

                  "Value": With respect to any Mortgaged Property, the lesser of
(i) the lesser of (a) the value thereof as  determined by an appraisal  made for
the related  Originator of the Mortgage Loan at the time of  origination  of the
Mortgage Loan by an appraiser who met the minimum requirements of Fannie Mae and
Freddie  Mac and (b) the  value  thereof  as  determined  by a review  appraisal
conducted by the related  Originator of the Mortgage Loan in accordance with the
related Originator'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 related Originator of the Mortgage
Loan 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 related Originator of the Mortgage Loan in accordance
with the related Originator's underwriting guidelines,  and (B) in the case of a
Mortgage Loan  originated in connection  with a

                                       67
<PAGE>

"lease-option  purchase,"  such value of the Mortgaged  Property is based on the
lower of the value  determined by an appraisal  made for the  Originator of such
Mortgage  Loan at the time of  origination  or the sale price of such  Mortgaged
Property if the "lease option  purchase price" was set less than 12 months prior
to  origination,  and is based on the value  determined by an appraisal made for
the related  Originator of such Mortgage Loan at the time of  origination if the
"lease option purchase price" was set 12 months or more prior to origination.

                  "Verification Report":  As defined in Section 4.19.

                  "Voting  Rights":  The portion of the voting  rights of all of
the Certificates which is allocated to any such Certificate. With respect to any
date of  determination,  98% of all Voting  Rights will be  allocated  among the
holders of the Class A Certificates, the Mezzanine Certificates and the Class CE
Certificates  in  proportion  to  the  then  outstanding  Certificate  Principal
Balances  of their  respective  Certificates,  1% of all Voting  Rights  will be
allocated  among the  holders of the Class P  Certificates  and 1% of all Voting
Rights  will be  allocated  among the holders of the Class R  Certificates.  The
Voting Rights  allocated to each Class of Certificate  shall be allocated  among
Holders  of each such  Class in  accordance  with  their  respective  Percentage
Interests as of the most recent Record Date.

                  "Wells  Fargo":  Wells  Fargo  Bank,  N.A.  or  any  successor
thereto.

                  SECTION 1.02.     Allocation of Certain Interest Shortfalls.

                  For purposes of calculating the amount of Accrued  Certificate
Interest  and the  amount of the  Interest  Distribution  Amount for the Class A
Certificates, the Mezzanine Certificates, the Class B Certificates and the Class
CE  Certificates  for any  Distribution  Date,  (1) the aggregate  amount of any
Prepayment  Interest  Shortfalls  (to the extent not  covered by payments by the
Servicers  pursuant to Section 3.22 of this Agreement or by the Master  Servicer
pursuant to Section 4.18 of this Agreement or by the Interim Servicers  pursuant
to the Interim  Servicing  Agreements)  and any Relief Act  Interest  Shortfalls
incurred in respect of the  Mortgage  Loans for any  Distribution  Date shall be
allocated  first,  to the  Class  CE  Certificates,  second,  to the  Class  B-2
Certificates,  third, to the Class B-1  Certificates,  fourth,  to the Class M-9
Certificates,  fifth,  to the Class M-8  Certificates,  sixth,  to the Class M-7
Certificates,  seventh, to the Class M-6 Certificates,  eighth, to the Class M-5
Certificates,  ninth,  to the Class M-4  Certificates,  tenth,  to the Class M-3
Certificates, eleventh, to the Class M-2 Certificates, twelfth, to the Class M-1
Certificates and thirteenth,  to the Class A Certificates,  on a PRO RATA basis,
in each case based on, and to the extent of, one  month's  interest  at the then
applicable respective  Pass-Through Rate on the respective Certificate Principal
Balance or Notional Amount, as applicable,  of each such Certificate and (2) the
aggregate  amount of any Realized Losses  allocated to the Class B Certificates,
the Mezzanine  Certificates and Net WAC Rate Carryover Amounts paid to the Class
A Certificates, the Mezzanine Certificates and the Class B Certificates incurred
for any  Distribution  Date shall be allocated to the Class CE Certificates on a
PRO RATA basis based on, and to the extent of, one month's  interest at the then
applicable respective  Pass-Through Rate on the respective Certificate Principal
Balance or Notional Amount thereof, as applicable.

                                    For  purposes of  calculating  the amount of
                  Uncertificated  Interest for the REMIC I Regular Interests for
                  any Distribution Date:

                                       68
<PAGE>

                                    (A) The REMIC I Marker Allocation Percentage
                  of the aggregate amount of any Prepayment  Interest Shortfalls
                  (to the  extent  not  covered  by  payments  by the  Servicers
                  pursuant  to  Section  3.22 of this  Agreement  or the  Master
                  Servicer  pursuant to Section 4.18 or by the Interim Servicers
                  pursuant to the Interim Servicing  Agreements) and the REMIC I
                  Marker  Allocation  Percentage  of  any  Relief  Act  Interest
                  Shortfalls  incurred in respect of the Mortgage  Loans for any
                  Distribution  Date shall be  allocated  among  REMIC I Regular
                  Interest  I-LTAA,  REMIC I Regular Interest  I-LTA1A,  REMIC I
                  Regular Interest  I-LTA1B,  REMIC I Regular Interest  I-LTA2A,
                  REMIC I Regular  Interest  I-LTA2B,  REMIC I Regular  Interest
                  I-LTA2C,  REMIC I  Regular  Interest  I-LTM1,  REMIC I Regular
                  Interest  I-LTM2,  REMIC I Regular  Interest  I-LTM3,  REMIC I
                  Regular  Interest  I-LTM4,  REMIC I Regular  Interest  I-LTM5,
                  REMIC I Regular  Interest  I-LTM6,  REMIC I  Regular  Interest
                  I-LTM7,  REMIC I  Regular  Interest  I-LTM8,  REMIC I  Regular
                  Interest  I-LTM9,  REMIC I Regular  Interest  I-LTB1,  REMIC I
                  Regular  Interest  I-LTB2 and REMIC I Regular  Interest I-LTZZ
                  PRO RATA based on, and to the extent of, one month's  interest
                  at the then applicable  respective  REMIC I Remittance Rate on
                  the  respective  Uncertificated  Balance  of each such REMIC I
                  Regular Interest; and

                                    (B)  The   REMIC   I  Sub   WAC   Allocation
                  Percentage of the aggregate amount of any Prepayment  Interest
                  Shortfalls  (to the extent  not  covered  by  payments  by the
                  Servicers pursuant to Section 3.22 of this Agreement or by the
                  Master Servicer  pursuant to Section 4.18 of this Agreement or
                  by the Interim  Servicers  pursuant  to the Interim  Servicing
                  Agreements)  and the REMIC I Sub WAC Allocation  Percentage of
                  any Relief Act Interest  Shortfalls incurred in respect of the
                  Mortgage  Loans for any  Distribution  Date shall be allocated
                  first, to  Uncertificated  Interest payable to REMIC I Regular
                  Interest I-LT1SUB,  REMIC I Regular Interest I-LT1GRP, REMIC I
                  Regular Interest  I-LT2SUB,  REMIC I Regular Interest I-LT2GRP
                  and REMIC I Regular Interest I-LTXX, PRO RATA based on, and to
                  the extent of, one  month's  interest  at the then  applicable
                  respective   REMIC  I  Remittance   Rate  on  the   respective
                  Uncertificated Balance of each such REMIC I Regular Interest.

                                       69
<PAGE>

                                   ARTICLE II

                          CONVEYANCE OF MORTGAGE LOANS;
                        ORIGINAL ISSUANCE OF CERTIFICATES

                  SECTION 2.01.     Conveyance of the Mortgage Loans.

                  The  Depositor,  concurrently  with the execution and delivery
hereof,  does hereby  transfer,  assign,  set over and  otherwise  convey to the
Trustee,  on behalf of the  Trust,  without  recourse,  for the  benefit  of the
Certificateholders,  all  the  right,  title  and  interest  of  the  Depositor,
including any security interest therein for the benefit of the Depositor, in and
to the Mortgage Loans  identified on the Mortgage Loan  Schedule,  the rights of
the Depositor  under the Mortgage Loan Purchase  Agreement  (including,  without
limitation  the right to enforce the  obligations  of the other parties  thereto
thereunder),  and all other  assets  included or to be included in REMIC I. Such
assignment  includes all interest and principal  received by the Depositor,  the
Servicers  and the Interim  Servicers 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).  The Depositor  herewith  delivers to the Trustee and
each Servicer an executed copy of the Mortgage Loan Purchase Agreement.

                  In connection with such transfer and assignment, the Depositor
does hereby deliver to, and deposit with the Custodian pursuant to the Custodial
Agreement  the documents  with respect to each Mortgage Loan as described  under
Section  2 of the  Custodial  Agreement  (the  "Mortgage  Loan  Documents").  In
connection  with  such  delivery  and as  further  described  in  the  Custodial
Agreement, the Custodian will be required to review such Mortgage Loan Documents
and  deliver  to the  Trustee,  the  Depositor,  each  Servicer  and the  Seller
certifications  (in the forms attached to the Custodial  Agreement) with respect
to such review with exceptions noted thereon.  In addition,  under the Custodial
Agreement the Depositor will be required to cure certain defects with respect to
the Mortgage Loan  Documents for the related  Mortgage  Loans after the delivery
thereof  by the  Depositor  to the  Custodian  as more  particularly  set  forth
therein.

                  Notwithstanding anything to the contrary contained herein, the
parties hereto acknowledge that the functions of the Trustee with respect to the
custody,  acceptance,  inspection and release of the Mortgage Files,  including,
but not limited to certain  insurance  policies and  documents  contemplated  by
Section  4.11,  and  preparation  and  delivery of the  certifications  shall be
performed by the Custodian pursuant to the terms and conditions of the Custodial
Agreement.

                  The Depositor shall deliver or cause the related Originator to
deliver  to each  Servicer  copies  of all  trailing  documents  required  to be
included in the Mortgage File at the same time the originals or certified copies
thereof are delivered to the Trustee or Custodian,  such documents including the
mortgagee  policy of title insurance and any Mortgage Loan Documents upon return
from the  recording  office.  The  Servicers  shall not be  responsible  for any
custodian  fees or other costs  incurred in  obtaining  such  documents  and the
Depositor  shall cause the  Servicers  to be  reimbursed  for any such costs the
Servicers may incur in connection  with  performing its  obligations  under this
Agreement.

                  The Mortgage Loans permitted by the terms of this Agreement to
be included in the Trust are limited to (i) Mortgage  Loans (which the Depositor
acquired pursuant to the Mortgage Loan Purchase Agreement, which contains, among
other  representations  and

                                       70
<PAGE>

warranties, a representation and warranty of the Seller that no Mortgage Loan is
a  "High-Cost  Home  Loan" as  defined  in the New  Jersey  Home  Ownership  Act
effective November 27, 2003 or as defined in the New Mexico Home Loan Protection
Act effective  January 1, 2004) and (ii)  Qualified  Substitute  Mortgage  Loans
(which,  by  definition as set forth herein and referred to in the Mortgage Loan
Purchase Agreement,  are required to conform to, among other representations and
warranties,  the  representation  and  warranty of the Seller that no  Qualified
Substitute Mortgage Loan is a "High-Cost Home Loan" as defined in the New Jersey
Home  Ownership Act effective  November 27, 2003 or as defined in the New Mexico
Home Loan  Protection  Act  effective  January 1, 2004.  The  Depositor  and the
Trustee on behalf of the Trust understand and agree that it is not intended that
any Mortgage  Loan be included in the Trust that is a  "High-Cost  Home Loan" as
defined in HOEPA or any other applicable predatory or abusive lending law.

                  SECTION 2.02.     Acceptance of REMIC I by Trustee.

                  The Trustee acknowledges receipt, subject to the provisions of
Section 2.01 hereof and Section 2 of the  Custodial  Agreement,  of the Mortgage
Loan  Documents  and all other assets  included in the  definition  of "REMIC I"
under clauses (i), (iii),  (iv) and (v) (to the extent of amounts deposited into
the  Distribution  Account) and declares  that it holds (or the Custodian on its
behalf holds) and will hold such documents and the other documents  delivered to
it constituting a Mortgage Loan Document, and that it holds (or the Custodian on
its behalf holds) or will hold all such assets and such other assets included in
the  definition  of "REMIC I" in trust for the  exclusive use and benefit of all
present and future Certificateholders.

                  SECTION 2.03.    Repurchase or Substitution of Mortgage Loans.

                  (a) Upon  discovery  or  receipt  of notice of any  materially
defective document in, or that a document is missing from, a Mortgage File or of
a breach by the Seller of any  representation,  warranty or  covenant  under the
Mortgage Loan Purchase Agreement in respect of any Mortgage Loan that materially
and adversely affects the value of such Mortgage Loan or the interest therein of
the  Certificateholders,  the Trustee shall  promptly  notify the Seller and the
related Servicer of such defect, missing document or breach and request that the
Seller deliver such missing document,  cure such defect or breach within 60 days
from the date the  Seller  was  notified  of such  missing  document,  defect or
breach,  and if the Seller does not deliver such  missing  document or cure such
defect or breach in all material respects during such period,  the Trustee shall
enforce the obligations of the Seller under the Mortgage Loan Purchase Agreement
to repurchase  such  Mortgage Loan from REMIC I at the Purchase  Price within 90
days after the date on which the Seller was 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.  The  Purchase  Price  for  the
repurchased  Mortgage Loan shall be remitted to the related Servicer for deposit
in the related  Collection  Account  and the  Trustee,  upon  receipt of written
certification  from such  Servicer of such  deposit,  shall release or cause the
Custodian  (upon  receipt of a request for  release in the form  attached to the
Custodial  Agreement) to release to the Seller the related Mortgage File and the
Trustee shall execute and deliver such instruments of transfer or assignment, in
each case without  recourse,  representation  or  warranty,  as the Seller shall
furnish to it and as shall be necessary to vest in the Seller any Mortgage  Loan
released   pursuant  hereto,   and  the  Trustee  shall  not  have  any  further
responsibility  with regard to such Mortgage File. In lieu of  repurchasing  any
such  Mortgage  Loan as provided  above,  if so provided  in the  Mortgage

                                       71
<PAGE>

Loan Purchase  Agreement,  the Seller may cause such Mortgage Loan to be removed
from  REMIC I (in  which  case it shall  become a  Deleted  Mortgage  Loan)  and
substitute  one or more  Qualified  Substitute  Mortgage Loans in the manner and
subject to the  limitations set forth in Section  2.03(b).  It is understood and
agreed  that  the  obligation  of the  Seller  to cure or to  repurchase  (or to
substitute for) any Mortgage Loan as to which a document is missing,  a material
defect  in a  constituent  document  exists  or as to which  such a  breach  has
occurred and is continuing  shall  constitute  the sole remedy  respecting  such
omission, defect or breach available to the Trustee and the Certificateholders.

                  In  addition,  promptly  upon the  earlier of  discovery  by a
Servicer or receipt of notice by a Servicer of the breach of the  representation
or  covenant  of the  Seller set forth in Section  5(xiv) of the  Mortgage  Loan
Purchase  Agreement which materially and adversely  affects the interests of the
Holders of the Class P  Certificates  in any  Prepayment  Charge,  such Servicer
shall  promptly  notify the Seller and the Trustee of such  breach.  The Trustee
shall  enforce the  obligations  of the Seller under the Mortgage  Loan Purchase
Agreement to remedy such breach to the extent and in the manner set forth in the
Mortgage Loan Purchase Agreement.

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

                  As  to  any  Deleted   Mortgage  Loan  for  which  the  Seller
substitutes a Qualified  Substitute  Mortgage Loan or Loans,  such  substitution
shall be effected by the Seller  delivering  to the Trustee or the  Custodian on
behalf of the Trustee, for such Qualified Substitute Mortgage Loan or Loans, the
Mortgage  Note,  the Mortgage,  the  Assignment  to the Trustee,  and such other
documents  and  agreements,  with all  necessary  endorsements  thereon,  as are
required by Section 2 of the Custodial Agreement,  as applicable,  together with
an Officers'  Certificate providing that each such Qualified Substitute Mortgage
Loan satisfies the definition thereof and specifying the Substitution  Shortfall
Amount (as described below), if any, in connection with such  substitution.  The
Custodian on behalf of the Trustee shall  acknowledge  receipt of such Qualified
Substitute  Mortgage  Loan or Loans and,  within ten Business  Days  thereafter,
review such documents and deliver to the Depositor,  the Trustee and the related
Servicer,  with respect to such Qualified  Substitute Mortgage Loan or Loans, an
initial certification  pursuant to the Custodial Agreement,  with any applicable
exceptions  noted  thereon.  Within  one year of the date of  substitution,  the
Custodian on behalf of the Trustee shall deliver to the  Depositor,  the Trustee
and  the  related  Servicer  a final  certification  pursuant  to the  Custodial
Agreement with respect to such Qualified Substitute Mortgage Loan or Loans, with
any applicable  exceptions  noted thereon.  Monthly Payments due with respect to
Qualified Substitute Mortgage Loans in the month of substitution are not part of
REMIC I and will be  retained  by the  Seller.  For the  month of  substitution,
distributions to Certificateholders will reflect the Monthly Payment due on such
Deleted  Mortgage  Loan on or before the Due Date in the month of  substitution,
and the Seller shall  thereafter be entitled to retain all amounts  subsequently
received in respect of such Deleted  Mortgage Loan. The Depositor  shall give or
cause  to  be  given  written  notice  to  the   Certificateholders   that  such
substitution has taken place,  shall amend the Mortgage Loan Schedule to reflect
the removal of such Deleted  Mortgage Loan from the terms of this  Agreement and
the  substitution of the Qualified  Substitute  Mortgage Loan or Loans and shall
deliver a copy of such  amended  Mortgage  Loan  Schedule to the Trustee and the
related Servicer.  Upon such substitution,  such Qualified  Substitute  Mortgage
Loan or Loans  shall  constitute  part

                                       72
<PAGE>

of the Trust  Fund and shall be  subject  in all  respects  to the terms of this
Agreement  and the Mortgage Loan Purchase  Agreement,  including all  applicable
representations  and warranties  thereof included herein or in the Mortgage Loan
Purchase Agreement.

                  For any  month in which  the  Seller  substitutes  one or more
Qualified  Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the
related  Servicer  will  determine  the  amount  (the  "Substitution   Shortfall
Amount"),  if any, by which the  aggregate  Purchase  Price of all such  Deleted
Mortgage  Loans exceeds the aggregate of, as to each such  Qualified  Substitute
Mortgage  Loan,  the  Scheduled  Principal  Balance  thereof  as of the  date of
substitution,  together with one month's  interest on such  Scheduled  Principal
Balance at the applicable Net Mortgage Rate,  plus all  outstanding P&I Advances
and Servicing Advances (including Nonrecoverable P&I Advances and Nonrecoverable
Servicing  Advances)  related  thereto.  On the date of such  substitution,  the
Seller will deliver or cause to be delivered to the related Servicer for deposit
in the related Collection Account an amount equal to the Substitution  Shortfall
Amount, if any, and the Trustee or the Custodian on behalf of the Trustee,  upon
receipt of the related Qualified Substitute Mortgage Loan or Loans, upon receipt
of a request for release in the form  attached to the  Custodial  Agreement  and
certification  by the related  Servicer of such  deposit,  shall  release to the
Seller the  related  Mortgage  File or Files and the Trustee  shall  execute and
deliver  such  instruments  of  transfer  or  assignment,  in each case  without
recourse,  representation or warranty,  as the Seller shall deliver to it and as
shall be necessary to vest therein any Deleted  Mortgage Loan released  pursuant
hereto.

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

                  (c) Upon discovery by the Depositor, the Seller, a Servicer or
the Trustee that any Mortgage  Loan does not  constitute a "qualified  mortgage"
within the meaning of Section 860G(a)(3) of the Code, the party discovering such
fact shall within two Business  Days give  written  notice  thereof to the other
parties. In connection therewith,  the Seller shall repurchase or 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 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  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 no representation  or warranty.  Any such repurchase or substitution
shall be made in the same  manner as set forth in Section  2.03(a).  The Trustee
shall reconvey to the Seller 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.

                  (d) With  respect  to a  breach  of the  representations  made
pursuant  to  Section  5(xiv)  of the  Mortgage  Loan  Purchase  Agreement  that
materially and adversely affects the value

                                       73
<PAGE>

of such Mortgage  Loan or the interest  therein of the  Certificateholders,  the
Seller shall be required to take the actions set forth in this Section 2.03.

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

                  SECTION  2.04.  Representations  and  Warranties of the Master
Servicer.

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

                       (i) The Master Servicer is a national banking association
         duly formed,  validly  existing and in good standing  under the laws of
         the United  States of America and is duly  authorized  and qualified to
         transact  any and all  business  contemplated  by this  Agreement to be
         conducted by the Master Servicer;

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

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

                                       74
<PAGE>

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

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

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

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

                  It  is  understood   and  agreed  that  the   representations,
warranties  and  covenants  set forth in this  Section  2.04 shall  survive  the
resignation or  termination  of the parties  hereto and the  termination of this
Agreement  and shall inure to the benefit of the Trustee,  the Depositor and the
Certificateholders.

                  SECTION  2.05.    Representations, Warranties and Covenants of
Ocwen and Saxon.

                  (a) Ocwen hereby  represents,  warrants  and  covenants to the
Master Servicer,  the Securities  Administrator,  the Depositor and the Trustee,
for the benefit of each of such  Persons and the  Certificateholders  that as of
the Closing Date or as of such date specifically provided herein:

                       (i)  Ocwen is a  federally  chartered  savings  bank duly
         organized and validly  existing under the laws of the United States and
         is duly  authorized  and  qualified  to transact  any and all  business
         contemplated by this Agreement to be conducted by Ocwen in any state in
         which a Mortgaged Property related to an Ocwen Mortgage Loan is located
         or is  otherwise  not  required  under  applicable  law to effect  such
         qualification  and,  in any  event,  is in  compliance  with the  doing
         business laws of any such State, to the extent  necessary to ensure its
         ability to enforce  each Ocwen  Mortgage  Loan and to service the Ocwen
         Mortgage Loans in accordance with the terms of this Agreement;

                       (ii)  Ocwen 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.   Ocwen  has  duly  authorized  the
         execution,  delivery  and  performance  of  this  Agreement,  has  duly
         executed

                                       75
<PAGE>

         and  delivered  this  Agreement,  and  this  Agreement,   assuming  due
         authorization,  execution  and  delivery by the other  parties  hereto,
         constitutes a legal, valid and binding obligation of Ocwen, 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
         Ocwen,  the servicing of the Ocwen Mortgage  Loans by Ocwen  hereunder,
         the  consummation  by Ocwen 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 Ocwen and will not (A)
         result in a breach of any term or  provision  of the charter or by-laws
         of Ocwen  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 Ocwen is a party or by which
         it may be bound,  or any statute,  order or  regulation  applicable  to
         Ocwen  of  any  court,   regulatory  body,   administrative  agency  or
         governmental  body having  jurisdiction  over Ocwen; and Ocwen 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 Ocwen's knowledge, would in the
         future  materially  and adversely  affect,  (x) the ability of Ocwen to
         perform  its  obligations  under  this  Agreement,  (y)  the  business,
         operations, financial condition, properties or assets of Ocwen taken as
         a  whole  or (z)  the  legality,  validity  or  enforceability  of this
         Agreement;

                       (iv) Ocwen 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;

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

                       (vi)  There are no  actions or  proceedings  against,  or
         investigations  known to it of, Ocwen 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 Ocwen of its obligations under,
         or the validity or enforceability of, this Agreement;

                       (vii) No consent, approval, authorization or order of any
         court or  governmental  agency or body is required  for the  execution,
         delivery and performance by Ocwen of, or compliance by Ocwen 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;

                       (viii)  Ocwen has fully  furnished  and will  continue to
         fully furnish, in accordance with the Fair Credit Reporting Act and its
         implementing  regulations,  accurate

                                       76
<PAGE>

         and complete  information  (e.g.,  favorable  and  unfavorable)  on its
         borrower  credit  files to Equifax,  Experian  and Trans  Union  Credit
         Information Company or their successors on a monthly basis; and

                       (ix) Ocwen  will not waive any  Prepayment  Charge  other
         than in accordance with the standard set forth in Section 3.01.

                  (b) Saxon hereby  represents,  warrants  and  covenants to the
Master Servicer,  the Securities  Administrator,  the Depositor and the Trustee,
for the benefit of each of such  Persons and the  Certificateholders  that as of
the Closing Date or as of such date specifically provided herein:

                       (i) Saxon is a corporation organized and validly existing
         under the laws of the State of its incorporation 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  related to a Saxon  Mortgage Loan is located or is
         otherwise   not   required   under   applicable   law  to  effect  such
         qualification  and,  in any  event,  is in  compliance  with the  doing
         business laws of any such State, to the extent  necessary to ensure its
         ability to enforce  each Saxon  Mortgage  Loan and to service the Saxon
         Mortgage Loans in accordance with the terms of this Agreement;

                       (ii)  Saxon 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.   Saxon  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 other  parties  hereto,
         constitutes a legal, valid and binding obligation of Saxon, 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
         Saxon,  the servicing of the Saxon Mortgage  Loans by Saxon  hereunder,
         the  consummation  by Saxon 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 Saxon and will not (A)
         result in a breach of any term or  provision  of the charter or by-laws
         of Saxon  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 Saxon is a party or by which
         it may be bound,  or any statute,  order or  regulation  applicable  to
         Saxon  of  any  court,   regulatory  body,   administrative  agency  or
         governmental  body having  jurisdiction  over Saxon; and Saxon is not a
         party to, bound by, or in breach or violation of any indenture or other
         material 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 Saxon's knowledge,  would
         in the future materially and adversely affect, (x) the ability of Saxon
         to perform its  obligations  under this  Agreement,  (y) the  business,
         operations,

                                       77
<PAGE>

         financial condition,  properties or assets of Saxon taken as a whole or
         (z) the legality, validity or enforceability of this Agreement;

                       (iv) Saxon 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;

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

                       (vi)  There are no  actions or  proceedings  against,  or
         investigations  known to it of, Saxon 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 Saxon of its obligations under,
         or the validity or enforceability of, this Agreement;

                       (vii) No consent, approval, authorization or order of any
         court or  governmental  agency or body is required  for the  execution,
         delivery and performance by Saxon of, or compliance by Saxon 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;

                       (viii)  Saxon has fully  furnished  and will  continue to
         fully furnish, in accordance with the Fair Credit Reporting Act and its
         implementing  regulations,  accurate  and complete  information  (e.g.,
         favorable  and  unfavorable)  on its borrower  credit files to Equifax,
         Experian and Trans Union Credit Information Company or their successors
         on a monthly basis; and

                       (ix) Saxon will not waive any  Prepayment  Charge related
         to a Saxon Mortgage Loan other than in accordance with the standard set
         forth in Section 3.01.

                  Notwithstanding  anything to the  contrary  contained  in this
Agreement,  if the  covenant  of the  related  Servicer  set  forth  in  Section
2.05(a)(ix)  and 2.05 (b)(ix) above is breached,  the related  Servicer will pay
the amount of such  waived  Prepayment  Charge,  from its own funds  without any
right  of  reimbursement,  for  the  benefit  of  the  Holders  of the  Class  P
Certificates,  by  depositing  such amount into the related  Collection  Account
within 90 days of the earlier of discovery by the related Servicer or receipt of
notice by the related Servicer of such breach. Furthermore,  notwithstanding any
other provisions of this Agreement, any payments made by the related Servicer in
respect of any waived  Prepayment  Charges  pursuant to this paragraph  shall be
deemed to be paid outside of the Trust Fund.

                  It  is  understood   and  agreed  that  the   representations,
warranties  and  covenants  set forth in this  Section  2.05 shall  survive  the
resignation  or  termination  of the parties  hereto,  the  termination  of this
Agreement  and the delivery of the  Mortgage  Files to the  Custodian  and shall
inure to the  benefit  of the  Trustee,  the  Master  Servicer,  the  Securities
Administrator, the Depositor, the Certificateholders. Upon discovery by any such
Person  or  the  related   Servicer  of  a

                                       78
<PAGE>

breach of any of the foregoing  representations,  warranties and covenants which
materially  and  adversely  affects the value of any Mortgage  Loan,  Prepayment
Charge or the interests therein of the Certificateholders, the party discovering
such  breach  shall give prompt  written  notice (but in no event later than two
Business Days following such discovery) to the Trustee. Subject to Section 8.01,
unless  such  breach  shall  not be  susceptible  of cure  within  90 days,  the
obligation of the related Servicer set forth in Section 2.03(e) to cure breaches
shall constitute the sole remedy against the related  Servicer  available to the
Certificateholders,   the   Depositor   or  the   Trustee   on   behalf  of  the
Certificateholders  respecting a breach of the  representations,  warranties and
covenants contained in this Section 2.05.

                  SECTION  2.06.   Issuance of the REMIC I Regular Interests and
the Class R-I Interest.

                  The Trustee  acknowledges the assignment to it of the Mortgage
Loans and the  delivery  to the  Custodian  on its behalf of the  Mortgage  Loan
Documents, subject to the provisions of Section 2.01 and Section 2.02 hereof and
Section 2 of the Custodial Agreement,  together with the assignment to it of all
other assets  included in REMIC I, the receipt of which is hereby  acknowledged.
The  interests  evidenced by the Class R-I  Interest,  together with the REMIC I
Regular Interests,  constitute the entire beneficial ownership interest in REMIC
I. The rights of the Holders of the Class R-I Interest and REMIC I (as holder of
the REMIC I Regular  Interests)  to receive  distributions  from the proceeds of
REMIC I in respect of the Class R-I Interest and the REMIC I Regular  Interests,
respectively,  and all ownership interests evidenced or constituted by the Class
R-I  Interest and the REMIC I Regular  Interests,  shall be as set forth in this
Agreement.

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

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

                  SECTION 2.08.    Issuance of Residual Certificates.

                  The Trustee  acknowledges  the assignment to it of the REMIC I
Regular Interests and, concurrently therewith and in exchange therefor, pursuant
to the written request of the Depositor executed by an officer of the Depositor,
the Securities  Administrator has executed and authenticated and the Trustee has
delivered to or upon the order of the  Depositor,  the Class R

                                       79
<PAGE>

Certificates  in authorized  denominations.  The Class R  Certificates  evidence
ownership in the Class R-I Interest and the Class R-II Interest.

                  SECTION 2.09.    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 "ACE Securities  Corp., Home Equity Loan
Trust,  Series  2005-HE1"  and does  hereby  appoint  HSBC  Bank  USA,  National
Association as Trustee in accordance with the provisions of this Agreement.

                                       80
<PAGE>

                                  ARTICLE III

                          ADMINISTRATION AND SERVICING
                         OF THE MORTGAGE LOANS; ACCOUNTS

                  SECTION 3.01.     Servicers to Act as Servicers.

                  The  obligations  of each of  Ocwen  and  Saxon  hereunder  to
service and administer the Mortgage Loans shall be limited to the Ocwen Mortgage
Loans and the Saxon Mortgage Loans, respectively, and with respect to the duties
and obligations of each Servicer references herein to the related Mortgage Loans
shall be limited to the Ocwen Mortgage Loans (and the related  proceeds  thereof
and related REO  Properties)  in the case of Ocwen and the Saxon  Mortgage Loans
(and the related  proceeds and related REO  Properties) in the case of Saxon and
in no event shall any Servicer have any responsibility or liability with respect
to any Mortgage  Loans serviced by the other  Servicer  hereunder.  In addition,
from and after the Closing  Date to the related  Servicing  Transfer  Date,  the
Cameron  Mortgage Loans will be serviced and administered by Cameron pursuant to
the Cameron Servicing Agreement, the Fremont Mortgage Loans will be serviced and
administered  by  Fremont  pursuant  to the  Fremont  Servicing  Agreement,  the
Metrocities  Mortgage  Loans will be serviced and  administered  by  Metrocities
pursuant to the  Metrocities  Servicing  Agreement and the Ownit  Mortgage Loans
will be serviced  and  administered  by Ownit  pursuant  to the Ownit  Servicing
Agreement,  and  neither  Servicer  will have any  responsibility  to service or
administer such Mortgage Loans or have any other obligation with respect to such
Mortgage Loans during that period.

                  On and  after  the  Closing  Date  with  respect  to the Ocwen
Mortgage  Loans and the  Saxon  Mortgage  Loans  and on and  after  the  related
Servicing  Transfer  Date with respect to Cameron  Mortgage  Loans,  the Fremont
Mortgage Loans, the Metrocities Mortgage Loans and the Ownit Mortgage Loans, the
Servicers shall service and administer the Mortgage Loans on behalf of the Trust
Fund and in the best interests of and for the benefit of the  Certificateholders
(as determined by the related Servicer in its reasonable judgment) in accordance
with the  terms of this  Agreement  and the  respective  Mortgage  Loans and all
applicable law and regulations and, to the extent consistent with such terms, in
the same manner in which it services and administers  similar mortgage loans for
its own portfolio,  giving due consideration to customary and usual standards of
practice of prudent  mortgage lenders and loan servicers  administering  similar
mortgage loans but without regard to:

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

                       (ii) the  ownership  of any  Certificate  by the  related
         Servicer or any Affiliate of such Servicer;

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

                       (iv) the related Servicer's right to receive compensation
         for its services hereunder.

                                       81
<PAGE>

                  To the extent  consistent  with the  foregoing,  each Servicer
shall also seek to maximize  the timely and complete  recovery of principal  and
interest  on the  Mortgage  Notes and shall waive (or permit a  Sub-Servicer  to
waive) a  Prepayment  Charge only under the  following  circumstances:  (i) such
waiver is standard and customary in servicing  similar  Mortgage  Loans and such
waiver is related to a default or reasonably  foreseeable  default and would, in
the reasonable  judgment of such 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,  (ii) such Prepayment Charge is unenforceable in accordance
with  applicable law or the collection of such related  Prepayment  Charge would
otherwise  violate  applicable  law or (iii) the  collection of such  Prepayment
Charge would be considered "predatory" pursuant to written guidance published or
issued by any applicable federal,  state or local regulatory authority acting in
its official capacity and having jurisdiction over such matters. Notwithstanding
any  provision in this  Agreement to the contrary,  in the event the  Prepayment
Charge  payable  under the terms of the Mortgage Note is less than the amount of
the  Prepayment  Charge set forth in the  Prepayment  Charge  Schedule  or other
information  provided to the related Servicer,  such Servicer shall not have any
liability or obligation with respect to such  difference,  and in addition shall
not have any  liability  or  obligation  to pay the  amount  of any  uncollected
Prepayment  Charge if the failure to collect such amount is the direct result of
inaccurate or incomplete information on the Prepayment Charge Schedule.

                  Subject only to the  above-described  servicing standards (the
"Accepted  Servicing  Practices")  and the  terms of this  Agreement  and of the
related Mortgage Loans, each Servicer shall have full power and authority, to do
or cause to be done any and all things in  connection  with such  servicing  and
administration  which  it may  deem  necessary  or  desirable  with  the goal of
maximizing proceeds of the Mortgage Loan. Without limiting the generality of the
foregoing,  each Servicer in its own name is hereby  authorized and empowered by
the  Trustee  when the related  Servicer  believes  it  appropriate  in its best
judgment,   to  execute  and  deliver,   on  behalf  of  the  Trust  Fund,   the
Certificateholders  and the Trustee or any of them,  and upon written  notice to
the Trustee,  any and all  instruments of satisfaction  or  cancellation,  or of
partial or full release or discharge or subordination,  and all other comparable
instruments,  with  respect  to the  related  Mortgage  Loans  and  the  related
Mortgaged  Properties  and to  institute  foreclosure  proceedings  or  obtain a
deed-in-lieu  of foreclosure so as to convert the ownership of such  properties,
and to hold or  cause to be held  title to such  properties,  on  behalf  of the
Trustee,  for the  benefit  of the Trust Fund and the  Certificateholders.  Each
Servicer shall service and  administer the related  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. Each 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
3.14,  the Trustee  shall  execute,  at the written  request of a Servicer,  and
furnish to such Servicer a power of attorney in the form of Exhibit D hereto and
other  documents  necessary or  appropriate to enable such Servicer to carry out
its servicing and  administrative  duties hereunder and furnished to the Trustee
by such  Servicer,  and the Trustee  shall not be liable for the actions of such
Servicer under such powers of attorney and shall be indemnified by such Servicer
for any cost,  liability or expense  incurred by the Trustee in connection  with
such Servicer's use or misuse of any such power of attorney.

                  In accordance with Accepted Servicing Practices, each Servicer
shall make or cause to be made  Servicing  Advances as necessary for the purpose
of effecting the payment of

                                       82
<PAGE>

taxes and  assessments on the Mortgaged  Properties,  which  Servicing  Advances
shall be  reimbursable in the first instance from related  collections  from the
related Mortgagors  pursuant to Section 3.07, and further as provided in Section
3.09;  provided,  however,  the related  Servicer shall only make such Servicing
Advance if the related Mortgagor has not made such payment and if the failure to
make such  Servicing  Advance would result in the loss of the related  Mortgaged
Property  due to a tax sale or  foreclosure  as result  of a tax lien.  Any cost
incurred by a Servicer in effecting  the payment of taxes and  assessments  on a
Mortgaged  Property  shall  not,  for the  purpose  of  calculating  the  Stated
Principal Balance of such Mortgage Loan or distributions to  Certificateholders,
be  added  to the  unpaid  principal  balance  of  the  related  Mortgage  Loan,
notwithstanding  that the terms of such Mortgage Loan so permit.  The parties to
this  Agreement  acknowledge  that  Servicing  Advances  shall  be  reimbursable
pursuant to Section 3.09 of this Agreement,  and agree that no Servicing Advance
shall be rejected or  disallowed by any party unless it has been shown that such
Servicing Advance was not made in accordance with the terms of this Agreement.

                  Notwithstanding anything in this Agreement to the contrary, no
Servicer may make any future  advances  with  respect to a Mortgage  Loan and no
Servicer shall permit any modification with respect to any related Mortgage Loan
that would change the Mortgage  Rate,  reduce or increase the principal  balance
(except for reductions  resulting  from actual  payments of principal) or change
the final  maturity date on such related  Mortgage Loan (unless,  as provided in
Section  3.06,  the related  Mortgagor is in default with respect to the related
Mortgage  Loan or such  default is, in the  judgment  of the  related  Servicer,
reasonably foreseeable) or any modification,  waiver or amendment of any term of
any related  Mortgage  Loan that would both (A) effect an exchange or reissuance
of such  Mortgage  Loan under  Section 1001 of the Code (or final,  temporary or
proposed Treasury  regulations  promulgated  thereunder) and (B) cause any Trust
REMIC  created  hereunder  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.

                  In the event that the Mortgage  Loan  Documents  relating to a
Mortgage Loan contain  provisions  requiring the related  Mortgagor to arbitrate
disputes  (at the option of the  Trustee,  on behalf of the Trust),  the Trustee
hereby authorizes the related Servicer to waive the Trustee's right or option to
arbitrate  disputes and to send written  notice of such waiver to the Mortgagor,
although the Mortgagor may still require arbitration at its option.

                  From and  after  the  Servicing  Transfer  Date,  the  related
Servicer will fully furnish,  in accordance  with the Fair Credit  Reporting Act
and its  implementing  regulations,  accurate  and complete  information  (e.g.,
favorable and unfavorable) on its borrower credit files to Equifax, Experian and
Trans Union Credit Information Company or their successors on a monthly basis.

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

                  Each Servicer may arrange for the subservicing of any Mortgage
Loan by a Sub- Servicer  pursuant to a  Sub-Servicing  Agreement;  provided that
such  sub-servicing  arrangement  and the  terms  of the  related  Sub-Servicing
Agreement  must  provide for the  servicing of such  Mortgage  Loans in a manner
consistent  with  the  servicing  arrangements   contemplated  hereunder.   Each
Sub-Servicer shall be (i) authorized to transact business in the state or states
where the

                                       83
<PAGE>

related Mortgaged Properties it is to service are situated, if and to the extent
required by applicable law to enable the Sub-Servicer to perform its obligations
hereunder and under the Sub-Servicing Agreement and (ii) a Freddie Mac or Fannie
Mae  approved  mortgage   servicer.   Notwithstanding   the  provisions  of  any
Sub-Servicing  Agreement,  any of the provisions of this  Agreement  relating to
agreements or arrangements  between a Servicer or a Sub-Servicer or reference to
actions taken through such Servicer or  otherwise,  the related  Servicer  shall
remain   obligated   and  liable  to  the   Depositor,   the   Trustee  and  the
Certificateholders for the servicing and administration of the Mortgage Loans in
accordance  with the  provisions of this  Agreement  without  diminution of such
obligation  or  liability  by  virtue  of  such   Sub-Servicing   Agreements  or
arrangements or by virtue of  indemnification  from the  Sub-Servicer and to the
same extent and under the same terms and  conditions as if the related  Servicer
alone were servicing and administering the Mortgage Loans.  Every  Sub-Servicing
Agreement  entered  into by a  Servicer  shall  contain a  provision  giving the
successor  Servicer  the  option  to  terminate  such  agreement  in the event a
successor  Servicer is  appointed.  All actions of each  Sub-Servicer  performed
pursuant to the related  Sub-Servicing  Agreement shall be performed as an agent
of the related Servicer with the same force and effect as if performed  directly
by the related Servicer.

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

                  SECTION 3.03.   Successor Sub-Servicers.

                  Any  Sub-Servicing  Agreement  shall  provide that the related
Servicer  shall be entitled to  terminate  any  Sub-Servicing  Agreement  and to
either  itself  directly  service  the  related  Mortgage  Loans or enter into a
Sub-Servicing  Agreement with a successor  Sub-Servicer  which  qualifies  under
Section 3.02. Any Sub-Servicing  Agreement shall include the provision that such
agreement may be immediately terminated by any successor to the related Servicer
(which may be the Trustee or the Master  Servicer)  without  fee, in  accordance
with the terms of this Agreement, in the event that the related Servicer (or any
successor  to the related  Servicer)  shall,  for any  reason,  no longer be the
Servicer of the related Mortgage Loans (including  termination due to a Servicer
Event of Default).

                  SECTION   3.04.     No    Contractual   Relationship   Between
Sub-Servicer, Trustee or the Certificateholders.

                  Any  Sub-Servicing  Agreement  and any other  transactions  or
services relating to the Mortgage Loans involving a Sub-Servicer shall be deemed
to be between the  Sub-Servicer  and the related  Servicer  alone and the Master
Servicer, Trustee and the Certificateholders shall not be deemed parties thereto
and shall  have no  claims,  rights,  obligations,  duties or  liabilities  with
respect to any Sub-Servicer except as set forth in Section 3.05.

                  SECTION  3.05.    Assumption or  Termination of  Sub-Servicing
Agreement by Successor Servicer.

                  In connection  with the  assumption  of the  responsibilities,
duties  and  liabilities  and of the  authority,  power and rights of a Servicer
hereunder  by a  successor  Servicer  (which  may be the  Trustee  or the Master
Servicer)  pursuant  to Section  8.02,  it is  understood  and agreed  that

                                       84
<PAGE>

such Servicer's rights and obligations under any Sub-Servicing Agreement then in
force between such Servicer and a Sub-Servicer  shall be assumed  simultaneously
by such  successor  Servicer  without act or deed on the part of such  successor
Servicer;  provided,  however,  that any  successor  Servicer may  terminate the
Sub-Servicer.

                  Each Servicer shall, upon the reasonable request of the Master
Servicer,  but at its own expense,  deliver to the assuming party  documents and
records  relating to each  Sub-Servicing  Agreement and an accounting of amounts
collected  and held by it and  otherwise  use its best  efforts  to  effect  the
orderly and efficient  transfer of the Sub-Servicing  Agreements to the assuming
party.

                  The Servicing Fee payable to any such successor Servicer shall
be payable from payments received on the Mortgage Loans in the amount and in the
manner set forth in this Agreement.

                  SECTION 3.06.   Collection of Certain Mortgage Loan Payments.

                  Each  Servicer  shall make  reasonable  efforts to collect all
payments  called  for under the terms and  provisions  of the  related  Mortgage
Loans,  and shall, to the extent such  procedures  shall be consistent with this
Agreement and Accepted Servicing Practices, follow such collection procedures as
it would follow with respect to mortgage loans  comparable to the Mortgage Loans
and held for its own account.  Consistent with the foregoing,  each Servicer may
in its discretion  (i) waive any late payment charge or, if applicable,  penalty
interest or (ii) extend the due dates for the Monthly Payments due on a Mortgage
Note  related  to a  Mortgage  Loan for a period of not  greater  than 180 days;
provided  that any  extension  pursuant  to this  clause  shall not  affect  the
amortization  schedule of any  Mortgage  Loan for  purposes  of any  computation
hereunder. Notwithstanding the foregoing, in the event that any Mortgage Loan is
in  default  or, in the  judgment  of the  related  Servicer,  such  default  is
reasonably foreseeable, the related Servicer, consistent with Accepted Servicing
Practices may waive,  modify or vary any term of such  Mortgage Loan  (including
modifications that change the Mortgage Rate, forgive the payment of principal or
interest  or extend  the final  maturity  date of such  Mortgage  Loan),  accept
payment from the related  Mortgagor of an amount less than the Stated  Principal
Balance  in  final  satisfaction  of  such  Mortgage  Loan,  or  consent  to the
postponement  of  strict  compliance  with  any  such  term or  otherwise  grant
indulgence  to any  Mortgagor if in the related  Servicer's  determination  such
waiver,  modification,  postponement or indulgence is not materially  adverse to
the  interests of the  Certificateholders  (taking  into  account any  estimated
Realized Loss that might result absent such action).

                  SECTION  3.07.    Collection of Taxes, Assessments and Similar
Items; Servicing Accounts.

                  To the  extent  the terms of a  Mortgage  provide  for  Escrow
Payments, the related Servicer shall establish and maintain one or more accounts
(the "Servicing  Accounts"),  into which all collections from the Mortgagors (or
related  advances  from  Sub-Servicers)  for the payment of taxes,  assessments,
fire, flood, and 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 related 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

                                       85
<PAGE>

one  Business  Day after the  related  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 later than the
second  Business Day after the deposit of good funds into the clearing  account,
and retain  therein,  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,  fire, flood, and hazard insurance premiums,  and comparable items;
(ii) reimburse itself out of related collections for any Servicing Advances made
pursuant to Section  3.01 (with  respect to taxes and  assessments)  and Section
3.11  (with  respect  to fire,  flood and  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  related  Servicer's  obligations  and  responsibilities  in  respect of the
Mortgage Loans under this Agreement in accordance with Article X. As part of its
servicing duties, each Servicer 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  therefor.
Notwithstanding the foregoing,  no Servicer shall be obligated to collect Escrow
Payments if the related  Mortgage  Loan does not require such  payments but each
Servicer shall  nevertheless be obligated to make Servicing Advances as provided
in Section 3.01 and Section 3.11.  In the event a Servicer  shall deposit in the
Servicing  Accounts any amount not required to be deposited  therein,  it may at
any time withdraw such amount from the Servicing Accounts,  any provision to the
contrary notwithstanding.

                  To the extent  that a  Mortgage  does not  provide  for Escrow
Payments, the related Servicer (i) shall determine whether any such payments are
made by the  Mortgagor  in a manner and at a time that is necessary to avoid the
loss of the Mortgaged  Property due to a tax sale or the foreclosure as a result
of a tax lien and (ii) shall ensure that all insurance required to be maintained
on the Mortgaged Property pursuant to this Agreement is maintained.  If any such
payment has not been made and the related Servicer receives notice of a tax lien
with respect to the Mortgage Loan being  imposed,  the related  Servicer  shall,
promptly  and to the extent  required to avoid loss of the  Mortgaged  Property,
advance or cause to be advanced  funds  necessary to discharge  such lien on the
Mortgaged  Property  unless the related  Servicer  determines  the advance to be
nonrecoverable. Each Servicer assumes full responsibility for the payment of all
such  bills and shall  effect  payments  of all such bills  irrespective  of the
Mortgagor's  faithful  performance  in the  payment of same or the making of the
Escrow  Payments  and shall make  Servicing  Advances  to effect  such  payments
subject to its determination of recoverability.

                  SECTION 3.08.   Collection Account and Distribution Account.

                  (a) On behalf of the Trust Fund, each Servicer shall establish
and maintain one or more "Collection Accounts", held in trust for the benefit of
the  Trustee  and the  Certificateholders.  On behalf of the  Trust  Fund,  each
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 such  Servicer's  receipt  thereof,  and shall
thereafter deposit in the related Collection Account, in no event later than two
Business Days after the deposit of good funds into the clearing account,  as and
when received or as otherwise  required

                                       86
<PAGE>

hereunder,  the following payments and collections  received or made by it on or
subsequent to the Cut-off Date other than amounts  attributable to a Due Date on
or prior to the Cut-off Date:

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

                       (ii) all  payments  on  account of  interest  (net of the
         related  Servicing  Fee and any  Prepayment  Interest  Excess)  on each
         related Mortgage Loan;

                       (iii) all  Insurance  Proceeds and  Liquidation  Proceeds
         (other  than  proceeds  collected  in  respect  of any  particular  REO
         Property)  and all  Subsequent  Recoveries  with respect to the related
         Mortgage Loans;

                       (iv) any amounts  required to be deposited by the related
         Servicer  pursuant  to  Section  3.10 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 related
         Servicer pursuant to the second paragraph of Section 3.11(a) in respect
         of any blanket policy deductibles;

                       (vi) any Purchase Price or Substitution  Shortfall Amount
         delivered  to the related  Servicer  and all  proceeds  (net of amounts
         payable or reimbursable to the related  Servicer,  the Master Servicer,
         the Trustee, the Custodian or the Securities Administrator) of Mortgage
         Loans  purchased  in  accordance  with  Section  2.03,  Section 3.13 or
         Section 10.01; and

                       (vii) any  Prepayment  Charges  collected  by the related
         Servicer in  connection  with the  Principal  Prepayment  of any of the
         Mortgage  Loans or amounts  required  to be  deposited  by the  related
         Servicer in connection with a breach of its  obligations  under Section
         2.05.

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

                  (b) On behalf of the Trust Fund, the Securities  Administrator
shall establish and maintain one or more accounts (such account or accounts, the
"Distribution Account"), held in trust for the benefit of the Trustee, the Trust
Fund and the  Certificateholders.  On behalf of the Trust  Fund,  each  Servicer
shall deliver to the Securities Administrator in immediately available funds for
deposit in the Distribution Account on or before 12:00 noon New York time on the
Servicer  Remittance  Date,  that portion of the Available  Distribution  Amount
(calculated  without  regard to the  references in clause (2) of the  definition
thereof to amounts that may be withdrawn from the Distribution  Account) for the
related  Distribution Date then on deposit in the related

                                       87
<PAGE>

Collection  Account and the amount of all  Prepayment  Charges  collected by the
related  Servicer in  connection  with the  Principal  Prepayment  of any of the
Mortgage Loans then on deposit in the related  Collection Account and the amount
of any funds  reimbursable  to an Advance  Financing  Person pursuant to Section
3.25. If the balance on deposit in a Collection  Account exceeds  $100,000 as of
the  commencement  of business on any  Business Day and the  Collection  Account
constitutes an Eligible Account solely pursuant to clause (ii) of the definition
of "Eligible  Account," the related  Servicer  shall, on or before 5:00 p.m. New
York time on such Business Day, withdraw from the Collection Account any and all
amounts  payable or  reimbursable to the Depositor,  the related  Servicer,  the
Trustee,  the  Master  Servicer,  the  Securities  Administrator  or the  Seller
pursuant  to Section  3.09 and shall pay such  amounts to the  Persons  entitled
thereto or shall establish a separate Collection Account (which shall also be an
Eligible Account) and withdraw from the existing  Collection  Account the amount
on deposit  therein in excess of $100,000  and deposit  such excess in the newly
created Collection Account.

                  With  respect to any  remittance  received  by the  Securities
Administrator  on or after the first  Business Day following the Business Day on
which such  payment was due,  the  Securities  Administrator  shall send written
notice thereof to the related  Servicer.  The related  Servicer shall pay to the
Securities  Administrator  interest on any such late payment by such Servicer at
an annual rate equal to Prime Rate (as defined in The Wall Street  Journal) plus
one percentage  point, but in no event greater than the maximum amount permitted
by applicable  law. Such interest  shall be paid by the related  Servicer to the
Securities  Administrator  on the date such late payment is made and shall cover
the period  commencing with the day following such first Business Day and ending
with the Business Day on which such payment is made, both inclusive. The payment
by the related  Servicer of any such interest,  or the failure of the Securities
Administrator  to notify the  related  Servicer of such  interest,  shall not be
deemed an  extension  of time for payment or a waiver of any Event of Default by
the related Servicer.

                  (c)  Funds  in  the  Collection  Accounts  and  funds  in  the
Distribution Account may be invested in Permitted Investments in accordance with
the provisions set forth in Section 3.10. Each Servicer shall give notice to the
Trustee, the Securities Administrator and the Master Servicer of the location of
the Collection Account maintained by it when established and prior to any change
thereof. The Securities Administrator shall give notice to the Servicers and the
Depositor of the location of the Distribution Account when established and prior
to any change thereof.

                  (d) Funds  held in the  Collection  Account at any time may be
delivered  by  the  related  Servicer  in  immediately  available  funds  to the
Securities Administrator for deposit in the Distribution Account. In the event a
Servicer  shall  deliver  to the  Securities  Administrator  for  deposit in the
Distribution  Account any amount not required to be deposited therein, it may at
any time request that the Securities Administrator withdraw such amount from the
Distribution  Account and remit to it any such amount,  any provision  herein to
the contrary  notwithstanding.  In no event shall the  Securities  Administrator
incur liability as a result of withdrawals from the Distribution  Account at the
direction of a Servicer in accordance with the immediately  preceding  sentence.
In addition,  each Servicer  shall deliver to the  Securities  Administrator  no
later than the  Servicer  Remittance  Date the  amounts set forth in clauses (i)
through (iv) below:

                       (i) any P&I  Advances,  as  required  pursuant to Section
         5.03;

                                       88
<PAGE>

                       (ii) any  amounts  required to be  deposited  pursuant to
         Section 3.21(d) or 3.21(f) in connection with any related 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 3.22 in connection with any Prepayment Interest Shortfalls.

                  SECTION 3.09.   Withdrawals from the  Collection  Accounts and
Distribution Account.

                  (a) Each Servicer shall,  from time to time, make  withdrawals
from the  related  Collection  Account for any of the  following  purposes or as
described in Section 5.03:

                       (i) to remit to the Securities  Administrator for deposit
         in the  Distribution  Account  the  amounts  required to be so remitted
         pursuant to Section 3.08(b) or permitted to be so remitted  pursuant to
         the first sentence of Section 3.08(d);

                       (ii)  subject to Section  3.13(d),  to  reimburse  itself
         (including  any  successor  Servicer)  for P&I Advances made by it, but
         only to the extent of amounts received which represent Late Collections
         (net of the  related  Servicing  Fees) of Monthly  Payments  on related
         Mortgage  Loans with  respect to which such P&I  Advances  were made in
         accordance with the provisions of Section 5.03;

                       (iii)  subject  to  Section  3.13(d),  to pay  itself any
         unpaid Servicing Fees and reimburse  itself any unreimbursed  Servicing
         Advances with respect to each related  Mortgage  Loan,  but only to the
         extent of any Liquidation Proceeds and Insurance Proceeds received with
         respect to such related Mortgage Loan;

                       (iv)  to pay to  itself  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 related
         Collection Account;

                       (v) to pay to itself or the  Seller,  as the case may be,
         with respect to each related  Mortgage  Loan that has  previously  been
         purchased or replaced  pursuant to Section 2.03 or Section  3.13(c) all
         amounts  received  thereon not  included in the  Purchase  Price or the
         Substitution Shortfall Amount;

                       (vi) to reimburse itself  (including any successor to the
         related Servicer) for

                                       (A) any P&I Advance or Servicing  Advance
                                       previously  made by it which the  related
                                       Servicer   has   determined   to   be   a
                                       Nonrecoverable    P&I    Advance   or   a
                                       Nonrecoverable   Servicing   Advance   in
                                       accordance with the provisions of Section
                                       5.03 provided  however,  that no Servicer
                                       shall be  entitled to  reimbursement  for
                                       any  Servicing  Advance made prior to the

                                       89
<PAGE>

                                       Cut-off Date if such Servicer  determines
                                       that such Servicing Advance constitutes a
                                       Nonrecoverable Servicing Advance; or

                                       (B)  any  unpaid  Servicing  Fees  to the
                                       extent not recoverable  from  Liquidation
                                       Proceeds,  Insurance  Proceeds  or  other
                                       amounts  received  with  respect  to  the
                                       related   Mortgage   Loan  under  Section
                                       3.06(a)(iii);

                       (vii) to reimburse  itself or the  Depositor for expenses
         incurred by or reimbursable to itself or the Depositor, as the case may
         be, pursuant to Section 3.01 or Section 7.03;

                       (viii) to reimburse  itself or the  Trustee,  as the case
         may be, for  expenses  reasonably  incurred in respect of the breach or
         defect  giving rise to the purchase  obligation  under  Section 2.03 of
         this  Agreement that were included in the Purchase Price of the related
         Mortgage Loan, including any expenses arising out of the enforcement of
         the purchase obligation;

                       (ix) to pay,  or to  reimburse  itself  for  advances  in
         respect of, expenses  incurred in connection with any related  Mortgage
         Loan pursuant to Section 3.13(b);

                       (x) to pay to itself any  Prepayment  Interest  Excess on
         the  related  Mortgage  Loans to the extent not  retained  pursuant  to
         Section 3.08(a)(ii)); and

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

                  Each Servicer shall keep and maintain separate accounting,  on
a Mortgage  Loan by Mortgage  Loan  basis,  for the  purpose of  justifying  any
withdrawal  from the  related  Collection  Account,  to the extent held by or on
behalf of it, pursuant to subclauses (ii), (iii), (v), (vi), (vii), (viii), (ix)
and (x) above.

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

                       (i)  to  make  distributions  to   Certificateholders  in
         accordance with Section 5.01;

                       (ii) to pay to  itself,  the  Custodian  and  the  Master
         Servicer  amounts to which it is entitled  pursuant to Section  9.05 or
         any other provision of this Agreement and any Extraordinary  Trust Fund
         Expenses;

                       (iii) to reimburse itself or the Master Servicer pursuant
         to Section 8.02;

                       (iv) reserved;

                       (v) to pay any  amounts in respect of taxes  pursuant  to
         Section 11.01(g)(v);

                                       90
<PAGE>

                       (vi) reserved;

                       (vii) to pay the Credit Risk Management Fee to the Credit
         Risk Manager; and

                       (viii) to clear and  terminate the  Distribution  Account
         pursuant to Section 10.01.

                  SECTION 3.10.  Investment of Funds in the Investment Accounts.

                  (a) Each Servicer may direct,  by means of written  directions
(which may be standing directions),  any depository institution  maintaining the
related  Collection  Account to invest the funds in such Collection Account (for
purposes of this Section 3.10, an "Investment Account") in one or more Permitted
Investments bearing interest or sold at a discount, and maturing, unless payable
on demand, (i) no later than the Business Day immediately  preceding the date on
which such funds are required to be withdrawn from such account pursuant to this
Agreement,  if a Person other than the Securities  Administrator  is the obligor
thereon,  and (ii) no later than the date on which such funds are required to be
withdrawn  from such  account  pursuant  to this  Agreement,  if the  Securities
Administrator  is the  obligor  on such  Permitted  Investment.  Amounts  in the
Distribution  Account may be invested in  Permitted  Investments  as directed in
writing by the Master  Servicer and maturing,  unless payable on demand,  (i) no
later than the Business Day  immediately  preceding the date on which such funds
are required to be withdrawn from such account pursuant to this Agreement,  if a
Person other than the Securities  Administrator is the obligor thereon, and (ii)
no later than the date on which such funds are  required  to be  withdrawn  from
such account pursuant to this Agreement, if the Securities  Administrator is the
obligor  thereon.  All such  Permitted  Investments  shall be held to  maturity,
unless  payable on demand.  Any investment of funds shall be made in the name of
the  Trustee  (in its  capacity  as  such) or in the  name of a  nominee  of the
Trustee. The Securities  Administrator shall be entitled to sole possession over
each such investment in the Distribution  Account and, subject to subsection (b)
below, the income thereon,  and any certificate or other  instrument  evidencing
any such investment shall be delivered directly to the Securities  Administrator
or its agent, together with any document of transfer necessary to transfer title
to such  investment  to the  Trustee  or its  nominee.  In the event  amounts on
deposit  in a  Collection  Account  are  at any  time  invested  in a  Permitted
Investment  payable on demand,  the party with  investment  discretion over such
Investment Account shall:

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

                  (y) demand payment of all amounts due thereunder promptly upon
                  receipt  by such  party of  written  notice  from the  related
                  Servicer that such Permitted Investment would not constitute a
                  Permitted Investment in respect of funds thereafter on deposit
                  in the Investment Account.

                  (b) All income and gain realized from the  investment of funds
deposited in a Collection  Account a Servicer,  shall be for the benefit of such
Servicer and shall be subject to its

                                       91
<PAGE>

withdrawal in accordance  with Section 3.09.  Each Servicer shall deposit in the
Collection  Account  maintained by it the amount of any loss incurred in respect
of any such  Permitted  Investment  made with funds in such account  immediately
upon  realization  of such  loss.  All  earnings  and  gain  realized  from  the
investment  of funds  deposited  in the  Distribution  Account  shall be for the
benefit of the Master  Servicer.  The Master  Servicer  shall remit from its own
funds for deposit into the Distribution  Account the amount of any loss incurred
on Permitted Investments in the Distribution Account.

                  (c) Except as otherwise  expressly provided in this Agreement,
if any  default  occurs  in the  making of a  payment  due  under any  Permitted
Investment,  or if a default occurs in any other performance  required under any
Permitted  Investment,  the Trustee may and, subject to Section 9.01 and Section
9.02(a)(v),  shall, at the written direction of the related Servicer,  take such
action as may be appropriate to enforce such payment or  performance,  including
the institution and prosecution of appropriate proceedings.

                  (d) The  Trustee,  the  Master  Servicer  or their  respective
Affiliates are permitted to receive additional compensation that could be deemed
to be in the Trustee's or the Master Servicer's  economic  self-interest for (i)
serving as  investment  adviser,  administrator,  shareholder  servicing  agent,
custodian or sub-custodian with respect to certain of the Permitted Investments,
(ii) using Affiliates to effect  transactions in certain  Permitted  Investments
and  (iii)  effecting  transactions  in  certain  Permitted  Investments.   Such
compensation  shall not be considered an amount that is  reimbursable or payable
to the  Trustee  or the Master  Servicer  pursuant  to  Section  3.09 or 3.10 or
otherwise  payable  in  respect  of  Extraordinary  Trust  Fund  Expenses.  Such
additional compensation shall not be an expense of the Trust Fund.

                  SECTION  3.11.   Maintenance  of Hazard  Insurance, Errors and
Omissions and Fidelity Coverage and Primary Mortgage Insurance.

                  (a) The  terms  of each  Mortgage  Note  require  the  related
Mortgagor to maintain fire, flood and hazard insurance  policies.  To the extent
such  policies  are not  maintained,  the  related  Servicer  shall  cause to be
maintained for each Mortgaged  Property fire and hazard  insurance with extended
coverage as is customary in the area where the Mortgaged  Property is located in
an amount which is at least equal to the lesser of the current principal balance
of the related  Mortgage Loan and the amount  necessary to compensate  fully for
any damage or loss to the  improvements  which are a part of such  property on a
replacement  cost basis,  in each case in an amount not less than such amount as
is necessary to avoid the application of any coinsurance clause contained in the
related hazard insurance policy. Each Servicer shall also cause to be maintained
fire and hazard  insurance on each REO  Property  with  extended  coverage as is
customary in the area where the Mortgaged Property is located in an amount which
is at least  equal  to the  lesser  of (i) the  maximum  insurable  value of the
improvements  which  are a part  of  such  property  and  (ii)  the  outstanding
principal  balance  of the  related  Mortgage  Loan at the time it became an REO
Property.  Each 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 a Servicer  under any such  policies
(other than amounts to be applied to the  restoration  or repair of the property
subject to the related  Mortgage or amounts to be released to the  Mortgagor  in
accordance  with  Accepted  Servicing  Practices,   subject  to  the  terms  and
conditions of the related  Mortgage and Mortgage Note) shall be deposited in the
related Collection  Account,  subject to withdrawal pursuant to Section 3.09, if
received  in respect  of a

                                       92
<PAGE>

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

                  In the  event  that the  related  Servicer  shall  obtain  and
maintain a blanket policy with an insurer having a General Policy Rating of B:VI
or better in Best's Key Rating  Guide or otherwise  acceptable  to Fannie Mae or
Freddie Mac insuring against hazard losses on all of the related Mortgage Loans,
it shall  conclusively be deemed to have satisfied its obligations to cause fire
and hazard  insurance to be  maintained on the  Mortgaged  Properties,  it being
understood and agreed that such policy may contain a deductible clause, in which
case the  related  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 3.11, and there shall have been one
or more losses  which  would have been  covered by such  policy,  deposit to the
related  Collection  Account from its own funds the amount not otherwise payable
under the blanket policy because of such deductible  clause.  In connection with
its activities as administrator  and servicer of the related Mortgage Loans, the
related  Servicer  agrees to  prepare  and  present,  on behalf of  itself,  the
Trustee, the Trust Fund, the  Certificateholders,  claims under any such blanket
policy in a timely fashion in accordance with the terms of such policy.

                  (b) Each 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 its respective  obligations  under this Agreement,
which  policy or  policies  shall be in such form and amount that would meet the
requirements  of  Fannie  Mae or  Freddie  Mac if it were the  purchaser  of the
related Mortgage Loans,  unless the related  Servicer,  has obtained a waiver of
such  requirements  from Fannie Mae or Freddie  Mac.  Each  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 related Servicer, has obtained a waiver
of such  requirements  from Fannie Mae or Freddie Mac.  Each  Servicer  shall be
deemed to have  complied with this  provision if an Affiliate of such  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 such 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.

                  (c) No  Servicer  shall take any action  that would  result in
noncoverage under any applicable  primary mortgage  insurance policy of any loss
which, but for the actions of such Servicer would have been covered  thereunder.
Each  Servicer  shall  use its best  efforts  to keep in force  and  effect  any
applicable primary mortgage insurance policy and, to the extent that the

                                       93
<PAGE>

related  Mortgage Loan requires the  Mortgagor to maintain such  insurance,  any
other primary  mortgage  insurance  applicable to any Mortgage  Loan.  Except as
required by applicable law or the related  Mortgage Loan Documents,  the related
Servicer shall not cancel or refuse to renew any such primary mortgage insurance
policy  that is in effect at the date of the  initial  issuance  of the  related
Mortgage Note and is required to be kept in force hereunder.

                  Each  Servicer  agrees to present on behalf of the Trustee and
the  Certificateholders  claims to the  applicable  insurer  under  any  primary
mortgage  insurance policies and, in this regard, to take such reasonable action
as shall be necessary to permit  recovery under any primary  mortgage  insurance
policies  respecting  defaulted  Mortgage  Loans.  Pursuant to Section 3.08, any
amounts  collected by a Servicer under any primary mortgage  insurance  policies
shall be  deposited in the related  Collection  Account,  subject to  withdrawal
pursuant to Section 3.09.  Notwithstanding  any  provision to the  contrary,  no
Servicer  shall  have any  responsibility  with  respect  to a primary  mortgage
insurance  policy  unless such  Servicer has been made aware of such policy,  as
reflected on the Mortgage Loan Schedule or otherwise and have been provided with
adequate information to administer such policy.

                  SECTION 3.12.  Enforcement of Due-on-Sale Clauses;  Assumption
Agreements

                  Each  Servicer  shall,  to the extent it has  knowledge of any
conveyance of any related Mortgaged  Property by any related 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 no
Servicer shall exercise any such rights if prohibited by law from doing so. If a
Servicer  reasonably  believes that 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,  such  Servicer  shall 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.  Each Servicer is
also  authorized to enter into a substitution  of liability  agreement with such
person,  pursuant to which the original Mortgagor is released from liability and
such  person is  substituted  as the  Mortgagor  and  becomes  liable  under the
Mortgage Note, provided that no such substitution shall be effective unless such
person satisfies the then current underwriting  criteria of the related Servicer
for mortgage loans similar to the related Mortgage Loans. In connection with any
assumption or substitution,  the related 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. No Servicer  shall 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 a
Servicer in respect of an assumption or substitution of liability agreement will
be retained by such 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. Each Servicer shall notify the Trustee (or the Custodian) that any such
substitution  or assumption  agreement  has

                                       94
<PAGE>

been  completed  by  forwarding  to the  Trustee the  executed  original of such
substitution  or  assumption  agreement,  which  document  shall be added to the
related Mortgage File and shall, for all purposes,  be considered a part of such
Mortgage  File  to the  same  extent  as all  other  documents  and  instruments
constituting a part thereof.

                  Notwithstanding the foregoing paragraph or any other provision
of this Agreement,  no Servicer shall be deemed to be in default,  breach or any
other  violation of its  obligations  hereunder by reason of any assumption of a
Mortgage  Loan by operation  of law or by the terms of the Mortgage  Note or any
assumption  which the related Servicer may be restricted by law from preventing,
for  any  reason  whatever.   For  purposes  of  this  Section  3.12,  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 3.13.   Realization Upon Defaulted Mortgage Loans.

                  (a) Each Servicer shall use its best efforts,  consistent with
Accepted Servicing Practices,  to foreclose upon or otherwise comparably convert
the ownership of properties securing such of the Mortgage Loans as come into and
continue in default and as to which no satisfactory arrangements can be made for
collection of delinquent  payments pursuant to Section 3.06. Each 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  Servicers as  contemplated  in Sections  3.09 and
3.21.  The  foregoing is subject to the  provision  that, in any case in which a
Mortgaged  Property  shall have  suffered  damage from an Uninsured  Cause,  the
related  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
3.13 or any other provision of this Agreement, with respect to any Mortgage Loan
as to which the related  Servicer has received  actual  notice of, or has actual
knowledge  of, the presence of any toxic or  hazardous  substance on the related
Mortgaged Property, such Servicer shall not, on behalf of the Trust Fund, either
(i)  obtain  title  to such  Mortgaged  Property  as a  result  of or in lieu of
foreclosure or otherwise,  or (ii) otherwise acquire  possession of, or take any
other action with respect to, such  Mortgaged  Property,  if, as a result of any
such  action,  the Trust Fund,  the Trustee 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 such Servicer has also
previously  determined,  based on its  reasonable  judgment and a prudent report
prepared by an Independent  Person who regularly conducts  environmental  audits
using customary industry standards, that:

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

                  (2)  there  are no  circumstances  present  at such  Mortgaged
                  Property  relating to the use,  management  or disposal of any
                  hazardous substances, hazardous

                                       95
<PAGE>

                  materials,  hazardous wastes or petroleum-based  materials for
                  which   investigation,   testing,   monitoring,   containment,
                  clean-up or  remediation  could be required under any federal,
                  state  or  local  law or  regulation,  or  that  if  any  such
                  materials are present for which such action could be required,
                  that it would be in the best  economic  interest  of the Trust
                  Fund  to  take  such  actions  with  respect  to the  affected
                  Mortgaged Property.

                  The cost of the  environmental  audit report  contemplated  by
this  Section  3.13 shall be advanced by the  related  Servicer,  subject to the
related  Servicer's right to be reimbursed  therefor from the related Collection
Account as provided in Section  3.09(a)(ix),  such right of reimbursement  being
prior to the rights of  Certificateholders  to receive any amount in the related
Collection  Account  received in respect of the affected  Mortgage Loan or other
Mortgage Loans.

                  If the related Servicer  determines,  as described above, that
it is in the best  economic  interest of the Trust Fund to take such  actions as
are  necessary  to bring  any  such  Mortgaged  Property  into  compliance  with
applicable  environmental  laws,  or to take such  action  with  respect  to the
containment,   clean-up  or  remediation  of  hazardous  substances,   hazardous
materials,  hazardous wastes, or  petroleum-based  materials  affecting any such
Mortgaged Property, then the related Servicer shall take such action as it deems
to be in the best  economic  interest  of the Trust  Fund.  The cost of any such
compliance, containment, cleanup or remediation shall be advanced by the related
Servicer, subject to the related Servicer's right to be reimbursed therefor from
the  related  Collection  Account  as  provided  in  Sections   3.09(a)(iii)  or
3.09(a)(ix),   such  right  of  reimbursement  being  prior  to  the  rights  of
Certificateholders  to receive  any  amount in the  related  Collection  Account
received in respect of the affected Mortgage Loan or other Mortgage Loans.

                  (c) Each Servicer  shall have the right to purchase from REMIC
I any defaulted Mortgage Loan serviced by it that is 90 days or more delinquent,
which such Servicer  determines in good faith will  otherwise  become subject to
foreclosure  proceedings  (evidence  of such  determination  to be  delivered in
writing to the Trustee, in form and substance  satisfactory to such Servicer and
the Trustee  prior to  purchase),  at a price equal to the Purchase  Price.  The
Purchase Price for any Mortgage Loan purchased  hereunder  shall be deposited in
the  related  Collection  Account,  and the  Trustee,  upon  receipt  of written
certification from the related Servicer of such deposit,  shall release or cause
to be released to the related Servicer the related Mortgage File and the Trustee
shall execute and deliver such  instruments of transfer or  assignment,  in each
case without recourse, representation or warranty, as the related Servicer shall
furnish and as shall be necessary to vest in the related  Servicer  title to any
Mortgage Loan released pursuant hereto.

                  (d) Proceeds  received in connection  with any Final  Recovery
Determination,  as well as any recovery  resulting from a partial  collection of
Insurance  Proceeds or  Liquidation  Proceeds,  in respect of any Mortgage Loan,
will be applied in the  following  order of priority:  first,  to reimburse  the
related  Servicer  for  any  related  unreimbursed  Servicing  Advances  and P&I
Advances,  pursuant to Section  3.09(a)(ii) or (a)(iii);  second, to accrued and
unpaid

                                       96
<PAGE>

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 related  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
related Servicer pursuant to Section  3.09(a)(iii).  The portion of the recovery
allocated  to  interest  (net of unpaid  Servicing  Fees) and the portion of the
recovery  allocated  to  principal  of the  Mortgage  Loan  shall be  applied as
follows:  first, to reimburse the related Servicer for any related  unreimbursed
Servicing or P&I Advances in accordance  with Section  3.09(a)(ii) and any other
amounts  reimbursable  to the related  Servicer  pursuant to Section  3.09,  and
second, as part of the amounts to be transferred to the Distribution  Account in
accordance with Section 3.08(b).

                  SECTION 3.14. Trustee to Cooperate; Release of Mortgage Files.

                  (a) Upon becoming aware of the payment in full of any Mortgage
Loan, or the receipt by the related  Servicer of a notification  that payment in
full has been  escrowed in a manner  customary  for such purposes for payment to
Certificateholders  on the next  Distribution  Date,  the related  Servicer will
promptly  furnish to the  Custodian,  on behalf of the Trustee,  two copies of a
request  for  release  substantially  in the  form  attached  to  the  Custodial
Agreement signed by a Servicing  Officer or in a mutually  agreeable  electronic
format  which  will,  in lieu  of a  signature  on its  face,  originate  from a
Servicing Officer (which  certification  shall include a statement to the effect
that all amounts  received in connection  with such payment that are required to
be  deposited  in the  related  Collection  Account  have  been  or  will  be so
deposited)  and shall  request  that the  Custodian,  on behalf of the  Trustee,
deliver to the related  Servicer the related Mortgage File. Upon receipt of such
certification and request, the Custodian, on behalf of the Trustee, shall within
five (5) Business Days release the related Mortgage File to the related Servicer
and the Trustee and Custodian shall have no further  responsibility  with regard
to such Mortgage File.  Upon any such payment in full,  the related  Servicer is
authorized,  to give,  as agent  for the  Trustee,  as the  mortgagee  under the
Mortgage  that secured the Mortgage  Loan, an  instrument  of  satisfaction  (or
assignment  of mortgage  without  recourse)  regarding  the  Mortgaged  Property
subject to the Mortgage, which instrument of satisfaction or assignment,  as the
case may be,  shall be  delivered  to the  Person or  Persons  entitled  thereto
against receipt therefor of such payment, it being understood and agreed that no
expenses  incurred  in  connection  with  such  instrument  of  satisfaction  or
assignment,  as the case may be, shall be chargeable  to the related  Collection
Account.

                  (b) From time to time and as appropriate  for the servicing or
foreclosure  of any Mortgage  Loan,  the Trustee shall execute such documents as
shall be prepared and furnished to the Trustee by the related  Servicer (in form
reasonably acceptable to the Trustee) and as are necessary to the prosecution of
any such proceedings.  The Custodian,  on behalf of the Trustee, shall, upon the
request of the related Servicer, and delivery to the Custodian, on behalf of the
Trustee,  of two copies of a request for release  signed by a Servicing  Officer
substantially in the form attached to the Custodial  Agreement (or in a mutually
agreeable  electronic  format  which will,  in lieu of a signature  on its face,
originate from a Servicing  Officer),  release within five (5) Business Days the
related Mortgage File held in its possession or control to the related Servicer.
Such trust  receipt shall  obligate the related  Servicer to return the Mortgage
File to the  Custodian on behalf of the Trustee,  when the need  therefor by the
related  Servicer no longer exists unless the Mortgage Loan shall be liquidated,
in which case,  upon receipt of a certificate of a Servicing

                                       97
<PAGE>

Officer  similar  to that  hereinabove  specified,  the  Mortgage  File shall be
released by the Custodian, on behalf of the Trustee, to the related Servicer.

                  Notwithstanding the foregoing,  in connection with a Principal
Prepayment in full of any Mortgage Loan, the Master Servicer may request release
of the  related  Mortgage  File  from  the  Custodian,  in  accordance  with the
provisions of the Custodial  Agreement,  in the event the related Servicer fails
to do so.

                  Upon written certification of a Servicing Officer, the Trustee
shall execute and deliver to the related Servicer, any court pleadings, requests
for trustee's sale or other documents  prepared and delivered to the Trustee and
reasonably  acceptable to it and 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. So long as no Servicer Event of Default shall have occurred and
be continuing,  the related Servicer shall have the right to execute any and all
such court pleadings,  requests and other documents as attorney-in-fact for, and
on behalf of the Trustee.

                  SECTION 3.15.   Servicing Compensation.

                  As compensation  for its activities  hereunder,  each Servicer
shall be  entitled  to the  Servicing  Fee with  respect to each  Mortgage  Loan
serviced  by it payable  solely  from  payments  of  interest in respect of such
Mortgage  Loan,  subject to Section  3.22. In addition,  each Servicer  shall be
entitled  to  recover  unpaid  Servicing  Fees  out  of  Insurance  Proceeds  or
Liquidation  Proceeds to the extent permitted by Section 3.09(a)(iii) and out of
amounts  derived  from the  operation  and sale of an REO Property to the extent
permitted by Section  3.21.  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
a Servicer's responsibilities and obligations under this Agreement to the extent
permitted herein.

                  Additional  servicing  compensation  in the form of assumption
fees, late payment charges and other  miscellaneous  fees (other than Prepayment
Charges) shall be retained by the related  Servicer only to the extent such fees
or charges are received by the related  Servicer.  Each  Servicer  shall also be
entitled pursuant to Section 3.09(a)(iv) to withdraw from the related Collection
Account and pursuant to Section  3.21(b) to withdraw  from any REO  Account,  as
additional servicing  compensation,  interest or other income earned on deposits
therein,  subject to Section 3.10. In addition,  Each Servicer shall be entitled
to retain or withdraw from the related Collection  Account,  pursuant to Section
3.09(a)(x),  any Prepayment  Interest  Excess with respect to the Mortgage Loans
serviced by it as additional  servicing  compensation.  Each  Servicer  shall be
required to pay all expenses  incurred by it in  connection  with its  servicing
activities hereunder and shall not be entitled to reimbursement  therefor except
as specifically provided herein.

                                       98
<PAGE>

                  SECTION 3.16.   Collection Account Statements.

                  Upon   request,   not  later  than  fifteen  days  after  each
Distribution  Date,  each  Servicer  shall forward to the Master  Servicer,  the
Securities Administrator,  the Trustee and the Depositor a statement prepared by
the institution at which the related  Collection  Account is maintained  setting
forth the status of the related  Collection  Account as of the close of business
on such Distribution Date and showing, for the period covered by such statement,
the  aggregate  amount  of  deposits  into  and  withdrawals  from  the  related
Collection  Account of each category of deposit specified in Section 3.08(a) and
each category of withdrawal  specified in Section 3.09. Copies of such statement
and any similar  statements  provided by the Servicers  shall be provided by the
Securities  Administrator to any  Certificateholder and to any Person identified
to the Securities  Administrator  as a prospective  transferee of a Certificate,
upon request at the expense of the requesting party,  provided such statement is
delivered by the related Servicer to the Securities Administrator.

                  SECTION 3.17.   Statement as to Compliance.

                  Not later than March 15th of each calendar year  commencing in
2006,  each Servicer shall deliver to the Trustee,  the Master  Servicer and the
Depositor  an Officers'  Certificate  in a form  acceptable  for filing with the
Securities  and Exchange  Commission as an exhibit to Form 8-K or other required
form (upon which the Master  Servicer can  conclusively  rely in connection with
its obligations under Section 5.06) stating, as to each signatory thereof,  that
(i) a review of the activities of such Servicer during the preceding year and of
performance under this Agreement has been made under such officers'  supervision
and (ii) to the best of such  officer's  knowledge,  based on such review,  such
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.  Copies of any such  statement  shall be  provided  by the
Trustee to any Certificateholder,  upon request at the expense of the requesting
party, provided such statement is delivered by the Servicers to the Trustee.

                  SECTION  3.18.   Independent  Public  Accountants'   Servicing
Report.

                  Not later than March 15th of each calendar year  commencing in
2006, each Servicer, at its expense, shall cause a nationally recognized firm of
independent certified public accountants to furnish to such Servicer a report in
a form  acceptable for filing with the Securities and Exchange  Commission as an
exhibit to Form 10-K or other  required  form stating that (i) it has obtained a
letter of  representation  regarding certain matters from the management of such
Servicer  which  includes an assertion  that such  Servicer  has  complied  with
certain minimum residential mortgage 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  and such firm has  determined  that the
related  Servicer  has  complied  in all  material  respects,  subject  to  such
exceptions and other  qualifications  that may be appropriate.  Immediately upon
receipt of such report, each Servicer shall furnish a copy of such report to the
Master  Servicer,  the Trustee and each Rating Agency.  Copies of such statement

                                       99
<PAGE>

shall be provided by the Trustee to any  Certificateholder  upon  request at the
expense of the  requesting  party,  provided that such statement is delivered by
the Servicers to the Trustee.

                  SECTION 3.19.   Annual Certification.

                  (a) Each Servicer shall deliver to the Master Servicer,  on or
before March 15th of each calendar  year  beginning in 2006 (or, if any such day
is  not a  Business  Day,  the  immediately  preceding  Business  Day)  or  such
alternative  date reasonably  specified by the Master Servicer which shall occur
not later than 15 days prior to the date any Form 10-K is  required  to be filed
with the Commission in connection  with the  transactions  contemplated  by this
Agreement,  a  certification  in the form  attached  hereto as  Exhibit  C. Such
certification  shall be signed by the senior  officer in charge of  servicing of
the related  Servicer.  In  addition,  each  Servicer  shall  provide such other
information  with respect to the related  Mortgage  Loans and the  servicing and
administration  thereof  within the  control  of such  Servicer  which  shall be
required to enable the Master Servicer to comply with the reporting requirements
of the Securities and Exchange Act of 1934, as amended, pursuant to Section 5.06
hereof.

                  (b) Each Servicer shall indemnify and hold harmless the Master
Servicer,  the Securities  Administrator,  the Trustee,  the Depositor and their
respective  officers,  directors,  agents and  affiliates  from and  against any
losses,  damages,  penalties,  fines,  forfeitures,  reasonable  legal  fees and
related  costs,  judgments and other costs and expenses  arising out of or based
upon a breach by such  Servicer  or any of its  officers,  directors,  agents or
affiliates  of its  obligations  under  this  Section  3.19 or  such  Servicer's
negligence,  bad faith or  willful  misconduct  in  connection  therewith.  Such
indemnity  shall survive the termination or resignation of the parties hereto or
the termination of this Agreement. If the indemnification provided for herein is
unavailable or insufficient to hold harmless the Master Servicer, the Securities
Administrator,  the Trustee and the Depositor, then such Servicer agrees that it
shall  contribute  to the amount  paid or payable  by the Master  Servicer,  the
Securities  Administrator,  the  Trustee  and the  Depositor  as a result of the
losses,  claims,  damages or liabilities of the Master Servicer,  the Securities
Administrator,   the  Trustee  and  the  Depositor  in  such  proportion  as  is
appropriate to reflect the relative fault of the Master Servicer, the Securities
Administrator,  the Trustee and the  Depositor on the one hand and such Servicer
on the other in connection  with a breach of such Servicer's  obligations  under
this Section 3.19.

                  SECTION 3.20.   Access to Certain Documentation.

                  Each   Servicer   shall   provide  to  the  Office  of  Thrift
Supervision,  the FDIC,  and any other  federal or state  banking  or  insurance
regulatory  authority that may exercise  authority over any  Certificate  Owner,
access to the  documentation  regarding the related  Mortgage  Loans required by
applicable laws and  regulations.  Such access shall be afforded without charge,
but only upon reasonable request and during normal business hours at the offices
of the related  Servicer  designated  by it.  Nothing in this Section 3.20 shall
limit the  obligation of the related  Servicer to comply with any applicable law
prohibiting  disclosure of information  regarding the Mortgagors and the failure
of the  related  Servicer to provide  access as  provided  in this  Section as a
result of such obligation shall not constitute a breach of this Section. Nothing
in this  Section  3.20 shall  require the related  Servicer to collect,  create,
collate or otherwise  generate any information  that it does not generate in its
usual  course of  business.  No Servicer  shall be

                                      100
<PAGE>

required to make copies of or ship  documents  to any Person  unless  provisions
have been made for the reimbursement of the costs thereof.

                  SECTION  3.21.  Title,   Management  and  Disposition  of  REO
Property.

                  (a) The  deed  or  certificate  of  sale  of any REO  Property
related to a Mortgage  Loan  shall be taken in the name of the  Trustee,  or its
nominee,   on   behalf  of  the  Trust   Fund  and  for  the   benefit   of  the
Certificateholders.  The related  Servicer,  on behalf of REMIC I, shall  either
sell any REO  Property by the close of the third  calendar  year  following  the
calendar  year in which  REMIC I acquires  ownership  of such REO  Property  for
purposes of Section  860(a)(8) of the Code or request from the Internal  Revenue
Service,  no later  than 60 days  before the day on which the  three-year  grace
period  would  otherwise  expire an extension of the  three-year  grace  period,
unless the related  Servicer had delivered to the Trustee an Opinion of Counsel,
addressed  to the Trustee and the  Depositor,  to the effect that the holding by
REMIC I of such REO  Property  subsequent  to three years after its  acquisition
will not result in the imposition on any Trust REMIC created  hereunder of taxes
on "prohibited transactions" thereof, as defined in Section 860F of the Code, or
cause any Trust REMIC  hereunder to fail to qualify as a REMIC under Federal law
at any time that any Certificates  are  outstanding.  The related Servicer shall
manage,   conserve,   protect   and   operate   each   REO   Property   for  the
Certificateholders  solely for the purpose of its prompt disposition and sale in
a  manner  which  does  not  cause  such  REO  Property  to fail to  qualify  as
"foreclosure  property" within the meaning of Section  860G(a)(8) of the Code or
result in the receipt by any Trust REMIC  created  hereunder 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) Each 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
with respect to REO  Properties  an account  held in trust for the  Trustee,  on
behalf of the Trust Fund and for the benefit of the Certificateholders (the "REO
Account"),  which shall be an Eligible Account. Each Servicer shall be permitted
to allow the related Collection Account to serve as the REO Account,  subject to
the maintenance of separate  ledgers for each REO Property.  Each Servicer shall
be entitled to retain or withdraw any interest income paid on funds deposited in
the related REO Account.

                  (c) Each 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  related to a Mortgage Loan
serviced by it as are consistent with the manner in which such Servicer  manages
and operates similar property owned by it or any of its Affiliates,  all on such
terms and for such period as such Servicer  deems to be in the best interests of
Certificateholders.  In connection  therewith,  each 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 such Servicer's  receipt thereof,  and shall thereafter deposit in the
REO Account,  in no event more than two Business  Days after the deposit of good
funds into the clearing account,  all revenues received by it with respect to an
REO  Property  related  to a Mortgage  Loan  serviced  by it and shall  withdraw
therefrom funds necessary for the proper  operation,  management and maintenance
of such REO Property including, without limitation:

                                      101
<PAGE>

                       (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 related
Servicer  shall  advance from its own funds such amount as is necessary for such
purposes if, but only if, the related  Servicer  would make such advances if the
related  Servicer  owned  the  REO  Property  and if in the  related  Servicer's
judgment,  the payment of such  amounts will be  recoverable  from the rental or
sale of the REO Property.

                  Subject to compliance  with applicable laws and regulations as
shall at any time be in force, and  notwithstanding  the foregoing,  the related
Servicer, on behalf of the Trust Fund, shall not:

                       (iv)  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;

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

                       (vi)  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

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

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

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

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

                       (ix)  any  such  contract  shall  require,  or  shall  be
         administered to require, that the Independent  Contractor pay all costs
         and expenses  incurred in

                                      102
<PAGE>

         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  related   Servicer  as  soon  as
         practicable,  but in no event  later than  thirty  days  following  the
         receipt thereof by such Independent Contractor;

                       (x)  none  of the  provisions  of  this  Section  3.21(c)
         relating  to any such  contract  or to actions  taken  through any such
         Independent  Contractor shall be deemed to relieve the related Servicer
         of any of its duties and  obligations  to the  Trustee on behalf of the
         Trust Fund and for the benefit of the  Certificateholders  with respect
         to the operation and management of any such REO Property; and

                       (xi) the related 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  related  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 related Servicer
by such Independent Contractor, and nothing in this Agreement shall be deemed to
limit or modify  such  indemnification.  The  related  Servicer  shall be solely
liable for all fees owed by it to any such Independent Contractor,  irrespective
of whether  the related  Servicer's  compensation  pursuant  to Section  3.15 is
sufficient to pay such fees. Any such  agreement  shall include a provision that
such  agreement  may be  immediately  terminated  by the Trustee  (as  successor
Servicer)  or any other  successor  Servicer  (including  the  Master  Servicer)
without  fee,  in the event the related  shall for any reason,  no longer be the
Servicer of the related Mortgage Loans (including  termination due to a Servicer
Event of Default).

                  (d) In addition to the  withdrawals  permitted  under  Section
3.21(c),  the related  Servicer may from time to time make  withdrawals from the
REO Account for any REO  Property:  (i) to pay itself unpaid  Servicing  Fees in
respect  of the  related  Mortgage  Loan;  and (ii) to  reimburse  itself or any
Sub-Servicer for unreimbursed Servicing Advances and Advances made in respect of
such REO Property or the related Mortgage Loan. On the Servicer Remittance Date,
the related  Servicer shall withdraw from each REO Account  maintained by it and
deposit into the  Distribution  Account in accordance with Section  3.08(d)(ii),
for  distribution  on the related  Distribution  Date in accordance with Section
5.01,  the  income  from the  related  REO  Property  received  during the prior
calendar month,  net of any withdrawals made pursuant to Section 3.21(c) or this
Section 3.21(d).

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

                  (f) The proceeds from the REO  Disposition,  net of any amount
required by law to be remitted to the Mortgagor under the related  Mortgage Loan
and net of any  payment or  reimbursement  to the  related  Servicer as provided
above, shall be deposited in the Distribution Account in accordance with Section
3.08(d)(ii) on the Servicer  Remittance  Date in the month following the receipt
thereof for  distribution  on the related  Distribution  Date in accordance with

                                      103
<PAGE>

Section 5.01. Any REO Disposition  shall be for cash only (unless changes in the
REMIC  Provisions  made  subsequent  to the  Startup  Day allow a sale for other
consideration).

                  (g) The related Servicer shall file  information  returns (and
shall provide a certification of a Servicing Officer to the Master Servicer that
such filings  have been made) 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  3.22.  Obligations  of the  Servicer's  in Respect of
Prepayment Interest Shortfalls; Relief Act Interest Shortfalls.

                  Each Servicer  shall deliver to the  Securities  Administrator
for deposit into the Distribution  Account on or before 12:00 noon New York time
on the Servicer Remittance Date from its own funds an amount equal to the lesser
of (i) the aggregate amount of the Prepayment Interest  Shortfalls  attributable
to  prepayments  in  full  on  the  related   Mortgage  Loans  for  the  related
Distribution Date resulting solely from voluntary Principal Prepayments received
by the  related  Servicer  during  the  related  Prepayment  Period and (ii) the
aggregate  amount of the related  Servicing Fees payable to the related Servicer
on such  Distribution  Date with  respect  to the  related  Mortgage  Loans.  No
Servicer shall have the right to  reimbursement  for any amounts remitted to the
Securities  Administrator  in respect of this Section 3.22. No Servicer shall be
obligated  to pay the amounts  set forth in this  Section  3.22 with  respect to
shortfalls resulting from the application of the Relief Act.

                  SECTION  3.23.  Obligations  of the  Servicers  in  Respect of
Mortgage Rates and Monthly Payments.

                  In  the  event  that  a  shortfall  in  any  collection  on or
liability with respect to any Mortgage Loan results from or is  attributable  to
adjustments to Mortgage Rates,  Monthly  Payments or Stated  Principal  Balances
that were made by a Servicer  in a manner not  consistent  with the terms of the
related Mortgage Note and this Agreement,  the related Servicer,  upon discovery
or receipt  of notice  thereof,  immediately  shall  deliver  to the  Securities
Administrator  for deposit in the  Distribution  Account  from its own funds the
amount of any such  shortfall  and shall  indemnify  and hold harmless the Trust
Fund,  the Trustee,  the  Securities  Administrator,  the Master  Servicer,  the
Depositor  and any  successor  Servicer in respect of any such  liability.  Such
indemnities  shall  survive the  termination  or  discharge  of this  Agreement.
Notwithstanding the foregoing,  this Section 3.23 shall not limit the ability of
the related  Servicer  to seek  recovery  of any such  amounts  from the related
Mortgagor  under the terms of the related  Mortgage  Note and  Mortgage,  to the
extent permitted by applicable law.

                  SECTION 3.24.   Reserve Fund.

                  (a)  No  later  than  the   Closing   Date,   the   Securities
Administrator shall establish and maintain a separate,  segregated trust account
entitled,  "Reserve  Fund,  Wells Fargo Bank,  N.A., in trust for the registered
holders of ACE Securities Corp. Home Equity Loan Trust,  Series 2005-HE1,  Asset
Backed  Pass-Through  Certificates."  On the Closing Date,  the  Depositor  will
deposit,  or cause to be deposited,  into the Reserve Fund $1,000.  In addition,
the amount

                                      104
<PAGE>

deposited in the Reserve Fund shall be increased by any payments received by the
Securities  Administrator  under the Group I Cap  Contract  and  deposited  into
Reserve  Fund  for  the  benefit  of  the  Class  A-1  Certificates,   Mezzanine
Certificates  and the Class B  Certificates  and under the Group II Cap Contract
and deposited in the Reserve Fund for the benefit of the Class A-2 Certificates,
the Mezzanine Certificates and the Class B Certificates.

                  (b) On each  Distribution  Date, the Securities  Administrator
shall   deposit  into  the  Reserve  Fund  the  amounts   described  in  Section
5.01(a)(7)(vi),   rather  than   distributing  such  amounts  to  the  Class  CE
Certificateholders, and Section 5.01(a)(7)(vii). On each such Distribution Date,
the Securities  Administrator shall hold all such amounts for the benefit of the
Holders of the Class A Certificates,  the Mezzanine Certificates and the Class B
Certificates  and will  distribute  such  amounts to the  Holders of the Class A
Certificates,  the Mezzanine  Certificates and the Class B Certificates,  in the
amounts  and  priorities  set  forth  in  Section  5.01(a).  If no Net WAC  Rate
Carryover   Amounts  are  payable  on  a   Distribution   Date,  the  Securities
Administrator  shall  deposit,  into the Reserve  Fund on behalf of the Class CE
Certificateholders,  from  amounts  otherwise  distributable  to  the  Class  CE
Certificateholders,  an amount such that when added to other amounts  already on
deposit in the Reserve Fund, the aggregate amount on deposit therein is equal to
$1,000.

                  (c) For federal and state  income tax  purposes,  the Class CE
Certificateholders  will be deemed to be the owners of the Reserve  Fund and all
amounts  deposited into the Reserve Fund (other than the initial deposit therein
of $1,000) and any amounts paid to the Reserve Fund from the Cap Contracts shall
be  treated as amounts  distributed  by REMIC II to the  Holders of the Class CE
Certificates.  Upon the termination of the Trust Fund, or the payment in full of
the  Class  A  Certificates,   the  Mezzanine   Certificates  and  the  Class  B
Certificates,  all  amounts  remaining  on deposit in the  Reserve  Fund will be
released by the Trust Fund and distributed to the Class CE Certificateholders or
their designees. The Reserve Fund will be part of the Trust Fund but not part of
any REMIC and any  payments  to the  Holders  of the Class A  Certificates,  the
Mezzanine  Certificates  or the Class B  Certificates  of Net WAC Rate Carryover
Amounts  will not be payments  with  respect to a "regular  interest" in a REMIC
within the meaning of Code Section 860(G)(a)(1).

                  (d) By  accepting  a  Class  CE  Certificate,  each  Class  CE
Certificateholder  hereby agrees that the Securities  Administrator will deposit
into the Reserve  Fund the amounts  described  above on each  Distribution  Date
rather than  distributing  such amounts to the Class CE  Certificateholders.  By
accepting a Class CE Certificate, each Class CE Certificateholder further agrees
that its agreement to such action by the Securities  Administrator  is given for
good  and  valuable  consideration,  the  receipt  and  sufficiency  of which is
acknowledged by such acceptance.

                  (e)  At  the  direction  of  the  Holders  of  a  majority  in
Percentage Interest in the Class CE Certificates,  the Securities  Administrator
shall direct any depository  institution  maintaining the Reserve Fund to invest
the funds in such account in one or more Permitted  Investments bearing interest
or sold at a discount, and maturing, unless payable on demand, (i) no later than
the Business Day immediately preceding the date on which such funds are required
to be withdrawn from such account pursuant to this Agreement,  if a Person other
than the  Securities  Administrator  or an  Affiliate  manages or  advises  such
investment,  and (ii) no later than the date on which such funds are required to
be withdrawn  from such account  pursuant to

                                      105
<PAGE>

this  Agreement,  if the  Securities  Administrator  or an Affiliate  manages or
advises such  investment.  All income and gain earned upon such investment shall
be  deposited   into  the  Reserve  Fund.  In  no  event  shall  the  Securities
Administrator be liable for any investments made pursuant to this clause (e). If
the Holders of a majority in  Percentage  Interest in the Class CE  Certificates
fail to provide  investment  instructions,  funds on deposit in the Reserve Fund
shall be held uninvested by the Securities  Administrator  without liability for
interest or compensation.

                  (f) For  federal  tax return and  information  reporting,  the
right of the Class A Certificateholders,  the Mezzanine  Certificateholders  and
Class B Certificateholders  to receive payments from the Reserve Fund in respect
of any Net WAC Rate  Carryover  Amount shall be assigned a value of $90,000 with
respect to  Certificates  covered by the Group I Cap  Contract  and $55,000 with
respect to Certificates covered by the Group II Cap Contract.

                  SECTION 3.25.   Advance Facility.

                  (a) Notwithstanding anything to the contrary contained herein,
(i) each  Servicer  is  hereby  authorized  to enter  into an  advance  facility
("Advance  Facility") but no more than two Advance  Facilities without the prior
written  consent  of the  Trustee,  which  consent  shall  not  be  unreasonably
withheld,  under which (A) the related Servicer sells,  assigns or pledges to an
advancing person (an "Advance Financing Person") its rights under this Agreement
to be  reimbursed  for any P&I  Advances  or  Servicing  Advances  and/or (B) an
Advance Financing Person agrees to finance some or all P&I Advances or Servicing
Advances  required to be made by the related Servicer pursuant to this Agreement
and (ii)  each  Servicer  is  hereby  authorized  to  assign  its  rights to the
Servicing Fee (which rights shall terminate upon the resignation, termination or
removal of the related  Servicer  pursuant to the terms of this  Agreement);  it
being  understood  that neither the Trust Fund nor any party hereto shall have a
right or claim (including without limitation any right of offset) to any amounts
for  reimbursement  of P&I Advances or Servicing  Advances so assigned or to the
portion of the Servicing Fee so assigned. Subject to the provisions of the first
sentence of this Section 3.25(a), no consent of the Depositor,  Trustee,  Master
Servicer,  Certificateholders  or any other party is required  before a Servicer
may enter into an Advance  Facility,  but such Servicer  shall provide notice to
the  Depositor,  Master  Servicer  and the Trustee of the  existence of any such
Advance Facility promptly upon the consummation thereof stating (a) the identity
of the Advance Financing Person and (b) the identity of any Person  ("Servicer's
Assignee") who has the right to receive amounts in  reimbursement  of previously
unreimbursed P&I Advances or Servicing  Advances.  Notwithstanding the existence
of any Advance  Facility  under which an advancing  person agrees to finance P&I
Advances  and/or  Servicing  Advances on such Servicer's  behalf,  such Servicer
shall  remain  obligated  pursuant to this  Agreement  to make P&I  Advances and
Servicing Advances pursuant to and as required by this Agreement,  and shall not
be relieved of such obligations by virtue of such Advance Facility.

                  (b) Reimbursement  amounts ("Advance  Reimbursement  Amounts")
shall  consist  solely of amounts in respect of P&I  Advances  and/or  Servicing
Advances made with respect to the related  Mortgage  Loans for which the related
Servicer  would be  permitted  to  reimburse  itself  in  accordance  with  this
Agreement,  assuming the related  Servicer  had made the related P&I  Advance(s)
and/or Servicing Advance(s).

                                      106
<PAGE>

                  (c) The related  Servicer  shall  maintain  and provide to any
successor  Servicer  (with,  upon  request,  a copy to the  Trustee)  a detailed
accounting  on a  loan-by-loan  basis as to  amounts  advanced  by,  pledged  or
assigned to, and  reimbursed to any  advancing  person.  The successor  Servicer
shall be entitled to rely on any such  information  provided by the  predecessor
Servicer,  and the successor Servicer shall not be liable for any errors in such
information.

                  (d)  Reimbursement  amounts  distributed  with respect to each
Mortgage  Loan shall be allocated to  outstanding  unreimbursed  P&I Advances or
Servicing  Advances (as the case may be) made with respect to that Mortgage Loan
on a "first-in,  first out" (FIFO) basis.  The  documentation  establishing  any
Advance  Facility  shall require the related  Servicer to provide to the related
advancing person or its designee  loan-by-loan  information with respect to each
such  reimbursement  amount  distributed  to such  advancing  person or  Advance
Facility  trustee on each  Distribution  Date, to enable the advancing person or
Advance Facility trustee to make the FIFO allocation of each such  reimbursement
amount with respect to each Mortgage  Loan.  The related  Servicer  shall remain
entitled to be reimbursed by the advancing  person or Advance  Facility  trustee
for all P&I Advances and Servicing  Advances  funded by the related  Servicer to
the extent the  related  rights to be  reimbursed  therefor  have not been sold,
assigned or pledged to an advancing person.

                  (e)  Any  amendment  to  this  Section  3.25  or to any  other
provision of this  Agreement  that may be necessary or appropriate to effect the
terms of an Advance  Facility  as  described  generally  in this  Section  3.25,
including amendments to add provisions relating to a successor Servicer,  may be
entered into by the Trustee, the Depositor, and the related Servicer without the
consent of any  Certificateholder,  notwithstanding  anything to the contrary in
this  Agreement,  provided,  that the  Trustee  has been  provided an Opinion of
Counsel that such amendment is authorized  hereunder and has no material adverse
effect on the Certificateholders, which opinion shall be an expense of the party
requesting  such  opinion but in any case shall not be an expense of the Trustee
or the Trust Fund; provided,  further, that the amendment shall not be deemed to
adversely affect in any material respect the interests of the Certificateholders
if the Person  requesting the amendment obtains a letter from each Rating Agency
(instead of  obtaining  an Opinion of Counsel to such  effect)  stating that the
amendment  would not result in the  downgrading  or withdrawal of the respective
ratings then assigned to the  Certificates;  it being understood and agreed that
any such rating letter in and of itself will not represent a determination as to
the materiality of any such amendment and will represent a determination only as
to the credit  issues  affecting  any such  rating.  Prior to  entering  into an
Advance  Facility,  the  related  Servicer  shall  notify the lender  under such
facility  in  writing  that:  (a) the P&I  Advances  and/or  Servicing  Advances
financed  by and/or  pledged to the lender are  obligations  owed to the related
Servicer on a  non-recourse  basis payable only from the cash flows and proceeds
received under this Agreement for reimbursement of P&I Advances and/or Servicing
Advances only to the extent provided  herein,  and neither the Master  Servicer,
the Securities Administrator,  the Trustee nor the Trust are otherwise obligated
or liable to repay any P&I Advances and/or  Servicing  Advances  financed by the
lender; (b) the related Servicer will be responsible for remitting to the lender
the applicable  amounts  collected by it as Servicing Fees and as  reimbursement
for P&I Advances and/or Servicing  Advances funded by the lender, as applicable,
subject to the  restrictions and priorities  created in this Agreement;  and (c)
neither the Master Servicer, the Securities  Administrator nor the Trustee shall
have any  responsibility  to  calculate  any  amount  payable  under an  Advance
Facility or to track or monitor the

                                      107
<PAGE>

administration of the financing arrangement between the related Servicer and the
lender or the payment of any amount under an Advance Facility.

                  (f) The related  Servicer shall indemnify the Master Servicer,
the  Securities  Administrator,  the  Trustee  and the Trust  Fund for any cost,
liability  or  expense  relating  to the  Advance  Facility  including,  without
limitation, a claim, pending or threatened, by an Advance Financing Person.

                  SECTION 3.26.   The Servicer Indemnification.

                  Each Servicer agrees to indemnify the Trustee, Master Servicer
and the Securities  Administrator,  from, and hold the Trustee,  Master Servicer
and the  Securities  Administrator  harmless  against,  any loss,  liability  or
expense (including reasonable attorney's fees and expenses) incurred by any such
Person by  reason of such  Servicer's  willful  misfeasance,  bad faith or gross
negligence in the performance of its duties under this Agreement or by reason of
such  Servicer's  reckless  disregard of its  obligations  and duties under this
Agreement.  Such  indemnity  shall survive the  termination or discharge of this
Agreement and the resignation or removal of related Servicer,  the Trustee,  the
Master Servicer and the Securities Administrator.  Any payment hereunder made by
the related Servicer to any such Person shall be from the related Servicer's own
funds, without reimbursement from REMIC I therefor.

                                      108
<PAGE>

                                   ARTICLE IV

                       ADMINISTRATION AND MASTER SERVICING
                  OF THE MORTGAGE LOANS BY THE MASTER SERVICER

                  SECTION 4.01.    Master Servicer.

                  The Master  Servicer  shall,  from and after the Closing  Date
supervise,  monitor and  oversee the  obligations  of the  Servicers  under this
Agreement and the Interim  Servicers under the Interim  Servicing  Agreements to
service and administer the related  Mortgage Loans in accordance  with the terms
of this Agreement and the Interim Servicing Agreements and shall have full power
and authority to do any and all things which it may deem  necessary or desirable
in connection with such master servicing and  administration.  In performing its
obligations hereunder, the Master Servicer shall act in a manner consistent with
Accepted  Master  Servicing  Practices.  Furthermore,  the Master Servicer shall
oversee and consult with the  Servicers  and the Interim  Servicers as necessary
from  time-to-time  to carry out the Master  Servicer's  obligations  hereunder,
shall  receive,  review and  evaluate all  reports,  information  and other data
provided to the Master  Servicer by the Servicers and the Interim  Servicers and
shall cause the Servicers  and the Interim  Servicers to perform and observe the
covenants,  obligations  and  conditions  to be  performed  or  observed  by the
Servicers  under this  Agreement  or the  Interim  Servicers  under the  Interim
Servicing  Agreements.  The Master Servicer shall  independently  and separately
monitor the  Servicers' and the Interim  Servicers'  servicing  activities  with
respect to each related Mortgage Loan,  reconcile the results of such monitoring
with such information  provided in the previous  sentence on a monthly basis and
coordinate  corrective  adjustments to the Servicers' or the Interim  Servicers'
and  Master  Servicer's  records,  and based on such  reconciled  and  corrected
information,  prepare the  statements  specified  in Section  5.03 and any other
information  and  statements  required  to be  provided  by the Master  Servicer
hereunder.  The Master Servicer shall reconcile the results of its Mortgage Loan
monitoring with the actual remittances of the Servicers or the Interim Servicers
to the  Distribution  Account  pursuant to the terms hereof based on information
provided to the Master  Servicer  by the  Servicers  and the Interim  Servicers.
Notwithstanding  anything to the contrary herein, the Master Servicer shall have
no obligation to supervise,  monitor or oversee the  performance  of the Interim
Servicers  under  the  Interim  Servicing  Agreement  on or  after  the  related
Servicing Transfer Date.

                  The Trustee  shall furnish the related  Servicer,  the related
Interim Servicer and the Master Servicer with any limited powers of attorney and
other documents in form as provided to it necessary or appropriate to enable the
related  Servicer,  the  related  Interim  Servicer  and the Master  Servicer to
service and administer the related Mortgage Loans and REO Property.  The Trustee
shall have no responsibility for any action of the Master Servicer,  the related
Servicer or the related Interim  Servicer  pursuant to any such limited power of
attorney and shall be indemnified by the Master  Servicer,  the related Servicer
or the related  Interim  Servicer,  as  applicable,  for any cost,  liability or
expense  incurred by the Trustee in connection  with such Person's misuse of any
such power of attorney.

                  The Trustee,  the Custodian and the  Securities  Administrator
shall  provide  access to the records and  documentation  in  possession  of the
Trustee,  the Custodian or the  Securities  Administrator  regarding the related
Mortgage   Loans  and  REO   Property   and  the   servicing   thereof   to  the
Certificateholders,  the FDIC, and the  supervisory  agents and examiners of the
FDIC, such

                                      109
<PAGE>

access being  afforded only upon  reasonable  prior  written  request and during
normal  business  hours at the  office  of the  Trustee,  the  Custodian  or the
Securities Administrator;  provided, however, that, unless otherwise required by
law, none of the Trustee, the Custodian or the Securities Administrator shall be
required to provide  access to such records and  documentation  if the provision
thereof would violate the legal right to privacy of any Mortgagor.  The Trustee,
the Custodian and the Securities  Administrator  shall allow  representatives of
the above entities to photocopy any of the records and  documentation  and shall
provide  equipment for that purpose at a charge that covers the  Trustee's,  the
Custodian's or the Securities Administrator's actual costs.

                  The Trustee shall execute and deliver to the related Servicer,
the related  Interim  Servicer  or the Master  Servicer  upon  request any court
pleadings, requests for trustee's sale or other documents necessary or desirable
to (i) the  foreclosure or trustee's sale with respect to a Mortgaged  Property;
(ii) any legal action  brought to obtain  judgment  against any Mortgagor on the
Mortgage  Note or any other  Mortgage Loan  Document;  (iii) obtain a deficiency
judgment  against the  Mortgagor;  or (iv)  enforce any other rights or remedies
provided by the Mortgage  Note or any other  Mortgage Loan Document or otherwise
available at law or equity.

                  SECTION 4.02.   REMIC-Related Covenants.

                  For as long as each REMIC  shall  exist,  the  Trustee and the
Securities Administrator shall act in accordance herewith to treat such REMIC as
a REMIC, and the Trustee and the Securities  Administrator shall comply with any
directions of the Seller, the related Servicer,  the related Interim Servicer or
the Master  Servicer to assure such  continuing  treatment.  In particular,  the
Trustee  shall  not (a) sell or  permit  the sale of all or any  portion  of the
Mortgage  Loans or of any  investment of deposits in an Account unless such sale
is as a result of a repurchase of the Mortgage  Loans pursuant to this Agreement
or the Trustee has received a REMIC Opinion prepared at the expense of the Trust
Fund; and (b) other than with respect to a substitution pursuant to the Mortgage
Loan Purchase Agreement or Section 2.03 of this Agreement, as applicable, accept
any contribution to any REMIC after the Startup Day without receipt of a Opinion
of Counsel  stating that such  contribution  will not result in an Adverse REMIC
Event as defined in Section 11.01(f).

                  SECTION 4.03.   Monitoring of Servicer.

                  (a) The Master  Servicer shall be  responsible  for monitoring
the  compliance  by the  Servicers  with  their  respective  duties  under  this
Agreement  and the Interim  Servicers  with their  respective  duties  under the
Interim  Servicing  Agreements.  In the review of the related  Servicer's or the
related  Interim  Servicer's  activities,  the Master  Servicer may rely upon an
officer's  certificate of the related  Servicer or the related Interim  Servicer
with regard to such Servicer's or Interim  Servicer's  compliance with the terms
of this Agreement or the related Interim Servicing Agreement, as applicable.  In
the event that the Master Servicer, in its judgment, determines that the related
Servicer or the related Interim Servicer should be terminated in accordance with
the terms hereof or the terms of the related Interim Servicing Agreement or that
a notice should be sent pursuant to the terms hereof or the terms of the related
Interim  Servicing  Agreement  with respect to the  occurrence of an event that,
unless  cured,  would  constitute  a Servicer  Event of Default,  or an event of
default under the related Interim Servicing Agreement, the Master Servicer shall
notify the related Servicer,  the related Interim  Servicer,  the

                                      110
<PAGE>

Seller and the Trustee  thereof and the Master  Servicer shall issue such notice
or take such other action as it deems appropriate.

                  (b) The Master  Servicer,  for the  benefit of the Trustee and
the  Certificateholders,  shall enforce the  obligations of the Servicers  under
this Agreement and the Interim Servicers under the Interim Servicing  Agreements
and shall,  in the event that a Servicer  fails to perform  its  obligations  in
accordance  with this  Agreement,  subject to this Section and Article VIII, the
Trustee shall terminate the rights and obligations of such Servicer hereunder in
accordance  with the  provisions  of Article  VIII. In the event that an Interim
Servicer fails to perform its obligations in accordance with the related Interim
Servicing  Agreement,  the  Master  Servicer  shall  terminate  the  rights  and
obligations of the Interim Servicer, as servicer, in accordance with the related
Interim Servicing Agreement.  Such enforcement,  including,  without limitation,
the legal prosecution of claims and the pursuit of other  appropriate  remedies,
shall be in such form and  carried out to such an extent and at such time as the
Master Servicer, in its good faith business judgment,  would require were it the
owner of the related  Mortgage Loans. The Master Servicer shall pay the costs of
such enforcement at its own expense, provided that the Master Servicer shall not
be required to prosecute  or defend any legal  action  except to the extent that
the Master Servicer shall have received  reasonable  indemnity for its costs and
expenses in pursuing such action.

                  (c) The Master  Servicer shall be entitled to be reimbursed by
the related  Servicer or the related  Interim  Servicer,  as applicable (or from
amounts on deposit in the  Distribution  Account if the related  Servicer or the
related Interim Servicer is unable to fulfill its obligations hereunder or under
the related Interim  Servicing  Agreement) for all reasonable  out-of-pocket  or
third party costs associated with the transfer of servicing from the predecessor
Servicer  (or if the  predecessor  Servicer  is the  Master  Servicer,  from the
Servicer  immediately  preceding  the Master  Servicer)  or the related  Interim
Servicer,  including without limitation,  any reasonable  out-of-pocket or third
party costs or expenses  associated with the complete  transfer of all servicing
data and the  completion,  correction or  manipulation of such servicing data as
may be required by the Master Servicer to correct any errors or  insufficiencies
in the servicing data or otherwise to enable the Master  Servicer to service the
related Mortgage Loans properly and effectively, upon presentation of reasonable
documentation of such costs and expenses.

                  (d) The Master  Servicer  shall  require the Servicers and the
Interim  Servicers  to  comply  with  the  remittance   requirements  and  other
obligations  set  forth in this  Agreement  and the  related  Interim  Servicing
Agreements.

                  (e) If the Master  Servicer acts as successor to a Servicer or
an Interim Servicer,  it will not assume liability for the  representations  and
warranties of the terminated Servicer or Interim Servicer.

                  SECTION 4.04.   Fidelity Bond.

                  The Master Servicer, at its expense,  shall maintain in effect
a blanket fidelity bond and an errors and omissions insurance policy,  affording
coverage with respect to all  directors,  officers,  employees and other Persons
acting on such Master  Servicer's  behalf,  and covering errors and omissions in
the performance of the Master Servicer's obligations  hereunder.  The errors and
omissions  insurance  policy  and the  fidelity  bond  shall be in such form and
amount  generally  acceptable  for  entities  serving  as  master  servicers  or
trustees.

                                      111
<PAGE>

                  SECTION 4.05.   Power to Act; Procedures.

                  The Master  Servicer  shall master  service the Mortgage Loans
and shall have full power and authority, subject to the REMIC Provisions and the
provisions of Article XI, to do any and all things that it may deem necessary or
desirable in  connection  with the master  servicing and  administration  of the
Mortgage  Loans,  including  but not limited to the power and  authority  (i) to
execute  and  deliver,  on behalf  of the  Certificateholders  and the  Trustee,
customary  consents  or waivers and other  instruments  and  documents,  (ii) to
consent to transfers of any Mortgaged  Property and  assumptions of the Mortgage
Notes and  related  Mortgages,  (iii) to  collect  any  Insurance  Proceeds  and
Liquidation Proceeds,  and (iv) to effectuate foreclosure or other conversion of
the  ownership of the  Mortgaged  Property  securing any Mortgage  Loan, in each
case, in accordance  with the provisions of this Agreement;  provided,  however,
that the Master Servicer shall not (and,  consistent  with its  responsibilities
under Section 4.03, shall not permit the related Servicer or the related Interim
Servicer to)  knowingly or  intentionally  take any action,  or fail to take (or
fail to cause to be taken) any action  reasonably  within  its  control  and the
scope of duties  more  specifically  set  forth  herein,  that,  under the REMIC
Provisions,  if taken or not taken,  as the case may be,  would cause REMIC I or
REMIC II to fail to qualify as a REMIC or result in the imposition of a tax upon
the Trust Fund (including but not limited to the tax on prohibited  transactions
as defined in Section  860F(a)(2) of the Code and the tax on  contributions to a
REMIC set forth in Section  860G(d) of the Code) unless the Master  Servicer has
received an Opinion of Counsel  (but not at the expense of the Master  Servicer)
to the effect that the contemplated action will not cause REMIC I or REMIC II to
fail to qualify as a REMIC or result in the  imposition of a tax upon REMIC I or
REMIC II, as the case may be. The Trustee  shall  furnish  the Master  Servicer,
upon  written  request  from a  Servicing  Officer,  with any powers of attorney
prepared and delivered to it and  reasonably  acceptable to it by empowering the
Master Servicer, the related Servicer or the related Interim Servicer to execute
and deliver  instruments of satisfaction or cancellation,  or of partial or full
release or discharge,  and to foreclose  upon or otherwise  liquidate  Mortgaged
Property, and to appeal, prosecute or defend in any court action relating to the
Mortgage Loans or the Mortgaged  Property,  in accordance with this Agreement or
the related  Interim  Servicing  Agreement,  and the Trustee  shall  execute and
deliver  such  other  documents  prepared  and  delivered  to it and  reasonably
acceptable to it, as the Master  Servicer,  the related  Servicer or the related
Interim  Servicer may request,  to enable the Master  Servicer to master service
and administer the related Mortgage Loans and carry out its duties hereunder, in
each case in  accordance  with  Accepted  Master  Servicing  Practices  (and the
Trustee shall have no liability for misuse of any such powers of attorney by the
Master Servicer,  the related Servicer or the related Interim Servicer and shall
be  indemnified  by the Master  Servicer,  the  related  Servicer or the related
Interim Servicer, as applicable,  for any cost, liability or expense incurred by
the Trustee in connection  with such Person's use or misuse of any such power of
attorney).  If the Master  Servicer or the Trustee has been  advised  that it is
likely that the laws of the state in which action is to be taken  prohibit  such
action  if  taken  in the  name of the  Trustee  or that  the  Trustee  would be
adversely  affected under the "doing business" or tax laws of such state if such
action is taken in its name, the Master  Servicer shall join with the Trustee in
the appointment of a co-trustee  pursuant to Section 9.10. In the performance of
its duties hereunder, the Master Servicer shall be an independent contractor and
shall not,  except in those  instances  where it is taking action in the name of
the Trustee, be deemed to be the agent of the Trustee.

                                      112
<PAGE>

                  SECTION 4.06.   Due-on-Sale Clauses; Assumption Agreements.

                  To the extent Mortgage Loans contain  enforceable  due-on-sale
clauses,  the Master  Servicer  shall cause the related  Servicer or the related
Interim Servicer, as applicable, to enforce such clauses in accordance with this
Agreement  or  the  related  Interim  Servicing  Agreement.  If  applicable  law
prohibits the  enforcement  of a due-on-sale  clause or such clause is otherwise
not enforced in accordance with this Agreement or the related Interim  Servicing
Agreement  and,  as a  consequence,  a Mortgage  Loan is assumed,  the  original
Mortgagor may be released from  liability in accordance  with this  Agreement or
the related Interim Servicing Agreement.

                  SECTION  4.07.  Documents,  Records and Funds in Possession of
Master Servicer To Be Held for Trustee.

                  (a) The  Master  Servicer  shall  transmit  to the  Trustee or
Custodian  such  documents  and  instruments  coming into the  possession of the
Master  Servicer  from time to time as are  required  by the terms  hereof to be
delivered to the Trustee or Custodian. Any funds received by the Master Servicer
in respect of any Mortgage  Loan or which  otherwise are collected by the Master
Servicer  as  Liquidation  Proceeds  or  Insurance  Proceeds  in  respect of any
Mortgage Loan shall be remitted to the Securities  Administrator  for deposit in
the  Distribution  Account.  The Master Servicer shall,  and, subject to Section
3.20 of this Agreement or, to the extent provided  therein,  the related Interim
Servicing  Agreement,  shall cause the related  Servicer or the related  Interim
Servicer to,  provide  access to  information  and  documentation  regarding the
Mortgage  Loans to the  Trustee,  its  agents and  accountants  at any time upon
reasonable  request and during normal business hours, and to  Certificateholders
that are savings and loan associations, banks or insurance companies, the Office
of Thrift Supervision, the FDIC and the supervisory agents and examiners of such
Office and  Corporation  or examiners of any other  federal or state  banking or
insurance regulatory  authority if so required by applicable  regulations of the
Office of Thrift  Supervision or other regulatory  authority,  such access to be
afforded  without charge but only upon reasonable  request in writing and during
normal business hours at the offices of the Master Servicer designated by it. In
fulfilling  such a request  the Master  Servicer  shall not be  responsible  for
determining the sufficiency of such information.

                  (b) All  Mortgage  Files  and funds  collected  or held by, or
under the control of, the Master  Servicer,  in respect of any  Mortgage  Loans,
whether  from  the  collection  of  principal  and  interest  payments  or  from
Liquidation Proceeds or Insurance Proceeds, shall be remitted to the Trustee for
deposit in the Distribution Account.

                  SECTION 4.08.  Standard  Hazard  Insurance and Flood Insurance
Policies.

                  For each Mortgage Loan, the Master  Servicer shall enforce the
obligation of each Servicer under this Agreement or each Interim  Servicer under
the Interim Servicing  Agreements to maintain or cause to be maintained standard
fire and casualty  insurance  and, where  applicable,  flood  insurance,  all in
accordance  with  the  provisions  of  this  Agreement  or the  related  Interim
Servicing  Agreement.  It is understood and agreed that such insurance  shall be
with insurers meeting the eligibility  requirements set forth in Section 3.11 of
the Agreement or the eligibility  requirements  set forth in the related Interim
Servicing  Agreement and that no earthquake or other additional  insurance is to
be required of any Mortgagor or to be maintained on property acquired

                                      113
<PAGE>

in respect of a defaulted loan,  other than pursuant to such applicable laws and
regulations  as  shall  at any  time  be in  force  and as  shall  require  such
additional insurance.

                  SECTION  4.09.   Presentment   of  Claims  and  Collection  of
Proceeds.

                  The Master Servicer shall enforce each Servicer's  obligations
under this Agreement or each Interim  Servicer's  obligations  under the Interim
Servicing  Agreement  to prepare  and  present on behalf of the  Trustee and the
Certificateholders all claims under the Insurance Policies and take such actions
(including  the  negotiation,  settlement,  compromise  or  enforcement  of  the
insured's  claim) as shall be necessary to realize recovery under such policies.
Any proceeds disbursed to the Master Servicer in respect of such policies, bonds
or  contracts  shall be  promptly  remitted  to the  Trustee  for deposit in the
Distribution Account upon receipt,  except that any amounts realized that are to
be applied to the repair or restoration of the related  Mortgaged  Property as a
condition  precedent to the  presentation of claims on the related Mortgage Loan
to the insurer under any applicable insurance policy need not be so or remitted.

                  SECTION  4.10.   Maintenance  of  Primary  Mortgage  Insurance
Policies.

                  (a) The Master  Servicer shall not take, or permit the related
Servicer or the related  Interim  Servicer to take (to the extent such action is
prohibited by this Agreement or the related Interim  Servicing  Agreement),  any
action that would result in  noncoverage  under any primary  mortgage  insurance
policy of any loss  which,  but for the  actions  of the  Master  Servicer,  the
related Servicer or the related Interim Servicer, as applicable, would have been
covered thereunder. The Master Servicer shall use its best reasonable efforts to
cause the related  Servicer or the related Interim Servicer to keep in force and
effect (to the extent that the Mortgage  Loan requires the Mortgagor to maintain
such insurance),  primary mortgage insurance applicable to each Mortgage Loan in
accordance  with  the  provisions  of  this  Agreement  or the  related  Interim
Servicing  Agreement.  The Master  Servicer  shall not, and shall not permit the
related  Servicer or the related Interim  Servicer to, cancel or refuse to renew
any  primary  mortgage  insurance  policy  that is in  effect at the date of the
initial  issuance  of the  Mortgage  Note  and is  required  to be kept in force
hereunder  except in accordance  with the  provisions  of this  Agreement or the
related Interim Servicing Agreement.

                  (b) The Master Servicer  agrees to cause the related  Servicer
or the related  Interim  Servicer  to present,  on behalf of the Trustee and the
Certificateholders,  claims to the insurer under any primary mortgage  insurance
policies  and,  in this  regard,  to take  such  reasonable  action  as shall be
necessary  to permit  recovery  under any primary  mortgage  insurance  policies
respecting defaulted Mortgage Loans.

                  SECTION  4.11.   Trustee  to  Retain   Possession  of  Certain
Insurance Policies and Documents.

                  The  Trustee  or  the  applicable   Custodian,   shall  retain
possession and custody of the originals (to the extent available) of any primary
mortgage insurance policies, or certificate of insurance if applicable,  and any
certificates  of renewal as to the  foregoing as may be issued from time to time
as contemplated by this Agreement. Until all amounts distributable in respect of
the  Certificates  have been distributed in full and the Master Servicer and the
related Servicer and the related Interim Servicer have otherwise fulfilled their
respective  obligations  under this Agreement and the related Interim  Servicing
Agreement the Trustee or the Custodian shall also

                                      114
<PAGE>

retain  possession  and custody of each  Mortgage  File in  accordance  with and
subject  to the  terms  and  conditions  of this  Agreement  and  the  Custodial
Agreement.  The Master Servicer shall promptly  deliver or cause to be delivered
to the  Trustee or the  Custodian,  upon the  execution  or receipt  thereof the
originals  of any primary  mortgage  insurance  policies,  any  certificates  of
renewal,  and such other documents or instruments that constitute  Mortgage Loan
Documents  that come into the  possession  of the Master  Servicer  from time to
time.

                  SECTION 4.12.  Realization Upon Defaulted Mortgage Loans.

                  The Master  Servicer  shall cause the related  Servicer or the
related Interim  Servicer to foreclose upon,  repossess or otherwise  comparably
convert the  ownership of  Mortgaged  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,  all  in
accordance with this Agreement or the related Interim Servicing Agreement.

                  SECTION 4.13.   Compensation for the Master Servicer.

                  As  compensation  for the  activities  of the Master  Servicer
hereunder,  the Master  Servicer shall be entitled to the income from investment
of or earnings on the funds from time to time in the  Distribution  Account,  as
provided in Section 3.10.  The  compensation  payable to the Master  Servicer in
respect of any  Distribution  Date shall be reduced in  accordance  with Section
4.18. The Master  Servicer shall be required to pay all expenses  incurred by it
in  connection  with its  activities  hereunder  and  shall not be  entitled  to
reimbursement therefor except as provided in this Agreement.

                  SECTION 4.14.   REO Property.

                  (a) In the event the Trust Fund acquires  ownership of any REO
Property in respect of any related  Mortgage  Loan,  the deed or  certificate of
sale shall be issued to the Trustee, or to its nominee, on behalf of the related
Certificateholders.  The Master Servicer shall cause the related Servicer or the
related Interim  Servicer to sell, any REO Property as expeditiously as possible
and in accordance  with the provisions of this Agreement or the related  Interim
Servicing  Agreement.  Further,  the Master  Servicer  shall  cause the  related
Servicer or the related Interim Servicer to sell any REO Property prior to three
years after the end of the calendar  year of its  acquisition  by REMIC I unless
(i) the Trustee shall have been supplied by the related  Servicer or the related
Interim  Servicer  with an Opinion of Counsel to the effect  that the holding by
the Trust Fund of such REO Property  subsequent to such  three-year  period will
not result in the imposition of taxes on "prohibited  transactions" of any REMIC
hereunder as defined in section 860F of the Code or cause any REMIC hereunder to
fail to qualify as a REMIC at any time that any Certificates are outstanding, in
which case the Trust Fund may continue to hold such Mortgaged  Property (subject
to any  conditions  contained  in such  Opinion of  Counsel) or (ii) the related
Servicer or the related  Interim  Servicer  shall have applied for, prior to the
expiration of such three-year  period, an extension of such three-year period in
the manner  contemplated  by Section  856(e)(3)  of the Code,  in which case the
three-year  period shall be extended by the  applicable  extension  period.  The
Master Servicer shall cause the related Servicer or the related Interim Servicer
to  protect  and  conserve,  such REO  Property  in the manner and to the extent
required  by this  Agreement  or the  related  Interim  Servicing  Agreement  in
accordance  with the REMIC  Provisions and in a manner that does not result in a
tax on "net income from foreclosure

                                      115
<PAGE>

property"  or  cause  such  REO  Property  to fail to  qualify  as  "foreclosure
property" within the meaning of Section 860G(a)(8) of the Code.

                  (b) The Master  Servicer  shall cause the related  Servicer or
the related  Interim  Servicer to deposit all funds  collected  and  received in
connection  with the  operation of any REO Property in the REO Account or in the
account   delegated  for  such  amounts  under  the  related  Interim  Servicing
Agreement.

                  SECTION 4.15.   Annual Officer's Certificate as to Compliance.

                  (a) The Master  Servicer  shall deliver to the Trustee and the
Rating  Agencies  on or before  March 15 of each year,  commencing  on March 15,
2006,  an  Officer's  Certificate,  certifying  that with  respect to the period
ending  December 31 of the prior year: (i) such  Servicing  Officer has reviewed
the  activities of such Master  Servicer  during the preceding  calendar year or
portion  thereof and its performance  under this Agreement,  (ii) to the best of
such Servicing Officer's  knowledge,  based on such review, such Master Servicer
has performed and fulfilled its duties,  responsibilities  and obligations under
this Agreement in all material  respects  throughout such year, or, if there has
been a  default  in the  fulfillment  of any such  duties,  responsibilities  or
obligations,  specifying  each such default known to such Servicing  Officer and
the nature and status  thereof,  (iii) nothing has come to the attention of such
Servicing  Officer to lead such  Servicing  Officer  to believe  that the Master
Servicer  has  failed  to  perform  any  of  its  duties,  responsibilities  and
obligations under this Agreement in all material respects  throughout such year,
or, if there has been a material  default in the  performance  or fulfillment of
any such duties,  responsibilities or obligations,  specifying each such default
known to such Servicing Officer and the nature and status thereof.

                  (b)  Copies  of  such  statements  shall  be  provided  to any
Certificateholder  upon request, by the Master Servicer or by the Trustee at the
Master  Servicer's  expense if the Master Servicer failed to provide such copies
(unless (i) the Master  Servicer  shall have failed to provide the Trustee  with
such  statement  or (ii) the Trustee  shall be unaware of the Master  Servicer's
failure to provide such statement).

                  SECTION  4.16.  Annual  Independent   Accountant's   Servicing
Report.

                  If the Master  Servicer has, during the course of any calendar
year,  directly  serviced any of the Mortgage Loans, then the Master Servicer at
its expense shall cause a nationally  recognized  firm of independent  certified
public  accountants to furnish a statement to the Trustee,  the Rating  Agencies
and the Seller on or before March 15 of each year,  commencing on March 15, 2006
to the effect that,  with respect to the most recently  ended fiscal year,  such
firm  has  examined  certain  records  and  documents  relating  to  the  Master
Servicer's  performance  of its servicing  obligations  under this Agreement and
pooling and servicing and trust agreements in material  respects similar to this
Agreement and to each other and that, on the basis of such examination conducted
substantially  in compliance  with the audit program for mortgages  serviced for
Freddie Mac or the Uniform Single Attestation Program for Mortgage Bankers, such
firm is of the opinion that the Master Servicer's activities have been conducted
in compliance  with this  Agreement,  or that such  examination has disclosed no
material  items of  noncompliance  except for (i) such  exceptions  as such firm
believes to be immaterial,  (ii) such other  exceptions as are set forth in such
statement and (iii) such exceptions that the Uniform Single Attestation  Program
for Mortgage Bankers or the Audit Program for Mortgages  Serviced by Freddie Mac

                                      116
<PAGE>

requires  it to  report.  Copies of such  statements  shall be  provided  to any
Certificateholder  upon request by the Master Servicer, or by the Trustee at the
expense of the Master Servicer if the Master Servicer shall fail to provide such
copies (unless (i) the Master  Servicer shall have failed to provide the Trustee
with  such  statement  or (ii)  the  Trustee  shall  be  unaware  of the  Master
Servicer's  failure  to  provide  such  statement).  If  such  report  discloses
exceptions  that are  material,  the Master  Servicer  shall  advise the Trustee
whether such  exceptions  have been or are  susceptible  of cure,  and will take
prompt action to do so.

                  SECTION 4.17.    UCC.

                  The Depositor agrees to file  continuation  statements for any
Uniform  Commercial Code financing  statements which the Seller has informed the
Depositor  were filed on the  Closing  Date in  connection  with the Trust.  The
Depositor shall file any financing  statements or amendments thereto required by
any change in the Uniform Commercial Code.

                  SECTION 4.18.  Obligation of the Master Servicer in Respect of
Prepayment Interest Shortfalls.

                  In the event of any Prepayment Interest Shortfalls, the Master
Servicer shall deposit into the Distribution  Account not later than the related
Distribution  Date an amount  equal to the lesser of (i) the  aggregate  amounts
required to be paid by the related Servicer or the related Interim Servicer with
respect to Prepayment Interest Shortfalls  attributable to Principal Prepayments
in full on the Mortgage Loans for the related Distribution Date, and not so paid
by the related  Servicer or the related Interim  Servicer and (ii) the aggregate
amount of the compensation  payable to the Master Servicer for such Distribution
Date in accordance with Secction 4.13, without reimbursement therefor.

                  SECTION 4.19. Prepayment Penalty Verification.

                  On or prior to each Servicer  Remittance  Date,  each Servicer
shall provide in an electronic format acceptable to the Master Servicer the data
necessary for the Master Servicer to perform its  verification  duties set forth
in this Section 4.19. The Master Servicer or a third party reasonably acceptable
to the Master Servicer and the Depositor (the "Verification Agent") will perform
such verification  duties and will use its best efforts to issue its findings in
a report (the  "Verification  Report")  delivered to the Master Servicer and the
Depositor within ten (10) Business Days following the related Distribution Date;
provided,  however,  that if the  Verification  Agent is  unable  to  issue  the
Verification  Report within ten (10) Business  Days  following the  Distribution
Date, the  Verification  Agent may issue and deliver to the Master  Servicer and
the Depositor the  Verification  Report upon the completion of its  verification
duties. The Master Servicer shall forward the Verification Report to the related
Servicer  and shall  notify the  related  Servicer  if the Master  Servicer  has
determined that the related Servicer did not deliver the appropriate  Prepayment
Charge to the Securities  Administrator in accordance with this Agreement.  Such
written  notification  from the Master  Servicer  shall include the loan number,
prepayment  penalty code and  prepayment  penalty  amount as  calculated  by the
Master Servicer or the Verification Agent, as applicable,  of each Mortgage Loan
for which  there is a  discrepancy.  If the  related  Servicer  agrees  with the
verified amounts,  the related Servicer shall adjust the immediately  succeeding
Servicer  Report  and  the  amount  remitted  to the  Trustee  with  respect  to
prepayments   accordingly.   If  the  related   Servicer   disagrees   with  the
determination  of the Master Servicer,  the related Servicer shall,  within five
(5) Business Days of its receipt of the

                                      117
<PAGE>

Verification Report, notify the Master Servicer of such disagreement and provide
the Master  Servicer with  detailed  information  to support its  position.  The
related  Servicer  and the  Master  Servicer  shall  cooperate  to  resolve  any
discrepancy on or prior to the immediately  succeeding Servicer Remittance Date,
and the related  Servicer  will  indicate the effect of such  resolution  on the
related  Servicer  Report and shall adjust the amount  remitted  with respect to
prepayments on such Servicer Remittance Date accordingly.

                  During  such  time as the  related  Servicer  and  the  Master
Servicer are resolving  discrepancies with respect to the Prepayment Charges, no
payments in respect of any disputed  Prepayment  Charges will be remitted to the
Securities  Administrator for deposit in the Distribution Account and the Master
Servicer  shall not be  obligated  to deposit such  payments,  unless  otherwise
required  pursuant to Section 8.01 hereof.  In connection with such duties,  the
Master Servicer shall be able to rely solely on the  information  provided to it
by the related  Servicer in accordance  with this Section.  The Master  Servicer
shall not be  responsible  for verifying the accuracy of any of the  information
provided to it by the related Servicer or the related Interim Servicer.

                                      118
<PAGE>

                                   ARTICLE V

                         PAYMENTS TO CERTIFICATEHOLDERS

                  SECTION 5.01.    Distributions.

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

                       (i) to Holders of REMIC I Regular Interest I-LTAA,  REMIC
         I Regular Interest I-LTA1A,  REMIC I Regular Interest I-LTA1B,  REMIC I
         Regular Interest  I-LTA2A,  REMIC I Regular Interest  I-LTA2B,  REMIC I
         Regular Interest  I-LTA2C,  REMIC I Regular  Interest  I-LTM1,  REMIC I
         Regular  Interest  I-LTM2,  REMIC I Regular  Interest  I-LTM3,  REMIC I
         Regular  Interest  I-LTM4,  REMIC I Regular  Interest  I-LTM5,  REMIC I
         Regular  Interest  I-LTM6,  REMIC I Regular  Interest  I-LTM7,  REMIC I
         Regular  Interest  I-LTM8,  REMIC I Regular  Interest  I-LTM9,  REMIC I
         Regular  Interest  I-LTB1,  REMIC I Regular  Interest  I-LTB2,  REMIC I
         Regular  Interest I-LTZZ and REMIC I Regular  Interest I-LTP, PRO RATA,
         in an  amount  equal  to  (A)  the  Uncertificated  Interest  for  such
         Distribution  Date, plus (B) any amounts in respect  thereof  remaining
         unpaid  from   previous   Distribution   Dates.   Amounts   payable  as
         Uncertificated  Interest in respect of REMIC I Regular  Interest I-LTZZ
         shall be reduced when the REMIC I Overcollateralization  Amount is less
         than the REMIC I Required  Overcollateralization  Amount, by the lesser
         of (x) the  amount  of such  difference  and  (y)  the  Maximum  I-LTZZ
         Uncertificated Interest Deferral Amount and such amount will be payable
         to the  Holders of REMIC I Regular  Interest  I-LTA1A,  REMIC I Regular
         Interest  I-LTA1B,  REMIC I Regular Interest  I-LTA2A,  REMIC I Regular
         Interest  I-LTA2B,  REMIC I Regular Interest  I-LTA2C,  REMIC I Regular
         Interest  I-LTM1,  REMIC I  Regular  Interest  I-LTM2,  REMIC I Regular
         Interest  I-LTM3,  REMIC I  Regular  Interest  I-LTM4,  REMIC I Regular
         Interest  I-LTM5,  REMIC I  Regular  Interest  I-LTM6,  REMIC I Regular
         Interest  I-LTM7,  REMIC I  Regular  Interest  I-LTM8,  REMIC I Regular
         Interest  I-LTM9,  REMIC I Regular  Interest I-LTB1 and REMIC I Regular
         Interest  I-LTB2 in the same  proportion  as the  Overcollateralization
         Increase Amount is allocated to the Corresponding  Certificates and the
         Uncertificated  Balance  of REMIC I Regular  Interest  I-LTZZ  shall be
         increased by such amount;

                       (ii) to  Holders  of REMIC I Regular  Interest  I-LT1SUB,
         REMIC I Regular Interest  I-LT1GRP,  REMIC I Regular Interest I-LT2SUB,
         REMIC I Regular Interest I-LT2GRP, and REMIC I Regular Interest I-LTXX,
         PRO RATA,  in an amount  equal to (A) the  Uncertificated  Interest for
         such  Distribution  Date,  plus  (B) any  amounts  in  respect  thereof
         remaining unpaid from previous Distribution Dates;

                       (iii) to the Holders of REMIC I Regular Interests,  in an
         amount  equal  to  the  remainder  of the  REMIC  I  Marker  Allocation
         Percentage of the available funds for such  Distribution Date after the
         distributions made pursuant to clause (i) above, allocated as follows:

                                      119
<PAGE>

                           (A) 98.00% of such  remainder to the Holders of REMIC
                  I Regular Interest I-LTAA, until the Uncertificated Balance of
                  such  Uncertificated  REMIC I Regular  Interest  is reduced to
                  zero;

                           (B) 2.00% of such remainder, first, to the Holders of
                  REMIC I Regular  Interest  I-LTA1A,  REMIC I Regular  Interest
                  I-LTA1B,  REMIC I Regular  Interest  I-LTA2A,  REMIC I Regular
                  Interest I-LTA2B,  REMIC I Regular Interest  I-LTA2C,  REMIC I
                  Regular  Interest  I-LTM1,  REMIC I Regular  Interest  I-LTM2,
                  REMIC I Regular  Interest  I-LTM3,  REMIC I  Regular  Interest
                  I-LTM4,  REMIC I  Regular  Interest  I-LTM5,  REMIC I  Regular
                  Interest  I-LTM6,  REMIC I Regular  Interest  I-LTM7,  REMIC I
                  Regular  Interest  I-LTM8,  REMIC I Regular  Interest  I-LTM9,
                  REMIC I Regular  Interest I-LTB1 and REMIC I Regular  Interest
                  I-LTB2,  1 % of  and  in  the  same  proportion  as  principal
                  payments  are  allocated  to the  Corresponding  Certificates,
                  until  the  Uncertificated  Balances  of such  REMIC I Regular
                  Interests  are  reduced to zero and  second to the  Holders of
                  REMIC I Regular  Interest  I-LTZZ,  until  the  Uncertificated
                  Balance of such REMIC I Regular Interest is reduced to zero;

                           (C) to the Holders of REMIC I Regular Interest I-LTP,
                  all   Prepayment   Charges  and  on  the   Distribution   Date
                  immediately  following the expiration of the latest Prepayment
                  Charge as identified on the Prepayment  Charge Schedule or any
                  Distribution  Date thereafter  until $100 has been distributed
                  pursuant to this clause; then

                           (D) any remaining  amount to the Holders of the Class
                  R-I Interest, in respect of the Class R-I Interest;

provided,  however,  that 98.00% and 2.00% of any  principal  payments  that are
attributable to an Overcollateralization  Reduction Amount shall be allocated to
Holders of REMIC I Regular  Interest I-LTAA and REMIC I Regular Interest I-LTZZ,
respectively.

                       (iv) to the Holders of REMIC I Regular  Interests,  in an
         amount  equal  to the  remainder  of the  REMIC  I Sub  WAC  Allocation
         Percentage  of  available  funds for such  Distribution  Date after the
         distributions   made   pursuant  to  clause   (ii)  above,   such  that
         distributions of interest are deemed to be made to the Holders of REMIC
         I Regular Interest I-LTISUB, REMIC I Regular Interest I-LT1GRP, REMIC I
         Regular  Interest  I-LT2GRP and REMIC I Regular  Interest  I-LTXX,  pro
         rata,  in an amount equal to (A) the  Uncertificated  Interest for each
         such REMIC I Regular Interest for such Distribution  Date, plus (B) any
         amounts in respect thereof remaining unpaid from previous  Distribution
         Dates and such that  distributions  of principal  shall be deemed to be
         made  to the  REMIC  I  Regular  Interests  first,  so as to  keep  the
         Uncertificated Balance of each REMIC I Regular Interest ending with the
         designation  "GRP"  equal to 0.01% of the  aggregate  Stated  Principal
         Balance of the  Mortgage  Loans in the related Loan Group;  second,  to
         each REMIC I Regular  Interest  ending with the  designation  "SUB," so
         that the  Uncertificated  Balance of each such REMIC I Regular Interest
         is equal to 0.01% of the excess of (x) the aggregate  Stated  Principal
         Balance of the  Mortgage  Loans in the related  Loan Group over (y) the
         current Certificate Principal Balance of the Class A Certificate in the
         related Loan Group  (except that if any such excess is a larger  number
         than  in  the

                                      120
<PAGE>

         preceding  distribution  period, the least amount of principal shall be
         distributed  to such  REMIC I Regular  Interests  such that the REMIC I
         Subordinated  Balance Ratio is  maintained);  and third,  any remaining
         principal to REMIC I Regular Interest I-LTXX.

                       (v)  Notwithstanding   the  distributions   described  in
         Section   5.01(a)(1),   distributions   of  funds   shall  be  made  to
         Certificateholders  only in accordance with Section 5.01(2) through (7)
         and Section 5.01(b).

                  (2) On each  Distribution  Date, the Securities  Administrator
         shall withdraw from the  Distribution  Account to the extent on deposit
         therein an amount equal to the Group I Interest  Remittance  Amount and
         make the following disbursements and transfers in the order of priority
         described  below,  in each case to the  extent of the Group I  Interest
         Remittance Amount remaining for such Distribution Date:

                  FIRST,  concurrently,   to  the  Holders  of  the  Class  A-1A
                  Certificates and Class A-1B Certificates,  the Senior Interest
                  Distribution  Amount  allocable  to each such Class,  on a pro
                  rata basis, based on the entitlement of each such Class; and

                  SECOND, concurrently,  to the Holders of the Class A-2A, Class
                  A-2B  and  Class  A-2C   Certificates,   the  Senior  Interest
                  Distribution  Amount  allocable  to each  such  Class,  to the
                  extent remaining unpaid after the distribution of the Group II
                  Interest  Remittance Amount as set forth in Section 5.01(a)(3)
                  below on a pro rata basis,  based on the  entitlement  of each
                  such Class.

                  (3) On each  Distribution  Date, the Securities  Administrator
         shall withdraw from the  Distribution  Account to the extent on deposit
         therein an amount equal to the Group II Interest  Remittance Amount and
         make the following disbursements and transfers in the order of priority
         described  below,  in each case to the extent of the Group II  Interest
         Remittance Amount remaining for such Distribution Date:

                  FIRST,  concurrently,  to the Holders of the Class A-2A, Class
                  A-2B  and  Class  A-2C   Certificates,   the  Senior  Interest
                  Distribution  Amount  allocable  to each such Class,  on a pro
                  rata basis, based on the entitlement of each such Class; and

                  SECOND,  concurrently,  to  the  Holders  of  the  Class  A-1A
                  Certificates and Class A-1B Certificates,  the Senior Interest
                  Distribution  Amount  allocable  to each  such  Class,  to the
                  extent  remaining unpaid after the distribution of the Group I
                  Interest  Remittance Amount as set forth in Section 5.01(a)(2)
                  above on a pro rata basis,  based on the  entitlement  of each
                  such Class.

                  (4) On each  Distribution  Date, the Securities  Administrator
         shall withdraw from the  Distribution  Account to the extent on deposit
         therein an amount equal to the Group I Interest  Remittance Amount, and
         the  Group  II  Interest   Remittance   Amount   remaining   after  the
         distributions  required  by  clauses  (2) and (3)  above  and  make the
         following   disbursements  and  transfers  in  the  order  of  priority
         described  below,  in each case to the  extent of the Group I  Interest
         Remittance Amount and Group II Interest Remittance Amount remaining for
         such Distribution Date:

                                      121
<PAGE>

                  sequentially,  to the  Holders  of the Class  M-1,  Class M-2,
                  Class M-3,  Class M-4,  Class M-5, Class M-6, Class M-7, Class
                  M-8, Class M-9, Class B-1 and Class B-2 Certificates,  in that
                  order, the Interest Distribution Amount allocable to each such
                  Class.

                  (5) On each  Distribution  Date (a) prior to the Stepdown Date
         or  (b)  on  which  a  Trigger  Event  is  in  effect,  the  Securities
         Administrator  shall  withdraw  from the  Distribution  Account  to the
         extent on  deposit  therein  an amount  equal to the Group I  Principal
         Distribution Amount and the Group II Principal  Distribution Amount and
         distribute  to the  Certificateholders  the following  amounts,  in the
         following order of priority:

                       (vi) The Group I Principal  Distribution  Amount shall be
         distributed in the following order of priority:

                  FIRST, to the Holders of the Class A-1A Certificates and Class
                  A-1B Certificates as follows:

                  (A) for each Distribution  Date on which a Sequential  Trigger
                  Event  is  not  in   effect   for  such   Distribution   Date,
                  concurrently,  to the  Holders of the Class A-1A  Certificates
                  and Class A-1B Certificates, on a pro rata basis, based on the
                  Certificate  Principal  Balance of each such Class,  until the
                  Certificate  Principal  Balance  of each  such  Class has been
                  reduced to zero; and

                  (B) for each Distribution  Date on which a Sequential  Trigger
                  Event is in effect for such Distribution  Date,  sequentially,
                  to the Holders of the Class A-1A  Certificates  and Class A-1B
                  Certificates,  in that order, until the Certificate  Principal
                  Balance of each such Class has been reduced to zero;

                  SECOND, sequentially,  to the Holders of the Class A-2A, Class
                  A-2B and Class A-2C Certificates,  in that order, after taking
                  into  account  the  distribution  of the  Group  II  Principal
                  Distribution  Amount as  described  in Section  5.01(a)(5)(ii)
                  below,  until the Certificate  Principal  Balance of each such
                  Class has been reduced to zero.

                       (vii) The Group II Principal Distribution Amount shall be
         distributed in the following order of priority:

                  FIRST,  sequentially,  to the Holders of the Class A-2A, Class
                  A-2B and Class A-2C  Certificates,  in that  order,  until the
                  Certificate  Principal  Balance  of each  such  Class has been
                  reduced to zero; and

                  SECOND,  to the  Holders  of the Class A-1A  Certificates  and
                  Class  A-1B   Certificates   after  taking  into  account  the
                  distribution of the Group I Principal  Distribution  Amount as
                  described above in Section 5.01(a)(5)(i) above as follows:

                  (A) for each Distribution  Date on which a Sequential  Trigger
                  Event  is  not  in   effect   for  such   Distribution   Date,
                  concurrently,  to the  Holders of the Class A-1A  Certificates
                  and Class A-1B Certificates, on a pro rata basis, based on the

                                      122
<PAGE>

                  Certificate  Principal  Balance of each such Class,  until the
                  Certificate  Principal  Balance  of each  such  class has been
                  reduced to zero; and

                  (B) for each Distribution  Date on which a Sequential  Trigger
                  Event is in effect for such Distribution  Date,  sequentially,
                  to the Holders of the Class A-1A  Certificates  and Class A-1B
                  Certificates,  in that order, until the Certificate  Principal
                  Balance of each such Class has been reduced to zero.

                       (viii)  The Group I  Principal  Distribution  Amount  and
         Group II Principal  Distribution  Amount remaining after  distributions
         pursuant to Sections  5.01(a)(5)(i) and (ii) above shall be distributed
         in the following order of priority:

                  sequentially,  to the  Holders  of the Class  M-1,  Class M-2,
                  Class M-3,  Class M-4,  Class M-5, Class M-6, Class M-7, Class
                  M-8, Class M-9, Class B-1 and Class B-2 Certificates,  in that
                  order,  until the Certificate  Principal  Balance of each such
                  Class has been reduced to zero.

                  (6) On each  Distribution  Date (a) on or after  the  Stepdown
         Date and (b) on which a Trigger Event is not in effect,  the Securities
         Administrator  shall  withdraw  from the  Distribution  Account  to the
         extent on  deposit  therein  an amount  equal to the Group I  Principal
         Distribution Amount and the Group II Principal  Distribution Amount and
         distribute  to the  Certificateholders  the following  amounts,  in the
         following order of priority:

                       (ix) The Group I Principal  Distribution  Amount shall be
         distributed in the following order of priority:

                  FIRST,   concurrenty,   to  the  Holders  of  the  Class  A-1A
                  Certificates  and  Class  A-1B  Certificates,  the  Class  A-1
                  Principal  Distribution  Amount, on a pro rata basis, based on
                  the Certificate  Principal  Balance of each such Class,  until
                  the Certificate  Principal Balance of each such Class has been
                  reduced to zero; and

                  SECOND, sequentially,  to the Holders of the Class A-2A, Class
                  A-2B and Class A-2C Certificates,  in that order, after taking
                  into  account  the  distribution  of the  Group  II  Principal
                  Distribution Amount pursuant to Section  5.01(a)(6)(ii) below,
                  up to an amount equal to the amount,  if any, of the Class A-2
                  Principal   Distribution   Amount  remaining  unpaid  on  such
                  Distribution Date, until the Certificate  Principal Balance of
                  each such Class has been reduced to zero.

                       (x) The Group II Principal  Distribution  Amount shall be
         distributed in the following order of priority:

                  FIRST,  sequentially,  to the Holders of the Class A-2A, Class
                  A-2B and Class A-2C Certificates, in that order, the Class A-2
                  Principal Distribution Amount, until the Certificate Principal
                  Balance of each such Class has been reduced to zero; and

                  SECOND,  concurrently,  to  the  Holders  of  the  Class  A-1A
                  Certificates  and Class A-1B  Certificates,  after taking into
                  account the distribution of the Group I Principal Distribution
                  Amount  pursuant  to  Section  5.01(a)(6)(i)  above,  up to an
                  amount

                                      123
<PAGE>

                  equal  to the  amount,  if any,  of the  Class  A-1  Principal
                  Distribution  Amount  remaining  unpaid  on such  Distribution
                  Date,  until the  Certificate  Principal  Balance of each such
                  Class has been reduced to zero.

                       (xi) The Principal  Distribution  Amount  remaining after
         distributions  pursuant to Sections  5.01(a)(6)(i) and (ii) above shall
         be distributed in the following order of priority:

                  FIRST,  to the  Holders  of the  Class M-1  Certificates,  the
                  lesser of (x) the remaining Principal  Distribution Amount and
                  (y) the Class M-1  Principal  Distribution  Amount,  until the
                  Certificate  Principal  Balance of the Class M-1  Certificates
                  has been reduced to zero;

                  SECOND,  to the  Holders  of the Class M-2  Certificates,  the
                  lesser  of (x)  the  excess  of (i)  the  remaining  Principal
                  Distribution  Amount over (ii) the amounts  distributed to the
                  Holders  of the  Class M-1  Certificates  under  clause  first
                  above,  and (y) the Class M-2 Principal  Distribution  Amount,
                  until  the  Certificate  Principal  Balance  of the  Class M-2
                  Certificates has been reduced to zero;

                  THIRD,  to the  Holders  of the  Class M-3  Certificates,  the
                  lesser  of (x)  the  excess  of (i)  the  remaining  Principal
                  Distribution   Amount   over  (ii)  the  sum  of  the  amounts
                  distributed to the Holders of the Class M-1 Certificates under
                  clause  first  above  and to the  Holders  of  the  Class  M-2
                  Certificates  under clause second above, and (y) the Class M-3
                  Principal Distribution Amount, until the Certificate Principal
                  Balance  of the Class M-3  Certificates  has been  reduced  to
                  zero;

                  FOURTH,  to the  Holders  of the Class M-4  Certificates,  the
                  lesser  of (x)  the  excess  of (i)  the  remaining  Principal
                  Distribution   Amount   over  (ii)  the  sum  of  the  amounts
                  distributed to the Holders of the Class M-1 Certificates under
                  clause  first   above,   to  the  Holders  of  the  Class  M-2
                  Certificates  under clause  second above and to the Holders of
                  the Class M-3  Certificates  under clause third above, and (y)
                  the  Class  M-4  Principal   Distribution  Amount,  until  the
                  Certificate  Principal  Balance of the Class M-4  Certificates
                  has been reduced to zero;

                  FIFTH,  to the  Holders  of the  Class M-5  Certificates,  the
                  lesser  of (x)  the  excess  of (i)  the  remaining  Principal
                  Distribution   Amount   over  (ii)  the  sum  of  the  amounts
                  distributed to the Holders of the Class M-1 Certificates under
                  clause  first   above,   to  the  Holders  of  the  Class  M-2
                  Certificates  under clause second above, to the Holders of the
                  Class M-3  Certificates  under  clause  third above and to the
                  Holders  of the Class M-4  Certificates  under  clause  fourth
                  above,  and (y) the Class M-5 Principal  Distribution  Amount,
                  until  the  Certificate  Principal  Balance  of the  Class M-5
                  Certificates has been reduced to zero;

                  SIXTH,  to the  Holders  of the  Class M-6  Certificates,  the
                  lesser  of (x)  the  excess  of (i)  the  remaining  Principal
                  Distribution   Amount   over  (ii)  the  sum  of  the  amounts
                  distributed to the Holders of the Class M-1 Certificates under
                  clause  first  above,   to  the  Holders  of  the  Class  M  2
                  Certificates  under clause second above, to the Holders of the
                  Class  M-3  Certificates  under  clause  third  above,  to the
                  Holders  of the Class M-4  Certificates  under  clause  fourth
                  above and to the Holders of the

                                      124
<PAGE>

                  Class M-5  Certificates  under clause fifth above, and (y) the
                  Class M-6 Principal Distribution Amount, until the Certificate
                  Principal  Balance  of the  Class  M-6  Certificates  has been
                  reduced to zero;

                  SEVENTH,  to the  Holders of the Class M-7  Certificates,  the
                  lesser  of (x)  the  excess  of (i)  the  remaining  Principal
                  Distribution   Amount   over  (ii)  the  sum  of  the  amounts
                  distributed to the Holders of the Class M-1 Certificates under
                  clause  first  above,   to  the  Holders  of  the  Class  M  2
                  Certificates  under clause second above, to the Holders of the
                  Class  M-3  Certificates  under  clause  third  above,  to the
                  Holders  of the Class M-4  Certificates  under  clause  fourth
                  above,  to the  Holders  of the Class M-5  Certificates  under
                  clause  fifth  above  and to the  Holders  of  the  Class  M-6
                  Certificates  under clause sixth above,  and (y) the Class M-7
                  Principal Distribution Amount, until the Certificate Principal
                  Balance  of the Class M-7  Certificates  has been  reduced  to
                  zero;

                  EIGHTH,  to the  Holders  of the Class M-8  Certificates,  the
                  lesser  of (x)  the  excess  of (i)  the  remaining  Principal
                  Distribution   Amount   over  (ii)  the  sum  of  the  amounts
                  distributed to the Holders of the Class M-1 Certificates under
                  clause  first  above,   to  the  Holders  of  the  Class  M  2
                  Certificates  under clause second above, to the Holders of the
                  Class  M-3  Certificates  under  clause  third  above,  to the
                  Holders  of the Class M-4  Certificates  under  clause  fourth
                  above,  to the  Holders  of the Class M-5  Certificates  under
                  clause  fifth   above,   to  the  Holders  of  the  Class  M-6
                  Certificates  under  clause  sixth above and to the Holders of
                  the Class M-7 Certificates under clause seventh above, and (y)
                  the  Class  M-8  Principal   Distribution  Amount,  until  the
                  Certificate  Principal  Balance of the Class M-8  Certificates
                  has been reduced to zero;

                  NINTH,  to the  Holders  of the  Class M-9  Certificates,  the
                  lesser  of (x)  the  excess  of (i)  the  remaining  Principal
                  Distribution   Amount   over  (ii)  the  sum  of  the  amounts
                  distributed to the Holders of the Class M-1 Certificates under
                  clause  first  above,   to  the  Holders  of  the  Class  M  2
                  Certificates  under clause second above, to the Holders of the
                  Class  M-3  Certificates  under  clause  third  above,  to the
                  Holders  of the Class M-4  Certificates  under  clause  fourth
                  above,  to the  Holders  of the Class M-5  Certificates  under
                  clause  fifth   above,   to  the  Holders  of  the  Class  M-6
                  Certificates  under clause sixth above,  to the Holders of the
                  Class M-7  Certificates  under clause seventh above and to the
                  Holders  of the Class M-8  Certificates  under  clause  eighth
                  above,  and (y) the Class M-9 Principal  Distribution  Amount,
                  until  the  Certificate  Principal  Balance  of the  Class M-9
                  Certificates has been reduced to zero;

                  TENTH,  to the  Holders  of the  Class B-1  Certificates,  the
                  lesser  of (x)  the  excess  of (i)  the  remaining  Principal
                  Distribution   Amount   over  (ii)  the  sum  of  the  amounts
                  distributed to the Holders of the Class M-1 Certificates under
                  clause  first  above,   to  the  Holders  of  the  Class  M  2
                  Certificates  under clause second above, to the Holders of the
                  Class  M-3  Certificates  under  clause  third  above,  to the
                  Holders  of the Class M-4  Certificates  under  clause  fourth
                  above,  to the  Holders  of the Class M-5  Certificates  under
                  clause  fifth   above,   to  the  Holders  of  the  Class  M-6
                  Certificates  under clause sixth above,  to the Holders of the
                  Class M-7  Certificates

                                      125
<PAGE>

                  under clause  seventh  above,  to the Holders of the Class M-8
                  Certificates  under clause  eighth above and to the Holders of
                  the Class M-9  Certificates  under clause ninth above, and (y)
                  the  Class  B-1  Principal   Distribution  Amount,  until  the
                  Certificate  Principal  Balance of the Class B-1  Certificates
                  has been reduced to zero; and

                  ELEVENTH,  to the Holders of the Class B-2  Certificates,  the
                  lesser  of (x)  the  excess  of (i)  the  remaining  Principal
                  Distribution   Amount   over  (ii)  the  sum  of  the  amounts
                  distributed to the Holders of the Class M-1 Certificates under
                  clause  first  above,   to  the  Holders  of  the  Class  M  2
                  Certificates  under clause second above, to the Holders of the
                  Class  M-3  Certificates  under  clause  third  above,  to the
                  Holders  of the Class M-4  Certificates  under  clause  fourth
                  above,  to the  Holders  of the Class M-5  Certificates  under
                  clause  fifth   above,   to  the  Holders  of  the  Class  M-6
                  Certificates  under clause sixth above,  to the Holders of the
                  Class M-7  Certificates  under clause  seventh  above,  to the
                  Holders  of the Class M-8  Certificates  under  clause  eighth
                  above,  to the  Holders  of the Class M-9  Certificates  under
                  clause  ninth  above  and to the  Holders  of  the  Class  B-1
                  Certificates  under clause tenth above,  and (y) the Class B-2
                  Principal Distribution Amount, until the Certificate Principal
                  Balance  of the Class B-2  Certificates  has been  reduced  to
                  zero.

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

                       (xii)  to  the   Holders  of  the  Class  or  Classes  of
         Certificates  then  entitled  to  receive  distributions  in respect of
         principal,  in an  amount  equal to any  Extra  Principal  Distribution
         Amount,  payable to such Holders in accordance  with the priorities set
         forth in Section 5.01(b) below;

                       (xiii)  sequentially,  to the  Holders  of the Class M-1,
         Class M-2, Class M-3, Class M-4, Class M-5, Class M-6, Class M-7, Class
         M-8, Class M-9, Class B-1 and Class B-2 Certificates, in that order, in
         an amount equal to the Interest Carry Forward Amount  allocable to each
         such Class;

                       (xiv)  sequentially,  to the  Holders  of the Class  M-1,
         Class M-2, Class M-3, Class M-4, Class M-5, Class M-6, Class M-7, Class
         M-8, Class M-9, Class B-1 and Class B-2 Certificates, in that order, in
         an amount equal to the Allocated Realized Loss Amount allocable to each
         such Class;

                       (xv)  concurrently,   to  the  Holders  of  the  Class  A
         Certificates,  in an amount equal to such Certificates' allocated share
         of any Prepayment  Interest Shortfalls on the related Mortgage Loans to
         the extent not covered by payments  pursuant to Section 3.22 or 4.18 of
         this Agreement or pursuant to the Interim Servicing  Agreements and any
         shortfalls  resulting from the application of the Relief Act or similar
         state or local law or the  bankruptcy  code with respect to the related
         Mortgage  Loans to the extent not  previously  reimbursed  pursuant  to
         Section 1.02;

                       (xvi)  sequentially,  to the  Holders  of the Class  M-1,
         Class M-2, Class M-3, Class M-4, Class M-5, Class M-6, Class M-7, Class
         M-8, Class M-9, Class B-1 and

                                      126
<PAGE>

                  Class B-2  Certificates,  in that order, in an amount equal to
                  such certificates' share of any Prepayment Interest Shortfalls
                  on the  Mortgage  Loans to the extent not  covered by payments
                  pursuant to Sections 3.22 or Section 4.18 of this Agreement or
                  pursuant to the Interim  Servicing  Agreements  and any Relief
                  Act Interest  Shortfall,  in each case that were  allocated to
                  such  Class  for  such  Distribution  Date  and for any  prior
                  Distribution  Date,  to the extent not  previously  reimbursed
                  pursuant to Section 1.02;

                       (xvii) to the Reserve Fund from amounts otherwise payable
         to the Class CE  Certificates,  and then from the  Reserve  Fund to the
         Class A, Class M-1,  Class M-2,  Class M-3, Class M-4, Class M-5, Class
         M-6,  Class  M-7,  Class  M-8,  Class  M-9,  Class  B-1 and  Class  B-2
         Certificates  in that order, in an amount equal to the unpaid amount of
         any Net WAC  Rate  Carryover  Amount  for  each  such  Class  for  such
         Distribution Date;

                       (xviii) to the Reserve  Fund,  the amount  required to be
         deposited  therein  pursuant  to Section  3.24(b),  after  taking  into
         account amounts received under the Cap Contracts;

                       (xix) for so long as Ocwen is the  Servicer  of the Ocwen
         Mortgage  Loans,  to the Holders of the Class CE-1  Certificates,  with
         respect to each Ocwen Mortgage Loan,  one-twelfth of the product of (i)
         the excess of the Servicing Fee Rate over the Ocwen  Servicing Fee Rate
         multiplied  by (ii)  the  Scheduled  Principal  Balance  of such  Ocwen
         Mortgage Loan as of the Due Date in the preceding calendar month;

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

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

                  The  Class  CE  Certificates   are  intended  to  receive  all
principal and interest  received by the Trust on the Mortgage  Loans that is not
otherwise  distributable  to any other  Class of Regular  Certificates  or REMIC
Regular Interests. If the Securities  Administrator determines that the Residual
Certificates are entitled to any  distributions  on any Distribution  Date other
than the final  Distribution  Date, the Securities  Administrator,  prior to any
such  distribution  to any Residual  Certificate,  shall notify the Depositor of
such impending distribution.  Upon such notification, the Depositor will prepare
and request that the other parties hereto enter into an amendment to the Pooling
and Servicing Agreement pursuant to Section 12.01, to revise such mistake in the
distribution provisions.

                  On each  Distribution  Date, after making the distributions of
the  Available   Distribution   Amount  as  set  forth  above,   the  Securities
Administrator  will first,  withdraw  from the Reserve  Fund all income from the
investment  of funds in the  Reserve  Fund and  distribute  such  amount  to the
Holders of the Class CE  Certificates,  and  second,  withdraw  from the Reserve

                                      127
<PAGE>

Fund, to the extent of amounts  remaining on deposit therein,  the amount of any
Net WAC Rate Carryover  Amount for such  Distribution  Date and distribute  such
amount first,  concurrently  to the Class A  Certificates,  on a PRO RATA basis;
second,  to the Class M-1  Certificates,  third, to the Class M-2  Certificates,
fourth,  to the Class M-3  Certificates,  fifth, to the Class M-4  Certificates,
sixth, to the Class M-5  Certificates,  seventh,  to the Class M-6 Certificates,
eighth,  to the Class M-7  Certificates,  ninth, to the Class M-8  Certificates,
tenth, to the Class M-9  Certificates,  eleventh,  to the Class B-1 Certificates
and twelfth,  to the Class B-2  Certificates,  in each case to the extent to the
extent any Net WAC Rate Carryover Amount is allocable to each such Class.

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

         FIRST, to the Holders of the Class A Certificates as follows:

                  (A) for each Distribution  Date on which a Sequential  Trigger
                  Event  is  not  in   effect   for  such   Distribution   Date,
                  concurrently to the Holders of the Class A Certificates,  on a
                  pro rata basis, based on the Certificate  Principal Balance of
                  each such Class,  until the Certificate  Principal  Balance of
                  each such Class has been  reduced to zero;  provided,  however
                  that the pro rata allocation to the Class A-2A, Class A-2B and
                  Class A-2C Certificates pursuant to this clause shall be based
                  on the total Certificate  Principal Balance of the Class A-2A,
                  Class  A-2B  and  Class  A-2C   Certificates,   but  shall  be
                  distributed  to the Class  A-2A,  Class  A-2B and  Class  A-2C
                  Certificates on a sequential  basis, in that order,  until the
                  Certificate  Principal  Balance  of each  such  Class has been
                  reduced to zero; and

                  (B) for each Distribution  Date on which a Sequential  Trigger
                  Event is in effect for such Distribution Date, concurrently to
                  the Holders of the Class A Certificates,  on a pro rata basis,
                  based on the Certificate Principal Balance of each such Class,
                  until the Certificate Principal Balance of each such Class has
                  been  reduced  to zero;  provided,  however  that the pro rata
                  allocation  to the Class  A-1A  Certificates  and  Class  A-1B
                  Certificates  pursuant  to this  clause  shall be based on the
                  total   Certificate   Principal  Balance  of  the  Class  A-1A
                  Certificates  and  Class  A-1B  Certificates,   but  shall  be
                  distributed to the Class A-1A  Certificates and the Class A-1B
                  Certificates on a sequential  basis, in that order,  until the
                  Certificate  Principal  Balance  of each  such  Class has been
                  reduced  to  zero;   provided,   further  that  the  pro  rata
                  allocation  to the  Class  A-2A,  Class  A-2B and  Class  A-2C
                  Certificates  pursuant  to this  clause  shall be based on the
                  total  Certificate  Principal Balance of the Class A-2A, Class
                  A-2B and Class A-2C Certificates,  but shall be distributed to
                  the Class A-2A,  Class A-2B and Class A-2C  Certificates  on a
                  sequential  basis,  in  that  order,   until  the  Certificate
                  Principal Balance of each such Class has been reduced to zero.

                  SECOND,  sequentially,  to the Holders of the Class M-1, Class
                  M-2,  Class M 3, Class M-4,  Class M-5,  Class M-6, Class M-7,
                  Class M-8, Class M-9, Class B-1 and Class B-2 Certificates, in
                  that order,  until the Certificate  Principal  Balance of each
                  such Class has been reduced to zero.

                                      128
<PAGE>

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

                  FIRST,   (a)  the   lesser  of  (x)  the  Group  I   Principal
                  Distribution   Amount   and  (y)  the  Class   A-1   Principal
                  Distribution Amount, shall be distributed  concurrently to the
                  Holders  of  the  Class  A-1A   Certificates  and  Class  A-1B
                  Certificates,  on a pro rata basis,  based on the  Certificate
                  Princpal  Balance of each such  Class,  until the  Certificate
                  Principal  Balance of each such Class has been reduced to zero
                  and (b) the lesser of (x) the Group II Principal  Distribution
                  Amount and (y) the Class A-2  Principal  Distribution  Amount,
                  shall be distributed  sequentially to the Holders of the Class
                  A-2A,  Class  A-2B  and  Class  A-2C  Certificates  until  the
                  Certificate  Principal  Balance  of each  such  Class has been
                  reduced to zero;

                  SECOND,  the  lesser of (x) the  excess  of (i) the  Principal
                  Distribution  Amount over (ii) the amount  distributed  to the
                  Holders of the Class A  Certificates  pursuant to clause FIRST
                  of this Section  5.01(b)(ii)  and (y) the Class M-1  Principal
                  Distribution  Amount,  shall be  distributed to the Holders of
                  the Class M-1  Certificates,  until the Certificate  Principal
                  Balance of such Class has been reduced to zero;

                  THIRD,  the  lesser  of (x) the  excess  of (i) the  Principal
                  Distribution   Amount   over  (ii)  the  sum  of  the  amounts
                  distributed  to  the  Holders  of  the  Class  A  Certificates
                  pursuant to clause  first of this Section  5.01(b)(ii)  and to
                  the Holders of the Class M-1  Certificates  pursuant to clause
                  second  of this  Section  5.01(b)(ii)  and (y) the  Class  M-2
                  Principal  Distribution  Amount,  shall be  distributed to the
                  Holders of the Class M-2  Certificates,  until the Certificate
                  Principal Balance of such Class has been reduced to zero;

                  FOURTH,  the  lesser of (x) the  excess  of (i) the  Principal
                  Distribution   Amount   over  (ii)  the  sum  of  the  amounts
                  distributed  to  the  Holders  of  the  Class  A  Certificates
                  pursuant to clause first of this Section  5.01(b)(ii),  to the
                  Holders  of the  Class  M-1  Certificates  pursuant  to clause
                  second of this Section  5.01(b)(ii)  and to the Holders of the
                  Class  M-2  Certificates  pursuant  to  clause  third  of this
                  Section   5.01(b)(ii)   and  (y)  the  Class   M-3   Principal
                  Distribution  Amount,  shall be  distributed to the Holders of
                  the Class M-3  Certificates,  until the Certificate  Principal
                  Balance of such Class has been reduced to zero;

                  FIFTH,  the  lesser  of (x) the  excess  of (i) the  Principal
                  Distribution   Amount   over  (ii)  the  sum  of  the  amounts
                  distributed  to  the  Holders  of  the  Class  A  Certificates
                  pursuant to clause first of this Section  5.01(b)(ii),  to the
                  Holders  of the  Class  M-1  Certificates  pursuant  to clause
                  second of this  Section  5.01(b)(ii),  to the  Holders  of the
                  Class  M-2  Certificates  pursuant  to  clause  third  of this
                  Section  5.01(b)(ii)  and to the  Holders  of  the  Class  M-3
                  Certificates   pursuant  to  clause  fourth  of  this  Section
                  5.01(b)(ii)  and  (y) the  Class  M-4  Principal  Distribution
                  Amount,  shall be  distributed to the Holders of the Class M-4
                  Certificates,  until the Certificate Principal Balance of such
                  Class has been reduced to zero;

                  SIXTH,  the  lesser  of (x) the  excess  of (i) the  Principal
                  Distribution   Amount   over  (ii)  the  sum  of  the  amounts
                  distributed  to  the  Holders  of  the  Class  A  Certificates

                                      129
<PAGE>

                  pursuant to clause first of this Section  5.01(b)(ii),  to the
                  Holders  of the  Class  M-1  Certificates  pursuant  to clause
                  second of this  Section  5.01(b)(ii),  to the  Holders  of the
                  Class  M-2  Certificates  pursuant  to  clause  third  of this
                  Section   5.01(b)(ii),   to  the  Holders  of  the  Class  M-3
                  Certificates   pursuant  to  clause  fourth  of  this  Section
                  5.01(b)(ii)  and to the Holders of the Class M-4  Certificates
                  pursuant to clause fifth of this Section  5.01(b)(ii)  and (y)
                  the  Class  M-5  Principal   Distribution   Amount,  shall  be
                  distributed  to the  Holders  of the Class  M-5  Certificates,
                  until the Certificate Principal Balance of such Class has been
                  reduced to zero;

                  SEVENTH,  the  lesser of (x) the  excess of (i) the  Principal
                  Distribution   Amount   over  (ii)  the  sum  of  the  amounts
                  distributed  to  the  Holders  of  the  Class  A  Certificates
                  pursuant to clause first of this Section  5.01(b)(ii),  to the
                  Holders  of the  Class  M-1  Certificates  pursuant  to clause
                  second of this  Section  5.01(b)(ii),  to the  Holders  of the
                  Class  M-2  Certificates  pursuant  to  clause  third  of this
                  Section   5.01(b)(ii),   to  the  Holders  of  the  Class  M-3
                  Certificates   pursuant  to  clause  fourth  of  this  Section
                  5.01(b)(ii),  to the  Holders  of the Class  M-4  Certificates
                  pursuant to clause  fifth of this Section  5.01(b)(ii)  and to
                  the Holders of the Class M-5  Certificates  pursuant to clause
                  sixth  of this  Section  5.01(b)(ii)  and (y)  the  Class  M-6
                  Principal  Distribution  Amount,  shall be  distributed to the
                  Holders of the Class M-6  Certificates,  until the Certificate
                  Principal Balance of such Class has been reduced to zero;

                  EIGHTH,  the  lesser of (x) the  excess  of (i) the  Principal
                  Distribution   Amount   over  (ii)  the  sum  of  the  amounts
                  distributed  to  the  Holders  of  the  Class  A  Certificates
                  pursuant to clause first of this Section  5.01(b)(ii),  to the
                  Holders  of the  Class  M-1  Certificates  pursuant  to clause
                  second of this  Section  5.01(b)(ii),  to the  Holders  of the
                  Class  M-2  Certificates  pursuant  to  clause  third  of this
                  Section   5.01(b)(ii),   to  the  Holders  of  the  Class  M-3
                  Certificates   pursuant  to  clause  fourth  of  this  Section
                  5.01(b)(ii),  to the  Holders  of the Class  M-4  Certificates
                  pursuant to clause fifth of this Section  5.01(b)(ii),  to the
                  Holders of the Class M-5 Certificates pursuant to clause sixth
                  of this  Section  5.01(b)(ii)  and to the Holders of the Class
                  M-6  Certificates  pursuant to clause  seventh of this Section
                  5.01(b)(ii)  and  (y) the  Class  M-7  Principal  Distribution
                  Amount,  shall be  distributed to the Holders of the Class M-7
                  Certificates,  until the Certificate Principal Balance of such
                  Class has been reduced to zero;

                  NINTH,  the  lesser  of (x) the  excess  of (i) the  Principal
                  Distribution   Amount   over  (ii)  the  sum  of  the  amounts
                  distributed  to  the  Holders  of  the  Class  A  Certificates
                  pursuant to clause first of this Section  5.01(b)(ii),  to the
                  Holders  of the  Class  M-1  Certificates  pursuant  to clause
                  second of this  Section  5.01(b)(ii),  to the  Holders  of the
                  Class  M-2  Certificates  pursuant  to  clause  third  of this
                  Section   5.01(b)(ii),   to  the  Holders  of  the  Class  M-3
                  Certificates   pursuant  to  clause  fourth  of  this  Section
                  5.01(b)(ii),  to the  Holders  of the Class  M-4  Certificates
                  pursuant to clause fifth of this Section  5.01(b)(ii),  to the
                  Holders of the Class M-5 Certificates pursuant to clause sixth
                  of this Section  5.01(b)(ii),  to the Holders of the Class M-6
                  Certificates  pursuant  to  clause  seventh  of  this  Section
                  5.01(b)(ii)  and to the Holders of the Class M-7  Certificates
                  pursuant to clause eighth of this Section  5.01(b)(ii) and (y)
                  the  Class  M-8  Principal   Distribution   Amount,  shall  be

                                      130
<PAGE>

                  distributed  to the  Holders  of the Class  M-8  Certificates,
                  until the Certificate Principal Balance of such Class has been
                  reduced to zero;

                  TENTH,  the  lesser  of (x) the  excess  of (i) the  Principal
                  Distribution   Amount   over  (ii)  the  sum  of  the  amounts
                  distributed  to  the  Holders  of  the  Class  A  Certificates
                  pursuant to clause first of this Section  5.01(b)(ii),  to the
                  Holders  of the  Class  M-1  Certificates  pursuant  to clause
                  second of this  Section  5.01(b)(ii),  to the  Holders  of the
                  Class  M-2  Certificates  pursuant  to  clause  third  of this
                  Section   5.01(b)(ii),   to  the  Holders  of  the  Class  M-3
                  Certificates   pursuant  to  clause  fourth  of  this  Section
                  5.01(b)(ii),  to the  Holders  of the Class  M-4  Certificates
                  pursuant to clause fifth of this Section  5.01(b)(ii),  to the
                  Holders of the Class M-5 Certificates pursuant to clause sixth
                  of this Section  5.01(b)(ii),  to the Holders of the Class M-6
                  Certificates  pursuant  to  clause  seventh  of  this  Section
                  5.01(b)(ii),  to the  Holders  of the Class  M-7  Certificates
                  pursuant to clause eighth of this Section  5.01(b)(ii)  and to
                  the Holders of the Class M-8  Certificates  pursuant to clause
                  ninth  of this  Section  5.01(b)(ii)  and (y)  the  Class  M-9
                  Principal  Distribution  Amount,  shall be  distributed to the
                  Holders of the Class M-9  Certificates,  until the Certificate
                  Principal Balance of such Class has been reduced to zero;

                  ELEVENTH,  the lesser of (x) the  excess of (i) the  Principal
                  Distribution   Amount   over  (ii)  the  sum  of  the  amounts
                  distributed  to  the  Holders  of  the  Class  A  Certificates
                  pursuant to clause first of this Section  5.01(b)(ii),  to the
                  Holders  of the  Class  M-1  Certificates  pursuant  to clause
                  second of this  Section  5.01(b)(ii),  to the  Holders  of the
                  Class  M-2  Certificates  pursuant  to  clause  third  of this
                  Section   5.01(b)(ii),   to  the  Holders  of  the  Class  M-3
                  Certificates   pursuant  to  clause  fourth  of  this  Section
                  5.01(b)(ii),  to the  Holders  of the Class  M-4  Certificates
                  pursuant to clause fifth of this Section  5.01(b)(ii),  to the
                  Holders of the Class M-5 Certificates pursuant to clause sixth
                  of this Section  5.01(b)(ii),  to the Holders of the Class M-6
                  Certificates  pursuant  to  clause  seventh  of  this  Section
                  5.01(b)(ii),  to the  Holders  of the Class  M-7  Certificates
                  pursuant to clause eighth of this Section 5.01(b)(ii),  to the
                  Holders of the Class M-8 Certificates pursuant to clause ninth
                  of this  Section  5.01(b)(ii)  and to the Holders of the Class
                  M-9  Certificates  pursuant  to clause  tenth of this  Section
                  5.01(b)(ii)  and  (y) the  Class  B-1  Principal  Distribution
                  Amount,  shall be  distributed to the Holders of the Class B-1
                  Certificates,  until the Certificate Principal Balance of such
                  Class has been reduced to zero; and

                  TWELFTH,  the  lesser of (x) the  excess of (i) the  Principal
                  Distribution   Amount   over  (ii)  the  sum  of  the  amounts
                  distributed  to  the  Holders  of  the  Class  A  Certificates
                  pursuant to clause first of this Section  5.01(b)(ii),  to the
                  Holders  of the  Class  M-1  Certificates  pursuant  to clause
                  second of this  Section  5.01(b)(ii),  to the  Holders  of the
                  Class  M-2  Certificates  pursuant  to  clause  third  of this
                  Section   5.01(b)(ii),   to  the  Holders  of  the  Class  M-3
                  Certificates   pursuant  to  clause  fourth  of  this  Section
                  5.01(b)(ii),  to the  Holders  of the Class  M-4  Certificates
                  pursuant to clause fifth of this Section  5.01(b)(ii),  to the
                  Holders of the Class M-5 Certificates pursuant to clause sixth
                  of this Section  5.01(b)(ii),  to the Holders of the Class M-6
                  Certificates  pursuant  to  clause  seventh  of  this  Section
                  5.01(b)(ii),  to the  Holders  of the Class  M-7  Certificates
                  pursuant to clause eighth of this Section 5.01(b)(ii),  to the
                  Holders of the Class M-8 Certificates pursuant to clause ninth
                  of this

                                      131
<PAGE>

                  Section   5.01(b)(ii),   to  the  Holders  of  the  Class  M-9
                  Certificates   pursuant  to  clause   tenth  of  this  Section
                  5.01(b)(ii)  and to the Holders of the Class B-1  Certificates
                  pursuant to clause  eleventh of this Section  5.01(b)(ii)  and
                  (y) the  Class B-2  Principal  Distribution  Amount,  shall be
                  distributed  to the  Holders  of the Class  B-2  Certificates,
                  until the Certificate Principal Balance of such Class has been
                  reduced to zero.

                  (c) On each  Distribution  Date, the Securities  Administrator
shall  withdraw  any amounts  then on deposit in the  Distribution  Account that
represent  Prepayment  Charges and shall  distribute such amounts to the Class P
Certificateholders as described above.

                  (d) All  distributions  made  with  respect  to each  Class of
Certificates  on each  Distribution  Date shall be allocated  PRO RATA among the
outstanding  Certificates  in such Class  based on their  respective  Percentage
Interests.   Payments  in  respect  of  each  Class  of   Certificates  on  each
Distribution  Date will be made to the Holders of the respective Class of record
on the related Record Date (except as otherwise  provided in Section  5.01(f) or
Section 10.01  respecting the final  distribution  on such Class),  based on the
aggregate Percentage Interest represented by their respective Certificates,  and
shall be made by wire transfer of immediately  available funds to the account of
any  such  Holder  at a bank  or  other  entity  having  appropriate  facilities
therefor, if such Holder shall have so notified the Securities  Administrator in
writing at least five Business Days prior to the Record Date  immediately  prior
to such Distribution Date and is the registered owner of Certificates  having an
initial aggregate  Certificate Principal Balance that is in excess of the lesser
of (i)  $5,000,000  or (ii)  two-thirds  of the  initial  Certificate  Principal
Balance of such Class of  Certificates,  or  otherwise  by check mailed by first
class mail to the address of such Holder appearing in the Certificate  Register.
The final distribution on each Certificate will be made in like manner, but only
upon presentment and surrender of such Certificate at the Corporate Trust Office
of the Securities  Administrator or such other location  specified in the notice
to Certificateholders of such final distribution.

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

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

                                      132
<PAGE>

                  (f) Except as otherwise  provided in Section  10.01,  whenever
the Securities Administrator expects that the final distribution with respect to
any  Class of  Certificates  will be made on the  next  Distribution  Date,  the
Securities  Administrator shall, no later than three (3) days before the related
Distribution  Date,  mail  to  each  Holder  on  such  date  of  such  Class  of
Certificates a notice to the effect that:

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

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

                  Any  funds  not  distributed  to  any  Holder  or  Holders  of
Certificates of such Class on such  Distribution  Date because of the failure of
such Holder or Holders to tender their Certificates  shall, on such date, be set
aside and held in trust by the  Securities  Administrator  and  credited  to the
account of the appropriate  non-tendering Holder or Holders. If any Certificates
as to which  notice has been given  pursuant to this Section  5.01(f)  shall not
have  been  surrendered  for  cancellation  within  six  months  after  the time
specified  in such  notice,  the  Securities  Administrator  shall mail a second
notice to the  remaining  non-tendering  Certificateholders  to surrender  their
Certificates  for cancellation in order to receive the final  distribution  with
respect  thereto.   If  within  one  year  after  the  second  notice  all  such
Certificates  shall not have been surrendered for  cancellation,  the Securities
Administrator  shall,  directly or through an agent,  mail a final notice to the
remaining  non-tendering   Certificateholders   concerning  surrender  of  their
Certificates  but shall continue to hold any remaining  funds for the benefit of
non-tendering  Certificateholders.  The costs and  expenses of  maintaining  the
funds in trust and of contacting  such  Certificateholders  shall be paid out of
the  assets  remaining  in such trust  fund.  If within one year after the final
notice any such  Certificates  shall not have been surrendered for cancellation,
the Securities  Administrator  shall pay to the Depositor all such amounts,  and
all  rights of  non-tendering  Certificateholders  in or to such  amounts  shall
thereupon cease. No interest shall accrue or be payable to any Certificateholder
on any amount held in trust by the Securities  Administrator as a result of such
Certificateholder's  failure  to  surrender  its  Certificate(s)  on  the  final
Distribution  Date for final  payment  thereof in  accordance  with this Section
5.01(f). Any such amounts held in trust by the Securities Administrator shall be
held uninvested in an Eligible Account.

                  (g) Notwithstanding anything to the contrary herein, (i) in no
event  shall the  Certificate  Principal  Balance  of a Class A  Certificate,  a
Mezzanine  Certificate  or a Class B  Certificate  be reduced  more than once in
respect of any  particular  amount both (a)  allocated  to such  Certificate  in
respect of Realized  Losses  pursuant to Section 5.04 and (b) distributed to the
Holder of such  Certificate in reduction of the  Certificate  Principal  Balance
thereof  pursuant to this Section 5.01 from Net Monthly Excess Cashflow and (ii)
in no event  shall the  Uncertificated  Balance of a REMIC  Regular  Interest be
reduced more than once in respect of any particular amount both (a) allocated to
such REMIC Regular  Interest in respect of Realized  Losses  pursuant to Section
5.04 and (b)  distributed  on such REMIC  Regular  Interest in  reduction of the
Uncertificated Balance thereof pursuant to this Section 5.01.

                                      133
<PAGE>

                  SECTION 5.02.   Statements to Certificateholders.

                  On each Distribution Date, the Securities Administrator (based
on the information set forth in the Servicer Reports for such  Distribution Date
and information provided by the Trustee or the counterparty to the Cap Contracts
with  respect  to  payments  made  pursuant  to the Cap  Contracts)  shall  make
available  to  each  Holder  of  the   Certificates,   a  statement  as  to  the
distributions made on such Distribution Date setting forth:

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

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

                       (iii)  the  aggregate   Servicing  Fee  received  by  the
         Servicers and the Interim Servicers during the related Due Period;

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

                       (v) Reserved;

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

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

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

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

                       (x) the aggregate  amount of Principal  Prepayments  made
         during the related  Prepayment  Period and the aggregate  amount of any
         Prepayment Charges received in respect thereof;

                                      134
<PAGE>

                       (xi) the  aggregate  amount of Realized  Losses  incurred
         during  the  related  Prepayment  Period  and the  aggregate  amount of
         Realized Losses incurred since the Closing Date;

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

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

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

                       (xv) the Interest  Distribution  Amount in respect of the
         Class  A  Certificates,   the  Mezzanine  Certificates,   the  Class  B
         Certificates,  and the Class CE Certificates for such Distribution Date
         and the Interest  Carry  Forward  Amount,  if any,  with respect to the
         Class A  Certificates,  the  Mezzanine  Certificates  and  the  Class B
         Certificates on such Distribution  Date, and in the case of the Class A
         Certificates,  the Mezzanine  Certificates and the Class B Certificates
         separately  identifying  any reduction  thereof due to  allocations  of
         Realized Losses,  Prepayment Interest  Shortfalls,  Relief Act Interest
         Shortfalls and Net WAC Rate Carryover Amounts;

                       (xvi) the  aggregate  amount of any  Prepayment  Interest
         Shortfall  for such  Distribution  Date,  to the extent not  covered by
         payments by the Servicers pursuant to Section 3.22 of this Agreement or
         the Master  Servicer  pursuant to Section 4.18 of this Agreement or the
         Interim Servicers pursuant to the Interim Servicing Agreements;

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

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

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

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

                       (xxi) the Net WAC Rate Carryover Amount, if any, for such
         Distribution Date;

                       (xxii)  the  Net  WAC  Rate  Carryover  Amount,  if  any,
         outstanding after reimbursements therefor on such Distribution Date and
         any amounts received under the Cap Contracts;

                                      135
<PAGE>

                       (xxiii) the respective  Pass-Through  Rates applicable to
         the  Class A  Certificates,  the  Mezzanine  Certificates,  the Class B
         Certificates, and the Class CE Certificates for such Distribution Date;

                       (xxiv) the  amount of any  deposit  to the  Reserve  Fund
         contemplated by Section 3.24(b);

                       (xxv)  the  balance  of the  Reserve  Fund  prior  to the
         deposit or withdrawal of any amounts on such Distribution Date;

                       (xxvi) the  amount of any  deposit  to the  Reserve  Fund
         pursuant to Section 5.01(a)(7)(vi);

                       (xxvii)  the  balance  of  the  Reserve  Fund  after  all
         deposits and withdrawals on such Distribution Date;

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

                       (xxix) the Aggregate Loss Severity Percentage; and

                  The Securities Administrator will make such statement (and, at
its  option,  any  additional  files  containing  the  same  information  in  an
alternative  format)  available  each  month to the  Certificateholders  and the
Rating  Agencies  via  the  Securities  Administrator's  internet  website.  The
Securities  Administrator's  internet  website  shall  initially  be  located at
http:\\www.ctslink.com  and  assistance  in using the website can be obtained by
calling the Securities  Administrator's customer service desk at 1-301-815-6600.
Parties  that are unable to use the above  distribution  options are entitled to
have a paper copy mailed to them via first  class mail by calling  the  customer
service desk and indicating  such. The Securities  Administrator  shall have the
right to change the way such  statements  are  distributed in order to make such
distribution more convenient and/or more accessible to the above parties and the
Securities  Administrator shall provide timely and adequate  notification to all
above parties regarding any such changes.

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

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

                  Within  a  reasonable  period  of time  after  the end of each
calendar year, the Securities  Administrator  shall furnish upon request to each
Person  who at any time  during  the  calendar  year was a Holder of a  Residual
Certificate a statement setting forth the amount,  if any,

                                      136
<PAGE>

actually distributed with respect to the Residual Certificates,  as appropriate,
aggregated  for such calendar year or applicable  portion  thereof  during which
such Person was a Certificateholder.

                  The Securities  Administrator shall, upon request,  furnish to
each  Certificateholder  during  the  term of  this  Agreement,  such  periodic,
special, or other reports or information, whether or not provided for herein, as
shall be reasonable  with respect to the  Certificateholder,  as applicable,  or
otherwise  with respect to the purposes of this  Agreement,  all such reports or
information  to  be  provided  at  the  expense  of  the  Certificateholder,  in
accordance with such reasonable and explicit  instructions and directions as the
Certificateholder may provide.

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

                  SECTION 5.03.   Servicer Reports; P&I Advances.

                  (a) On or before 12:00 noon New York time on the 18th calendar
day of each  month,  and if the 18th  calendar  day is not a Business  Day,  the
immediately  following  Business Day, each Servicer  shall deliver to the Master
Servicer and the Securities  Administrator by telecopy or electronic mail (or by
such other means as the related Servicer, the Master Servicer and the Securities
Administrator  may agree from time to time) a remittance  report containing such
information  with  respect  to  the  related  Mortgage  Loans  and  the  related
Distribution  Date as is  reasonably  available  to the related  Servicer as the
Master Servicer or the Securities  Administrator may reasonably require so as to
enable the Master  Servicer to master  service the  related  Mortgage  Loans and
oversee the servicing by the related  Servicer and the Securities  Administrator
to  fulfill  its  obligations  hereunder  with  respect  to  securities  and tax
reporting.

                  (b) The  amount  of P&I  Advances  to be  made by the  related
Servicer or the related Interim Servicer on any  Distribution  Date shall equal,
subject to Section 5.03(d), (i) the aggregate amount of Monthly Payments (net of
the related Servicing Fees), due during the related Due Period in respect of the
Mortgage  Loans  serviced by such  Servicer or Interim  Servicer,  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  was
acquired during or prior to the related Prepayment Period and as to which an REO
Disposition did not occur during the related  Prepayment Period, an amount equal
to the excess,  if any, of the REO Imputed Interest on such REO Property for the
most recently ended calendar  month,  over the net income from such REO Property
deposited  in the related  Collection  Account or Custodial  Acount  pursuant to
Section  3.21 of this  Agreement  or  pursuant  the  related  Interim  Servicing
Agreement for distribution on such Distribution Date; provided, however, neither
Servicer nor any Interim  Servicer  shall be required to make P&I Advances  with
respect  to Relief  Act  Interest  Shortfalls,  or with  respect  to  Prepayment
Interest Shortfalls in excess of its obligations under Section 3.22 or under the
related Interim Servicing Agreement. For purposes of the preceding sentence, the
Monthly Payment on each Balloon Mortgage Loan with a delinquent  Balloon Payment
is equal to the assumed  monthly payment that would have been due on the related
Due Date based on the original principal  amortization schedule for such Balloon
Mortgage Loan.

                  By 12:00 noon New York time on the Servicer  Remittance  Date,
each  Servicer  shall remit in  immediately  available  funds to the  Securities
Administrator  for deposit in the

                                      137
<PAGE>

Distribution Account an amount equal to the aggregate amount of P&I Advances, if
any,  to be made in  respect  of the  related  Mortgage  Loans  for the  related
Distribution  Date  either  (i) from  its own  funds  or (ii)  from the  related
Collection Account, to the extent of any Amounts Held For Future Distribution on
deposit therein (in which case it will cause to be made an appropriate  entry in
the records of the  related  Collection  Account  that  Amounts  Held For Future
Distribution  have been, as permitted by this Section 5.03,  used by the related
Servicer  in  discharge  of any  such P&I  Advance)  or (iii) in the form of any
combination of (i) and (ii)  aggregating  the total amount of P&I Advances to be
made by the related  Servicer  with respect to the related  Mortgage  Loans.  In
addition,  the related Servicer shall have the right to reimburse itself for any
outstanding  P&I Advance  made from its own funds from  Amounts  Held for Future
Distribution.  Any  Amounts  Held For Future  Distribution  used by the  related
Servicer  to make P&I  Advances  or to  reimburse  itself  for  outstanding  P&I
Advances shall be appropriately  reflected in the related Servicer's records and
replaced by the related Servicer by deposit in the related Collection Account no
later than the close of business on the  Servicer  Remittance  Date  immediately
following the Due Period or Prepayment Period for which such amounts relate. The
Securities  Administrator  will  notify  the  related  Servicer  and the  Master
Servicer by the close of business on the Business Day prior to the  Distribution
Date in the event  that the  amount  remitted  by the  related  Servicer  to the
Securities  Administrator on such date is less than the P&I Advances required to
be made by the related Servicer for the related Distribution Date.

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

                  (d)  Notwithstanding  anything herein to the contrary,  no P&I
Advance or Servicing Advance shall be required to be made hereunder or under the
related  Interim  Servicing  Agreement  by the  related  Servicer or the related
Interim  Servicer  if such P&I  Advance or  Servicing  Advance  would,  if made,
constitute a Nonrecoverable  P&I Advance or  Nonrecoverable  Servicing  Advance,
respectively.  The  determination by the related Servicer or the related Interim
Servicer  that it has made a  Nonrecoverable  P&I  Advance  or a  Nonrecoverable
Servicing  Advance or that any  proposed P&I Advance or  Servicing  Advance,  if
made, would constitute a Nonrecoverable P&I Advance or Nonrecoverable  Servicing
Advance,  respectively,  shall be  evidenced by a  certification  of a Servicing
Officer delivered to the Master Servicer.

                  (e)  Subject  to and in  accordance  with  the  provisions  of
Article  VIII,  in the event a Servicer  fails to make any required P&I Advance,
then the Master  Servicer (in its  capacity as successor  servicer) or any other
successor   Servicer  shall  be  required  to  make  such  P&I  Advance  on  the
Distribution  Date on which such  Servicer  was  required to make such  Advance,
subject to its determination of recoverability.  In addition,  in the event that
the related  Interim  Servicer  fails to make a required  P&I Advance  under the
related  Interim  Servicing  Agreement,  the Master Servicer will be required to
make such P&I Advance, subject to its determination of recoverability.

                                      138
<PAGE>

                  SECTION 5.04.   Allocation of Realized Losses.

                  (a) Prior to the  Determination  Date,  each Servicer and each
Interim  Servicer  shall  determine as to each  Mortgage  Loan  serviced by such
Servicer or such  Interim  Servicer  and any related REO Property and include in
the monthly remittance report provided to the Master Servicer and the Securities
Administrator  (substantially in the form of Schedule 4 hereto) such information
as is reasonably  available to the  Servicers  and the Interim  Servicers as the
Master Servicer or the Securities  Administrator may reasonably require so as to
enable the Master  Servicer to master service the Mortgage Loans and oversee the
servicing  by the  Servicers  and  the  Interim  Servicers  and  the  Securities
Administrator  to fulfill its  obligations  hereunder with respect to securities
and tax  reporting,  which shall  include,  but not be limited to: (i) the total
amount  of  Realized  Losses,  if any,  incurred  in  connection  with any Final
Recovery  Determinations made during the related Prepayment Period; and (ii) the
respective  portions of such Realized Losses allocable to interest and allocable
to principal.  Prior to each Determination  Date, each Servicer and each Interim
Servicer  shall also determine as to each Mortgage Loan: (i) the total amount of
Realized Losses,  if any,  incurred in connection with any Deficient  Valuations
made during the related Prepayment Period; and (ii) the total amount of Realized
Losses, if any,  incurred in connection with Debt Service  Reductions in respect
of Monthly Payments due during the related Due Period.

                  (b) All Realized Losses on the Mortgage Loans allocated to any
REMIC I Regular Interest pursuant to Section 5.04(c) on the Mortgage Loans shall
be  allocated  by the  Securities  Administrator  on each  Distribution  Date as
follows:  first,  to Net  Monthly  Excess  Cashflow;  second,  to the  Class  CE
Certificates;  third,  to the  Class  B-2  Certificates  until  the  Certificate
Principal  Balance  of the  Class B-2  Certificates  has been  reduced  to zero,
fourth, to the Class B-1 Certificates until the Certificate Principal Balance of
the Class B-1  Certificates  has been reduced to zero,  fifth,  to the Class M-9
Certificates,   until  the  Certificate  Principal  Balance  of  the  Class  M-9
Certificates  has been reduced to zero;  sixth,  to the Class M-8  Certificates,
until the Certificate  Principal  Balance of the Class M-8 Certificates has been
reduced to zero; seventh,  to the Class M-7 Certificates,  until the Certificate
Principal  Balance  of the  Class M-7  Certificates  has been  reduced  to zero;
eighth, to the Class M-6 Certificates,  until the Certificate  Principal Balance
of the Class M-6 Certificates has been reduced to zero;  ninth, to the Class M-5
Certificates,   until  the  Certificate  Principal  Balance  of  the  Class  M-5
Certificates  has been reduced to zero;  tenth,  to the Class M-4  Certificates,
until the Certificate  Principal  Balance of the Class M-4 Certificates has been
reduced to zero; eleventh, to the Class M-3 Certificates,  until the Certificate
Principal  Balance  of the  Class M-3  Certificates  has been  reduced  to zero;
twelfth, to the Class M-2 Certificates,  until the Certificate Principal Balance
of the Class M-2 Certificates  has been reduced to zero; and thirteenth,  to the
Class M-1 Certificates, until the Certificate Principal Balance of the Class M-1
Certificates  has been reduced to zero.  All Realized  Losses to be allocated to
the Certificate Principal Balances of all Classes on any Distribution Date shall
be so  allocated  after  the  actual  distributions  to be made on such  date as
provided above. All references above to the Certificate Principal Balance of any
Class of  Certificates  shall be to the  Certificate  Principal  Balance of such
Class  immediately  prior to the relevant  Distribution  Date,  before reduction
thereof by any  Realized  Losses,  in each case to be allocated to such Class of
Certificates, on such Distribution Date.

                  Any allocation of Realized  Losses to a Mezzanine  Certificate
or Class B Certificate  on any  Distribution  Date shall be made by reducing the
Certificate Principal Balance

                                      139
<PAGE>

thereof by the amount so allocated; any allocation of Realized Losses to a Class
CE  Certificates  shall be made by  reducing  the  amount  otherwise  payable in
respect  thereof  pursuant to Section  5.01(a)(7)(viii).  No  allocations of any
Realized Losses shall be made to the Certificate Principal Balances of the Class
A Certificates or Class P Certificates.

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

                  In  addition,  in the  event  that  a  Servicer  receives  any
Subsequent  Recoveries  with  respect to a  Mortgage  Loan  serviced  by it, the
related  Servicer shall deposit such funds into the related  Collection  Account
pursuant  to Section  3.08.  If,  after  taking  into  account  such  Subsequent
Recoveries and any Subsequent Recoveries received by the Interim Servicers,  the
amount of a Realized Loss is reduced,  the amount of such Subsequent  Recoveries
will be applied to increase the  Certificate  Principal  Balance of the Class of
Subordinate  Certificates  with the highest  payment  priority to which Realized
Losses have been  allocated,  but not by more than the amount of Realized Losses
previously allocated to that Class of Subordinate  Certificates pursuant to this
Section  5.04  and not  previously  reimbursed  to  such  Class  of  Subordinate
Certificates  with Net Monthly Excess Cashflow  pursuant to Section  5.01(a)(7).
The  amount  of  any  remaining   Subsequent   Recoveries  will  be  applied  to
sequentially  increase  the  Certificate  Principal  Balance of the  Subordinate
Certificates, beginning with the Class of Subordinate Certificates with the next
highest payment  priority,  up to the amount of such Realized Losses  previously
allocated  to such Class of  Subordinate  Certificates  pursuant to this Section
5.04 and not  previously  reimbursed to such Class of  Subordinate  Certificates
with Net Monthly Excess Cashflow pursuant to Section 5.01(a)(7)(iii). Holders of
such  Certificates  will not be  entitled  to any  payment in respect of current
interest  on the  amount  of such  increases  for any  Interest  Accrual  Period
preceding  the  Distribution  Date on  which  such  increase  occurs.  Any  such
increases  shall  be  applied  to the  Certificate  Principal  Balance  of  each
Subordinate  Certificate  of  such  Class  in  accordance  with  its  respective
Percentage Interest.

                  (c) (i) The REMIC I Marker  Percentage of all Realized  Losses
on the Mortgage  Loans shall be  allocated  by the Trustee,  based solely on the
instructions of the Securities  Administrator,  on each Distribution Date to the
following REMIC I Regular  Interests in the specified  percentages,  as follows:
first, to Uncertificated Interest payable to the REMIC I Regular Interest I-LTAA
and REMIC I Regular Interest I-LTZZ up to an aggregate amount equal to the REMIC
I Interest Loss Allocation Amount,  98.00% and 2.00%,  respectively;  second, to
the  Uncertificated  Balances of the REMIC I Regular Interest I-LTAA and REMIC I
Regular Interest I-LTZZ up to an aggregate amount equal to the REMIC I Principal
Loss  Allocation  Amount,  98.00%  and  2.00%,   respectively;   third,  to  the
Uncertificated  Balances  of REMIC I Regular  Interest  I-LTAA,  REMIC I Regular
Interest I-LTB2 and REMIC I Regular  Interest I-LTZZ,  98.00%,  1.00% and 1.00%,
respectively,  until the  Uncertificated  Balance  of

                                      140
<PAGE>

REMIC I  Regular  Interest  I-LTB2  has been  reduced  to zero;  fourth,  to the
Uncertificated  Balances  of REMIC I Regular  Interest  I-LTAA,  REMIC I Regular
Interest I-LTB1 and REMIC I Regular  Interest I-LTZZ,  98.00%,  1.00% and 1.00%,
respectively,  until the  Uncertificated  Balance  of REMIC I  Regular  Interest
I-LTB1 has been reduced to zero; fifth, to the Uncertificated  Balances of REMIC
I Regular Interest  I-LTAA,  REMIC I Regular Interest I-LTM9 and REMIC I Regular
Interest I-LTZZ, 98.00%, 1.00% and 1.00%, respectively, until the Uncertificated
Balance of REMIC I Regular  Interest I-LTM9 has been reduced to zero;  sixth, to
the Uncertificated  Balances of REMIC I Regular Interest I-LTAA, REMIC I Regular
Interest I-LTM8 and REMIC I Regular  Interest I-LTZZ,  98.00%,  1.00% and 1.00%,
respectively,  until the  Uncertificated  Balance  of REMIC I  Regular  Interest
I-LTM8 has been  reduced to zero;  seventh,  to the  Uncertificated  Balances of
REMIC I Regular  Interest  I-LTAA,  REMIC I Regular  Interest I-LTM7 and REMIC I
Regular  Interest  I-LTZZ,  98.00%,  1.00% and  1.00%,  respectively,  until the
Uncertificated  Balance of REMIC I Regular  Interest  I-LTM7 has been reduced to
zero; eighth, to the Uncertificated Balances of REMIC I Regular Interest I-LTAA,
REMIC I Regular  Interest I-LTM6 and REMIC I Regular  Interest  I-LTZZ,  98.00%,
1.00% and  1.00%,  respectively,  until the  Uncertificated  Balance  of REMIC I
Regular Interest I-LTM6 has been reduced to zero;  ninth, to the  Uncertificated
Balances of REMIC I Regular Interest I-LTAA, REMIC I Regular Interest I-LTM5 and
REMIC I Regular Interest I-LTZZ,  98.00%, 1.00% and 1.00%,  respectively,  until
the  Uncertificated  Balance of REMIC I Regular Interest I-LTM5 has been reduced
to zero;  tenth,  to the  Uncertificated  Balances  of REMIC I Regular  Interest
I-LTAA,  REMIC I Regular  Interest I-LTM4 and REMIC I Regular  Interest  I-LTZZ,
98.00%, 1.00% and 1.00%, respectively, until the Uncertificated Balance of REMIC
I  Regular  Interest  I-LTM4  has  been  reduced  to  zero;  eleventh,   to  the
Uncertificated  Balances  of REMIC I Regular  Interest  I-LTAA,  REMIC I Regular
Interest I-LTM3 and REMIC I Regular  Interest I-LTZZ,  98.00%,  1.00% and 1.00%,
respectively,  until the  Uncertificated  Balance  of REMIC I  Regular  Interest
I-LTM3 has been  reduced to zero;  twelfth,  to the  Uncertificated  Balances of
REMIC I Regular  Interest  I-LTAA,  REMIC I Regular  Interest I-LTM2 and REMIC I
Regular  Interest  I-LTZZ,  98.00%,  1.00% and  1.00%,  respectively,  until the
Uncertificated  Balance of REMIC I Regular  Interest  I-LTM2 has been reduced to
zero; and thirteenth, to the Uncertificated Balances of REMIC I Regular Interest
I-LTAA,  REMIC I Regular  Interest I-LTM1 and REMIC I Regular  Interest  I-LTZZ,
98.00%, 1.00% and 1.00%, respectively, until the Uncertificated Balance of REMIC
I Regular Interest I-LTM1 has been reduced to zero.

                       (ii) The  REMIC I Sub WAC  Allocation  Percentage  of all
         Realized Losses shall be applied after all distributions have been made
         on each  Distribution  Date  first,  so as to keep  the  Uncertificated
         Balance of each REMIC I Regular  Interest  ending with the  designation
         "GRP" equal to 0.01% of the aggregate Stated  Principal  Balance of the
         Mortgage  Loans in the  related  Loan  Group;  second,  to each REMIC I
         Regular  Interest  ending  with  the  designation  "SUB,"  so that  the
         Uncertificated  Balance of each such REMIC I Regular  Interest is equal
         to 0.01% of the excess of (x) the aggregate Stated Principal Balance of
         the  Mortgage  Loans in the  related  Loan Group  over (y) the  current
         Certificate Principal Balance of the Class A Certificate in the related
         Loan Group  (except that if any such excess is a larger  number than in
         the preceding  distribution period, the least amount of Realized Losses
         shall be applied to such REMIC I Regular  Interests such that the REMIC
         I Subordinated  Balance Ratio is maintained);  and third, any remaining
         Realized Losses shall be allocated to REMIC I Regular Interest I-LTXX.

                  SECTION 5.05.   Compliance with Withholding Requirements.

                  Notwithstanding  any other  provision of this  Agreement,  the
Trustee  and  the  Securities   Administrator  shall  comply  with  all  federal
withholding  requirements  respecting

                                      141
<PAGE>

payments to  Certificateholders  of interest or original issue discount that the
Trustee  reasonably  believes  are  applicable  under the Code.  The  consent of
Certificateholders shall not be required for such withholding.  In the event the
Securities  Administrator  does  withhold  any amount from  interest or original
issue discount payments or advances thereof to any Certificateholder pursuant to
federal withholding  requirements,  the Securities  Administrator shall indicate
the amount withheld to such Certificateholders.

                  SECTION  5.06.  Reports  Filed with  Securities  and  Exchange
Commission.

                  The  Depositor  shall  prepare  or  cause to be  prepared  the
initial current report on Form 8-K. Within 15 days after each Distribution Date,
the Securities Administrator shall, in accordance with industry standards,  file
with the  Commission  via the  Electronic  Data  Gathering and Retrieval  System
("EDGAR"),  a Form  8-K  (or  other  comparable  Form  containing  the  same  or
comparable information or other information mutually agreed upon) with a copy of
the statement to be furnished to the  Certificateholders  for such  Distribution
Date  as  an  exhibit  thereto.  Prior  to  January  30,  2006,  the  Securities
Administrator  shall,  in  accordance  with industry  standards,  file a Form 15
Suspension  Notice with respect to the Trust Fund, if  applicable.  Prior to (i)
March 20, 2006 and (ii) unless and until a Form 15 Suspension  Notice shall have
been filed,  prior to March 20th of each year  thereafter,  the Master  Servicer
shall provide the Securities Administrator with a Master Servicer Certification,
together with a copy of the annual independent accountant's servicing report and
annual statement of compliance of the Servicer to be delivered  pursuant to this
Agreement  and, if applicable,  the annual  independent  accountant's  servicing
report and annual statement of compliance to be delivered by the Master Servicer
pursuant to Sections 4.15 and 4.16.  Prior to (i) March 31, 2006 and (ii) unless
and until a Form 15  Suspension  Notice shall have been filed,  March 31 of each
year  thereafter,  the  Securities  Administrator  shall  file a Form  10-K,  in
substance conforming to industry standards, with respect to the Trust. Such Form
10-K shall include the Master  Servicer  Certification  and other  documentation
provided by the Master Servicer pursuant to the second preceding  sentence.  The
Depositor  hereby  grants to the  Securities  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 either the earlier of (i) receipt by the
Securities Administrator from the Depositor of written termination of such power
of attorney and (ii) the termination of the Trust Fund. The Depositor  agrees to
promptly  furnish  to the  Securities  Administrator,  from  time to  time  upon
request,  such further information,  reports and financial statements within its
control  related  to  this  Agreement,  the  Mortgage  Loans  as the  Securities
Administrator  reasonably  deems  appropriate  to prepare and file all necessary
reports  with  the  Commission.  The  Securities  Administrator  shall  have  no
responsibility  to file any items  other than those  specified  in this  Section
5.06; provided,  however,  the Securities  Administrator will cooperate with the
Depositor in connection  with any  additional  filings with respect to the Trust
Fund as the Depositor deems necessary under the Securities Exchange Act of 1934,
as amended (the "Exchange  Act").  Fees and expenses  incurred by the Securities
Administrator  in  connection  with this Section 5.06 shall not be  reimbursable
from the Trust Fund.

                                      142
<PAGE>

                                   ARTICLE VI

                                THE CERTIFICATES

                  SECTION 6.01.    The Certificates.

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

                  The  Certificates  will be  substantially in the forms annexed
hereto as  Exhibits  A-1 through  A-6.  The  Certificates  of each Class will be
issuable in registered  form only,  in  denominations  of authorized  Percentage
Interests as described in the definition  thereof.  Each  Certificate will share
ratably in all rights of the related Class.

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

                  (b) The Class A  Certificates  and the Mezzanine  Certificates
shall  initially be issued as one or more  Certificates  held by the  Book-Entry
Custodian  or, if appointed to hold such  Certificates  as provided  below,  the
Depository  and  registered  in the name of the  Depository  or its nominee and,
except  as  provided  below,  registration  of  such  Certificates  may  not  be
transferred by the Securities  Administrator  except to another  Depository that
agrees to hold such  Certificates  for the  respective  Certificate  Owners with
Ownership Interests therein.  The Certificate Owners shall hold their respective
Ownership  Interests  in  and  to  such  Certificates   through  the  book-entry
facilities  of the  Depository  and,  except  as  provided  below,  shall not be
entitled   to   definitive,    fully   registered   Certificates    ("Definitive
Certificates")  in  respect  of  such  Ownership  Interests.  All  transfers  by
Certificate  Owners of their  respective  Ownership  Interests in the Book-Entry
Certificates shall be made in accordance with the procedures  established by the
Depository  Participant or brokerage firm representing  such Certificate  Owner.
Each Depository  Participant shall only transfer the Ownership  Interests in the
Book-Entry  Certificates  of  Certificate  Owners it  represents or of brokerage
firms  for which it acts as agent in  accordance  with the  Depository's  normal
procedures.  The Securities  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  and,  if the  Trustee  is not  the
Book-Entry  Custodian,  the Trustee,  any other  transfer  agent  (including the

                                      143
<PAGE>

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 Securities
Administrator  resigns or is removed in accordance  with the terms  hereof,  the
successor  Securities  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.

                  (c) The Class B  Certificates  initially  offered  and sold in
offshore transactions in reliance on Regulation S shall be issued in the form of
a temporary  global  certificate in definitive,  fully  registered form (each, a
"Regulation S Temporary Global Certificate"),  which shall be deposited with the
Securities  Administrator  or  an  agent  of  the  Securities  Administrator  as
custodian for the Depository and registered in the name of Cede & Co. as nominee
of the  Depository  for the account of  designated  agents  holding on behalf of
Euroclear or  Clearstream.  Beneficial  interests in each Regulation S Temporary
Global Certificate may be held only through Euroclear or Clearstream;  provided,
however,  that such  interests  may be exchanged  for  interests in a Definitive
Certificate in accordance with the requirements described in Section 6.02. After
the  expiration  of the Release  Date, a  beneficial  interest in a Regulation S
Temporary Global  Certificate may be exchanged for a beneficial  interest in the
related  permanent  global  certificate of the same Class (each, a "Regulation S
Permanent Global  Certificate"),  in accordance with the procedures set forth in
Section 6.02. Each Regulation S Permanent Global  Certificate shall be deposited
with the Securities Administrator or an agent of the Securities Administrator as
custodian for the Depository and registered in the name of Cede & Co. as nominee
of the Depository.

                  The  Class  B  Certificates  offered  and  sold  to  Qualified
Institutional  Buyers ("QIBs") in reliance on Rule 144A under the Securities Act
("Rule 144A") or  institutional  investors that are accredited  investors within
the  meaning  of Rule  501(a)(1),  (2),  (3) or (7) of  Regulation  D under  the
Securities Act ("Institutional Accredited Investors") will be issued in the form
of Book-Entry Certificates.

                  (d) The Class CE, Class CE-1 and Class P Certificates  offered
and sold to QIBs in reliance on Rule 144A under the Securities Act ("Rule 144A")
will be issued in the form of Definitive Certificates.

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

                                      144
<PAGE>

Administrator  may  establish  a  reasonable  record  date  in  connection  with
solicitations  of consents from or voting by  Certificateholders  and shall give
notice to the Depository of such record date.

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

                  SECTION  6.02.   Registration  of  Transfer  and  Exchange  of
Certificates.

                  (a) The Securities Administrator shall cause to be kept at one
of the offices or agencies to be appointed by the  Securities  Administrator  in
accordance  with the provisions of Section 9.11, a Certificate  Register for the
Certificates  in  which,  subject  to  such  reasonable  regulations  as it  may
prescribe,  the Securities  Administrator  shall provide for the registration of
Certificates and of transfers and exchanges of Certificates as herein provided.

                  (b)  No  transfer  of  any  Class  B  Certificate,   Class  CE
Certificate, Class CE-1 Certificate, Class P Certificate or Residual Certificate
shall be made unless that transfer is made pursuant to an effective registration
statement  under the  Securities  Act of 1933, as amended (the "1933 Act"),  and
effective  registration or qualification under applicable state securities laws,
or is  made  in a  transaction  that  does  not  require  such  registration  or
qualification. In the event that such a transfer of a Class B Certificate, Class
CE  Certificate,  Class P  Certificate  or  Residual  Certificate  is to be made
without registration or qualification (other than in connection with the

                                      145
<PAGE>

initial  transfer of any such  Certificate  by the  Depositor),  the  Securities
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 form attached
hereto as  Exhibit  B-1;  (ii) if such  transfer  is  purportedly  being made in
reliance upon Rule 501(a) under the 1933 Act,  written  certifications  from the
Certificateholder    desiring   to   effect   the   transfer   and   from   such
Certificateholder's  prospective transferee,  substantially in the form attached
hereto as Exhibit  B-2;  (iii) if such  transfer  is  purportedly  being made in
reliance  on  Regulation  S,  a  written   certification  from  the  prospective
transferee, substantially in the form attached hereto as Exhibit B-1 and (iv) in
all  other  cases,  an  Opinion  of  Counsel   satisfactory  to  the  Securities
Administrator  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 Master  Servicer,  the  Securities
Administrator   or  the   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.  Neither  of  the  Depositor  nor  the  Securities
Administrator  is obligated to register or qualify any such  Certificates  under
the 1933 Act or any other  securities  laws or to take any action not  otherwise
required  under this  Agreement  to permit  the  transfer  of such  Certificates
without registration or qualification.  Any Certificateholder desiring to effect
the transfer of any such Certificate  shall, and does hereby agree to, indemnify
the Trustee, the Depositor,  the Master Servicer,  the Securities  Administrator
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.

                  A holder of a beneficial  interest in a Regulation S Temporary
Global  Certificate must provide  Euroclear or Clearstream,  as the case may be,
with a certificate in the form of Annex A to Exhibit B-1 hereto  certifying that
the  beneficial  owner of the interest in such Global  Certificate is not a U.S.
Person (as defined in Regulation S), and Euroclear or  Clearstream,  as the case
may be, must provide to the Trustee and Securities  Administrator  a certificate
in the form of  Exhibit  B-1 hereto  prior to (i) the  payment  of  interest  or
principal with respect to such holder's  beneficial interest in the Regulation S
Temporary Global  Certificate and (ii) any exchange of such beneficial  interest
for a beneficial interest in a Regulation S Permanent Global Certificate.

                  (c)  No  transfer  of  a  Class  CE  Certificate,  Class  CE-1
Certificate,  Class P  Certificate  or a Residual  Certificate  or any  interest
therein  shall be made to any Plan subject to ERISA or Section 4975 of the Code,
any Person  acting,  directly or  indirectly,  on behalf of any such Plan or any
Person  acquiring  such  Certificates  with "Plan  Assets" of a Plan  within the
meaning of the  Department  of Labor  regulation  promulgated  at 29 C.F.R.  ss.
2510.3-101 ("Plan Assets") unless the Securities  Administrator is provided with
an  Opinion  of  Counsel  on which  the  Depositor,  the  Master  Servicer,  the
Securities  Administrator,   the  Trustee  and  the  Servicer  may  rely,  which
establishes  to  the  satisfaction  of the  Securities  Administrator  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 Trustee, the
Master  Servicer,  the  Securities  Administrator  or  the  Trust  Fund  to  any
obligation or liability  (including  obligations or  liabilities  under ERISA or
Section  4975 of the Code) in addition to those  undertaken  in this  Agreement,
which Opinion of Counsel shall not be an expense of the Depositor, the Servicer,
the Trustee, the Master Servicer, the Securities Administrator,  the Trust Fund.
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

                                      146
<PAGE>

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  Securities  Administrator  shall be entitled to
conclusively  rely  upon  a  representation  (which,  upon  the  request  of the
Securities Administrator,  shall be a written representation) from the Depositor
of the status of such transferee as an affiliate of the Depositor.

                  Each  Transferee  of  a  Mezzanine   Certificate  or  Class  B
Certificate  will be deemed to have  represented  by virtue of its  purchase  or
holding  of  such  Certificate  (or  interest  therein)  that  either  (a)  such
Transferee is not a Plan or purchasing such Certificate with Plan Assets, (b) in
the  case of a  Mezzanine  Certificate,  it has  acquired  and is  holding  such
Certificate in reliance on Prohibited Transaction Exemption ("PTE") 94-84 or FAN
97-03E,  as  amended by PTE 97-34,  62 Fed.  Reg.  39021  (July 21,  1997),  PTE
2000-58,  65 Fed. Reg. 67765  (November 13, 2000) and PTE 2002-41,  67 Fed. Reg.
54487 (August 22, 2002) (the  "Exemption"),  and that it understands  that there
are certain conditions to the availability of the Exemption  including that such
Certificate  must be rated,  at the time of purchase,  not lower than "BBB-" (or
its equivalent) by a Rating Agency and in the case of a Class B Certificate that
it will obtain a  representation  from any transferee that such transferee is an
accredited  investor  so long  as it is  required  to  obtain  a  representation
regarding compliance with the Securities Act or (c) the following conditions are
satisfied: (i) such Transferee is an insurance company, (ii) the source of funds
used to purchase or hold such Certificate (or interest therein) is an "insurance
company general account" (as defined in PTCE 95-60, and (iii) the conditions set
forth in Sections I and III of PTCE 95-60 have been satisfied.

                  If any Certificate or any interest therein is acquired or held
in violation of the  conditions  described  in this  Section  6.02(c),  the next
preceding permitted  beneficial owner will be treated as the beneficial owner of
that  Certificate,  retroactive  to  the  date  of  transfer  to  the  purported
beneficial owner. Any purported beneficial owner whose acquisition or holding of
any certificate or interest  therein was effected in violation of the conditions
described  in this  Section  6.02(c)  shall  indemnify  and  hold  harmless  the
Depositor,  the Trustee,  the  Servicer,  the Master  Servicer,  the  Securities
Administrator  and the Trust  Fund  from and  against  any and all  liabilities,
claims,  costs or  expenses  incurred  by  those  parties  as a  result  of that
acquisition or holding.

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

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

                           (B) In connection  with any proposed  Transfer of any
                  Ownership  Interest  in a Residual  Certificate,  the  Trustee
                  shall  require  delivery  to it,  and shall

                                      147
<PAGE>

                  not register the  Transfer of any Residual  Certificate  until
                  its  receipt  of, an  affidavit  and  agreement  (a  "Transfer
                  Affidavit  and  Agreement,"  in the form  attached  hereto  as
                  Exhibit  B-3)  from  the  proposed  Transferee,  in  form  and
                  substance   satisfactory  to  the  Securities   Administrator,
                  representing  and  warranting,  among other things,  that such
                  Transferee is a Permitted Transferee, that it is not acquiring
                  its Ownership Interest in the Residual Certificate that is the
                  subject of the  proposed  Transfer  as a  nominee,  trustee or
                  agent for any Person that is not a Permitted Transferee,  that
                  for so long as it retains its Ownership Interest in a Residual
                  Certificate,   it  will   endeavor   to  remain  a   Permitted
                  Transferee,  and that it has reviewed the  provisions  of this
                  Section 6.02(d) and agrees to be bound by them.

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

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

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

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

                       (iii)  (A) If any  purported  Transferee  shall  become a
         Holder of a Residual Certificate in violation of the provisions of this
         Section 6.02(d),  then the last preceding Permitted Transferee shall be
         restored,  to the  extent  permitted  by law,  to all  rights as holder
         thereof  retroactive  to the date of  registration  of such Transfer of
         such Residual Certificate.  The Securities Administrator shall be under
         no  liability  to any

                                      148
<PAGE>

Person for any  registration  of Transfer of a Residual  Certificate  that is in
fact not  permitted  by this  Section  6.02(d) or for making any payments due on
such  Certificate  to the holder  thereof or for  taking any other  action  with
respect to such holder under the provisions of this Agreement.

                           (B) If any purported Transferee shall become a holder
                  of a Residual  Certificate in violation of the restrictions in
                  this  Section  6.02(d) and to the extent that the  retroactive
                  restoration  of the  rights  of the  holder  of such  Residual
                  Certificate  as  described in clause  (iii)(A)  above shall be
                  invalid,   illegal  or  unenforceable,   then  the  Securities
                  Administrator  shall  have the  right,  without  notice to the
                  holder or any prior holder of such  Residual  Certificate,  to
                  sell such Residual  Certificate to a purchaser selected by the
                  Securities  Administrator  on  such  terms  as the  Securities
                  Administrator  may choose.  Such  purported  Transferee  shall
                  promptly  endorse and deliver  each  Residual  Certificate  in
                  accordance   with   the   instructions   of   the   Securities
                  Administrator.   Such   purchaser   may  be   the   Securities
                  Administrator  itself  or  any  Affiliate  of  the  Securities
                  Administrator.   The  proceeds  of  such  sale,   net  of  the
                  commissions  (which  may  include  commissions  payable to the
                  Securities  Administrator  or its  Affiliates),  expenses  and
                  taxes  due,  if  any,  will  be  remitted  by  the  Securities
                  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   Securities
                  Administrator,  and the Securities  Administrator shall not be
                  liable  to  any  Person  having  an  Ownership  Interest  in a
                  Residual  Certificate  as a  result  of its  exercise  of such
                  discretion.

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

                       (v) The  provisions  of this  Section  6.02(d)  set forth
         prior to this  subsection (v) may be modified,  added to or eliminated,
         provided  that  there  shall  have  been  delivered  to the  Securities
         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

                                      149
<PAGE>

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

                  (e) Subject to the preceding  subsections,  upon surrender for
registration  of  transfer  of any  Certificate  at any  office or agency of the
Securities  Administrator  maintained for such purpose pursuant to Section 9.11,
the Securities  Administrator  shall execute,  authenticate and deliver,  in the
name of the designated  Transferee or Transferees,  one or more new Certificates
of the same Class of a like aggregate Percentage Interest.

                  (f) At the option of the Holder  thereof,  any Certificate may
be  exchanged  for  other   Certificates  of  the  same  Class  with  authorized
denominations and a like aggregate Percentage  Interest,  upon surrender of such
Certificate  to  be  exchanged  at  any  office  or  agency  of  the  Securities
Administrator maintained for such purpose pursuant to Section 9.11. Whenever any
Certificates are so surrendered for exchange, the Securities Administrator shall
execute,  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  Securities
Administrator) be duly endorsed by, or be accompanied by a written instrument of
transfer in the form satisfactory to the Securities  Administrator duly executed
by, the Holder thereof or his attorney duly authorized in writing.

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

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

                  SECTION   6.03.   Mutilated,   Destroyed,   Lost   or   Stolen
Certificates.

                  If  (i)  any  mutilated  Certificate  is  surrendered  to  the
Securities  Administrator,  or the Securities Administrator receives evidence to
its satisfaction of the destruction, loss or theft of any Certificate and of the
ownership thereof, and (ii) there is delivered to Securities  Administrator such
security or indemnity as may be required by it to save it harmless, then, in the
absence  of  actual  knowledge  by  the  Securities   Administrator   that  such
Certificate  has  been  acquired  by  a  protected  purchaser,   the  Securities
Administrator,  shall execute,  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 of any new  Certificate  under this  Section,  the  Securities
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  Securities  Administrator)
connected therewith. Any replacement Certificate issued pursuant to this Section
shall  constitute  complete  and  indefeasible  evidence  of  ownership  in  the
applicable REMIC

                                      150
<PAGE>

created hereunder,  as if originally issued,  whether or not the lost, stolen or
destroyed Certificate shall be found at any time.

                  SECTION 6.04.   Persons Deemed Owners.

                  The Depositor, the Servicer, the Trustee, the Master Servicer,
the Securities  Administrator  and any agent of any of them may treat the Person
in whose name any Certificate is registered as the owner of such Certificate for
the purpose of  receiving  distributions  pursuant  to Section  4.01 and for all
other purposes whatsoever, and none of the Depositor, the Servicer, the Trustee,
the Master  Servicer,  the Securities  Administrator or any agent of any of them
shall be affected by notice to the contrary.

                  SECTION 6.05.   Certain Available Information.

                  On or  prior  to the  date of the  first  sale of any  Class B
Certificate,  Class CE Certificate,  Class CE-1 Certificate, Class P Certificate
or Residual  Certificate  to an  Independent  third party,  the Depositor  shall
provide to the  Securities  Administrator  ten copies of any  private  placement
memorandum or other disclosure document used by the Depositor in connection with
the  offer  and sale of such  Certificate.  In  addition,  if any  such  private
placement memorandum or disclosure document is revised,  amended or supplemented
at any time following the delivery thereof to the Securities Administrator,  the
Depositor  promptly shall inform the Securities  Administrator of such event and
shall  deliver  to the  Securities  Administrator  ten  copies  of  the  private
placement   memorandum  or   disclosure   document,   as  revised,   amended  or
supplemented.  The Securities  Administrator shall maintain at its office as set
forth in Section  12.05 hereof and shall make  available  free of charge  during
normal  business  hours for review by any Holder of a Certificate  or any Person
identified to the  Securities  Administrator  as a  prospective  transferee of a
Certificate,  originals or copies of the following  items:  (i) in the case of a
Holder or prospective transferee of a Class B Certificate, Class CE Certificate,
Class CE-1 Certificate, Class P Certificate or Residual Certificate, the related
private placement memorandum or other disclosure document relating to such Class
of  Certificates,   in  the  form  most  recently  provided  to  the  Securities
Administrator;  and (ii) in all cases,  (A) this  Agreement  and any  amendments
hereof  entered  into  pursuant to Section  11.01,  (B) all  monthly  statements
required to be delivered to Certificateholders of the relevant Class pursuant to
Section 4.02 since the Closing Date, and all other notices, reports,  statements
and written  communications  delivered to the Certificateholders of the relevant
Class  pursuant to this  Agreement  since the Closing Date and (C) any copies of
all Officers'  Certificates  of the Servicer since the Closing Date delivered to
the Master Servicer to evidence such Person's determination that any P&I Advance
or Servicing  Advance was, or if made, would be a Nonrecoverable  P&I Advance or
Nonrecoverable  Servicing  Advance.  Copies  and  mailing  of any and all of the
foregoing items will be available from the Securities Administrator upon request
at the expense of the Person requesting the same.

                                      151
<PAGE>

                                  ARTICLE VII

              THE DEPOSITOR, THE SERVICERS AND THE MASTER SERVICER

                  SECTION 7.01.  Liability of the  Depositor,  the Servicers and
the Master Servicer.

                  The  Depositor,  each  Servicer and the Master  Servicer  each
shall be liable in  accordance  herewith  only to the extent of the  obligations
specifically imposed by this Agreement upon them in their respective  capacities
as Depositor,  a Servicer and Master  Servicer and  undertaken  hereunder by the
Depositor, each Servicer and the Master Servicer herein.

                  SECTION 7.02.  Merger or Consolidation  of the Depositor,  the
Servicers or the Master Servicer.

                  Subject to the following paragraph, the Depositor will keep in
full effect its existence, rights and franchises as a corporation under the laws
of the jurisdiction of its  incorporation.  Subject to the following  paragraph,
Ocwen  will keep in full  effect  its  existence,  rights  and  franchises  as a
federally chartered savings bank. Subject to the following paragraph, Saxon will
keep in full effect its existence,  rights and franchises as a corporation under
the laws of the  jurisdiction  of its  incorporation.  Subject to the  following
paragraph,  the Master  Servicer will keep in full effect its existence,  rights
and franchises as a national banking association.  The Depositor,  each Servicer
and the Master  Servicer each will obtain and preserve its  qualification  to do
business  as  a  foreign   corporation  in  each   jurisdiction  in  which  such
qualification   is  or  shall  be   necessary   to  protect  the   validity  and
enforceability of this Agreement,  the Certificates or any of the Mortgage Loans
and to perform its respective duties under this Agreement.

                  The  Depositor,  any  Servicer or the Master  Servicer  may be
merged or consolidated with or into any Person, or transfer all or substantially
all of its assets to any  Person,  in which case any Person  resulting  from any
merger or  consolidation  to which  the  Depositor,  a  Servicer  or the  Master
Servicer  shall be a party,  or any Person  succeeding  to the  business  of the
Depositor,  such Servicer or the Master Servicer,  shall be the successor of the
Depositor,  such Servicer or the Master Servicer, as the case may be, hereunder,
without the  execution  or filing of any paper or any further act on the part of
any of the parties  hereto,  anything  herein to the  contrary  notwithstanding;
provided, however, that any successor to a Servicer or the Master Servicer shall
meet the eligibility requirements set forth in clauses (i) and (iii) of the last
paragraph of Section 8.02(a) or Section 7.06, as applicable.

                  SECTION 7.03.  Limitation on Liability of the  Depositor,  the
Servicers, the Master Servicer and Others.

                  None  of  the  Depositor,   the   Servicers,   the  Securities
Administrator,  the Master Servicer or any of the directors, officers, employees
or agents of the Depositor,  the Servicers or the Master Servicer shall be under
any liability to the Trust Fund or the  Certificateholders  for any action taken
or for  refraining  from the taking of any action in good faith pursuant to this
Agreement,  or for errors in judgment;  provided,  however,  that this provision
shall not protect the Depositor, a Servicer, the Securities  Administrator,  the
Master   Servicer  or  any  such  person   against  any  breach  of  warranties,
representations  or  covenants  made  herein or against any  specific  liability
imposed on any such Person  pursuant hereto or against any liability which

                                      152
<PAGE>

would otherwise be imposed by reason of willful misfeasance,  bad faith or gross
negligence in the  performance  of duties or by reason of reckless  disregard of
obligations and duties hereunder.  The Depositor,  each Servicer, the Securities
Administrator,  the Master Servicer and any director, officer, employee or agent
of the Depositor,  each Servicer,  the Securities  Administrator  and the Master
Servicer may rely in good faith on any document of any kind which,  prima facie,
is properly  executed and submitted by any Person respecting any matters arising
hereunder.  The Depositor,  each Servicer,  the  Securities  Administrator,  the
Master Servicer and any director,  officer,  employee or agent of the Depositor,
each Servicer,  the  Securities  Administrator  or the Master  Servicer shall be
indemnified  and held harmless by the Trust Fund against any loss,  liability or
expense incurred in connection with any legal action relating to this Agreement,
the Certificates or any Credit Risk Management  Agreement or any loss, liability
or expense  incurred other than by reason of willful  misfeasance,  bad faith or
gross negligence in the performance of duties hereunder or by reason of reckless
disregard  of  obligations  and duties  hereunder.  None of the  Depositor,  any
Servicer, the Securities Administrator or the Master Servicer shall be under any
obligation to appear in, prosecute or defend any legal action unless such action
is related to its  respective  duties under this  Agreement and, in its opinion,
does not involve it in any expense or liability; provided, however, that each of
the  Depositor,  each  Servicer,  the  Securities  Administrator  and the Master
Servicer  may in its  discretion  undertake  any such  action  which it may deem
necessary or desirable  with respect to this Agreement and the rights and duties
of the parties hereto and the interests of the Certificateholders  hereunder. In
such  event,  the legal  expenses  and costs of such  action  and any  liability
resulting therefrom (except any loss, liability or expense incurred by reason of
willful misfeasance,  bad faith or gross negligence in the performance of duties
hereunder  or  by  reason  of  reckless  disregard  of  obligations  and  duties
hereunder)  shall be expenses,  costs and liabilities of the Trust Fund, and the
Depositor,  the related  Servicer,  the Securities  Administrator and the Master
Servicer shall be entitled to be reimbursed therefor from the related Collection
Account or the Distribution Account as and to the extent provided in Article III
and Article IV, any such right of reimbursement being prior to the rights of the
Certificateholders  to receive any amount in the related  Collection Account and
the Distribution Account.

                  Notwithstanding  anything to the contrary contained herein, no
Servicer shall be liable for any actions or inactions  prior to the Cut-off Date
of any prior  servicer of the  related  Mortgage  Loans and the Master  Servicer
shall not be liable for any action or inaction of either Servicer or any Interim
Servicer,  except to the extent expressly  provided  herein,  or the Credit Risk
Management Agreement.

                  SECTION 7.04.   Limitation on Resignation of the Servicers.

(a) Except as expressly provided herein, no Servicer shall neither assign all or
substantially all of its rights under this Agreement or the servicing  hereunder
nor  delegate  all or  substantially  all of its  duties  hereunder  nor sell or
otherwise dispose of all or substantially all of its property or assets without,
in each case, the prior written  consent of the Master  Servicer,  which consent
shall not be unreasonably withheld;  provided,  that in each case, there must be
delivered  to the  Trustee  and the Master  Servicer a letter  from each  Rating
Agency to the effect that such transfer of servicing or sale or  disposition  of
assets  will not  result in a  qualification,  withdrawal  or  downgrade  of the
then-current  rating of any of the Certificates.  Notwithstanding the foregoing,
each Servicer,  without the consent of the Trustee or the Master  Servicer,  may
retain   third-party   contractors  to  perform   certain   servicing  and  loan
administration   functions,

                                      153
<PAGE>

including without  limitation hazard insurance  administration,  tax payment and
administration, flood certification and administration,  collection services and
similar functions,  provided, however, that the retention of such contractors by
a Servicer  shall not limit the  obligation  of such  Servicer  to  service  the
related  Mortgage Loans pursuant to the terms and conditions of this  Agreement.
No Servicer  shall resign from the  obligations  and duties hereby imposed on it
except by consent of the Master Servicer or upon  determination  that its duties
hereunder  are no longer  permissible  under  applicable  law or as  provided in
Section  7.04(c).  Any such  determination  pursuant to the  preceding  sentence
permitting  the  resignation  (other  than  pursuant  to Section  7.04(c))  of a
Servicer shall be evidenced by an Opinion of Counsel to such effect  obtained at
the  expense  of such  Servicer  and  delivered  to the  Trustee  and the Rating
Agencies.  No resignation of a Servicer shall become  effective until the Master
Servicer  or  a  successor   Servicer   shall  have  assumed   such   Servicer's
responsibilities,  duties,  liabilities  (other than those  liabilities  arising
prior  to  the  appointment  of  such  successor)  and  obligations  under  this
Agreement.

                  (b) Except as expressly provided herein, no Servicer shall not
assign or transfer any of its rights,  benefits or  privileges  hereunder to any
other Person,  or delegate to or  subcontract  with, or authorize or appoint any
other  Person to perform  any of the  duties,  covenants  or  obligations  to be
performed by such Servicer  hereunder.  The foregoing  prohibition on assignment
shall not prohibit a Servicer from  designating a  Sub-Servicer  as payee of any
indemnification  amount payable to such Servicer hereunder;  provided,  however,
that as  provided  in  Section  3.02,  no  Sub-Servicer  shall be a  third-party
beneficiary  hereunder and the parties hereto shall not be required to recognize
any Sub-Servicer as an indemnitee under this Agreement.

(c) Notwithstanding anything to the contrary herein, each Servicer may pledge or
assign as collateral all its rights,  title and interest under this Agreement to
a lender (the "Lender"), provided, that:

                  (1) upon a Servicer  Event of Default  and receipt of a notice
                  of termination  by such  Servicer,  the Lender may direct such
                  Servicer  or its  designee  to  appoint a  successor  Servicer
                  pursuant to the provisions, and subject to the conditions, set
                  forth in Section 8.02 regarding such Servicer's appointment of
                  a successor Servicer;

                  (2) the Lender's rights are subject to this Agreement; and

                  (3) such  Servicer  shall  remain  subject to  termination  as
                  servicer under this Agreement pursuant to the terms hereof.

                  SECTION  7.05.   Limitation  on   Resignation  of  the  Master
Servicer.

                  The Master  Servicer shall not resign from the obligations and
duties hereby imposed on it except upon  determination that its duties hereunder
are no longer permissible under applicable law. Any such determination  pursuant
to the preceding  sentence  permitting the  resignation  of the Master  Servicer
shall be  evidenced  by an Opinion of Counsel  to such  effect  obtained  at the
expense of the Master  Servicer  and  delivered  to the  Trustee  and the Rating
Agencies. No resignation of the Master Servicer shall become effective until the
Trustee or a successor Master Servicer meeting the criteria specified in Section
7.06  shall  have  assumed  the

                                      154
<PAGE>

Master  Servicer's  responsibilities,  duties,  liabilities  (other  than  those
liabilities  arising prior to the appointment of such successor) and obligations
under this Agreement.

                  SECTION 7.06.   Assignment of Master Servicing.

                  The  Master  Servicer  may  sell and  assign  its  rights  and
delegate its duties and  obligations  in its entirety as Master  Servicer  under
this Agreement;  provided, however, that: (i) the purchaser or transferee accept
in writing such  assignment  and  delegation  and assume the  obligations of the
Master  Servicer  hereunder  (a)  shall  have  a net  worth  of  not  less  than
$15,000,000  (unless otherwise approved by each Rating Agency pursuant to clause
(ii) below);  (b) shall be reasonably  satisfactory to the Trustee (as evidenced
in a writing  signed by the  Trustee);  and (c) shall execute and deliver to the
Trustee an  agreement,  in form and  substance  reasonably  satisfactory  to the
Trustee,  which  contains an  assumption  by such Person of the due and punctual
performance  and  observance  of each  covenant and condition to be performed or
observed by it as master servicer under this Agreement,  any custodial agreement
from and after the  effective  date of such  agreement;  (ii) each Rating Agency
shall be given prior written notice of the identity of the proposed successor to
the Master  Servicer  and each Rating  Agency's  rating of the  Certificates  in
effect  immediately  prior to such  assignment,  sale and delegation will not be
downgraded,  qualified  or withdrawn  as a result of such  assignment,  sale and
delegation,  as  evidenced  by a letter to such effect  delivered  to the Master
Servicer and the Trustee;  and (iii) the Master  Servicer  assigning and selling
the master  servicing shall deliver to the Trustee an officer's  certificate and
an Opinion of Independent counsel, each stating that all conditions precedent to
such  action  under  this  Agreement  have  been  completed  and such  action is
permitted by and complies with the terms of this  Agreement.  No such assignment
or delegation  shall affect any liability of the Master Servicer  arising out of
acts or omissions prior to the effective date thereof.

                  SECTION  7.07.  Rights  of the  Depositor  in  Respect  of the
Servicers and the Master Servicer.

                  Each of the Master  Servicer  and the  Servicers  shall afford
(and any  Sub-Servicing  Agreement  shall provide that each  Sub-Servicer  shall
afford) the Depositor and the Trustee,  upon  reasonable  notice,  during normal
business hours,  access to all records  maintained by the Master Servicer or the
related  Servicer  (and  any  such  Sub-Servicer)  in  respect  of  the  related
Servicer's rights and obligations hereunder and access to officers of the Master
Servicer  or  the  related  Servicer  (and  those  of  any  such   Sub-Servicer)
responsible for such  obligations,  and the Master Servicer shall have access to
all such records maintained by the related Servicer and any Sub-Servicers.  Upon
request,  each of the Master  Servicer  and the  Servicer  shall  furnish to the
Depositor  and the  Trustee  its  (and  any  such  Sub-Servicer's)  most  recent
financial   statements  and  such  other  information  relating  to  the  Master
Servicer's or such  Servicer's  capacity to perform its  obligations  under this
Agreement as it possesses  (and that any such  Sub-Servicer  possesses).  To the
extent such information is not otherwise  available to the public, the Depositor
and the Trustee shall not disseminate any information  obtained  pursuant to the
preceding two sentences without the Master Servicer's or the related  Servicer's
written consent,  except as required pursuant to this Agreement or to the extent
that it is  appropriate  to do so (i) to its  legal  counsel,  auditors,  taxing
authorities  or other  governmental  agencies and the  Certificateholders,  (ii)
pursuant to any law, rule,  regulation,  order,  judgment,  writ,  injunction or
decree of any  court or  governmental  authority  having  jurisdiction  over the
Depositor and the Trustee or the Trust Fund,  and in any

                                      155
<PAGE>

case, the Depositor or the Trustee,  (iii) disclosure of any and all information
that is or becomes  publicly known, or information  obtained by the Trustee from
sources other than the Depositor,  the related  Servicer or the Master Servicer,
(iv) disclosure as required  pursuant to this Agreement or (v) disclosure of any
and  all  information  (A)  in  any  preliminary  or  final  offering  circular,
registration   statement  or  contract  or  other  document  pertaining  to  the
transactions contemplated by the Agreement approved in advance by the Depositor,
the related Servicer or the Master Servicer or (B) to any affiliate, independent
or internal auditor, agent, employee or attorney of the Trustee having a need to
know  the  same,  provided  that  the  Trustee  advises  such  recipient  of the
confidential  nature  of the  information  being  disclosed,  shall use its best
efforts  to  assure  the  confidentiality  of any such  disseminated  non-public
information.  Nothing in this  Section  7.07 shall limit the  obligation  of the
related  Servicer to comply with any  applicable law  prohibiting  disclosure of
information  regarding the Mortgagors and the failure of the related Servicer to
provide  access as provided in this Section 7.07 as a result of such  obligation
shall not  constitute  a breach of this  Section.  Nothing in this  Section 7.07
shall  require the related  Servicer to collect,  create,  collate or  otherwise
generate  any  information  that it does not  generate  in its  usual  course of
business.  No Servicer  shall be required to make copies of or ship documents to
any party unless  provisions have been made for the  reimbursement  of the costs
thereof.  The Depositor may, but is not obligated to, enforce the obligations of
the Master  Servicer and the Servicers  under this Agreement and may, but is not
obligated to, perform, or cause a designee to perform,  any defaulted obligation
of the Master  Servicer or any  Servicer  under this  Agreement  or exercise the
rights of the Master  Servicer or any Servicer  under this  Agreement;  provided
that neither the Master  Servicer nor the Servicers  shall be relieved of any of
its  obligations  under  this  Agreement  by virtue of such  performance  by the
Depositor or its designee.  The Depositor shall not have any  responsibility  or
liability  for any  action  or  failure  to act by the  Master  Servicer  or the
Servicers  and is not  obligated  to  supervise  the  performance  of the Master
Servicer or any Servicer under this Agreement or otherwise.

                  SECTION 7.08.   Duties of the Credit Risk Manager.

                  For and on behalf of the  Depositor,  the Credit Risk  Manager
will provide  reports and  recommendations  concerning  certain  delinquent  and
defaulted  Mortgage  Loans,  and as to the collection of any Prepayment  Charges
with respect to the Mortgage  Loans.  Such reports and  recommendations  will be
based upon  information  provided  to the Credit  Risk  Manager  pursuant to the
Credit Risk Management Agreements, and the Credit Risk Manager shall look solely
to the Servicers  and/or Master Servicer for all information and data (including
loss and  delinquency  information  and data)  relating to the  servicing of the
related  Mortgage Loans.  Upon any termination of the Credit Risk Manager or the
appointment of a successor Credit Risk Manager, the Depositor shall give written
notice  thereof  to  the  Servicers,   the  Master   Servicer,   the  Securities
Administrator,   the  Trustee,  and  each  Rating  Agency.  Notwithstanding  the
foregoing,  the termination of the Credit Risk Manager  pursuant to this Section
shall not become  effective  until the  appointment  of a successor  Credit Risk
Manager.

                  SECTION  7.09.  Limitation  Upon  Liability of the Credit Risk
Manager.

                  Neither the Credit  Risk  Manager,  nor any of its  directors,
officers,  employees, or agents shall be under any liability to the Trustee, the
Certificateholders, or the Depositor for any action taken or for refraining from
the  taking of any action  made in good faith  pursuant  to this  Agreement,  in
reliance upon information provided by the Servicer under the related Credit Risk

                                      156
<PAGE>

Management Agreement,  or for errors in judgment;  provided,  however, that this
provision  shall not protect the Credit Risk Manager or any such person  against
liability  that would  otherwise be imposed by reason of willful  malfeasance or
bad faith in its  performance  of its duties.  The Credit  Risk  Manager and any
director,  officer,  employee,  or agent of the Credit Risk  Manager may rely in
good  faith on any  document  of any kind  prima  facie  properly  executed  and
submitted by any Person respecting any matters arising  hereunder,  and may rely
in good  faith  upon the  accuracy  of  information  furnished  by the  Servicer
pursuant to the related Credit Risk  Management  Agreement in the performance of
its duties thereunder and hereunder.

                  SECTION 7.10.   Removal of the Credit Risk Manager.

                  The Credit Risk  Manager may be removed as Credit Risk Manager
by Certificateholders  holding not less than 66 2/3% of the Voting Rights in the
Trust   Fund,   in  the   exercise  of  its  or  their  sole   discretion.   The
Certificateholders  shall provide  written  notice of the Credit Risk  Manager's
removal to the Trustee.  Upon receipt of such notice,  the Trustee shall provide
written  notice to the  Credit  Risk  Manager  of its  removal,  which  shall be
effective upon receipt of such notice by the Credit Risk Manager, with a copy to
the Securities Administrator and the Master Servicer.

                                      157
<PAGE>

                                  ARTICLE VIII

                                     DEFAULT

                  SECTION 8.01.   Servicer Events of Default.

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

                       (i) any failure by a Servicer to remit to the  Securities
         Administrator  for distribution to the  Certificateholders  any payment
         (other than a P&I Advance required to be made from its own funds on any
         Servicer  Remittance Date pursuant to Section 5.03) required to be made
         by such Servicer under the terms of the Certificates and this Agreement
         which  continues  unremedied for a period of one Business Day after the
         date upon which written  notice of such failure,  requiring the same to
         be remedied, shall have been given to such Servicer by the Depositor or
         the Trustee (in which case notice shall be provided by telecopy), or to
         such  Servicer,  the  Depositor,  the  Trustee  and by the  Holders  of
         Certificates entitled to at least 25% of the Voting Rights; or

                       (ii)  any  failure  on the  part  of a  Servicer  duly to
         observe or perform in any material  respect any other of the  covenants
         or agreements on the part of such Servicer contained in this Agreement,
         or the material breach by a Servicer of any representation and warranty
         contained in Section 2.05,  which continues  unremedied for a period of
         30 days  after  the  date on  which  written  notice  of such  failure,
         requiring  the  same to be  remedied,  shall  have  been  given to such
         Servicer  by the  Depositor  or the  Trustee or to such  Servicer,  the
         Depositor and the Trustee by the Holders of Certificates entitled to at
         least 25% of the Voting Rights; provided,  however, that in the case of
         a failure that cannot be cured within thirty (30) days, the cure period
         may be extended for an additional thirty (30) days if such Servicer can
         demonstrate  to the  reasonable  satisfaction  of the Trustee  that the
         Servicer is diligently pursuing remedial action; or

                       (iii)  a  decree  or  order  of  a  court  or  agency  or
         supervisory  authority  having  jurisdiction  in  the  premises  in  an
         involuntary   case  under  any  present  or  future  federal  or  state
         bankruptcy,   insolvency  or  similar  law  or  the  appointment  of  a
         conservator or receiver or liquidator in any  insolvency,  readjustment
         of debt,  marshalling of assets and liabilities or similar  proceeding,
         or for the winding-up or  liquidation  of its affairs,  shall have been
         entered against a Servicer and such decree or order shall have remained
         in force undischarged or unstayed for a period of 90 days; or

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

                       (v) a 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;

                                      158
<PAGE>

                       (vi)  failure by a Servicer to duly  perform,  within the
         required time period,  its obligations under Section 3.17, 3.18 or 3.19
         which failure continues  unremedied for a period of ten (10) days after
         the date on which written notice of such failure, requiring the same to
         be  remedied,  shall have been given to such  Servicer  by any party to
         this Agreement; or

                       (vii) any  failure of a Servicer  to make any P&I Advance
         on any Servicer  Remittance Date required to be made from its own funds
         pursuant to Section 5.03 which continues unremedied until 3:00 p.m. New
         York  time on the  Business  Day  immediately  following  the  Servicer
         Remittance Date; or

                       (viii)  failure of a  Servicer  to  maintain  at least an
         "average" rating from the Rating Agencies.

                  If a  Servicer  Event of  Default  described  in  clauses  (i)
through (vi) or (viii) of this Section shall occur,  then, and in each and every
such  case,  so long as such  Servicer  Event of  Default  shall  not have  been
remedied,  the Depositor or the Trustee may, and at the written direction of the
Holders of Certificates  entitled to at least 51% of Voting Rights,  the Trustee
shall, by notice in writing to the defaulting  Servicer (and to the Depositor if
given by the Trustee or to the Trustee if given by the Depositor) with a copy to
the Master  Servicer  and each Rating  Agency,  terminate  all of the rights and
obligations of the defaulting  Servicer in its capacity as a Servicer under this
Agreement,  to the extent  permitted by law, and in and to the related  Mortgage
Loans and the  proceeds  thereof.  If a Servicer  Event of Default  described in
clause (vii) hereof shall occur,  the Trustee shall, by notice in writing to the
defaulting Servicer, the Depositor and the Master Servicer, terminate all of the
rights and obligations of the defaulting  Servicer in its capacity as a Servicer
under this  Agreement and in and to the related  Mortgage Loans and the proceeds
thereof.  Subject to Section  8.02,  on or after the  receipt by the  defaulting
Servicer of such  written  notice,  all  authority  and power of the  defaulting
Servicer under this Agreement,  whether with respect to the Certificates  (other
than as a Holder of any Certificate) or the related Mortgage Loans or otherwise,
shall pass to and be vested in the Master  Servicer  pursuant  to and under this
Section,  and, without limitation,  the Master Servicer is hereby authorized and
empowered,  as attorney-in-fact or otherwise,  to execute and deliver, on behalf
of and at the expense of the  defaulting  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  defaulting  Servicer  agrees
promptly  (and in any event no later than ten Business  Days  subsequent to such
notice) to provide the Master Servicer with all documents and records  requested
by it to enable it to assume  the  defaulting  Servicer's  functions  under this
Agreement,   and  to  cooperate  with  the  Master  Servicer  in  effecting  the
termination of the defaulting Servicer's  responsibilities and rights under this
Agreement,  including,  without limitation, the transfer within one Business Day
to the Master Servicer for administration by it of all cash amounts which at the
time shall be or should  have been  credited by the  defaulting  Servicer to the
related  Collection  Account held by or on behalf of the defaulting  Servicer or
thereafter be received with respect to the related Mortgage Loans or any related
REO Property (provided,  however, that the defaulting Servicer shall continue to
be entitled to receive all amounts  accrued or owing to it under this  Agreement
on or prior to the date of such termination, whether in respect of P&I Advances,
Servicing  Advances,  accrued and unpaid Servicing Fees or otherwise,  and shall
continue to be entitled to the  benefits of Section

                                      159
<PAGE>

7.03,  notwithstanding  any such  termination,  with respect to events occurring
prior  to  such  termination).   Reimbursement  of  unreimbursed  P&I  Advances,
Servicing  Advances  and  accrued and unpaid  Servicing  Fees shall be made on a
first in, first out ("FIFO") basis no later than the related Servicer Remittance
Date. For purposes of this Section  8.01(a),  the Trustee shall not be deemed to
have knowledge of a Servicer  Event of Default  unless a Responsible  Officer of
the Trustee assigned to and working in the Trustee's  Corporate Trust Office has
actual knowledge  thereof or unless written notice of any event which is in fact
such a Servicer  Event of Default is received  by the  Trustee at its  Corporate
Trust  Office and such notice  references  the  Certificates,  the Trust or this
Agreement.  The Trustee shall promptly notify the Master Servicer and the Rating
Agencies  of the  occurrence  of a  Servicer  Event of  Default  of which it has
knowledge as provided above.

                  The Master  Servicer shall be entitled to be reimbursed by the
defaulting  Servicer (or from amounts on deposit in the Distribution  Account if
the defaulting Servicer is unable to fulfill its obligations  hereunder) for all
reasonable  out-of-pocket  or third party costs  associated with the transfer of
servicing  from the  defaulting  Servicer,  including  without  limitation,  any
reasonable  out-of-pocket  or third party costs or expenses  associated with the
complete  transfer  of all  servicing  data and the  completion,  correction  or
manipulation of such servicing data as may be required by the Master Servicer to
correct any errors or  insufficiencies  in the  servicing  data or  otherwise to
enable the Master  Servicer to service the related  Mortgage  Loans properly and
effectively,  upon  presentation of reasonable  documentation  of such costs and
expenses.

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

                       (i) any failure on the part of the Master  Servicer  duly
         to  observe  or  perform  in any  material  respect  any  other  of the
         covenants or agreements on the part of the Master Servicer contained in
         this   Agreement,   or  the  breach  by  the  Master  Servicer  of  any
         representation  and warranty contained in Section 2.04, which continues
         unremedied  for a period  of 30 days  after  the date on which  written
         notice of such failure,  requiring the same to be remedied,  shall have
         been given to the Master Servicer by the Depositor or the Trustee or to
         the Master  Servicer,  the  Depositor and the Trustee by the Holders of
         Certificates entitled to at least 25% of the Voting Rights; or

                       (ii)  a  decree   or  order  of  a  court  or  agency  or
         supervisory  authority  having  jurisdiction  in  the  premises  in  an
         involuntary   case  under  any  present  or  future  federal  or  state
         bankruptcy,   insolvency  or  similar  law  or  the  appointment  of  a
         conservator or receiver or liquidator in any  insolvency,  readjustment
         of debt,  marshalling of assets and liabilities or similar  proceeding,
         or for the winding-up or  liquidation  of its affairs,  shall have been
         entered against the Master Servicer and such decree or order shall have
         remained in force undischarged or unstayed for a period of 90 days; or

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

                       (iv) the  Master  Servicer  shall  admit in  writing  its
         inability  to pay its  debts  generally  as  they  become  due,  file a
         petition  to  take   advantage   of  any   applicable

                                      160
<PAGE>

         insolvency  or  reorganization  statute,  make  an  assignment  for the
         benefit  of  its  creditors,  or  voluntarily  suspend  payment  of its
         obligations.

                  If a Master  Servicer Event of Default shall occur,  then, and
in each and every such case,  so long as such Master  Servicer  Event of Default
shall not have been  remedied,  the  Depositor  or the Trustee  may,  and at the
written  direction  of the Holders of  Certificates  entitled to at least 51% of
Voting Rights,  the Trustee shall,  by notice in writing to the Master  Servicer
(and to the  Depositor if given by the Trustee or to the Trustee if given by the
Depositor)  with a copy to each Rating  Agency,  terminate all of the rights and
obligations of the Master Servicer in its capacity as Master Servicer under this
Agreement,  to the extent permitted by law, and in and to the Mortgage Loans and
the  proceeds  thereof.  On or after the receipt by the Master  Servicer of such
written  notice,  all  authority  and power of the  Master  Servicer  under this
Agreement,  whether with respect to the Certificates  (other than as a Holder of
any  Certificate)  or  the  Mortgage  Loans  or  otherwise  including,   without
limitation,   the  compensation  payable  to  the  Master  Servicer  under  this
Agreement, shall pass to and be vested in the Trustee pursuant to and under this
Section,  and,  without  limitation,   the  Trustee  is  hereby  authorized  and
empowered,  as attorney-in-fact or otherwise,  to execute and deliver, on behalf
of and at the expense of the Master  Servicer,  any and all  documents and other
instruments  and to do or  accomplish  all  other  acts or things  necessary  or
appropriate  to effect the  purposes of such notice of  termination,  whether to
complete the transfer and  endorsement  or assignment of the Mortgage  Loans and
related documents, or otherwise. The Master Servicer agrees promptly (and in any
event no later than ten Business Days  subsequent to such notice) to provide the
Trustee with all  documents  and records  requested by it to enable it to assume
the Master Servicer's functions under this Agreement,  and to cooperate with the
Trustee in effecting the termination of the Master  Servicer's  responsibilities
and rights under this Agreement  (provided,  however,  that the Master  Servicer
shall  continue to be  entitled  to receive  all amounts  accrued or owing to it
under  this  Agreement  on or prior to the date of such  termination  and  shall
continue to be entitled to the  benefits of Section  7.03,  notwithstanding  any
such termination,  with respect to events occurring prior to such  termination).
For purposes of this Section  8.01(b),  the Trustee  shall not be deemed to have
knowledge of a Master Servicer Event of Default unless a Responsible  Officer of
the Trustee assigned to and working in the Trustee's  Corporate Trust Office has
actual knowledge  thereof or unless written notice of any event which is in fact
such a Master  Servicer  Event of Default is  received  by the  Trustee and such
notice  references the  Certificates,  the Trust or this Agreement.  The Trustee
shall promptly notify the Rating Agencies of the occurrence of a Master Servicer
Event of Default of which it has knowledge as provided above.

                  To the  extent  that the costs  and  expenses  of the  Trustee
related to the  termination of the Master  Servicer,  appointment of a successor
Master  Servicer or the transfer and  assumption of the master  servicing by the
Trustee (including, without limitation, (i) all legal costs and expenses and all
due diligence costs and expenses  associated with an evaluation of the potential
termination  of the Master  Servicer as a result of a Master  Servicer  Event of
Default and (ii) all costs and expenses associated with the complete transfer of
the master  servicing,  including all servicing files and all servicing data and
the  completion,  correction or  manipulation  of such  servicing data as may be
required   by  the   successor   Master   Servicer  to  correct  any  errors  or
insufficiencies  in the  servicing  data or  otherwise  to enable the  successor
Master  Servicer to master  service the Mortgage  Loans in accordance  with this
Agreement)  are  not  fully  and  timely  reimbursed  by the  terminated  Master
Servicer,  the  Trustee  shall be entitled  to  reimbursement  of such costs and
expenses from the Distribution Account.

                                      161
<PAGE>

                  SECTION  8.02.   Master   Servicer  to  Act;   Appointment  of
Successor.

(a) On and after the time a  Servicer  receives  a notice  of  termination,  the
Master  Servicer  shall be the successor in all respects to such Servicer in its
capacity as a Servicer  under this Agreement and the  transactions  set forth or
provided  for  herein,  and all the  responsibilities,  duties  and  liabilities
relating thereto and arising  thereafter shall be assumed by the Master Servicer
(except  for any  representations  or  warranties  of such  Servicer  under this
Agreement,  the  responsibilities,  duties and liabilities  contained in Section
2.03 and the  obligation  to deposit  amounts in respect of losses  pursuant  to
Section  3.10(b))  by  the  terms  and  provisions  hereof  including,   without
limitation, such Servicer's obligations to make P&I Advances pursuant to Section
5.03 of this  Agreement;  provided,  however,  that if the  Master  Servicer  is
prohibited  by law  or  regulation  from  obligating  itself  to  make  advances
regarding  delinquent  mortgage  loans,  then the Master  Servicer  shall not be
obligated to make P&I Advances  pursuant to Section 5.03 of this Agreement;  and
provided  further,  that any failure to perform such duties or  responsibilities
caused by such  Servicer's  failure to provide  information  required by Section
8.01 shall not be  considered  a default by the Master  Servicer as successor to
such  Servicer  hereunder;  provided,  however,  that (1) it is  understood  and
acknowledged  by the parties  hereto  that there will be a period of  transition
(not to exceed  120 days)  before the actual  servicing  functions  can be fully
transferred  to the Master  Servicer  or any  successor  Servicer  appointed  in
accordance  with the  following  provisions  and (2) any failure to perform such
duties  or  responsibilities  caused  by  such  Servicer's  failure  to  provide
information required by Section 8.01 of this Agreement shall not be considered a
default by the Master  Servicer as successor to such Servicer.  As  compensation
therefor,  the Master  Servicer  shall be entitled to the  Servicing Fee and all
funds relating to the related  Mortgage  Loans to which the terminated  Servicer
would have been entitled if it had continued to act  hereunder.  Notwithstanding
the above  and  subject  to the  immediately  following  paragraph,  the  Master
Servicer  may, if it shall be unwilling to so act, or shall,  if it is unable to
so act  promptly  appoint  or  petition  a court of  competent  jurisdiction  to
appoint, a Person that satisfies the eligibility criteria set forth below as the
successor to the  terminated  Servicer under this Agreement in the assumption of
all or any part of the responsibilities, duties or liabilities of the terminated
Servicer under this Agreement.

                  Notwithstanding   any  provision  in  this  Agreement  to  the
contrary,  for a period of 30 days  following the date on which Ocwen shall have
received a notice of  termination  pursuant to Section  8.01 of this  Agreement,
Ocwen or its  designee  may  appoint a successor  Servicer  that  satisfies  the
eligibility  criteria of a successor Servicer set forth below, which appointment
shall be  subject  to the  consent  of the  Depositor,  the  Seller,  the Master
Servicer,  and the Trustee,  which consent shall not be unreasonably withheld or
delayed;  provided  that such  successor  Servicer  agrees to fully  effect  the
servicing  transfer  within 120 days  following the  termination of Ocwen and to
make all P&I Advances that would  otherwise be made by the Master Servicer under
Section 8.01 as of the date of such  appointment,  and to  reimburse  the Master
Servicer for any  unreimbursed  P&I Advances they have made and any reimbursable
expenses that they may have incurred in connection  with this Section 8.02.  Any
proceeds received in connection with the appointment of such successor  Servicer
shall be the  property  of Ocwen  or its  designee.  This  30-day  period  shall
terminate immediately (i) at the close of business on the second Business Day of
such 30-day  period if (A) Ocwen was  terminated  because of an Event of Default
described  in Section  8.01(a)(vii)  for failing to make a required P&I Advance,
and (B) Ocwen shall have failed to make (or cause to be made) such P&I  Advance,
or shall fail to reimburse (or cause to be reimbursed) the Master Servicer for a
P&I Advance made by the Master Servicer, by the close of

                                      162
<PAGE>

business  on such second  Business  Day, or (ii) at the close of business on the
second  Business Day  following  the date (if any) during such 30-day  period on
which a P&I  Advance is due to be made,  if Ocwen  shall have failed to make (or
caused to be made) such P&I Advance, or Ocwen shall have failed to reimburse (or
cause to be reimbursed) the Master  Servicer for such P&I Advance,  by the close
of business on such second Business Day.

                  Notwithstanding  anything herein to the contrary,  in no event
shall the Trustee or the Master  Servicer be liable for any Servicing Fee or for
any  differential  in the amount of the  Servicing  Fee paid  hereunder  and the
amount necessary to induce any successor  Servicer to act as successor  Servicer
under this Agreement and the transactions set forth or provided for herein.

                  Any successor Servicer appointed under this Agreement must (i)
be an established  mortgage loan servicing  institution that is a Fannie Mae and
Freddie Mac approved seller/servicer,  (ii) be approved by each Rating Agency by
a written  confirmation  from each Rating  Agency that the  appointment  of such
successor  Servicer  would not result in the reduction or withdrawal of the then
current ratings of any outstanding Class of Certificates, (iii) have a net worth
of not less than $15,000,000 and (iv) assume all the responsibilities, duties or
liabilities  of the  related  Servicer  (other than  liabilities  of the related
Servicer  hereunder incurred prior to termination of such Servicer under Section
8.01  herein)  under this  Agreement as if  originally  named as a party to this
Agreement.

                  (b) (1)  All  servicing  transfer  costs  (including,  without
limitation,  servicing  transfer costs of the type described in Section  8.02(a)
and incurred by the Trustee,  the Master  Servicer  and any  successor  Servicer
under  paragraph  (b)(2)  below) shall be paid by the  terminated  Servicer upon
presentation of reasonable  documentation of such costs, and if such predecessor
or initial  Servicer,  as  applicable,  defaults in its  obligation  to pay such
costs,  the  successor  Servicer,  the Master  Servicer and the Trustee shall be
entitled to reimbursement therefor from the assets of the Trust Fund.

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

                  SECTION 8.03.   Notification to Certificateholders.

                  (a) Upon any termination of the related Servicer or the Master
Servicer pursuant to Section 8.01(a) or (b) or any appointment of a successor to
such Servicer or the Master Servicer pursuant to Section 8.02, the Trustee shall
give prompt written notice thereof to the Certificateholders at their respective
addresses appearing in the Certificate Register.

                  (b) Not later than the later of 60 days  after the  occurrence
of any event,  which constitutes or which, with notice or lapse of time or both,
would  constitute  a Servicer  Event of

                                      163
<PAGE>

Default or a Master  Servicer  Event of Default or five days after a Responsible
Officer of the Trustee  becomes aware of the  occurrence  of such an event,  the
Trustee  shall  transmit by mail to all Holders of  Certificates  notice of each
such  occurrence,  unless such  default or  Servicer  Event of Default or Master
Servicer Event of Default shall have been cured or waived.

                  SECTION 8.04.   Waiver of Servicer Events of Default.

                  The  Holders  representing  at least 66% of the Voting  Rights
evidenced by all Classes of Certificates affected by any default, Servicer Event
of Default or Master Servicer Event of Default hereunder may waive such default,
Servicer  Event of  Default  or  Master  Servicer  Event of  Default;  provided,
however,  that a Servicer  Event of Default under clause (i) or (vii) of Section
8.01(a) may be waived  only by all of the  Holders of the Regular  Certificates.
Upon any such waiver of a default,  Servicer Event of Default or Master Servicer
Event of Default,  such default,  Servicer  Event of Default or Master  Servicer
Event of Default  shall cease to exist and shall be deemed to have been remedied
for every purpose  hereunder.  No such waiver shall extend to any  subsequent or
other default,  Servicer Event of Default or Master Servicer Event of Default or
impair any right consequent thereon except to the extent expressly so waived.

                                      164
<PAGE>

                                   ARTICLE IX

             CONCERNING THE TRUSTEE AND THE SECURITIES ADMINISTRATOR

                  SECTION 9.01.  Duties of Trustee and Securities Administrator.

                  The  Trustee,  prior to the  occurrence  of a Master  Servicer
Event of Default and after the curing or waiver of all Master Servicer Events of
Default which may have occurred, and the Securities Administrator each undertake
to perform  such  duties and only such duties as are  specifically  set forth in
this  Agreement  as  duties of the  Trustee  and the  Securities  Administrator,
respectively.  During the continuance of a Master Servicer Event of Default, the
Trustee  shall  exercise  such of the  rights  and  powers  vested in it by this
Agreement,  and use the same  degree  of care and  skill  in its  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  enumerated in
this Agreement shall not be construed as a duty.

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

                  The Trustee shall promptly  remit to the related  Servicer any
complaint, claim, demand, notice or other document (collectively, the "Notices")
delivered to the Trustee as a consequence of the assignment of any Mortgage Loan
hereunder and relating to the servicing of the Mortgage Loans; provided than any
such notice (i) is delivered to the Trustee at its Corporate Trust Office,  (ii)
contains  information  sufficient to permit the Trustee to make a  determination
that the real property to which such document  relates is a Mortgaged  Property.
The  Trustee  shall  have no duty  hereunder  with  respect to any Notice it may
receive  or which may be  alleged to have been  delivered  to or served  upon it
unless such Notice is delivered to it or served upon it at its  Corporate  Trust
Office and such Notice contains the information required pursuant to clause (ii)
of the preceding sentence.

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

                       (i) Prior to the occurrence of a Master Servicer Event of
         Default,  and after the  curing or waiver of all such  Master  Servicer
         Events of Default  which may have  occurred with respect to the Trustee
         and at all times with  respect  to the  Securities  Administrator,  the
         duties and obligations of the Trustee shall be determined solely by the
         express  provisions  of this  Agreement,  neither  the  Trustee nor the
         Securities  Administrator shall be liable except for the performance of
         such  duties  and  obligations  as are  specifically  set forth in this
         Agreement,  no implied covenants or obligations shall be read into this
         Agreement against the Trustee or the Securities  Administrator  and, in
         the

                                      165
<PAGE>

         absence  of bad  faith on the  part of the  Trustee  or the  Securities
         Administrator,    respectively,   the   Trustee   or   the   Securities
         Administrator,  respectively, may conclusively rely, as to the truth of
         the statements and the correctness of the opinions  expressed  therein,
         upon any  certificates  or  opinions  furnished  to the  Trustee or the
         Securities   Administrator,   respectively,   that   conform   to   the
         requirements of this Agreement;

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

                       (iii)   Neither   the   Trustee   nor   the    Securities
         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 Holders of  Certificates  entitled to at least 25%
         of the  Voting  Rights  relating  to the  time,  method  and  place  of
         conducting any  proceeding  for any remedy  available to the Trustee or
         the Securities Administrator or exercising any trust or power conferred
         upon the Trustee or the Securities Administrator under this Agreement.

                  SECTION 9.02. Certain Matters Affecting Trustee and Securities
Administrator.

                  (a) Except as otherwise provided in Section 9.01:

                       (i) The  Trustee  and the  Securities  Administrator  may
         request and rely upon and shall be  protected  in acting or  refraining
         from acting upon any resolution, Officers' Certificate,  certificate of
         auditors  or any other  certificate,  statement,  instrument,  opinion,
         report, notice, request, consent, order, appraisal, bond or other paper
         or  document  reasonably  believed by it to be genuine and to have been
         signed or presented by the proper party or parties;

                       (ii) The Trustee  and the  Securities  Administrator  may
         consult with counsel of its selection and any advice of such counsel or
         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 advice or Opinion
         of Counsel;

                       (iii)   Neither   the   Trustee   nor   the    Securities
         Administrator  shall be under any  obligation  to  exercise  any of the
         trusts  or  powers  vested  in it by this  Agreement  or to  institute,
         conduct or defend any litigation hereunder or in relation hereto at the
         request, order or direction of any of the Certificateholders,  pursuant
         to the  provisions of this  Agreement,  unless such  Certificateholders
         shall have offered to the Trustee or the Securities  Administrator,  as
         the case may be,  reasonable  security or indemnity  satisfactory to it
         against  the costs,  expenses  and  liabilities  which may be  incurred
         therein or thereby;  nothing contained herein shall,  however,  relieve
         the Trustee of the obligation, upon the occurrence of a Master Servicer
         Event of Default (which has not been cured or waived), to exercise such
         of the rights and powers vested in it by this Agreement, and to

                                      166
<PAGE>

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 Securities Administrator
         shall be liable for any action taken, suffered or omitted by it in good
         faith and believed by it to be authorized  or within the  discretion or
         rights or powers conferred upon it by this Agreement;

                       (v) Prior to the occurrence of a Master Servicer Event of
         Default hereunder and after the curing or waiver of all Master Servicer
         Events of Default  which may have  occurred with respect to the Trustee
         and at all times with respect to the Securities Administrator,  neither
         the Trustee nor the Securities 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 Holders of  Certificates  entitled
         to at least 25% of the Voting Rights;  provided,  however,  that if the
         payment  within a  reasonable  time to the  Trustee  or the  Securities
         Administrator  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  Securities  Administrator,  as  applicable,  not
         reasonably  assured to the Trustee or the Securities  Administrator  by
         such Certificateholders,  the Trustee or the Securities  Administrator,
         as applicable,  may require  reasonable  indemnity  satisfactory  to it
         against such expense,  or liability from such  Certificateholders  as a
         condition to taking any such action;

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

                       (vii)  The  Trustee  shall  not be  liable  for any  loss
         resulting from the investment of funds held in the Collection  Account,
         for any loss resulting from the investment of funds held in the Reserve
         Fund or for any loss  resulting from the redemption or sale of any such
         investment as therein authorized;

                       (viii) The Trustee  shall not be deemed to have notice of
         any  default,  Master  Servicer  Event of Default or Servicer  Event of
         Default  unless  a  Responsible  Officer  of  the  Trustee  has  actual
         knowledge  thereof or unless  written  notice of any event  which is in
         fact such a default is received by a Responsible Officer of the Trustee
         at  the  Corporate  Trust  Office  of  the  Trustee,  and  such  notice
         references the Certificates and this Agreement; and

                       (ix) The rights, privileges,  protections, immunities and
         benefits given to the Trustee, including, without limitation, its right
         to be  indemnified,  are extended to, and shall be enforceable by, each
         agent, custodian and other Person employed to act hereunder.

                  (b) All rights of action under this  Agreement or under any of
the Certificates,  enforceable by the 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

                                      167
<PAGE>

such suit,  action or  proceeding  instituted by the Trustee shall be brought in
its name for the benefit of all the Holders of such Certificates, subject to the
provisions of this Agreement.

                  (c) The Trustee is hereby directed by the Depositor to execute
the Cap Contracts on behalf of the Trust Fund in the form presented to it by the
Depositor  and  shall  have  no  responsibility  for  the  contents  of the  Cap
Contracts,  including,  without  limitation,  the representations and warranties
contained  therein.  Any funds payable by the Trustee under the Cap Contracts at
closing shall be paid by the Depositor. Notwithstanding anything to the contrary
contained  herein or in the Cap Contracts,  the Trustee shall not be required to
make any payments to the counterparty under the Cap Contracts.

                  (d) None of the Securities Administrator, the Master Servicer,
the Servicer,  the Seller, the Depositor,  the Custodian or the Trustee shall be
responsible  for the acts or omissions of the others,  it being  understood that
this Agreement  shall not be construed to render those partners joint  venturers
or agents of one another.

                  SECTION 9.03. Trustee and Securities  Administrator not Liable
for Certificates or Mortgage Loans.

                  The recitals  contained herein and in the Certificates  (other
than the signature of the Securities  Administrator,  the  authentication of the
Securities Administrator on the Certificates, the acknowledgments of the Trustee
contained in Article II and the representations and warranties of the Trustee in
Section 9.12) shall be taken as the  statements of the Depositor and neither the
Trustee nor the Securities  Administrator  assumes any  responsibility for their
correctness.  Neither  the Trustee nor the  Securities  Administrator  makes any
representations  or  warranties  as to  the  validity  or  sufficiency  of  this
Agreement  (other  than as  specifically  set forth in  Section  9.12) or of the
Certificates  (other than the  signature  of the  Securities  Administrator  and
authentication  of the Securities  Administrator on the  Certificates) or of any
Mortgage Loan or related document. The Trustee and the Securities  Administrator
shall not be  accountable  for the use or application by the Depositor of any of
the  Certificates  or of the  proceeds of such  Certificates,  or for the use or
application of any funds paid to the Depositor or the Master Servicer in respect
of the Mortgage Loans or deposited in or withdrawn  from any Collection  Account
by the related Servicer, other than with respect to the Securities Administrator
any funds held by it or on behalf of the Trustee in accordance with Section 3.23
and 3.24.

                  SECTION 9.04.  Trustee and  Securities  Administrator  May Own
Certificates.

                  Each of the Trustee and the  Securities  Administrator  in its
individual  capacity  or any other  capacity  may become the owner or pledgee of
Certificates and may transact  business with other interested  parties and their
Affiliates  with the same  rights it would  have if it were not  Trustee  or the
Securities Administrator.

                  SECTION  9.05.  Fees and  Expenses of Trustee  and  Securities
Administrator.

                  The  fees  of the  Trustee  and the  Securities  Administrator
hereunder  and of Wells Fargo  under the  Custodial  Agreement  shall be paid in
accordance with a side letter agreement with the Master Servicer and at the sole
expense of the  Master  Servicer.  In  addition,  the  Trustee,  the  Securities
Administrator, the Custodian and any director, officer, employee or agent of the

                                      168
<PAGE>

Trustee, the Securities  Administrator and the Custodian shall be indemnified by
the Trust and held harmless  against any loss,  liability or expense  (including
reasonable  attorney's fees and expenses) incurred by the Trustee, the Custodian
or the Securities  Administrator in connection with any claim or legal action or
any pending or threatened  claim or legal action arising out of or in connection
with the acceptance or administration  of its respective  obligations and duties
under  this  Agreement,  including  the Cap  Contracts  and  any  and all  other
agreements  related  hereto,  other than any loss,  liability or expense (i) for
which the Trustee is  indemnified by the Master  Servicer or any Servicer,  (ii)
that  constitutes  a  specific  liability  of  the  Trustee  or  the  Securities
Administrator  pursuant  to Section  11.01(g)  or (iii) any loss,  liability  or
expense  incurred by reason of willful  misfeasance,  bad faith or negligence in
the   performance  of  duties   hereunder  by  the  Trustee  or  the  Securities
Administrator  or by reason of  reckless  disregard  of  obligations  and duties
hereunder.  In no event shall the  Trustee or the  Securities  Administrator  be
liable  for  special,  indirect  or  consequential  loss or  damage  of any kind
whatsoever  (including  but not  limited to lost  profits),  even if it has been
advised of the  likelihood of such loss or damage and  regardless of the form of
action. The Master Servicer agrees to indemnify the Trustee,  from, and hold the
Trustee harmless against, any loss,  liability or expense (including  reasonable
attorney's  fees and  expenses)  incurred by the Trustee by reason of the Master
Servicer's willful misfeasance, bad faith or gross negligence in the performance
of its  duties  under  this  Agreement  or by  reason of the  Master  Servicer's
reckless  disregard  of its  obligations  and duties  under this  Agreement.  In
addition,  the Seller  agrees to  indemnify  the  Trustee  for,  and to hold the
Trustee harmless against,  any loss,  liability or expense arising out of, or in
connection with, the provisions set forth in the last paragraph of Section 2.01,
including,  without limitation,  all costs,  liabilities and expenses (including
reasonable  legal fees and  expenses)  of  investigating  and  defending  itself
against any claim, action or proceeding, pending or threatened,  relating to the
provisions of such paragraph. The indemnities in this Section 9.05 shall survive
the termination or discharge of this Agreement and the resignation or removal of
the Master Servicer, the Trustee, the Securities Administrator or the Custodian.
Any payment  hereunder made by the Master  Servicer to the Trustee shall be from
the Master Servicer's own funds, without reimbursement from REMIC I therefor.

                  SECTION  9.06.   Eligibility   Requirements  for  Trustee  and
Securities Administrator.

                  The  Trustee  and the  Securities  Administrator  shall at all
times be a corporation or an association (other than the Depositor,  the Seller,
the Master  Servicer or any  Affiliate  of the  foregoing)  organized  and doing
business under the laws of any state or the United States of America, authorized
under such laws to exercise  corporate trust powers,  having a combined  capital
and surplus of at least $50,000,000 (or a member of a bank holding company whose
capital  and surplus is at least  $50,000,000)  and  subject to  supervision  or
examination by federal or state  authority.  If such  corporation or association
publishes  reports of  conditions at least  annually,  pursuant to law or to the
requirements of the aforesaid  supervising or examining authority,  then for the
purposes of this Section the combined capital and surplus of such corporation or
association  shall be deemed to be its combined capital and surplus as set forth
in its most recent report of  conditions  so published.  In case at any time the
Trustee  or the  Securities  Administrator,  as  applicable,  shall  cease to be
eligible in accordance  with the provisions of this Section,  the Trustee or the
Securities Administrator,  as applicable, shall resign immediately in the manner
and with the effect specified in Section 9.07.

                                      169
<PAGE>

                  SECTION   9.07.   Resignation   and  Removal  of  Trustee  and
Securities Administrator.

                  The Trustee and the Securities  Administrator  may at any time
resign and be discharged  from the trust hereby created by giving written notice
thereof  to  the  Depositor,   to  the  Master   Servicer,   to  the  Securities
Administrator (or the Trustee, if the Securities  Administrator  resigns) and to
the Certificateholders. Upon receiving such notice of resignation, the Depositor
shall promptly appoint a successor trustee or successor securities administrator
by written instrument, in duplicate,  which instrument shall be delivered to the
resigning  Trustee  or  Securities  Administrator,  as  applicable,  and  to the
successor trustee or successor securities  administrator,  as applicable. A copy
of such instrument  shall be delivered to the  Certificateholders,  the Trustee,
the Securities  Administrator  and the Master  Servicer by the Depositor.  If no
successor  trustee  or  successor  securities  administrator  shall have been so
appointed and have accepted  appointment within 30 days after the giving of such
notice of resignation, the resigning Trustee or Securities Administrator, as the
case may be,  may,  at the  expense  of the Trust  Fund,  petition  any court of
competent  jurisdiction  for the appointment of a successor  trustee,  successor
securities administrator, Trustee or Securities Administrator, as applicable.

                  If at any time the  Trustee  or the  Securities  Administrator
shall cease to be eligible in accordance with the provisions of Section 9.06 and
shall fail to resign after written request  therefor by the Depositor,  or if at
any time the Trustee or the Securities  Administrator  shall become incapable of
acting, or shall be adjudged bankrupt or insolvent, or a receiver of the Trustee
or the Securities  Administrator  or of its property shall be appointed,  or any
public  officer  shall take charge or control of the  Trustee or the  Securities
Administrator  or of its property or affairs for the purpose of  rehabilitation,
conservation  or  liquidation,  then the Depositor may remove the Trustee or the
Securities  Administrator,  as  applicable  and appoint a  successor  trustee or
successor securities  administrator,  as applicable,  by written instrument,  in
duplicate,  which instrument shall be delivered to the Trustee or the Securities
Administrator  so removed and to the successor  trustee or successor  securities
administrator.   A  copy  of  such   instrument   shall  be   delivered  to  the
Certificateholders,  the Trustee,  the Securities  Administrator  and the Master
Servicer by the Depositor.

                  The  Holders of  Certificates  entitled to at least 51% of the
Voting Rights may at any time remove the Trustee or the Securities Administrator
and appoint a successor trustee or successor securities administrator 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 Securities
Administrator  so removed and one complete set to the successor so appointed.  A
copy of such  instrument  shall  be  delivered  to the  Certificateholders,  the
Trustee  (in the  case of the  removal  of the  Securities  Administrator),  the
Securities  Administrator  (in the case of the removal of the  Trustee)  and the
Master Servicer by the Depositor.

                  Any  resignation  or removal of the Trustee or the  Securities
Administrator  and  appointment of a successor  trustee or successor  securities
administrator pursuant to any of the provisions of this Section shall not become
effective until acceptance of appointment by the successor  trustee or successor
securities administrator, as applicable, as provided in Section 8.08.

                                      170
<PAGE>

                  Notwithstanding anything to the contrary contained herein, the
Master Servicer and the Securities  Administrator shall at all times be the same
Person.

                  SECTION 9.08.   Successor Trustee or Securities Administrator.

                  Any successor  trustee or successor  securities  administrator
appointed as provided in Section 9.07 shall execute,  acknowledge and deliver to
the   Depositor  and  its   predecessor   trustee  or   predecessor   securities
administrator an instrument accepting such appointment hereunder,  and thereupon
the resignation or removal of the predecessor trustee or predecessor  securities
administrator  shall become  effective and such  successor  trustee or successor
securities  administrator  without any further act,  deed or  conveyance,  shall
become fully vested with all the rights,  powers,  duties and obligations of its
predecessor hereunder, with the like effect as if originally named as trustee or
securities   administrator   herein.  The  predecessor  trustee  or  predecessor
securities  administrator  shall deliver to the  successor  trustee or successor
securities  administrator  all Mortgage Loan Documents and related documents and
statements to the extent held by it hereunder, as well as all moneys, held by it
hereunder,  and  the  Depositor  and  the  predecessor  trustee  or  predecessor
securities  administrator shall execute and deliver such instruments and do such
other things as may reasonably be required for more fully and certainly  vesting
and confirming in the successor  trustee or successor  securities  administrator
all such rights, powers, duties and obligations.

                  No  successor  trustee or successor  securities  administrator
shall accept  appointment as provided in this Section unless at the time of such
acceptance such successor trustee or successor securities administrator shall be
eligible  under the  provisions  of  Section  8.06 and the  appointment  of such
successor trustee or successor  securities  administrator  shall not result in a
downgrading of any Class of Certificates by any Rating Agency, as evidenced by a
letter from each Rating Agency.

                  Upon  acceptance  of  appointment  by a  successor  trustee or
successor  securities  administrator as provided in this Section,  the Depositor
shall mail notice of the succession of such trustee  hereunder to all Holders of
Certificates  at their addresses as shown in the  Certificate  Register.  If the
Depositor  fails  to mail  such  notice  within  10  days  after  acceptance  of
appointment by the successor trustee or successor securities administrator,  the
successor trustee or successor securities  administrator shall cause such notice
to be mailed at the expense of the Depositor.

                  SECTION 9.09. Merger or Consolidation of Trustee or Securities
Administrator.

                  Any  corporation or association  into which the Trustee or the
Securities  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 Securities Administrator
shall be a party, or any  corporation or association  succeeding to the business
of the Trustee or the  Securities  Administrator  shall be the  successor of the
Trustee or the Securities Administrator hereunder,  provided such corporation or
association shall be eligible under the provisions of Section 8.06,  without the
execution  or filing of any paper or any  further  act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding.

                                      171
<PAGE>

                  SECTION 9.10.   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 the REMIC I or  property  securing  the same may at the time be located,
the Trustee shall have the power and shall  execute and deliver all  instruments
to appoint one or more Persons  approved by the Trustee to act as  co-trustee or
co-trustees, jointly with the Trustee, or separate trustee or separate trustees,
of all or any part of REMIC I, and to vest in such  Person or  Persons,  in such
capacity, and for the benefit of the Holders of the Certificates,  such title to
REMIC I, or any part  thereof,  and,  subject  to the other  provisions  of this
Section 9.10, such powers, duties, obligations, rights and trusts as the Trustee
may consider necessary or desirable. No co-trustee or separate trustee hereunder
shall be required to meet the terms of eligibility as a successor  trustee under
Section  9.06  hereunder  and  no  notice  to  Holders  of  Certificates  of the
appointment  of  co-trustee(s)  or separate  trustee(s)  shall be required under
Section 8.08 hereof.

                  In the case of any  appointment  of a  co-trustee  or separate
trustee pursuant to this Section 9.10 all rights, powers, duties and obligations
conferred  or imposed  upon the Trustee  shall be  conferred or imposed upon and
exercised or performed by the Trustee and such  separate  trustee or  co-trustee
jointly,  except to the extent that under any law of any  jurisdiction  in which
any  particular  act or acts are to be  performed  by the  Trustee  (whether  as
Trustee  hereunder or as successor to a defaulting  Master Servicer  hereunder),
the Trustee shall be  incompetent or unqualified to perform such act or acts, in
which event such rights,  powers, duties and obligations  (including the holding
of title to REMIC I or any portion  thereof in any such  jurisdiction)  shall be
exercised and performed by such separate  trustee or co-trustee at the direction
of the Trustee.

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

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

                  SECTION 9.11.   Appointment of Office or Agency.

                  The  Certificates  may  be  surrendered  for  registration  of
transfer or exchange at the Securities  Administrator's  office located at Sixth
and  Marquette,   Minneapolis,   Minnesota   55479,   and  presented  for  final
distribution at the Corporate Trust Office of the Securities Administrator

                                      172
<PAGE>

where notices and demands to or upon the Securities  Administrator in respect of
the Certificates and this Agreement may be served.

                  SECTION 9.12.   Representations and Warranties.

                  The  Trustee  hereby  represents  and  warrants  to the Master
Servicer,  the  Securities  Administrator,  the  Servicer  and the  Depositor as
applicable, as of the Closing Date, that:

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

                       (ii) The execution and delivery of this  Agreement by it,
         and the  performance and compliance with the terms of this Agreement by
         it,  will  not  violate  its  articles  of  association  or  bylaws  or
         constitute a default (or an event which,  with notice or lapse of time,
         or both, would constitute a default) under, or result in the breach of,
         any material  agreement or other  instrument  to which it is a party or
         which is applicable to it or any of its assets.

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

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

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

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

                                      173
<PAGE>

                                    ARTICLE X

                                   TERMINATION

                  SECTION 10.01.  Termination  Upon Repurchase or Liquidation of
All Mortgage Loans.

                  (a) Subject to Section 10.02,  the respective  obligations and
responsibilities under this Agreement of the Depositor, the Master Servicer, the
Securities  Administrator,  the  Servicers  and  the  Trustee  (other  than  the
obligations of the Master  Servicer to the Trustee  pursuant to Section 9.05 and
of the Servicers to make  remittances  to the Securities  Administrator  and the
Securities  Administrator  to make  payments  in  respect of the REMIC I Regular
Interests,  REMIC  I  Regular  Interests  or  the  Classes  of  Certificates  as
hereinafter  set forth) shall  terminate upon payment to the  Certificateholders
and the deposit of all amounts  held by or on behalf of the Trustee and required
hereunder to be so paid or deposited on the Distribution Date coinciding with or
following the earlier to occur of (i) the purchase by the Master Servicer of all
Mortgage  Loans and each REO  Property  remaining  in REMIC I and (ii) the final
payment or other  liquidation (or any advance with respect  thereto) of the last
Mortgage Loan or REO Property remaining in REMIC I; provided,  however,  that in
no event shall the trust created hereby  continue  beyond the earlier of (i) the
expiration of 21 years from the death of the last survivor of the descendants of
Joseph P. Kennedy,  the late ambassador of the United States to the Court of St.
James, living on the date hereof and (ii) the Last Scheduled  Distribution Date.
The purchase by the Master  Servicer of all Mortgage Loans and each REO Property
remaining in REMIC I shall be at a price (the "Termination  Price") equal to the
sum of (i) the greater of (A) the aggregate  Purchase  Price of all the Mortgage
Loans  included in REMIC I, plus the appraised  value of each REO  Property,  if
any,  included  in REMIC I,  such  appraisal  to be  conducted  by an  appraiser
mutually agreed upon by the Master Servicer and the Trustee in their  reasonable
discretion and (B) the aggregate fair market value of all of the assets of REMIC
I (as  determined  by the Master  Servicer and the  Trustee,  as of the close of
business on the third  Business Day next preceding the date upon which notice of
any such  termination is furnished to  Certificateholders  pursuant to the third
paragraph of this Section  10.01) plus (ii) any amounts due the Servicer and the
Master Servicer in respect of unpaid Servicing Fees and outstanding P&I Advances
and Servicing Advances.

                  (b) The Master  Servicer  shall have the right to purchase all
of the  Mortgage  Loans and each REO  Property  remaining in REMIC I pursuant to
clause (i) of the preceding  paragraph no later than the  Determination  Date in
the month immediately  preceding the Distribution Date on which the Certificates
will be  retired;  provided,  however,  that the  Master  Servicer  may elect to
purchase  all of the Mortgage  Loans and each REO Property  remaining in REMIC I
pursuant to clause (i) above only if the aggregate Stated  Principal  Balance of
the Mortgage Loans and each REO Property remaining in the Trust Fund at the time
of such election is reduced to less than or equal to 10% of the aggregate Stated
Principal Balance of the Mortgage Loans as of the Cut-off Date. By acceptance of
the Residual  Certificates,  the Holder of the Residual  Certificates agrees, in
connection with any termination hereunder, to assign and transfer any portion of
the Termination Price in excess of par, and to the extent received in respect of
such  termination,  to pay any  such  amounts  to the  Holders  of the  Class CE
Certificates.

                                      174
<PAGE>

                  (c) Notice of the  liquidation  of the  Certificates  shall be
given   promptly   by   the   Securities   Administrator   by   letter   to  the
Certificateholders  mailed (a) in the event such  notice is given in  connection
with the  purchase  of the  Mortgage  Loans and each REO  Property by the Master
Servicer,  not earlier  than the 15th day and not later than the 25th day of the
month next preceding the month of the final  distribution on the Certificates or
(b)  otherwise  during  the month of such  final  distribution  on or before the
Determination  Date in such month, in each case specifying (i) the  Distribution
Date upon which the Trust Fund will  terminate  and the final payment in respect
of the REMIC I Regular Interests,  REMIC I Regular Interests or the Certificates
will be made upon presentation and surrender of the related  Certificates at the
office of the Securities  Administrator  therein designated,  (ii) the amount of
any such final  payment,  (iii) that no interest  shall accrue in respect of the
REMIC I Regular  Interests,  REMIC I Regular  Interests or Certificates from and
after the  Interest  Accrual  Period  relating  to the final  Distribution  Date
therefor and (iv) that the Record Date otherwise applicable to such Distribution
Date is not applicable, payments being made only upon presentation and surrender
of the Certificates at the office of the Securities Administrator.  In the event
such notice is given in  connection  with the  purchase  of all of the  Mortgage
Loans and each REO  Property  remaining in REMIC I by the Master  Servicer,  the
Master Servicer shall deliver to the Securities Administrator for deposit in the
Distribution  Account not later than the Business Day prior to the  Distribution
Date  on  which  the  final  distribution  on  the  Certificates  an  amount  in
immediately available funds equal to the above-described  Termination Price. The
Securities  Administrator shall remit to the Servicer,  the Master Servicer, the
Trustee and the Custodian from such funds deposited in the Distribution  Account
(i) any amounts  which the  Servicer  would be  permitted to withdraw and retain
from the Collection  Account  pursuant to Section 3.09 as if such funds had been
deposited  therein  (including all unpaid Servicing Fees and all outstanding P&I
Advances and Servicing Advances) and (ii) any other amounts otherwise payable by
the Securities  Administrator to the Master Servicer, the Trustee, the Custodian
and the Servicer from amounts on deposit in the Distribution Account pursuant to
the terms of this Agreement prior to making any final distributions  pursuant to
Section  10.01(d)  below.  Upon  certification  to the Trustee by the Securities
Administrator  of the making of such final  deposit,  the Trustee shall promptly
release or cause to be released to the Master  Servicer the  Mortgage  Files for
the  remaining  Mortgage  Loans,  and Trustee  shall  execute  all  assignments,
endorsements and other  instruments  delivered to it and necessary to effectuate
such transfer.

                  (d)   Upon   presentation   of   the   Certificates   by   the
Certificateholders on the final Distribution Date, the Securities  Administrator
shall  distribute to each  Certificateholder  so presenting and surrendering its
Certificates the amount otherwise  distributable  on such  Distribution  Date in
accordance  with Section 5.01 in respect of the  Certificates  so presented  and
surrendered.  Any funds not distributed to any Holder or Holders of Certificates
being retired on such Distribution Date because of the failure of such Holder or
Holders to tender their Certificates  shall, on such date, be set aside and held
in trust and credited to the account of the appropriate  non-tendering Holder or
Holders.  If any Certificates as to which notice has been given pursuant to this
Section 10.01 shall not have been surrendered for cancellation within six months
after the time specified in such notice, the Securities Administrator shall mail
a second notice to the remaining  non-tendering  Certificateholders to surrender
their  Certificates for cancellation in order to receive the final  distribution
with  respect  thereto.  If within  one year  after the  second  notice all such
Certificates  shall not have been surrendered for  cancellation,  the Securities
Administrator  shall,  directly or through an agent,  mail a final notice to the
remaining  non-tendering   Certificateholders   concerning  surrender  of  their
Certificates.  The costs and

                                      175
<PAGE>

expenses   of   maintaining   the  funds  in  trust  and  of   contacting   such
Certificateholders shall be paid out of the assets remaining in the trust funds.
If within one year after the final notice any such  Certificates  shall not have
been surrendered for cancellation, the Securities Administrator shall pay to the
Depositor all such amounts,  and all rights of non-tendering  Certificateholders
in or to such amounts  shall  thereupon  cease.  No interest  shall accrue or be
payable to any  Certificateholder  on any amount held in trust by the Securities
Administrator as a result of such  Certificateholder's  failure to surrender its
Certificate(s)  on the final  Distribution  Date for final  payment  thereof  in
accordance  with  this  Section  10.01.  Any such  amounts  held in trust by the
Securities Administrator shall be held uninvested in an Eligible Account.

                  SECTION 10.02.   Additional Termination Requirements.

                  (a) In the event that the Master  Servicer  purchases  all the
Mortgage  Loans  and  each  REO  Property  or  the  final  payment  on or  other
liquidation  of the last  Mortgage  Loan or REO  Property  remaining  in REMIC I
pursuant to Section 10.01, the Trust Fund shall be terminated in accordance with
the following additional requirements:

                       (i) The Trustee shall specify the first day in the 90-day
         liquidation  period in a statement attached to each Trust REMIC's final
         Tax Return pursuant to Treasury  regulation  Section 1.860F-1 and shall
         satisfy all requirements of a qualified  liquidation under Section 860F
         of the Code and any regulations thereunder,  as evidenced by an Opinion
         of Counsel obtained by and at the expense of the Master Servicer;

                       (ii)  During such  90-day  liquidation  period and, at or
         prior to the time of making of the final  payment on the  Certificates,
         the  Trustee  shall  sell all of the  assets  of REMIC I to the  Master
         Servicer for cash; and

                       (iii) At the time of the  making of the final  payment on
         the  Certificates,  the Securities  Administrator  shall  distribute or
         credit,  or cause to be distributed or credited,  to the Holders of the
         Residual  Certificates  all cash on hand in the Trust Fund  (other than
         cash  retained to meet claims),  and the Trust Fund shall  terminate at
         that time.

                  (b) At the  expense of the Master  Servicer  (or, if the Trust
Fund is being terminated as a result of the occurrence of the event described in
clause (ii) of the first paragraph of Section 10.01, at the expense of the Trust
Fund),   the  Master  Servicer  shall  prepare  or  cause  to  be  prepared  the
documentation  required in connection with the adoption of a plan of liquidation
of each Trust REMIC pursuant to this Section 10.02.

                  (c) By their acceptance of  Certificates,  the Holders thereof
hereby agree to authorize the Trustee to specify the 90-day  liquidation  period
for each Trust REMIC,  which  authorization  shall be binding upon all successor
Certificateholders.

                                      176
<PAGE>

                                   ARTICLE XI

                                REMIC PROVISIONS

                  SECTION 11.01.    REMIC Administration.

                  (a) The  Trustee  shall  elect to treat each Trust  REMIC as a
REMIC under the Code and, if necessary,  under  applicable  state law. Each such
election  will be made by the  Securities  Administrator  on Form  1066 or other
appropriate  federal tax or information  return or any appropriate  state return
for the taxable  year ending on the last day of the  calendar  year in which the
Certificates  are issued.  For the purposes of the REMIC  election in respect of
REMIC I, the  REMIC I  Regular  Interests  shall be  designated  as the  Regular
Interests  in REMIC I and the  Class R-I  Interest  shall be  designated  as the
Residual  Interests  in  REMIC  I.  The  Class  A  Certificates,  the  Mezzanine
Certificates,  the Class B Certificates,  the Class P Certificates, the Class CE
Certificates and the Class CE-1 Certificates  (exclusive of any right to receive
payments from the Reserve Fund) shall be designated as the Regular  Interests in
REMIC II and the  Class  R-II  Interest  shall  be  designated  as the  Residual
Interests  in REMIC  II.  The  Trustee  shall not  permit  the  creation  of any
"interests" in each Trust REMIC (within the meaning of Section 860G of the Code)
other than the REMIC I Regular  Interests and the interests  represented  by the
Certificates.

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

                  (c) The Securities  Administrator  shall be reimbursed for any
and all expenses relating to any tax audit of the Trust Fund (including, but not
limited to, any professional fees or any administrative or judicial  proceedings
with respect to each Trust REMIC that involve the  Internal  Revenue  Service or
state tax  authorities),  including  the  expense of  obtaining  any tax related
Opinion of Counsel except as specified herein. The Securities Administrator,  as
agent for each Trust  REMIC's tax matters  person shall (i) act on behalf of the
Trust Fund in  relation  to any tax matter or  controversy  involving  any Trust
REMIC  and (ii)  represent  the Trust  Fund in any  administrative  or  judicial
proceeding  relating  to an  examination  or  audit by any  governmental  taxing
authority with respect thereto. The holder of the largest Percentage Interest of
each Class of Residual Certificates shall be designated,  in the manner provided
under Treasury  regulations section 1.860F-4(d) and Treasury regulations section
301.6231(a)(7)-1,  as the  tax  matters  person  of the  related  REMIC  created
hereunder.  By their acceptance  thereof,  the holder of the largest  Percentage
Interest of the Residual  Certificates  hereby agrees to irrevocably appoint the
Securities  Administrator  or an  Affiliate  as its agent to perform  all of the
duties of the tax matters person for the Trust Fund.

                  (d) The  Securities  Administrator  shall prepare and file and
the Trustee  shall sign all of the Tax Returns in respect of each REMIC  created
hereunder.  The expenses of preparing  and filing such returns shall be borne by
the Securities Administrator without any right of reimbursement therefor.

                  (e) The  Securities  Administrator  shall perform on behalf of
each Trust  REMIC all  reporting  and other tax  compliance  duties that are the
responsibility  of such  REMIC  under the Code,  the REMIC  Provisions  or other
compliance guidance issued by the Internal Revenue Service or any state or local
taxing  authority.  Among its other duties,  as required by the

                                      177
<PAGE>

Code, the REMIC  Provisions or other such  compliance  guidance,  the Securities
Administrator shall provide (i) to any Transferor of a Residual Certificate such
information  as is  necessary  for the  application  of any tax  relating to the
transfer  of a  Residual  Certificate  to any  Person  who  is  not a  Permitted
Transferee  upon  receipt of  additional  reasonable  compensation,  (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 each
Trust  REMIC.  The  Depositor  shall  provide  or  cause to be  provided  to the
Securities  Administrator,  within ten (10) days  after the  Closing  Date,  all
information or data that the Securities  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) To  the  extent  in the  control  of  the  Trustee  or the
Securities Administrator,  each such Person (i) shall take such action and shall
cause each REMIC created  hereunder to take such action as shall be necessary to
create or maintain  the status  thereof as a REMIC  under the REMIC  Provisions,
(ii) shall not take any action,  cause the Trust Fund to take any action or fail
to take  (or fail to cause  to be  taken)  any  action  that,  under  the  REMIC
Provisions,  if taken or not taken,  as the case may be,  could (A) endanger the
status of each Trust REMIC as a REMIC or (B) result in the  imposition  of a tax
upon  the  Trust  Fund  (including  but not  limited  to the  tax on  prohibited
transactions  as  defined  in  Section  860F(a)(2)  of the  Code  and the tax on
contributions  to a REMIC set forth in Section 860G(d) of the Code) (either such
event,  an "Adverse  REMIC  Event")  unless such action or inaction is permitted
under this  Agreement  or the  Trustee  and the  Securities  Administrator  have
received  an Opinion of  Counsel,  addressed  to the them (at the expense of the
party  seeking to take such action but in no event at the expense of the Trustee
or the Securities Administrator) to the effect that the contemplated action will
not,  with  respect to any Trust  REMIC,  endanger  such status or result in the
imposition of such a tax, nor (iii) shall the Securities  Administrator  take or
fail to take any action  (whether or not  authorized  hereunder) as to which 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 Securities Administrator 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 any Trust REMIC or the respective assets of each, or causing any
Trust REMIC to take any  action,  which is not  contemplated  under the terms of
this Agreement,  the Securities  Administrator  will consult with the Trustee or
its  designee,  in writing,  with  respect to whether such action could cause an
Adverse REMIC Event to occur with respect to any Trust REMIC, and the Securities
Administrator  shall not take any such  action or cause any Trust  REMIC to take
any such  action as to which the  Trustee  has  advised  it in  writing  that an
Adverse  REMIC Event could  occur.  The Trustee may consult with counsel to make
such written advice,  and the cost of same shall be home 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.

                  (g) In the  event  that  any  tax is  imposed  on  "prohibited
transactions" of any REMIC created hereunder as defined in Section 860F(a)(2) of
the Code, on the "net income from foreclosure property" of such REMIC as defined
in Section 860G(c) of the Code, on any contributions to any such REMIC after the
Startup Day therefor  pursuant to Section  860G(d) of

                                      178
<PAGE>

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  Trustee
pursuant to Section 11.03, 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
Securities Administrator pursuant to Section 11.03, if such tax arises out of or
results from a breach by the Securities  Administrator of any of its obligations
under this Article XI, (iii) to the Master  Servicer  pursuant to Section 11.03,
if such tax arises out of or results from a breach by the Master Servicer of any
of its  obligations  under  Article IV or under  this  Article  XI,  (iv) to the
related Servicer pursuant to Section 11.03, if such tax arises out of or results
from a breach by such  Servicer of any of its  obligations  under Article III or
under this Article XI, or (v) in all other cases,  against amounts on deposit in
the Distribution Account and shall be paid by withdrawal therefrom.

                  (h) The Securities Administrator shall, for federal income tax
purposes,  maintain  books and  records  with  respect to each Trust  REMIC on a
calendar year and on an accrual basis.

                  (i)  Following  the  Startup  Day,   neither  the   Securities
Administrator  nor the Trustee shall accept any  contributions  of assets to any
Trust REMIC other than in connection with any Qualified Substitute Mortgage Loan
delivered  in  accordance  with  Section  2.03 unless it shall have  received an
Opinion of Counsel to the effect that the  inclusion of such assets in the Trust
Fund will not cause the related  REMIC to fail to qualify as a REMIC at any time
that any Certificates are outstanding or subject such REMIC to any tax under the
REMIC Provisions or other applicable provisions of federal,  state and local law
or ordinances.

                  (j) Neither the Trustee nor the Securities Administrator shall
knowingly enter into any arrangement by which any Trust REMIC will receive a fee
or other compensation for services nor permit either REMIC to receive any income
from assets other than "qualified mortgages" as defined in Section 860G(a)(3) of
the Code or  "permitted  investments"  as defined in Section  860G(a)(5)  of the
Code.

                  (k) The Securities  Administrator  shall apply for an employer
identification number with the Internal Revenue Service via a Form SS-4 or other
comparable  method  for  each  REMIC.  In  connection  with the  foregoing,  the
Securities  Administrator  shall  provide the name and address of the person who
can be contacted to obtain information required to be reported to the holders of
Regular Interests in each REMIC as required by IRS Form 8811.

                  SECTION 11.02.   Prohibited Transactions and Activities.

                  None  of  the  Depositor,   the   Servicers,   the  Securities
Administrator,  the Master  Servicer  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 of this Agreement),  nor
acquire any assets for any Trust  REMIC  (other  than REO  Property  acquired in
respect of a defaulted Mortgage Loan), nor sell or dispose of any investments in
the  Collection  Account or the  Distribution  Account for gain,  nor accept any
contributions  to any Trust REMIC after the Closing Date (other than a Qualified
Substitute  Mortgage Loan delivered in accordance with Section 2.03),  unless it
has received an

                                      179
<PAGE>

Opinion of Counsel,  addressed to the Trustee and the  Securities  Administrator
(at  the  expense  of  the  party  seeking  to  cause  such  sale,  disposition,
substitution,  acquisition or contribution but in no event at the expense of the
Trustee) that such sale, disposition,  substitution, acquisition or contribution
will not (a) affect  adversely  the status of any Trust  REMIC as a REMIC or (b)
cause any Trust  REMIC to be subject to a tax on  "prohibited  transactions"  or
"contributions" pursuant to the REMIC Provisions.

                  SECTION 11.03.   Indemnification.

                  (a) The  Trustee  agrees to be liable  for any taxes and costs
incurred by the Trust Fund, the Depositor,  the Master Servicer,  the Securities
Administrator or the Servicers  including,  without  limitation,  any reasonable
attorneys  fees  imposed on or incurred by the Trust Fund,  the  Depositor,  the
Master  Servicer,  the Securities  Administrator or the Servicers as a result of
the  Trustee's  failure to perform its covenants set forth in this Article XI in
accordance with the standard of care of the Trustee set forth in this Agreement.

                  (b) Ocwen agrees to indemnify the Trust Fund,  the  Depositor,
Saxon, the Master Servicer, the Securities Administrator and the Trustee for any
taxes and costs including any reasonable  attorneys' fees imposed on or incurred
by  the  Trust  Fund,  the  Depositor,   the  Master  Servicer,  the  Securities
Administrator  or the  Trustee,  as a result of Ocwen's  failure to perform  its
covenants  set forth in Article III in  accordance  with the standard of care of
Ocwen set forth in this Agreement.

                  (c) Saxon agrees to indemnify the Trust Fund,  the  Depositor,
Ocwen, the Master Servicer, the Securities Administrator and the Trustee for any
taxes and costs including any reasonable  attorneys' fees imposed on or incurred
by  the  Trust  Fund,  the  Depositor,   the  Master  Servicer,  the  Securities
Administrator  or the  Trustee,  as a result of Saxon's  failure to perform  its
covenants  set forth in Article III in  accordance  with the standard of care of
Saxon set forth in this Agreement.

                  (d) The Master  Servicer  agrees to indemnify  the Trust Fund,
the Depositor,  the Servicers and the Trustee for any taxes and costs  including
any  reasonable  attorneys'  fees imposed on or incurred by the Trust Fund,  the
Depositor,  the Servicers or the Trustee,  as a result of the Master  Servicer's
failure to perform its covenants set forth in Article IV in accordance  with the
standard of care of the Master Servicer set forth in this Agreement.

                  (e) The Securities  Administrator  agrees to be liable for any
taxes and costs incurred by the Trust Fund, the Depositor,  the Servicers or the
Trustee  including any reasonable  attorneys' fees imposed on or incurred by the
Trust  Fund,  the  Depositor,  the  Servicers  or the Trustee as a result of the
Securities  Administrator's  failure to perform its  covenants set forth in this
Article  XI  in  accordance   with  the  standard  of  care  of  the  Securities
Administrator set forth in this Agreement.

                                      180
<PAGE>

                                  ARTICLE XII

                            MISCELLANEOUS PROVISIONS

                  SECTION 12.01.    Amendment.

                  This  Agreement  may be  amended  from  time  to  time  by the
Depositor,  each Servicer, the Master Servicer, the Securities Administrator and
the Trustee,  but without the consent of any of the  Certificateholders,  (i) to
cure any  ambiguity  or  defect,  (ii) to  correct,  modify  or  supplement  any
provisions   herein   (including   to  give  effect  to  the   expectations   of
Certificateholders),  or (iii) to make any  other  provisions  with  respect  to
matters  or  questions   arising  under  this  Agreement   which  shall  not  be
inconsistent  with the  provisions of this  Agreement and that such action shall
not, as evidenced by an Opinion of Counsel  delivered to the Trustee,  adversely
affect in any material respect the interests of any Certificateholder;  provided
that any such amendment shall be deemed not to adversely  affect in any material
respect the interests of the  Certificateholders  and no such Opinion of Counsel
shall be required if the Person  requesting such amendment obtains a letter from
each  Rating  Agency  stating  that  such  amendment  would  not  result  in the
downgrading  or  withdrawal  of the  respective  ratings  then  assigned  to the
Certificates.  No amendment shall be deemed to adversely  affect in any material
respect the interests of any Certificateholder who shall have consented thereto,
and no Opinion of Counsel  shall be  required  to address the effect of any such
amendment on any such consenting Certificateholder.

                  This  Agreement  may also be amended  from time to time by the
Depositor,  each Servicer, the Master Servicer, the Securities Administrator and
the Trustee with the consent of the Holders of Certificates entitled to at least
66% of the Voting Rights for the purpose of adding any provisions to or changing
in any manner or  eliminating  any of the  provisions  of this  Agreement  or of
modifying  in any manner the rights of the  Holders of  Certificates;  provided,
however, that no such amendment shall (i) reduce in any manner the amount of, or
delay the timing of,  payments  received on Mortgage Loans which are required to
be  distributed  on any  Certificate  without  the consent of the Holder of such
Certificate,  (ii) adversely affect in any material respect the interests of the
Holders of any Class of  Certificates  in a manner,  other than as  described in
(i), without the consent of the Holders of Certificates of such Class evidencing
at least 66% of the Voting Rights  allocated to such Class,  or (iii) modify the
consents required by the immediately  preceding clauses (i) and (ii) without the
consent of the Holders of all Certificates then outstanding. Notwithstanding any
other provision of this Agreement,  for purposes of the giving or withholding of
consents pursuant to this Section 12.01,  Certificates registered in the name of
the Depositor or a Servicer or any Affiliate thereof shall be entitled to Voting
Rights with respect to matters affecting such Certificates. Without limiting the
generality  of the  foregoing,  any  amendment  to this  Agreement  required  in
connection  with  the  compliance  with or the  clarification  of any  reporting
obligations  described  in Section  5.06 hereof shall not require the consent of
any  Certificateholder and without the need for any Opinion of Counsel or Rating
Agency confirmation.

                  Notwithstanding any contrary provision of this Agreement,  the
Trustee  shall not consent to any  amendment to this  Agreement  unless it shall
have first  received an Opinion of Counsel to the effect that such  amendment is
permitted  hereunder  and will not  result in the  imposition  of any tax on any
Trust REMIC pursuant to the REMIC Provisions or cause any Trust

                                      181
<PAGE>

REMIC  to fail to  qualify  as a REMIC at any time  that  any  Certificates  are
outstanding  and  that  such  amendment  is  authorized  or  permitted  by  this
Agreement.

                  Promptly after the execution of any such amendment the Trustee
shall furnish a copy of such amendment to each Certificateholder.

                  It   shall   not   be    necessary    for   the   consent   of
Certificateholders  under this Section 12.01 to approve the  particular  form of
any proposed amendment, but it shall be sufficient if such consent shall approve
the substance  thereof.  The manner of obtaining such consents and of evidencing
the  authorization  of the  execution  thereof  by  Certificateholders  shall be
subject to such reasonable regulations as the Trustee may prescribe.

                  The cost of any Opinion of Counsel to be delivered pursuant to
this Section 12.01 shall be borne by the Person  seeking the related  amendment,
but in no event shall such Opinion of Counsel be an expense of the Trustee.

                  The Trustee  may, but shall not be obligated to enter into any
amendment  pursuant  to  this  Section  that  affects  its  rights,  duties  and
immunities under this Agreement or otherwise.

                  SECTION 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  Depositor  at the expense of the  Certificateholders,  but only
upon direction of the Trustee accompanied by an Opinion of Counsel to the effect
that such recordation  materially and beneficially  affects the interests of the
Certificateholders.

                  For  the  purpose  of  facilitating  the  recordation  of this
Agreement  as herein  provided and for other  purposes,  this  Agreement  may be
executed   simultaneously   in  any  number  of  counterparts,   each  of  which
counterparts  shall be deemed to be an  original,  and such  counterparts  shall
constitute but one and the same instrument.

                  SECTION 12.03.   Limitation on Rights of Certificateholders.

                  The death or  incapacity  of any  Certificateholder  shall not
operate  to  terminate  this  Agreement  or the Trust  Fund,  nor  entitle  such
Certificateholder's  legal representatives or heirs to claim an accounting or to
take any action or  proceeding in any court for a partition or winding up of the
Trust Fund, nor otherwise affect the rights,  obligations and liabilities of the
parties hereto or any of them.

                  No  Certificateholder  shall have any right to vote (except as
expressly  provided for herein) or in any manner otherwise control the operation
and management of the Trust Fund, or the obligations of the parties hereto,  nor
shall  anything  herein  set  forth,  or  contained  in the  terms of any of the
Certificates,  be construed so as to constitute the Certificateholders from time
to  time  as   partners   or   members   of  an   association;   nor  shall  any
Certificateholder  be under any  liability  to any third person by reason of any
action taken by the parties to this Agreement pursuant to any provision hereof.

                                      182
<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 as it may require against the costs,  expenses
and liabilities to be incurred therein or thereby,  and the Trustee, for 15 days
after its receipt of such  notice,  request and offer of  indemnity,  shall have
neglected or refused to institute  any such action,  suit or  proceeding.  It is
understood and intended, and expressly covenanted by each Certificateholder with
every other  Certificateholder.  and the Trustee, that no one or more Holders of
Certificates  shall  have any right in any  manner  whatsoever  by virtue of any
provision of this  Agreement to affect,  disturb or prejudice  the rights of the
Holders  of any  other of such  Certificates,  or to  obtain  or seek to  obtain
priority over or  preference  to any other such Holder,  or to enforce any right
under this  Agreement,  except in the manner herein  provided and for the equal,
ratable and common  benefit of all  Certificateholders.  For the  protection and
enforcement of the provisions of this Section, each and every  Certificateholder
and the Trustee  shall be entitled to such relief as can be given  either at law
or in equity.

                  SECTION 12.04.    Governing Law.

                  This Agreement  shall be construed in accordance with the laws
of the State of New York and the obligations, rights and remedies of the parties
hereunder  shall be determined in  accordance  with such laws without  regard to
conflicts of laws principles thereof.

                  SECTION 12.05.    Notices.

                  All  directions,  demands  and notices  hereunder  shall be in
writing  and shall be deemed to have been duly  given when  received  if sent by
facsimile,  receipt  confirmed,  if  personally  delivered at or mailed by first
class mail, postage prepaid,  or by express delivery service or delivered in any
other  manner  specified  herein,  to (a)  in the  case  of the  Depositor,  ACE
Securities Corp., AMACAR GROUP, 6525 Morrison  Boulevard,  Suite 318, Charlotte,
North  Carolina  28211,   Attention:   Juliana  Johnson  (telecopy  number:(704)
365-1362),  or such  other  address  or  telecopy  number  as may  hereafter  be
furnished to the Servicers,  the Master Servicer,  the Securities  Administrator
and the  Trustee in writing by the  Depositor,  (b) in the case of Ocwen,  Ocwen
Federal Bank FSB, 1675 Palm Beach Lakes  Boulevard,  Suite 10A, West Palm Beach,
Florida 33401,  Attention:  Secretary (telecopy number: (561) 682-8177), or such
other  address or telecopy  number as may hereafter be furnished to the Trustee,
the Master Servicer,  the Securities  Administrator and the Depositor in writing
by  Ocwen,  (d) in the  case of  Saxon,  Saxon  Mortgage  Services,  Inc.,  4708
Mercantile Drive, Fort Worth, Texas 76137, Attention:  Mr. David Dill, President
(telecopy  number:  (817)  655-7509) or such other address or telecopy number as
may hereafter be furnished to the Trustee,  the Master Servicer,  the Securities
Administrator  and the  Depositor  in writing  by Saxon,  (d) in the case of the
Master  Servicer  and the  Securities  Administrator,  P.O.  Box  98,  Columbia,
Maryland 21046 and for overnight delivery to 9062 Old Annapolis Road,  Columbia,
Maryland 21045,  Attention:  Ace Securities  Corp.,  2005-HE1  (telecopy number:
(410)  715-2380),  or such other address or telecopy  number as may hereafter be
furnished  to the Trustee,  the  Depositor  and the  Servicers in writing by the
Master  Servicer  or

                                      183
<PAGE>

the  Securities  Administrator  and  (e) in the  case  of  the  Trustee,  at the
Corporate  Trust Office or such other address or telecopy  number as the Trustee
may hereafter be furnish to the Servicers,  the Master Servicer,  the Securities
Administrator  and the Depositor in writing by the Trustee.  Any notice required
or  permitted to be given to a  Certificateholder  shall be given by first class
mail, postage prepaid, at the address of such Holder as shown in the Certificate
Register.  Any notice so mailed  within the time  prescribed  in this  Agreement
shall be conclusively  presumed to have been duly given when mailed,  whether or
not the Certificateholder receives such notice. A copy of any notice required to
be telecopied  hereunder  also shall be mailed to the  appropriate  party in the
manner set forth above.

                  SECTION 12.06.   Severability of Provisions.

                  If any one or more of the covenants, agreements, provisions or
terms of this Agreement shall be for any reason  whatsoever  held invalid,  then
such covenants,  agreements,  provisions or terms shall be deemed severable from
the remaining covenants,  agreements,  provisions or terms of this Agreement and
shall in no way affect the validity or enforceability of the other provisions of
this Agreement or of the Certificates or the rights of the Holders thereof.

                  SECTION 12.07.   Notice to Rating Agencies.

                  The  Trustee  shall use its best  efforts  promptly to provide
notice to the Rating  Agencies  with respect to each of the following of which a
Responsible Officer has actual knowledge:

                  1. Any material change or amendment to this Agreement;

                  2. The  occurrence of any Servicer  Event of Default or Master
         Servicer Event of Default that has not been cured or waived;

                  3. The  resignation or  termination of a Servicer,  the Master
         Servicer or the Trustee;

                  4. The repurchase or  substitution  of Mortgage Loans pursuant
         to or as contemplated by Section 2.03;

                  5.  The  final   payment  to  the  Holders  of  any  Class  of
         Certificates;

                  6. Any change in the location of the Distribution Account; and

                  7. Any event that would result in the inability of the Trustee
         as successor  Servicer to make advances regarding  delinquent  Mortgage
         Loans.

                  In addition, the Securities  Administrator shall promptly make
available  to each Rating  Agency  copies of each  report to  Certificateholders
described in Section 5.02.

                  The Servicer shall make available to each Rating Agency copies
of the following:

                  8. Each annual statement as to compliance described in Section
         3.17; and

                                      184
<PAGE>

                  9.  Each  annual  independent  public  accountants'  servicing
         report described in Section 3.18.

                  Any such  notice  pursuant to this  Section  12.07 shall be in
writing and shall be deemed to have been duly given if  personally  delivered at
or mailed by first class mail,  postage prepaid,  or by express delivery service
to Standard & Poor's,  a division of the McGraw-Hill  Companies,  Inc., 55 Water
Street,  New York, New York 10041;  to DBRS,  Dominion Bond Rating  Service,  55
Broadway,  15th  Floor,  New York,  New York  10006;  and to  Moody's  Investors
Service,  Inc.,  99  Church  Street,  New  York,  New York  10007 or such  other
addresses as the Rating Agencies may designate in writing to the parties hereto.

                  SECTION 12.08.   Article and Section References.

                  All  article and section  references  used in this  Agreement,
unless otherwise provided, are to articles and sections in this Agreement.

                  SECTION 12.09.   Grant of Security Interest.

                  It is the  express  intent  of the  parties  hereto  that  the
conveyance of the Mortgage  Loans by the Depositor to the Trustee,  on behalf of
the Trust and for the benefit of the  Certificateholders,  be, and be  construed
as, a sale of the  Mortgage  Loans  by the  Depositor  and not a  pledge  of the
Mortgage Loans to secure a debt or other  obligation of the Depositor.  However,
in the event that, notwithstanding the aforementioned intent of the parties, the
Mortgage  Loans are held to be property of the  Depositor,  then,  (a) it is the
express  intent of the parties  that such  conveyance  be deemed a pledge of the
Mortgage  Loans by the Depositor to the Trustee,  on behalf of the Trust and for
the benefit of the  Certificateholders,  to secure a debt or other obligation of
the  Depositor and (b)(1) this  Agreement  shall also be deemed to be a security
agreement within the meaning of Articles 8 and 9 of the Uniform  Commercial Code
as in effect  from time to time in the  State of New  York;  (2) the  conveyance
provided for in Section  2.01 shall be deemed to be a grant by the  Depositor to
the   Trustee,   on  behalf  of  the   Trust   and  for  the   benefit   of  the
Certificateholders,  of a security  interest  in all of the  Depositor's  right,
title and interest in and to the Mortgage  Loans and all amounts  payable to the
holders of the  Mortgage  Loans in  accordance  with the terms  thereof  and all
proceeds of the  conversion,  voluntary or  involuntary,  of the foregoing  into
cash,  instruments,  securities or other property,  including without limitation
all amounts, other than investment earnings,  from time to time held or invested
in the Collection Account and the Distribution  Account,  whether in the form of
cash, instruments,  securities or other property; (3) the obligations secured by
such security agreement shall be deemed to be all of the Depositor's obligations
under   this   Agreement,   including   the   obligation   to   provide  to  the
Certificateholders the benefits of this Agreement relating to the Mortgage Loans
and the Trust Fund; and (4) notifications to persons holding such property,  and
acknowledgments,  receipts or confirmations  from persons holding such property,
shall be deemed notifications to, or acknowledgments,  receipts or confirmations
from, financial intermediaries, bailees or agents (as applicable) of the Trustee
for the purpose of  perfecting  such security  interest  under  applicable  law.
Accordingly,  the Depositor hereby grants to the Trustee, on behalf of the Trust
and for the  benefit  of the  Certificateholders,  a  security  interest  in the
Mortgage Loans and all other  property  described in clause (2) of the preceding
sentence,  for the purpose of securing  to the  Trustee the  performance  by the
Depositor of the obligations  described in clause (3) of the preceding sentence.
Notwithstanding the foregoing, the parties hereto intend

                                      185
<PAGE>

the conveyance pursuant to Section 2.01 to be a true, absolute and unconditional
sale of the  Mortgage  Loans  and  assets  constituting  the  Trust  Fund by the
Depositor  to the  Trustee,  on behalf of the Trust and for the  benefit  of the
Certificateholders.

                  SECTION 12.10.   Survival of Indemnification.

                  Any and all  indemnities  to be  provided by any party to this
Agreement  shall survive the termination and resignation of any party hereto and
the termination of this Agreement.

                  SECTION 12.11.   Servicing Agreements.

                  With respect to the Cameron  Mortgage Loans,  Fremont Mortgage
Loans,  Mandalay Mortgage Loans,  Metrocities  Mortgage Loans and Ownit Mortgage
Loans, in the event of any conflict between the provisions of this Agreement and
the provisions of the related Interim Servicing Agreement, the provisions of the
related Interim Servicing Agreement shall control.

                                      186
<PAGE>

                  IN WITNESS WHEREOF, the Depositor,  the Servicers,  the Master
Servicer,  the Securities  Administrator and the Trustee have caused their names
to be signed hereto by their respective  officers thereunto duly authorized,  in
each case as of the day and year first above written.

                            ACE SECURITIES CORP.,
                            as Depositor

                            By:
                                ------------------------------------------------
                            Name:
                            Title:

                            By:
                                ------------------------------------------------
                            Name:
                            Title:

                            OCWEN FEDERAL BANK FSB
                            as a Servicer

                            By:
                                ------------------------------------------------
                            Name:
                            Title:

                            SAXON MORTGAGE SERVICES, INC.
                            as a Servicer

                            By:
                                ------------------------------------------------
                            Name:
                            Title:

                            HSBC BANK USA, NATIONAL ASSOCIATION
                            not in its individual capacity but solely as Trustee

                            By:
                                ------------------------------------------------
                            Name:
                            Title:

<PAGE>

                            WELLS FARGO BANK, N.A.
                            as Master Servicer and Securities Administrator

                            By:
                                ------------------------------------------------
                            Name:
                            Title:

                            ACKNOWLEDGED AND AGREED FOR PURPOSES OF SECTION
                            9.05:

                            DB STRUCTURED PRODUCTS, INC

                            By:
                                ------------------------------------------------
                            Name:
                            Title:

                            By:
                                ------------------------------------------------
                            Name:
                            Title:

                            ACKNOWLEDGED AND AGREED FOR PURPOSES OF SECTION 7.08
                            AND 7.09:

                            THE MURRAYHILL COMPANY

                            By:
                                ------------------------------------------------
                            Name:
                            Title:

<PAGE>

STATE OF                     )
                             ) ss.:
COUNTY OF                    )

                  On the ___ day of January 2005,  before me, a notary public in
and for said State, personally appeared  _____________________ known to me to be
a  _____________________  of ACE Securities  Corp., one of the corporations that
executed  the  within  instrument,  and also  known to me to be the  person  who
executed  it on behalf of said  corporation,  and  acknowledged  to me that such
corporation executed the within instrument.

                  IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.

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

[Notarial Seal]                               My commission expires

<PAGE>

STATE OF                          )
                                  ) ss.:
COUNTY OF                         )

                  On the ___ day of January 2005,  before me, a notary public in
and for said State, personally appeared  _____________________ known to me to be
a  _____________________  of ACE Securities  Corp., one of the corporations that
executed  the  within  instrument,  and also  known to me to be the  person  who
executed  it on behalf of said  corporation,  and  acknowledged  to me that such
corporation executed the within instrument.

                  IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.

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

[Notarial Seal]                               My commission expires

<PAGE>

STATE OF                             )
                                     ) ss.:
COUNTY OF                            )

                  On the ___ day of January 2005,  before me, a notary public in
and for said State, personally appeared  _____________________ known to me to be
a _____________________  of Ocwen Federal Bank FSB, one of the federal chartered
savings  banks that executed the within  instrument,  and also known to me to be
the person who executed it on behalf of said federally  chartered  savings bank,
and acknowledged to me that such federally  chartered  savings bank executed the
within instrument.

                  IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.

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

[Notarial Seal]                               My commission expires

<PAGE>

STATE OF                                      )
                                              ) ss.:
COUNTY OF                                     )

                  On the ___ day of January 2005,  before me, a notary public in
and for said State, personally appeared  _____________________ known to me to be
a   _____________________   of  Saxon  Mortgage  Services,   Inc.,  one  of  the
corporations that executed the within instrument, and also known to me to be the
person who executed it on behalf of said  corporation,  and  acknowledged  to me
that such corporation executed the within instrument.

                  IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.

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

[Notarial Seal]                               My commission expires

<PAGE>

STATE OF                                      )
                                              ) ss.:
COUNTY OF                                     )

                  On the ___ day of January 2005,  before me, a notary public in
and for said State, personally appeared  _____________________ known to me to be
a _____________________  of Wells Fargo Bank, N.A., one of the corporations that
executed  the  within  instrument,  and also  known to me to be the  person  who
executed  it on behalf of said  corporation,  and  acknowledged  to me that such
corporation executed the within instrument.

                  IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.

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

[Notarial Seal]                               My commission expires

<PAGE>

STATE OF                                      )
                                              ) ss.:
COUNTY OF                                     )

                  On the ___ day of January 2005,  before me, a notary public in
and for said State, personally appeared  _____________________ known to me to be
a  _____________________  of HSBC Bank  USA,  National  Association,  one of the
corporations that executed the within instrument, and also known to me to be the
person who executed it on behalf of said  corporation,  and  acknowledged  to me
that such corporation executed the within instrument.

                  IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.

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

[Notarial Seal]                               My commission expires

<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 (THE "CODE").

         UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
         THE  DEPOSITORY  TRUST  COMPANY  TO  THE  DEPOSITOR  OR ITS  AGENT  FOR
         REGISTRATION  OF  TRANSFER,  EXCHANGE OR PAYMENT,  AND ANY  CERTIFICATE
         ISSUED IS  REGISTERED  IN THE NAME OF CEDE & CO. OR SUCH  OTHER NAME AS
         REQUESTED  BY AN  AUTHORIZED  REPRESENTATIVE  OF THE  DEPOSITORY  TRUST
         COMPANY AND ANY PAYMENT IS MADE TO CEDE & CO., ANY TRANSFER,  PLEDGE OR
         OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
         SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

<PAGE>

<TABLE>
<S>                                                           <C>
Series 2005-HE1, Class A-[1A][1B][2A][2B][2C]                 Aggregate Certificate Principal Balance of the Class
                                                              A-[1A][1B][2A][2B][2C] Certificates as of the Issue
                                                              Date:   $

Pass-Through Rate: Variable                                   Denomination:  $

Date of Pooling and  Servicing  Agreement  and Cut-off Date:  Master Servicer: Wells Fargo Bank, N.A.
January 1, 2005

First Distribution Date: February 25, 2005                    Trustee: HSBC Bank USA, National Association

No.__                                                         Issue Date: January 31, 2005

                                                              CUSIP:________________
</TABLE>

         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-1-2

<PAGE>

          ACE SECURITIES CORP. HOME EQUITY LOAN TRUST, SERIES 2005-HE1
                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial  ownership  interest in a Trust Fund (the "Trust  Fund")
consisting  primarily of a pool of conventional  one- to four-family,  fixed and
adjustable-rate  first and second lien  mortgage  loans (the  "Mortgage  Loans")
formed and sold by

                              ACE SECURITIES CORP.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN ACE
         SECURITIES  CORP., THE MASTER SERVICER,  THE SECURITIES  ADMINISTRATOR,
         THE  SERVICERS,  THE  TRUSTEE  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  ________________  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
A-[1A][1B][2A][2B][2C]  Certificates  as of the  Issue  Date)  in  that  certain
beneficial ownership interest evidenced by all the Class  A-[1A][1B][2A][2B][2C]
Certificates in REMIC II created pursuant to a Pooling and Servicing  Agreement,
dated as specified  above (the  "Agreement"),  among ACE  Securities  Corp.,  as
depositor (hereinafter called the "Depositor", which term includes any successor
entity under the  Agreement),  Wells Fargo Bank,  N.A. as master  servicer  (the
"Master    Servicer")   and   securities    administrator    (the    "Securities
Administrator"), Ocwen Federal Bank FSB, as a servicer ("Ocwen"), Saxon Mortgage
Services,   Inc.,  as  a  servicer  ("Saxon";   and  together  with  Ocwen,  the
"Servicers") and HSBC Bank USA, National Association 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 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 such 25th day (a  "Distribution  Date"),
commencing on the First  Distribution  Date  specified  above,  to the Person in
whose name this  Certificate  is  registered  on the  Business  Day  immediately
preceding such  Distribution Date (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  A-[1A][1B][2A][2B][2C]
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 Securities  Administrator  by
wire  transfer  in  immediately  available  funds to the  account  of the Person
entitled   thereto  if  such  Person  shall  have  so  notified  the  Securities
Administrator  in writing at least five  Business  Days prior to the Record Date

                                      A-1-3
<PAGE>

immediately prior to such Distribution Date and is the registered owner of Class
A-[1A][1B][2A][2B][2C]  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
A-[1A][1B][2A][2B][2C] 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 Securities
Administrator of the pendency of such  distribution  and only upon  presentation
and  surrender  of this  Certificate  at the office or agency  appointed  by the
Securities Administrator for that purpose as provided in the Agreement.

                  The  Pass-Through   Rate  applicable  to  the  calculation  of
interest payable with respect to this Certificate on any Distribution Date shall
be a rate per annum equal to the lesser of (i) One-Month LIBOR plus [_____]%, in
the case of each  Distribution  Date through and including the Distribution Date
on which the aggregate  principal  balance of the Mortgage Loans (and properties
acquired in respect thereof) remaining in the Trust Fund is reduced to less than
or equal to 10% of the aggregate  principal  balance of the Mortgage Loans as of
the  Cut-off  Date,  or  One-Month  LIBOR  plus  [_____]%,  in the  case  of any
Distribution  Date thereafter and (ii) the applicable Net WAC Pass-Through  Rate
for such Distribution Date.

                  This  Certificate  is  one  of  a  duly  authorized  issue  of
Certificates  designated as Asset Backed Pass-Through  Certificate 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 and payments  received
pursuant to the Cap Contracts,  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 Master Servicer,  the Trustee, the Securities
Administrator,  the Servicers and the rights of the Certificateholders under the
Agreement at any time by the Depositor,  the Master Servicer,  the Trustee,  the
Securities  Administrator  and the Servicers  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

                                      A-1-4
<PAGE>

Certificate for registration of transfer at the offices or agencies appointed by
the Securities 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 Securities  Administrator 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,  the  Certificates  are  exchangeable  for new
Certificates of the same Class in authorized  denominations  evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.

                  No service  charge will be made for any such  registration  of
transfer or exchange  of  Certificates,  but the  Securities  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  Master  Servicer,   the  Trustee,   the
Securities  Administrator,  the  Servicers and any agent of the  Depositor,  the
Master Servicer, the Trustee, the Securities  Administrator or the Servicers may
treat the  Person in whose  name this  Certificate  is  registered  as the owner
hereof for all purposes,  and none of the Depositor,  the Master  Servicer,  the
Trustee, the Securities Administrator, the Servicers 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  Securities  Administrator  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 REMIC I and (ii) the purchase by the party  designated in the
Agreement at a price determined as provided in the Agreement from REMIC I 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 REMIC I all the  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
or equal to 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 Securities  Administrator  assumes
any responsibility for their correctness.

                  Unless  the  certificate  of  authentication  hereon  has been
executed by the Securities Administrator,  by manual signature, this Certificate
shall not be  entitled to any benefit  under the  Agreement  or be valid for any
purpose.

                                      A-1-5

<PAGE>

                  IN WITNESS WHEREOF,  the Securities  Administrator  has caused
this Certificate to be duly executed.

Dated:

                                WELLS FARGO BANK, N.A.
                                as Securities Administrator

                                By:
                                    --------------------------------------------
                                                Authorized Officer

                          CERTIFICATE OF AUTHENTICATION

                  This is one of the Class  A-[1A][1B][2A][2B][2C]  Certificates
referred to in the within-mentioned Agreement.

                                WELLS FARGO BANK, N.A.
                                as Securities Administrator

                                By:
                                    --------------------------------------------
                                                Authorized Signatory

<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:

<TABLE>
<S>                   <C>                                   <C>                              <C>
TEN COM       -       as tenants in common                  UNIF GIFT MIN ACT -                   CUSTODIAN
                                                                                             --------------
                                                                                                (Cust) (Minor)
                                                                                              under Uniform Gifts

                                                                                                 to Minors Act

TEN ENT       -       as tenants by the entireties                                             ________________
                                                                                                    (State)

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

                       Additional abbreviations may also be used though not in the above list.
</TABLE>

                                   ASSIGNMENT

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

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

--------------------------------------------------------------------------------
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)

a  Percentage  Interest  equal to ____%  evidenced  by the within  Asset  Backed
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   Securities
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

<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-2

                           FORM OF CLASS M 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").

         UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
         THE  DEPOSITORY  TRUST  COMPANY  TO  THE  DEPOSITOR  OR ITS  AGENT  FOR
         REGISTRATION  OF  TRANSFER,  EXCHANGE OR PAYMENT,  AND ANY  CERTIFICATE
         ISSUED IS  REGISTERED  IN THE NAME OF CEDE & CO. OR SUCH  OTHER NAME AS
         REQUESTED  BY AN  AUTHORIZED  REPRESENTATIVE  OF THE  DEPOSITORY  TRUST
         COMPANY AND ANY PAYMENT IS MADE TO CEDE & CO., ANY TRANSFER,  PLEDGE OR
         OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
         SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

         THIS  CERTIFICATE IS  SUBORDINATE TO THE CLASS A CERTIFICATES  [[,/AND]
         CLASS M-1 CERTIFICATES [,/AND] CLASS M-2 CERTIFICATES[,/AND]  CLASS M-3
         CERTIFICATES   [,/AND]  CLASS  M-4   CERTIFICATES   [,/AND]  CLASS  M-5
         CERTIFICATES]   [,/AND]  CLASS  M-6  CERTIFICATES]  [,/AND]  CLASS  M-7
         CERTIFICATES]  [,/AND] CLASS M-8  CERTIFICATES] TO THE EXTENT DESCRIBED
         IN THE AGREEMENT REFERRED TO HEREIN.

         ANY  TRANSFEREE  OF THIS  CERTIFICATE  SHALL  BE  DEEMED  TO  MAKE  THE
         REPRESENTATIONS  SET FORTH IN SECTION 6.02(C) OF THE AGREEMENT REFERRED
         TO HEREIN.

         THE CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE WILL BE DECREASED
         BY THE PRINCIPAL  PAYMENTS HEREON AND REALIZED LOSSES  ALLOCABLE HERETO
         AS  DESCRIBED  IN  THE  AGREEMENT  REFERRED  TO  HEREIN.   ACCORDINGLY,
         FOLLOWING THE INITIAL  ISSUANCE OF THE  CERTIFICATES,  THE  CERTIFICATE
         PRINCIPAL  BALANCE  OF THIS  CERTIFICATE  WILL BE  DIFFERENT  FROM  THE
         DENOMINATION  SHOWN  BELOW.   ANYONE  ACQUIRING  THIS  CERTIFICATE  MAY
         ASCERTAIN  ITS  CERTIFICATE   PRINCIPAL   BALANCE  BY  INQUIRY  OF  THE
         SECURITIES ADMINISTRATOR NAMED HEREIN.

<PAGE>

<TABLE>
<S>                                                            <C>
Series 2005-HE1, Class M-[1][2][3][4][5][6][7][8][9]           Aggregate Certificate Principal Balance of the
                                                               Class M-[1][2][3][4][5][6][7][8][9] Certificates as
                                                               of the Issue Date: $______________

Pass-Through Rate: Variable                                    Denomination: $______________

Date of Pooling and Servicing Agreement                        Master Servicer: Wells Fargo Bank, N.A.
and Cut-off Date: January 1, 2005

First Distribution Date: February 25, 2005                     Trustee: HSBC Bank USA, National Association

No.___                                                         Issue Date: January 31, 2005

                                                               CUSIP:_________________
</TABLE>

                                      A-2-2

<PAGE>

          ACE SECURITIES CORP. HOME EQUITY LOAN TRUST, SERIES 2005-HE1
                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial  ownership  interest in a Trust Fund (the "Trust  Fund")
consisting  primarily of a pool of conventional  one- to four-family,  fixed and
adjustable-rate  first and second lien  mortgage  loans (the  "Mortgage  Loans")
formed and sold by

                              ACE SECURITIES CORP.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN ACE
         SECURITIES  CORP., THE MASTER SERVICER,  THE SECURITIES  ADMINISTRATOR,
         THE  SERVICERS,  THE  TRUSTEE  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  _____________________  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
M-[1][2][3][4][5][6][7][8][9] Certificates as of the Issue Date) in that certain
beneficial     ownership     interest     evidenced    by    all    the    Class
M-[1][2][3][4][5][6][7][8][9]  Certificates  in REMIC II created  pursuant  to a
Pooling and Servicing  Agreement,  dated as specified  above (the  "Agreement"),
among ACE Securities  Corp., as depositor  (hereinafter  called the "Depositor",
which term includes any successor entity under the Agreement), Wells Fargo Bank,
N.A. as master  servicer (the "Master  Servicer") and  securities  administrator
(the  "Securities  Administrator"),   Ocwen  Federal  Bank  FSB  as  a  servicer
("Ocwen"),  Saxon Mortgage Services,  Inc., as a servicer ("Saxon"; and together
with Ocwen, the "Servicers") and HSBC Bank USA, National Association, 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 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 such 25th day (a  "Distribution  Date"),
commencing on the First  Distribution  Date  specified  above,  to the Person in
whose name this  Certificate  is  registered  on the  Business  Day  immediately
preceding such  Distribution Date (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 M-[1][2][3][4][5][6][7][8][9]
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 Securities  Administrator  by
wire  transfer  in  immediately  available  funds to the  account  of the Person
entitled   thereto  if  such  Person  shall  have  so  notified

                                      A-2-3
<PAGE>

the Securities 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 M-[1][2][3][4][5][6][7][8][9]  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 M-[1][2][3][4][5][6][7][8][9] 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  Securities  Administrator  of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Securities  Administrator  for that purpose as
provided in the Agreement.

                  The  Pass-Through   Rate  applicable  to  the  calculation  of
interest payable with respect to this Certificate on any Distribution Date shall
equal a rate per annum equal to the lesser of (i) One-Month LIBOR plus [____]% ,
in the case of each  Distribution  Date through and including  the  Distribution
Date on which  the  aggregate  principal  balance  of the  Mortgage  Loans  (and
properties  acquired in respect thereof)  remaining in the Trust Fund is reduced
to less than or equal to 10% of the aggregate  principal balance of the Mortgage
Loans as of the Cut-off  Date, or One-Month  LIBOR plus [____]%,  in the case of
any  Distribution  Date thereafter and (ii) the applicable Net WAC  Pass-Through
Rate for such Distribution Date.

                  This  Certificate  is  one  of  a  duly  authorized  issue  of
Certificates  designated as Asset Backed Pass-Through  Certificate 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 and payments  received
pursuant to the Cap Contracts,  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 Master Servicer,  the Trustee, the Securities
Administrator,  the Servicers and the rights of the Certificateholders under the
Agreement at any time by the Depositor,  the Master Servicer,  the Trustee,  the
Securities  Administrator  and the Servicers  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.

                                      A-2-4
<PAGE>

                  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 Securities 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  Securities  Administrator  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,  the  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.

                  Any transferee of this Certificate shall be deemed to make the
representations set forth in Section 6.02(c) of the Agreement.

                  No service  charge will be made for any such  registration  of
transfer or exchange  of  Certificates,  but the  Securities  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  Master  Servicer,   the  Trustee,   the
Securities  Administrator,  the  Servicers and any agent of the  Depositor,  the
Master Servicer, the Trustee, the Securities  Administrator or the Servicers may
treat the  Person in whose  name this  Certificate  is  registered  as the owner
hereof for all purposes,  and none of the Depositor,  the Master  Servicer,  the
Trustee, the Securities Administrator, the Servicers 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  Securities  Administrator  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 REMIC I and (ii) the purchase by the party  designated in the
Agreement at a price determined as provided in the Agreement from REMIC I 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 REMIC I all the  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
or equal to 10% of the aggregate  principal  balance of the Mortgage Loans as of
the Cut-off Date.

                                      A-2-5
<PAGE>

                  The recitals  contained herein shall be taken as statements of
the Depositor and neither the Trustee nor the  Securities  Administrator  assume
any responsibility for their correctness.

                  Unless  the  certificate  of  authentication  hereon  has been
executed by the Securities  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 Securities  Administrator  has caused
this Certificate to be duly executed.

Dated:

                                   WELLS FARGO BANK, N.A.
                                   as Securities Administrator

                                   By:
                                       ----------------------------------------
                                                  Authorized Officer

                          CERTIFICATE OF AUTHENTICATION

                  This  is  one  of  the   Class   M-[1][2][3][4][5][6][7][8][9]
Certificates referred to in the within-mentioned Agreement.

                                   WELLS FARGO BANK, N.A.
                                   as Securities Administrator

                                   By:
                                       ----------------------------------------
                                                 Authorized Signatory

<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:

<TABLE>
<S>                   <C>                                   <C>                              <C>
TEN COM       -       as tenants in common                  UNIF GIFT MIN ACT -                   CUSTODIAN
                                                                                             --------------
                                                                                                (Cust) (Minor)
                                                                                              under Uniform Gifts

                                                                                                 to Minors Act

TEN ENT       -       as tenants by the entireties                                             ________________
                                                                                                    (State)

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

                       Additional abbreviations may also be used though not in the above list.
</TABLE>

                                   ASSIGNMENT

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

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

--------------------------------------------------------------------------------
 (Please  print or  typewrite  name,  address  including  postal  zip code,  and
Taxpayer Identification Number of assignee)

a  Percentage  Interest  equal to _____%  evidenced  by the within  Asset Backed
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 Securities  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

<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 B CERTIFICATES

         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  IS  SUBORDINATED  IN RIGHT OF PAYMENT TO THE CLASS A
         CERTIFICATES  AND  THE  MEZZANINE   CERTIFICATES  [AND  THE  CLASS  B-1
         CERTIFICATES], AS DESCRIBED IN THE AGREEMENT REFERRED TO HEREIN.

         THE CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE WILL BE DECREASED
         BY THE PRINCIPAL  PAYMENTS HEREON AND REALIZED LOSSES  ALLOCABLE HERETO
         AS  DESCRIBED  IN  THE  AGREEMENT  REFERRED  TO  HEREIN.   ACCORDINGLY,
         FOLLOWING THE INITIAL  ISSUANCE OF THE  CERTIFICATES,  THE  CERTIFICATE
         PRINCIPAL  BALANCE  OF THIS  CERTIFICATE  WILL BE  DIFFERENT  FROM  THE
         DENOMINATION  SHOWN  BELOW.   ANYONE  ACQUIRING  THIS  CERTIFICATE  MAY
         ASCERTAIN  ITS  CERTIFICATE   PRINCIPAL   BALANCE  BY  INQUIRY  OF  THE
         SECURITIES ADMINISTRATOR NAMED HEREIN.

         THIS  CERTIFICATE  HAS NOT BEEN AND WILL NOT BE  REGISTERED  UNDER  THE
         SECURITIES  ACT OF 1933,  AS AMENDED  (THE  "ACT"),  OR UNDER ANY STATE
         SECURITIES  LAWS. THE HOLDER HEREOF,  BY PURCHASING  THIS  CERTIFICATE,
         AGREES  THAT THIS  CERTIFICATE  MAY BE  REOFFERED,  RESOLD,  PLEDGED OR
         OTHERWISE  TRANSFERRED  ONLY IN COMPLIANCE  WITH THE SECURITIES ACT AND
         OTHER  APPLICABLE  LAWS AND (1) OUTSIDE OF THE UNITED STATES WITHIN THE
         MEANING  OF  AND  IN  COMPLIANCE   WITH  REGULATION  S  UNDER  THE  ACT
         ("REGULATION  S"),  OR (2) WITHIN THE UNITED  STATES TO (A)  "QUALIFIED
         INSTITUTIONAL BUYERS" WITHIN THE MEANING OF AND IN COMPLIANCE WITH RULE
         144A UNDER THE ACT ("RULE 144A") OR (B) TO INSTITUTIONAL INVESTORS THAT
         ARE "ACCREDITED  INVESTORS" WITHIN THE MEANING OF RULE 501(A)(1),  (2),
         (3) OR (7) OF "REGULATION D" UNDER THE ACT.

         [THIS  CERTIFICATE IS A REGULATION S TEMPORARY  GLOBAL  CERTIFICATE FOR
         PURPOSES OF  REGULATION  S UNDER THE UNITED  STATES  SECURITIES  ACT OF
         1933, AS AMENDED (THE "SECURITIES  ACT").  PRIOR TO THE DATE THAT IS 40
         DAYS AFTER THE LATER OF (I) THE  COMMENCEMENT  OF THE  OFFERING  OF

<PAGE>

         THE OFFERED  CERTIFICATES  AND (II) THE CLOSING DATE, THIS  CERTIFICATE
         MAY NOT BE  OFFERED,  SOLD,  PLEDGED OR  OTHERWISE  TRANSFERRED  IN THE
         UNITED STATES OR TO A U.S.  PERSON EXCEPT PURSUANT TO AN EXEMPTION FROM
         THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.]

         [NO BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL CERTIFICATE
         SHALL BE ENTITLED TO RECEIVE  PAYMENTS OF PRINCIPAL OR INTEREST  HEREIN
         UNLESS THE REQUIRED  CERTIFICATIONS HAVE BEEN DELIVERED PURSUANT TO THE
         TERMS OF THE AGREEMENT (AS DEFINED HEREIN).]

         [THE HOLDER OF THIS  REGULATION S PERMANENT  GLOBAL  CERTIFICATE BY ITS
         ACCEPTANCE HEREOF AGREES NOT TO OFFER, SELL OR OTHERWISE  TRANSFER SUCH
         CERTIFICATE  WITHIN THE UNITED STATES OR TO U.S. PERSONS (AS DEFINED IN
         REGULATION S UNDER THE  SECURITIES  ACT) PRIOR TO THE DATE WHICH IS THE
         LATER OF (I) 40 DAYS AFTER THE LATER OF THE  CLOSING  DATE AND (II) THE
         DATE ON WHICH THE REQUISITE  CERTIFICATIONS  ARE DUE TO AND PROVIDED TO
         THE TRUSTEE AND SECURITIES  ADMINISTRATOR PURSUANT TO THE AGREEMENT (AS
         DEFINED BELOW),  EXCEPT PURSUANT TO AN EXEMPTION FROM THE  REGISTRATION
         REQUIREMENTS OF THE SECURITIES ACT.]

         NO TRANSFER OF THIS  CERTIFICATE MAY BE MADE TO ANY PERSON,  UNLESS THE
         TRANSFEREE PROVIDES A CERTIFICATION  PURSUANT TO SECTION 6.02(C) OF THE
         AGREEMENT.

                                      A-3-2

<PAGE>

<TABLE>
<S>                                                            <C>
Series ACE 2005-HE1, Class B-[1][2]                            Aggregate Certificate Principal Balance of the
                                                               Class B-[1][2] Certificates as of the
                                                               Issue Date: $

Pass-Through Rate: Variable                                    Denomination: $

Date of Pooling and Servicing Agreement                        Master Servicer: Wells Fargo Bank, N.A.
and Cut-off Date: January 1, 2005

First Distribution Date: February 25, 2005                     Trustee: HSBC Bank USA, National Association

No. ______                                                     Issue Date: January 31, 2005

                                                               CUSIP:
</TABLE>

          ACE SECURITIES CORP. HOME EQUITY LOAN TRUST, SERIES 2005-HE1
                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial  ownership  interest in a Trust Fund (the "Trust  Fund")
consisting  primarily of a pool of conventional  one- to four-family,  fixed and
adjustable-rate  first and second lien  mortgage  loans (the  "Mortgage  Loans")
formed and sold by

                              ACE SECURITIES CORP.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN ACE
         SECURITIES  CORP., THE MASTER SERVICER,  THE SECURITIES  ADMINISTRATOR,
         THE  SERVICERS,  THE  TRUSTEE  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  _______________  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  B-[1][2]
Certificates as of the Issue Date) in that certain beneficial ownership interest
evidenced  by all the Class B  Certificates  in REMIC II created  pursuant  to a
Pooling and Servicing  Agreement,  dated as specified  above (the  "Agreement"),
among ACE Securities  Corp., as depositor  (hereinafter  called the "Depositor",
which term includes any successor entity under the Agreement), Wells Fargo Bank,
N.A., as master servicer (the "Master Servicer"),  and securities  administrator
(the  "Securities  Administrator"),  Ocwen  Federal  Bank  FSB,  as  a  servicer
("Ocwen"),  Saxon Mortgage Services,  Inc., as a servicer ("Saxon"; and together
with Ocwen, the "Servicers") and HSBC Bank USA, National Association, 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

                                      A-3-3
<PAGE>

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  such  25th day (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 such  Distribution Date (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
B-[1][2] 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  Securities  Administrator  by wire
transfer in immediately  available  funds to the account of the Person  entitled
thereto if such Person shall have so notified the  Securities  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  B-[1][2]
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 B-[1][2]  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 Securities Administrator of the pendency of
such  distribution and only upon  presentation and surrender of this Certificate
at the  office or agency  appointed  by the  Securities  Administrator  for that
purpose as provided in the Agreement.

         The Pass-Through Rate applicable to the calculation of interest payable
with respect to this Certificate on any Distribution Date shall equal a rate per
annum  equal to the lesser of (i) One Month  LIBOR plus  _____%,  in the case of
each  Distribution Date through and including the Distribution Date on which the
aggregate  principal  balance of the Mortgage Loans (and properties  acquired in
respect thereof) remaining in the Trust Fund is reduced to less than or equal to
10% of the aggregate  principal  balance of the Mortgage Loans as of the Cut-off
Date,  or One-Month  LIBOR plus  _____%,  in the case of any  Distribution  Date
thereafter  and  (ii)  the  applicable  Net  WAC  Pass-Through   Rate  for  such
Distribution Date.

         This  Certificate  is one of a duly  authorized  issue of  Certificates
designated as Asset Backed 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 and payments  received pursuant to
the  Cap  Contracts,  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
<PAGE>

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 Master Servicer, the Trustee, the Securities  Administrator,  the
Servicers  and the rights of the  Certificateholders  under the Agreement at any
time  by the  Depositor,  the  Master  Servicer,  the  Trustee,  the  Securities
Administrator  and the Servicers 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 Securities 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 Securities
Administrator 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,  the  Certificates  are  exchangeable  for new
Certificates of the same Class in authorized  denominations  evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.

         No service charge will be made for any such registration of transfer or
exchange of Certificates,  but the Securities  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.

         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  Securities  Administrator  shall  require
receipt of (i) if such transfer is purportedly  being made in reliance upon Rule
144A or Regulation S under the 1933 Act, written  certifications from the Holder
of the  Certificate  desiring  to effect the  transfer,  and from such  Holder's

                                      A-3-5
<PAGE>

prospective transferee,  substantially in the forms attached to the Agreement as
Exhibit B-1,  (ii) if such transfer is  purportedly  being made in reliance upon
Rule 501(a) 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 form attached to the Agreement as Exhibit B-2
and (iii) 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 Master Servicer or the Securities Administrator 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 Securities 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  Depositor,  the
Master Servicer and the Securities  Administrator 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  shall be made to any person unless the
Transferee  provides  a  certification   pursuant  to  Section  6.02(d)  of  the
Agreement.

         The  Depositor,  the  Master  Servicer,  the  Trustee,  the  Securities
Administrator,  the  Servicers  and  any  agent  of the  Depositor,  the  Master
Servicer,  the Trustee, the Securities  Administrator or the Servicers may treat
the Person in whose name this  Certificate is registered as the owner hereof for
all purposes,  and none of the Depositor,  the Master Servicer, the Trustee, the
Securities Administrator,  the Servicers 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 Securities Administrator 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 REMIC I and (ii)  the  purchase  by the  party  designated  in the
Agreement at a price determined as provided in the Agreement from REMIC I 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 REMIC I all the  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
or equal to 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  Securities  Administrator  assume any
responsibility for their correctness.

         Unless the  certificate of  authentication  hereon has been executed by
the Securities 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  Securities  Administrator  has  caused  this
Certificate to be duly executed.

Dated:

                                WELLS FARGO BANK, N.A.
                                as Securities Administrator

                                By:
                                    --------------------------------------------
                                                Authorized Officer

                          CERTIFICATE OF AUTHENTICATION

                  This is one of the Class B-[1][2]  Certificates referred to in
the within-mentioned Agreement.

                                WELLS FARGO BANK, N.A.
                                as Securities Administrator

                                By:
                                    --------------------------------------------
                                                Authorized Signatory

<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 evidenced by the within Mortgage Pass-Through  Certificate
and hereby  authorizes the transfer of registration of such interest to assignee
on the Certificate Register of the Trust Fund.

                  I (We) further direct the Securities  Administrator to issue a
new  Certificate of a like  denomination  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

                            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-4

             FORM OF CLASS CE CERTIFICATE AND CLASS CE-1 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  IS  SUBORDINATE  TO THE  CLASS A  CERTIFICATES,  THE
         MEZZANINE  CERTIFICATES  AND THE CLASS TO THE EXTENT  DESCRIBED  IN THE
         AGREEMENT REFERRED TO HEREIN.

         THIS  CERTIFICATE  HAS NOT BEEN AND WILL NOT BE  REGISTERED  UNDER  THE
         SECURITIES  ACT OF 1933,  AS AMENDED  (THE  "ACT"),  OR UNDER ANY STATE
         SECURITIES  LAWS. THE HOLDER HEREOF,  BY PURCHASING  THIS  CERTIFICATE,
         AGREES  THAT THIS  CERTIFICATE  MAY BE  REOFFERED,  RESOLD,  PLEDGED OR
         OTHERWISE  TRANSFERRED  ONLY IN COMPLIANCE  WITH THE SECURITIES ACT AND
         OTHER  APPLICABLE  LAWS AND (1) OUTSIDE OF THE UNITED STATES WITHIN THE
         MEANING  OF  AND  IN  COMPLIANCE   WITH  REGULATION  S  UNDER  THE  ACT
         ("REGULATION  S"),  OR (2) WITHIN THE UNITED  STATES TO (A)  "QUALIFIED
         INSTITUTIONAL BUYERS" WITHIN THE MEANING OF AND IN COMPLIANCE WITH RULE
         144A UNDER THE ACT ("RULE 144A") OR (B) TO INSTITUTIONAL INVESTORS THAT
         ARE "ACCREDITED  INVESTORS" WITHIN THE MEANING OF RULE 501(A)(1),  (2),
         (3) OR (7) OF "REGULATION D" UNDER THE ACT.

         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.

         NO TRANSFER OF THIS  CERTIFICATE MAY BE MADE TO ANY PERSON,  UNLESS THE
         TRANSFEREE PROVIDES A CERTIFICATION  PURSUANT TO SECTION 6.02(C) OF THE
         AGREEMENT.

<PAGE>

<TABLE>
<S>                                                                <C>
Series 2005-HE1, Class [CE][CE-1]                                  Aggregate Certificate Principal Balance of the
                                                                   Class [CE][CE-1] Certificates as of the Issue
                                                                   Date: $_____________

Pass-Through Rate: Variable                                        Denomination: $_________________

Cut-off Date and date of Pooling and Servicing Agreement:          Master Servicer: Wells Fargo Bank, N.A.
January 1, 2005

First Distribution Date: February 25, 2005                         Trustee: HSBC Bank USA, National Association

No. __                                                             Issue Date: January 31, 2005
</TABLE>

          ACE SECURITIES CORP. HOME EQUITY LOAN TRUST, SERIES 2005-HE1
                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial  ownership  interest in a Trust Fund (the "Trust  Fund")
consisting  primarily of a pool of conventional  one- to four-family,  fixed and
adjustable-rate,  first and second lien mortgage  loans (the  "Mortgage  Loans")
formed and sold by

                              ACE SECURITIES CORP.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN ACE
         SECURITIES  CORP., THE MASTER SERVICER,  THE SECURITIES  ADMINISTRATOR,
         THE  SERVICERS,  THE  TRUSTEE  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  ________________  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
[CE][CE-1]  Certificates  as of the  Issue  Date)  in  that  certain  beneficial
ownership interest  evidenced by all the Class [CE][CE-1]  Certificates in REMIC
II created  pursuant to a Pooling and  Servicing  Agreement,  dated as specified
above (the "Agreement"),  among ACE Securities Corp., as depositor  (hereinafter
called the  "Depositor,"  which term  includes  any  successor  entity under the
Agreement),  Wells Fargo Bank, N.A., as master servicer (the "Master  Servicer")
and securities  administrator  (the "Securities  Administrator"),  Ocwen Federal
Bank FSB, as a servicer ("Ocwen"),  Saxon Mortgage Services,  Inc. ("Saxon"; and
together with Ocwen, the "Servicers") and HSBC Bank USA,  National  Association,
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

                                      A-4-2
<PAGE>

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 such 25th day (a  "Distribution  Date"),
commencing on the First  Distribution  Date  specified  above,  to the Person in
whose  name this  Certificate  is  registered  on the last  Business  Day of the
calendar month immediately preceding the month in which the related Distribution
Date  occurs  (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 [CE][CE-1] 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 Securities  Administrator  by
wire  transfer  in  immediately  available  funds to the  account  of the Person
entitled   thereto  if  such  Person  shall  have  so  notified  the  Securities
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
[CE][CE-1]  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  [CE][CE-1]
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 Securities Administrator of the
pendency of such  distribution and only upon  presentation and surrender of this
Certificate at the office or agency  appointed by the  Securities  Administrator
for that purpose as provided in the Agreement.

                  This  Certificate  is  one  of  a  duly  authorized  issue  of
Certificates  designated as Asset Backed Pass-Through  Certificate 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 Master Servicer,  the Trustee, the Securities
Administrator,  the Servicers and the rights of the Certificateholders under the
Agreement at any time by the Depositor,  the Master Servicer,  the Trustee,  the
Securities  Administrator  and the Servicers  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

                                      A-4-3
<PAGE>

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 Securities 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  Securities  Administrator  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.

                  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  Securities  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 B-1,
(ii) if such  transfer is  purportedly  being made in reliance  upon Rule 501(a)
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 form attached to the Agreement as Exhibit B-2 and (iii) 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
Master Servicer or the Securities  Administrator 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 Securities  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 Depositor,  the Master Servicer
and the  Securities  Administrator  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 6.02(c) of the Agreement.

                                      A-4-4
<PAGE>

                  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,  the  Certificates  are  exchangeable  for new
Certificates of the same Class in authorized  denominations  evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange
of Certificates,  but the Securities  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  Master  Servicer,   the  Trustee,   the
Securities  Administrator,  the  Servicers and any agent of the  Depositor,  the
Master Servicer, the Trustee, the Securities  Administrator or the Servicers may
treat the  Person in whose  name this  Certificate  is  registered  as the owner
hereof for all purposes,  and none of the Depositor,  the Master  Servicer,  the
Trustee, the Securities Administrator, the Servicers 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  Securities  Administrator  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 REMIC I and (ii) the purchase by the party  designated in the
Agreement at a price determined as provided in the Agreement from REMIC I 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 REMIC I all the  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
or equal to 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  Securities  Administrator  assume
any responsibility for their correctness.

                  Unless  the  certificate  of  authentication  hereon  has been
executed by the Securities Administrator,  by manual signature, this Certificate
shall not be  entitled to any benefit  under the  Agreement  or be valid for any
purpose.

                                      A-4-5

<PAGE>

                  IN WITNESS WHEREOF,  the Securities  Administrator  has caused
this Certificate to be duly executed.

Dated:

                                WELLS FARGO BANK, N.A.
                                as Securities Administrator

                                By:
                                    --------------------------------------------
                                                Authorized Officer

                          CERTIFICATE OF AUTHENTICATION

                  This is one of the Class [CE][CE-1]  Certificates  referred to
in the within-mentioned Agreement.

                                WELLS FARGO BANK, N.A.
                                as Securities Administrator

                                By:
                                    --------------------------------------------
                                                Authorized Officer

<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:

<TABLE>
<S>                   <C>                                   <C>                              <C>
TEN COM       -       as tenants in common                  UNIF GIFT MIN ACT -                   CUSTODIAN
                                                                                                --------------
                                                                                                (Cust) (Minor)
                                                                                              under Uniform Gifts

                                                                                                 to Minors Act

TEN ENT       -       as tenants by the entireties                                             ________________
                                                                                                    (State)

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

                       Additional abbreviations may also be used though not in the above list.
</TABLE>

                                   ASSIGNMENT

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

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

--------------------------------------------------------------------------------
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)

a  Percentage  Interest  equal to ____%  evidenced  by the within  Asset  Backed
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 Securities  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

<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-5

                               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  (THE  "ACT"),  OR UNDER ANY STATE
         SECURITIES  LAWS. THE HOLDER HEREOF,  BY PURCHASING  THIS  CERTIFICATE,
         AGREES  THAT THIS  CERTIFICATE  MAY BE  REOFFERED,  RESOLD,  PLEDGED OR
         OTHERWISE  TRANSFERRED  ONLY IN COMPLIANCE  WITH THE SECURITIES ACT AND
         OTHER  APPLICABLE  LAWS AND (1) OUTSIDE OF THE UNITED STATES WITHIN THE
         MEANING  OF  AND  IN  COMPLIANCE   WITH  REGULATION  S  UNDER  THE  ACT
         ("REGULATION  S"),  OR (2) WITHIN THE UNITED  STATES TO (A)  "QUALIFIED
         INSTITUTIONAL BUYERS" WITHIN THE MEANING OF AND IN COMPLIANCE WITH RULE
         144A UNDER THE ACT ("RULE 144A") OR (B) TO INSTITUTIONAL INVESTORS THAT
         ARE "ACCREDITED  INVESTORS" WITHIN THE MEANING OF RULE 501(A)(1),  (2),
         (3) OR (7) OF "REGULATION D" UNDER THE ACT.

         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.

         NO TRANSFER OF THIS  CERTIFICATE MAY BE MADE TO ANY PERSON,  UNLESS THE
         TRANSFEREE PROVIDES A CERTIFICATION  PURSUANT TO SECTION 6.02(C) OF THE
         AGREEMENT.

<PAGE>

<TABLE>
<S>                                                              <C>
Series 2005-HE1, Class P                                         Aggregate Certificate Principal Balance of the Class
                                                                 P Certificates as of the Issue Date: $100.00

Cut-off Date and date of Pooling and Servicing Agreement:        Denomination: $100.00
January 1, 2005

First Distribution Date: February 25, 2005                       Master Servicer: Wells Fargo Bank, N.A.

No.__                                                            Trustee: HSBC  Bank USA, National Association

                                                                 Issue Date: January 31, 2005
</TABLE>

         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-5-2

<PAGE>

          ACE SECURITIES CORP. HOME EQUITY LOAN TRUST, SERIES 2005-HE1
                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial  ownership  interest in a Trust Fund (the "Trust  Fund")
consisting  primarily of a pool of conventional  one- to four-family,  fixed and
adjustable-rate,  first and second lien mortgage  loans (the  "Mortgage  Loans")
formed and sold by

                              ACE SECURITIES CORP.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN ACE
         SECURITIES  CORP., THE MASTER SERVICER,  THE SECURITIES  ADMINISTRATOR,
         THE  SERVICERS,  THE  TRUSTEE  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____________________  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 REMIC II created  pursuant  to a
Pooling and Servicing  Agreement,  dated as specified  above (the  "Agreement"),
among ACE Securities  Corp., as depositor  (hereinafter  called the "Depositor",
which term includes any successor entity under the Agreement), Wells Fargo Bank,
N.A., as master servicer (the "Master Servicer"),  and securities  administrator
(the  "Securities  Administrator"),  Ocwen  Federal  Bank  FSB,  as  a  servicer
("Ocwen"),  Saxon Mortgage Services, Inc. ("Saxon"; and together with Ocwen, the
"Servicers")  and  HSBC  Bank  USA,  National   Association,   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 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 such 25th day (a  "Distribution  Date"),
commencing on the First  Distribution  Date  specified  above,  to the Person in
whose  name this  Certificate  is  registered  on the last  Business  Day of the
calendar month immediately preceding the month in which the related Distribution
Date  occurs  (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 Securities  Administrator  by
wire  transfer  in  immediately  available  funds to the  account  of the Person
entitled   thereto  if  such  Person  shall  have  so  notified  the  Securities
Administrator  in writing at least five  Business  Days prior to the Record Date

                                      A-5-3
<PAGE>

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  Securities  Administrator  of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Securities  Administrator  for that purpose as
provided in the Agreement.

                  This  Certificate  is  one  of  a  duly  authorized  issue  of
Certificates  designated as Asset Backed Pass-Through  Certificate 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 Master Servicer,  the Trustee, the Securities
Administrator,  the Servicers and the rights of the Certificateholders under the
Agreement at any time by the Depositor,  the Master Servicer,  the Trustee,  the
Securities  Administrator  and the Servicers  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 Securities 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  Securities  Administrator  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.

                                      A-5-4
<PAGE>

                  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  Securities  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 B-1,
(ii) if such  transfer is  purportedly  being made in reliance  upon Rule 501(a)
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 form attached to the Agreement as Exhibit B-2 and (iii) 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
Master Servicer or the Securities  Administrator 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 Securities  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 Depositor,  the Master Servicer
and the  Securities  Administrator  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 6.02(c) of the Agreement.

                  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,  the  Certificates  are  exchangeable  for new
Certificates of the same Class in authorized  denominations  evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange
of Certificates,  but the Securities  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  Master  Servicer,   the  Trustee,   the
Securities  Administrator,  the  Servicers and any agent of the  Depositor,  the
Master Servicer, the Trustee, the Securities  Administrator or the Servicers may
treat the  Person in whose  name this  Certificate  is  registered  as the owner
hereof for all purposes,  and none of the Depositor,  the Master  Servicer,  the
Trustee,

                                      A-5-5
<PAGE>

the Securities Administrator, the Servicers 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  Securities  Administrator  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 REMIC I and (ii) the purchase by the party  designated in the
Agreement at a price determined as provided in the Agreement from REMIC I 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 REMIC I all the  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
or equal to 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  Securities  Administrator  assume
any responsibility for their correctness.

                  Unless  the  certificate  of  authentication  hereon  has been
executed by the Securities Administrator,  by manual signature, this Certificate
shall not be  entitled to any benefit  under the  Agreement  or be valid for any
purpose.

                                      A-5-6

<PAGE>

                  IN WITNESS WHEREOF,  the Securities  Administrator  has caused
this Certificate to be duly executed.

Dated:

                                WELLS FARGO BANK, N.A.
                                as Securities Administrator

                                By:
                                    --------------------------------------------
                                                Authorized Officer

                          CERTIFICATE OF AUTHENTICATION

                  This is one of the  Class P  Certificates  referred  to in the
within-mentioned Agreement.

                                WELLS FARGO BANK, N.A.
                                as Securities Administrator

                                By:
                                    --------------------------------------------
                                                Authorized Officer

<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:

<TABLE>
<S>                   <C>                                   <C>                               <C>
TEN COM       -       as tenants in common                  UNIF GIFT MIN ACT -                   CUSTODIAN
                                                                                                --------------
                                                                                                (Cust) (Minor)
                                                                                              under Uniform Gifts

                                                                                                 to Minors Act

TEN ENT       -       as tenants by the entireties                                             ________________
                                                                                                    (State)

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

                       Additional abbreviations may also be used though not in the above list.
</TABLE>

                                   ASSIGNMENT

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

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

--------------------------------------------------------------------------------
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)

a  Percentage  Interest  equal to ____%  evidenced  by the within  Asset  Backed
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 Securities  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

<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-6

                           FORM OF CLASS R CERTIFICATE

         THIS CERTIFICATE MAY NOT BE TRANSFERRED TO A NON-UNITED STATES PERSON.

         SOLELY  FOR  U.S.   FEDERAL  INCOME  TAX  PURPOSES,   THIS  CERTIFICATE
         REPRESENTS THE SOLE "RESIDUAL  INTEREST" IN EACH "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  6.02 OF THE
         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 6.02 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
         SECURITIES ADMINISTRATOR THAT (A) SUCH TRANSFEREE 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

<PAGE>

         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")  OR  (4)  AN  AGENT  OF  A  DISQUALIFIED
         ORGANIZATION  AND (B) NO  PURPOSE  OF SUCH  TRANSFER  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  DISQUALIFIED   ORGANIZATION   OR  AN  AGENT  OF  A
         DISQUALIFIED  ORGANIZATION,  SUCH REGISTRATION SHALL BE DEEMED TO BE OF
         NO LEGAL FORCE OR EFFECT WHATSOEVER AND SUCH PERSON SHALL NOT BE DEEMED
         TO BE A CERTIFICATEHOLDER FOR ANY PURPOSE HEREUNDER, INCLUDING, BUT NOT
         LIMITED  TO, THE RECEIPT OF  DISTRIBUTIONS  ON THIS  CERTIFICATE.  EACH
         HOLDER OF THIS CERTIFICATE BY ACCEPTANCE HEREOF SHALL BE DEEMED TO HAVE
         CONSENTED TO THE  PROVISIONS OF THIS  PARAGRAPH  AND THE  PROVISIONS OF
         SECTION 6.02(D) OF THE AGREEMENT REFERRED TO HEREIN. ANY PERSON THAT IS
         A DISQUALIFIED  ORGANIZATION  IS PROHIBITED  FROM ACQUIRING  BENEFICIAL
         OWNERSHIP OF THIS CERTIFICATE.

<TABLE>
<S>                                                              <C>
Series 2005-HE1, Class R                                         Aggregate Percentage Interest of the Class R
                                                                 Certificates as of the Issue Date: 100.00%

Date of Pooling and Servicing Agreement                          Master Servicer: Wells Fargo Bank, N.A.
and Cut-off Date: January 1, 2005
First Distribution Date: February 25, 2005                       Trustee: HSBC Bank USA, National Association

No __                                                            Issue Date: January 31, 2005
</TABLE>

                                      A-6-2

<PAGE>

          ACE SECURITIES CORP. HOME EQUITY LOAN TRUST, SERIES 2005-HE1
                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial  ownership  interest in a Trust Fund (the "Trust  Fund")
consisting  primarily of a pool of conventional  one- to four-family,  fixed and
adjustable-rate  first and second lien  mortgage  loans (the  "Mortgage  Loans")
formed and sold by

                              ACE SECURITIES CORP.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN ACE
         SECURITIES  CORP., THE MASTER SERVICER,  THE SECURITIES  ADMINISTRATOR,
         THE  SERVICERS,  THE  TRUSTEE  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.

                                      A-6-3

<PAGE>

                  This certifies that _______________ 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 R Certificates as of
the Issue Date) in that certain  beneficial  ownership interest evidenced by all
the Class R Certificates in REMIC II created pursuant to a Pooling and Servicing
Agreement,  dated as specified  above (the  "Agreement"),  among ACE  Securities
Corp., as depositor (hereinafter called the "Depositor", which term includes any
successor  entity  under the  Agreement),  Wells  Fargo  Bank,  N.A.,  as master
servicer (the "Master  Servicer") and securities  administrator (the "Securities
Administrator"), Ocwen Federal Bank FSB, as a servicer ("Ocwen"), Saxon Mortgage
Services, Inc. ("Saxon"; and together with Ocwen, the "Servicers") and HSBC Bank
USA, National Association,  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 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 R  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 Securities  Administrator  by
wire  transfer  in  immediately  available  funds to the  account  of the Person
entitled   thereto  if  such  Person  shall  have  so  notified  the  Securities
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,  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 Securities Administrator of the
pendency of such  distribution and only upon  presentation and surrender of this
Certificate at the office or agency  appointed by the  Securities  Administrator
for that purpose as provided in the Agreement.

                  This  Certificate  is  one  of  a  duly  authorized  issue  of
Certificates  designated as Asset Backed Pass-Through  Certificate 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

                                      A-6-4
<PAGE>

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 Master Servicer,  the Trustee, the Securities
Administrator,  the Servicers and the rights of the Certificateholders under the
Agreement at any time by the Depositor,  the Master Servicer,  the Trustee,  the
Securities  Administrator  and the Servicers  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 Securities 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  Securities  Administrator  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"),  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  Securities  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 B-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 Master Servicer or the Securities Administrator 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

                                      A-6-5
<PAGE>

such  Opinion of Counsel is based.  None of the  Depositor,  the  Trustee or the
Securities  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 Depositor,  the Master Servicer
and the  Securities  Administrator  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 6.02 of the Agreement.

                  Prior  to  registration   of  any  transfer,   sale  or  other
disposition of this  Certificate,  the proposed  transferee shall provide to the
Securities  Administrator (i) an affidavit to the effect that such transferee is
any Person  other than a  Disqualified  Organization  or the agent  (including a
broker,  nominee  or  middleman)  of a  Disqualified  Organization,  and  (ii) a
certificate  that  acknowledges  that (A) the  Class R  Certificates  have  been
designated as representing the beneficial ownership of the residual interests in
each of REMIC I and REMIC II, (B) it will include in its income a PRO RATA share
of the net  income of the  Trust  Fund 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  Disqualified  Organization  or an agent  (including a broker,
nominee or middleman) of a Disqualified Organization, such registration shall be
deemed to be of no legal force or effect whatsoever and such Person shall not be
deemed to be a Certificateholder for any purpose, 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  6.02 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 any portion
of the Trust Fund to cease to qualify  as a REMIC or cause the  imposition  of a
tax upon any REMIC.

                  No service  charge will be made for any such  registration  of
transfer or exchange  of  Certificates,  but the  Securities  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  Master  Servicer,   the  Trustee,   the
Securities  Administrator,  the  Servicers and any agent of the  Depositor,  the
Master Servicer, the Trustee, the Securities  Administrator or the Servicers may
treat the  Person in whose  name this  Certificate  is  registered

                                      A-6-6
<PAGE>

as the owner  hereof for all  purposes,  and none of the  Depositor,  the Master
Servicer, the Trustee, the Securities Administrator,  the Servicers 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  Securities  Administrator  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 REMIC I and (ii) the purchase by the party  designated in the
Agreement at a price determined as provided in the Agreement from REMIC I 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 REMIC I all the  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
or equal to 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  Securities  Administrator  assume
any responsibility for their correctness.

                  Unless  the  certificate  of  authentication  hereon  has been
executed by the Securities Administrator,  by manual signature, this Certificate
shall not be  entitled to any benefit  under the  Agreement  or be valid for any
purpose.

                                      A-6-7

<PAGE>

                  IN WITNESS WHEREOF,  the Securities  Administrator  has caused
this Certificate to be duly executed.

Dated:

                                WELLS FARGO BANK, N.A.
                                as Securities Administrator

                                By:
                                    --------------------------------------------
                                                Authorized Officer

                          CERTIFICATE OF AUTHENTICATION

                  This is one of the  Class R  Certificates  referred  to in the
within-mentioned Agreement.

                                WELLS FARGO BANK, N.A.
                                as Securities Administrator

                                By:
                                    --------------------------------------------
                                                Authorized Signatory

<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:

<TABLE>
<S>                   <C>                                   <C>                              <C>
TEN COM       -       as tenants in common                  UNIF GIFT MIN ACT -                   CUSTODIAN
                                                                                                --------------
                                                                                                (Cust) (Minor)
                                                                                              under Uniform Gifts

                                                                                                 to Minors Act

TEN ENT       -       as tenants by the entireties                                             ________________
                                                                                                    (State)

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

                       Additional abbreviations may also be used though not in the above list.
</TABLE>

                                   ASSIGNMENT

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

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

--------------------------------------------------------------------------------
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)

a  Percentage  Interest  equal to _____%  evidenced  by the within  Asset Backed
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 Securities  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

                                     B-1-2

<PAGE>

                            DISTRIBUTION INSTRUCTIONS

                  The  assignee  should  include the  following  for purposes of
distribution:

                  Distributions shall be made, by wire transfer or otherwise, in
immediately  available  funds to  ______________________________________________
for  the  account  of  ________________________________________________________,
account number _________________,  or, if mailed by check, to __________________
_____________________________________________________________________________.
Applicable  statements  should  be  mailed  to  ________________________________
_____________________________________________________________________________.
This information is provided by ___________________________________________, the
assignee named above, or _______________________________________, as its agent.

                                     B-1-3

<PAGE>

                                   EXHIBIT B-1
                    FORM OF TRANSFEROR REPRESENTATION LETTER

                                     [Date]

Wells Fargo Bank, N.A.
Sixth and Marquette Avenue
Minneapolis, Minnesota 55479

Attention: Corporate Trust ACE 2005-HE1

         Re:   ACE Securities Corp. Home Equity Loan Trust, Series 2005-HE1
               Asset Backed Pass-Through Certificates
               Class B, Class CE, Class CE-1, Class P and Class R Certificates
               -----------------------------------------------------------------

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
January 1, 2005, among ACE Securities Corp. as Depositor, Ocwen Federal Bank FSB
as a Servicer,  Saxon Mortgage Services,  Inc. as a Servicer,  Wells Fargo Bank,
N.A. as Master Servicer and Securities Administrator and HSBC Bank USA, National
Association  as trustee (the  "Pooling and  Servicing  Agreement"),  pursuant to
which Pooling and Servicing Agreement the Certificates were issued.

                                     B-1-4

<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:

                                     B-1-5

<PAGE>

                    FORM OF TRANSFEREE REPRESENTATION LETTER

                                                                       [Date]

Wells Fargo Bank, N.A.
Sixth and Marquette Avenue
Minneapolis, Minnesota 55479

Attention: Corporate Trust ACE 2005-HE1

           Re:   ACE Securities Corp. Home Equity Loan Trust, Series 2005-HE1
                 Asset Backed Pass-Through Certificates
                 Class B, Class CE, Class CE-1, Class P and Class R Certificates
                 ---------------------------------------------------------------

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.

3. The Transferee:  (a) is not an employee  benefit or other plan subject to the
prohibited transaction provisions of the Employee Retirement Income Security Act
of 1974, as amended  ("ERISA),  or Section 4975 of the Internal  Revenue Code of
1986, as amended (the "Code") (each, a "Plan"),  or any other person  (including
an  investment  manager,  a named  fiduciary  or a trustee of any Plan)  acting,
directly or indirectly,  on behalf of or purchasing any  Certificate  with "plan
assets"  of any Plan  within  the  meaning of the  Department  of Labor  ("DOL")
regulation at 29 C.F.R.  ss.12510.3-101 or (b) [[for Class CE, Class CE-1, Class
P and Class R] has  provided  the  Securities  Administrator  with an opinion of
counsel on which the Trustee, the Depositor, the Master Servicer, the Securities
Administrator  and  the  Servicers  may  rely,  acceptable  to and in

                                     B-1-6
<PAGE>

form and substance  satisfactory  to the Trustee to the effect that the purchase
of  Certificates  is permissible  under  applicable  law, will not constitute or
result in any non-exempt  prohibited  transaction under ERISA or Section 4975 of
the Code and will not subject the Trust Fund, the Trustee,  the  Depositor,  the
Master Servicer, the Securities Administrator or the Servicers to any obligation
or liability  (including  obligations or liabilities under ERISA or Section 4975
of the Code) in  addition  to those  undertaken  in the  Pooling  and  Servicing
Agreement.]  [[for Class B] represents  and warrants that it has acquired and is
holding such certificate in reliance on Prohibited Transaction Exemption ("PTE")
2002-41,  and that it  understands  that  there are  certain  conditions  to the
availability of PTE 2002-41,  including that such  certificate must be rated, at
the time of purchase, not lower than "BBB-" (or its equivalent) by S&P, Fitch or
Moody's Investors  Service,  Inc., and such certificate is so rated, and that it
is an "accredited  investor" as defined in Rule 501(a)(1) of Regulation D issued
under the  Securities Act and will obtain a  representation  from any transferee
that such  transferee  is an  accredited  investor  so long as it is required to
obtain a representation  regarding  compliance with the Securities Act or (c)(i)
it is an insurance company, (ii) the source of funds used to acquire or hold the
certificate or interest  therein is an "insurance  company general  account," as
such term is defined in Prohibited  Transaction Class Exemption  ("PTCE") 95-60,
and  (iii)  the  conditions  in  Sections  I and III of  PTCE  95-60  have  been
satisfied.

                  In addition,  the Transferee hereby certifies,  represents and
warrants to, and covenants  with,  the  Depositor,  the Trustee,  the Securities
Administrator,  the Master  Servicer and the Servicers that the Transferee  will
not transfer such  Certificates to any Plan or person unless such Plan or person
meets the requirements set forth in paragraph 3 above.

                  All  capitalized  terms used but not otherwise  defined herein
have the  respective  meanings  assigned  thereto in the Pooling  and  Servicing
Agreement, dated as of January 1, 2005, among ACE Securities Corp. as Depositor,
Wells Fargo Bank,  N.A. as Master Servicer and Securities  Administrator,  Ocwen
Federal Bank FSB as a Servicer,  Saxon Mortgage Services, Inc. as a Servicer and
HSBC  Bank  USA,  National  Association  as  Trustee,   pursuant  to  which  the
Certificates were issued.

                                  [TRANSFEREE]

                                  By:
                                      ------------------------------------------
                                  Name:

                                  Title:

                                     B-1-7

<PAGE>

                                                          ANNEX 1 TO EXHIBIT B-1

            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 Wells  Fargo  Bank,  N.A.,  as  Securities
Administrator,  with respect to the asset backed 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.

----------------
(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.

                                     B-1-8
<PAGE>

         ___      BROKER-DEALER.  The  Transferee   is   a   dealer   registered
                  pursuant to Section 15 of the Securities Exchange Act of 1934.

         ___      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

                                     B-1-9
<PAGE>

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.

                  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:

                                     B-1-10

<PAGE>

                                                          ANNEX 2 TO EXHIBIT B-1

            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 Wells  Fargo  Bank,  N.A.,  as  Securities
Administrator,  with respect to the asset backed 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.

                                     B-1-11
<PAGE>

                  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 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

                                     B-1-12

<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
                                             -----------------------------------

                                     B-1-13

<PAGE>

                                    EXHIBIT C

                    FORM OF REGULATION S TRANSFER CERTIFICATE

[Date]

Wells Fargo Bank, N.A.
Sixth and Marquette Avenue
Minneapolis, Minnesota 55479

Attention: Corporate Trust ACE 2005-HE1

              Re:  ACE Securities Corp. Home Equity Loan Trust, Series 2005-HE1
                   Asset Backed Pass-Through Certificates, Class B Certificates
                   ------------------------------------------------------------

Ladies and Gentlemen:

                  Reference  is  hereby  made  to  the  Pooling  and   Servicing
Agreement (the  "Agreement"),  dated as of January 1, 2005, among ACE Securities
Corp.  (the  "Depositor"),  Wells  Fargo  Bank,  N.A.,  as master  servicer  and
securities  administrator (the "Master Servicer"),  Ocwen Federal Bank FSB, as a
servicer ("Ocwen"),  Saxon Mortgage Services,  Inc. ("Saxon";  and together with
Ocwen, the "Servicers") and HSBC Bank USA, National Association, as trustee (the
"Trustee").  Capitalized terms used herein but not defined herein shall have the
meanings assigned thereto in the Agreement.

                  This  letter   relates  to  U.S.   $[__________]   Certificate
Principal Balance of Class B Certificates (the "Certificates") which are held in
the name of [name of transferor]  (the  "Transferor")  to effect the transfer of
the  Certificates to a person who wishes to take delivery thereof in the form of
an equivalent beneficial interest [name of transferee] (the "Transferee").

                  In  connection  with  such  request,   the  Transferor  hereby
certifies  that such transfer has been effected in accordance  with the transfer
restrictions  set forth in the  Agreement and the private  placement  memorandum
dated  January __,  2005  relating to the  Certificates  and that the  following
additional requirements (if applicable) were satisfied:

                  (a) the offer of the  Certificates was not made to a person in
the United States;

                  (b) at the time the buy order was  originated,  the Transferee
was outside the United  States or the  Transferor  and any person  acting on its
behalf reasonably believed that the Transferee was outside the United States;

                  (c) no directed  selling efforts were made in contravention of
the requirements of Rule 903(b) or 904(b) of Regulation S, as applicable;

                  (d) the  transfer  or exchange is not part of a plan or scheme
to evade the registration requirements of the Securities Act;

                                     B-1-14
<PAGE>

                  (e)  the  Transferee  is  not a U.S.  Person,  as  defined  in
Regulation S under the Securities Act;

                  (f) the transfer was made in  accordance  with the  applicable
provisions of Rule 903(b)(2) or (3) or Rule 904(b)(1), as the case may be; and

                  (g) the Transferee  understands that the Certificates have not
been and will not be registered under the Securities Act, that any offers, sales
or  deliveries  of the  Certificates  purchased by the  Transferee in the United
States or to U.S.  persons  prior to the date that is 40 days after the later of
(i) the  commencement of the offering of the  Certificates  and (ii) the Closing
Date,   may   constitute  a  violation  of  United  States  law,  and  that  (x)
distributions  of principal  and  interest  and (y) the  exchange of  beneficial
interests  in  a  Temporary  Regulation  S  Global  Certificate  for  beneficial
interests  in the related  Permanent  Regulation S Global  Certificate,  in each
case, will be made in respect of such  Certificates  only following the delivery
by the Holder of a certification of non-U.S.  beneficial ownership, at the times
and in the manner set forth in the Agreement.

                                     B-1-15

<PAGE>

                  You are entitled to rely upon this letter and are  irrevocably
authorized  to produce this letter or a copy hereof to any  interested  party in
any  administrative or legal proceedings or official inquiry with respect to the
matters covered hereby.

                                 [Name of Transferor]

                                 By:
                                     -------------------------------------------
                                 Name:
                                 Title:

                                     B-1-16

<PAGE>

                                   EXHIBIT B-2

                    FORM OF TRANSFEROR REPRESENTATION LETTER

                                                              ____________, 20__

Wells Fargo Bank, N.A.
Sixth and Marquette Avenue
Minneapolis, Minnesota 55479

Attention: Corporate Trust ACE 2005-HE1

            Re:  ACE Securities Corp. Home Equity Loan Trust, Series 2005-HE1
                 Asset Backed Pass-Through Certificates,
                 Class B, Class CE, Class CE-1, Class P and Class R Certificates
                 ---------------------------------------------------------------

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 Seller  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, or (e) has taken any other action,  that (as to any of (a) through
(e)  above)  would  constitute  a  distribution  of the  Certificates  under the
Securities  Act of 1933 (the "Act'),  that would render the  disposition  of any
Certificate a violation of Section 5 of the Act or any state  securities law, or
that would require  registration or qualification  pursuant thereto.  The Seller
will not act, in any manner set forth in the foregoing  sentence with respect to
any Certificate.  The Seller has not and will not sell or otherwise transfer any
of the Certificates, except in compliance with the provisions of the Pooling and
Servicing Agreement.

                                  Very truly yours,

                                  ----------------------------------------------
                                  (Transferor)

                                  By:
                                      ------------------------------------------
                                  Name:
                                  Title:

<PAGE>

                            FORM OF TRANSFEREE LETTER

                                                           _______________, 20__

Wells Fargo Bank, N.A.
Sixth and Marquette Avenue
Minneapolis, Minnesota 55479

Attention: Corporate Trust ACE 2005-HE1

            Re:  ACE Securities Corp. Home Equity Loan Trust, Series 2005-HE1
                 Asset Backed Pass-Through Certificates,
                 Class B, Class CE, Class CE-1, Class P and Class R Certificates
                 ---------------------------------------------------------------

Ladies and Gentlemen:

                  In connection with the transfer by ______________________ (the
"Transferor") to __________________________  (the "Transferee") of the captioned
mortgage pass-through  certificates (the "Certificates"),  the Transferee hereby
certifies as follows:

                  1. The Transferee  understands that (a) the Certificates  have
         not been and will not be registered or qualified  under the  Securities
         Act of 1933,  as amended (the "Act") or any state  securities  law, (b)
         the   Depositor   is  not  required  to  so  register  or  qualify  the
         Certificates, (c) the Certificates may be resold only if registered and
         qualified pursuant to the provisions of the Act or any state securities
         law, or if an exemption from such  registration  and  qualification  is
         available,   (d)  the  Pooling   and   Servicing   Agreement   contains
         restrictions  regarding  the transfer of the  Certificates  and (e) the
         Certificates will bear a legend to the foregoing effect.

                  2. The  Transferee is acquiring the  Certificates  for its own
         account  for  investment  only  and not  with a view to or for  sale in
         connection  with any  distribution  thereof  in any  manner  that would
         violate the Act or any applicable state securities laws.

                  3.  The  Transferee  is  (a)  a   substantial,   sophisticated
         institutional   investor   having  such  knowledge  and  experience  in
         financial and business  matters,  and, in  particular,  in such matters
         related  to  securities  similar to the  Certificates,  such that it is
         capable  of  evaluating  the  merits  and  risks of  investment  in the
         Certificates, (b) able to bear the economic risks of such an investment
         and (c) an  "accredited  investor"  within the  meaning of Rule  501(a)
         promulgated pursuant to the Act.

                  4. The  Transferee  has been  furnished  with,  and has had an
         opportunity to review (a) a copy of the Pooling and Servicing Agreement
         and  (b)  such  other  information  concerning  the  Certificates,  the
         Mortgage  Loans  and  the  Depositor  as  has  been  requested  by  the
         Transferee  from the Depositor or the Transferor and is relevant to the
         Transferee's decision to purchase the Certificates.  The Transferee has
         had any questions arising from such review answered by the Depositor or
         the Transferor to the satisfaction of the Transferee.

                                      B-2-2
<PAGE>

                  5. The  Transferee  has not and will not nor has it authorized
         or will it authorize any person to (a) offer,  pledge, sell, dispose of
         or otherwise transfer any Certificate,  any interest in any Certificate
         or any other similar security to any person in any manner,  (b) solicit
         any offer to buy or to accept a pledge,  disposition  of other transfer
         of any  Certificate,  any  interest  in any  Certificate  or any  other
         similar security from any person in any manner,  (c) otherwise approach
         or  negotiate  with  respect to any  Certificate,  any  interest in any
         Certificate  or any  other  similar  security  with any  person  in any
         manner,  (d)  make  any  general   solicitation  by  means  of  general
         advertising  or in any other manner or (e) take any other action,  that
         (as to any of (a) through (e) above) would constitute a distribution of
         any Certificate under the Act, that would render the disposition of any
         Certificate  a  violation  of  Section  5 of the 1933 Act or any  state
         securities  law, or that would require  registration  or  qualification
         pursuant  thereto.  The Transferee will not sell or otherwise  transfer
         any of the  Certificates,  except in compliance  with the provisions of
         the Pooling and Servicing Agreement.

                  6. The  Transferee:  (a) is not an  employee  benefit or other
         plan subject to the prohibited  transaction  provisions of the Employee
         Retirement  Income  Security  Act of 1974,  as  amended  ("ERISA"),  or
         Section  4975 of the  Internal  Revenue  Code of 1986,  as amended (the
         "Code") (each, a "Plan"),  or any other person (including an investment
         manager,  a named fiduciary or a trustee of any Plan) acting,  directly
         or indirectly,  on behalf of or purchasing any  Certificate  with "plan
         assets" of any Plan  within  the  meaning  of the  Department  of Labor
         ("DOL")  regulation at 29 C.F.R.  ss.12510.3-101 or (b) [[for Class CE,
         Class  CE-1,  Class P and Class R] has  provided  the  Trustee  with an
         opinion of counsel on which the  Depositor,  the Master  Servicer,  the
         Securities  Administrator,  the  Trustee  and the  Servicers  may rely,
         acceptable to and in form and substance  satisfactory to the Trustee to
         the effect  that the  purchase of  Certificates  is  permissible  under
         applicable  law,  will  not  constitute  or  result  in any  non-exempt
         prohibited transaction under ERISA or Section 4975 of the Code and will
         not subject the Trust  Fund,  the  Trustee,  the Master  Servicer,  the
         Securities  Administrator,  the  Depositor  or  the  Servicers  to  any
         obligation or liability  (including  obligations or  liabilities  under
         ERISA or Section 4975 of the Code) in addition to those  undertaken  in
         the Pooling and Servicing  Agreement.]  [[for Class B]  represents  and
         warrants  that it has  acquired  and is  holding  such  certificate  in
         reliance on Prohibited  Transaction Exemption ("PTE") 2002-41, and that
         it understands that there are certain conditions to the availability of
         PTE 2002-41, including that such certificate must be rated, at the time
         of purchase, not lower than "BBB-" (or its equivalent) by S&P, Fitch or
         Moody's Investors Service,  Inc., and such certificate is so rated, and
         that it is an  "accredited  investor"  as defined in Rule  501(a)(1) of
         Regulation  D  issued  under  the  Securities  Act and  will  obtain  a
         representation   from  any  transferee   that  such  transferee  is  an
         accredited   investor   so  long  as  it  is   required   to  obtain  a
         representation  regarding  compliance with the Securities Act or (c)(i)
         it is an insurance company, (ii) the source of funds used to acquire or
         hold the  certificate  or  interest  therein is an  "insurance  company
         general  account,"  as such term is defined in  Prohibited  Transaction
         Class Exemption  ("PTCE") 95-60, and (iii) the conditions in Sections I
         and III of PTCE 95-60 have been satisfied.]

                                      B-2-3
<PAGE>

                  In addition,  the Transferee hereby certifies,  represents and
warrants to, and covenants  with,  the  Depositor,  the Trustee,  the Securities
Administrator,  the Master  Servicer and the Servicers that the Transferee  will
not transfer such  Certificates to any Plan or person unless such Plan or person
meets the requirements set forth in paragraph 6 above.

                                    Very truly yours,

                                    By:
                                       -----------------------------------------
                                    Name:
                                    Title:

                                      B-2-4

<PAGE>

                                   EXHIBIT B-3

                        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 ACE Securities
                  Corp.  Home Equity Loan Trust,  Series  2005-HE1  Asset Backed
                  Pass-Through Certificates,  Class R Certificates (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
                  ____________________.  ____ 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  real   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
                  April 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

                                      B-2-5
<PAGE>

                  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 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 Securities  Administrator will not
                  register  the transfer of any Class R  Certificate  unless the
                  transferee,   or  the  transferee's  agent,  delivers  to  the
                  Securities Administrator,  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
                  6.02(d) of the Pooling and Servicing Agreement under which the
                  Class R  Certificates  were  issued  (in  particular,  clauses
                  (iii)(A) and (iii)(B) of Section  6.02(d) which  authorize the
                  Securities Administrator to deliver payments to a person other
                  than  the  Owner  and  negotiate  a  mandatory   sale  by  the
                  Securities  Administrator  in the event  that the Owner  holds
                  such  Certificate in violation of Section  6.02(d));  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

                                      B-3-2
<PAGE>

                  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.

         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 6.02(d) 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  Securities
                  Administrator 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.

         17.      The Owner of the Class R  Certificate,  hereby  agrees that in
                  the event  that the Trust  Fund  created  by the  Pooling  and
                  Servicing  Agreement is  terminated  pursuant to Section 10.01
                  thereof,  the  undersigned  shall  assign and  transfer to the
                  Holders  of  the  Class  CE,   Class  CE-1  and  the  Class  P
                  Certificates   any  amounts  in  excess  of  par  received  in
                  connection with such termination. Accordingly, in the event of
                  such  termination,  the  Securities  Administrator  is  hereby
                  authorized  to withhold  any such amounts in excess of par and
                  to pay such  amounts  directly to the Holders of the Class CE,
                  Class CE-1 and the Class P Certificates.  This agreement shall
                  bind and be enforceable  against any successor,  transferee or

                                      B-3-3
<PAGE>

                  assigned of the  undersigned  in the Class R  Certificate.  In
                  connection  with any transfer of the Class R Certificate,  the
                  Owner shall obtain an agreement  substantially similar to this
                  clause from any subsequent owner.

                                      B-3-4

<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
_________________, ____.

                                     [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
__________, ____.

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

                                    County of
                                              ----------------------------------
                                    State of
                                             -----------------------------------

                                    My Commission expires:

                                      B-3-5

<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 Trustee or a transfer  affidavit  and  agreement in the form attached to the
Pooling  and  Servicing  Agreement  as Exhibit  B-2.  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.

                                      B-3-6
<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
________________, ____.

                                     [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
_____________, ____.

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

                                    County of
                                              ----------------------------------
                                    State of
                                             -----------------------------------

                                    My Commission expires:

<PAGE>

                                    EXHIBIT C

                         FORM OF SERVICER CERTIFICATION

Re:      __________ (the "Trust")

         MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2005-HE1

I, [identify the certifying  individual],  certify to ACE Securities  Corp. (the
"Depositor"),  HSBC Bank USA,  National  Association  (the  "Trustee") and Wells
Fargo Bank, National  Association (the "Master Servicer"),  and their respective
officers,  directors and affiliates, and with the knowledge and intent that they
will rely upon this certification, that:

         1.       Based on my knowledge, the information in the Annual Statement
                  of  Compliance,  the Annual  Independent  Public  Accountant's
                  Servicing   Report  and  all  servicing   reports,   officer's
                  certificates and other  information  relating to the servicing
                  of the Mortgage Loans  submitted to the Master  Servicer taken
                  as a  whole,  does  not  contain  any  untrue  statement  of a
                  material fact or omit to state a material  fact  (constituting
                  information  required to be provided  by [Ocwen  Federal  Bank
                  FSB/Saxon Mortgage Services,  Inc.] (the "Servicer") under the
                  Agreement)  necessary to make the statements made, in light of
                  the  circumstances  under which such statements were made, not
                  misleading as of the date of this certification.

         2.       Based on my knowledge,  the servicing  information required to
                  be  provided  to Master  Servicer  by the  Servicer  under the
                  Agreement has been provided to the Master Servicer.

         3.       I am responsible for reviewing the activities performed by the
                  Servicer  under the  Agreement and based upon my knowledge and
                  the review required by the Agreement,  and except as disclosed
                  in  the  Annual   Statement  of   Compliance   or  the  Annual
                  Independent Public Accountant's  Servicing Report submitted to
                  the  Master   Servicer,   the  Servicer  has   fulfilled   its
                  obligations under the Agreement; and

         4.       I  have  disclosed  to the  Master  Servicer  all  significant
                  deficiencies  relating to the Servicer's  compliance  with the
                  minimum  servicing  standards  in  accordance  with  a  review
                  conducted in compliance  with the Uniform  Single  Attestation
                  Program for Mortgage  Bankers or similar standard as set forth
                  in the Pooling and Servicing Agreement.

Capitalized  terms  used and not  otherwise  defined  herein  have the  meanings
assigned thereto in the Pooling and Servicing Agreement,  dated as of January 1,
2005,  among ACE  Securities  Corp.,  Ocwen  Federal  Bank FSB,  Saxon  Mortgage
Services, Inc., Wells Fargo Bank, N.A. and HSBC Bank USA, National Association

                                      C-1
<PAGE>

Date:
       ----------------------------------------------

-----------------------------------------------------
[Signature]

-----------------------------------------------------
[Title]

                                      C-2
<PAGE>

                                    EXHIBIT D

                            FORM OF POWER OF ATTORNEY

RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO
[Ocwen Federal Bank FSB
1675 Palm Lakes Boulevard, Suite 10A
West Palm Beach, Florida 33401
Attn: _________________________________]

[Saxon Mortgage Services, Inc.
[Address]
Attn: _________________________________]

                            LIMITED POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that , having its principal place of business at
, as Trustee (the  "Trustee")  pursuant to that Pooling and Servicing  Agreement
among (the "Depositor"),  Ocwen Federal Bank FSB, Saxon Mortgage Services, Inc.,
and the  Trustee,  dated as of  January  1, 2005  (the  "Pooling  and  Servicing
Agreement"),  hereby  constitutes and appoints the Servicer,  by and through the
Servicer's  officers,  the Trustee's  true and lawful  Attorney-in-Fact,  in the
Trustee's  name,  place and stead and for the Trustee's  benefit,  in connection
with all mortgage  loans  serviced by the  Servicer  pursuant to the Pooling and
Servicing  Agreement  for the purpose of  performing  all acts and executing all
documents  in the  name of the  Trustee  as may be  customarily  and  reasonably
necessary and appropriate to effectuate the following enumerated transactions in
respect  of any of the  mortgages  or deeds of trust  (the  "Mortgages"  and the
"Deeds of Trust",  respectively)  and  promissory  notes  secured  thereby  (the
"Mortgage  Notes")  for which the  undersigned  is acting as Trustee for various
certificateholders  (whether the  undersigned  is named  therein as mortgagee or
beneficiary  or has become  mortgagee by virtue of  endorsement  of the Mortgage
Note  secured by any such  Mortgage or Deed of Trust) and for which the Servicer
is acting as  servicer,  all subject to the terms of the  Pooling and  Servicing
Agreement.

This appointment shall apply to the following enumerated transactions only:

1.       The modification or re-recording of a Mortgage or Deed of Trust,  where
         said modification or re-recordings is for the purpose of correcting the
         Mortgage or Deed of Trust to conform same to the original intent of the
         parties thereto or to correct title errors  discovered after such title
         insurance was issued and said  modification or re-recording,  in either
         instance, does not adversely affect the lien of the Mortgage or Deed of
         Trust as insured.

                                      C-3
<PAGE>

2.       The  subordination  of the  lien of a  Mortgage  or Deed of Trust to an
         easement in favor of a public utility company of a government agency or
         unit with powers of eminent domain; this section shall include, without
         limitation,  the execution of partial  satisfactions/releases,  partial
         reconveyances  or the  execution or requests to trustees to  accomplish
         same.

3.       The  conveyance  of the  properties  to the  mortgage  insurer,  or the
         closing of the title to the  property  to be  acquired  as real  estate
         owned, or conveyance of title to real estate owned.

4.       The completion of loan assumption agreements.

5.       The full  satisfaction/release  of a Mortgage  or Deed of Trust or full
         conveyance  upon payment and  discharge  of all sums  secured  thereby,
         including,  without  limitation,  cancellation of the related  Mortgage
         Note.

6.       The  assignment  of any  Mortgage  or Deed  of  Trust  and the  related
         Mortgage  Note, in connection  with the repurchase of the mortgage loan
         secured and evidenced thereby.

7.       The full  assignment  of a Mortgage  or Deed of Trust upon  payment and
         discharge  of  all  sums  secured  thereby  in  conjunction   with  the
         refinancing thereof,  including,  without limitation, the assignment of
         the related Mortgage Note.

8.       With  respect  to a Mortgage  or Deed of Trust,  the  foreclosure,  the
         taking of a deed in lieu of foreclosure,  or the completion of judicial
         or non-judicial foreclosure or termination,  cancellation or rescission
         of any such foreclosure,  including, without limitation, any and all of
         the following acts:

         a.       the substitution of trustee(s)  serving under a Deed of Trust,
                  in accordance with state law and the Deed of Trust;

         b.       the  preparation  and  issuance  of  statements  of  breach or
                  non-performance;

         c.       the  preparation  and  filing of  notices  of  default  and/or
                  notices of sale;

         d.       the  cancellation/rescission  of  notices  of  default  and/or
                  notices of sale;

         e.       the taking of a deed in lieu of foreclosure; and

         f.       the  preparation  and  execution of such other  documents  and
                  performance  of such other  actions as may be necessary  under
                  the  terms of the  Mortgage,  Deed of  Trust  or state  law to
                  expeditiously  complete said  transactions  in paragraphs 8.a.
                  through 8.e., above.

The undersigned gives said  Attorney-in-Fact full power and authority to execute
such instruments and to do and perform all and every act and thing necessary and
proper to carry into

                                      C-4
<PAGE>

effect the power or powers granted by or under this Limited Power of Attorney as
fully as the  undersigned  might or could do, and hereby does ratify and confirm
to all  that  said  Attorney-in-Fact  shall  lawfully  do or cause to be done by
authority hereof.

Third  parties  without  actual  notice may rely upon the  exercise of the power
granted  under this Limited  Power of attorney;  and may be satisfied  that this
Limited  Power of Attorney  shall  continue in full force and effect and has not
been revoked  unless an instrument of revocation has been made in writing by the
undersigned.

IN WITNESS WHEREOF,  as Trustee pursuant to that Pooling and Servicing Agreement
among the Depositor,  Ocwen Federal Bank FSB, Saxon Mortgage Services, Inc., and
the Trustee, dated as of _________________ 1, 200__ ( Asset Backed Certificates,
Series 200__-___),  has caused its corporate seal to be hereto affixed and these
presents  to be  signed  and  acknowledged  in its name and  behalf  by its duly
elected  and  authorized   Vice  President  this  day  of  ,  200__.

                                           -------------------------------------
                                                      as Trustee for _____ Asset
                                           Backed Certificates, Series 200__-___

                                           By __________________________________

STATE OF
         ------------------

COUNTY OF
          -----------------

On _____________ ________, 200__, before me, the undersigned, a Notary Public in
and  for  said  state,  personally  appeared  __________________________,   Vice
President of  ____________________  as Trustee for _______________  Asset Backed
Certificates,  Series  200__-___,  personally known to me to be the person whose
name is subscribed to the within  instrument and  acknowledged to me that he/she
executed that same in his/her authorized capacity, and that by his/her signature
on the  instrument the entity upon behalf of which the person acted and executed
the instrument.

WITESS my hand and official seal.
         (SEAL)

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

                                My Commission Expires ________________________

                                      C-5
<PAGE>

                                   SCHEDULE 1

                             MORTGAGE LOAN SCHEDULE

                                      C-6
<PAGE>

                                   SCHEDULE 2

                           PREPAYMENT CHARGE SCHEDULE

                                      C-1
<PAGE>

                                   SCHEDULE 3

                                   [RESERVED]

                                      C-1
<PAGE>

                                   SCHEDULE 4

                   STANDARD FILE LAYOUT- DELINQUENCY REPORTING
<TABLE>
<CAPTION>

EXHIBIT 1: STANDARD FILE LAYOUT - DELINQUENCY REPORTING
------------------------------------------------------------------------------------------------------------------------------------
COLUMN/HEADER NAME                                                DESCRIPTION                            DECIMAL    FORMAT COMMENT
------------------------------------------------------------------------------------------------------------------------------------
<S>                                           <C>                                                            <C>       <C>
SERVICER_LOAN_NBR                             A unique  number  assigned  to a loan by the
                                              Servicer. This may be different than the LOAN_NBR
------------------------------------------------------------------------------------------------------------------------------------
LOAN_NBR                                      A unique identifier assigned to each loan by the
                                              originator.
------------------------------------------------------------------------------------------------------------------------------------
CLIENT_NBR                                    Servicer Client Number
------------------------------------------------------------------------------------------------------------------------------------
SERV_INVESTOR_NBR                             Contains   a  unique   number   as
                                              assigned by an  external  servicer
                                              to  identify  a group  of loans in
                                              their system.
------------------------------------------------------------------------------------------------------------------------------------
BORROWER_FIRST_NAME                           First Name of the Borrower.
------------------------------------------------------------------------------------------------------------------------------------
BORROWER_LAST_NAME                            Last name of the borrower.
------------------------------------------------------------------------------------------------------------------------------------
PROP_ADDRESS                                  Street Name and Number of Property
------------------------------------------------------------------------------------------------------------------------------------
PROP_STATE                                    The state where the  property located.
------------------------------------------------------------------------------------------------------------------------------------
PROP_ZIP                                      Zip code where the property is located.
------------------------------------------------------------------------------------------------------------------------------------
BORR_NEXT_PAY_DUE_DATE                        The date that the borrower's  next
                                              payment  is due to the                                                    MM/DD/YYYY
                                              servicer at the end of  processing
                                              cycle, as reported by Servicer.
------------------------------------------------------------------------------------------------------------------------------------
LOAN_TYPE                                     Loan Type (i.e. FHA, VA, Conv)
------------------------------------------------------------------------------------------------------------------------------------
BANKRUPTCY_FILED_DATE                         The date a particular bankruptcy claim was filed.                         MM/DD/YYYY
------------------------------------------------------------------------------------------------------------------------------------
BANKRUPTCY_CHAPTER_CODE                       The chapter under which the bankruptcy was filed.
------------------------------------------------------------------------------------------------------------------------------------
BANKRUPTCY_CASE_NBR                           The case  number  assigned  by the
                                              court to the bankruptcy filing.
------------------------------------------------------------------------------------------------------------------------------------
POST_PETITION_DUE_DATE                        The payment due date once the  bankruptcy                                 MM/DD/YYYY
                                              has been  approved by the courts
------------------------------------------------------------------------------------------------------------------------------------
BANKRUPTCY_DCHRG_DISM_DATE                    The Date The  Loan Is  Removed  From  Bankruptcy.                         MM/DD/YYYY
                                              Either  by  Dismissal,   Discharged   and/or
                                               a  Motion  For  Relief  Was Granted.
------------------------------------------------------------------------------------------------------------------------------------
LOSS_MIT_APPR_DATE                            The Date The Loss Mitigation Was Approved By The Servicer                 MM/DD/YYYY
------------------------------------------------------------------------------------------------------------------------------------
LOSS_MIT_TYPE                                 The Type Of Loss Mitigation Approved For A Loan Such As;
------------------------------------------------------------------------------------------------------------------------------------
LOSS_MIT_EST_COMP_DATE                        The Date The Loss Mitigation /Plan Is Scheduled To End/Close              MM/DD/YYYY
------------------------------------------------------------------------------------------------------------------------------------
LOSS_MIT_ACT_COMP_DATE                        The Date The Loss Mitigation Is Actually Completed                        MM/DD/YYYY
------------------------------------------------------------------------------------------------------------------------------------
FRCLSR_APPROVED_DATE                          The date DA  Admin  sends a letter                                        MM/DD/YYYY
                                              to the  servicer  with  instructions
                                              to begin  foreclosure proceedings.
------------------------------------------------------------------------------------------------------------------------------------
ATTORNEY_REFERRAL_DATE                        Date File Was Referred To Attorney to Pursue Foreclosure                  MM/DD/YYYY
------------------------------------------------------------------------------------------------------------------------------------
FIRST_LEGAL_DATE                              Notice of 1st legal  filed by an  Attorney  in a  Foreclosure             MM/DD/YYYY
                                              Action
------------------------------------------------------------------------------------------------------------------------------------
FRCLSR_SALE_EXPECTED_DATE                     The date by which a foreclosure sale is expected to occur.                MM/DD/YYYY
------------------------------------------------------------------------------------------------------------------------------------
FRCLSR_SALE_DATE                              The actual date of the foreclosure sale.                                  MM/DD/YYYY
------------------------------------------------------------------------------------------------------------------------------------
FRCLSR_SALE_AMT                               The amount a property sold for at the foreclosure sale.        2          No commas(,)
                                                                                                                        or dollar
                                                                                                                        signs ($)
------------------------------------------------------------------------------------------------------------------------------------
EVICTION_START_DATE                           The date the servicer initiates eviction of the borrower.                 MM/DD/YYYY
------------------------------------------------------------------------------------------------------------------------------------
EVICTION_COMPLETED_DATE                       The date the court  revokes  legal                                        MM/DD/YYYY
                                              possession    of   the    property
                                              from the borrower.
------------------------------------------------------------------------------------------------------------------------------------
LIST_PRICE                                    The price at which an REO property is marketed.                2          No commas(,)
                                                                                                                        or dollar
                                                                                                                        signs ($)
------------------------------------------------------------------------------------------------------------------------------------
LIST_DATE                                     The date an REO property is listed at a particular price.                 MM/DD/YYYY
------------------------------------------------------------------------------------------------------------------------------------

</TABLE>

                                      C-1
<PAGE>

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
<S>                                           <C>                                                            <C>       <C>
OFFER_AMT                                     The dollar value of an offer for an REO property.              2          No commas(,)
                                                                                                                        or dollar
                                                                                                                        signs ($)
------------------------------------------------------------------------------------------------------------------------------------
OFFER_DATE_TIME                               The date an offer is received by DA Admin or by the Servicer.             MM/DD/YYYY
------------------------------------------------------------------------------------------------------------------------------------
REO_CLOSING_DATE                              The date the REO sale of the property is scheduled to close.              MM/DD/YYYY
------------------------------------------------------------------------------------------------------------------------------------
REO_ACTUAL_CLOSING_DATE                       Actual Date Of REO Sale                                                   MM/DD/YYYY
------------------------------------------------------------------------------------------------------------------------------------
OCCUPANT_CODE                                 Classification of how the property is occupied.
------------------------------------------------------------------------------------------------------------------------------------
PROP_CONDITION_CODE                           A code that indicates the condition of the property.
------------------------------------------------------------------------------------------------------------------------------------
PROP_INSPECTION_DATE                          The date a  property inspection is performed.                             MM/DD/YYYY
------------------------------------------------------------------------------------------------------------------------------------
APPRAISAL_DATE                                The date the appraisal was done.                                          MM/DD/YYYY
------------------------------------------------------------------------------------------------------------------------------------
CURR_PROP_VAL                                 The current "as is" value of the  property                     2
                                              based on brokers price opinion or appraisal.
------------------------------------------------------------------------------------------------------------------------------------
REPAIRED_PROP_VAL                             The amount the  property  would be
                                              worth if repairs  are  completed                               2
                                              pursuant   to  a  broker's   price
                                              opinion or appraisal.
------------------------------------------------------------------------------------------------------------------------------------
IF APPLICABLE:
------------------------------------------------------------------------------------------------------------------------------------
DELINQ_STATUS_CODE                            FNMA Code Describing Status of Loan

------------------------------------------------------------------------------------------------------------------------------------
DELINQ_REASON_CODE                            The  circumstances  which caused a
                                              borrower to stop paying on a loan.
                                              Code  indicates the reason why the
                                              loan is in default for this cycle.

------------------------------------------------------------------------------------------------------------------------------------
MI_CLAIM_FILED_DATE                           Date  Mortgage   Insurance  Claim  Was  Filed  With  Mortgage             MM/DD/YYYY
                                              Insurance Company.
------------------------------------------------------------------------------------------------------------------------------------
MI_CLAIM_AMT                                  Amount of Mortgage Insurance Claim Filed                                  No commas(,)
                                                                                                                        or dollar
                                                                                                                        signs ($)
------------------------------------------------------------------------------------------------------------------------------------
MI_CLAIM_PAID_DATE                            Date Mortgage Insurance Company Disbursed Claim Payment                   MM/DD/YYYY
------------------------------------------------------------------------------------------------------------------------------------
MI_CLAIM_AMT_PAID                             Amount Mortgage Insurance Company Paid On Claim                2          No commas(,)
                                                                                                                        or dollar
                                                                                                                        signs ($)
------------------------------------------------------------------------------------------------------------------------------------
POOL_CLAIM_FILED_DATE                         Date Claim Was Filed With Pool Insurance Company                          MM/DD/YYYY
------------------------------------------------------------------------------------------------------------------------------------
POOL_CLAIM_AMT                                Amount of Claim Filed With Pool Insurance Company              2          No commas(,)
                                                                                                                        or dollar
                                                                                                                        signs ($)
------------------------------------------------------------------------------------------------------------------------------------
POOL_CLAIM_PAID_DATE                          Date Claim Was  Settled  and The Check Was Issued By The Pool             MM/DD/YYYY
                                              Insurer
------------------------------------------------------------------------------------------------------------------------------------
POOL_CLAIM_AMT_PAID                           Amount Paid On Claim By Pool Insurance Company                 2          No commas(,)
                                                                                                                        or dollar
                                                                                                                        signs ($)
------------------------------------------------------------------------------------------------------------------------------------
FHA_PART_A_CLAIM_FILED_DATE                    Date FHA Part A Claim Was Filed With HUD                                 MM/DD/YYYY
------------------------------------------------------------------------------------------------------------------------------------
FHA_PART_A_CLAIM_AMT                           Amount of FHA Part A Claim Filed                              2          No commas(,)
                                                                                                                        or dollar
                                                                                                                        signs ($)
------------------------------------------------------------------------------------------------------------------------------------
FHA_PART_A_CLAIM_PAID_DATE                     Date HUD Disbursed Part A Claim Payment                                  MM/DD/YYYY
------------------------------------------------------------------------------------------------------------------------------------
FHA_PART_A_CLAIM_PAID_AMT                      Amount HUD Paid on Part A Claim                               2          No commas(,)
                                                                                                                        or dollar
                                                                                                                        signs ($)
------------------------------------------------------------------------------------------------------------------------------------
FHA_PART_B_CLAIM_FILED_DATE                     Date FHA Part B Claim Was Filed With HUD                                MM/DD/YYYY
------------------------------------------------------------------------------------------------------------------------------------
FHA_PART_B_CLAIM_AMT                            Amount of FHA Part B Claim Filed                             2          No commas(,)
                                                                                                                        or dollar
                                                                                                                        signs ($)
------------------------------------------------------------------------------------------------------------------------------------
FHA_PART_B_CLAIM_PAID_DATE                       Date HUD Disbursed Part B Claim Payment                                MM/DD/YYYY
------------------------------------------------------------------------------------------------------------------------------------
FHA_PART_B_CLAIM_PAID_AMT                      Amount HUD Paid on Part B Claim                               2          No commas(,)
                                                                                                                        or dollar
                                                                                                                        signs ($)
------------------------------------------------------------------------------------------------------------------------------------
VA_CLAIM_FILED_DATE                            Date VA Claim Was Filed With the Veterans Admin                          MM/DD/YYYY
------------------------------------------------------------------------------------------------------------------------------------
VA_CLAIM_PAID_DATE                             Date Veterans Admin. Disbursed VA Claim Payment                          MM/DD/YYYY
------------------------------------------------------------------------------------------------------------------------------------
VA_CLAIM_PAID_AMT                              Amount Veterans Admin. Paid on VA Claim                       2          No commas(,)
                                                                                                                        or dollar
                                                                                                                        signs ($)
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                      C-2
<PAGE>

EXHIBIT 2: STANDARD FILE CODES - DELINQUENCY REPORTING

The  LOSS MIT TYPE  field  should  show the  approved  Loss  Mitigation  Code as
follows:
    -------------
     o   ASUM-   Approved Assumption
     o   BAP-    Borrower Assistance Program
     o   CO-     Charge Off
     o   DIL-    Deed-in-Lieu
     o   FFA-    Formal Forbearance Agreement
     o   MOD-    Loan Modification
     o   PRE-    Pre-Sale
     o   SS-     Short Sale
     o   MISC-   Anything else approved by the PMI or Pool Insurer

NOTE:  Wells Fargo Bank will accept  alternative  Loss Mitigation Types to those
above,  provided  that they are  consistent  with  industry  standards.  If Loss
Mitigation Types other than those above are used, the Servicer must supply Wells
Fargo Bank with a  description  of each of the Loss  Mitigation  Types  prior to
sending the file.

The OCCUPANT  CODE field should show the current  status of the property code as
follows:

     o   Mortgagor
     o   Tenant
     o   Unknown
     o   Vacant

The  PROPERTY  CONDITION  field should show the last  reported  condition of the
property as follows:
    ------------------
     o   Damaged
     o   Excellent
     o   Fair
     o   Gone
     o   Good
     o   Poor
     o   Special Hazard
     o   Unknown

                                      C-3
<PAGE>

EXHIBIT 2: STANDARD FILE CODES - DELINQUENCY REPORTING, CONTINUED

The FNMA DELINQUENT  REASON CODE field should show the Reason for Delinquency as
follows:

          ----------------------------------------------------------------------
          DELINQUENCY CODE         DELINQUENCY DESCRIPTION
          ----------------------------------------------------------------------
          001                      FNMA-Death of principal mortgagor
          ----------------------------------------------------------------------
          002                      FNMA-Illness of principal mortgagor
          ----------------------------------------------------------------------
          003                      FNMA-Illness of mortgagor's family member
          ----------------------------------------------------------------------
          004                      FNMA-Death of mortgagor's family member
          ----------------------------------------------------------------------
          005                      FNMA-Marital difficulties
          ----------------------------------------------------------------------
          006                      FNMA-Curtailment of income
          ----------------------------------------------------------------------
          007                      FNMA-Excessive Obligation
          ----------------------------------------------------------------------
          008                      FNMA-Abandonment of property
          ----------------------------------------------------------------------
          009                      FNMA-Distant employee transfer
          ----------------------------------------------------------------------
          011                      FNMA-Property problem
          ----------------------------------------------------------------------
          012                      FNMA-Inability to sell property
          ----------------------------------------------------------------------
          013                      FNMA-Inability to rent property
          ----------------------------------------------------------------------
          014                      FNMA-Military Service
          ----------------------------------------------------------------------
          015                      FNMA-Other
          ----------------------------------------------------------------------
          016                      FNMA-Unemployment
          ----------------------------------------------------------------------
          017                      FNMA-Business failure
          ----------------------------------------------------------------------
          019                      FNMA-Casualty loss
          ----------------------------------------------------------------------
          022                      FNMA-Energy environment costs
          ----------------------------------------------------------------------
          023                      FNMA-Servicing problems
          ----------------------------------------------------------------------
          026                      FNMA-Payment adjustment
          ----------------------------------------------------------------------
          027                      FNMA-Payment dispute
          ----------------------------------------------------------------------
          029                      FNMA-Transfer of ownership pending
          ----------------------------------------------------------------------
          030                      FNMA-Fraud
          ----------------------------------------------------------------------
          031                      FNMA-Unable to contact borrower
          ----------------------------------------------------------------------
          INC                      FNMA-Incarceration
          ----------------------------------------------------------------------

                                      C-4
<PAGE>

EXHIBIT 2: STANDARD FILE CODES - DELINQUENCY REPORTING, CONTINUED

The FNMA  DELINQUENT  STATUS  CODE  field  should  show the Status of Default as
follows:

          ----------------------------------------------------------------------
                STATUS CODE        STATUS DESCRIPTION
          ----------------------------------------------------------------------
                    09             Forbearance
          ----------------------------------------------------------------------
                    17             Pre-foreclosure Sale Closing Plan Accepted
          ----------------------------------------------------------------------
                    24             Government Seizure
          ----------------------------------------------------------------------
                    26             Refinance
          ----------------------------------------------------------------------
                    27             Assumption
          ----------------------------------------------------------------------
                    28             Modification
          ----------------------------------------------------------------------
                    29             Charge-Off
          ----------------------------------------------------------------------
                    30             Third Party Sale
          ----------------------------------------------------------------------
                    31             Probate
          ----------------------------------------------------------------------
                    32             Military Indulgence
          ----------------------------------------------------------------------
                    43             Foreclosure Started
          ----------------------------------------------------------------------
                    44             Deed-in-Lieu Started
          ----------------------------------------------------------------------
                    49             Assignment Completed
          ----------------------------------------------------------------------
                    61             Second Lien Considerations
          ----------------------------------------------------------------------
                    62             Veteran's Affairs-No Bid
          ----------------------------------------------------------------------
                    63             Veteran's Affairs-Refund
          ----------------------------------------------------------------------
                    64             Veteran's Affairs-Buydown
          ----------------------------------------------------------------------
                    65             Chapter 7 Bankruptcy
          ----------------------------------------------------------------------
                    66             Chapter 11 Bankruptcy
          ----------------------------------------------------------------------
                    67             Chapter 13 Bankruptcy
          ----------------------------------------------------------------------

                                      C-5
<PAGE>

EXHIBIT 3: CALCULATION OF REALIZED LOSS/GAIN FORM 332- INSTRUCTION SHEET

     1.     The numbers on the form correspond with the numbers listed below.

     LIQUIDATION AND ACQUISITION EXPENSES:

     1.     The Actual Unpaid Principal Balance of the Mortgage Loan. For
            documentation, an Amortization Schedule from date of default through
            liquidation breaking out the net interest and servicing fees
            advanced is required.

     2.     The Total Interest Due less the aggregate amount of servicing fee
            that would have been earned if all delinquent payments had been made
            as agreed. For documentation, an Amortization Schedule from date of
            default through liquidation breaking out the net interest and
            servicing fees advanced is required.

     3.     Accrued Servicing Fees based upon the Scheduled Principal Balance of
            the Mortgage Loan as calculated on a monthly basis. For
            documentation, an Amortization Schedule from date of default through
            liquidation breaking out the net interest and servicing fees
            advanced is required.

     4-12.  Complete as applicable. All line entries must be supported by copies
            of appropriate statements, vouchers, receipts, bills, canceled
            checks, etc., to document the expense. Entries not properly
            documented will not be reimbursed to the Servicer.

     13.    The total of lines 1 through 12.

     2.     CREDITS:

     14-21. Complete as applicable. All line entries must be supported by copies
            of the appropriate claims forms, EOBs, HUD-1 and/or other proceeds
            verification, statements, payment checks, etc. to document the
            credit. If the Mortgage Loan is subject to a Bankruptcy Deficiency,
            the difference between the Unpaid Principal Balance of the Note
            prior to the Bankruptcy Deficiency and the Unpaid Principal Balance
            as reduced by the Bankruptcy Deficiency should be input on line 20.

     22.    The total of lines 14 through 21.

     PLEASE NOTE: For HUD/VA loans, use line (15) for Part A/Initial proceeds
     and line (16) for Part B/Supplemental proceeds.

     3.     TOTAL REALIZED LOSS (OR AMOUNT OF ANY GAIN)

     23.    The total derived from subtracting line 22 from 13. If the amount
            represents a realized gain, show the amount in parenthesis ( ).

                                      C-6
<PAGE>

EXHIBIT 3A: CALCULATION OF REALIZED LOSS/GAIN FORM 332

                             WELLS FARGO BANK, N.A.
                        CALCULATION OF REALIZED LOSS/GAIN

  Prepared by:  __________________                     Date:  ___________
  Phone:  ______________________   Email Address:_____________________

<TABLE>
<S>                                          <C>                              <C>
          ----------------------------       --------------------------       -----------------------------
          Servicer Loan No.                  Servicer Name                    Servicer Address

          ----------------------------       --------------------------       -----------------------------
</TABLE>

  WELLS FARGO BANK, N.A. Loan No._____________________________

  Borrower's Name:________________________________________________________

  Property Address:__________________________________________________________
  LIQUIDATION AND ACQUISITION EXPENSES:

  (1)  Actual Unpaid Principal Balance of Mortgage Loan  $________________(1)

  (2)  Interest accrued at Net Rate                       ________________(2)

  (3)  Accrued Servicing Fees                             ________________(3)

  (4)  Attorney's Fees                                    ________________(4)

  (5)  Taxes                                              ________________(5)

  (6)  Property Maintenance                               ________________(6)

  (7)  MI/Hazard Insurance Premiums                       ________________(7)

  (8)  Utility Expenses                                   ________________(8)

  (9)  Appraisal/BPO                                      ________________(9)

  (10) Property Inspections                               ________________(10)

  (11) FC Costs/Other Legal Expenses                      ________________(11)

  (12) Other (itemize)                                   $________________(12)

           Cash for Keys__________________________        ________________

           HOA/Condo Fees_________________________        ________________

           _______________________________________        ________________

           _______________________________________        ________________

           TOTAL EXPENSES                                $________________(13)

  CREDITS:
  (14) Escrow Balance                                    $________________(14)

  (15) HIP Refund                                         ________________(15)

  (16) Rental Receipts                                    ________________(16)

  (17) Hazard Loss Proceeds                               ________________(17)

  (18) Primary Mortgage Insurance Proceeds                ________________(18)

  (19) Pool Insurance Proceeds                            ________________(19)

  (20) Proceeds from Sale of Acquired Property            ________________(20)

                                      C-7
<PAGE>

  (21) Other (itemize)                                    ________________(21)

       TOTAL CREDITS                                     $________________(22)

  TOTAL REALIZED LOSS (OR AMOUNT OF GAIN)                $________________(23)

                                      C-8
<PAGE>

                                   SCHEDULE 5

                    STANDARD FILE LAYOUT- SCHEDULED/SCHEDULED

EXHIBIT 1: STANDARD FILE LAYOUT - SCHEDULED/SCHEDULED
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
COLUMN NAME                                        DESCRIPTION                      DECIMAL    FORMAT COMMENT
-----------------------------------------------------------------------------------------------------------------------------------
<S>                             <C>                                                   <C>     <C>
LOAN_NBR                        Loan Number assigned by investor                               Text up to 10 digits
-----------------------------------------------------------------------------------------------------------------------------------
SERVICER LOAN_NBR               Servicer Loan Number                                           Text up to 10 digits
-----------------------------------------------------------------------------------------------------------------------------------
BORROWER_NAME                   Mortgagor name assigned to Note                                Max length of 30
-----------------------------------------------------------------------------------------------------------------------------------
SCHED_PMT_AMT                   P&I constant                                           2       No commas(,) or dollar signs ($)
-----------------------------------------------------------------------------------------------------------------------------------
NOTE_INT_RATE                   Gross Interest Rate                                    4       Max length of 6
-----------------------------------------------------------------------------------------------------------------------------------
NET_RATE                        Gross Interest Rate less the Service Fee Rate          4       Max length of 6
-----------------------------------------------------------------------------------------------------------------------------------
SERV_FEE_RATE                   Service Fee Rate                                       4       Max length of 6
-----------------------------------------------------------------------------------------------------------------------------------
NEW_PAY_AMT                     ARM loan's forecasted P&I constant                     2       No commas(,) or dollar signs ($)
-----------------------------------------------------------------------------------------------------------------------------------
NEW_LOAN_RATE                   ARM loan's forecasted Gross Interest Rate              4       Max length of 6
-----------------------------------------------------------------------------------------------------------------------------------
ARM_INDEX_RATE                  ARM loan's index Rate used                             4       Max length of 6
-----------------------------------------------------------------------------------------------------------------------------------
ACTL_BEG_BAL                    Beginning Actual Balance                               2       No commas(,) or dollar signs ($)
-----------------------------------------------------------------------------------------------------------------------------------
ACTL_END_BAL                    Ending Actual Balance                                  2       No commas(,) or dollar signs ($)
-----------------------------------------------------------------------------------------------------------------------------------
NEXT_DUE_DATE                   Borrower's next due date                                       MM/DD/YYYY
-----------------------------------------------------------------------------------------------------------------------------------
CURT_AMT_1                      Curtailment Amount                                     2       No commas(,) or dollar signs ($)
-----------------------------------------------------------------------------------------------------------------------------------
CURT_DATE_1                     Due date Curtailment was applied to                            MM/DD/YYYY
-----------------------------------------------------------------------------------------------------------------------------------
CURT_ADJ_ AMT_1                 Curtailment Interest if applicable                     2       No commas(,) or dollar signs ($)
-----------------------------------------------------------------------------------------------------------------------------------
CURT_AMT_2                      Curtailment Amount 2                                   2       No commas(,) or dollar signs ($)
-----------------------------------------------------------------------------------------------------------------------------------
CURT_DATE_2                     Due date Curtailment was applied to                            MM/DD/YYYY
-----------------------------------------------------------------------------------------------------------------------------------
CURT_ADJ_ AMT2                  Curtailment Interest if applicable                     2       No commas(,) or dollar signs ($)
-----------------------------------------------------------------------------------------------------------------------------------
CURT_AMT_3                      Curtailment Amount 3                                   2       No commas(,) or dollar signs ($)
-----------------------------------------------------------------------------------------------------------------------------------
CURT_DATE_3                     Due date Curtailment was applied to                            MM/DD/YYYY
-----------------------------------------------------------------------------------------------------------------------------------
CURT_ADJ_AMT3                   Curtailment Interest, if applicable                    2       No commas(,) or dollar signs ($)
-----------------------------------------------------------------------------------------------------------------------------------
SCHED_BEG_BAL                   Beginning Scheduled Balance                            2       No commas(,) or dollar signs ($)
-----------------------------------------------------------------------------------------------------------------------------------
SCHED_END_BAL                   Ending Scheduled Balance                               2       No commas(,) or dollar signs ($)
-----------------------------------------------------------------------------------------------------------------------------------
SCHED_PRIN_AMT                  Scheduled Principal portion of P&I                     2       No commas(,) or dollar signs ($)
-----------------------------------------------------------------------------------------------------------------------------------
                                Scheduled Net Interest (less Service Fee)
SCHED_NET_INT                   portion of P&I                                         2       No commas(,) or dollar signs ($)
-----------------------------------------------------------------------------------------------------------------------------------
                                Liquidation  Principal  Amt to bring  balance  to
LIQ_AMT                         zero                                                   2       No commas(,) or dollar signs ($)
-----------------------------------------------------------------------------------------------------------------------------------
PIF_DATE                        Liquidation Date                                               MM/DD/YYYY
-----------------------------------------------------------------------------------------------------------------------------------
ACTION_CODE                     Either 60 for liquidation or 65 for Repurchase                 Max length of 2
-----------------------------------------------------------------------------------------------------------------------------------
PRIN_ADJ_AMT                    Principal Adjustments made to loan, if applicable      2       No commas(,) or dollar signs ($)
-----------------------------------------------------------------------------------------------------------------------------------
INT_ADJ_AMT                     Interest Adjustment made to loan, if applicable        2       No commas(,) or dollar signs ($)
-----------------------------------------------------------------------------------------------------------------------------------
PREPAYMENT PENALTY AMT          Prepayment penalty amount, if applicable               2       No commas(,) or dollar signs ($)
-----------------------------------------------------------------------------------------------------------------------------------
                                Soldier and Sailor Adjustment amount, if
SOILDER_SAILOR ADJ AMT          applicable                                             2       No commas(,) or dollar signs ($)
-----------------------------------------------------------------------------------------------------------------------------------
NON ADV LOAN AMT                Non Recoverable Loan Amount, if applicable             2       No commas(,) or dollar signs ($)
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

                                   SCHEDULE 6

                SERVICING ADVANCES INCURRED PRIOR TO CUT-OFF DATE

                                      NONE<PAGE>

CONFIDENTIAL                                                       EXHIBIT 10.28

      [*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED
        SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
                REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

                             COLLABORATION AGREEMENT

      This COLLABORATION AGREEMENT (this "Agreement") is made effective as of
the 17th day of December, 2004 (the "Effective Date") by and among ILLUMINA,
INC., a Delaware corporation having its principal place of business at 9885
Towne Centre Drive, San Diego, California, 92121 ("Illumina"), and INVITROGEN
CORPORATION, a Delaware corporation having its principal place of business at
1600 Faraday Avenue, Carlsbad, California, 92008 ("Invitrogen"). Illumina and
Invitrogen are sometimes referred to herein individually as a "Party" and,
collectively, as the "Parties."

                                    RECITALS

      The Parties separately possess intellectual property and have developed
instrumentation, technology and standard operating procedures for the
development, manufacturing and commercialization of oligonucleotides.

      The Parties desire to enter into an exclusive collaboration, pursuant and
subject to the terms of this Agreement, whereby (a) Invitrogen markets, sells
and supports certain oligonucleotides ("Oligos") in tubes and plates to
customers throughout the world, (b) Illumina contributes certain oligonucleotide
synthesis technology, (c) Invitrogen manufactures certain Oligos that are to be
sold to customers throughout the world, excluding North America, and (d)
Illumina manufactures certain Oligos that are to be sold to customers in North
America and certain Oligos that are to be sold to customers throughout the
world.

      NOW, THEREFORE, in consideration of the premises, covenants and agreements
set forth herein, and for other good and valuable consideration, the mutual
receipt and sufficiency of which are hereby acknowledged, and intending to be
legally bound hereby, the Parties hereby agree as follows:

1.    Definitions.

      As used in this Agreement, the following terms, whether used in the
singular or plural, shall have the following meanings:

      "AAA" shall have the meaning set forth in Section 12.1.

      "Affiliate" shall mean any corporation or other business entity (a) in
which a Party owns or controls, directly or indirectly, at least fifty percent
(50%) of the outstanding stock or other voting rights entitled to elect
directors, or (b) which owns or controls, directly or indirectly, at least fifty
percent (50%) of the outstanding stock or other voting rights entitled to elect
directors, of a Party, or (c) which is under common control with a Party,
through ownership or control of at least fifty percent (50%) of the outstanding
stock or other voting rights entitled to elect directors; provided, however, in
any country where the local law does not permit foreign equity participation of
at least fifty percent (50%), then an "Affiliate" includes any company in which
the Party owns or controls or is owned or controlled by, directly or indirectly,
the maximum percentage of outstanding stock or voting rights permitted by local
law.

<PAGE>

CONFIDENTIAL

      "Agreement" shall have the meaning set forth in the preamble.

      "Bankruptcy Code" shall have the meaning set forth in Section 6.5.

      "Big Bird" shall mean the fourth generation synthesis technology currently
in design and development by Illumina for the synthesis of Oligos. Illumina
anticipates that this platform will be capable of synthesizing an estimated [*]
at an estimated starting synthesis scale range of [*].

      "Big Bird Milestone Payment" shall have the meaning set forth in Section
7.2.

      "Build-out Dates" shall mean each of the dates on which Illumina completes
the build-out stages of the collaboration's manufacturing capacity as described
in clauses (a) through (b) of Section 3.1, and Invitrogen completes the
build-out stages of the collaboration's manufacturing capacity as described in
clause (c) of Section 3.1.

      "Budget" shall mean the annual region-by-region pro forma income and
related statements for the Collaboration, covering, among other things, costs
and expenses for capital and facility investments, New R&D Projects and
Marketing Programs.

      "Collaboration" shall mean the collaboration between the Parties hereunder
to jointly develop, manufacture, sell and market, and provide customers with
support services for Joint Products throughout the world upon the terms and
conditions set forth in this Agreement.

      "Collaboration Committee" shall have the meaning set forth in Section 2.1.

      "Collaboration Funding" shall have the meaning set forth in Section 7.1.

      "Collaboration Profits" shall have the meaning set forth in Section 7.7.

      "Commercially Reasonable Efforts" shall mean, with respect to the efforts
to be expended by a Party with respect to any objective, reasonable, diligent,
good faith efforts to accomplish such objective as such Party would normally use
to accomplish a similar objective under similar circumstances.

      "Committee Facility Improvements" shall have the meaning set forth in
Section 7.3.

      "Confidential Information" shall mean all Know-How or other information,
including, without limitation, proprietary information and materials (whether or
not patentable) regarding a Party's technology, products, business information
or objectives, that is designated as confidential by the disclosing Party or is
treated as confidential by the disclosing Party in the regular course of
business. Notwithstanding any failure to expressly designate it as such, all
Know-How related to Big Bird, the VB Oligator(R) and all Oligator(R) Technology
shall be the Confidential Information of Illumina.

[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                       2
<PAGE>

CONFIDENTIAL

      "Controlled" shall mean, with respect to any Intellectual Property Right,
the possession (whether by license (other than a license granted pursuant to
this Agreement) or ownership, or by control over an Affiliate having possession
by license or ownership) by a Party, of the ability to grant to the other Party
access, a license or sublicense without violating the terms of any agreement
with any third party.

      "Cost of Goods" shall have the meaning set forth in Section 7.7.

      "Direct Marketing Budget" shall have the meaning set forth in Section 7.4.

      "Direct Marketing Expenses" shall have the meaning set forth in Section
7.7.

      "Effective Date" shall have the meaning set forth in the preamble to this
Agreement.

      "Foreign G&A" shall have the meaning set forth in Section 7.7.

      "Future Joint Products" shall mean any composition or product which
becomes a Joint Product after the Effective Date by approval by the
Collaboration Committee.

      "GAAP". GAAP shall mean generally accepted accounting principles in the
United States.

      "Illumina" shall have the meaning set forth in the preamble to this
Agreement.

      "Illumina Facility Improvements" shall mean any and all capital purchases
by Illumina acquired with or produced using the Collaboration Funding and/or the
Big Bird Milestone Payment.

      "Illumina Manufacturing Facility" shall mean Illumina's manufacturing
facility currently located in San Diego, California, or any successor facility
or facilities.

      "Illumina Manufacturing Territory" shall mean all of North America.

      "Illumina Marks" shall have the meaning set forth in Section 6.2(d).

      "Illumina Patents" shall have the meaning set forth in Section 6.2(a)

      "Independent Accountants" shall have the meaning set forth in Section 8.3.

      "Industry Communications" shall mean industry communications and Joint
Product press releases, Joint Product branding, commercial trade show
positioning and presence, scientific publications and joint product related
literature.

      "Intellectual Property" shall mean all patents, patent applications, trade
secrets (including proprietary processes, inventions, formulae and ideas),
Know-How, copyrights and other intellectual property and proprietary rights
protectable under the laws of any jurisdiction, together with all rights under
applications therefor and registrations thereof.

                                       3
<PAGE>

CONFIDENTIAL

      "Invitrogen" shall have the meaning set forth in the preamble to this
Agreement.

      "Invitrogen Facility Improvements" shall have the meaning set forth in
Section 7.3.

      "Invitrogen Patents" shall have the meaning set forth in Section 6.1(a)

      "Invitrogen Manufacturing Facility(ies)" shall mean Invitrogen
Manufacturing Facility (Japan) and Invitrogen Manufacturing Facility (Scotland),
or any successor facility or facilities.

      "Invitrogen Manufacturing Facility (Japan)" shall mean Invitrogen's
manufacturing facility currently located in Japan, or any successor facility or
facilities.

      "Invitrogen Manufacturing Facility (Scotland)" shall mean Invitrogen's
manufacturing facility currently located in Scotland, or any successor facility
or facilities.

      "Invitrogen Manufacturing Territory" shall mean all countries of the
world, excluding North America.

      "Invitrogen Marks" shall have the meaning set forth in Section 6.1(d).

      "Joint Intellectual Property" shall have the meaning set forth in Section
6.4.

      "Joint Products" shall mean those products described in Exhibit A and
those Future Joint Products added to the Collaboration by the Collaboration
Committee. For clarity, Joint Products shall not include (a) Oligos made by
Illumina for use with Illumina's arrays or Kits, or (b) Oligos made by
Invitrogen for use with Invitrogen's arrays or Kits.

      "Joint Products Sales Force" shall have the meaning set forth in Section
4.3.

      "Know-How" shall mean any information or materials, whether or not
patentable and whether stored or transmitted in oral, documentary, electronic or
other form, Controlled by a Party during the Term that is necessary or useful
for the development, manufacture or commercialization of Oligos. Know-How may
include, without limitation, ideas, concepts, formulas, methods, procedures,
designs, plans, documents, data, inventions, discoveries, developments,
e-commerce tools, works of authorship, standard operating procedures, quality
control testing procedures, customer service software and any information
relating to research and development plans, experiments, results, trade secrets
and technical, manufacturing, marketing, financial, regulatory, commercial,
personnel and other business information and plans, and any scientific,
clinical, regulatory, marketing, financial and commercial information or data;
in each case, to the extent necessary or useful for the development, manufacture
or commercialization of Oligos.

      "Kit" means a catalog product that consists of both (a) one or more Oligo
components that, if sold as stand-alone items, would constitute Joint Products,
and

                                       4
<PAGE>

CONFIDENTIAL

(b) one or more components that (i) are active ingredients, and (ii) if sold as
stand-alone items, would not constitute Joint Products; provided, however, that
(x) sales bundling of catalog products or Kits with Joint Products do not
constitute a Kit, and (y) custom oligo synthesis components ordered by customers
are not considered components of Kits.

      "LIMS" shall mean laboratory information management systems either
developed or Controlled by Illumina.

      "Marketing Program" shall mean the Joint Product direct advertising,
electronic marketing, marketing programs, and any other items based on
guidelines provided by the Collaboration Committee.

      "Net Sales" shall have the meaning set forth in Section 7.7.

      "New R&D Projects" means defined research and development projects
undertaken to improve or expand the production capabilities of Joint Products,
which, for the avoidance of doubt, shall exclude ongoing research and
development undertaken to maintain the production capabilities of Joint
Products.

      "North America" shall mean the United States of America, Canada, and
Mexico.

      "Oligator(R) Technology" shall mean Intellectual Property Controlled by
Illumina and instrumentation developed by Illumina, in each case, relating to
the development, manufacturing and commercialization of Oligos, including the VB
Oligator, Big Bird and the LIMS, quality control software and business
processing software.

      "Oligo Plates" shall mean (a) Oligos ordered by a customer [ * ] in one
order, in a quantity of Oligos greater than [ * ] (greater than [ * ]), or (b)
plate Oligos ordered by [ * ] customers. For customers that have an established
practice of placing multiple single plate orders during one day, it is the
intent that such orders will be considered a single order.

      "Oligos" shall have the meaning set forth in the Recitals to this
Agreement.

      "Party" shall have the meaning set forth in the preamble to this
Agreement.

      "Performance Monitoring" shall mean monitoring the regional pro forma
income statements for the Collaboration, quality specifications, delivery
specifications and other performance metrics as agreed to by the Collaboration
Committee.

      "Pricing Guidelines" means the Collaboration's global pricing strategy and
range of pricing for the Joint Products, which are subject to review and
revision by the Collaboration Committee at least on an annual basis, taking into
consideration, changes in currency exchange rates, market conditions,
competitive pricing and industry average sales prices.

      "Sales & Marketing" shall have the meaning set forth in Section 7.7.

[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                       5
<PAGE>

CONFIDENTIAL

      "Solely Owned Intellectual Property" shall have the meaning set forth in
Section 6.4.

      "Term" shall mean the period of time beginning on the Effective Date and
ending on the date that this Agreement is terminated in accordance with Section
10.

      "VB Oligator" means the synthesis platform (capable of synthesizing [* ])
developed by Illumina currently used in production at Illumina's North American
manufacturing facility.

      "Website" shall have the meaning set forth in Section 4.4(a).

2.    Management of Collaboration.

      2.1   Formation of Collaboration Committee; Purposes and Principles.
Within fourteen (14) days after the Effective Date, Invitrogen and Illumina
shall establish a committee (the "Collaboration Committee") that will govern,
subject to approval by authorized representatives of the respective Parties, and
have overall responsibility for the success of the Collaboration. The purposes
of the Collaboration Committee will be (i) to determine the overall strategy for
the Collaboration consistent with the terms and conditions of this Agreement,
(ii) to coordinate the Parties' activities hereunder, and (iii) to develop,
approve and effectuate plans for the Collaboration as provided herein. It is the
intent of the Parties to assign responsibilities for the various operational
aspects of the Collaboration to those portions of their respective organizations
which have the appropriate resources, expertise and responsibility for such
functions. The Parties intend that their respective organizations will work
together towards the success of the Collaboration.

      2.2   Membership. The Collaboration Committee shall be composed of an
equal number of representatives appointed by each Party. The Collaboration
Committee shall initially have six (6) members, consisting of three (3)
representatives from each Party; provided that the Collaboration Committee may
change its size from time to time by unanimous consent of its members. A Party's
representatives shall serve at the discretion of such Party and each Party may
replace any of its Collaboration Committee representatives at any time upon
written notice to the other Party. Each representative appointed by a Party
shall have the requisite experience, knowledge and seniority to be able to make
decisions on behalf of such Party with respect to the Collaboration. From time
to time, the Collaboration Committee may establish subcommittees or subordinate
committees (which may or may not include members of the Collaboration Committee
itself) to oversee particular projects or activities, and such subcommittees or
subordinate committees shall be constituted and shall operate as the
Collaboration Committee agrees until such particular projects or activities are
deemed complete or are no longer required as determined by the Collaboration
Committee.

      2.3   Meetings of the Collaboration Committee. The Collaboration Committee
shall hold meetings at such times as it elects to do so, but in no event shall
such meetings be held less frequently than once every calendar quarter. The
Collaboration Committee shall meet alternately at Illumina's facilities in San
Diego, California and Invitrogen's

[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                       6
<PAGE>

facilities in Carlsbad, California or at such locations as the Parties may
otherwise agree (including by audio or video teleconference with the consent of
each Party). With the consent of the representatives of each Party serving on
the Collaboration Committee, other representatives of each Party or of Third
Parties involved in the collaboration may attend meetings of the Collaboration
Committee as nonvoting participants. Each Party shall be responsible for all of
its own expenses of participating in the Collaboration Committee.

      2.4   Specific Responsibilities of the Collaboration Committee. In
addition to its overall responsibility for managing the Collaboration, subject
to approval by the authorized representative of the respective Parties, the
Collaboration Committee shall have exclusive responsibility to:

      (a)   establish Pricing Guidelines and review them at least quarterly, and
            revise as appropriate;

      (b)   create, review and approve Budgets;

      (c)   carry out Performance Monitoring;

      (d)   establish a strategy and an approval process for Industry
            Communications;

      (e)   establish strategy for and review of Marketing Programs;

      (f)   propose, evaluate and select Future Joint Products to become Joint
            Products

      (g)   propose, evaluate and approve the establishment of Oligo
            manufacturing facilities for the production of Joint Products;

      (h)   perform such other functions as appropriate to further the purposes
            of this Agreement as determined by the Parties; and

      (i)   propose, evaluate, monitor and select Collaboration capital
            expenditures and New R&D Projects.

      (j)   monitor progress of Big Bird development and post synthesis
            automation.

      2.5   Decision-Making. All decisions of the Collaboration Committee shall
be made by unanimous vote of the Parties, with each Party's representatives
collectively having one (1) vote on behalf of such Party regardless of the
number of representatives in attendance. Any deadlocks in disputes arising from
the Collaboration Committee shall be promptly referred to a designated
representative selected by the Parties' respective Chief Executive Officers
("Representatives") or equivalent for resolution. If the Representatives cannot
resolve such dispute, the parties shall agree to a binding arbitration process
as set forth in section 12.

                                       7
<PAGE>

CONFIDENTIAL

      2.6   Management Team. Each Party shall appoint a senior representative
(who may be a member of the Collaboration Committee) to act as its project
coordinator for all of the activities contemplated under this Agreement. Such
project coordinators will be responsible for the day-to-day worldwide
coordination of the Collaboration and will serve to facilitate communication
between the Parties. Such project coordinators will be experienced in project
management and have a general understanding of development, regulatory,
manufacturing and sales and marketing issues.

      2.7   Collaboration Guidelines.

      (a)   General. In all matters related to the Collaboration, the Parties
shall strive to balance as best they can the legitimate interests and concerns
of the Parties and to realize the economic potential of the Joint Products and
each Party agrees to use Commercially Reasonable Efforts to carry out the
activities assigned to such Party in this Agreement and/or by the Collaboration
Committee. In conducting activities under this Agreement, neither Party shall
intentionally prejudice the value of any Joint Product by reason of such Party's
activities outside of the Collaboration; provided that nothing in this Agreement
is intended to require either Party to limit or prejudice the development or
commercialization of products that are not Joint Products (including any Oligos
or products based thereon, including Invitrogen's modified, purified, large
scale and specialty Oligos). Each Party acknowledges that the other Party is in
the business of developing, manufacturing and selling Oligos (or products
requiring Oligo synthesis) that are not Joint Products and nothing in this
Agreement shall be construed as restricting such businesses or imposing a duty
to market and/or sell and exploit the Joint Products to the exclusion of, or in
preference to, any other product or process, or in any way other than in
accordance with its normal commercial practices.

      (b)   Independence. Subject to the terms of this Agreement, the activities
and resources of each Party shall be managed by such Party, acting independently
and in its individual capacity. Nothing in this Agreement shall constitute or
create a joint venture, partnership, or any other similar arrangement between
the Parties. Neither Party is authorized to act as agent for the other Party and
neither Party shall have the power to bind or obligate the other Party in any
manner.

      (c)   Compliance with Applicable Law. Each Party agrees to conduct all of
its activities in furtherance of or in connection with the Collaboration in
compliance with all applicable laws and regulations.

      2.8   Actions by Affiliates. Any action required to be performed by a
Party under this Agreement may be performed by an Affiliate of such Party;
provided, however that such Party shall (a) not thereby be relieved of any of
its responsibilities under this Agreement, and (b) be jointly and severally
responsible with such Affiliate for failure by such Affiliate to comply with all
relevant restrictions, limitations and obligations in this Agreement.

      2.9   Exhibits. In the event that the Parties do not revise or amend
Exhibits B and/or C prior to 2011, and except as otherwise provided in this
Agreement, the amounts

                                       8
<PAGE>

CONFIDENTIAL

and percentages set forth in Exhibits B and/or C applicable to the calendar year
2010 shall be the amounts and percentages applicable to all calendar years
following 2010 for the purposes of this Agreement.

3.    Early Stage Capacity Build-Out; Middleware; Joint Products.

      3.1   Manufacturing Build-out. Following the Effective Date, Illumina will
initiate the phased build-out of the Collaboration's manufacturing capacity in
the following stages:

(a)   Stage 1: When Illumina has the capability contemplated by this Agreement
      to fulfill orders of plate-based Joint Products from Invitrogen at the
      Illumina Manufacturing Facility;

(b)   Stage 2: When Illumina has the capability contemplated by this Agreement
      to support tube-based Joint Product manufacturing at the Illumina
      Manufacturing Facility; and

(c)   Stage 3: When Invitrogen has the capability to use VB Oligators in both
      Invitrogen Manufacturing Facilities, and such instrumentation is fully
      validated and demonstrated to be ready to receive and manufacture Oligo
      orders as contemplated by this Agreement.

      3.2   Middleware. Following the Effective Date, Illumina and Invitrogen
will co-develop e-commerce and middleware systems to enter, validate and route
tube and plate Joint Product orders.

      3.3   Drying Instrumentation. It is contemplated that Invitrogen will be
reducing the Oligo production capacity of its manufacturing facility in
Frederick, Maryland. As such production capacity diminishes, Invitrogen shall
deliver to Illumina, at Invitrogen's book value, such of Invitrogen's
proprietary Oligo drying instrumentation (devices for drying Oligos in tubes and
plates) and related standard operating procedures used in connection with such
instrumentation as are no longer required by Invitrogen. Upon the termination of
this Agreement, Illumina shall, at Invitrogen's request, deliver to Invitrogen
all such proprietary Oligo drying instrumentation at Illumina's then current
book value plus delivery costs, subject to an arbitration decision that provides
otherwise from Section 12.

4.    Marketing and Sales.

      4.1   Marketing. Invitrogen will have the primary responsibilities for
global marketing activities, including account-specific pricing consistent with
the Pricing Guidelines. Invitrogen will promote the Joint Products in accordance
with this Agreement and Collaboration Committee guidelines. Subject to Section
6.2(d), all Joint Products will be co-branded globally with primary Invitrogen
branding and prominent secondary Illumina branding as approved by the
Collaboration Committee.

                                       9
<PAGE>

CONFIDENTIAL

      4.2   Sales. Invitrogen will have exclusive responsibilities for Joint
Product sales and will book and recognize the revenue from the sales. Invitrogen
will have responsibility for billing the end customer and for collections.
Illumina will work with Invitrogen to make summary data available related to
work in process and shipped orders to facilitate billing.

      4.3   Sales Force. Following the Stage 2 Build-out Date, Invitrogen shall
employ a Joint Products sales force whose sole sales responsibility will be to
sell Joint Products ("Joint Products Sales Force") that will have at least [ * ]
members. The Joint Products Sales Force's exclusive sales responsibility shall
be to both serve as Oligo specialists focused on high value opportunities and
support the general Invitrogen sales force in selling Joint Products. [ * ]

      4.4   Order Taking and Routing.

      (a)   Website. Invitrogen will host an order taking front end website for
use with ordering of Joint Products ("Website") co-developed with Illumina that
enables customers to order Joint Products. The Website will be accessible
through Invitrogen's Invitrogen.com website. Invitrogen's Oligo design tools
(e.g., LUX(TM), RNA), which will continue to be hosted at Invitrogen.com
website, will also be integrated into the Website. For the avoidance of doubt,
the Parties agree and acknowledge that neither LUX(TM) (comprised of one labeled
and one unmodified Oligo) nor RNA Oligos are or shall be treated as Joint
Products under this Agreement.

      (b)   Fax and Email Orders. Invitrogen will receive all email and fax
orders for Joint Products and enter them into the order entry mechanisms.
Invitrogen will maintain sufficient customer service personnel to enter e-mail-
and fax-based orders. Invitrogen will use Commercially Reasonable Efforts to
induce customers to use low transaction cost order channels.

      (c)   Order Processing. Invitrogen shall comply with the following
order-routing protocol:

            (i)   After the Stage 1 Build-out Date, all orders for Oligo Plates
      that are Joint Products, which are to be sold anywhere in the world
      (including the Illumina Manufacturing Territory and/or the Invitrogen
      Manufacturing Territory)

[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                       10
<PAGE>

CONFIDENTIAL

      shall be routed to the Illumina Manufacturing Facility; provided that the
      Collaboration Committee may permit exceptions either on a case-by-case
      basis or via establishment of criteria to accommodate specific customer
      requirements;

            (ii)  After the Stage 2 Build-out Date, all orders for tube-based
      Joint Products to be sold into the Illumina Manufacturing Territory shall
      be routed to the Illumina Manufacturing Facility; provided that the
      Collaboration Committee may permit exceptions either on a case-by-case
      basis or via establishment of criteria, when critical, to accommodate
      specific customer requirements;

            (iii) All orders for Joint Products (other than orders for Oligo
      Plates) to be sold into the Invitrogen Manufacturing Territory shall be
      routed to the applicable Invitrogen Manufacturing Facility; provided that
      Collaboration Committee may permit exceptions either on a case-by-case
      basis or via establishment of criteria to accommodate specific customer
      requirements;

            (iv)  In the event that the Collaboration Committee approves the
      establishment of additional manufacturing facilities for the manufacture
      of Joint Products, the Collaboration Committee may develop a routing
      protocol for these additional facilities.

      4.5   Customer Service; Technical Support. Invitrogen will provide
customer service and technical support to all Joint Product customers. Illumina
will establish a point of contact who will be available to assist Invitrogen in
resolving customer service and technical support issues arising from Joint
Products manufactured at the Illumina Manufacturing Facility.

      4.6   Diligence. Invitrogen agrees to use Commercially Reasonable Efforts
to allocate and focus the appropriate sales and marketing resources to
substantiate the fixed sales and marketing allocation expenses outlined in
Exhibit B line item 5 in promoting and selling Joint Products. During the first
(2) two years of the Collaboration, any changes in the Joint Products Sales
Force in number or region shall be approved by the Collaboration Committee.
Nothing in the foregoing shall prevent Invitrogen from ceasing at any time, in
its sole discretion, to employ any member of the Joint Products Sales Force for
cause, provided only that Invitrogen use Reasonable Commercial Efforts to
promptly replace such individual. Thereafter, Invitrogen will be responsible for
the size and staffing of the Joint Products Sales Force.

      4.7   End-User Agreement. The Collaboration Committee shall approve all
forms of end-user agreements to be used in sales of Joint Products to customers.
Nothing in the foregoing shall imply that the Collaboration Committee shall have
any approval rights over Invitrogen's standard terms of sale, which shall govern
the majority of sales. A copy of Invitrogen's current standard terms of sale is
attached hereto as Exhibit E. Invitrogen at its sole discretion may change such
standard terms of sale from time to time; provided that such standard terms are
not inconsistent with standard terms for all other Invitrogen products, and
Invitrogen shall provide a copy to Illumina.

                                       11
<PAGE>

CONFIDENTIAL

5.    Manufacturing.

      5.1   Illumina Manufacturing. Illumina shall exclusively manufacture all
Joint Products to be sold into the Illumina Manufacturing Territory and Joint
Products that are Oligo Plates to be sold anywhere in the world. Invitrogen
shall obtain its supply of Joint Products to be sold into the Illumina
Manufacturing Territory and its supply of Joint Products that are Oligo Plates
exclusively from Illumina. Illumina will implement the quality controls set
forth on Exhibit D-1 for the manufacture of tube and plate Joint Products at the
Illumina Manufacturing Facility. Illumina will work with Invitrogen to develop
capability to make readily available the summary of manufacturing status and
quality-control data to Invitrogen customer service and technical support staff
for supporting Joint Product customers. Illumina will utilize its
post-processing capabilities described in Exhibit D-1. Illumina will develop its
pick, pack and ship capabilities to accommodate tube orders and to support
combined volume of Joint Products and forecast growth as outlined by the
Collaboration Committee. Illumina will further endeavor to automate its pick,
pack and ship capabilities to accommodate increased volume of Joint Products.
Illumina shall conduct the activities described in this Section 5.1 in
accordance with such additional summary quality control data and other
specifications adopted by the Collaboration Committee from time to time.

      5.2   Invitrogen Manufacturing.

      (a)   Invitrogen shall exclusively manufacture Joint Products (other than
Oligo Plates) to be sold into the Invitrogen Manufacturing Territory.

      (b)   Within three (3) months of Big Bird becoming operational in the
Illumina Manufacturing Facility, Illumina will deliver to Invitrogen's
Affiliates that operate the two current Invitrogen Manufacturing Facilities [ *
] VB Oligators per Invitrogen Manufacturing Facility solely for the purpose of
manufacturing Joint Products subject to the license granted in Section 6 of this
Agreement; provided, however, that (i) Illumina will use Commercially Reasonable
Efforts to deliver such VB Oligators within [ * ] following the Effective Date,
and (ii) Illumina will in no event deliver such VB Oligators later than [ * ]
after the Effective Date. Illumina will provide to Invitrogen (i) Illumina's
expertise and technical support at the Invitrogen Manufacturing Facilities to
facilitate the establishment of the manufacturing and related capabilities
efficiently and effectively, and (ii) the quality control systems identified on
Exhibit D-2 for use by Invitrogen's Affiliates solely at the Invitrogen
Manufacturing Facilities. Invitrogen shall reimburse Illumina for Illumina's
costs (including, the then-current book value of the VB Oligators, installation
costs, and delivery costs) out of Invitrogen's [ * ]-per-Invitrogen
Manufacturing Facility funding described in Section 7.3; provided, however, in
the event that new VB Oligators must be built for Invitrogen, the purchase price
of such new VB Oligators to Invitrogen shall not exceed the then book value of
the existing VB Oligators that the parties contemplated would have been provided
to Invitrogen under this Agreement. Illumina shall not charge Invitrogen for the
cost of assembling such VB Oligators in the event that such VB Oligators have
not been assembled. Invitrogen shall own the VB Oligators it purchases. Upon
termination of this Agreement, Invitrogen shall, at Illumina's request, resell
to

[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                       12
<PAGE>

CONFIDENTIAL

Illumina all VB Oligators at Invitrogen's then current book value plus delivery
costs, subject to an arbitration decision that provides otherwise from Section
12.

      (c)   Invitrogen will establish, with Illumina technical support, low-cost
manufacturing, which will require additional automation for formatting and
handling tubes in the Invitrogen Manufacturing Facilities, the costs for which
are included in the [ * ]-per-Invitrogen Manufacturing Facility funding
described in Section 7.3. Invitrogen will be responsible for facilitating all
pick, pack and ship requirements in the Invitrogen Manufacturing Facilities.
Invitrogen shall conduct the activities described in this Section 5.2 in
accordance with such additional quality control and other specifications adopted
by the Collaboration Committee from time to time.

      5.3   Additional Manufacturing Facilities. Except as expressly authorized
in this Section 5 or by the Collaboration Committee, neither Party shall be
permitted to (a) prepare or establish any additional Oligo manufacturing
facilities or capacity with the intent to produce Joint Products, or (b) build
out existing manufacturing facilities with the intent or capability to produce
Joint Products. Following the Effective Date, the Collaboration Committee may
authorize one or both Parties to establish additional manufacturing facilities
utilizing the [ * ] VB Oligator instrument set-up utilized by the Invitrogen
Manufacturing Facilities (as described in Section 5.2) to manufacture Joint
Products to be sold into the Invitrogen Manufacturing Territory.

      5.4   Cost Containment. The Collaboration Committee will work together to
achieve lowest practical Cost of Goods by (a) introducing and maintaining best
practices among the Illumina Manufacturing Facility and the Invitrogen
Manufacturing Facilities, and (b) minimizing raw materials and overhead costs,
and (c) increasing efficiency.

6.    Intellectual Property.

      6.1   Invitrogen Grants.

      (a)   Invitrogen hereby grants during the Term, under Intellectual
Property Controlled by Invitrogen (other than the Invitrogen Marks) that, but
for the license granted in this Section 6.1(a) would be infringed or otherwise
violated, to Illumina a royalty-free (except to the extent that royalties are
owed to third party licensors, in which event such royalties shall be deducted
by Invitrogen in determining Net Sales), non-exclusive right and license, with
the right to grant sublicenses only as permitted under Section 6.3, solely to
manufacture the Joint Products at the Illumina Manufacturing Facility. An
initial list of the patents and patent applications to be licensed pursuant this
subparagraph is listed on the attached Exhibit F, and shall be referred to as
"Invitrogen Patents". Invitrogen Patents shall also include all continuing
applications including divisions, substitutions, and continuations-in-part, and
any patents issuing on any of the foregoing applications including reissues,
reexaminations and extensions; and all foreign applications and patents
corresponding to any of the foregoing.

      (b)   Invitrogen hereby grants during the Term, under all Intellectual
Property Controlled by Invitrogen (other than the Invitrogen Marks) that, but
for the license granted in this Section 6.1(b) would be infringed or otherwise
violated, to Illumina a royalty-free (except to the extent that royalties are
owed to third party licensors, in which

[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                       13
<PAGE>

CONFIDENTIAL

event such royalties shall be deducted by Invitrogen in determining Net Sales),
non-exclusive right and license, with the right to grant sublicenses only as
permitted under Section 6.3, solely to enable Illumina to perform its
obligations under this Agreement relating to the commercialization of Joint
Products.

      (c)   Invitrogen hereby grants, under all Intellectual Property that (i)
Invitrogen develops during the Term, and (ii) was developed by funding approved
by the Collaboration Committee, to Illumina a perpetual, royalty-free (except to
the extent that royalties are owed to third party licensors, in which event such
royalties shall be deducted by Invitrogen in determining Net Sales),
non-exclusive right and license, with the right to grant sublicenses only as
permitted under Section 6.3, to manufacture, use or sell Oligos. Such rights
shall survive termination of this Agreement.

      (d)   Invitrogen hereby grants Illumina during the Term, a limited,
royalty-free, non-exclusive right and license, with the right to grant
sublicenses only as permitted under Section 6.3, to the use of certain of its
trademarks and service marks, trade names and logos to be specifically
identified by Invitrogen (collectively hereinafter referred to as "Invitrogen
Marks") solely in connection with the commercialization activities provided for
in this Agreement. Illumina agrees to comply with Invitrogen's guidelines
delivered to Illumina from time to time with respect to manner of use, and to
maintain the quality standards of Invitrogen with respect to the goods sold and
services provided in connection with the Invitrogen Marks. Illumina recognizes
and agrees that no ownership rights are vested or created by the limited rights
of use granted to Illumina in connection with this use of the Invitrogen Marks,
and that all use thereof inures to the benefit of Invitrogen. Further, Illumina
shall submit to Invitrogen any materials bearing the Invitrogen Marks for review
and approval prior to the use thereof and shall make no use of the Invitrogen
Marks without Invitrogen's prior written consent. Each Party shall execute any
documents required in the reasonable opinion of the other Party for Illumina to
be entered as a "registered user" or recorded licensee of the Invitrogen Marks,
or to be removed as registered user or licensee thereof.

      6.2   Illumina Grants.

      (a)   Illumina hereby grants during the Term, under all Intellectual
Property Controlled by Illumina (other than the Illumina Marks) that, but for
the license granted in this Section 6.2(a) would be infringed or otherwise
violated, to Invitrogen a royalty-free (except to the extent that royalties are
owed to third party licensors, in which event such royalties shall be deducted
by Invitrogen in determining Net Sales, or added to Cost of Goods by Illumina,
as applicable), non-exclusive right and license, with the right to grant
sublicenses only as permitted under Section 6.3, solely to manufacture the Joint
Products at the Invitrogen Manufacturing Facilities. An initial list of the
patents and patent applications to be licensed pursuant this subparagraph is
listed on the attached Exhibit G, and shall be referred to as "Illumina
Patents". Illumina Patents shall also include all continuing applications
including divisions, substitutions, and continuations-in-part, and any patents
issuing on any of the foregoing applications including reissues, reexaminations
and extensions; and all foreign applications and patents corresponding to any of
the foregoing.

                                       14
<PAGE>

CONFIDENTIAL

      (b)   Illumina hereby grants during the Term, under all Intellectual
Property Controlled by Illumina (other than the Illumina Marks) that, but for
the license granted in this Section 6.2(b) would be infringed or otherwise
violated, to Invitrogen a royalty-free (except to the extent that royalties are
owed to third party licensors, in which event such royalties shall be deducted
by Invitrogen in determining Net Sales, or added to Cost of Goods by Illumina,
as applicable), non-exclusive right and license, with the right to grant
sublicenses only as permitted under Section 6.3, solely to enable Invitrogen to
perform its obligations under this Agreement relating to the commercialization
of Joint Products.

      (c)   Illumina hereby grants, under all Intellectual Property that (i)
Illumina develops during the Term, and (ii) was developed with the Collaboration
Funding, Big Bird Milestone Payment, and/or funding approved by the
Collaboration Committee, to Invitrogen a perpetual, royalty-free (except to the
extent that royalties are owed to third party licensors, in which event such
royalties shall be deducted by Invitrogen in determining Net Sales, or added to
Cost of Goods by Illumina, as applicable), non-exclusive right and license, with
the right to grant sublicenses only as permitted under Section 6.3 to
manufacture, use or sell Oligos. Such rights shall survive termination of this
Agreement.

      (d)   Illumina hereby grants Invitrogen during the Term, a limited,
royalty-free, non-exclusive right and license, with the right to grant
sublicenses only as permitted under Section 6.3, to the use of certain of its
trademarks and service marks, trade names and logos to be specifically
identified by Illumina (collectively hereinafter referred to as "Illumina
Marks") solely in connection with the commercialization activities provided for
in this Agreement. Invitrogen agrees to comply with Illumina's guidelines
delivered to Invitrogen from time to time with respect to manner of use, and to
maintain the quality standards of Illumina with respect to the goods sold and
services provided in connection with the Illumina Marks. Invitrogen recognizes
and agrees that no ownership rights are vested or created by the limited rights
of use granted to Invitrogen in connection with this use of the Illumina Marks,
and that all use thereof inures to the benefit of Illumina. Further, Invitrogen
shall submit to Illumina any materials bearing the Illumina Marks for review and
approval prior to the use thereof and shall make no use of the Illumina Marks
without Illumina's prior written consent. Each Party shall execute any documents
required in the reasonable opinion of the other Party for Invitrogen to be
entered as a "registered user" or recorded licensee of the Illumina Marks, or to
be removed as registered user or licensee thereof.

      6.3   Sublicensing and Extension of Rights. Either Party may, subject to
the prior written approval of the other Party on a case-by-case basis,
sublicense its rights under the licenses granted pursuant to Section 6.1 or 6.2,
as the case may be; provided, however, that no consent or approval shall be
required for either Party to extend such a sublicense to its Affiliates and/or
third party distributors for Joint Products. All such sublicenses (other than
sublicenses to Affiliates and/or third party distributors for Joint Products)
shall be granted pursuant to a written agreement that subjects the sublicensee
to all relevant restrictions, limitations and obligations in this Agreement;
provided, that no such sublicensee shall be permitted to further sublicense. A
Party sublicensing its rights pursuant to this Section 6.3 shall be jointly and
severally responsible with each of its

                                       15
<PAGE>

CONFIDENTIAL

sublicensees (including its Affiliates) for failure by such sublicensee to
comply with all relevant restrictions, limitations and obligations in this
Agreement.

      6.4   Ownership; Reservation of Rights. The Parties shall jointly own all
inventions and Intellectual Property developed jointly during the term of this
Agreement by employees, agents and consultants of Invitrogen, on the one hand,
and employees, agents and consultants of Illumina, on the other hand, on the
basis of each Party having an undivided interest in the whole (collectively,
"Joint Intellectual Property"). Other than Joint Intellectual Property, each
Party shall own, to the exclusion of the other Party, all inventions and
Intellectual Property developed by such Party, its employees, agents and
consultants (collectively, "Solely Owned Intellectual Property"). For purposes
of determining whether an invention or Intellectual Property Right is Joint
Intellectual Property or Solely-Owned Intellectual Property, questions of
inventorship and/or ownership shall be resolved in accordance with applicable
United States laws. Each Party reserves all rights not expressly granted in this
Agreement, and no licenses are granted by such Party under this Agreement,
whether by implication, estoppel or otherwise, except as expressly set forth
herein and nothing in this Agreement is intended to be or should be construed as
an assignment of any Intellectual Property Controlled by either Party prior to
the Effective Date or thereafter.

      6.5   Bankruptcy. All rights and licenses granted pursuant to this
Agreement are, for purposes of Section 365(n) of Title 11 of the United States
Code, as amended, and any foreign equivalents thereof ("Bankruptcy Code"),
licenses of rights to "intellectual property" as such term is used in Bankruptcy
Code. Each Party in its capacity as a licensor hereunder agrees that, in the
event of the commencement of bankruptcy proceedings by or against such Party
under Bankruptcy Code, the other Party, in its capacity as a licensee of rights
under this Agreement, shall retain and may fully exercise all of such licensed
rights under this Agreement (including the license granted hereunder) and all of
its rights and elections under Bankruptcy Code.

      6.6   Infringement by Third Parties. Each Party shall promptly notify the
other Party in writing of any suspected, alleged or threatened infringement or
violation of any Intellectual Property Controlled by either Party that covers
the manufacture, use or sale of the Joint Products which it becomes aware. The
Party Controlling the Intellectual Property suspected, alleged or threatened to
be infringed shall have the right, but not the obligation, to control the
prosecution of any infringement or violation. In the event that such Party
brings an infringement action in accordance with this Section 6.6, the other
Party shall cooperate fully, including, if required to bring such action, the
furnishing of a power of attorney. If one Party brings any such action or
proceeding, the other Party agrees to be joined as a party plaintiff and to give
the first Party reasonable assistance and authority to file and prosecute the
suit. The costs of any litigation commenced pursuant to this Section 6.6,
including attorneys' fees and expenses, shall be borne by the Party commencing
such litigation. The Party bringing or threatening such litigation shall be
entitled to any recovery realized as a result of any settlement or litigation.

      6.7   Defense and Settlement of Third-Party Claims Against Joint Products.
If a third party asserts that an Intellectual Property right Controlled by it is
infringed or

                                       16
<PAGE>

CONFIDENTIAL

otherwise violated by the manufacture, use or sale of any Joint Product, the
Party first obtaining knowledge of such a claim shall immediately provide the
other Party notice of such claim and the related facts in reasonable detail. In
such event, except for third party claims covered by Sections 11.5 or 11.6:

            (a)   the Parties shall determine how best to control the defense of
      any such claim (including the bringing of a declaratory judgment action)
      with respect to the Joint Products;

            (b)   The Party receiving the claim shall have the right, but not
      the obligation, to control such defense, and in such event the other Party
      shall cooperate in the defense and shall have the right to be represented
      separately by counsel of its own choice;

            (c)   The Party (whether Invitrogen or Illumina) that controls the
      defense of a given claim with respect to Joint Products shall also have
      the right to control settlement of such claim; provided, however, that if
      one Party controls, no settlement shall be entered into without the
      consent of the other Party if such settlement would adversely affect the
      interests of such other Party in a manner different from the interests of
      the defending Party; and

            (d)   The expenses of defending and/or settling a third-party claim
      relating to Joint Products shall be a shared expense of the Parties.

7.    Financial Provisions.

      7.1   Collaboration Funding. Invitrogen shall pay to Illumina a
non-refundable, non-creditable, collaboration payment of $2,300,000 (the
"Collaboration Funding") in accordance with the following schedule:

      (a)   $1,200,000 million within fifteen (15) days of the Effective Date;
            and

      (b)   $1,100,000 within three (3) months following the Effective Date.

      7.2   Big Bird Milestone Payment. Invitrogen shall pay to Illumina a
non-refundable, non-creditable, milestone payment of $1,100,000 ("Big Bird
Milestone Payment") upon delivery of the Big Bird synthesis platform to the
Illumina Manufacturing Facility with a commercially reasonable demonstration of
the ability of the Big Bird to manufacture to the expected scale and to
specifications no less stringent than those specified for VB Oligators-made
Oligos, such that the VB Oligators then being operated may be delivered to an
Invitrogen Manufacturing Facility.

      7.3   Invitrogen Manufacturing Facility Funding. With respect to each of
the Invitrogen Manufacturing Facilities, the first [ * ] in capital costs and
expenses as described in Section 5.2(b) incurred in preparing each such
Invitrogen Manufacturing Facility shall be paid by Invitrogen ("Invitrogen
Facility Improvements"). Of such [ * ] per Invitrogen Manufacturing Facility in
capital costs and expenses, it is anticipated that approximately [ * ] will be
allocated to the purchase of the

[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                       17
<PAGE>

CONFIDENTIAL

VB Oligators described in Section 5.2(b), provided that the actual amount so
allocated will be the book value of the VB Oligators as of the date of transfer
by Illumina. All additional financial expenditures required for improving the
Invitrogen Facility Improvements must be approved by the Collaboration Committee
("Committee Facility Improvements") and shall be borne equally by the Parties.

      7.4   Direct Marketing Budget. The Collaboration Committee will approve
and oversee the implementation of a rolling twelve (12) month direct marketing
budget ("Direct Marketing Budget"). The aggregate amount that the Collaboration
Committee is permitted to allocate to the Direct Marketing Budget shall be:

      (a)   for calendar year 2005, [ * ] of Net Sales forecasted for 2005 on
            Exhibit B;

      (b)   for calendar year 2006, an amount not less than [ * ] and no greater
            than [ * ] of Net Sales in 2006; and

      (c)   for the calendar year 2007 and each calendar year thereafter, an
            amount not less than [ * ] and no greater than [ * ] of Net Sales in
            such year.

The Direct Marketing Budget funds will be used by the Collaboration Committee
for Marketing Programs.

      7.5   Additional Collaboration Funding Generally. Subject to Section 7.1
through 7.4, the Parties shall share equally in all costs and expenses
associated with Collaboration capital purchases (e.g., for Committee Facility
Improvements described in Section 7.3), New R&D Projects and any other
expenditures, in each case, approved by the Collaboration Committee. Except as
otherwise set forth in this Agreement, each Party shall otherwise be responsible
for the costs and expenses incurred in performing its obligations under this
Agreement, including sales and marketing expenses and the costs and expenses of
operating the Parties' respective manufacturing facilities. It is understood
that sustained manufacturing support for the Parties' respective manufacturing
facilities shall be treated as a cost and expense of the respective
manufacturing facilities, to be funded by the Party operating such facility, and
shall not be treated as a capital expenditure or New R&D Project.

      7.6   Purchases of Joint Products. Joint Products manufactured at the
Illumina Manufacturing Facility for delivery to customers shall be purchased by
Invitrogen as follows:

      (a)   In respect of the sale of such Joint Products to Invitrogen,
Illumina shall invoice Invitrogen for the Cost of Goods of Joint Products
manufactured at the Illumina Manufacturing Facility, FCA shipping point.
Invitrogen shall bear the risk of loss during shipment, and shall pay for all
other expenses, including shipping expenses and insurance, which shall not be
included in Cost of Goods for purposes of calculating Collaboration Profits.

[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                       18
<PAGE>

CONFIDENTIAL

      (b)   Invitrogen shall pay the amount invoiced within forty-five (45) days
after the date of invoice.

      (c)   In the event that Illumina is unable to fill customer orders for
Joint Products in a timely basis, Invitrogen may fill such customer orders.

      (d)   Any excess and obsolete inventory related to customer orders for
Joint Products and cancelled customer orders shall be purchased by Invitrogen,
and Illumina shall invoice Invitrogen for the cost of goods of such excess and
obsolete inventory of Joint Products.

      7.7   Profit Sharing. Within fourteen (14) business days following the end
of each calendar quarter, Invitrogen shall pay to Illumina an amount equal to
fifty percent (50%) of the Collaboration Profits for that calendar quarter. For
the purpose of this Agreement:

(a)   "Collaboration Profits" shall mean Net Sales minus (i) Cost of Goods, (ii)
      Sales and Marketing, (iii) Direct Marketing Expenses, and (iv) Foreign G&A
      (i.e., Net Sales - (Cost of Goods + Sales and Marketing + Direct Marketing
      Expenses + Foreign G&A)).

(b)   "Net Sales" shall mean the gross sales revenues for Joint Products sold by
      Invitrogen and/or its Affiliates minus deductions for (i) import, export,
      excise, sales, value added and use taxes, custom duties, any and all
      freight and insurance expenses related to shipment of Joint Products; (ii)
      trade discounts (but not free samples) given in accordance with the
      Pricing Guidelines; (iii) credits for returns, allowances or trades,
      actually granted; and (iv) royalties paid by Invitrogen to third party
      licensors resulting from the manufacture, use or sale of Joint Products.
      For the purposes of calculating Net Sales, (1) with respect to Joint
      Products sold in a given month, the gross sales revenues shall be deemed
      to be the greater of (x) the amount that Invitrogen invoices its customers
      in the aggregate for Joint Products, or (y) the aggregate amount for such
      Joint Products based on the Pricing Guidelines; and (2) with respect to
      each order of Joint Products that are bundled with non-Joint Products
      offered by Invitrogen, the gross sales revenues attributable to such order
      shall be deemed to be the greater of (x) the amount that Invitrogen
      invoices the customer for said order in respect of the Joint Products
      included in the order, or (y) the average price that Invitrogen charges
      customers for similar volume purchases of such Joint Products that are not
      bundled with non-Joint Products.

(c)   "Cost of Goods" shall mean (i) with respect to Joint Products manufactured
      at the Illumina Manufacturing Facility, Illumina's actual cost of goods as
      determined by GAAP, excluding, however, depreciation recognized in
      connection with the Illumina Facility Improvements, and (ii) with respect
      to Joint Products synthesized at one of the Invitrogen Manufacturing
      Facilities, Invitrogen's actual cost of goods to synthesize the Joint
      Products as determined by GAAP; provided, however, that (x) so long as [ *
      ] of the sales forecasts for each site set forth in

[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                       19
<PAGE>

CONFIDENTIAL

      Exhibit C are met or exceeded, the cost-per-base charge of unmodified
      Oligo Joint Products shall not, for the purposes of clauses 7.7(c)(i) and
      (ii), [ * ] of the cost-per-base forecasts set forth in Exhibit C, and (y)
      for the purposes of clause 7.7(c)(i) only, the cost-per-base amount of
      unmodified Oligo Joint Products manufactured at the Illumina Manufacturing
      Facility shall not be [ * ] of the cost-per-base forecasts set forth in
      Exhibit C. The cost-per-base forecasts and variance will be reviewed
      annually and adjusted if agreed to by the Collaboration Committee. For
      years after 2010, the cost-per-base charge for such years shall not be [ *
      ] or [ * ] used to determine Cost of Goods for such prior year, in
      accordance with this paragraph. The cost-per-base forecast for the
      Invitrogen Manufacturing Facilities are estimates, since those facilities
      are not currently manufacturing Joint Products and the Parties do not have
      a historical basis for estimating costs. The Parties agree that the
      cost-per-base forecast for the Invitrogen Manufacturing Facilities shall
      be reviewed and adjusted by the Collaboration Committee, based on actual
      costs, once such facilities commence production of Joint Products. Subject
      to the foregoing, depreciation recognized in connection with the
      Invitrogen Facility Improvements and the Committee Facility Improvements
      shall be included in the Cost of Goods; however, depreciation recognized
      in connection with the Illumina Facility Improvements shall be excluded
      from the Cost of Goods. Cost of Goods will also exclude inventory
      obsolescence.

(d)   "Sales & Marketing" shall mean an amount equal to [* ] of Net Sales. Sales
      and Marketing costs shall exclude reserves for bad debt.

(e)   "Direct Marketing Expenses" shall mean the amount Invitrogen actually
      spent in support of Marketing Programs, provided, however, that for a
      given calendar year, such amount shall not exceed the Direct Marketing
      Budget for that calendar year.

(f)   "Foreign G&A" shall mean an amount equal to [ * ] of Net Sales for Joint
      Products that are (i) manufactured at Invitrogen Manufacturing Facilities,
      or (ii) manufactured at the Illumina Manufacturing Facility and sold in
      the Invitrogen Manufacturing Territory.

      7.8   Delinquent Payments. Any amounts not paid when due under Sections
7.6 or 7.7 of this Agreement shall be subject to a late fee equal to the prime
lending rate published by the Wall Street Journal applicable to such period plus
two percent (2%).

      7.9   United States Dollars. All payments required to be made pursuant to
this Agreement shall be made in United States dollars. All dollar ($) amounts
specified in this Agreement are United States Dollar amounts. For purposes of
computing Collaboration Profits, all revenues earned or expenses incurred in
foreign currencies shall be converted to United States dollars using the same
foreign exchange rate Invitrogen uses for preparing its consolidated financial
statements filed with the United States

[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                       20
<PAGE>

CONFIDENTIAL

Securities and Exchange Commission. Any benefit or detriment to either Party
resulting from currency exchange rate fluctuations shall be shared equally by
the Parties.

      7.10  Tax Matters. The Parties shall use all reasonable efforts to reduce
or otherwise optimize, in a manner consistent with applicable laws, tax
withholding on payments, if any, made pursuant to this Agreement. Each Party
agrees to cooperate in good faith to provide the other Party with such documents
and certifications as are reasonably necessary to enable such other Party to
minimize any withholding tax obligations. The Parties will reasonably cooperate
in providing one another with documentation of the payment of any withholding
taxes paid pursuant to this Section 7.9 and in completing and filing documents
required under the provisions of any applicable tax laws or under any other
applicable law in connection with the making of any required tax payment or
withholding payment, or in connection with any claim to a refund of or credit
for any such payment.

8.    Records, Reports and Audits.

      8.1   Records. Each Party shall keep accurate books and accounts of record
relating to the manufacture, marketing and sale of the Joint Products (including
the Collaboration Profits, number of bases sold, gross sales revenues for Joint
Products, Net Sales, Cost of Goods and SG&A), in sufficient detail to permit
accurate determination of all figures necessary for verification of amounts
required to be paid hereunder. Each Party shall maintain such records for a
period of at least two (2) years after the end of the calendar year in which
they were generated.

      8.2   Reports. Within seven (7) business days following the end of each
calendar month, Illumina shall submit to Invitrogen a written report prepared in
accordance with GAAP setting forth in reasonable detail in the same form as
Illumina keeps its records for the Cost of Goods for Joint Products synthesized
at the Illumina Manufacturing Facility. Within ten (10) business days following
the end of each calendar month, Invitrogen shall submit to Illumina a written
report prepared in accordance with GAAP setting forth in reasonable detail at
least as detailed as an income statement, on a product-by-product (e.g., plates
vs. tubes) and region-by-region basis, including following information
(pro-rated, where applicable) with respect to such calendar month (a) the
Collaboration Profits, (b) number of bases sold, (c) Gross sales revenues for
Joint Products excluding shipping, freight, insurance, and taxes (e.g., sales,
use, and value added tax) (d) the Net Sales, (e) the Cost of Goods, and (f) the
Direct Marketing Expenses in the same form as Invitrogen keeps its records for
its other products.

      8.3   Audits. During the Term and for one (1) year thereafter, each Party
shall permit, upon thirty (30) days' prior written notice from the other Party,
an independent certified public accounting firm of national standing selected by
the auditing Party (the "Independent Accountants") to examine its relevant books
and records as may be reasonably necessary to verify the accuracy of any
payments or invoicing required to be made hereunder. Such examination shall be
limited to the pertinent books and records for any calendar year ending not more
than two (2) years before the date of the request. Neither Party shall be
entitled to an examination of the other Party's books and records

                                       21
<PAGE>

CONFIDENTIAL

under this Section 8.3 more than once in any calendar year. The Independent
Accountants shall be provided access to such books and records at the audited
Party's facility(ies), as applicable, where such books and records are normally
kept and such examination shall be conducted during normal business hours.
Either Party may require the Independent Accountants to sign a standard
non-disclosure agreement before providing the Independent Accountants access to
facilities or records. Upon completion of the examination, the Independent
Accountants shall provide to both Parties a written report disclosing whether
the reports submitted by the audited Party are correct or incorrect, whether the
relevant payments are correct or incorrect, and, in each case, the specific
details concerning any discrepancies. No other information will be provided to
the auditing Party by the Independent Accountants.

      8.4   Reconciliation. If the review by the Independent Accountants reveals
an over- or under-payment under this Agreement, then the Parties shall reconcile
such payments within thirty (30) days following the delivery of the Independent
Accountants' report pursuant to Section 8.3. The auditing Party shall bear the
costs and fees of the Independent Accountants associated with examinations
pursuant to Section 8.3; provided, however, that in the event that it is
determined by the Independent Accountants that the aggregate amount of payments
remitted by the audited Party to the auditing Party during the time period
covered by the records reviewed by the Independent Accountants were less than
ninety-five percent (95%) of the aggregate amount of payments that should have
been paid by the audited Party during such time period, then the audited Party
shall reimburse the auditing Party for the fees and expenses of the Independent
Accountants with respect to such audit except, in the case of Invitrogen, to the
extent that such error was caused by errors in Illumina's calculation of the
Cost of Goods for Joint Products manufactured at the Illumina Manufacturing
Facility.

      8.5   GAAP. All books and accounts of record required to be kept pursuant
to Section 8.1, all reports required to be submitted pursuant to Section 8.2,
and all calculations of gross sales revenues for Joint Products, Net Sales, Cost
of Goods and SG&A made for the purposes of calculating Collaboration Profits
pursuant to Section 7.7, shall, in each case, be prepared and maintained in
accordance with GAAP, subject to depreciation of the Illumina Facility
Improvements in Section 7.7(c), consistently applied on the same basis as in
prior years throughout the Term.

9.    Confidentiality.

      9.1   Confidentiality. All Confidential Information disclosed by a Party
to the other Party during the term of this Agreement shall not be used by the
receiving Party except in connection with the activities contemplated by this
Agreement, shall be maintained in confidence by the receiving Party, and shall
not be disclosed by the receiving Party to any other person, firm, or agency,
governmental or private, without the prior written consent of the disclosing
Party, except to the extent that the Confidential Information disclosed by the
Disclosing Party, as can be demonstrated by the receiving Party's records
however maintained: (a) was known or used by the receiving Party prior to its
date of disclosure to the receiving Party; or (b) either before or after the
date of the disclosure by the disclosing Party to the receiving Party, is
lawfully disclosed to the

                                       22
<PAGE>

CONFIDENTIAL

receiving Party by sources other than the disclosing Party rightfully in
possession of the Confidential Information; or (c) either before or after the
date of the disclosure to the receiving Party, becomes published or generally
known to the public (including information known to the public through the sale
of products in the ordinary course of business), without the receiving Party or
its sublicensees violating this Article 9; or (d) is independently developed by
or for the receiving Party without reference to or reliance upon the disclosing
Party's Confidential Information.

      9.2   Remedies. Each Party acknowledges that due to the unique nature of
the Confidential Information, any breach of the restrictions contained in this
Section 9 is a material breach of this Agreement, which may cause immediate and
irreparable harm for which money damages would not be an adequate remedy. Any
such breach shall entitle the disclosing Party to seek injunctive relief in
addition to all remedies that may be available in law, in equity or otherwise.

      9.3   Publicity. Each Party intends to issue a press release after the
execution of this Agreement, subject to the provisions of the following
sentence. Neither Party shall issue any press release or public announcement
relating to the Joint Products or this Agreement without the prior written
approval of the other Party, which approval shall not be unreasonably withheld,
except that a Party may issue such a press release or public announcement if
required by Law, including without limitation by the rules or regulations of the
United States Securities and Exchange Commission or any stock exchange or
Nasdaq; provided that the other Party has received prior notice of such intended
press release or public announcement if practicable under the circumstances and
the Party subject to the requirement includes in such press release or public
announcement only such information relating to the Joint Products or this
Agreement as is required by such Law. The rights of approval and notice granted
to a Party in accordance with the preceding sentence shall not apply to
subsequent public discussions relating to a press release or public announcement
that has previously been reviewed and approved by the other Party, provided that
the contents of such subsequent public discussions are substantially similar to
the information that has previously been reviewed and approved.

10.   Term and Termination.

      10.1  Term. The initial Term of this Agreement shall begin on the
Effective Date and end on the eighth (8th) anniversary of the Effective Date.
Thereafter, this Agreement may be renewed for consecutive one (1) year terms, if
one year prior to the expiration of the initial term or any succeeding term, the
Parties mutually agree to renew the Agreement.

      10.2  Termination. This Agreement may be terminated by a Party ( the
"Non-defaulting Party") in the event that the other Party (the "Defaulting
Party"): (a) or one or more of its Affiliates materially breaches any term of
this Agreement, if after written notification the breach is not cured within
ninety (90) days, or (b) becomes the subject of a voluntary or involuntary
petition in bankruptcy or any proceeding relating to insolvency, receivership,
liquidation or composition for the benefit of creditors that is not dismissed
within sixty (60) days. If the Defaulting Party disputes it is in material
breach,

                                       23
<PAGE>

CONFIDENTIAL

then it may institute an arbitration proceeding as provided in Section 12. If
the cure period for material breach expires, and the Non-Defaulting Party
terminates this Agreement, the Non-Defaulting Party may institute an arbitration
proceeding as provided Section 12 to seek its remedies.

      10.3  Effect of Termination. All rights and obligations of the Parties set
forth herein that expressly or by their nature survive the expiration or
termination of this Agreement, including provisions of Sections 1, 3.3, 5.2(b)
as to repurchase of VB Oligators, 6.1(c), 6.2(c), 6.4, 6.5, 7, 8, 9, 10.2, 10.3,
11, 12 and 13 shall continue in full force and effect subsequent to and
notwithstanding the expiration or termination of this Agreement, until they are
satisfied or by their nature expire and shall bind the Parties and their legal
representatives, successors, and permitted assigns. Termination of this
Agreement shall not relieve the Parties of any liability which accrued hereunder
prior to the effective date of such termination nor preclude either Party from
pursuing all rights and remedies it may have hereunder or at law or in equity
with respect to any breach of this Agreement nor prejudice either Party's right
to obtain performance of any obligation.

11.   Representations and Warranties; Limitation of Liability.

      11.1  Mutual Representations and Warranties. Each Party represents and
warrants to the other Party that (i) it has the full corporate right, power and
authority to enter into this Agreement and to perform its obligations hereunder,
(ii) the execution of this Agreement and the performance of its obligations
hereunder does not and shall not conflict with or result in a material breach
(including with the passage of time) of any other agreement to which it is a
party or by which any of its assets or properties is bound or affected, and
(iii) this Agreement has been duly executed and delivered by such Party and
constitutes the valid and binding agreement of such Party, enforceable against
such Party in accordance with its terms, except to the extent that
enforceability is limited by public policy or creditors' rights generally.

      11.2  Representations by Illumina. Illumina represents and warrants to
Invitrogen that (i) the VB Oligators it will provide to Invitrogen for the
Invitrogen Manufacturing Facilities will be suitable in design and
manufacturing, and that such VB Oligators will manufacture Joint Products that
comply with product quality specifications, unless due to the negligence or
willful misconduct of Invitrogen; and (ii) the Joint Products that it
manufactures will comply with product quality specifications. In the event that
such Joint Products fail to meet the product quality specifications, Illumina
shall replace the non-conforming Joint Products with conforming Joint Products.
If, during the first twelve (12) months of this agreement, the VB Oligators
Illumina provides to Invitrogen fails to manufacture Joint Products that comply
with product quality specifications, and cannot be repaired, Illumina shall
replace such VB Oligators at Illumina's expense.

      11.3  DISCLAIMER. EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, NEITHER
PARTY MAKES ANY REPRESENTATIONS OR WARRANTIES, EXPRESS, IMPLIED OR STATUTORY,
WITH RESPECT TO ANY JOINT PRODUCTS, THE VB OLIGATOR, THE OLIGATOR TECHNOLOGY OR

                                       24
<PAGE>

CONFIDENTIAL

ANY OTHER PRODUCTS OR SERVICES PROVIDED IN CONNECTION WITH THIS AGREEMENT,
INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE, NONINFRINGEMENT, OR ARISING FROM COURSE OF PERFORMANCE, DEALING, USAGE
OR TRADE.

      11.4  Without prejudice to the foregoing, the Collaboration Committee
shall approve of the representations and warranties that may be granted to Joint
Product customers by Invitrogen and the liabilities arising from breaches of
such representations and warranties and any insurance obtained to limit such
liabilities shall be divided between the Parties.

      11.5  Indemnification by Illumina. Illumina shall indemnify, defend and
hold harmless Invitrogen (including its officers, trustees, employees and
Affiliates) against any and all third party claims, costs or liabilities,
including attorneys' fees and court costs, for any loss, damage, injury or loss
of life, arising out of the manufacture, use or sale of Joint Products under
this Agreement to the extent attributable to Illumina's technology, execution of
responsibilities under this Agreement, negligence or willful misconduct.
Invitrogen shall promptly notify Illumina in writing after Invitrogen has
received notice of any claim under this paragraph. Illumina shall have the sole
control of the defense, trial and any related settlement negotiations, provided
that Invitrogen may be represented at its own expense by counsel of its own
choosing and provided further that Illumina may not enter into any settlement
that diminishes the rights or interests of Invitrogen or requires an admission
on the part of Invitrogen or incurs financial obligation on the part of
Invitrogen, without Invitrogen's prior written consent. Invitrogen shall fully
cooperate with Illumina in the defense of any such claim.

      11.6  Indemnification by Invitrogen. Invitrogen shall indemnify, defend
and hold harmless Illumina (including its officers, trustees, employees and
Affiliates) against any and all third party claims, losses, damages, costs or
liabilities, including attorneys' fees and court costs, for any loss, damage,
injury or loss of life, arising out of the manufacture, use or sale of Joint
Products under this Agreement to the extent attributable to Invitrogen's
technology, execution of responsibilities under this Agreement, negligence or
willful misconduct. Illumina shall promptly notify Invitrogen in writing after
Illumina has received notice of any claim under this paragraph. Invitrogen shall
have the sole control of the defense, trial and any related settlement
negotiations, provided that Illumina may be represented at its own expense by
counsel of its own choosing and provided further that Invitrogen may not enter
into any settlement that diminishes the rights or interests of Illumina or
requires an admission on the part of Illumina or incurs financial obligation on
the part of Illumina, without Illumina's prior written consent. Illumina shall
fully cooperate with Invitrogen in the defense of any such claim.

      11.7  LIMITATION OF LIABILITY. EXCEPT FOR VIOLATIONS OF SECTION 9, NEITHER
PARTY HERETO WILL BE LIABLE HEREUNDER FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL,
SPECIAL, EXEMPLARY OR MULTIPLE DAMAGES ARISING FROM OR RELATING TO ANY BREACH OF

                                       25
<PAGE>

CONFIDENTIAL

THIS AGREEMENT OR THE EXERCISE OF ITS RIGHTS HEREUNDER, REGARDLESS OF ANY NOTICE
OF SUCH DAMAGES.

12.   Arbitration.

      12.1  Any dispute, controversy or claim arising out of or relating to the
validity, construction, enforceability or performance of this Agreement,
including disputes relating to alleged breach or to termination of this
Agreement and disputes that cannot be resolved by the Collaboration Committee,
shall be settled by arbitration administered by the American Arbitration
Association ("AAA") under its Commercial Arbitration Rules, in each case, not
inconsistent with the terms of this Agreement, and judgment on the award
rendered by the arbitrators may be entered in any court having jurisdiction
thereof. Notwithstanding the above, any disputes, controversies or claims
relating in any way to patents, patent applications, trade secrets, know-how or
other Intellectual Property or relating to a breach of Section 9 shall not be
subject to this Section 12. In the event an arbitration is initiated on an
alleged breach, the cure period of Section 10.2 for such alleged breach is
stayed pending the outcome of the arbitration, thus preventing the termination
of this Agreement during the arbitration process.

      12.2  The arbitration shall be conducted in San Diego, California by a
panel of three (3) arbitrators of the AAA selected as follows: within thirty
(30) days after initiation of arbitration, each Party shall select one (1)
person to act as arbitrators and the two (2) Party-selected arbitrators shall
select a third arbitrator within five (5) days of their appointment. If the
arbitrators selected by the Parties are unable or fail to agree upon the third
arbitrator, the third arbitrator shall be appointed by the AAA as soon as
practicable.

      12.3  Each Party shall share equally in the Parties' total costs of the
arbitration, except that each Party shall be responsible for the costs and
expenses incurred in presenting its own case to the arbitrators, including
attorneys' fees and expenses. Except to the extent necessary to confirm an award
or as may be required by law, neither a Party nor an arbitrator may disclose the
existence, content, or results of an arbitration without the prior written
consent of both Parties.

      12.4  In no event shall arbitration be initiated after the date when
commencement of a legal or equitable proceeding based on the dispute,
controversy or claim would be barred by the applicable California statute of
limitations.

      12.5  Remedies for material breach. At the completion of an arbitration,
the arbitrator may declare one party in material breach of this Agreement. The
arbitrator shall issue an order which will contain provisions to resolve the
dispute to return the Collaboration to its pre-notice of breach condition. If
such order is implemented, the material breach will be deemed to have been
cured. If unsuccessful, and the Agreement terminates as a result of the material
breach, the arbitrators in their discretion may order a remedy to the
Non-defaulting party to allow the Non-Defaulting party to remain in the business
of commercializing Oligos that were Joint Products during the term of this
Agreement. These remedies could include financial compensation, requirements for
continued supply, and/or licenses to Intellectual Property, such that both
Parties are fairly

                                       26
<PAGE>

CONFIDENTIAL

compensated. The arbitrators have no authority to prevent either Party from
commercializing Oligos that were Joint Products under this Agreement.

13.   Miscellaneous.

      13.1  Severability. If any provision of this Agreement is held invalid or
unenforceable, such provision shall be enforced to the maximum extent
permissible so as to effect the intent of the Parties, and the remainder of this
Agreement will continue in full force and effect.

      13.2  Waiver. The failure of either Party to exercise any right granted
herein or to require any performance of any term of this Agreement or the waiver
by either Party of any breach of this Agreement shall not prevent a subsequent
exercise or enforcement of, or be deemed a waiver of any subsequent breach of,
the same or any other term of this Agreement.

      13.3  No Third-Party Beneficiaries. Nothing in this Agreement is intended
to or shall confer upon any person who is not a Party to this Agreement any
rights, benefits or remedies of any nature whatsoever under or by reason of this
Agreement, nor shall any such person be entitled to assert any claim hereunder.

      13.4  Export Control. This Agreement is made subject to any restrictions
concerning the export of products or technical information from the United
States of America or other countries which may be imposed upon or related to
Invitrogen or Illumina from time to time. Each Party agrees that it will not
export, directly or indirectly, any technical information acquired from the
other Party under this Agreement or any products using such technical
information to a location or in a manner that at the time of export requires an
export license or other governmental approval, without first obtaining the
written consent to do so from the appropriate agency or other governmental
entity.

      13.5  Notices. Any notice required or permitted to be given under this
Agreement shall be in writing, shall specifically refer to this Agreement and
shall be deemed to have been sufficiently given for all purposes on the third
day following the date of mailing if mailed by first class certified or
registered mail, postage prepaid and on the date of delivery if by express
delivery service or personally delivered. Unless otherwise specified in writing,
the mailing addresses of the Parties shall be as described below:

                  For Invitrogen:           Invitrogen Corporation
                                            1600 Faraday Avenue
                                            Carlsbad, CA  92008
                                            Attn: Contracts Department

                  With a Copy to:           Invitrogen Corporation
                                            1600 Faraday Avenue
                                            Carlsbad, CA  92008
                                            Attention:  General Counsel

                                       27
<PAGE>

CONFIDENTIAL

                  For Illumina:             Illumina, Inc.
                                            9885 Towne Centre Drive
                                            San Diego, CA  92121
                                            Attention:  President

                  With a copy to:           Illumina, Inc.
                                            9885 Towne Centre Drive
                                            San Diego, CA  92121
                                            Attention:  Chief Financial Officer

      13.6  Assignment. Neither Party shall assign or transfer this Agreement or
any rights or obligations under this Agreement, whether voluntary, by operation
of law or otherwise, without the prior written consent of the other Party,
except that either Party may assign or transfer this Agreement in its entirety
to a successor in connection with the sale of all or substantially all of such
Party's stock, assets or business, provided that such successor agrees in
writing to be bound by and perform the obligations of the such Party under this
Agreement and is capable of performing such obligations. A change in control of
a Party shall be deemed to be an assignment to a successor for purposes of this
Section 13.6. Any assignment or transfer of this Agreement made in contravention
of the terms hereof shall be a material breach and shall be null and void.
Subject to the foregoing, this Agreement shall be binding on and inure to the
benefit of the Parties' respective successors and permitted assigns.

      13.7  Governing Law and Venue. This Agreement and performance by the
Parties hereunder shall be construed in accordance with the laws in effect in
the State of California, U.S.A., without regard to provisions on the conflicts
of laws. Each Party consents to the exclusive jurisdiction of, and venue in, the
state and federal courts within San Diego County, California, U.S.A.

      13.8  Force Majeure. Neither Party shall be responsible for any failure to
perform or delay attributable in whole or in part to any cause beyond its
reasonable control (other than any payment obligations), including Acts of God,
fire, flood, tornado, earthquake, hurricane, lightning, government actions,
actual or threatened acts of war, terrorism, civil disturbance or insurrection,
sabotage, labor shortages or disputes, failure or delay in delivery by suppliers
or subcontractors, transportation difficulties, shortage of energy or raw
materials or equipment, or the other Party's fault or negligence.

      13.9  Entire Agreement and Modifications. This Agreement supersedes all
prior communications, transactions, and understandings, whether oral or written,
with respect to the subject matter hereof and constitutes the sole and entire
agreement between the Parties pertaining to the subject matter thereof. No
modification, addition or deletion, or waiver of any of the terms and conditions
of this Agreement shall be binding on either Party unless made in a written
agreement clearly understood by both Parties to be a modification or waiver, and
signed by a duly authorized representative of each Party.

      13.10 Counterparts. This Agreement may be executed in one or more
counterparts, each in the English language and each of which shall be deemed to
be an

                                       28
<PAGE>

CONFIDENTIAL

original instrument, and all such counterparts shall together constitute the
same agreement.

      13.11 Interpretation. Sections, titles, headings and any table of contents
are inserted for convenience of reference only and are not intended to be a part
of or to affect the meaning or interpretation hereof. The Exhibits referred to
herein shall be construed with and as an integral part of this Agreement to the
same extent as if they were set forth verbatim herein. As used in this
Agreement, except as the context may otherwise require, "include," "includes"
and "including" are deemed to be followed by "without limitation," whether or
not they are in fact followed by such words or words of like import; references
to any gender include the other; the singular includes the plural and vice
versa; and references to "Section" or another subdivision or to an "Exhibit" are
to a section or subdivision hereof or an "Exhibit" annexed hereto. As used
herein, the term "business days" shall mean all days other than Saturdays,
Sundays or state (recognized in California) or federal holidays. Ambiguities, if
any, in this Agreement shall not be construed against any Party, irrespective of
which Party may be deemed to have authored the ambiguous provision.

13.12 Non-solicitation. Without the prior written approval of the other Party
and except as otherwise permitted in Section 4.3, neither Party shall solicit
the employment or engagement (as employee, consultant or agent), of any officer,
director or employee of the other Party or solicit such person to terminate his
or her employment and/or engagement with the other Party prior to twelve (12)
months after the termination of this Agreement or services of such effected
employee, officer or director with either Party. A general advertisement or a
request for employment which is initiated exclusively by an officer, director or
employee of the other shall not be considered a solicitation pursuant to this
section.

      IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed by their respective authorized officers as of the day and year first
written above.

                                    ILLUMINA, INC.

                                    By: /s/ JOHN R. STUELPNAGEL
                                        ----------------------------------------
                                        Name: John R. Stuelpnagel
                                        Title: Senior Vice President, Operations

                                    INVITROGEN CORPORATION

                                    By: /s/ JOHN D. THOMPSON
                                        ----------------------------------------
                                        Name: John D. Thompson
                                        Title: Senior Vice President

                                       29
<PAGE>

                                    EXHIBIT A

                          COLLABORATION JOINT PRODUCTS

      1.    Any Oligos that are (i) made for sale to third parties and (ii)
synthesized using the Oligator Technology. Such oligos will be Joint Products to
the extent they are (i) sold by or for Invitrogen and (ii) sold by or for
Illumina after the time specified in clause 4 below.

      2.    [ * ] Oligos ranging from a [ * ] sold to third parties for delivery
anywhere in the world which are capable of being manufactured on Oligator
Technology in Oligo Plates received by Invitrogen and/or its Affiliates, except
where such Oligos are excluded from Joint Products elsewhere in the Agreement.
All orders for such Oligos received by Invitrogen and/or its Affiliates will be
deemed Joint Products as soon as Illumina reasonably demonstrates that the
Illumina infrastructure is ready to receive and manufacture timely such orders.
Until such time, such products in such orders will not be Joint Products.

      3.    [ * ] Oligos ranging from a [ * ] sold to third parties for delivery
in the US and Canada which are capable of being manufactured on Oligator
Technology in tubes in orders received by Invitrogen and/or its Affiliates. All
orders for such Oligos received by Invitrogen and/or its Affiliates will be
deemed Joint Products as soon as Illumina reasonably demonstrates that the
Illumina infrastructure is ready to receive and manufacture timely such orders.
Until such time, such products in such orders will not be Joint Products.

      4.    [ * ] Oligos ranging from a [ * ] sold to third parties pursuant to
orders received by Illumina and/or its Affiliates for delivery anywhere in the
world. All such orders received by Illumina and/or its Affiliates will be deemed
Joint Products as soon as Illumina begins receiving the North American tube
orders from Invitrogen (see paragraph 3 above). Until such time, such products
in such orders will not be Joint Products.

      5.    [ * ] Oligos sold to third parties ranging from a [ * ] pursuant to
orders received by Invitrogen and/or its Affiliates which are made in
Invitrogen's Manufacturing Facilities, which are capable of being manufactured
on Oligator Technology. All orders for such Oligos received by Invitrogen and/or
its Affiliates will be deemed Joint Products as soon as Illumina transfers the
VB Oligators or other Oligator Technology in accordance with the Agreement and
such instrumentation is fully validated and demonstrated to be ready to receive
and manufacture timely such orders. Until such time, such products in such
orders will not be Joint Products.

      6.    All other [ *] Oligos manufactured in future locations once these
sites have been approved by the Collaboration Committee and the required
equipment and software has been validated and is ready to receive orders, and
manufacture timely.

[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

<PAGE>

CONFIDENTIAL

      7.    All Future Products, when and where agreed by the Collaboration
Committee.

      8.    Any [ * ] Oligos scales less than [ * ] will be analyzed on a
case-by-case basis by the Collaboration Committee and may be added to the Joint
Products in Exhibit A, but only if the parties mutually agree to add such Oligos
as Joint Products.

      9.    Any Oligos that meet all of the requirements in (a), (b) and (c)
below shall be excluded from Joint Products:

            (a)   that are not Oligo Plates,

            (b)   that are made by either Party; and

            (c)   made in (i) [ * ], and sold to end users and distributors for
                  sale to end-users in [ * ]; or (ii) manufacturing facilities
                  established or expanded by Invitrogen not using Oligator
                  Technology, if the Collaboration Committee makes a
                  determination that the geographic market demand does not
                  warrant the two (2) VB Oligator instrument set-up.

[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

<PAGE>

CONFIDENTIAL

                                    EXHIBIT B

                   CONSENSUS COLLABORATION FINANCIAL STRUCTURE

                                       [*]

[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

<PAGE>

CONFIDENTIAL

                                    EXHIBIT C

                                 COGS CONSENSUS

                                       [*]

[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

<PAGE>

                                   EXHIBIT D-1

                             QUALITY CONTROL SYSTEMS

      -     100% OD260 analysis

      -     100% real time digital trityl monitoring using Illumina's
            proprietary Cyclops trityl imaging system

      -     Statistical CE or mass spec analysis using Illumina's proprietary
            modified CE instruments and customized analytical and data
            management software

      -     Illumina standard operating procedures covering the manufacture and
            delivery of Joint Products, including standard operating procedures
            covering incoming materials management through picking, packaging
            and shipping of Joint Products.

                          POST-PROCESSING CAPABILITIES

      Illumina will utilize its automated and integrated post-processing
capabilities for plate orders. Illumina will also develop capabilities for
formatting and handling tubes with ability to maintain end-to-end LIMS control.
In addition to plate-to-tube rearray (as of the Effective Date, all Oligos will
be manufactured in plates and, as indicated by the order, rearrayed into tubes),
standard post-processing capabilities will include volume and concentration
normalization, aliquoting, primer mixing, and drying of Joint Products.

<PAGE>

                                   EXHIBIT D-2

                             QUALITY CONTROL SYSTEMS

      -     Real-time digital trityl monitoring

      -     Software and control systems to support real-time digital trityl
            monitoring

      Notwithstanding the above, instrumentation for CE, mass spec and OD260
analysis will be provided by Invitrogen in the facilities outside North America.

<PAGE>

CONFIDENTIAL

                                    EXHIBIT E

                   INVITROGEN'S CURRENT STANDARD TERMS OF SALE

                                       36
<PAGE>

CONFIDENTIAL

             INVITROGEN CORPORATION -- GENERAL TERMS AND CONDITIONS

1. ACCEPTANCE GOVERNING PROVISIONS: In these General Terms and Conditions (the
"Conditions") "we," "us," and "our" means Invitrogen Corporation or the
Invitrogen affiliate that is processing this order or purchase of goods, and
"you" and "your" means the person, company or other legal entity that orders or
buys goods from us and in each case their respective successors and/or assigns.
We are shipping these goods subject to these Conditions. You will be deemed to
have assented to these Conditions unless you return the goods to us within 15
days after your receipt of the goods and this form. Our failure to object to
provisions contained in any purchase order or other form or document from you
shall not be construed as a waiver of these Conditions nor an acceptance of any
such provision. These Conditions, including all writings incorporated herein by
reference, any quotation issued to you by us, and those specific terms of a
purchase order or other document that are either consistent with these
Conditions or expressly agreed upon by us in writing, constitute the entire
contract between us (the "Contract"), and supersede all prior agreements and
understandings between us, whether written or oral, relating to the subject
matter hereof. In the event of a conflict, a quotation takes precedence over
these Conditions, and a written contract signed by both of us takes precedence
over either. If one or more of these Conditions are held to be invalid, illegal,
or unenforceable by a court of competent jurisdiction, the remaining Conditions
shall be unimpaired.

2. DELIVERY: Unless specified differently in writing, all sales are FCA our
shipping point. We reserve the right to make delivery in installments, all such
installments to be separately invoiced and paid for when due per invoice.

3. INSPECTION AND RETURNS: Upon your receipt of goods shipped hereunder, you
shall inspect the goods and notify our Customer Services Department of any
claims for shortages, defects or damages. If you fail to so notify us within
three days after you receive the goods, the goods shall conclusively be deemed
to conform to these Conditions and to have been irrevocably accepted by you.
Authorization for all product returns must be approved by our Customer Services
Department and a return authorization number given to you prior to the return of
goods. Not all items will be authorized for return, due to temperature and
packing requirements. Items authorized for return must arrive at our facilities
in a state satisfactory for resale to be eligible for product credit. A
restocking charge of 25% or $25 (whichever is greater) shall be charged on
returns that are not the result of any error or fault of ours. Shipping charges
will not be credited. Goods may not be returned for credit after 20 days after
your receipt of the goods.

4. CREDITS AND REFUNDS: At our discretion, we may issue a product credit or
refund for the product value and shipping charges. No product credit shall be
available for use if a past due balance is outstanding on the account. Any
product credit not used within six months of the date of issue shall expire.

5. PAYMENTS: Unless otherwise specified in a written quotation we provide to you
or written contract between the parties: goods will be billed at the price in
effect at the time shipment is made; such prices shall be subject to change from
time to time without notice; terms of sale are net 30 days of date of invoice,
in U.S. Dollars. If you default in making any payment to us when due, we, at our
option and without prejudice to our other lawful remedies, may defer delivery or
cancel the Contract. If you provide a purchase order number which proves to be
erroneous or invalid, you agree to pay the invoice(s) upon receipt of a "proof
of delivery (POD)" and/or a proof of shipment "signed and executed bill of
lading/airbill from us.

6. TAXES AND OTHER CHARGES: Any use tax, sales tax, excise tax, duty, inspection
or testing fee, or any other tax, fee or charge imposed by any governmental
authority, on or measured by the transaction between us shall be paid by you in
addition to the prices quoted or invoiced. If we are required to pay any such
tax, fee or charge, you shall

                                       37
<PAGE>

CONFIDENTIAL

reimburse us therefor or provide us at the time the order is submitted an
exemption certificate or other document acceptable to the authority imposing the
tax, fee or charge.

7. WARRANTY: We warrant to you, our direct customer, that our goods shall
conform substantially to the description of such goods as provided in our
catalogues and literature accompanying the goods until their respective
expiration dates or, if no expiration date is provided, for 6 months from the
date of your receipt of such goods. THIS WARRANTY IS EXCLUSIVE, AND WE MAKE NO
OTHER WARRANTY, EXPRESS OR IMPLIED, INCLUDING ANY IMPLIED WARRANTY OF
MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE. Our warranty shall not be
effective if we determine, in our sole discretion, that you have altered or
misused the goods or have failed to use or store them in accordance with
instructions furnished by us. Our sole and exclusive liability and your
exclusive remedy with respect to goods proved to our satisfaction (applying
analytical methods reasonably selected by us) to be defective or nonconforming
shall be the replacement of such goods free of charge, upon the return of such
goods in accordance with our instructions, although at our discretion we may
provide a credit or refund in accordance with Section 4 above. IN NO EVENT SHALL
WE BE LIABLE UNDER ANY LEGAL THEORY (INCLUDING BUT NOT LIMITED TO CONTRACT,
NEGLIGENCE, STRICT LIABILITY IN TORT OR WARRANTY OF ANY KIND) FOR ANY INDIRECT,
SPECIAL, INCIDENTAL, CONSEQUENTIAL OR EXEMPLARY DAMAGES (INCLUDING BUT NOT
LIMITED TO LOST PROFITS), EVEN IF WE HAD NOTICE OF THE POSSIBILITY OF SUCH
DAMAGES. If we manufacture custom goods for you based on instructions,
specifications, or other directions you provide to us, we shall not be liable
for the lack of sufficiency, fitness for purpose or quality of the goods to the
extent attributable to such instructions, specifications, or other directions.
We shall not be liable for any loss, damage or penalty as a result of any delay
in or failure to manufacture, deliver or otherwise perform hereunder due to any
cause beyond our reasonable control.

8. COMPLIANCE WITH LAWS AND REGULATIONS: We certify that to the best of our
knowledge: our goods are produced in compliance with all applicable federal,
state, and local statutes, rules, regulations, ordinances, and orders, including
applicable requirements of the Fair Labor Standards Act, as amended, the
Occupational Safety and Health Act of 1970 and Executive Order 11246; we have a
written Affirmative Action Program and annually file Standard Form 100 (EEO-1);
we do not discriminate against any employee or prospective employee because of
race, creed, color, national origin, sex, age or handicap, nor permit
discrimination in any form nor maintain segregated facilities for our employees;
we actively pursue employment of minorities, females, handicapped, disabled
veterans and veterans of the Vietnam era; and we use our best efforts to award
contracts to and place purchase orders with minority business enterprises and
with labor surplus area concerns and small business concerns.

9. INTELLECTUAL PROPERTY RIGHTS

9.1 We warrant to you that the manufacture and sale by us of goods manufactured
by or for us without reliance upon instructions, specifications, or other
directions provided by you and delivered hereunder, to our knowledge will not
infringe the claims of any patent, trademark or copyright ("Intellectual
Property") of any third party. We do not warrant that the manufacture and sale
by us of goods manufactured in reliance upon instructions, specifications, or
other directions provided by you or your use or resale of goods delivered
hereunder will not infringe the claims of any Intellectual Property of any third
party.

9.2 If any claim is made against you or us for infringement of Intellectual
Property rights of any third party arising directly and solely from the
manufacture or sale of goods by us in circumstances in which the manufacture of
such goods was not based upon instructions, specifications, or other directions
provided by you,

                                       38
<PAGE>

CONFIDENTIAL

we shall assume the defense of any ensuing litigation and conduct all
negotiations for settlement of such claims and will bear the costs of any
payment made in settlement or resulting from an award; provided that you shall
give us notice in writing as early as is reasonably practicable of any such
claim being made or action threatened or brought against you, shall make no
admission of liability or take any other action in connection with such matter
and shall permit us to defend such claim and shall (at our expense) give all
reasonable information, co-operation and assistance to us (including without
limitation lending your name to proceedings) in relation thereto. The foregoing
describes our entire liability to you and your exclusive remedies against us in
connection with claims made against you based on or resulting from such
infringement of Intellectual Property rights of third parties.

9.3 If any claim is made against us for infringement of Intellectual Property
rights of any third party as a result of (i) the manufacture or sale of goods
based upon instructions, specifications, or other directions provided by you or
(ii) your use or resale of goods purchased from us, you shall indemnify us,
defend us and hold us harmless from and against any and all losses, damages and
expenses (including reasonable attorneys' fees and other costs of defending any
action) that we may incur as a result thereof. You shall fully cooperate with us
in any investigation relating to any such claims and make available to us all
related statements, reports and tests available to you.

10. AUTHORIZED USES

10.1 Except as otherwise agreed in writing by our authorized representative, the
purchase of goods only conveys to you the non-transferable right for only you to
use the quantity of goods and components of goods purchased in compliance with
the applicable intended use statement, limited use statement or limited label
license, if any, in our catalogues or on the label or other documentation
accompanying the goods (all such statements or licenses being incorporated
herein by reference as if set forth herein in their entirety). Unless otherwise
authorized, no right to resell the goods, or any portion of them, is conveyed
hereunder.

10.2 Unless otherwise expressly indicated in our catalogues or on the label or
other documentation accompanying the goods, the goods are intended for research
use only and are not to be used for any other purposes including, but not
limited to, unauthorized commercial purposes, in vitro diagnostic purposes, ex
vivo or in vivo therapeutic purposes, investigational use, in foods, drugs,
devices or cosmetics of any kind, or for consumption by or use in connection
with or administration or application to humans or animals. You acknowledge that
the goods have not been tested by or for us for safety or efficacy, unless
expressly stated in our catalogues or on the label or other documentation
accompanying the goods. Without limiting the foregoing restrictions, you warrant
to us that should you use or sell the goods for any use other than research, you
shall conduct all necessary tests, comply with all applicable regulatory
requirements, issue all appropriate warnings and information to subsequent
purchasers and/or users and be responsible for obtaining any required
Intellectual Property rights.

10.3 You represent and warrant to us that: you will properly test, use, and, to
the extent authorized, manufacture and market any goods purchased from us and
any final articles made from them in accordance with the practices of a
reasonable person who is an expert in the field, including, but not limited to,
a technically qualified individual (40 C.F.R. Section 720.3(ee)), and in strict
compliance with all applicable national, state, provincial, and local food,
drug, device, and cosmetic and other relevant laws and regulations, now and
hereinafter enacted; and any final articles manufactured from the goods shall
not be adulterated or misbranded within the meaning of the Federal Food, Drug
and Cosmetic Act and shall not be articles which may not, under Sections 404,
505, or 512 of the Act, be introduced into interstate commerce.

                                       39
<PAGE>

CONFIDENTIAL

10.4 You realize that, because our goods are intended primarily for research
purposes, they may not be on the Toxic Substances Control Act (TSCA) inventory.
You assume responsibility to ensure that the goods purchased from us are
approved for use under TSCA, if applicable. Consistent with your agreement to
comply with all TSCA R&D substance exemption requirements applicable to the
purchase, you agree and warrant that you will comply with all requirements
necessary to maintain the R&D exemption, including using the R&D substance under
the supervision of a technically qualified individual, maintaining all necessary
labeling, and providing all necessary notifications. You also agree and warrant
that you will use or sell (if otherwise so authorized) the R&D substance
exclusively for R&D purposes or specified exempt commercial purposes. You
specifically agree and warrant that you will not sell or distribute the R&D
substance to consumers.

10.5 You have the responsibility to conduct any research necessary to learn the
hazards involved for any of your uses of goods purchased from us and to warn
your customers, employees and any auxiliary personnel (such as freight handlers,
etc.) of any risks involved in using or handling the goods. You agree to comply
with instructions for use of the goods furnished by us, if any, and not to
misuse the goods. If the goods purchased from us are to be repackaged, relabeled
or used as starting materials or components of other products, you will verify
our assay of the goods, qualify the goods provided by us for such applications,
and comply with all governmental requirements relating to labeling or providing
other communications to customers. You acknowledge that we provide Material
Safety Data Sheets (MSDS) for our products, and that they are available
electronically on our web site at www.invitrogen.com, or in paper copy by
calling our Customer Service Tech line at 800-955-6288, and that you are willing
and able to access MSDS by these means. You also agree to inform your employees
of the risks, if any, involved in using or handling the goods and to train and
equip them to handle the goods safely.

10.6 You acknowledge that products received from us are subject to U.S. export
control laws and regulations. You represent and warrant to us that you will not,
directly or indirectly, (1) sell, export, reexport, transfer, divert, or
otherwise dispose of any products, software, or technology (including products
derived from or based on such technology) received from US to any destination,
entity, or person prohibited by the laws or regulations of the United States, or
(2) use the product for any use prohibited by the laws or regulations of the
United States and/or your local jurisdiction, without obtaining prior
authorization from the competent government authorities as required by those
laws and regulations

11. INDEMNITY: You shall, at your own expense, indemnify us, defend us and hold
us harmless from and against any and all losses, damages and expenses (including
reasonable attorneys' fees and other costs of defending any action) that we may
incur as a result of any claim of negligence, breach of implied warranty, strict
liability in tort, or other theory of law, by you, your officers, agents or
employees, your successors and assigns, and your customers, whether direct or
indirect, in connection with the use or resale of any goods sold pursuant hereto
either as a standalone product or a component part or raw material of another
product, or by reason of your breach of or failure to perform any of your
obligations hereunder, except to the extent provided in Condition 9.2 above or
caused by a breach by us of the express warranty set forth in Condition 7
herein. You shall notify us promptly of any incident involving goods sold
pursuant hereto resulting in personal injury or damage to property, and you
shall fully cooperate with us in the investigation of such incident and provide
us with all related statements, reports and tests available to you.

12. TECHNICAL ASSISTANCE: Unless otherwise agreed, all technical assistance and
information we provide to you regarding the goods will be provided gratis, and
you assume sole responsibility for results obtained in reliance thereon. We make
no warranty regarding such technical assistance or information.

                                       40
<PAGE>

CONFIDENTIAL

13. MISCELLANEOUS: The Contract shall be governed by and construed in accordance
with the laws of the State of California, without giving effect to the
principles of conflicts of laws. Our exercise of any option, or failure to
exercise any rights hereunder shall not constitute a waiver of our rights to
damages for breach of contract and shall not constitute a waiver of any
subsequent failure, delay, or breach by you. We may assign our rights and/or
obligations under the Contract to any person in whole or in part.

                                       41
<PAGE>

CONFIDENTIAL

                                    EXHIBIT F

                           INVITROGEN'S PATENT RIGHTS

                                       [*]

[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                       42
<PAGE>

CONFIDENTIAL

                                    EXHIBIT G

                            ILLUMINA'S PATENT RIGHTS

                                       [*]

[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                       43

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00079-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00079-of-00352.parquet"}]]