Document:

<PAGE>
                                                                     EXHIBIT 4.1

                                                                  EXECUTION COPY

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

                     MERRILL LYNCH MORTGAGE INVESTORS, INC.,
                                    Depositor

              CREDIT-BASED ASSET SERVICING AND SECURITIZATION LLC,
                                     Seller

                            LITTON LOAN SERVICING LP,
                                    Servicer

                                       and

                              JPMORGAN CHASE BANK,
                                     Trustee

                         POOLING AND SERVICING AGREEMENT

                          Dated as of February 1, 2004

                                 2004-CB2 Trust

         C-BASS Mortgage Loan Asset-Backed Certificates, Series 2004-CB2

================================================================================
<PAGE>
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                           PAGE
<S>                                                                                                                        <C>
ARTICLE I     DEFINITIONS ............................................................................................      11

         Section 1.01   Defined Terms ................................................................................      11

         Section 1.02   Accounting ...................................................................................      52

ARTICLE II    CONVEYANCE OF MORTGAGE LOANS; ORIGINAL ISSUANCE OF CERTIFICATES ........................................      52

         Section 2.01   Conveyance of Mortgage Loans .................................................................      52

         Section 2.02   Acceptance by Trustee ........................................................................      54

         Section 2.03   Repurchase or Substitution of Mortgage Loans by the Seller ...................................      56

         Section 2.04   Representations and Warranties of the Seller with Respect to the Mortgage Loans ..............      59

         Section 2.05   Representations, Warranties and Covenants of the Servicer ....................................      60

         Section 2.06   Representations and Warranties of the Depositor ..............................................      62

         Section 2.07   Issuance of Certificates and the Uncertificated Regular Interests ............................      63

         Section 2.08   Representations and Warranties of the Seller .................................................      64

         Section 2.09   Covenants of the Seller ......................................................................      66

ARTICLE III   ADMINISTRATION AND SERVICING OF THE TRUST FUND .........................................................      66

         Section 3.01   Servicer to Act as Servicer ..................................................................      66

         Section 3.02   Collection of Mortgage Loan Payments .........................................................      68

         Section 3.03   Realization Upon Defaulted Mortgage Loans ....................................................      68

         Section 3.04   Collection Account and Distribution Account ..................................................      70

         Section 3.05   Permitted Withdrawals From the Collection Account ............................................      71

         Section 3.06   Establishment of Escrow Account; Deposits in Escrow Account ..................................      72

         Section 3.07   Permitted Withdrawals From Escrow Account ....................................................      73

         Section 3.08   Payment of Taxes, Insurance and Other Charges; Collections Thereunder ........................      73

         Section 3.09   Transfer of Accounts .........................................................................      74

         Section 3.10   Maintenance of Hazard Insurance ..............................................................      75

         Section 3.11   Maintenance of Mortgage Impairment Insurance Policy ..........................................      75

         Section 3.12   Fidelity Bond, Errors and Omissions Insurance ................................................      76

         Section 3.13   Title, Management and Disposition of REO Property ............................................      76
</TABLE>

                                       i
<PAGE>
                                TABLE OF CONTENTS
                                   (continued)

<TABLE>
<CAPTION>
                                                                                                                           PAGE
<S>                                                                                                                        <C>
         Section 3.14   Due-on-Sale Clauses; Assumption and Substitution Agreements ..................................      78

         Section 3.15   Notification of Adjustments ..................................................................      79

         Section 3.16   Optional Purchases of Mortgage Loans by Servicer .............................................      79

         Section 3.17   Trustee to Cooperate; Release of Files .......................................................      80

         Section 3.18   Servicing Compensation .......................................................................      81

         Section 3.19   Annual Statement as to Compliance ............................................................      81

         Section 3.20   Annual Independent Certified Public Accountants' Reports .....................................      82

         Section 3.21   Access to Certain Documentation and Information Regarding the Mortgage Loans .................      82

         Section 3.22   Reserved .....................................................................................      83

         Section 3.23   Obligations of the Servicer in Respect of Compensating Interest ..............................      83

         Section 3.24   Obligations of the Servicer in Respect of Mortgage Interest Rates and Monthly Payments .......      83

         Section 3.25   Investment of Funds in the Collection Account and the Distribution Account ...................      83

         Section 3.26   Liability of Servicer; Indemnification .......................................................      84

         Section 3.27   Reports of Foreclosure and Abandonment of Mortgaged Properties ...............................      85

         Section 3.28   Protection of Assets .........................................................................      86

         Section 3.29   Periodic Filings .............................................................................      86

         Section 3.30   Advance Facility .............................................................................      88

ARTICLE IV    FLOW OF FUNDS ..........................................................................................      90

         Section 4.01   Interest Distributions .......................................................................      90

         Section 4.02   Distributions of Principal and Monthly Excess Cashflow Amounts ...............................      92

         Section 4.03   Allocation of Losses .........................................................................      97

         Section 4.04   Method of Distribution .......................................................................      97

         Section 4.05   Distributions on Book-Entry Certificates .....................................................      98

         Section 4.06   Statements ...................................................................................      98

         Section 4.07   Remittance Reports; Advances .................................................................     101
</TABLE>

                                       ii
<PAGE>
                                TABLE OF CONTENTS
                                   (continued)

<TABLE>
<CAPTION>
                                                                                                                           PAGE
<S>                                                                                                                        <C>
         Section 4.08   REMIC Distributions ..........................................................................     102

ARTICLE V     THE CERTIFICATES .......................................................................................     106

         Section 5.01   The Certificates .............................................................................     106

         Section 5.02   Registration of Transfer and Exchange of Certificates ........................................     107

         Section 5.03   Mutilated, Destroyed, Lost or Stolen Certificates ............................................     112

         Section 5.04   Persons Deemed Owners ........................................................................     112

         Section 5.05   Appointment of Paying Agent ..................................................................     112

ARTICLE VI    THE SELLER, THE SERVICER AND THE DEPOSITOR .............................................................     113

         Section 6.01   Liability of the Seller, the Servicer and the Depositor ......................................     113

         Section 6.02   Merger or Consolidation of, or Assumption of the Obligations of, the Seller,
                        the Servicer or the Depositor ................................................................     113

         Section 6.03   Limitation on Liability of the Servicer and Others ...........................................     113

         Section 6.04   Servicer Not to Resign .......................................................................     114

         Section 6.05   Delegation of Duties .........................................................................     115

ARTICLE VII   DEFAULT.... ............................................................................................     117

         Section 7.01   Servicer Events of Termination ...............................................................     117

         Section 7.02   Trustee to Act; Appointment of Successor .....................................................     119

         Section 7.03   Waiver of Defaults ...........................................................................     120

         Section 7.04   Notification to Certificateholders ...........................................................     121

         Section 7.05   Survivability of Servicer Liabilities ........................................................     121

ARTICLE VIII  THE TRUSTEE ............................................................................................     121

         Section 8.01   Duties of Trustee ............................................................................     121

         Section 8.02   Certain Matters Affecting the Trustee ........................................................     123

         Section 8.03   Trustee Not Liable for Certificates or Mortgage Loans ........................................     124

         Section 8.04   Trustee May Own Certificates .................................................................     125

         Section 8.05   Seller to Pay Trustee Fees and Expenses ......................................................     125

         Section 8.06   Eligibility Requirements for Trustee .........................................................     126

         Section 8.07   Resignation or Removal of Trustee ............................................................     126

         Section 8.08   Successor Trustee ............................................................................     127

         Section 8.09   Merger or Consolidation of Trustee ...........................................................     127
</TABLE>

                                      iii
<PAGE>
                                TABLE OF CONTENTS
                                   (continued)

<TABLE>
<CAPTION>
                                                                                                                           PAGE
<S>                                                                                                                        <C>
         Section 8.10   Appointment of Co-Trustee or Separate Trustee ................................................     128

         Section 8.11   Limitation of Liability ......................................................................     129

         Section 8.12   Trustee May Enforce Claims Without Possession of Certificates ................................     129

         Section 8.13   Suits for Enforcement ........................................................................     129

         Section 8.14   Waiver of Bond Requirement ...................................................................     130

         Section 8.15   Waiver of Inventory, Accounting and Appraisal Requirement ....................................     130

         Section 8.16   Compliance with National Housing Act of 1934 .................................................     130

ARTICLE IX    REMIC AND GRANTOR TRUST ADMINISTRATION .................................................................     130

         Section 9.01   REMIC Administration .........................................................................     130

         Section 9.02   Prohibited Transactions and Activities .......................................................     133

         Section 9.03   Indemnification with Respect to Certain Taxes and Loss of REMIC Status .......................     134

         Section 9.04   REO Property .................................................................................     134

         Section 9.05   Grantor Trust Administration .................................................................     135

ARTICLE X     TERMINATION ............................................................................................     135

         Section 10.01  Termination ..................................................................................     135

         Section 10.02  Additional Termination Requirements ..........................................................     137

ARTICLE XI    MISCELLANEOUS PROVISIONS ...............................................................................     138

         Section 11.01  Amendment ....................................................................................     138

         Section 11.02  Recordation of Agreement; Counterparts .......................................................     139

         Section 11.03  Limitation on Rights of Certificateholders ...................................................     139

         Section 11.04  Governing Law; Jurisdiction ..................................................................     140

         Section 11.05  Notices ......................................................................................     140

         Section 11.06  Severability of Provisions ...................................................................     141

         Section 11.07  Article and Section References ...............................................................     141

         Section 11.08  Notice to the Rating Agencies ................................................................     141

         Section 11.09  Further Assurances ...........................................................................     142

         Section 11.10  Section 11.10 Benefits of Agreement ..........................................................     142

         Section 11.11  Acts of Certificateholders ...................................................................     142
</TABLE>

                                       iv
<PAGE>
                                    EXHIBITS:

Exhibit A-1                Form of Class AF-1 Certificates
Exhibit A-2                Form of Class AV-1 Certificates
Exhibit A-3                Form of Class AV-2 Certificates
Exhibit A-4                Form of Class AV-3 Certificates
Exhibit A-5                Form of Class A-IO Certificates
Exhibit B-1                Form of Class B-1 Certificates
Exhibit B-2                Form of Class B-2 Certificates
Exhibit B-3                Form of Class B-3 Certificates
Exhibit B-4-1              Form of Class B-4 Certificates (144A)
Exhibit B-4-2              Form of Class B-4 Certificates (Regulation S)
Exhibit C-1-1              Form of Class R Certificate
Exhibit C-1-2              Form of Class R-X Certificates
Exhibit C-2                Form of Class M-1 Certificates
Exhibit C-3                Form of Class M-2 Certificates
Exhibit C-4                Form of Class M-3 Certificates
Exhibit C-5                Form of Class X Certificates
Exhibit C-6                Form of Class N Certificates
Exhibit D-1                Mortgage Loan Schedule for Group I Mortgage Loans
Exhibit D-2                Mortgage Loan Schedule for Group II Mortgage Loans
Exhibit E                  Form of Request for Release of Documents
Exhibit F-1                Form of Trustee's Initial Certification
Exhibit F-2                Form of Trustee's Final Certification
Exhibit F-3                Form of Receipt of Mortgage Note
Exhibit G                  Mortgage Loan Purchase Agreement
Exhibit H                  Form of Lost Note Affidavit
Exhibit I                  Form of ERISA Representation
Exhibit J                  Form of Investment Letter
Exhibit K                  Form of Residual Certificate Transfer Affidavit
Exhibit L                  Form of Transferor Certificate
Exhibit M                  Monthly Information Provided by Servicer
Exhibit N                  Form of Certification
Exhibit O                  Form of Certification to be Provided by Trustee
Exhibit P                  Form of Yield Maintenance Agreement
Exhibit Q                  Form of Power of Attorney

                                       v
<PAGE>
      This Pooling and Servicing Agreement is dated as of February 1, 2004 (the
"Agreement"), among MERRILL LYNCH MORTGAGE INVESTORS, INC., as depositor (the
"Depositor"), CREDIT-BASED ASSET SERVICING AND SECURITIZATION LLC, as seller
(the "Seller"), LITTON LOAN SERVICING LP, as servicer (the "Servicer"), and
JPMORGAN CHASE BANK, as trustee (the "Trustee").

                              PRELIMINARY STATEMENT

      The Depositor intends to sell pass-through certificates (collectively, the
"Certificates"), to be issued hereunder in multiple Classes, which in the
aggregate will evidence the entire beneficial ownership interest in the Trust
Fund created hereunder. The Certificates will consist of sixteen Classes of
Certificates, designated as (i) the Class AF-1, Class AV-1, Class AV-2, Class
AV-3 and Class A-IO Certificates, (ii) the Class M-1, Class M-2 and Class M-3
Certificates, (iii) the Class B-1, Class B-2, Class B-3 and Class B-4
Certificates, (iv) the Class N Certificates, (v) the Class X Certificates, (vi)
the Class R Certificates and the Class R-X Certificates.

      As provided herein, the Trustee shall elect that the Trust Fund (other
than the Grantor Trust) be treated for federal income tax purposes as six
separate real estate mortgage investment conduits (each a "REMIC" or, in the
alternative, "REMIC 1," "REMIC 2," "REMIC 3," "REMIC 4," "REMIC 5" and "REMIC 6"
respectively). The REMIC 6 Regular Interests represent all of the "regular
interests" in REMIC 6. The REMIC 5 Regular Interests represent all of the
"regular interests" in REMIC 5. The REMIC 4 Regular Interests represent all of
the "regular interests" in REMIC 4. Each Class of Cap Carryover Certificates
(other than the Class B-4 Certificates) represents beneficial ownership of the
Corresponding REMIC 4 Regular Interest and the right to receive LIBOR Carryover
Amounts. The Class B-4 Certificates represent beneficial ownership of the REMIC
6 Regular Interest and the right to receive LIBOR Carryover Amounts. For federal
income tax purposes, the Class N and Class X Certificates together represent
beneficial ownership of the REMIC 5 X/N Interest, the Reserve Account and the
Yield Maintenance Agreement subject to the obligation to pay LIBOR Carryover
Amounts. Each of the Class R-1, Class R-2, Class R-3 and Class R-4 Interests,
represented collectively by the Class R Certificates, represents the sole Class
of "residual interest" in REMIC 1, REMIC 2, REMIC 3 and REMIC 4, respectively,
for purposes of the REMIC Provisions. Each of the Class R-5 and Class R-6
Interests, represented collectively by the Class R-X Certificates, represent the
sole Class of "residual interest" in REMIC 5 and REMIC 6, respectively, for
purposes of the REMIC provisions. The REMIC 3 Regular Interests represent all of
the "regular interests" in REMIC 3. The REMIC 2 Regular Interests represent all
of the "regular interests" in REMIC 2. The REMIC 1 Regular Interests represent
all of the "regular interests" in REMIC 1. The REMIC 1 Regular Interests will be
held as assets of REMIC 2. The REMIC 2 Regular Interests, other than the REMIC 2
IO Interests, will be held as assets of REMIC 3. The REMIC 3 Regular Interests
and the REMIC 2 IO Interests will be held as assets of REMIC 4. The REMIC 4 X/N
Interest will be held as the sole asset of REMIC 5. For federal income tax
purposes, the REMIC 5 X/N Interest, the Yield Maintenance Agreement and the
Reserve Account will be held as assets of the Grantor Trust. The REMIC 4 B-4
Interest will be held as the sole asset of REMIC 6. The "latest possible
maturity date" for federal income tax purposes of all interests created hereby
will be the Distribution Date on December 25, 2033.
<PAGE>
REMIC 1

      The following table specifies the class designation, interest rate, and
initial principal amount for each class of REMIC 1 Interests.

<TABLE>
<CAPTION>
  Designation     Interest Rate      Initial Principal Amount     Related Loan Group
---------------   -------------      ------------------------     ------------------
<S>               <C>                <C>                          <C>
LT1-I-1                (1)                  $12,108,368.00            Loan Group I
LT1-I-2                (1)                  $11,209,188.00            Loan Group I
LT1-I-3                (1)                  $10,376,805.00            Loan Group I
LT1-I-4                (1)                  $ 9,606,257.00            Loan Group I
LT1-I-5                (1)                  $ 8,892,960.00            Loan Group I
LT1-I-6                (1)                  $ 8,232,661.00            Loan Group I
LT1-I-7                (1)                  $ 7,621,428.00            Loan Group I
LT1-I-8                (1)                  $ 7,055,619.00            Loan Group I
LT1-I-9                (1)                  $ 6,531,861.00            Loan Group I
LT1-I-10               (1)                  $ 6,047,034.00            Loan Group I
LT1-I-11               (1)                  $ 5,598,247.00            Loan Group I
LT1-I-12               (1)                  $ 5,182,822.00            Loan Group I
LT1-I-13               (1)                  $ 4,798,286.00            Loan Group I
LT1-I-14               (1)                  $ 4,442,342.00            Loan Group I
LT1-I-15               (1)                  $ 4,112,867.00            Loan Group I
LT1-I-16               (1)                  $ 3,807,897.00            Loan Group I
LT1-I-17               (1)                  $ 3,525,610.00            Loan Group I
LT1-I-18               (1)                  $ 3,264,323.00            Loan Group I
LT1-I-19               (1)                  $ 3,022,476.00            Loan Group I
LT1-I-20               (1)                  $ 2,798,623.00            Loan Group I
LT1-I-21               (1)                  $ 2,591,428.00            Loan Group I
LT1-I-22               (1)                  $ 2,399,656.00            Loan Group I
LT1-I-23               (1)                  $ 2,222,157.00            Loan Group I
LT1-I-24               (1)                  $ 2,057,873.00            Loan Group I
LT1-I-25               (1)                  $ 1,905,822.00            Loan Group I
LT1-I-26               (1)                  $ 1,765,094.00            Loan Group I
LT1-I-27               (1)                  $ 1,634,848.00            Loan Group I
LT1-I-28               (1)                  $ 1,514,305.00            Loan Group I
LT1-I-29               (1)                  $ 1,402,743.00            Loan Group I
LT1-I-30               (1)                  $27,575,026.00            Loan Group I
LT1-I-X                (1)                  $         0.43            Loan Group I
LT1-II-1               (2)                  $18,199,793.00            Loan Group II
LT1-II-2               (2)                  $16,850,759.00            Loan Group II
LT1-II-3               (2)                  $15,601,642.00            Loan Group II
LT1-II-4               (2)                  $14,445,064.00            Loan Group II
LT1-II-5               (2)                  $13,374,164.00            Loan Group II
LT1-II-6               (2)                  $12,382,602.00            Loan Group II
LT1-II-7               (2)                  $11,464,501.00            Loan Group II
LT1-II-8               (2)                  $10,614,423.00            Loan Group II
</TABLE>

                                       2
<PAGE>
<TABLE>
<S>               <C>                <C>                          <C>
LT1-II-9               (2)                  $ 9,827,331.00            Loan Group II
LT1-II-10              (2)                  $ 9,098,562.00            Loan Group II
LT1-II-11              (2)                  $ 8,423,798.00            Loan Group II
LT1-II-12              (2)                  $ 7,799,037.00            Loan Group II
LT1-II-13              (2)                  $ 7,220,577.00            Loan Group II
LT1-II-14              (2)                  $ 6,684,991.00            Loan Group II
LT1-II-15              (2)                  $ 6,189,102.00            Loan Group II
LT1-II-16              (2)                  $ 5,729,969.00            Loan Group II
LT1-II-17              (2)                  $ 5,304,898.00            Loan Group II
LT1-II-18              (2)                  $ 4,911,308.00            Loan Group II
LT1-II-19              (2)                  $ 4,546,898.00            Loan Group II
LT1-II-20              (2)                  $ 4,209,761.00            Loan Group II
LT1-II-21              (2)                  $ 3,897,887.00            Loan Group II
LT1-II-22              (2)                  $ 3,608,563.00            Loan Group II
LT1-II-23              (2)                  $ 3,340,693.00            Loan Group II
LT1-II-24              (2)                  $ 3,092,692.00            Loan Group II
LT1-II-25              (2)                  $ 2,863,086.00            Loan Group II
LT1-II-26              (2)                  $ 2,650,513.00            Loan Group II
LT1-II-27              (2)                  $ 2,453,708.00            Loan Group II
LT1-II-28              (2)                  $ 2,271,505.00            Loan Group II
LT1-II-29              (2)                  $ 2,102,820.00            Loan Group II
LT1-II-30              (2)                  $26,184,704.00            Loan Group II
LT1-II-X               (2)                  $         0.23            Loan Group II
R-1                    (3)                              (3)           N/A
</TABLE>

----------
      (1)   For any Distribution Date, the interest rate for each REMIC 1
            Regular Interest containing "I" in its designation shall be a per
            annum rate equal to Group I Net Rate for such Distribution Date.

      (2)   For any Distribution Date, the interest rate for each REMIC 1
            Regular Interest containing "II" in its designation shall be a per
            annum rate equal to Group II Net Rate for such Distribution Date.

      (3)   The Class R-1 Interest shall represent the sole class of residual
            interest in REMIC 1. The Class R-1 Interest will not have a
            principal amount or an interest rate. The Class R-1 Interest shall
            be represented by the Class R Certificate.

REMIC 2

      The following table specifies the class designation, interest rate, and
initial principal amount for each class of REMIC 2 Interests.

<TABLE>
<CAPTION>
                                                                 Initial Principal
                                                                 Amount or Initial
                         Interest           Adjustment                Notional               Related Loan
  Designation              Rate               Period             Principal Amount                Group
---------------          --------         -------------          -----------------           ------------
<S>                      <C>              <C>                    <C>                         <C>
LT2-I-1                     (1)           March 2004               $12,108,368.00            Loan Group I
LT2-I-2                     (1)           April 2004               $11,209,188.00            Loan Group I
LT2-I-3                     (1)           May 2004                 $10,376,805.00            Loan Group I
LT2-I-4                     (1)           June 2004                $ 9,606,257.00            Loan Group I
</TABLE>

                                       3
<PAGE>
<TABLE>
<S>                         <C>           <C>                      <C>                       <C>
LT2-I-5                     (1)           July 2004                $ 8,892,960.00            Loan Group I
LT2-I-6                     (1)           August 2004              $ 8,232,661.00            Loan Group I
LT2-I-7                     (1)           September 2004           $ 7,621,428.00            Loan Group I
LT2-I-8                     (1)           October 2004             $ 7,055,619.00            Loan Group I
LT2-I-9                     (1)           November 2004            $ 6,531,861.00            Loan Group I
LT2-I-10                    (1)           December 2004            $ 6,047,034.00            Loan Group I
LT2-I-11                    (1)           January 2005             $ 5,598,247.00            Loan Group I
LT2-I-12                    (1)           February 2005            $ 5,182,822.00            Loan Group I
LT2-I-13                    (1)           March 2005               $ 4,798,286.00            Loan Group I
LT2-I-14                    (1)           April 2005               $ 4,442,342.00            Loan Group I
LT2-I-15                    (1)           May 2005                 $ 4,112,867.00            Loan Group I
LT2-I-16                    (1)           June 2005                $ 3,807,897.00            Loan Group I
LT2-I-17                    (1)           July 2005                $ 3,525,610.00            Loan Group I
LT2-I-18                    (1)           August 2005              $ 3,264,323.00            Loan Group I
LT2-I-19                    (1)           September 2005           $ 3,022,476.00            Loan Group I
LT2-I-20                    (1)           October 2005             $ 2,798,623.00            Loan Group I
LT2-I-21                    (1)           November 2005            $ 2,591,428.00            Loan Group I
LT2-I-22                    (1)           December 2005            $ 2,399,656.00            Loan Group I
LT2-I-23                    (1)           January 2006             $ 2,222,157.00            Loan Group I
LT2-I-24                    (1)           February 2006            $ 2,057,873.00            Loan Group I
LT2-I-25                    (1)           March 2006               $ 1,905,822.00            Loan Group I
LT2-I-26                    (1)           April 2006               $ 1,765,094.00            Loan Group I
LT2-I-27                    (1)           May 2006                 $ 1,634,848.00            Loan Group I
LT2-I-28                    (1)           June 2006                $ 1,514,305.00            Loan Group I
LT2-I-29                    (1)           July 2006                $ 1,402,743.00            Loan Group I
LT2-I-30                    (1)           August 2006              $27,575,026.00            Loan Group I
LT2-I-X                     (2)           N/A                      $         0.43            Loan Group I
LT2-I-1-IO                  (3)           March 2004               $12,108,368.00            Loan Group I
LT2-I-2-IO                  (3)           April 2004               $11,209,188.00            Loan Group I
LT2-I-3-IO                  (3)           May 2004                 $10,376,805.00            Loan Group I
LT2-I-4-IO                  (3)           June 2004                $ 9,606,257.00            Loan Group I
LT2-I-5-IO                  (3)           July 2004                $ 8,892,960.00            Loan Group I
LT2-I-6-IO                  (3)           August 2004              $ 8,232,661.00            Loan Group I
LT2-I-7-IO                  (3)           September 2004           $ 7,621,428.00            Loan Group I
LT2-I-8-IO                  (3)           October 2004             $ 7,055,619.00            Loan Group I
LT2-I-9-IO                  (3)           November 2004            $ 6,531,861.00            Loan Group I
LT2-I-10-IO                 (3)           December 2004            $ 6,047,034.00            Loan Group I
LT2-I-11-IO                 (3)           January 2005             $ 5,598,247.00            Loan Group I
LT2-I-12-IO                 (3)           February 2005            $ 5,182,822.00            Loan Group I
LT2-I-13-IO                 (3)           March 2005               $ 4,798,286.00            Loan Group I
LT2-I-14-IO                 (3)           April 2005               $ 4,442,342.00            Loan Group I
LT2-I-15-IO                 (3)           May 2005                 $ 4,112,867.00            Loan Group I
LT2-I-16-IO                 (3)           June 2005                $ 3,807,897.00            Loan Group I
LT2-I-17-IO                 (3)           July 2005                $ 3,525,610.00            Loan Group I
LT2-I-18-IO                 (3)           August 2005              $ 3,264,323.00            Loan Group I
LT2-I-19-IO                 (3)           September 2005           $ 3,022,476.00            Loan Group I
</TABLE>

                                       4
<PAGE>
<TABLE>
<S>                         <C>           <C>                      <C>                       <C>
LT2-I-20-IO                 (3)           October 2005             $ 2,798,623.00            Loan Group I
LT2-I-21-IO                 (3)           November 2005            $ 2,591,428.00            Loan Group I
LT2-I-22-IO                 (3)           December 2005            $ 2,399,656.00            Loan Group I
LT2-I-23-IO                 (3)           January 2006             $ 2,222,157.00            Loan Group I
LT2-I-24-IO                 (3)           February 2006            $ 2,057,873.00            Loan Group I
LT2-I-25-IO                 (3)           March 2006               $ 1,905,822.00            Loan Group I
LT2-I-26-IO                 (3)           April 2006               $ 1,765,094.00            Loan Group I
LT2-I-27-IO                 (3)           May 2006                 $ 1,634,848.00            Loan Group I
LT2-I-28-IO                 (3)           June 2006                $ 1,514,305.00            Loan Group I
LT2-I-29-IO                 (3)           July 2006                $ 1,402,743.00            Loan Group I
LT2-I-30-IO                 (3)           August 2006              $27,575,026.00            Loan Group I
LT2-II-1                    (4)           March 2004               $18,199,793.00            Loan Group II
LT2-II-2                    (4)           April 2004               $16,850,759.00            Loan Group II
LT2-II-3                    (4)           May 2004                 $15,601,642.00            Loan Group II
LT2-II-4                    (4)           June 2004                $14,445,064.00            Loan Group II
LT2-II-5                    (4)           July 2004                $13,374,164.00            Loan Group II
LT2-II-6                    (4)           August 2004              $12,382,602.00            Loan Group II
LT2-II-7                    (4)           September 2004           $11,464,501.00            Loan Group II
LT2-II-8                    (4)           October 2004             $10,614,423.00            Loan Group II
LT2-II-9                    (4)           November 2004            $ 9,827,331.00            Loan Group II
LT2-II-10                   (4)           December 2004            $ 9,098,562.00            Loan Group II
LT2-II-11                   (4)           January 2005             $ 8,423,798.00            Loan Group II
LT2-II-12                   (4)           February 2005            $ 7,799,037.00            Loan Group II
LT2-II-13                   (4)           March 2005               $ 7,220,577.00            Loan Group II
LT2-II-14                   (4)           April 2005               $ 6,684,991.00            Loan Group II
LT2-II-15                   (4)           May 2005                 $ 6,189,102.00            Loan Group II
LT2-II-16                   (4)           June 2005                $ 5,729,969.00            Loan Group II
LT2-II-17                   (4)           July 2005                $ 5,304,898.00            Loan Group II
LT2-II-18                   (4)           August 2005              $ 4,911,308.00            Loan Group II
LT2-II-19                   (4)           September 2005           $ 4,546,898.00            Loan Group II
LT2-II-20                   (4)           October 2005             $ 4,209,761.00            Loan Group II
LT2-II-21                   (4)           November 2005            $ 3,897,887.00            Loan Group II
LT2-II-22                   (4)           December 2005            $ 3,608,563.00            Loan Group II
LT2-II-23                   (4)           January 2006             $ 3,340,693.00            Loan Group II
LT2-II-24                   (4)           February 2006            $ 3,092,692.00            Loan Group II
LT2-II-25                   (4)           March 2006               $ 2,863,086.00            Loan Group II
LT2-II-26                   (4)           April 2006               $ 2,650,513.00            Loan Group II
LT2-II-27                   (4)           May 2006                 $ 2,453,708.00            Loan Group II
LT2-II-28                   (4)           June 2006                $ 2,271,505.00            Loan Group II
LT2-II-29                   (4)           July 2006                $ 2,102,820.00            Loan Group II
LT2-II-30                   (4)           August 2006              $26,184,704.00            Loan Group II
LT2-II-X                    (5)           N/A                      $         0.23            Loan Group II
LT2-II-1-IO                 (6)           March 2004               $18,199,793.00            Loan Group II
LT2-II-2-IO                 (6)           April 2004               $16,850,759.00            Loan Group II
LT2-II-3-IO                 (6)           May 2004                 $15,601,642.00            Loan Group II
LT2-II-4-IO                 (6)           June 2004                $14,445,064.00            Loan Group II
</TABLE>

                                       5
<PAGE>
<TABLE>
<S>                         <C>           <C>                      <C>                       <C>
LT2-II-5-IO                 (6)           July 2004                $13,374,164.00            Loan Group II
LT2-II-6-IO                 (6)           August 2004              $12,382,602.00            Loan Group II
LT2-II-7-IO                 (6)           September 2004           $11,464,501.00            Loan Group II
LT2-II-8-IO                 (6)           October 2004             $10,614,423.00            Loan Group II
LT2-II-9-IO                 (6)           November 2004            $ 9,827,331.00            Loan Group II
LT2-II-10-IO                (6)           December 2004            $ 9,098,562.00            Loan Group II
LT2-II-11-IO                (6)           January 2005             $ 8,423,798.00            Loan Group II
LT2-II-12-IO                (6)           February 2005            $ 7,799,037.00            Loan Group II
LT2-II-13-IO                (6)           March 2005               $ 7,220,577.00            Loan Group II
LT2-II-14-IO                (6)           April 2005               $ 6,684,991.00            Loan Group II
LT2-II-15-IO                (6)           May 2005                 $ 6,189,102.00            Loan Group II
LT2-II-16-IO                (6)           June 2005                $ 5,729,969.00            Loan Group II
LT2-II-17-IO                (6)           July 2005                $ 5,304,898.00            Loan Group II
LT2-II-18-IO                (6)           August 2005              $ 4,911,308.00            Loan Group II
LT2-II-19-IO                (6)           September 2005           $ 4,546,898.00            Loan Group II
LT2-II-20-IO                (6)           October 2005             $ 4,209,761.00            Loan Group II
LT2-II-21-IO                (6)           November 2005            $ 3,897,887.00            Loan Group II
LT2-II-22-IO                (6)           December 2005            $ 3,608,563.00            Loan Group II
LT2-II-23-IO                (6)           January 2006             $ 3,340,693.00            Loan Group II
LT2-II-24-IO                (6)           February 2006            $ 3,092,692.00            Loan Group II
LT2-II-25-IO                (6)           March 2006               $ 2,863,086.00            Loan Group II
LT2-II-26-IO                (6)           April 2006               $ 2,650,513.00            Loan Group II
LT2-II-27-IO                (6)           May 2006                 $ 2,453,708.00            Loan Group II
LT2-II-28-IO                (6)           June 2006                $ 2,271,505.00            Loan Group II
LT2-II-29-IO                (6)           July 2006                $ 2,102,820.00            Loan Group II
LT2-II-30-IO                (6)           August 2006              $26,184,704.00            Loan Group II
R-2                         (7)           N/A                                  (7)           N/A
</TABLE>

----------
      (1)   For any Distribution Date during or prior to the related Adjustment
            Period, the interest rate for each REMIC 2 Interest related to Loan
            Group I that does not contain "IO" in its designation (other than
            the LT2-I-X Interest) shall be a per annum rate equal to the greater
            of (i) the Group I Net Rate for such Distribution Date minus 1.50%
            and (ii) 0.00%. For any Distribution Date after the related
            Adjustment Period, the interest rate for each such REMIC 2 Interest
            shall be the Group I Net Rate.

      (2)   For any Distribution Date, the interest rate for the LT2-I-X
            Interest shall be a per annum rate equal to the Group I Net Rate for
            such Distribution Date.

      (3)   For any Distribution Date during or prior to the related Adjustment
            Period, the interest rate for each REMIC 2 Interest related to Loan
            Group I that contains an "IO" in its designation shall be a per
            annum rate equal to 1.50% subject to a cap equal to the Group I Net
            Rate. For any Distribution Date after the related Adjustment Period,
            the interest rate for each such REMIC 2 Interest shall be 0.00%.

      (4)   For any Distribution Date during or prior to the related Adjustment
            Period, the interest rate for each REMIC 2 Interest related to Loan
            Group II that does not contain "IO" in its designation (other than
            the LT2-II-X Interest) shall be the greater of (i) a per annum rate
            equal to the Group II Net Rate for such Distribution Date minus
            1.50% and (ii) 0.00%. For any Distribution Date after the related
            Adjustment Period, the interest rate for each such REMIC 2 Interest
            shall be the Group II Net Rate.

      (5)   For any Distribution Date, the interest rate for the LT2-II-X
            Interest shall be a per annum rate equal to the Group II Net Rate
            for such Distribution Date.

      (6)   For any Distribution Date during or prior to the related Adjustment
            Period, the interest rate for each

                                       6
<PAGE>
            REMIC 2 Interest related to Loan Group II that contains an "IO" in
            its designation shall be a per annum rate equal to 1.50% subject to
            a cap equal to the Group II Net Rate. For any Distribution Date
            after the related Adjustment Period, the interest rate for each such
            REMIC 2 Interest shall be 0.00%.

      (7)   The Class R-2 Interest shall represent the sole class of residual
            interest in REMIC 2. The Class R-2 Interest will not have a
            principal amount or an interest rate. The Class R-2 Interest shall
            be represented by the Class R Certificate.

      (8)   The REMIC 2 IO Interests are interest-only interests and are not
            entitled to payments of principal.

REMIC 3

      The following table specifies the class designation, interest rate, and
initial principal amount for each class of REMIC 3 Interests.

<TABLE>
<CAPTION>
                                                                                 Related Loan
                                                                               Group or Related
  Designation     Interest Rate          Initial Principal Amount                 Certificate
--------------    -------------          ------------------------              ----------------
<S>               <C>                    <C>                                   <C>
LT3-AF1                 (1)                $ 35,527,250.00000000                   Class AF-1
LT3-AV1                 (1)                $ 25,084,000.00000000                   Class AV-1
LT3-AV2                 (1)                $ 16,509,500.00000000                   Class AV-2
LT3-AV3                 (1)                $  8,702,250.00000000                   Class AV-3
LT3-M1                  (1)                $  6,018,000.00000000                   Class M-1
LT3-M2                  (1)                $  5,233,000.00000000                   Class M-2
LT3-M3                  (1)                $  1,308,250.00000000                   Class M-3
LT3-B1                  (1)                $  1,308,250.00000000                   Class B-1
LT3-B2                  (1)                $  1,308,250.00000000                   Class B-2
LT3-B3                  (1)                $  1,308,250.00000000                   Class B-3
LT3-B4                  (1)                $  1,832,000.00000000                   Class B-4
LT3-X1                  (1)                $105,185,988.83000000                      N/A
LT3-IA                  (1)                $     15,597.81321500                  Loan Group I
LT3-IB                  (2)                $     86,652.31321500                  Loan Group I
LT3-IIA                 (1)                $     22,081.17561500                 Loan Group II
LT3-IIB                 (3)                $    122,672.67561500                 Loan Group II
LT3-X2                  (1)                $209,077,984.85234000                      N/A
R-3                     (4)                                   (4)                     N/A
</TABLE>

----------
      (1)   For any Distribution Date, the interest rate for the LT3-AF1
            Interest, the LT3-AV1 Interest, the LT3-AV2 Interest, the LT3-AV3
            Interest, the LT3-M1 Interest, the LT3-M2 Interest, the LT3-M3
            Interest, the LT3-B1 Interest, the LT3-B2 Interest, the LT3-B3
            Interest, the LT3-B4 Interest, the LT3-X1 Interest, the LT3-IA
            Interest, the LT3-IIA Interest and the LT3-X2 Interest shall be a
            per annum rate equal to the weighted average interest rate of the
            REMIC 2 Regular Interests (other than the REMIC 2 IO Interests) for
            such Distribution Date, weighted on the basis of their respective
            principal balances.

      (2)   For any Distribution Date, the interest rate for the LT3-IB Interest
            shall be a per annum rate equal to the Group I Cap for such
            Distribution Date which shall be the numeric equivalent of the
            weighted average interest rate of the REMIC 2 Regular Interests
            related to Loan Group I (other than any REMIC 2 IO Interest) for
            such Distribution Date weighted on the basis of their respective
            principal balances.

      (3)   For any Distribution Date, the interest rate for the LT3-IIB
            Interest shall be a per annum rate equal to the Group II Cap for
            such Distribution Date which shall be the numeric equivalent of the
            weighted average interest rate of the REMIC 2 Regular Interests
            related to Loan Group II (other than any REMIC 2 IO

                                       7
<PAGE>
            Interest) for such Distribution Date weighted on the basis of their
            respective principal balances.

      (4)   The Class R-3 Interest shall represent the sole class of residual
            interest in REMIC 3. The Class R-3 Interest will not have a
            principal amount or an interest rate. The Class R-3 Interest shall
            be represented by the Class R Certificate.

      All computations with respect to any REMIC 3 Interest shall be taken out
to ten decimal places.

      REMIC 4

      The sole assets of REMIC 4 shall be the REMIC 3 Regular Interests and the
REMIC 2 IO Interests. REMIC 4 shall issue the REMIC 4 Regular Interests, which
shall represent the regular interests in REMIC 4, and the Class R-4 Interest,
which shall represent the sole class of residual interest in REMIC 4.

      REMIC 5

      The sole asset of REMIC 5 shall be the REMIC 4 X/N Interest. The sole
regular interest in REMIC 5 will be the REMIC 5 X/N Interest. The residual
interest in REMIC 5 will be the Class R-5 Interest, which will be represented by
the Class R-X Certificate.

      REMIC 6

      The sole asset of REMIC 6 shall be the REMIC 4 B-4 Interest. The sole
regular interest in REMIC 6 will be the REMIC 6 B-4 Interest. The residual
interest in REMIC 6 will be the Class R-6 Interest, which will be represented by
the Class R-X Certificate.

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

<TABLE>
<CAPTION>
                Original Class
                  Certificate
              Principal Balance or                   Pass-Through                      Assumed Final
 Class           Notional Amount                         Rate                          Maturity Dates
-------       --------------------                   ------------                    ------------------
<S>           <C>                                    <C>                             <C>
AF-1             $142,109,000.00                           (1)                         March 25, 2033
AV-1             $100,336,000.00                           (2)                       September 25, 2033
AV-2             $ 66,038,000.00                           (3)                         March 25, 2027
AV-3             $ 34,809,000.00                           (4)                       September 25, 2033
A-IO             $418,649,977.00  (5)                 1.50%(6)                         August 25, 2006
M-1              $ 24,072,000.00                           (7)                          July 25, 2033
M-2              $ 20,932,000.00                           (8)                          June 25, 2033
M-3              $  5,233,000.00                           (9)                         March 25, 2033
B-1              $  5,233,000.00                          (10)                        February 25, 2033
B-2              $  5,233,000.00                          (11)                        December 25, 2033
B-3              $  5,233,000.00                          (12)                       September 25, 2032
B-4              $  7,328,000.00                          (13)                        February 25, 2032
N                $ 15,800,000.00  (14)                0.00%                                  N/A
</TABLE>

                                       8
<PAGE>
<TABLE>
<CAPTION>
                Original Class
                  Certificate
              Principal Balance or                   Pass-Through                      Assumed Final
 Class           Notional Amount                         Rate                          Maturity Dates
-------       --------------------                   ------------                    ------------------
<S>           <C>                                    <C>                             <C>
X                            N/A  (14)                    N/A                                N/A
R                            N/A                          N/A                                N/A
R -X                         N/A                          N/A                                N/A
Total            $416,556,000.00  (15)
</TABLE>

(1)   Interest will accrue on the Class AF-1 Certificates during each Interest
      Accrual Period at a rate equal to the lesser of: (i) the Class AF-1
      Pass-Through Rate and (ii) the Group I Cap for such Distribution Date.

(2)   Interest will accrue on the Class AV-1 Certificates at a rate equal to the
      least of: (i) the Class AV-1 Pass-Through Rate, (ii) the Group II Cap for
      such Distribution Date and (iii) the Group II Maximum Rate Cap for such
      Distribution Date.

(3)   Interest will accrue on the Class AV-2 Certificates at a rate equal to the
      least of: (i) the Class AV-2 Pass-Through Rate, (ii) the Group II Cap for
      such Distribution Date and (iii) the Group II Maximum Rate Cap for such
      Distribution Date.

(4)   Interest will accrue on the Class AV-3 Certificates at a rate equal to the
      least of: (i) the Class AV-3 Pass-Through Rate, (ii) the Group II Cap for
      such Distribution Date and (iii) the Group II Maximum Rate Cap for such
      Distribution Date.

(5)   Initial aggregate Notional Amount. The Class A-IO is made up of two
      components, Component A-IO-1 and Component A-IO-2, each of which has a
      separate notional amount.

(6)   No interest will accrue on the Class A-IO Certificates for Distribution
      Dates after the Distribution Date in August 2006. The Pass-Through Rate on
      Component A-IO-1 and Component A-IO-2 on any Distribution Date will be
      subject to a cap equal to the Group I Net Rate or Group II Net Rate, as
      applicable.

(7)   Interest will accrue on the Class M-1 Certificates at a rate equal to the
      least of: (i) the Class M-1 Pass-Through Rate, (ii) the Subordinate Rate
      Cap for such Distribution Date and (iii) the Subordinate Maximum Rate Cap.

(8)   Interest will accrue on the Class M-2 Certificates at a rate equal to the
      least of: (i) the Class M-2 Pass-Through Rate, (ii) the Subordinate Rate
      Cap for such Distribution Date and (iii) the Subordinate Maximum Rate Cap.

(9)   Interest will accrue on the Class M-3 Certificates at a rate equal to the
      least of: (i) the Class M-3 Pass-Through Rate, (ii) the Subordinate Rate
      Cap for such Distribution Date and (iii) the Subordinate Maximum Rate Cap.

(10)  Interest will accrue on the Class B-1 Certificates at a rate equal to the
      least of: (i) the Class B-1 Pass-Through Rate, (ii) the Subordinate Rate
      Cap for such Distribution Date and (iii) the Subordinate Maximum Rate Cap.

(11)  Interest will accrue on the Class B-2 Certificates at a rate equal to the
      least of: (i) the Class B-2 Pass-Through Rate, (ii) the Subordinate Rate
      Cap for such Distribution Date and (iii) the Subordinate Maximum Rate Cap.

(12)  Interest will accrue on the Class B-3 Certificates at a rate equal to the
      least of: (i) the Class B-3 Pass-Through Rate, (ii) the Subordinate Rate
      Cap for such Distribution Date and (iii) the Subordinate Maximum Rate Cap.

(13)  Interest will accrue on the Class B-4 Certificates at a rate equal to the
      lesser of: (i) the Class B-4 Pass-Through Rate, (ii) the Subordinate Rate
      Cap for such Distribution Date and (iii) the Subordinate Maximum Rate Cap.

(14)  The Class N and Class X Certificates, collectively, represent the
      beneficial ownership of the REMIC 5 X/N Interest, subject to the
      obligation to make payments in respect of LIBOR Carryover Amounts.

(15)  Exclusive of the Class A-IO Notional Amount and the Class N Notional
      Amount. The Class N Original Notional Amount is $15,800,000.00.

                                       9
<PAGE>
                                   ARTICLE I

                                   DEFINITIONS

      Section 1.01 Defined Terms.

      Whenever used in this Agreement or in the Preliminary Statement, the
following words and phrases, unless the context otherwise requires, shall have
the meanings specified in this Article. Unless otherwise specified, interest on
the Class AV-1, Class AV-2, Class AV-3, Class M-1, Class M-2, Class M-3, Class
B-1, Class B-2, Class B-3 and Class B-4 Certificates will be calculated on the
basis of the actual number of days in the related Interest Accrual Period and a
360-day year. Interest on the Class AF-1, Class A-IO, Class N and Class X
Certificates will be calculated on the basis of a 360-day year consisting of
twelve 30-day months.

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

      "60+ Day Delinquent Loan": With respect to any date of determination, each
Mortgage Loan with respect to which any portion of a Monthly Payment is, as of
the last day of the prior Collection Period, two months or more past due, each
Mortgage Loan in foreclosure, all REO Property and each Mortgage Loan for which
the Mortgagor has filed for bankruptcy after the Closing Date.

      "Account": Any of the Collection Account, the Distribution Account, the
Escrow Account and the Reserve Account.

      "Accrued Certificate Interest": With respect to each Distribution Date and
Class of Certificates, an amount equal to the interest accrued at the applicable
rate set forth or described for such Class in the table in the Preliminary
Statement during the related Interest Accrual Period on the Certificate
Principal Balance or Notional Amount of such Class of Certificates, reduced by
such Class's Interest Percentage of Relief Act Interest Shortfalls for such
Distribution Date.

      "Actuarial Mortgage Loan": Any Mortgage Loan other than a Simple Interest
Mortgage Loan.

      "Adjustment Date": With respect to each Group II Mortgage Loan, each
adjustment date, on which the Mortgage Interest Rate of a Group II Mortgage Loan
changes pursuant to the related Mortgage Note. The first Adjustment Date
following the Cut-off Date as to each Group II Mortgage Loan is set forth in the
Mortgage Loan Schedule for Group II Mortgage Loans.

      "Adjustment Period": As defined in the Preliminary Statement.

      "Advance": As to any Actuarial Mortgage Loan or REO Property, any advance
made by the Servicer in respect of any Distribution Date pursuant to Section
4.07.

      "Advance Facility": As defined in Section 3.30(a) hereof.

      "Advance Facility Notice": As defined in Section 3.30(b) hereof.

                                       10
<PAGE>
      "Advance Financing Person": As defined in Section 3.30(a) hereof.

      "Advance Reimbursement Amounts": As defined in Section 3.30(b) hereof.

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

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

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

      "Applicable Regulations": As to any Mortgage Loan, all federal, state and
local laws, statutes, rules and regulations applicable thereto, including with
respect to each FHA Loan, the FHA Regulations and the related FHA Insurance
Contract.

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

      "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 or
record the sale of the Mortgage.

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

      "Available Funds": As to any Distribution Date, an amount equal to the
excess of (i) the sum of (a) the aggregate of the Monthly Payments due during
the related Collection Period and received by the Servicer on or prior to the
related Determination Date, (b) Liquidation Proceeds, Insurance Proceeds,
Condemnation Proceeds, Principal Prepayments, Substitution Adjustment Amounts,
the Purchase Price for any repurchased Mortgage Loan, the Termination Price with
respect to the termination of the Trust pursuant to Section 10.01 hereof, any
Reimbursement Amount or Recovery deposited to the Collection Account and other
unscheduled recoveries of principal and interest (excluding prepayment
penalties) in respect of the Mortgage Loans during the related Prepayment
Period, (c) the aggregate of any amounts received in respect of an REO Property
withdrawn from any REO Account and deposited in the Collection Account for such
Distribution Date, (d) any Compensating Interest for such Distribution Date, and
(e) the aggregate of any Advances made by the Servicer for such Distribution
Date over (ii) the sum of (a) amounts reimbursable or payable to the Servicer
pursuant to Section 3.05, (b) Stayed Funds, (c) the Servicing Fee and (d)
amounts deposited in the Collection Account or the Distribution Account, as the
case may be, in error.

                                       11
<PAGE>
      "Balloon Mortgage Loan": A Mortgage Loan that provides for the payment of
the unamortized principal balance of such Mortgage Loan in a single payment at
the maturity of such Mortgage Loan that is substantially greater than the
preceding monthly payment.

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

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

      "Book-Entry Certificates": Any of the Certificates that shall be
registered in the name of the Depository or its nominee, the ownership of which
is reflected on the books of the Depository or on the books of a Person
maintaining an account with the Depository (directly, as a "Depository
Participant," or indirectly, as an indirect participant in accordance with the
rules of the Depository and as described in Section 5.02 hereof). On the Closing
Date, the Class AF-1, Class AV-1, Class AV-2, Class AV-3, Class A-IO, Class M-1,
Class M-2, Class M-3, Class B-1, Class B-2, Class B-3 and Class B-4 Certificates
shall be Book-Entry Certificates.

      "Book-Entry Regulation S Global Securities": As defined in Section 5.01.

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

      "Cap": Any of the Group I Cap, the Group II Cap, the Group II Maximum Rate
Cap, the Subordinate Rate Cap or the Subordinate Maximum Rate Cap.

      "Cap Carryover Certificates": The Class AV-1, Class AV-2, Class AV-3,
Class M-1, Class M-2, Class M-3, Class B-1, Class B-2, Class B-3 and Class B-4
Certificates.

      "Certificate": Any Regular Certificate or Residual Certificate.

      "Certificate Custodian": Initially, JPMorgan Chase Bank; thereafter any
other Certificate Custodian acceptable to the Depository and selected by the
Trustee.

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

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

                                       12
<PAGE>
Balance of such Class. Notwithstanding the foregoing on any Distribution Date
relating to a Collection Period in which a Recovery has been received by the
Servicer, the Certificate Principal Balance of any Class of Certificates then
outstanding for which any Applied Realized Loss Amount has been allocated will
be increased, in order of seniority, by an amount equal to the lesser of (i) the
Unpaid Realized Loss Amount for such Class of Certificates and (ii) the total of
any Recovery distributed on such date to the Certificateholders (reduced by the
amount of the increase in the Certificate Principal Balance of any more senior
Class of Certificates pursuant to this sentence on such Distribution Date).

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

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

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

      "Class AF-1 Pass-Through Rate": For each Distribution Date (i) on or prior
to the Optional Termination Date, 3.608% per annum, and (ii) following the
Optional Termination Date, 4.108% per annum, subject in either case to a cap
equal to the Group I Cap.

      "Class A-IO Notional Amount": With respect to any Distribution Date, the
sum of the Notional Amount of Component A-IO-1 and Component A-IO-2. With
respect to each of Component A-IO-1 and Component A-IO-2 and any Distribution
Date through the Distribution Date in August 2006, the Notional Amount of each
Component shall be an amount equal to the lesser of (a) the amount listed in the
notional schedule for the related Component below and (b) the aggregate
Principal Balance of the Group I Mortgage Loans or the Group II Mortgage Loans,
as applicable, before the application of any principal payments for the related
Due Date. With respect to each of Component A-IO-1 and Component A-IO-2 and any
Distribution Date after the August 2006 Distribution Date, zero. For federal
income tax purposes, the Class A-IO Certificates will not have a principal
amount or notional amount, but shall instead represent the right to receive 100%
of the payments on the REMIC 2 IO Interests.

<TABLE>
<CAPTION>
                                         MAXIMUM                   MAXIMUM             MAXIMUM CLASS A-IO
          DISTRIBUTION              COMPONENT A-IO-1          COMPONENT A-IO-2              (TOTAL)
              DATE                   NOTIONAL AMOUNT           NOTIONAL AMOUNT          NOTIONAL AMOUNT
        ----------------            ----------------          ----------------         ------------------
<S>                                 <C>                       <C>                      <C>
              March 2004              $173,304,626              $245,345,351             $418,649,977
              April 2004               161,196,258               227,145,558              388,341,817
                May 2004               149,987,070               210,294,799              360,281,868
               June 2004               139,610,265               194,693,157              334,303,422
               July 2004               130,004,008               180,248,093              310,252,101
             August 2004               121,111,048               166,873,929              287,984,977
          September 2004               112,878,387               154,491,327              267,369,714
            October 2004               105,256,959               143,026,826              248,283,785
</TABLE>

                                       13
<PAGE>
<TABLE>
<S>                                 <C>                       <C>                      <C>
           November 2004                98,201,340               132,412,403              230,613,744
           December 2004                91,669,479               122,585,072              214,254,551
              January 05                85,622,445               113,486,510              199,108,954
             February 05                80,024,198               105,062,712              185,086,911
                March 05                74,841,376                97,263,675              172,105,051
                April 05                70,043,090                90,043,098              160,086,188
                  May 05                65,600,748                83,358,107              148,958,855
                 June 05                61,487,881                77,169,005              138,656,886
               July 2005                57,679,984                71,439,036              129,119,021
             August 2005                54,154,374                66,134,138              120,288,512
          September 2005                50,890,051                61,222,830              112,112,881
            October 2005                47,867,575                56,675,932              104,543,507
           November 2005                45,068,952                52,466,171               97,535,123
           December 2005                42,477,524                48,568,284               91,045,808
            January 2006                40,077,868                44,959,721               85,037,589
           February 2006                37,855,711                41,619,028               79,474,739
              March 2006                35,797,838                38,526,336               74,324,174
              April 2006                33,892,016                35,663,250               69,555,265
                May 2006                32,126,922                33,012,737               65,139,659
               June 2006                30,492,074                30,559,029               61,051,102
               July 2006                28,977,769                28,287,524               57,265,293
             August 2006                27,575,026                26,184,704               53,759,730
          September 2006                         0                         0                        0
</TABLE>

      "Class A-IO Pass-Through Rate": For each Distribution Date (i) on or prior
to the Distribution Date in August 2006, 1.50% per annum on each Component of
the Class A-IO Certificates, subject, in the case of Component A-IO-1, to a cap
equal to the Group I Net Rate, and, in the case of the Component A-IO-2, to a
cap equal to the Group II Net Rate, and (ii) after the Distribution Date in
August 2006, 0%.

      "Class AV-1 Certificate Margin": For each Distribution Date (i) on or
prior to the Optional Termination Date, 0.25% per annum, and (ii) following the
Optional Termination Date, 0.50% per annum.

      "Class AV-1 Pass-Through Rate": For each Distribution Date, the least of
(i) LIBOR as of the related LIBOR Determination Date, plus the Class AV-1
Certificate Margin, (ii) the Group II Cap and (iii) the Group II Maximum Rate
Cap.

      "Class AV-2 Certificate Margin": For each Distribution Date (i) on or
prior to the Optional Termination Date, 0.12% per annum, and (ii) following the
Optional Termination Date, 0.24% per annum.

      "Class AV-2 Pass-Through Rate": For each Distribution Date, the least of
(i) LIBOR as of the related LIBOR Determination Date, plus the Class AV-2
Certificate Margin, (ii) the Group II Cap and (iii) the Group II Maximum Rate
Cap.

                                       14
<PAGE>
      "Class AV-3 Certificate Margin": For each Distribution Date (i) on or
prior to the Optional Termination Date, 0.31% per annum, and (ii) following the
Optional Termination Date, 0.62% per annum.

      "Class AV-3 Pass-Through Rate": For each Distribution Date, the least of
(i) LIBOR as of the related LIBOR Determination Date, plus the Class AV-3
Certificate Margin, (ii) the Group II Cap and (iii) the Group II Maximum Rate
Cap.

      "Class A Certificate": Any one of the Certificates with an "A" designated
on the face thereof substantially in the form annexed hereto as Exhibits A-1,
A-2, A-3, A-4 and A-5, executed by the Trustee on behalf of the Trust and
authenticated and delivered by the Certificate Registrar, representing the right
to distributions as set forth herein and therein.

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

      "Class A Interest Carry Forward Amount": For any Distribution Date, the
sum of the Interest Carry Forward Amounts for the Class A Certificates for such
Distribution Date.

      "Class A Principal Distribution Amount": As of any Distribution Date (a)
prior to the Stepdown Date or with respect to which a Trigger Event is in
effect, the Principal Distribution Amount and (b) on or after the Stepdown Date
and as long as a Trigger Event is not in effect, the excess of (x) the sum of
the Certificate Principal Balances of the Class A Certificates immediately prior
to such Distribution Date over (y) the lesser of (A) the product of (i) 64.00%
and (ii) the Pool Balance as of the last day of the related Collection Period
and (B) the Pool Balance as of the last day of the related Collection Period
minus the product of 0.50% and the Pool Balance on the Cut-off Date.

      "Class B Certificate": Any one of the Certificates with a "B" designated
on the face thereof substantially in the form annexed hereto as Exhibits B-1,
B-2, B-3 and B-4, executed by the Trustee on behalf of the Trust and
authenticated and delivered by the Certificate Registrar, representing the right
to distributions as set forth herein and therein.

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

      "Class B-1 Applied Realized Loss Amount": As to the Class B-1 Certificates
and as of any Distribution Date, the lesser of (x) the Certificate Principal
Balance thereof (after taking into account the distribution of the Principal
Distribution Amount on such Distribution Date, but prior to the application of
the Class B-1 Applied Realized Loss Amount, if any, on such Distribution Date)
and (y) the excess of (i) the Applied Realized Loss Amount as of such
Distribution Date over (ii) the sum of the Class B-2 Applied Realized Loss
Amount, the Class B-3 Applied Realized Loss Amount and the Class B-4 Applied
Realized Loss Amount, in each case as of such Distribution Date.

      "Class B-1 Certificate Margin": For each Distribution Date (i) on or prior
to the Optional Termination Date, 1.65% per annum, and (ii) following the
Optional Termination Date, 2.475% per annum, subject in either case to a cap
equal to the Subordinate Rate Cap.

                                       15
<PAGE>
      "Class B-1 Pass-Through Rate": For each Distribution Date, the least of
(i) LIBOR as of the related LIBOR Determination Date, plus the Class B-1
Certificate Margin, (ii) the Subordinate Rate Cap and (iii) the Subordinate
Maximum Rate Cap.

      "Class B-1 Principal Distribution Amount": As of any Distribution Date on
or after the Stepdown Date and as long as a Trigger Event is not in effect, the
excess of (x) the sum of (i) the sum of the Certificate Principal Balances 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 B-1 Certificates immediately prior to such
Distribution Date over (y) the lesser of (A) the product of (i) 90.50% and (ii)
the Pool Balance as of the last day of the related Collection Period and (B) the
Pool Balance as of the last day of the related Collection Period minus the
product of 0.50% and the Pool Balance on the Cut-off Date.

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

      "Class B-2 Applied Realized Loss Amount": As to the Class B-2 Certificates
and as of any Distribution Date, the lesser of (x) the Certificate Principal
Balance thereof (after taking into account the distribution of the Principal
Distribution Amount on such Distribution Date, but prior to the application of
the Class B-2 Applied Realized Loss Amount, if any, on such Distribution Date)
and (y) the excess of (i) the Applied Realized Loss Amount as of such
Distribution Date over (ii) the sum of the Class B-3 Applied Realized Loss
Amount and the Class B-4 Applied Realized Loss Amount, in each case as of such
Distribution Date.

      "Class B-2 Certificate Margin": For each Distribution Date (i) on or prior
to the Optional Termination Date, 1.70% per annum, and (ii) following the
Optional Termination Date, 2.550% per annum, subject in either case to a cap
equal to the Subordinate Rate Cap

      "Class B-2 Pass-Through Rate": For each Distribution Date, the least of
(i) LIBOR as of the related LIBOR Determination Date, plus the Class B-2
Certificate Margin, (ii) the Subordinate Rate Cap and (iii) the Subordinate
Maximum Rate Cap.

      "Class B-2 Principal Distribution Amount": As of any Distribution Date on
or after the Stepdown Date and as long as a Trigger Event is not in effect, the
excess of (x) the sum of (i) the sum of the Certificate Principal Balances 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

                                       16
<PAGE>
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 B-1 Certificates (after taking into account the payment of the Class B-1
Principal Distribution Amount on such Distribution Date) and (v) 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) 93.00% and (ii)
the Pool Balance as of the last day of the related Collection Period and (B) the
Pool Balance as of the last day of the related Collection Period minus the
product of 0.50% and the Pool Balance on the Cut-off Date.

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

      "Class B-3 Applied Realized Loss Amount": As to the Class B-3 Certificates
and as of any Distribution Date, the lesser of (x) the Certificate Principal
Balance thereof (after taking into account the distribution of the Principal
Distribution Amount on such Distribution Date, but prior to the application of
the Class B-3 Applied Realized Loss Amount, if any, on such Distribution Date)
and (y) the Class B-4 Applied Realized Loss Amount as of such Distribution Date.

      "Class B-3 Certificate Margin": For each Distribution Date (i) on or prior
to the Optional Termination Date, 2.75% per annum, and (ii) following the
Optional Termination Date, 4.125% per annum, subject in either case to a cap
equal to the Subordinate Rate Cap.

      "Class B-3 Pass-Through Rate": For each Distribution Date, the least of
(i) LIBOR as of the related LIBOR Determination Date, plus the Class B-3
Certificate Margin, (ii) the Subordinate Rate Cap and (iii) the Subordinate
Maximum Rate Cap.

      "Class B-3 Principal Distribution Amount": As of any Distribution Date on
or after the Stepdown Date and as long as a Trigger Event is not in effect, the
excess of (x) the sum of (i) the sum of the Certificate Principal Balances of
the Class A Certificates (after taking into account the payment of the 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 B-1 Certificates (after taking into account the
payment of the Class B-1 Principal Distribution Amount on such Distribution
Date), (vi) the Certificate Principal Balance of the Class B-2 Certificates
(after taking into account the payment of the Class B-2 Principal Distribution
Amount on such Distribution Date) and (vii) the Certificate Principal Balance of
the Class B-3 Certificates immediately prior to such Distribution Date over (y)
the lesser of (A) the product of (i) 95.50% and (ii) the Pool Balance as of the
last day of the related Collection Period

                                       17
<PAGE>
and (B) the Pool Balance as of the last day of the related Collection Period
minus the product of 0.50% and the Pool Balance on the Cut-off Date.

      "Class B-3 Realized Loss Amortization Amount": As to the Class B-3
Certificates and as of any Distribution Date, the lesser of (x) the Unpaid
Realized Loss Amount for the Class B-3 Certificates as of such Distribution Date
and (y) the excess of (i) the Monthly Excess Cashflow Amount over (ii) the sum
of the amounts described in Section 4.02(b)(i) through (xx) hereof, in each case
for such Distribution Date.

      "Class B-4 Applied Realized Loss Amount": As to the Class B-4 Certificates
and as of any Distribution Date, the lesser of (x) the Certificate Principal
Balance thereof (after taking into account the distribution of the Principal
Distribution Amount on such Distribution Date, but prior to the application of
the Class B-4 Applied Realized Loss Amount, if any, on such Distribution Date)
and (y) the Applied Realized Loss Amount as of such Distribution Date.

      "Class B-4 Certificate Margin": For each Distribution Date (i) on or prior
to the Optional Termination Date, 3.50% per annum, and (ii) following the
Optional Termination Date, 5.250% per annum.

      "Class B-4 Pass-Through Rate": For each Distribution Date, the least of
(i) LIBOR as of the related LIBOR Determination Date, plus the Class B-4
Certificate Margin, (ii) the Subordinate Rate Cap and (iii) the Subordinate
Maximum Rate Cap.

      "Class B-4 Principal Distribution Amount": As of any Distribution Date on
or after the Stepdown Date and as long as a Trigger Event is not in effect, the
excess of (x) the sum of (i) the sum of the Certificate Principal Balances of
the Class A Certificates (after taking into account the payment of the 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 B-1 Certificates (after taking into account the
payment of the Class B-1 Principal Distribution Amount on such Distribution
Date), (vi) the Certificate Principal Balance of the Class B-2 Certificates
(after taking into account the payment of the Class B-2 Principal Distribution
Amount on such Distribution Date), (vii) the Certificate Principal Balance of
the Class B-3 Certificates (after taking into account the payment of the Class
B-3 Principal Distribution Amount on such Distribution Date) and (viii) the
Certificate Principal Balance of the Class B-4 Certificates immediately prior to
such Distribution Date over (y) the lesser of (A) the product of (i) 99.00% and
(ii) the Pool Balance as of the last day of the related Collection Period and
(B) the Pool Balance as of the last day of the related Collection Period minus
the product of 0.50% and the Pool Balance on the Cut-off Date.

      "Class B-4 Realized Loss Amortization Amount": As to the Class B-4
Certificates and as of any Distribution Date, the lesser of (x) the Unpaid
Realized Loss Amount for the Class B-4 Certificates as of such Distribution Date
and (y) the excess of (i) the Monthly Excess Cashflow

                                       18
<PAGE>
Amount over (ii) the sum of the amounts described in Section 4.02(b)(i) through
(xxiii) hereof, in each case for such Distribution Date.

      "Class M Certificate": Any one of the Certificates with an "M" designated
on the face thereof substantially in the form annexed hereto as Exhibit C-2,
Exhibit C-3 and Exhibit C-4, executed by the Trustee on behalf of the Trust and
authenticated and delivered by the Certificate Registrar, representing the right
to distributions as set forth herein and therein.

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

      "Class M-1 Applied Realized Loss Amount": As to the Class M-1 Certificates
and as of any Distribution Date, the lesser of (x) the Certificate Principal
Balance thereof (after taking into account the distribution of the Principal
Distribution Amount on such Distribution Date, but prior to the application of
the Class M-1 Applied Realized Loss Amount, if any, on such Distribution Date)
and (y) the excess of (i) the Applied Realized Loss Amount as of such
Distribution Date over (ii) the sum of the Class M-2 Applied Realized Loss
Amount, the Class B-1 Applied Realized Loss Amount, the Class B-2 Applied
Realized Loss Amount, the Class B-3 Applied Realized Loss Amount and the Class
B-4 Applied Realized Loss Amount, in each case as of such Distribution Date.

      "Class M-1 Certificate Margin": For each Distribution Date (i) on or prior
to the Optional Termination Date, 0.52% per annum, and (ii) following the
Optional Termination Date, 0.780% per annum.

      "Class M-1 Pass-Through Rate": For each Distribution Date, the least of
(i) LIBOR as of the related LIBOR Determination Date, plus the Class M-1
Certificate Margin, (ii) the Subordinate Rate Cap and (iii) the Subordinate
Maximum Rate Cap.

      "Class M-1 Principal Distribution Amount": As of any Distribution Date on
or after the Stepdown Date and as long as a Trigger Event is not in effect, the
excess of (x) the sum of (i) the Certificate Principal Balances of the Class A
Certificates (after taking into account the payment of the 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) 75.50% and (ii)
the Pool Balance as of the last day of the related Collection Period and (B) the
Pool Balance as of the last day of the related Collection Period minus the
product of 0.50% and the Pool Balance on the Cut-off Date.

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

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

                                       19
<PAGE>
Date over (ii) the sum of the Class M-3 Applied Realized Loss Amount, the Class
B-1 Applied Realized Loss Amount, the Class B-2 Applied Realized Loss Amount,
the Class B-3 Applied Realized Loss Amount and the Class B-4 Applied Realized
Loss Amount, in each case as of such Distribution Date.

      "Class M-2 Certificate Margin": For each Distribution Date (i) on or prior
to the Optional Termination Date, 1.07% per annum, and (ii) following the
Optional Termination Date, 1.605% per annum.

      "Class M-2 Pass-Through Rate": For each Distribution Date, the least of
(i) LIBOR as of the related LIBOR Determination Date, plus the Class M-2
Certificate Margin, (ii) the Subordinate Rate Cap and (iii) the Subordinate
Maximum Rate Cap.

      "Class M-2 Principal Distribution Amount": As of any Distribution Date on
or after the Stepdown Date and as long as a Trigger Event is not in effect, the
excess of (x) the sum of (i) the sum of the Certificate Principal Balances 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) 85.50% and (ii) the Pool Balance as of the last day of the
related Collection Period and (B) the Pool Balance as of the last day of the
related Collection Period minus the product of 0.50% and the Pool Balance on the
Cut-off Date.

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

      "Class M-3 Applied Realized Loss Amount": As to the Class M-3 Certificates
and as of any Distribution Date, the lesser of (x) the Certificate Principal
Balance thereof (after taking into account the distribution of the Principal
Distribution Amount on such Distribution Date, but prior to the application of
the Class M-3 Applied Realized Loss Amount, if any, on such Distribution Date)
and (y) the excess of (i) the related Applied Realized Loss Amount as of such
Distribution Date over (ii) the sum of the Class B-1 Applied Realized Loss
Amount, the Class B-2 Applied Realized Loss Amount, the Class B-3 Applied
Realized Loss Amount and the Class B-4 Applied Realized Loss Amount, in each
case as of such Distribution Date.

      "Class M-3 Certificate Margin": For each Distribution Date (i) on or prior
to the Optional Termination Date, 1.27% per annum, and (ii) following the
Optional Termination Date, 1.905% per annum.

      "Class M-3 Pass-Through Rate": For each Distribution Date, the least of
(i) LIBOR as of the related LIBOR Determination Date, plus the Class M-1
Certificate Margin, (ii) the Subordinate Rate Cap and (iii) the Subordinate
Maximum Rate Cap.

                                       20
<PAGE>
      "Class M-3 Principal Distribution Amount": As of any Distribution Date on
or after the Stepdown Date and as long as a Trigger Event is not in effect, the
excess of (x) the sum of (i) the sum of the Certificate Principal Balances of
the Class A Certificates (after taking into account the payment of the 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) 88.00% and (ii) the Pool Balance as of the
last day of the related Collection Period and (B) the Pool Balance as of the
last day of the related Collection Period minus the product of 0.50% and the
Pool Balance on the Cut-off Date.

      "Class M-3 Realized Loss Amortization Amount": As to the Class M-3
Certificates and as of any Distribution Date, the lesser of (x) the Unpaid
Realized Loss Amount for the Class M-3 Certificates as of such Distribution Date
and (y) the excess of (i) the Monthly Excess Cashflow Amount over (ii) the sum
of the amounts described in Section 4.02(b)(i) through (xi) hereof, in each case
for such Distribution Date.

      "Class N Certificate": Any one of the Certificates with an "N" designated
on the face thereof substantially in the form annexed hereto as Exhibit C-5,
executed by the Trustee on behalf of the Trust and authenticated and delivered
by the Certificate Registrar, representing the right to distributions as set
forth herein and therein.

      "Class N Notional Amount": As of any date, the Notional Amount of the
Class N Certificates.

      "Class R Certificate": The Class R Certificate executed by the Trustee on
behalf of the Trust, and authenticated and delivered by the Certificate
Registrar, substantially in the form annexed hereto as Exhibit C-1-1 and
evidencing the ownership of the Residual Interest in each of REMIC 1, REMIC 2,
REMIC 3 and REMIC 4. The Class R Certificate represents the ownership of the
Class R-1 Interest, Class R-2 Interest, Class R-3 Interest and Class R-4
Interest.

      "Class R Excess Interest Amount": For any Distribution Date, .05% of the
Monthly Excess Interest Amount for such Distribution Date.

      "Class R Excess Interest Carryforward Amount": For any Distribution Date,
the excess of the Class R Excess Interest Amount for all prior Distribution
Dates over all amounts previously distributed to the Class R Certificates in
respect of Class R Excess Interest Amounts or Class R Excess Interest
Carryforward Amounts.

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

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

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

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

                                       21
<PAGE>
      "Class R-5 Interest": The uncertificated residual interest in REMIC 5.

      "Class R-6 Interest": The uncertificated residual interest in REMIC 6.

      "Class R-X Certificate": The Class R-X Certificate executed by the Trustee
on behalf of the Trust, and authenticated and delivered by the Certificate
Registrar, substantially in the form annexed hereto as Exhibit C-1-2 and
evidencing the ownership of the Residual Interest in each of REMIC 5 and REMIC
6. The Class R-X Certificate represents the ownership of the Class R-5 Interest
and Class R-6 Interest.

      "Class X": Any one of the Class X Certificates as designated on the face
thereof substantially in the form annexed hereto as Exhibit C-4, executed by the
Trustee on behalf of the Trust and authenticated and delivered by the
Certificate Registrar, representing the right to distributions as set forth
herein and therein.

      "Class X/N Interest": An uncertificated interest in the Trust held by the
Trustee on behalf of the holders of the Class X and Class N Certificates,
representing, for federal income tax purposes, ownership of the Yield
Maintenance Agreement, the Reserve Account and the REMIC 5 Class X/N Interest,
and which is entitled to all distributions in respect of the REMIC 5 X/N
Interest less the amount of any LIBOR Carryover Amounts paid pursuant to Section
4.02(b)(xxvii) or (xxviii).

      "Class X Distributable Amount": With respect to any Distribution Date, the
excess of (i) the aggregate of amounts distributable on the Class X/N Interest
for such Distribution Date, over (ii) the aggregate of amounts distributable to
the Class N Certificates pursuant to Section 4.02(b).

      "Closing Date": March 12, 2004.

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

      "Collection Account": The account or accounts created and maintained by
the Servicer pursuant to Section 3.04, which shall be entitled "Collection
Account, Litton Loan Servicing LP, as Servicer for the Trust under the Pooling
and Servicing Agreement dated as of February 1, 2004 among Merrill Lynch
Mortgage Investors, Inc., as Depositor, Credit-Based Asset Servicing and
Securitization LLC, as Seller, Litton Loan Servicing LP, as Servicer, and
JPMorgan Chase Bank, as Trustee, in trust for registered Holders of 2004-CB2
Trust, C-BASS Mortgage Loan Asset-Backed Certificates, Series 2004-CB2," and
which must be an Eligible Account.

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

      "Combined Loan-to-Value Ratio": As of any date and Mortgage Loan, the
fraction, expressed as a percentage, the numerator of which is the Principal
Balance of the Mortgage Loan as of the Cut-off Date plus the principal balance
of any related senior mortgage loan, if any, at origination of the Mortgage Loan
and the denominator of which is the Value of the related Mortgaged Property.

                                       22
<PAGE>
      "Compensating Interest": As defined in Section 3.23 hereof.

      "Component A-IO-1": An interest-only component represented by the Class
A-IO Certificates bearing interest at the rate specified in the definition of
"Class A-IO Pass Through Rate" on the notional amount specified in the
definition of "Component A-IO-1 Notional Amount."

      "Component A-IO-2": An interest-only component represented by the Class
A-IO Certificates bearing interest at the rate specified in the definition of
"Class A-IO Pass Through Rate" on the notional amount specified in the
definition of "Component A-IO-2 Notional Amount."

      "Component A-IO-1 Notional Amount": With respect to any Distribution Date
through the Distribution Date in August 2006, an amount equal to the lesser of
(a) the amount listed in the notional schedule for Component A-IO-1 specified in
the definition of "Class A-IO Notional Amount" and (b) the aggregate Principal
Balance of the Group I Mortgage Loans, before the application of any principal
payments for the related Due Date. With respect to each of the Distribution
Dates after the August 2006 Distribution Date, zero.

      "Component A-IO-2 Notional Amount": With respect to any Distribution Date
through the Distribution Date in August 2006, an amount equal to the lesser of
(a) the amount listed in the notional schedule for Component A-IO-2 specified in
the definition of "Class A-IO Notional Amount" and (b) the aggregate Principal
Balance of the Group II Mortgage Loans, before the application of any principal
payments for the related Due Date. With respect to each of the Distribution
Dates after the August 2006 Distribution Date, zero.

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

      "Conventional Mortgage Loan": Any Mortgage Loan that is not an FHA Loan.

      "Corporate Trust Office": With respect to the Trustee, (i) the principal
corporate trust office of the Trustee at which at any particular time its
corporate trust business in connection with this Agreement shall be
administered, which office at the date of the execution of this instrument is
located at 4 New York Plaza, 6th Floor, New York, New York 10004-2477,
Attention: Institutional Trust Services/Global Debt, MLMI C-BASS 2004-CB2 and
(ii) for purposes of Certificate transfers, is located at 2001 Bryan Street,
10th Floor, Dallas, Texas 75201, Attention: Institutional Trust Services/Global
Debt, MLMI C-BASS 2004-CB2, or at such other addresses as the Trustee may
designate from time to time by notice to the Certificateholders, the Depositor,
the Servicer and the Seller.

      "Corresponding Cap Carryover Certificate" and "Corresponding REMIC 4
Regular Interest": For any REMIC 4 Regular Interest set forth below, the
corresponding Cap Carryover Certificate set forth below, and for any Cap
Carryover Certificate set forth below, the corresponding REMIC 4 Regular
Interest set forth below:

                                       23
<PAGE>
<TABLE>
<CAPTION>
Corresponding Cap Carryover Certificate              Corresponding REMIC 4 Regular Interest
---------------------------------------              --------------------------------------
<S>                                                  <C>
Class AV-1 Certificate                               REMIC 4 AV-1 Interest

Class AV-2 Certificate                               REMIC 4 AV-2 Interest
Class AV-3 Certificate                               REMIC 4 AV-3 Interest

Class M-1 Certificate                                REMIC 4 M-1 Interest

Class M-2 Certificate                                REMIC 4 M-2 Interest

Class M-3 Certificate                                REMIC 4 M-3 Interest

Class B-1 Certificate                                REMIC 4 B-1 Interest

Class B-2 Certificate                                REMIC 4 B-2 Interest

Class B-3 Certificate                                REMIC 4 B-3 Interest

Class B-4 Certificate                                REMIC 4 B-4 Interest
</TABLE>

      "Custodial Agreement": The Custodial Agreement, dated as of February 1,
2004, among the Trustee, the Servicer and the Custodian, as the same may be
amended or supplemented pursuant to the terms thereof.

      "Custodian": The Bank of New York, a New York banking corporation, or any
successor custodian appointed pursuant to the terms of the Custodial Agreement.

      "Cut-off Date": February 1, 2004.

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

      "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.

      "Defective Mortgage Loan": A Mortgage Loan replaced or to be replaced by
one or more Eligible Substitute Mortgage Loans.

      "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.

                                       24
<PAGE>
      "Definitive Certificates": As defined in Section 5.02(c) hereof.

      "Delinquent": Any Mortgage Loan with respect to which the Monthly Payment
and/or any Escrow Payment due on a Due Date is not made by the close of business
on the next scheduled Due Date for such Mortgage Loan or any Mortgage Loan with
respect to which any Servicing Advances made on or before the Cut-off Date has
not been reimbursed by the related Mortgagor.

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

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

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

      "Determination Date": With respect to any Distribution Date, the 10th day
of the calendar month in which such Distribution Date occurs or, if such 10th
day is not a Business Day, the Business Day immediately preceding such 10th day.

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

      "Disqualified Non-U.S. Person": With respect to a Residual Certificate,
any (A) non-U.S. Person or agent thereof or (B) U.S. Person with respect to whom
income from a Residual Certificate is attributable to a foreign permanent
establishment or fixed base, within the meaning of an applicable income tax
treaty, of such Person or any other U.S. Person.

      "Disqualified Organization": A "disqualified organization" under Section
860E of the Code, which as of the Closing Date is any of: (i) the United States,
any state or political subdivision thereof, any possession of the United States,
any foreign government, any international organization, or any agency or
instrumentality of any of the foregoing, (ii) any organization (other than a
cooperative described in Section 521 of the Code) which is exempt from the tax
imposed by Chapter 1 of the Code unless such organization is subject to the tax
imposed by Section 511 of the Code, (iii) any organization described in Section
1381(a)(2)(C) of

                                       25
<PAGE>
the Code, or (iv) any other Person so designated by the Trustee based upon an
Opinion of Counsel provided by nationally recognized counsel to the Trustee that
the holding of an ownership interest in a Residual Certificate by such Person
may cause the Trust Fund or any Person having an ownership interest in any Class
of Certificates (other than such Person) to incur liability for any federal tax
imposed under the Code that would not otherwise be imposed but for the transfer
of an ownership interest in a Residual Certificate to such Person. A corporation
will not be treated as an instrumentality of the United States or of any state
or political subdivision thereof if all of its activities are subject to tax and
a majority of its board of directors is not selected by a governmental unit. The
term "United States," "state" and "international organization" shall have the
meanings set forth in Section 7701 of the Code.

      "Distribution Account": The trust account or accounts created and
maintained by the Trustee pursuant to Section 3.04(b) which shall be entitled
"Distribution Account, JPMorgan Chase Bank, as Trustee, in trust for the
registered Holders of 2004-CB2 Trust, C-BASS Mortgage Loan Asset-Backed
Certificates, Series 2004-CB2" and which must be an Eligible Account.

      "Distribution Date": The 25th day of any calendar month, or if such 25th
day is not a Business Day, the Business Day immediately following such 25th day,
commencing in March 2004.

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

      "Eligible Account": Any of (i) an account or accounts maintained with a
federal or state chartered depository institution or trust company the
short-term unsecured debt obligations of which (or, in the case of a depository
institution or trust company that is the principal subsidiary of a holding
company, the short-term unsecured debt obligations of such holding company) are
rated "A-2" (or the equivalent) by each of the Rating Agencies at the time any
amounts are held on deposit therein, (ii) an account or accounts the deposits in
which are fully insured by the FDIC (to the limits established by such
corporation), the uninsured deposits in which account are otherwise secured such
that, as evidenced by an Opinion of Counsel delivered to the Trustee and to each
Rating Agency, the Certificateholders will have a claim with respect to the
funds in such account or a perfected first priority security interest against
such collateral (which shall be limited to Permitted Investments) securing such
funds that is superior to claims of any other depositors or creditors of the
depository institution with which such account is maintained, (iii) a trust
account or accounts maintained with the trust department of a federal or state
chartered depository institution, national banking association or trust company
acting in its fiduciary capacity or (iv) an account otherwise acceptable to each
Rating Agency without reduction or withdrawal of their then current ratings of
the Certificates as evidenced by a letter from each Rating Agency to the
Trustee. Eligible Accounts may bear interest.

      "Eligible Substitute Mortgage Loan": A mortgage loan substituted for a
Defective 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

                                       26
<PAGE>
of, and not more than 5% less than, the outstanding principal balance of the
Defective Mortgage Loan as of the Due Date in the calendar month during which
the substitution occurs, (ii) have a Mortgage Interest Rate, with respect to a
Group I Mortgage Loan, not less than the Mortgage Interest Rate of the Defective
Mortgage Loan and not more than 1% in excess of the Mortgage Interest Rate of
such Defective Mortgage Loan, (iii) if a Group II Mortgage Loan, have a Maximum
Loan Rate not less than the Maximum Loan Rate for the Defective Mortgage Loan,
(iv) if a Group II Mortgage Loan, have a Minimum Loan Rate not less than the
Minimum Loan Rate of the Defective Mortgage Loan, (v) if a Group II Mortgage
Loan, have a Gross Margin equal to or greater than the Gross Margin of the
Defective Mortgage Loan, (vi) if a Group II Mortgage Loan, have the same Index
as the Defective Mortgage Loan, (vii) if a Group II Mortgage Loan, have a next
Adjustment Date not more than two months later than the next Adjustment Date on
the Defective Mortgage Loan, (viii) have a remaining term to maturity not
greater than (and not more than one year less than) that of the Defective
Mortgage Loan, (ix) be current as of the date of substitution, (x) have a
Combined Loan-to-Value Ratio as of the date of substitution equal to or lower
than the Combined Loan-to-Value Ratio of the Defective Mortgage Loan as of such
date, (xi) have a risk grading determined by the Seller at least equal to the
risk grading assigned on the Defective Mortgage Loan, (xii) have been
reunderwritten by the Seller in accordance with the same underwriting criteria
and guidelines as the Defective Mortgage Loan, (xiii) have the same Due Date as
the Defective Mortgage Loan and (xiv) conform to each representation and
warranty set forth in Section 2.04 hereof applicable to the Defective Mortgage
Loan. In the event that one or more mortgage loans are substituted for one or
more Defective Mortgage Loans, the amounts described in clause (i) hereof shall
be determined on the basis of aggregate principal balances, the Mortgage
Interest Rates described in clause (ii) hereof shall be determined on the basis
of weighted average Mortgage Interest Rates, the risk gradings described in
clause (xi) hereof shall be satisfied as to each such mortgage loan, the terms
described in clause (viii) hereof shall be determined on the basis of weighted
average remaining term to maturity, the Combined Loan-to-Value Ratios 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 (xiv) hereof must be satisfied as to each
Eligible Substitute Mortgage Loan or in the aggregate, as the case may be.

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

      "ERISA-Restricted Certificates": Any of the Class M-1, Class M-2, Class
M-3, Class B-1, Class B-2, Class B-3, Class B-4, Class N, Class X, Class R-X and
Class R Certificates.

      "Escrow Account": The account or accounts created and maintained pursuant
to Section 3.06.

      "Escrow Payments": The amounts constituting ground rents, taxes,
assessments, water rates, mortgage insurance premiums, fire and hazard insurance
premiums and other payments required to be escrowed by the Mortgagor with the
mortgagee pursuant to any Mortgage Loan.

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

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

                                       27
<PAGE>
      "Extended Period": As defined in Section 9.04(b).

      "Extra Principal Distribution Amount": As of any Distribution Date, the
lesser of (x) 99.95% of the Monthly Excess Interest Amount for such Distribution
Date and (y) the Overcollateralization Deficiency for such Distribution Date.

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

      "FHA": The Federal Housing Administration, an agency within HUD.

      "FHA Approved Mortgagee": Those institutions which are approved by FHA to
act as servicer and mortgagee of record pursuant to FHA Regulations.

      "FHA Insurance Contract" or "FHA Insurance": The contractual obligation of
FHA respecting the insurance of an FHA Loan pursuant to the National Housing
Act, as amended.

      "FHA Loan": A Mortgage Loan which is the subject of an FHA Insurance
Contract as evidenced by a Mortgage Insurance Certificate.

      "FHA Regulations": Regulations promulgated by HUD under the National
Housing Act, codified in 24 Code of Federal Regulations, and other HUD issuances
relating to FHA Loans, including the related handbooks, circulars, notices and
mortgagee letters.

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

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

      "First Lien Mortgage Loan": Any of the Mortgage Loans which are secured by
a first mortgage lien that is senior to a Second Lien Mortgage Loan on the
related Mortgage Property.

      "Fitch": Fitch Ratings and its successors, and if such company shall for
any reason no longer perform the functions of a securities rating agency,
"Fitch" shall be deemed to refer to any other "nationally recognized statistical
rating organization" as set forth on the most current list of such organizations
released by the Securities and Exchange Commission.

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

      "Grantor Trust": That portion of the Trust exclusive of REMIC 1, REMIC 2,
REMIC 3, REMIC 4, REMIC 5 and REMIC 6 which holds (a) the REMIC 5 X/N Interest,
(b) the obligation to pay LIBOR Carryover Amounts and (c) the Yield Maintenance
Agreement and the Reserve Account.

                                       28
<PAGE>
      "Gross Margin": With respect to each Group II Mortgage Loan, the fixed
percentage, if any, 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 Interest Rate for such Mortgage
Loan.

      "Group I Cap": With respect to any Distribution Date, a per annum rate
equal to 12 times the quotient of (x) the total scheduled interest on the Group
I Mortgage Loans for the related Interest Accrual Period at their Net Mortgage
Interest Rates, net of the current interest on the Component A-IO-1 and (y) the
aggregate Principal Balance of the Group I Mortgage Loans (as of the first day
of the related Collection Period).

      "Group I Group Subordinate Amount": For any Distribution Date, the excess
of the aggregate Principal Balance of the Group I Mortgage Loans (as of the
first day of the related Collection Period) over the aggregate Certificate
Principal Balance of the Class AF-1 Certificates as of such Distribution Date
(before distributions in respect of principal on such Distribution Date).

      "Group I Interest Remittance Amount": As of any Distribution Date, the
sum, without duplication, of (i) all interest received by the Servicer on or
prior to the related Determination Date for such Distribution Date or advanced
with respect to Monthly Payments due during the related Collection Period on the
Group I Mortgage Loans (less the Servicing Fee, amounts available for
reimbursement of Advances and Servicing Advances pursuant to Section 3.05 and
expenses reimbursable pursuant to Section 6.03), (ii) the portion of any full or
partial Principal Prepayment related to interest with respect to a Group I
Mortgage Loan received during the related Prepayment Period, (iii) all
Compensating Interest paid by the Servicer on the related Determination Date
with respect to the Group I Mortgage Loans, (iv) the portion of any payment in
connection with any Purchase Price, Net Liquidation Proceeds, Insurance Proceeds
or Condemnation Proceeds relating to interest with respect to the Group I
Mortgage Loans received during the related Prepayment Period, (v) the portion of
any Substitution Adjustment Amount relating to interest with respect to the
Group I Mortgage Loans received during the related Prepayment Period, (vi) with
respect to the related Distribution Date on which the Trust is to be terminated
in accordance with the Section 10.01 hereof, that portion of the Termination
Price with respect to the Group I Mortgage Loans in respect of interest and
(vii) the portion of any Reimbursement Amount or Recovery related to the Group I
Mortgage Loans received during the related Prepayment Period.

      "Group I Mortgage Loan": A Mortgage Loan in Loan Group I.

      "Group I Net Rate": With respect to any Distribution Date, a per annum
rate equal to 12 times the quotient of (x) the total scheduled interest on the
Group I Mortgage Loans for the related Interest Accrual Period at their Net
Mortgage Interest Rates and (y) the aggregate Principal Balance of the Group I
Mortgage Loans (as of the first day of the related Collection Period).

      "Group I Principal Distribution Amount": As of any Distribution Date, the
product of the Group I Principal Allocation Percentage and the Class A Principal
Distribution Amount.

                                       29
<PAGE>
      "Group I Principal Allocation Percentage": As of any Distribution Date, a
fraction expressed as a percentage, the numerator of which is the Principal
Remittance Amount allocable to the Group I Mortgage Loans during the related
Collection Period and the denominator of which is equal to the Principal
Remittance Amount for such Distribution Date.

      "Group Subordinate Amount": In the case of Loan Group I, the Group I Group
Subordinate Amount, and, in the case of Loan Group II, the Group II Group
Subordinate Amount.

      "Group II Cap": With respect to any Distribution Date, a per annum rate
(subject to adjustment based on the actual number of days elapsed in the related
Interest Accrual Period) equal to 12 times the quotient of (x) the total
scheduled interest on the Group II Mortgage Loans for the related Interest
Accrual Period at the Net Mortgage Interest Rates, net of the current interest
on the Component A-IO-2 and (y) the aggregate Principal Balance of the Group II
Mortgage Loans (as of the first day of the related Collection Period).

      "Group II Group Subordinate Amount": For any Distribution Date, the excess
of the aggregate Principal Balance of the Group II Mortgage Loans (as of the
first day of the related Collection Period) over the aggregate Certificate
Principal Balance of the Class AV-1, Class AV-2 and Class AV-3 Certificates as
of such Distribution Date (before distributions in respect of principal on such
Distribution Date).

      "Group II Interest Remittance Amount": As of any Distribution Date, the
sum, without duplication, of (i) all interest received by the Servicer on or
prior to the related Determination Date for such Distribution Date or advanced
with respect to Monthly Payments due during the related Collection Period on the
Group II Mortgage Loans (less the Servicing Fee, amounts available for
reimbursement of Advances and Servicing Advances pursuant to Section 3.05 and
expenses reimbursable pursuant to Section 6.03), (ii) the portion of any full or
partial Principal Prepayment related to interest with respect to a Group II
Mortgage Loan received during the related Prepayment Period, (iii) all
Compensating Interest paid by the Servicer on the related Determination Date
with respect to the Group II Mortgage Loans, (iv) the portion of any payment in
connection with any Purchase Price, Net Liquidation Proceeds, Insurance Proceeds
or Condemnation Proceeds relating to interest with respect to the Group II
Mortgage Loans received during the related Prepayment Period, (v) the portion of
any Substitution Adjustment Amount relating to interest with respect to the
Group II Mortgage Loans received during the related Prepayment Period, (vi) with
respect to the related Distribution Date on which the Trust is to be terminated
in accordance with the Section 10.01 hereof, that portion of the Termination
Price with respect to the Group II Mortgage Loans in respect of interest and
(vii) the portion of any Reimbursement Amount or Recovery related to the Group
II Mortgage Loans received during the related Prepayment Period.

      "Group II Maximum Rate Cap": With respect to any Distribution Date, a per
annum rate (subject to adjustment based on the actual number of days elapsed in
the related Interest Accrual Period) equal to the 12 times the quotient of (x)
the total scheduled interest that would have accrued on the Group II Mortgage
Loans at their maximum lifetime Net Mortgage Interest Rates, net of the current
interest on the Component A-IO-2 and (y) the aggregate Principal Balance of the
Group II Mortgage Loans (as of the first day of the related Collection Period).

                                       30
<PAGE>
      "Group II Mortgage Loan": A Mortgage Loan in Loan Group II.

      "Group II Net Rate": With respect to any Distribution Date, a per annum
rate equal to 12 times the quotient of (x) the total scheduled interest on the
Group II Mortgage Loans for the related Interest Accrual Period at their Net
Mortgage Interest Rates and (y) the aggregate Principal Balance of the Group II
Mortgage Loans (as of the first day of the related Collection Period).

      "Group II Principal Distribution Amount": As of any Distribution Date, the
product of the Group II Principal Allocation Percentage and the Class A
Principal Distribution Amount.

      "Group II Principal Allocation Percentage": As of any Distribution Date, a
fraction expressed as a percentage, the numerator of which is the Principal
Remittance Amount allocable to the Group II Mortgage Loans during the related
Collection Period and the denominator of which is equal to the Principal
Remittance Amount for such Distribution Date.

      "HUD": The United States Department of Housing and Urban Development, or
any successor thereto, including the Federal Housing Commissioner and the
Secretary of Housing and Urban Development where appropriate under the FHA
Regulations.

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

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

                                       31
<PAGE>
      "Index": With respect to each Group II Mortgage Loan and with respect to
each related Adjustment Date, the index as specified in the related Mortgage
Note.

      "Initial Certificate Principal Balance": With respect to any Certificate
of a Class other than a Class A-IO, Class N, Class X or Residual Certificate,
the amount designated "Initial Certificate Principal Balance" on the face
thereof.

      "Initial Notional Amount": With respect to any Class A-IO or Class N
Certificate, the amount designated "Initial Notional Amount" on the face
thereof.

      "Initial Overcollateralization Amount": $2,093,977.66.

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

      "Interest Accrual Period": With respect to any Distribution Date and (i)
with respect to the Class AV-1, Class AV-2, Class AV-3, Class M-1, Class M-2,
Class M-3, Class B-1, Class B-2, Class B-3 and Class B-4 Certificates, the
period from the preceding Distribution Date through the day prior to the current
Distribution Date (or, in the case of the first Distribution Date, the period
from the Closing Date through March 24, 2004), and (ii) with respect to the
Class AF-1, Class A-IO, Class N and Class X Certificates, the REMIC 1 Regular
Interests and the REMIC 2 Regular Interests and the REMIC 3 Regular Interests,
the calendar month immediately preceding the month in which such Distribution
Date occurs.

      "Interest Carry Forward Amount": For any Class of Certificates (other than
the Residual Certificates) and any Distribution Date, the sum of (a) the excess,
if any, of the Accrued Certificate Interest and any Interest Carry Forward
Amount for each Class for the prior Distribution Date, over the amount in
respect of interest actually distributed on such Class on such prior
Distribution Date and (b) interest on such excess at the applicable Pass-Through
Rate (x) with respect to the Certificates (other than the Class AF-1, Class
A-IO, Class N and Class X Certificates), on the basis of the actual number of
days elapsed on the basis of a 360-day year since the prior Distribution Date,
and (y) with respect to the Class AF-1, Class A-IO, Class N and Class X
Certificates, on the basis of a 360-day year consisting of twelve 30-day months.

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

      "Interest Remittance Amount": As of any Determination Date, the sum of the
Group I Interest Remittance Amount and the Group II Interest Remittance Amount.

      "Late Collections": With respect to any Mortgage Loan, all amounts
received subsequent to the Determination Date immediately following any related
Collection Period, whether as late

                                       32
<PAGE>
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 on a contractual basis for such
Collection Period and not previously recovered.

      "Lender": As defined in Section 3.30(a) hereof.

      "LIBOR": With respect to each Interest Accrual Period, the rate determined
by the Trustee on the related LIBOR Determination Date on the basis of the
offered rate for one-month United States dollar deposits, as such rate appears
on the Telerate Page 3750, as of 11:00 a.m. (London time) on such LIBOR
Determination Date. If no such quotations are available on an LIBOR
Determination Date, LIBOR for the related Interest Accrual Period will be
established by the Trustee as follows:

                  (i) If on such LIBOR Determination Date two or more Reference
Banks provide quotations as to the rate at which deposits in U.S. Dollars are
offered as of 11:00 a.m. (London time) to prime banks in the London interbank
market for a period of one month in amounts approximately equal to the aggregate
Certificate Principal Balance of the Class AV-1, Class AV-2, Class AV-3, Class
M-1, Class M-2, Class M-3, Class B-1, Class B-2, Class B-3 and Class B-4
Certificates, LIBOR for the related Interest Accrual Period shall be the
arithmetic mean of such offered quotations (rounded upwards if necessary to the
nearest whole multiple of 0.001%);

                  (ii) If on such LIBOR Determination Date fewer than two
Reference Banks provide such offered quotations, LIBOR for the related Interest
Accrual Period shall be the arithmetic mean of the rates quoted by one or more
major banks in New York City, selected by the Trustee after consultation with
the Servicer, as of 11:00 a.m., New York City time, on such date for loans in
U.S. Dollars to leading European banks for a period of one month in amounts
approximately equal to the aggregate Certificate Principal Balance of the Class
AV-1, Class AV-2, Class AV-3, Class M-1, Class M-2, Class M-3, Class B-1, Class
B-2, Class B-3 and Class B-4 Certificates; and

                  (iii) If no such quotations can be obtained, LIBOR for the
related Interest Accrual Period shall be LIBOR for the prior Distribution Date.

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

      "LIBOR Carryover Amount": If on any Distribution Date, the Accrued
Certificate Interest for (a) the Class AV-1, Class AV-2 and Class AV-3
Certificates is based upon the Group II Cap or (b) the Class M-1, Class M-2,
Class M-3, Class B-1, Class B-2, Class B-3 or Class B-4 Certificates is based on
the Subordinate Rate Cap, the excess of (i) the amount of interest such
Certificate would have been entitled to receive on such Distribution Date based
on the related Pass-Through Rate (up to but not exceeding the Group II Maximum
Rate Cap in the case of the Class AV-1, Class AV-2 and Class AV-3 Certificates
and up to but not exceeding the Subordinate Maximum Rate Cap in the case of the
Class M-1, Class M-2, Class M-3, Class B-1, Class B-2, Class B-3 and Class B-4
Certificates), over (ii) the amount of interest such Certificate

                                       33
<PAGE>
was entitled to receive on such Distribution Date based on the applicable Cap,
together with the unpaid portion of any such excess from prior Distribution
Dates (and interest accrued thereon at the then applicable Pass-Through Rate on
such Certificate).

      "LIBOR Determination Date": With respect to the Offered Certificates
(other than the Class AF-1 and Class A-IO Certificates) and the Class B-4
Certificates, (i) for the first Distribution Date, the second LIBOR Business Day
preceding the Closing Date and (ii) for each subsequent Distribution Date, the
second LIBOR Business Day prior to the immediately preceding Distribution Date.

      "Liquidated Mortgage Loan": As to any Distribution Date, any Mortgage Loan
in respect of which the Servicer has determined, in accordance with the
servicing procedures specified herein, as of the end of the related Prepayment
Period, that all Liquidation Proceeds and Insurance Proceeds which it expects to
recover with respect to the liquidation of the Mortgage Loan or disposition of
the related REO Property have been 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 the Trust Fund by reason of its being purchased, sold or replaced
pursuant to or as contemplated by Section 2.03 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 the Trust Fund by reason of its being sold or purchased pursuant to
Section 3.13 or Section 10.01.

      "Liquidation Proceeds": The amount (other than amounts received in respect
of the rental of any REO Property prior to REO Disposition) received by the
Servicer in connection with (i) the taking of all or a part of a Mortgaged
Property by exercise of the power of eminent domain or condemnation or (ii) the
liquidation of a defaulted Mortgage Loan by means of a trustee's sale,
foreclosure sale or otherwise.

      "Liquidation Report": The report with respect to a Liquidated Mortgage
Loan in such form and containing such information as is agreed to by the
Servicer and the Trustee.

      "Loan Group": Either Loan Group I or Loan Group II, as the context
requires.

      "Loan Group Balance": Either the Group I Loan Balance or the Group II Loan
Balance, as applicable.

      "Loan Group I": The pool of Mortgage Loans identified in Exhibit D-1 of
the Mortgage Loan Schedule as having been assigned to Loan Group I.

      "Loan Group II": The pool of Mortgage Loans identified in Exhibit D-2 of
the Mortgage Loan Schedule as having been assigned to Loan Group II.

      "Losses": As defined in Section 9.03.

      "Lost Note Affidavit": With respect to any Mortgage Loan as to which the
original Mortgage Note has been permanently lost or destroyed and has not been
replaced, an affidavit

                                       34
<PAGE>
from the Seller certifying that the original Mortgage Note has been lost,
misplaced or destroyed (together with a copy of the related Mortgage Note and
indemnifying the Trust against any loss, cost or liability resulting from the
failure to deliver the original Mortgage Note) in the form of Exhibit H hereto.

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

      "Majority Class R Certificateholders": The Holders of Class R Certificates
evidencing at least a 51% Percentage Interest in the Class R Certificates.

      "Marker Interest": Each of the LT3-AF1 Interest, the LT3-AV1 Interest, the
LT3-AV2 Interest, the LT3-AV3 Interest, the LT3-M1 Interest, the LT3-M2
Interest, the LT3-M3 Interest, the LT3-B1 Interest, the LT3-B2 Interest, the
LT3-B3 Interest and the LT3-B4 Interest.

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

      "Minimum Loan Rate": With respect to each Group II Mortgage Loan, the
percentage set forth in the related Mortgage Note as the minimum Mortgage
Interest Rate thereunder or if no such percentage is set forth in the related
Mortgage Note, the Gross Margin set forth in the related Mortgage Note.

      "Monthly Excess Cashflow Amount": The sum of the Monthly Excess Interest
Amount, the Overcollateralization Release Amount and (without duplication) any
portion of the Principal Distribution Amount remaining after principal
distributions on the Offered Certificates and the Class B-4 Certificates.

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

      "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 Servicer pursuant to Section 3.01; 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. and its successors, and if such
company shall for any reason no longer perform the functions of a securities
rating agency, "Moody's" shall be deemed to refer to any other "nationally
recognized statistical rating organization" as set forth on the most current
list of such organizations released by the Securities and Exchange Commission.

                                       35
<PAGE>
      "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 documents listed in Section 2.01 pertaining
to a particular Mortgage Loan and any additional documents required to be added
to the Mortgage File pursuant to this Agreement.

      "Mortgage Insurance Certificate": The certificate evidencing an FHA
Insurance Contract.

      "Mortgage Interest 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 (i) in
the case of each Group I Mortgage Loan shall remain constant at the rate set
forth in the Mortgage Loan Schedule as the Mortgage Interest Rate in effect
immediately following the Cut-off Date and (ii) in the case of each Group II
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 Interest Rate in effect immediately following the
Cut-off Date and (B) as of any date of determination thereafter shall be the
rate as adjusted on the most recent Adjustment Date, to equal the sum, rounded
to the nearest 0.125% as provided in the Mortgage Note, of the Index, determined
as set forth in the related Mortgage Note, plus the related Gross Margin subject
to the limitations set forth in the related Mortgage Note. 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.

      "Mortgage Loan": Each mortgage loan transferred and assigned to the
Trustee pursuant to Section 2.01 or Section 2.03(d) as from time to time held as
a part of the Trust Fund, the Mortgage Loans so held being identified in the
Mortgage Loan Schedule and set forth in Exhibits D-1 and D-2 attached hereto.

      "Mortgage Loan Purchase Agreement": The agreement between the Seller and
the Depositor, dated as of March 12, 2004, regarding the transfer of the
Mortgage Loans by the Seller to or at the direction of the Depositor attached
hereto as Exhibit G.

      "Mortgage Loan Schedule": As of any date (i) with respect to the Mortgage
Loans, the list of such Mortgage Loans included in the Trust Fund on such date,
separately identifying the Group I Mortgage Loans and the Group II Mortgage
Loans, attached hereto as Exhibits D-1 and D-2. The Mortgage Loan Schedule shall
be prepared by the Seller and shall set forth the following information with
respect to each Mortgage Loan:

(1)   the Seller's Mortgage Loan identifying number;

(2)   the city, state, and zip code of the Mortgaged Property;

(3)   the type of Residential Dwelling constituting the Mortgaged Property or a
      designation that the Mortgaged Property is a multi-family property;

                                       36
<PAGE>
(4)   the occupancy status of the Mortgaged Property at origination;

(5)   the original months to maturity;

(6)   the date of origination;

(7)   the first payment date;

(8)   the stated maturity date;

(9)   the stated remaining months to maturity;

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

(11)  the Principal Balance of each Mortgage Loan as of the Cut-off Date;

(12)  the Mortgage Interest Rate of the Mortgage Loan as of the Cut-off Date;

(13)  the current principal and interest payment of the Mortgage Loan as of the
      Cut-off Date;

(14)  the contractual interest paid to date of the Mortgage Loan;

(15)  if the Mortgage Loan is not owner-financed, the Combined Loan-to-Value
      Ratio at origination;

(16)  a code indicating the loan performance status of the Mortgage Loan as of
      the Cut-off Date;

(17)  a code indicating whether the Mortgage Loan is a Simple Interest Mortgage
      Loan or an Actuarial Mortgage Loan;

(18)  a code indicating whether the Mortgaged Property is in bankruptcy or in
      its forbearance period as of the Cut-off Date;

(19)  a code indicating whether the Mortgage Loan is conventional, insured by
      the FHA;

(20)  a code indicating the Index that is associated with such Mortgage Loan;

(21)  the Gross Margin;

(22)  the Periodic Rate Cap;

(23)  the Minimum Loan Rate;

(24)  the Maximum Loan Rate;

(25)  a code indicating whether the Mortgage Loan has a prepayment penalty and
      the type of prepayment penalty;

                                       37
<PAGE>
(26)  the first Adjustment Date immediately following the Cut-off Date;

(27)  the rate adjustment frequency;

(28)  the payment adjustment frequency;

(29)  a code indicating whether the Mortgage Loan is owner-financed; and

(30)  a code indicating whether the Mortgage Loan is a Second Lien Mortgage
      Loan.

      The Mortgage Loan Schedule shall set forth the following information, as
of the Cut-off Date, with respect to the Mortgage Loans in the aggregate, for
each Loan Group: (1) the number of Mortgage Loans; (2) the current Principal
Balance of the Mortgage Loans; (3) the weighted average Mortgage Interest 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
Seller in accordance with the provisions of this Agreement. With respect to any
Eligible Substitute Mortgage Loan, 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
indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan.

      "Mortgage Pool": The pool of Mortgage Loans, identified on Exhibits D-1
and D-2 from time to time, and any REO Properties acquired in respect thereof.

      "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 or multi-family dwelling.

      "Mortgagor": The obligor on a Mortgage Note.

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

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

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

      "Nonrecoverable Advance": Any Advance or 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 Servicer, will not or, in the case of a
proposed Advance or Servicing

                                       38
<PAGE>
Advance, would not be ultimately recoverable from Late Collections on such
Mortgage Loan or REO Property as provided herein.

      "Notional Amount": With respect to the Class A-IO Certificates, the Class
A-IO Notional Amount. With respect to Component A-IO-1, the Component A-IO-1
Notional Amount. With respect to Component A-IO-2, the Component A-IO-2 Notional
Amount. With respect to the Class N Certificates, an amount equal to the
Original Class N Notional Amount reduced by the aggregate distributions made to
the Class N Certificates in respect of the Class N Notional Amount pursuant to
Section 4.02(b)(xxix) or Section 4.02(c).

      "Offered Certificates": The Class AF-1, Class AV-1, Class AV-2, Class
AV-3, Class A-IO, Class M-1, Class M-2, Class M-3, Class B-1, Class B-2 and
Class B-3 Certificates.

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

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

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

      "Original Class A-IO Notional Amount": The Notional Amount of the Class
A-IO Certificates on the Closing Date, as set forth opposite such Class in the
Preliminary Statement. "Original Class N Notional Amount": The Notional Amount
of the Class N Certificates on the Closing Date, as set forth opposite such
Class in the Preliminary Statement.

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

      "Original Notional Amount": The Original Class A-IO Notional Amount or the
Original Class N Notional Amount, as the case may be.

      "Overcollateralization Amount": As of any Distribution Date, the excess,
if any, of (x) the Pool Balance as of the last day of the immediately preceding
Collection Period over (y) the aggregate Certificate Principal Balances of all
Classes of Offered Certificates and the Class B-4 Certificates (after taking
into account all distributions of principal on such Distribution Date).

      "Overcollateralization Deficiency": As of any Distribution Date, the
excess, if any, of (x) the Targeted Overcollateralization Amount for such
Distribution Date over (y) the Overcollateralization Amount for such
Distribution Date, calculated for this purpose after taking

                                       39
<PAGE>
into account the reduction on such Distribution Date of the Certificate
Principal Balances of all Classes of Offered Certificates and the Class B-4
Certificates resulting from the distribution of the Principal Distribution
Amount (but not the Extra Principal Distribution Amount) on such Distribution
Date, but prior to taking into account any Applied Realized Loss Amounts on such
Distribution Date.

      "Overcollateralization Release Amount": With respect to any Distribution
Date after the Stepdown Date on which a Trigger Event is not in effect, the
lesser of (x) the Principal Remittance Amount for such Distribution Date and (y)
the excess, if any, of (i) the Overcollateralization Amount for such
Distribution Date, assuming that 100% of the Principal Remittance Amount is
applied as a principal payment on the Offered Certificates and the Class B-4
Certificates on such Distribution Date, over (ii) the Targeted
Overcollateralization Amount for such Distribution Date. With respect to any
Distribution Date on which a Trigger Event is in effect, the
Overcollateralization Release Amount will be zero.

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

      "Pass-Through Rate": Any of the Class AF-1 Pass-Through Rate, the Class
AV-1 Pass-Through Rate, the Class AV-2 Pass-Through Rate, the Class AV-3
Pass-Through Rate, the Class A-IO Pass-Through Rate, the Class M-1 Pass-Through
Rate, the Class M-2 Pass-Through Rate, the Class M-3 Pass-Through Rate, Class
B-1 Pass-Through Rate, the Class B-2 Pass-Through Rate, the Class B-3
Pass-Through Rate and the Class B-4 Pass-Through Rate. With respect to the Class
N Certificates, the Pass-Through Rate is 0.00% per annum.

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

      "Percentage Interest": With respect to any Certificate (other than a Class
A-IO, Class N, Class X or Residual Certificate), a fraction, expressed as a
percentage, the numerator of which is the Initial Certificate Principal Balance
represented by such Certificate and the denominator of which is the Original
Class Certificate Principal Balance of the related Class. With respect to a
Class A-IO or Class N Certificate, the undivided percentage interest obtained by
dividing the Initial Notional Amount evidenced by such Certificate by the
Original Class A-IO Notional Amount or Original Class N Notional Amount, as the
case may be, of such Class. With respect to a Class X or Residual Certificate,
the portion of the Class evidenced thereby, expressed as a percentage, as stated
on the face of such Certificate; provided, however, that the sum of all such
percentages for each such Class totals 100%.

      "Periodic Rate Cap": With respect to each Group II 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 Interest Rate for such
Mortgage Loan may increase or decrease (without regard to the Maximum Loan Rate
or the Minimum Loan Rate) on such Adjustment Date from the Mortgage Interest
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 or managed by

                                       40
<PAGE>
the Depositor, the Servicer, the Trustee or any of their respective Affiliates
or for which an Affiliate of the Trustee serves as an advisor:

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

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

      (iii) repurchase obligations with a term not to exceed 30 days with
respect to any security described in clause (i) above and entered into with a
depository institution or trust company (acting as principal) rated A or higher
by S&P and Fitch and rated 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 or (B) pursuant to such valuation, be equal,
at all times, to 105% of the cash transferred by the Trustee in exchange for
such collateral and (C) be delivered to the Trustee or, if the Trustee is
supplying the collateral, an agent for the Trustee, in such a manner as to
accomplish perfection of a security interest in the collateral by possession of
certificated securities;

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

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

      (vi) units of money market funds registered under the Investment Company
Act of 1940 including funds managed or advised by the Trustee or affiliates
thereof having the highest rating category by the applicable Rating Agency; and

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

                                       41
<PAGE>
provided, that (i) 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 and (ii) each
such investment must be a "permitted investment" within the meaning of Section
1.860G(a)(5) of the Code.

      "Permitted Transferee": Any transferee of a Residual Certificate other
than a Disqualified Organization or a Disqualified Non-U.S. Person.

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

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

      "Prepayment Interest Shortfall": With respect to any Distribution Date,
for each Mortgage Loan that was during the related Prepayment Period the subject
of a Principal Prepayment in full that was applied by the Servicer to reduce the
outstanding principal balance of such loan on a date preceding the related Due
Date, an amount equal to interest at the applicable Mortgage Interest Rate (net
of the Servicing Fee Rate) on the amount of such Principal Prepayment for the
number of days commencing on the date on which the prepayment is applied and
ending on the last day of the related Prepayment Period.

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

      "Primary Insurance Policy": Each policy of primary guaranty mortgage
insurance issued by a Qualified Insurer in effect with respect to any Mortgage
Loan, or any replacement policy therefor obtained by the Servicer pursuant to
Section 3.08.

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

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

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

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

      "Private Certificates": Any of the Class B-4, Class N, Class X and
Residual Certificates.

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

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

      "Prospectus Supplement": That certain Prospectus Supplement dated March 9,
2004 relating to the public offering of the Offered Certificates.

      "Purchase Price": With respect to any Mortgage Loan or REO Property to be
purchased pursuant to or as contemplated by Section 2.03 or 10.01, and as
confirmed by an Officer's Certificate from the Servicer to the Trustee, an
amount equal to the sum of (i) 100% of the Principal Balance thereof as of the
date of purchase (or such other price as provided in Section 10.01), (ii) in the
case of (x) a Mortgage Loan, accrued interest on such Principal Balance at the
applicable Mortgage Interest Rate in effect from time to time from the Due Date
as to which interest was last covered by a payment by the Mortgagor or an
Advance by the Servicer, which payment or Advance had as of the date of purchase
been distributed pursuant to Section 4.01, through the end of the calendar month
in which the purchase is to be effected, and (y) an REO Property, its fair
market value, determined in good faith by the Servicer, (iii) any unreimbursed
Servicing Advances and Advances and any unpaid Servicing Fees allocable to such
Mortgage Loan or REO Property, (iv) any amounts previously withdrawn from the
Collection Account in respect of such Mortgage Loan or REO Property pursuant to
Section 3.13, and (v) in the case of

                                       43
<PAGE>
a Mortgage Loan required to be purchased pursuant to Section 2.03, (x) any costs
and damages incurred by the Trust in connection with any violation by such
Mortgage Loan of any predatory and abusive lending law and (y) expenses
reasonably incurred or to be incurred by the Servicer or the Trustee in respect
of the breach or defect giving rise to the purchase obligation.

      "Qualified Insurer": Any insurance company acceptable to Fannie Mae or
Freddie Mac.

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

      "Realized Loss": With respect to a Liquidated Mortgage Loan, the amount by
which the remaining unpaid Principal Balance of the Mortgage Loan plus accrued
and unpaid interest thereon at the Mortgage Interest Rate through the last day
of the month of liquidation, exceeds the amount of Net Liquidation Proceeds
applied to the principal balance of the related Mortgage Loan. With respect to
any Mortgage Loan, a Deficient Valuation or a reduction in the Principal Balance
thereof resulting from a Servicer Modification.

      "Realized Loss Amortization Amount": Any of the Class M-1 Realized Loss
Amortization Amount, the Class M-2 Realized Loss Amortization Amount, the Class
M-3 Realized Loss Amortization Amount, the Class B-1 Realized Loss Amortization
Amount, the Class B-2 Realized Loss Amortization Amount, the Class B-3 Realized
Loss Amortization Amount and the Class B-4 Realized Loss Amortization Amount.

      "Record Date": With respect to all of the Certificates (except for the
Class AF-1, Class A-IO, Class N, Class X, Class R and Class R-X Certificates),
the Business Day immediately preceding such Distribution Date; provided,
however, that if any such Certificate becomes a Definitive Certificate, the
Record Date for such Certificate shall be the last Business Day of the month
immediately preceding the month in which the related Distribution Date occurs.
With respect to the Class AF-1, Class A-IO, Class N, Class X, Class R and Class
R-X Certificates, the last Business Day of the month immediately preceding the
month in which the related Distribution Date occurs or the Closing Date, in the
case of the first Distribution Date.

      "Recovery": Any amount received on a Mortgage Loan subsequent to such
Mortgage Loan being determined to be a Liquidated Mortgage Loan.

      "Reference Banks": Those banks (i) with an established place of business
in London, England, (ii) not controlling, under the control of or under common
control with the Depositor or the Trustee, (iii) that have been designated as
such by the Trustee, after consultation with the Servicer and (iv) that are
engaged in transactions in the London interbank market.

      "Regular Certificate": Any of the Offered Certificates, the Class B-4
Certificates, the Class N Certificates and the Class X Certificates.

      "Regulation S": Regulation S promulgated under the Securities Act or any
successor provision thereto, in each case as the same may be amended from time
to time; and all references

                                       44
<PAGE>
to any rule, section or subsection of, or definition or term contained in,
Regulation S means such rule, section, subsection, definition or term, as the
case may be, or any successor thereto, in each case as the same may be amended
from time to time.

      "Regulation S Global Securities": The Book-Entry Regulation S Global
Securities and the Definitive Regulation S Global Securities.

      "Reimbursement Amount": As defined in Section 2.03.

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

      "Relief Act": The Servicemembers Civil Relief Act.

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

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

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

      "REMIC Regular Interest": Any REMIC 1 Regular Interest, REMIC 2 Regular
Interest, REMIC 3 Regular Interest or REMIC 4 Regular Interest or the REMIC 5
X/N Interest or the REMIC 6 B-4 Interest.

      "REMIC 1": As defined in the Preliminary Statement.

      "REMIC 1 Interest": Each interest in REMIC 1 as described in the
Preliminary Statement.

      "REMIC 1 Regular Interest": Each REMIC 1 Interest other than the Class R-1
Interest.

      "REMIC 2": As defined in the Preliminary Statement.

      "REMIC 2 Interest": Each interest in REMIC 2 as described in the
Preliminary Statement.

      "REMIC 2 IO Interests": Each of the LT2-I-1-IO Interest, LT2-I-2-IO
Interest, LT2-I-3-IO Interest, LT2-I-4-IO Interest, LT2-I-5-IO Interest,
LT2-I-6-IO Interest, LT2-I-7-IO Interest,

                                       45
<PAGE>
LT2-I-8-IO Interest, LT2-I-9-IO Interest, LT2-I-10-IO Interest, LT2-I-11-IO
Interest, LT2-I-12-IO Interest, LT2-I-13-IO Interest, LT2-I-14-IO Interest,
LT2-I-15-IO Interest, LT2-I-16-IO Interest, LT2-I-17-IO Interest, LT2-I-18-IO
Interest, LT2-I-19-IO Interest, LT2-I-20-IO Interest, LT2-I-21-IO Interest,
LT2-I-22-IO Interest, LT2-I-23-IO Interest, LT2-I-24-IO Interest, LT2-I-25-IO
Interest, LT2-I-26-IO Interest, LT2-I-27-IO Interest, LT2-I-28-IO Interest,
LT2-I-29-IO Interest, LT2-I-30-IO Interest, LT2-II-1-IO Interest, LT2-II-2-IO
Interest, LT2-II-3-IO Interest, LT2-II-4-IO Interest, LT2-II-5-IO Interest,
LT2-II-6-IO Interest, LT2-II-7-IO Interest, LT2-II-8-IO Interest, LT2-II-9-IO
Interest, LT2-II-10-IO Interest, LT2-II-11-IO Interest, LT2-II-12-IO Interest,
LT2-II-13-IO Interest, LT2-II-14-IO Interest, LT2-II-15-IO Interest,
LT2-II-16-IO Interest, LT2-II-17-IO Interest, LT2-II-18-IO Interest,
LT2-II-19-IO Interest, LT2-II-20-IO Interest, LT2-II-21-IO Interest,
LT2-II-22-IO Interest, LT2-II-23-IO Interest, LT2-II-24-IO Interest,
LT2-II-25-IO Interest, LT2-II-26-IO Interest, LT2-II-27-IO Interest,
LT2-II-28-IO Interest, LT2-II-29-IO Interest and LT2-II-30-IO Interest.

      "REMIC 2 Regular Interest": Each REMIC 2 Interest other than the Class R-2
Interest.

      "REMIC 3": As defined in the Preliminary Statement.

      "REMIC 3 Interest": Each interest in REMIC 3 as described in the
Preliminary Statement.

      "REMIC 3 Regular Interest": Each REMIC 3 Interest other than the Class R-3
Interest.

      "REMIC 3 Subordinated Balance Ratio": The ratio among the principal
balances of the Class LT3-IA Interest and the Class LT3-IIA Interest that is
equal to the ratio among, with respect to each such REMIC 3 Regular Interest,
the Group Subordinate Amount for the related Mortgage Group.

      "REMIC 4": As defined in the Preliminary Statement.

      "REMIC 4 Interest": Each of the REMIC 4 Regular Interests and the Class
R-4 Interest.

      "REMIC 4 Regular Interest": Each of the Class AF-1 Certificates, the REMIC
4 AV-1 Interest, the REMIC 4 AV-2 Interest, the REMIC 4 AV-3 Interest, the REMIC
4 M-1 Interest, the REMIC 4 M-2 Interest, the REMIC 4 M-3 Interest, the REMIC 4
B-1 Interest, the REMIC 4 B-2 Interest, the REMIC 4 B-3 Interest, the REMIC 4
B-4 Interest, the Class A-IO Certificates and the REMIC 4 X/N Interest.

      "REMIC 4 AV-1 Interest": An uncertificated "regular interest" in REMIC 4
having the same rights to payments as the Class AV-1 Certificates other than the
right to any payments in respect of LIBOR Carryover Amounts.

      "REMIC 4 AV-2 Interest": An uncertificated "regular interest" in REMIC 4
having the same rights to payments as the Class AV-2 Certificates other than the
right to any payments in respect of LIBOR Carryover Amounts.

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<PAGE>
      "REMIC 4 AV-3 Interest": An uncertificated "regular interest" in REMIC 4
having the same rights to payments as the Class AV-3 Certificates other than the
right to any payments in respect of LIBOR Carryover Amounts.

      "REMIC 4 M-1 Interest": An uncertificated "regular interest" in REMIC 4
having the same rights to payments as the Class M-1 Certificates other than the
right to any payments in respect of LIBOR Carryover Amounts.

      "REMIC 4 M-2 Interest": An uncertificated "regular interest" in REMIC 4
having the same rights to payments as the Class M-2 Certificates other than the
right to any payments in respect of Carryover Amounts.

      "REMIC 4 M-3 Interest": An uncertificated "regular interest" in REMIC 4
having the same rights to payments as the Class M-3 Certificates other than the
right to any payments in respect of LIBOR Carryover Amounts.

      "REMIC 4 B-1 Interest": An uncertificated "regular interest" in REMIC 4
having the same rights to payments as the Class B-1 Certificates other than the
right to any payments in respect of Carryover Amounts.

      "REMIC 4 B-2 Interest": An uncertificated "regular interest" in REMIC 4
having the same rights to payments as the Class B-2 Certificates other than the
right to any payments in respect of Carryover Amounts.

      "REMIC 4 B-3 Interest": An uncertificated "regular interest" in REMIC 4
having the same rights to payments as the Class B-3 Certificates other than the
right to any payments in respect of Carryover Amounts.

      "REMIC 4 B-4 Interest": An uncertificated "regular interest" in REMIC 4
having the same rights to payments as the Class B-4 Certificates other than the
right to any payments in respect of LIBOR Carryover Amounts.

      "REMIC 4 X/N Interest": An uncertificated "regular interest" in REMIC 4
held by REMIC 5 having an initial principal balance of $2,093,977.66 and bearing
interest at the REMIC 4 X/N Interest Distributable Interest Rate on a notional
balance equal to 99.95% of the aggregate of the Principal Balance of the
Mortgage Loans outstanding as of the beginning of the related Interest Accrual
Period. The REMIC 4 Class X/N Interest shall be entitled to all prepayment
penalties (including amounts deposited in connection with the full or partial
waiver of such prepayment penalties pursuant to Section 3.01).

      "REMIC 4 X/N Interest Current Interest: As of any Distribution Date, the
interest accrued during the related Interest Accrual Period at the REMIC 4 X/N
Interest Distributable Interest Rate on a notional amount equal to 99.95% of the
aggregate of the Principal Balance of the Mortgage Loans outstanding as of the
beginning of such Interest Accrual Period (such amount of interest representing
a "specified portion" (within the meaning of Treasury Regulations Section
1.860G-1(a)(2)(i)(C)) of interest payments on the REMIC 3 Regular Interests
(other than the LT3-IB Interest and the LT3-IIB Interest)).

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<PAGE>
      "REMIC 4 X/N Interest Distributable Interest Rate": The excess, if any, of
(a) the weighted average of the interest rates on the REMIC 3 Regular Interests
over (b) two times the weighted average of the interest rates on the Marker
Interests and the LT3-X1 Interest (treating for purposes of this clause (b) the
interest rate on each of the Marker Interests as being subject to a cap and a
floor equal to the Pass-Through Rate of the Related Certificate of such Marker
Interest (as described in the Preliminary Statement) and treating the LT3-X1
Interest as being capped at zero). The averages described in the preceding
sentence shall be weighted on the basis of the respective principal balances of
the relevant REMIC 3 Regular Interests immediately prior to any date of
determination.

      "REMIC 5": As defined in the Preliminary Statement.

      "REMIC 5 Interest": Each of the REMIC 5 Regular Interests and the Class
R-5 Interest.

      "REMIC 5 Regular Interest": The REMIC 5 X/N Interest.

      "REMIC 5 X/N Interest": An uncertificated "regular interest" in REMIC 5
held by the Trustee on behalf of the holders of the Class X and Class N
Certificates and entitled to all payments in respect of the REMIC 4 X/N Interest
..

      "REMIC 6": As defined in the Preliminary Statement.

      "REMIC 6 Interest": Each of the REMIC 6 Regular Interests and the Class
R-6 Interest.

      "REMIC 6 Regular Interest": The REMIC 6 B-4 Interest.

      "REMIC 6 B-4 Interest": An uncertificated "regular interest" in REMIC 6
having the same rights to payments as the Class B-4 Certificates other than the
right to any payments in respect of LIBOR Carryover Amounts.

      "Remittance Report": A report prepared by the Servicer and delivered to
the Trustee pursuant to Section 4.07, containing the information attached hereto
as Exhibit M.

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

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

      "REO Principal Amortization": With respect to any REO Property, for any
calendar month, the aggregate of all amounts received in respect of such REO
Property during such calendar month, whether in the form of rental income, sale
proceeds (including, without limitation, that portion of the Termination Price
paid in connection with a purchase of all of the Mortgage Loans and REO
Properties pursuant to Section 10.01 that is allocable to such REO Property) or
otherwise, net of any portion of such amounts (i) payable pursuant to Section
3.13 in respect of the proper operation, management and maintenance of such REO
Property or (ii) payable or reimbursable to the Servicer pursuant to Section
3.13 for unpaid Servicing Fees in

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<PAGE>
respect of the related Mortgage Loan and unreimbursed Servicing Advances and
Advances in respect of such REO Property or the related Mortgage Loan.

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

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

      "Reserve Account": The trust account created and maintained by the Trustee
pursuant to Section 3.04(f) which shall be entitled "Reserve Account, JPMorgan
Chase Bank, as Trustee, in trust for registered Holders of C-BASS Mortgage Loan
Asset-Backed Certificates, Series 2004-CB2" and which must be an Eligible
Account. Amounts on deposit in the Reserve Account shall not be invested. The
Reserve Account shall not be an asset of any REMIC formed under this Agreement.

      "Residential Dwelling": Any one of the following: (i) a one-family
dwelling, (ii) a two- to four-family dwelling, (iii) a one-family dwelling unit
in a Fannie Mae eligible condominium project, (iv) a one-family dwelling in a
planned unit development, which is not a co-operative, or (v) a mobile or
manufactured home (as defined in 42 United States Code, Section 5402(6)).

      "Residual Certificates": The Class R Certificates and the Class R-X
Certificates .

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

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

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

      "Second Lien Mortgage Loan": Any of the Mortgage Loans which are secured
by a second mortgage lien that is junior to a First Lien Mortgage Loan on the
related Mortgaged Property. "Seller": Credit-Based Asset Servicing and
Securitization LLC, or its successor in interest, in its capacity as seller
under the Mortgage Loan Purchase Agreement.

      "Senior Certificates": The Class AF-1, Class AV-1, Class AV-2, Class AV-3
and Class A-IO Certificates.

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

      "Senior Specified Enhancement Percentage": On any date of determination
thereof, 36.00%.

      "Servicer": Litton Loan Servicing LP, a Delaware limited partnership, or
any successor servicer appointed as herein provided, in its capacity as Servicer
hereunder.

      "Servicer Affiliate": A Person (i) controlling, controlled by or under
common control with the Servicer or which is 50% or more owned by the Servicer
and (ii) which is qualified to service residential mortgage loans.

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

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

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

      "Servicer's Assignee": As defined in Section 3.30(b) hereof.

      "Servicing Advances": All customary, reasonable and necessary "out of
pocket" costs and expenses incurred by the Servicer in the performance of its
servicing obligations to the extent such costs or expenses constitute
"unanticipated expenses" within the meaning of Treasury Regulations
1.860G-1(b)(3)(ii), including, but not limited to, the cost of (i) the
preservation, restoration and protection of the Mortgaged Property, (ii) any
enforcement or judicial proceedings, including foreclosures, (iii) the
management and liquidation of the REO Property and (iv) compliance with the
obligations under Section 3.08.

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

      "Servicing Fee Rate": With respect to each Mortgage Loan, 0.50% per annum.

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

                                       50
<PAGE>
      "Servicing Rights Pledgee": One or more lenders, selected by the Servicer,
to which the Servicer will pledge and assign all of its right, title and
interest in, to and under this Agreement, including Wachovia Bank, National
Association, as the representative of certain lenders.

      "Servicing Standard": Shall mean the standards set forth in Section 3.01.

      "Simple Interest Method": The method of allocating a payment to principal
and interest, pursuant to which the portion of such payment that is allocated to
interest is equal to the product of the fixed rate of interest multiplied by the
unpaid principal balance multiplied by the period of time elapsed since the
preceding payment of interest was made and divided by either 360 or 365, as
specified in the related Mortgage Note, and the remainder of such payment is
allocated to principal.

      "Simple Interest Mortgage Loan": Any Mortgage Loan under which the portion
of a payment allocable to interest and the portion of such payment allocable to
principal is determined in accordance with the Simple Interest Method.

      "Special Hazard Loss": Any Realized Losses that result from direct
physical damage to Mortgaged Properties caused by natural disasters and other
hazards (i) which are not covered by hazard insurance policies (such as
earthquakes) and (ii) for which claims have been submitted and rejected by the
related hazard insurer and any shortfall in insurance proceeds for partial
damage due to the application of the co-insurance clauses contained in hazard
insurance policies.

      "SPV": As defined in Section 3.30(a) hereof.

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

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

      "Stepdown Date": The later to occur of (x) the earlier to occur of (A) the
Distribution Date in March 2007 and (B) the Distribution Date on which the
aggregate Certificate Principal Balance of the Class A Certificates is reduced
to zero, and (y) the first Distribution Date on which the Senior Enhancement
Percentage (after taking into account distributions of principal on such
Distribution Date) is greater than or equal to the Senior Specified Enhancement
Percentage.

      "Subordinate Maximum Rate Cap": For any Distribution Date will be a per
annum rate equal to the weighted average of the Group I Cap (as adjusted to
reflect the actual number of days in the related Interest Accrual Period) and
the Group II Maximum Rate Cap, weighted on the basis of the Group I Group
Subordinate Amount and the Group II Group Subordinate Amount, respectively.

      "Subordinate Rate Cap": With respect to any Distribution Date, a per annum
rate equal to the weighted average of the Group I Cap (as adjusted to reflect
the actual number of days in the related Interest Accrual Period) and the Group
II Cap, weighted on the basis of the Group I Group Subordinate Amount and the
Group II Group Subordinate Amount, respectively.

                                       51
<PAGE>
      "Subordinated Certificates": The Class M-1, Class M-2, Class M-3, Class
B-1, Class B-2, Class B-3, Class B-4, Class N, Class X, Class R and Class R-X
Certificates.

      "Subsequent Overcollateralization Amount": As of any Distribution Date,
after the application of principal payments and Applied Realized Loss Amounts,
an amount equal to the excess, if any of (a) the Pool Balance over (b) the sum
of (i) the Certificate Principal Balance of each Class of Offered Certificates
and the Class B-4 Certificates and (ii) the Remaining Initial
Overcollateralization Amount.

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

      "Targeted Overcollateralization Amount": As of any Distribution Date, (x)
prior to the Stepdown Date, 0.50% of the Pool Balance on the Cut-off Date and
(y) on and after the Stepdown Date, (i) if a Trigger Event has not occurred, the
lesser of (a) 0.50% of the Pool Balance on the Cut-off Date and (b) the greater
of (A) 1.00% of the Pool Balance as of the last day of the related Collection
Period and (B) 0.50% of the Pool Balance on the Cut-off Date and (ii) if a
Trigger Event has occurred, the Targeted Overcollateralization Amount for the
immediately preceding Distribution Date.

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

      "Tax Returns": The federal income tax returns on Internal Revenue Service
Form 1066, U.S. Real Estate Mortgage Investment Conduit Income Tax Return,
including Schedule Q thereto, Quarterly Notice to Residual Interest Holders of
the REMIC Taxable Income or Net Loss Allocation, or any successor forms, to be
filed on behalf of the Trust for each of the eight REMICs created pursuant to
this Agreement under the REMIC Provisions, together with any and all other
information reports or returns that may be required to be furnished to the
Certificateholders or filed with the Internal Revenue Service or any other
governmental taxing authority under any applicable provisions of federal, state
or local tax laws.

      "Telerate Page 3750": The display page currently so designated on the
Moneyline Telerate Service (or such other page as may replace the Telerate Page
3750 page on that service for the purpose of displaying London interbank offered
rates of major banks).

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

      "Trigger Event": With respect to any Distribution Date, if (i) the
six-month rolling average of 60+ Day Delinquent Loans equals or exceeds 40% of
the Senior Enhancement Percentage or (ii) the aggregate amount of Realized
Losses incurred since the Cut-off Date through the last day of the related
Collection Period divided by the Pool Balance as of the Cut-off Date exceeds the
applicable percentages set forth below with respect to such Distribution Date:

<TABLE>
<CAPTION>
        DISTRIBUTION DATE OCCURRING IN                    PERCENTAGE
        ------------------------------                    ----------
<S>                                                       <C>
        March 2007 through February 2008                    2.50%
        March 2008 through February 2009                    4.00%
</TABLE>

                                       52
<PAGE>
<TABLE>
<S>                                                       <C>
        March 2009 through February 2010                    5.00%
        March 2010 through February 2011                    5.25%
        March 2011 and thereafter                           5.50%
</TABLE>

      "Trust": 2004-CB2 Trust, the trust created hereunder.

      "Trust Fund": The segregated pool of assets subject hereto, constituting
the primary trust created hereby and to be administered hereunder, with respect
to a portion of which eight REMIC elections are to be made, such entire Trust
Fund consisting of: (i) such Mortgage Loans as from time to time are subject to
this Agreement, together with the Mortgage Files relating thereto, and together
with all collections thereon and proceeds thereof, (ii) any REO Property,
together with all collections thereon and proceeds thereof, (iii) the Trustee's
rights with respect to the Mortgage Loans under all insurance policies required
to be maintained pursuant to this Agreement and any proceeds thereof, (iv) the
Depositor's rights under the Mortgage Loan Purchase Agreement (including any
security interest created thereby), (v) the Trustee's rights under the Yield
Maintenance Agreement and (vi) the Collection Account, the Distribution Account,
the Reserve 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.

      "Trustee": JPMorgan Chase Bank, a New York banking corporation organized
and existing under the laws of New York, or any successor Trustee appointed as
herein provided.

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

      "Trustee Fee Rate": With respect to any Distribution Date, 0.0055% per
annum.

      "Underwriters": Merrill Lynch, Pierce, Fenner & Smith Incorporated and
Residential Funding Securities Corporation, as underwriters with respect to the
Offered Certificates.

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

      "Unpaid Realized Loss Amount": For any Class M-1, Class M-2, Class M-3,
Class B-1, Class B-2, Class B-3 and Class B-4 Certificates and as to any
Distribution Date, the excess of (1) the cumulative amount of related Applied
Realized Loss Amounts with respect to such Class for

                                       53
<PAGE>
all prior Distribution Dates over (2) the sum of (x) the cumulative amount of
related Realized Loss Amortization Amounts with respect to such Class for all
prior Distribution Dates and (y) all increases in the Certificate Principal
Balance of such Class pursuant to the last sentence of the definition of
"Certificate Principal Balance."

      "VA": The United States Department of Veterans Affairs.

      "VA Approved Lender": Those institutions that are approved by the VA to
act as servicer and mortgagee of record pursuant to the VA Regulations.

      "VA Regulations" Any and all regulations promulgated by the VA under the
Servicemen's Readjustment Act of 1944, as amended.

      "Value": With respect to any Mortgaged Property, the lower of the value
thereof as determined by an independent appraisal made at the time of the
origination of the related Mortgage Loan or the sale price, if the appraisal is
not available; except that, with respect to any Mortgage Loan that is a purchase
money mortgage loan, the lesser of (i) the value thereof as determined by an
independent appraisal made at the time of the origination of such Mortgage Loan,
if any, and (ii) the sales price of the related Mortgaged Property.

      "Voting Rights": The portion of the voting rights of all of the
Certificates which is allocated to any Certificate. The Voting Rights allocated
among Holders of the Offered Certificates (other than the Class A-IO
Certificates) and the Class B-4 Certificates shall be 98%, and shall be
allocated among each such Class according to the fraction, expressed as a
percentage, the numerator of which is the aggregate Certificate Principal
Balance of all the Certificates of such Class then outstanding and the
denominator of which is the aggregate Certificate Principal Balance of all the
Offered Certificates and the Class B-4 Certificates then outstanding. The Voting
Rights allocated to each such Class of Certificates shall be allocated among all
holders of each such Class in proportion to the outstanding Certificate
Principal Balance of such Certificates; provided, however, that any Certificate
registered in the name of the Servicer, the Depositor or the Trustee or any of
their respective affiliates shall not be included in the calculation of Voting
Rights; provided that only such Certificates as are known by a Responsible
Officer of the Trustee to be so registered will be so excluded. On each
Distribution Date (a) prior to the date on which the Notional Amount of the
Class N Certificates is reduced to zero, the percentage of all the Voting Rights
allocated among the Holders of the Class N and Class X Certificates,
respectively, shall be 1% and (b) on and after the date on which the Notional
Amount of the Class N Certificates is reduced to zero, the percentage of all the
Voting Rights allocated among the Holders of the Class N Certificates shall be
0% and the percentage of all the Voting Rights allocated among the Holder of the
Class X Certificates shall be 2%. The Class A-IO and Residual Certificates shall
have no Voting Rights.

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

      "Yield Maintenance Agreement": The interest rate cap agreement between the
Trustee, on behalf of the Trust, and the Yield Maintenance Agreement Provider
substantially in the form

                                       54
<PAGE>
attached hereto as Exhibit P. The Yield Maintenance Agreement shall not be an
asset of any REMIC formed under this Agreement.

      Yield Maintenance Agreement Payment": On each Distribution Date through
the Distribution Date in August 2006, the amount equal to the product of (a) the
excess of the lesser of (i) LIBOR and (ii) 8.10% over the strike rate for such
Distribution Date set forth on the schedule attached to the confirmation to the
Yield Maintenance Agreement for such Distribution Date, (b) the cap notional
amount, as set forth on the schedule attached to the confirmation to the Yield
Maintenance Agreement for such Distribution Date and (c) a fraction, the
numerator of which is the actual number of days elapsed since the previous
Distribution Date to but excluding the current Distribution Date and the
denominator of which is 360.

      "Yield Maintenance Agreement Provider": The Bank of New York and any
successor thereto.

      Section 1.02 Accounting.

      Unless otherwise specified herein, for the purpose of any definition or
calculation, whenever amounts are required to be netted, subtracted or added or
any distributions are taken into account such definition or calculation and any
related definitions or calculations shall be determined without duplication of
such functions.

                                   ARTICLE II

                          CONVEYANCE OF MORTGAGE LOANS;
                        ORIGINAL ISSUANCE OF CERTIFICATES

      Section 2.01 Conveyance of 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 (i) each Mortgage Loan
identified on the Mortgage Loan Schedule, including the related Cut-off Date
Principal Balance, all interest accruing thereon after the Cut-off Date and all
collections in respect of interest and principal due after the Cut-off Date;
(ii) property which secured each such Mortgage Loan and which has been acquired
by foreclosure or deed in lieu of foreclosure; (iii) its interest in any
insurance policies in respect of the Mortgage Loans; (iv) all proceeds of any of
the foregoing; (v) the rights of the Depositor under the Mortgage Loan Purchase
Agreement, and (vi) all other assets included or to be included in the Trust
Fund; provided, however, so long as the Servicer is an FHA Approved Mortgagee,
the Commissioner of HUD shall have no obligation to recognize or deal with any
person other than the Servicer with respect to FHA Insurance. Such assignment
includes all interest and principal due to the Depositor or the Servicer after
the Cut-off Date with respect to the Mortgage Loans.

      It is agreed and understood by the Depositor, the Seller, the Servicer and
the Trustee that it is not intended that any Mortgage Loan be included in the
Trust that is either (i) a "High-Cost Home Loan" as defined in the New Jersey
Home Ownership Act effective November 27, 2003;

                                       55
<PAGE>
or (ii) a "High-Cost Home Loan" as defined in the New Mexico Home Loan
Protection Act effective January 1, 2004.

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

                  (i) the original Mortgage Note including any riders thereto,
endorsed either (A) in blank or (B) in the following form: "Pay to the order of
JPMorgan Chase Bank, as Trustee under the Pooling and Servicing Agreement, dated
as of February 1, 2004, among Credit-Based Asset Servicing and Securitization
LLC, Merrill Lynch Mortgage Investors, Inc., Litton Loan Servicing LP and
JPMorgan Chase Bank, C-BASS Mortgage Loan Asset-Backed Certificates, Series
2004-CB2, without recourse," or with respect to any lost Mortgage Note, an
original Lost Note Affidavit, together with a copy of the related Mortgage Note;

                  (ii) the original Mortgage including any riders thereto, with
evidence of recording thereon, and the original recorded power of attorney, if
the Mortgage was executed pursuant to a power of attorney, with evidence of
recording thereon or, if such Mortgage or power of attorney has been submitted
for recording but has not been returned from the applicable public recording
office, has been lost or is not otherwise available, a copy of such Mortgage or
power of attorney, as the case may be, certified to be a true and complete copy
of the original submitted for recording;

                  (iii) an original Assignment of Mortgage, in form and
substance acceptable for recording. The Mortgage shall be assigned either (A) in
blank or (B) to "JPMorgan Chase Bank, as Trustee under the Pooling and Servicing
Agreement, dated as of February 1, 2004, among Credit-Based Asset Servicing and
Securitization LLC, Merrill Lynch Mortgage Investors, Inc., Litton Loan
Servicing LP and JPMorgan Chase Bank, C-BASS Mortgage Loan Asset-Backed
Certificates, Series 2004-CB2, without recourse";

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

                  (v) the original or a certified copy of lender's title
insurance policy except with respect to those Mortgage Loans identified on
Exhibit U hereto;

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

                  (vii) for each FHA Loan, the original Mortgage Insurance
Certificate.

      The Trustee agrees to execute and deliver (or cause the Custodian to
execute and deliver) to the Depositor on or prior to the Closing Date an
acknowledgment of receipt of the original Mortgage Note (with any exceptions
noted), substantially in the form attached as Exhibit F-3 hereto.

                                       56
<PAGE>
      If any of the documents referred to in Section 2.01(ii), (iii) or (iv)
above has as of the Closing Date been submitted for recording but either (x) has
not been returned from the applicable public recording office or (y) has been
lost or such public recording office has retained the original of such document,
the obligations of the Seller to deliver such documents shall be deemed to be
satisfied upon (1) delivery to the Trustee or the Custodian no later than the
Closing Date, of a copy of each such document certified by the Seller in the
case of (x) above or the applicable public recording office in the case of (y)
above to be a true and complete copy of the original that was submitted for
recording and (2) if such copy is certified by the Seller, delivery to the
Trustee or the Custodian, promptly upon receipt thereof of either the original
or a copy of such document certified by the applicable public recording office
to be a true and complete copy of the original. The Seller shall deliver or
cause to be delivered to the Trustee or the Custodian promptly upon receipt
thereof any other documents constituting a part of a Mortgage File received with
respect to any Mortgage Loan, including, but not limited to, any original
documents evidencing an assumption or modification of any Mortgage Loan.

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

      The Servicer shall cause the Assignments of Mortgage which were delivered
in blank to be completed and shall cause all Assignments referred to in Section
2.01(iii) hereof and, to the extent necessary, in Section 2.01(iv) hereof to be
recorded at the Servicer's expense and of no cost to the Trust Fund; provided,
however, the Servicer need not cause to be recorded any Assignment which relates
to a Mortgage Loan in any jurisdiction under the laws of which, as evidenced by
an Opinion of Counsel delivered by the Servicer to the Trustee and the Rating
Agencies, the recordation of such assignment is not necessary to protect the
Trustee's interest, on behalf of the Trust, in the related Mortgage Loan. The
Servicer shall be required to deliver such assignments for recording within 30
days of the Closing Date. The Servicer shall furnish the Trustee, or its
designated agent, with a copy of each assignment of Mortgage submitted for
recording. In the event that any such Assignment is lost or returned unrecorded
because of a defect therein, the Servicer shall promptly have a substitute
Assignment prepared or have such defect cured, as the case may be, and
thereafter cause each such Assignment to be duly recorded. In the event that any
Mortgage Note is endorsed in blank as of the Closing Date, promptly following
the Closing Date the Servicer shall cause to be completed such endorsements "Pay
to the order of JPMorgan Chase Bank, as Trustee under the Pooling and Servicing
Agreement, dated as of February 1, 2004, among Credit-Based Asset Servicing and
Securitization LLC, Merrill Lynch Mortgage Investors, Inc., Litton Loan
Servicing LP and JPMorgan Chase Bank, C-BASS Mortgage Loan Asset-Backed
Certificates, Series 2004-CB2, without recourse."

      In the event that any Assignments of Mortgage is not recorded or is
improperly recorded (as a result of actions taken or not taken by a person other
than the Servicer), neither the Servicer nor the Trustee shall have any
liability for its failure to receive notices related to such Assignment of
Mortgage.

                                       57
<PAGE>
      The Depositor herewith delivers to the Trustee executed copies of the
Mortgage Loan Purchase Agreement.

      Section 2.02 Acceptance by Trustee.

      The Trustee acknowledges the receipt of, subject to the provisions of
Section 2.01 and subject to the review described below and any exceptions noted
on the exception report described in the next paragraph below, the documents
referred to in Section 2.01 above and all other assets included in the
definition of "Trust Fund" and declares that it holds and will hold such
documents and the other documents delivered to it constituting a Mortgage File,
and that it holds or will hold all such assets and such other assets included in
the definition of "Trust Fund" in trust for the exclusive use and benefit of all
present and future Certificateholders.

      The Trustee agrees, for the benefit of the Certificateholders, to review
(or cause the Custodian to review) each Mortgage File within 60 days after the
Closing Date (or, with respect to any document delivered after the Startup Day,
within 60 days of receipt and with respect to any Qualified Substitute Mortgage,
within 60 days after the assignment thereof) and to certify (or cause the
Custodian to certify) in substantially the form attached hereto as Exhibit F-1
that, as to each Mortgage Loan listed in the Mortgage Loan Schedule (other than
any Mortgage Loan paid in full or any Mortgage Loan specifically identified in
the exception report annexed thereto as not being covered by such
certification), (i) all documents required to be delivered to it pursuant to
Section 2.01 of this Agreement are in its possession, (ii) such documents have
been reviewed by it and have not been mutilated, damaged or torn and relate to
such Mortgage Loan and (iii) based on its examination and only as to the
foregoing, the information set forth in the Mortgage Loan Schedule that
corresponds to items (1), (2), (3), (5), (13) and (26) (in the case of (26),
only as to whether there is a prepayment penalty) of the Mortgage Loan Schedule
accurately reflects information set forth in the Mortgage File. It is herein
acknowledged that, in conducting such review, the Trustee (or the Custodian, as
applicable) is under no duty or obligation to inspect, review or examine any
such documents, instruments, certificates or other papers to determine that they
are genuine, enforceable, or appropriate for the represented purpose or that
they have actually been recorded or that they are other than what they purport
to be on their face.

      Prior to the first anniversary date of this Agreement the Trustee shall
deliver (or cause the Custodian to deliver) to the Depositor and the Servicer a
final certification in the form annexed hereto as Exhibit F-2 evidencing the
completeness of the Mortgage Files, with any applicable exceptions noted
thereon.

      If in the process of reviewing the Mortgage Files and making or preparing,
as the case may be, the certifications referred to above, the Trustee (or the
Custodian, as applicable) finds any document or documents constituting a part of
a Mortgage File to be missing or defective in any material respect, at the
conclusion of its review the Trustee (upon its notification by the Custodian)
shall so notify the Seller, the Depositor and the Servicer. In addition, upon
the discovery by the Seller, Depositor, the Trustee or the Servicer (or upon
receipt by the Trustee of written notification of such breach) of a breach of
any of the representations and warranties made by the Seller in the related
Mortgage Loan Purchase Agreement in respect of any Mortgage Loan which
materially adversely affects such Mortgage Loan or the interests of the related

                                       58
<PAGE>
Certificateholders in such Mortgage Loan, the party discovering such breach
shall give prompt written notice to the other parties.

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

      The Trustee is hereby directed to execute and deliver, on behalf of the
Trust, the Yield Maintenance Agreement.

      Section 2.03 Repurchase or Substitution of Mortgage Loans by the Seller.

            (a) Upon discovery or receipt of written notice of any materially
defective document in, or that a document is missing from, a Mortgage File or of
the breach by the Seller of any representation, warranty or covenant under the
Mortgage Loan Purchase Agreement or in Section 2.04 in respect of any Mortgage
Loan which materially adversely affects the value of such Mortgage Loan or the
interest therein of the Certificateholders, the Trustee (or the Custodian, as
applicable) shall promptly notify the Seller, the Servicer and the Trustee of
such defect, missing document or breach and request that the Seller deliver such
missing document or cure such defect or breach within 120 days or 150 days
following the Closing Date, in the case of missing Mortgages or Assignments 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 Seller's obligation under the Mortgage Loan Purchase Agreement and cause the
Seller to repurchase such Mortgage Loan from the Trust Fund at the Purchase
Price on or prior to the Determination Date following the expiration of such 120
day period (subject to Section 2.03(e)); provided that, in connection with any
such breach that could not reasonably have been cured within such 120 day or 150
day period, if the Seller shall have commenced to cure such breach within such
120 day or 150 day period, the Seller shall be permitted to proceed thereafter
diligently and expeditiously to cure the same within the additional period
provided under the Mortgage Loan Purchase Agreement. The Purchase Price for the
repurchased Mortgage Loan shall be deposited in the Collection Account, and the
Trustee, upon receipt of written certification from the Servicer of such
deposit, shall release to the Seller the related Mortgage File and shall execute
and deliver such instruments of transfer or assignment, in each case without
recourse, 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 have
no further responsibility with regard to such Mortgage File. In lieu of
repurchasing any such Mortgage Loan as provided above, the Seller may cause such
Mortgage Loan to be removed from the Trust Fund (in which case it shall become a
Defective Mortgage Loan) and substitute one or more Eligible Substitute Mortgage
Loans in the manner and subject to the limitations set forth in Section 2.03(d).
In

                                       59
<PAGE>
addition to the foregoing, in the case of a breach of the Seller's
representation set forth in Section 3.01(f) of the Mortgage Loan Purchase
Agreement, the Seller shall reimburse the Trust for all costs or damages
incurred by the Trust as a result of the violation of such law (such amount, the
"Reimbursement Amount"). The Reimbursement Amount shall be delivered to the
Servicer for deposit into the Collection Account within 10 days from the date
the Seller was notified by the Trustee of the amount of such costs and damages.
It is understood and agreed that the obligation of the Seller to pay the
Reimbursement Amount and to either cure or repurchase (or 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 against the Seller respecting such
omission, defect or breach available to the Trustee and the Trustee on behalf of
the Certificateholders.

            (b) [Reserved].

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

            (d) Any substitution of Eligible Substitute Mortgage Loans for
Defective Mortgage Loans made pursuant to Section 2.03(a) must be effected prior
to the last Business Day that is within two years after the Closing Date. As to
any Defective Mortgage Loan for which the Seller substitutes a Eligible
Substitute Mortgage Loan or Loans, such substitution shall be effected by the
Seller delivering to the Trustee for such Eligible Substitute Mortgage Loan or
Loans, the Mortgage Note, the Mortgage, the Assignment to the Trustee, and such
other documents and agreements, with all necessary endorsements thereon, as are
required by Section 2.01, together with an Officers' Certificate providing that
each such Eligible Substitute Mortgage Loan satisfies the definition thereof and
specifying the Substitution Adjustment Amount (as described below), if any, in
connection with such substitution. The Trustee shall acknowledge receipt for
such Eligible Substitute Mortgage Loan or Loans and, within ten Business Days
thereafter, shall review such documents as specified in Section 2.02 and deliver
(or cause the Custodian to deliver) to the Servicer, with respect to such
Eligible Substitute Mortgage Loan or Loans, a certification substantially in the
form attached hereto as Exhibit F-1, with any applicable exceptions noted
thereon. Within one year of the date of substitution, the Trustee shall deliver
(or cause the Custodian to deliver) to the Servicer a certification
substantially in the form of Exhibit F-2 hereto with respect to such Eligible
Substitute Mortgage Loan or Loans, with any applicable exceptions noted thereon.
Monthly Payments due with respect to Eligible Substitute Mortgage Loans in the
month of substitution are not part of the Trust Fund and will be retained by the
Seller. For the month of substitution, distributions to Certificateholders will
reflect the collections and recoveries in respect of such Defective Mortgage
Loan in the Collection Period preceding the month of substitution and the
Depositor or the Seller, as the case may be, shall thereafter be entitled to
retain all amounts subsequently received in respect of such Defective Mortgage
Loan. The Seller 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 Defective Mortgage Loan
from the terms of this Agreement and the substitution of the Eligible Substitute
Mortgage Loan or Loans and shall

                                       60
<PAGE>
deliver a copy of such amended Mortgage Loan Schedule to the Trustee. Upon such
substitution, such Eligible Substitute Mortgage Loan or Loans shall constitute
part of the Mortgage Pool and shall be subject in all respects to the terms of
this Agreement and, in the case of a substitution effected by the Seller, the
Mortgage Loan Purchase Agreement, including, in the case of a substitution
effected by the Seller all applicable representations and warranties thereof
included in the Mortgage Loan Purchase Agreement and all applicable
representations and warranties thereof set forth in Section 2.04, in each case
as of the date of substitution.

      For any month in which the Seller substitutes one or more Eligible
Substitute Mortgage Loans for one or more Defective Mortgage Loans, the Servicer
will determine the amount (the "Substitution Adjustment Amount"), if any, by
which the aggregate Purchase Price of all such Defective Mortgage Loans exceeds
the aggregate, as to each such Eligible Substitute Mortgage Loan, of the
principal balance thereof as of the date of substitution, together with one
month's interest on such principal balance at the applicable Net Mortgage
Interest Rate. On the date of such substitution, the Seller will deliver or
cause to be delivered to the Servicer for deposit in the Collection Account an
amount equal to the Substitution Adjustment Amount, if any, and the Trustee,
upon receipt of the related Eligible Substitute Mortgage Loan or Loans and
certification by the Servicer of such deposit, shall release to the Seller the
related Mortgage File or Files and shall execute and deliver such instruments of
transfer or assignment, in each case without recourse, as the Seller shall
deliver to it and as shall be necessary to vest therein any Defective 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 the Trust Fund, including without
limitation, any federal tax imposed on "prohibited transactions" under Section
860F(a)(l) of the Code or on "contributions after the startup date" under
Section 860G(d)(l) of the Code, or (b) any REMIC formed under this Agreement to
fail to qualify as a REMIC at any time that any Certificate is outstanding. If
such Opinion of Counsel can not be delivered, then such substitution may only be
effected at such time as the required Opinion of Counsel can be given.

            (e) Upon discovery by the Seller, the Servicer or the Trustee that
any Mortgage Loan does not constitute a "qualified mortgage" within the meaning
of Section 860G(a)(3) of the Code, the party discovering such fact shall within
two Business Days give written notice thereof to the other parties. In
connection therewith, the Seller shall repurchase or, subject to the limitations
set forth in Section 2.03(d), substitute one or more Eligible 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.
In addition, upon discovery that a Mortgage Loan is defective in a manner that
would cause it to be a "defective obligation" within the meaning of Treasury
regulations relating to REMICs, the Seller shall cure the defect or make the
required purchase or substitution no later than 90 days after the discovery of
the defect. Any such repurchase or substitution shall be made in the same manner
as set forth in Section 2.03(a), if made by the Seller. 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.

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      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 pursuant to
Sections 2.01, 2.02 and 2.03 and preparation and delivery of the certifications
in the form of Exhibit F-1 and Exhibit F-2 shall be performed by the Custodian
pursuant to the terms and conditions of the Custodial Agreement. The fees and
expenses of the Custodian shall be paid by the Servicer.

      Section 2.04 Representations and Warranties of the Seller with Respect to
the Mortgage Loans.

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

            (a) The representations and warranties made by the Seller pursuant
to Section 3.01 of the Mortgage Loan Purchase Agreement are hereby being made to
the Trustee and are true and correct as of the Closing Date.

            (b) Any written agreement between the Mortgagor in respect of a
Mortgage Loan and the Servicer modifying such Mortgagor's obligation to make
payments under the Mortgage Loan (such modified Mortgage Loan, a "Modified
Mortgage Loan") involved the application of the Seller's underwriting standards
or some assessment of the Mortgagor's ability to repay the Modified Mortgage
Loan.

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

      Upon discovery by the Depositor, the Seller, the Servicer or the Trustee
of a breach of any of the representations and warranties contained in this
Section that materially and adversely affects the value of any Mortgage Loan or
the interest therein of the Certificateholders, the party discovering the breach
shall give prompt written notice to the others and in no event later than two
Business Days from the date of such discovery. Within ninety days of its
discovery or its receipt of notice of any such missing or materially defective
documentation or any such breach of a representation or warranty, the Seller
shall promptly deliver such missing document or cure such defect or breach in
all material respects, or in the event such defect or breach cannot be cured,
the Seller shall repurchase the affected Mortgage Loan or cause the removal of
such Mortgage Loan from the Trust Fund and substitute for it one or more
Eligible Substitute Mortgage Loans, in either case, in accordance with Section
2.03.

      It is understood and agreed that the representations and warranties set
forth in this Section 2.04 shall survive delivery of the Mortgage Files to the
Trustee and shall inure to the benefit of

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the Certificateholders notwithstanding any restrictive or qualified endorsement
or assignment. It is understood and agreed that the obligations of the Seller
set forth in Section 2.03(a) and (c) to cure, substitute for or repurchase a
Mortgage Loan pursuant to the Mortgage Loan Purchase Agreement and to reimburse
the Trust the Reimbursement Amount, constitute the sole remedies available to
the Certificateholders or to the Trustee on their behalf respecting a breach of
the representations and warranties contained in this Section 2.04.

      Section 2.05 Representations, Warranties and Covenants of the Servicer.

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

                  (i) The Servicer is duly organized, validly existing, and in
good standing under the laws of the jurisdiction of its formation and has all
licenses necessary to carry on its business as now being conducted, except for
such licenses, certificates and permits the absence of which, individually or in
the aggregate, would not have a material adverse effect on the ability of the
Servicer to conduct its business as it is presently conducted, and is licensed,
qualified and in good standing in the states where the Mortgaged Property is
located if the laws of such state require licensing or qualification in order to
conduct business of the type conducted by the Servicer or to ensure the
enforceability or validity of each Mortgage Loan; the Servicer has the power and
authority to execute and deliver this Agreement and to perform in accordance
herewith; the execution, delivery and performance of this Agreement (including
all instruments of transfer to be delivered pursuant to this Agreement) by the
Servicer and the consummation of the transactions contemplated hereby have been
duly and validly authorized; this Agreement evidences the valid, binding and
enforceable obligation of the Servicer, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally; and all requisite corporate action
has been taken by the Servicer to make this Agreement valid and binding upon the
Servicer in accordance with its terms;

                  (ii) The consummation of the transactions contemplated by this
Agreement are in the ordinary course of business of the Servicer and will not
result in the breach of any term or provision of the certificate of formation or
the partnership agreement of the Servicer or result in the breach of any term or
provision of, or conflict with or constitute a default under or result in the
acceleration of any obligation under, any agreement, indenture or loan or credit
agreement or other instrument to which the Servicer or its property is subject,
or result in the violation of any law, rule, regulation, order, judgment or
decree to which the Servicer or its property is subject;

                  (iii) The Servicer is an approved seller/servicer of
conventional mortgage loans for Fannie Mae and is an FHA Approved Mortgagee in
good standing to service mortgages, is a VA Approved Lender and has not been
suspended as a mortgagee or servicer by the FHA or VA and has the facilities,
procedures and experienced personnel necessary for the sound servicing of
mortgage loans of the same type as the Mortgage Loans. The Servicer is, and
shall remain for as long as it is servicing the Mortgage Loans hereunder, in
good standing as a FHA Approved Mortgagee and a VA Approved Lender and to
service mortgage loans for HUD,

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Fannie Mae or Freddie Mac, and no event has occurred, including but not limited
to a change in insurance coverage, which would make the Servicer unable to
comply with HUD, Fannie Mae, Freddie Mac or FHA eligibility requirements or
which would require notification to any of HUD, Fannie Mae, Freddie Mac, FHA or
VA;

                  (iv) This Agreement, and all documents and instruments
contemplated hereby which are executed and delivered by the Servicer, constitute
and will constitute valid, legal and binding obligations of the Servicer,
enforceable in accordance with their respective terms, except as the enforcement
thereof may be limited by applicable bankruptcy laws and general principles of
equity;

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

                  (vi) There is no action, suit, proceeding or investigation
pending or, to its knowledge, threatened against the Servicer that, either
individually or in the aggregate, may result in any material adverse change in
the business, operations, financial condition, properties or assets of the
Servicer, or in any material impairment of the right or ability of the Servicer
to carry on its business substantially as now conducted, or in any material
liability on the part of the Servicer, or that would draw into question the
validity or enforceability of this Agreement or of any action taken or to be
taken in connection with the obligations of the Servicer contemplated herein, or
that would be likely to impair materially the ability of the Servicer to perform
under the terms of this Agreement;

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

                  (viii) Neither this Agreement nor any information, certificate
of an officer, statement furnished in writing or report delivered to the Trustee
by the Servicer in connection with the transactions contemplated hereby contains
or will contain any untrue statement of a material fact or omits or will omit to
state a material fact necessary in order to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading; and

                  (ix) The Servicer has fully furnished, and shall continue to
fully furnish for so long as it is servicing the Mortgage Loans hereunder, in
accordance with the Fair Credit Reporting Act and its implementing regulations,
accurate and complete information on the Mortgagor credit files to Equifax,
Experian and Trans Union Credit Information Company on a monthly basis.

      It is understood and agreed that the representations, warranties and
covenants set forth in this Section 2.05 shall survive delivery of the Mortgage
Files to the Trustee and shall inure to the benefit of the Trustee, the
Depositor and the Certificateholders. Upon discovery by any of the Depositor,
the Servicer, the Seller or the Trustee of a breach of any of the foregoing

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representations, warranties and covenants which materially and adversely affects
the value of any Mortgage Loan or the interests therein of the
Certificateholders, the party discovering such breach shall give prompt written
notice (but in no event later than two Business Days following such discovery)
to the other parties hereto.

      Section 2.06 Representations and Warranties of the Depositor.

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

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

                  (ii) Immediately prior to the sale and assignment by the
Depositor to the Trustee on behalf of the Trust of each Mortgage Loan, the
Depositor had good and marketable title to each Mortgage Loan (insofar as such
title was conveyed to it by the Seller) subject to no prior lien, claim,
participation interest, mortgage, security interest, pledge, charge or other
encumbrance or other interest of any nature;

                  (iii) As of the Closing Date, the Depositor has transferred
all right, title interest in the Mortgage Loans to the Trustee on behalf of the
Trust;

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

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

                  (vi) The Depositor is not in violation of its certificate of
incorporation or by-laws or in default in the performance or observance of any
material obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other instrument to which
the Depositor is a party or by which it or its properties may be bound, which
default might result in any material adverse changes in the financial condition,
earnings, affairs or business of the Depositor or which might materially and
adversely affect the properties or assets, taken as a whole, of the Depositor;

                  (vii) The execution, delivery and performance of this
Agreement by the Depositor, and the consummation of the transactions
contemplated thereby, do not and will not result in a material breach or
violation of any of the terms or provisions of, or, to the knowledge of the
Depositor, constitute a default under, any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument to which the Depositor is a
party or by which the Depositor is bound or to which any of the property or
assets of the Depositor is subject, nor will such actions result in any
violation of the provisions of the certificate of incorporation or by-laws

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<PAGE>
of the Depositor or, to the best of the Depositor's knowledge without
independent investigation, any statute or any order, rule or regulation of any
court or governmental agency or body having jurisdiction over the Depositor or
any of its properties or assets (except for such conflicts, breaches, violations
and defaults as would not have a material adverse effect on the ability of the
Depositor to perform its obligations under this Agreement);

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

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

      Section 2.07 Issuance of Certificates and the Uncertificated Regular
Interests.

      The Trustee acknowledges the assignment to it of the Mortgage Loans and
the delivery to it (or the Custodian, as bailee and Custodian of the Trustee) of
the Mortgage Files, subject to the provisions of Sections 2.01 and 2.02, and the
Trustee acknowledges the assignment to it of all other assets included in the
Trust Fund, receipt of which is hereby acknowledged. Concurrently with such
assignment and delivery and in exchange therefor, the Trustee, pursuant to the
Written Order to Authenticate executed by an officer of the Depositor, has
executed, and the Certificate Registrar has authenticated and delivered to or
upon the order of the Depositor, the Certificates (other than the Class X and
Residual Certificates) in minimum dollar denominations or $25,000 and integral
dollar multiples of $1 in excess. The Class X and Class R Certificates are
issuable only in minimum Percentage Interests of 10%. The Class R-X Certificates
are issuable only in minimum Percentage Interests of 50%. The Trustee
acknowledges the issuance of the uncertificated REMIC 1 Regular Interests, the
uncertificated REMIC 2 Regular Interests, the uncertificated REMIC 3 Regular
Interests, the uncertificated REMIC 4 Regular Interests, the uncertificated
REMIC 5 Regular Interests and the uncertificated REMIC 6 Regular Interests and
declares that it holds the REMIC 1 Regular Interests as assets of REMIC 2, the
REMIC 2 Regular Interests (other than the REMIC 2 IO Interests) as assets of
REMIC 3, the REMIC 3 Regular Interests and the REMIC 2 IO Interests as assets of
REMIC 4, the REMIC 4 X/N Interest as the asset of REMIC 5 and the REMIC 4 B-4
Interest as the asset of REMIC 6. The Trustee acknowledges the issuance of the
uncertificated REMIC 5 X/N Interest, beneficial

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ownership of which is evidenced by the Class X/N Interest, and declares that it
holds the same as assets of the Grantor Trust on behalf of the Holders of the
Class N and Class X Certificates. The interests evidenced by the Certificates
constitute the entire beneficial ownership interest in the Trust Fund.

      Section 2.08 Representations and Warranties of the Seller.

      The Seller hereby represents and warrants to the Trust and the Trustee on
behalf of the Certificateholders that as of the Closing Date or as of such date
specifically provided herein:

                  (i) The Seller is duly organized, validly existing and in good
standing as a limited liability company under the laws of the State of Delaware
and has the power and authority to own its assets and to transact the business
in which it is currently engaged. The Seller is duly qualified to do business
and is in good standing in each jurisdiction in which the character of the
business transacted by it or properties owned or leased by it requires such
qualification and in which the failure to so qualify would have a material
adverse effect on (a) its business, properties, assets or condition (financial
or other), (b) the performance of its obligations under this Agreement, (c) the
value or marketability of the Mortgage Loans, or (d) its ability to foreclose on
the related Mortgaged Properties.

                  (ii) The Seller has the power and authority to make, execute,
deliver and perform this Agreement and to consummate all of the transactions
contemplated hereunder and has taken all necessary action to authorize the
execution, delivery and performance of this Agreement. When executed and
delivered, this Agreement will constitute the Seller's legal, valid and binding
obligations enforceable in accordance with its terms, except as enforcement of
such terms may be limited by (1) bankruptcy, insolvency, reorganization,
receivership, moratorium or similar laws affecting the enforcement of creditors'
rights generally and by the availability of equitable remedies, (2) general
equity principles (regardless of whether such enforcement is considered in a
proceeding in equity or at law) or (3) public policy considerations underlying
the securities laws, to the extent that such policy considerations limit the
enforceability of the provisions of this Agreement which purport to provide
indemnification from securities laws liabilities.

                  (iii) The Seller holds all necessary licenses, certificates
and permits from all governmental authorities necessary for conducting its
business as it is presently conducted, except for such licenses, certificates
and permits the absence of which, individually or in the aggregate, would not
have a material adverse effect on the ability of the Seller to conduct its
business as it is presently conducted. It is not required to obtain the consent
of any other party or any consent, license, approval or authorization from, or
registration or declaration with, any governmental authority, bureau or agency
in connection with the execution, delivery, performance, validity or
enforceability of this Agreement, except for such consents, licenses, approvals
or authorizations, or registrations or declarations as shall have been obtained
or filed, as the case may be, prior to the Closing Date.

                  (iv) The execution, delivery and performance of this Agreement
by the Seller will not conflict with or result in a breach of, or constitute a
default under, any provision of any existing law or regulation or any order or
decree of any court applicable to the Seller or

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any of its properties or any provision of its Limited Liability Company
Agreement, or constitute a material breach of, or result in the creation or
imposition of any lien, charge or encumbrance upon any of its properties
pursuant to any mortgage, indenture, contract or other agreement to which it is
a party or by which it may be bound.

                  (v) No certificate of an officer, written statement or report
delivered pursuant to the terms hereof by the Seller contains any untrue
statement of a material fact or omits to state any material fact necessary to
make the certificate, statement or report not misleading.

                  (vi) The transactions contemplated by this Agreement are in
the ordinary course of the Seller's business.

                  (vii) The Seller is not insolvent, nor will the Seller be made
insolvent by the transfer of the Mortgage Loans to the Depositor, nor is the
Seller aware of any pending insolvency.

                  (viii) The Seller is not in violation of, and the execution
and delivery of this Agreement by it and its performance and compliance with the
terms of this Agreement will not constitute a violation with respect to any
order or decree of any court, or any order or regulation of any federal, state,
municipal or governmental agency having jurisdiction, which violation would
materially and adversely affect the Seller's condition (financial or otherwise)
or operations or any of the Seller's properties, or materially and adversely
affect the performance of any of its duties hereunder.

                  (ix) There are no actions or proceedings against, or
investigations of, the Seller pending or, to its knowledge, threatened, before
any court, administrative agency or other tribunal (i) that, if determined
adversely, would prohibit the Seller from entering into this Agreement, (ii)
seeking to prevent the consummation of any of the transactions contemplated by
this Agreement or (iii) that, if determined adversely, would prohibit or
materially and adversely affect the Seller's performance of any of its
respective obligations under, or the validity or enforceability of, this
Agreement.

                  (x) The Seller did not transfer the Mortgage Loans to the
Depositor with any intent to hinder, delay or defraud any of its creditors.

                  (xi) The Seller acquired title to the Mortgage Loans in good
faith, without notice of any adverse claims.

                  (xii) The transfer, assignment and conveyance of the Mortgage
Notes and the Mortgages by the Seller to the Depositor are not subject to the
bulk transfer laws or any similar statutory provisions in effect in any
applicable jurisdiction.

      Section 2.09 Covenants of the Seller.

            (a) The Seller hereby covenants that except for the transfer
hereunder, the Seller will not sell, pledge, assign or transfer to any other
Person, or grant, create, incur, assume or suffer to exist any lien on any
Mortgage Loan, or any interest therein; the Seller will notify the

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Trustee, as assignee of the Depositor, of the existence of any lien on any
Mortgage Loan immediately upon discovery thereof, and the Seller will defend the
right, title and interest of the Trust, as assignee of the Depositor, in, to and
under the Mortgage Loans, against all claims of third parties claiming through
or under the Seller; provided, however, that nothing in this Section 2.09 shall
prevent or be deemed to prohibit the Seller from suffering to exist upon any of
the Mortgage Loans any liens for municipal or other local taxes and other
governmental charges if such taxes or governmental charges shall not at the time
be due and payable or if the Seller shall currently be contesting the validity
thereof in good faith by appropriate proceedings and shall have set aside on its
books adequate reserves with respect thereto.

            (b) The Seller hereby covenants that neither it nor any Affiliate of
the Seller will directly solicit any Mortgagor hereunder to refinance the
related Mortgage Loan. For the purposes of the foregoing, neither the Seller nor
any Affiliate of the Seller shall be deemed to directly solicit any Mortgagor if
the Seller responds to a request from a Mortgagor regarding a refinancing or if
the Mortgagor receives marketing materials which are generally disseminated.

                                  ARTICLE III

                          ADMINISTRATION AND SERVICING
                                OF THE TRUST FUND

      Section 3.01 Servicer to Act as Servicer.

      The Servicer, as independent contract servicer, shall service and
administer the Mortgage Loans in accordance with this Agreement and the normal
and usual standards of practice of prudent mortgage servicers, and shall have
full power and authority, acting alone, to do or cause to be done any and all
things in connection with such servicing and administration which the Servicer
may deem necessary or desirable and consistent with the terms of this Agreement
including, in the case of FHA Loans, taking all actions that a mortgagee is
permitted or required to take by the FHA (the "Servicing Standards").

      Consistent with the terms of this Agreement, the Servicer may waive,
modify or vary any term of any Mortgage Loan or consent to the postponement of
strict compliance with any such term or in any manner grant indulgence to any
Mortgagor if in the Servicer's reasonable and prudent determination such waiver,
modification, postponement or indulgence is not materially adverse to the
Certificateholders; provided, however, that the Servicer shall not make future
advances and (unless the Mortgagor is in default with respect to the Mortgage
Loan or such default is, in the judgment of the Servicer, reasonably
foreseeable) the Servicer shall not permit any modification with respect to any
Mortgage Loan that would (i) change the Mortgage Interest Rate, defer or forgive
the payment thereof of any principal or interest payments, reduce the
outstanding principal amount (except for actual payments of principal) or extend
the final maturity date with respect to such Mortgage Loan, (ii) in the case of
FHA Loans, affect the FHA Insurance Contract with respect to such Mortgage Loan,
(iii) affect adversely the status of any REMIC constituting part of the Trust
Fund as a REMIC or (iv) cause any REMIC to be subject to a tax on "prohibited
transactions" or "contributions" pursuant to the REMIC Provisions.
Notwithstanding the foregoing, the Servicer shall not permit any modification
with respect to any Mortgage Loan that would both (x) effect an exchange or
reissuance of such Mortgage Loan

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<PAGE>
under Section 1.860G-2(b) of the Treasury Regulations and (y) cause any REMIC
constituting part of the Trust Fund to fail to qualify as a REMIC under the Code
or the imposition of any tax on "prohibited transactions" or "contributions"
after the Startup Day under the REMIC Provisions. Without limiting the
generality of the foregoing, the Servicer shall continue, and is hereby
authorized and empowered to execute and deliver on behalf of itself, and the
Trustee, all instruments of satisfaction or cancellation, or of partial or full
release, discharge and all other comparable instruments, with respect to the
Mortgage Loans and with respect to the Mortgaged Property. The Servicer shall
make all required Servicing Advances and shall service and administer the
Mortgage Loans in accordance with Applicable Regulations, and shall provide to
the Mortgagors any reports required to be provided to them thereby. If
reasonably required by the Servicer, the Trustee shall furnish the Servicer a
power of attorney (substantially in the form annexed hereto as Exhibit Q) and
other documents necessary or appropriate to enable the Servicer to carry out its
servicing and administrative duties under this Agreement.

      In servicing and administering FHA Loans, the Servicer shall comply
strictly with the National Housing Act, the FHA Regulations, the Servicemen's
Readjustment Act and administrative guidelines issued thereunder or pursuant
thereto (insofar as the same apply to any Mortgage Loan) and, to the extent
permitted hereunder, promptly discharge all of the obligations of the mortgagee
thereunder and under each Mortgage including the timely giving of notices, the
essence hereof being that the full benefits of each FHA Insurance Contract inure
to the Trustee, on behalf of the Certificateholders.

      In servicing and administering the Mortgage Loans, the Servicer shall
employ procedures including collection procedures and exercise the same care
that it customarily employs and exercises in servicing and administering
mortgage loans for its own account giving due consideration to accepted mortgage
servicing practices of prudent lending institutions and the FHA Insurance
Contracts and the Certificateholders' reliance on the Servicer.

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

      Notwithstanding anything in this Agreement to the contrary, in the event
of a Principal Prepayment in full, the Servicer may not waive any prepayment
penalty or portion thereof required by the terms of the related Mortgage Note
unless (i) the related Mortgage Loan is in default or foreseeable default and
such waiver (a) is standard and customary in servicing mortgage loans similar to
the Mortgage Loans and (b) would, in the reasonable judgment of the Servicer,
maximize recovery of total proceeds taking into account the value of such
prepayment penalty and the related Mortgage Loan, (ii) (A) the enforceability
thereof is limited (1) by bankruptcy, insolvency, moratorium, receivership, or
other similar law relating to creditors' rights generally or (2) due to
acceleration in connection with a foreclosure or other involuntary payment, or
(B) the enforceability is otherwise limited or prohibited by applicable law, or
(iii) the Servicer has not been provided with information sufficient to enable
it to collect the prepayment penalty. For the avoidance of doubt, the Servicer
may waive a prepayment penalty in connection with a short sale or short payoff
on a defaulted Mortgage Loan. If the Servicer has waived all or a portion of a
prepayment penalty relating to a Principal Prepayment, other than as provided
above, the Servicer shall deliver to the Trustee no later than the next
succeeding

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Servicer Remittance Date, for deposit into the Distribution Account the amount
of such prepayment penalty (or such portion thereof as had been waived) for
distribution in accordance with the terms of this Agreement.

      The Trustee shall prepare and deliver to the Depositor and the owners of
the Class N and Class X Certificates, on a monthly basis, a statement setting
forth the amounts received with respect to prepayment penalties.

      Section 3.02 Collection of Mortgage Loan Payments.

      Continuously from the date hereof until the principal and interest on all
Mortgage Loans are paid in full, the Servicer will diligently collect all
payments due under each Mortgage Loan when the same shall become due and payable
and shall, to the extent such procedures shall be consistent with this Agreement
and the terms and provisions of any related Primary Insurance Policy and
Applicable Regulations, follow such collection procedures as it follows with
respect to mortgage loans comparable to the Mortgage Loans and held for its own
account. Further, the Servicer will take special care in ascertaining and
estimating annual ground rents, taxes, assessments, water rates, fire and hazard
insurance premiums, mortgage insurance premiums, and all other charges that, as
provided in the Mortgage, will become due and payable to that end that the
installments payable by the Mortgagors will be sufficient to pay such charges as
and when they become due and payable.

      Section 3.03 Realization Upon Defaulted Mortgage Loans.

      In the event that any payment due under any Conventional Mortgage Loan is
not paid when the same becomes due and payable, or in the event the Mortgagor
fails to perform any other covenant or obligation under the Mortgage Loan and
such failure continues beyond any applicable grace period, the Servicer shall
take such action as it shall deem to be in the best interest of the
Certificateholders. In the event that any payment due under any FHA Loan becomes
delinquent, the Servicer shall take all such actions as are in the best
interests of the Certificateholders and permitted under any applicable FHA loss
mitigation proceedings, including, but not limited to, requesting the FHA to
accept an assignment of such FHA Loan, and, upon the Servicer's determination
that foreclosure is in the best interest of the Certificateholders, commencing
foreclosure proceedings. With respect to any defaulted Mortgage Loan, the
Servicer shall have the right to review the status of the related forbearance
plan and, subject to the second paragraph of Section 3.01, may modify such
forbearance plan; including, extending the Mortgage Loan repayment date for a
period of one year or reducing the Mortgage Interest Rate up to 50 basis points.

      In connection with a foreclosure or other conversion, the Servicer shall
exercise such rights and powers vested in it hereunder and use the same degree
of care and skill in its exercise as prudent mortgage servicers would exercise
or use under the circumstances in the conduct of their own affairs and
consistent with Applicable Regulations and the servicing standards set forth in
the Fannie Mae Guide, including, without limitation, advancing funds for the
payment of taxes and insurance premiums with respect to first lien Mortgage
Loans.

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      Notwithstanding the foregoing provisions of this Section 3.03, with
respect to any Mortgage Loan as to which the Servicer has received actual notice
of, or has actual knowledge of, the presence of any toxic or hazardous substance
on the related Mortgaged Property, the Servicer shall not 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 would be considered to hold title to, to be a mortgagee-in-possession
of, or to be an owner or operator of such Mortgaged Property within the meaning
of the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended from time to time, or any comparable law, unless the Servicer
has also previously determined, based on its reasonable judgment and a prudent
report prepared by a Person who regularly conducts environmental audits using
customary industry standards, that:

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

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

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

      If the Servicer determines, as described above, that it is in the best
economic interest of the Certificateholders to take such actions as are
necessary to bring any such Mortgaged Property into compliance with applicable
environmental laws, or to take such action with respect to the containment,
clean-up or remediation of hazardous substances, hazardous materials, hazardous
wastes, or petroleum-based materials affecting any such Mortgaged Property, then
the Servicer shall take such action as it deems to be in the best economic
interest of the Certificateholders. The cost of any such compliance,
containment, cleanup or remediation shall be advanced by the Servicer, subject
to the Servicer's right to be reimbursed therefor from the Collection Account as
provided in Section 3.05(ii).

      Section 3.04 Collection Account, Distribution Account and Reserve Account.

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

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      The Servicer shall deposit in the Collection Account on a daily basis
within two Business Days of receipt, and retain therein, the following payments
and collections received or made by it after the Cut-off Date with respect to
the Mortgage Loans:

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

                  (ii) all payments on account of interest on the Mortgage Loans
adjusted to the Mortgage Interest Rate less the Servicing Fee Rate;

                  (iii) all proceeds from a Cash Liquidation;

                  (iv) all Insurance Proceeds including amounts required to be
deposited pursuant to Section 3.10, other than proceeds to be held in the Escrow
Account and applied to the restoration or repair of the Mortgaged Property or
released to the Mortgagor in accordance with the Servicer's normal servicing
procedures, the loan documents or applicable law;

                  (v) all Condemnation Proceeds affecting any Mortgaged Property
which are not released to the Mortgagor in accordance with the Servicer's normal
servicing procedures, the loan documents or applicable law; and

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

      Any interest paid on funds deposited in the Collection Account, subject to
Section 3.25, shall accrue to the benefit of the Servicer and the Servicer shall
be entitled to retain and withdraw such interest from the Collection Account
pursuant to Section 3.05(v). The foregoing requirements for deposit from the
Collection Account shall be exclusive, it being understood and agreed that,
without limiting the generality of the foregoing, payments in the nature of late
payment charges, prepayment charges that are not prepayment penalties, and
assumption fees need not be deposited by the Servicer in the Collection Account.

            (b) On behalf of the Trust Fund, the Trustee shall establish and
maintain one or more accounts (such account or accounts, the "Distribution
Account"), held in trust for the benefit of the Certificateholders. On behalf of
the Trust Fund, the Servicer shall deliver to the Trustee in immediately
available funds for deposit in the Distribution Account by the close of business
New York time on the Servicer Remittance Date, that portion of the Available
Funds (calculated without regard to the references in the definition thereof to
amounts that may be deposited to the Distribution Account from a different
source as provided herein) then on deposit in the Collection Account. Amounts in
the Distribution Account shall be deemed to be held on behalf of the related
REMICs and the Grantor Trust in accordance with the REMIC distributions set
forth in Section 4.08. Funds on deposit in the Distribution Account will remain
uninvested.

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

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

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

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

                  (iii) any prepayment penalties or amounts in connection with
the waiver of such prepayment penalties, in each case required to be deposited
pursuant to Section 3.01;

                  (iv) any amounts required to be deposited in the Distribution
Account pursuant to Sections 2.03, 3.04, 3.15, 3.16, 3.23 or 4.07; and

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

            (e) Promptly upon receipt of any Stayed Funds, whether from the
Servicer, a trustee in bankruptcy, or federal bankruptcy court or other source,
the Trustee shall notify the Servicer of such receipt and deposit such funds in
the Distribution Account, subject to withdrawal thereof as permitted hereunder.

            (f) (i) The Trustee shall establish and maintain the Reserve
Account, held in trust for the benefit of the Holders of the Class M-1, Class
M-2, Class M-3, Class B-1, Class B-2 and Class B-3 Certificates. The Trustee
shall deposit in the Reserve Account on the date received by it, any Yield
Maintenance Agreement Payment received from the Yield Maintenance Agreement
Provider for the related Distribution Date. Amounts in the Reserve Account shall
remain uninvested. On each Distribution Date, the Trustee shall withdraw from
the Reserve Account any Yield Maintenance Agreement Payment and apply it in the
following order of priority:

                        (A) concurrently, to the Class M-1, Class M-2, Class
M-3, Class B-1, Class B-2 and Class B-3 Certificates, any remaining unpaid LIBOR
Carryover Amounts for such Classes for such Distribution Date (after
distributions pursuant to Section 4.02(b)(xxviii) hereof), pro rata;

                        (B) and to the Trustee as additional compensation for
its services hereunder, any remaining amount on deposit in the Reserve Account.

                  (ii) The Trustee shall account for the Reserve Account as an
asset of a grantor trust under subpart E, part I of subchapter J of the Code and
not an asset of any REMIC created pursuant to this Agreement. The Reserve
Account shall be an outside reserve fund for

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purposes of Treasury Regulations 1.860G-2(h). The beneficial owner of the
Reserve Account is the Holder of the Class X/N Interest. For all federal tax
purposes, amounts transferred to the Reserve Account shall be treated as
distributions to the Holder of the Class X/N Interest.

                  (iii) Any LIBOR Carryover Amounts paid by the Trustee pursuant
to this Section 3.04(f) to the Offered Certificates shall be accounted for by
the Trustee as amounts paid first to the Holder of the Class X/N Interest and
then to the respective Class or Classes of Offered Certificates. In addition,
the Trustee shall account for the Class M-1, Class M-2, Class M-3, Class B-1,
Class B-2 and Class B-3 Certificates' rights to receive payments of LIBOR
Carryover Amounts as rights in a limited recourse interest rate cap contract
written by the Holder of the Class X/N Interest in favor of the Class M-1, Class
M-2, Class M-3, Class B-1, Class B-2 and Class B-3 Certificates.

                  (iv) For federal information reporting purposes, the right of
the Holders of the Class M-1, Class M-2, Class M-3, Class B-1, Class B-2 and
Class B-3 Certificates to receive payments from the Reserve Account shall be
assigned a value of zero.

      Section 3.05 Permitted Withdrawals From the Collection Account.

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

                  (i) to remit to the Trustee for deposit in the Distribution
Account the amounts required to be so remitted pursuant to Section 3.04(b) or
permitted to be so remitted pursuant to the first sentence of Section 3.04(d) or
clause (ii) of first sentence of the second paragraph of Section 4.07(b);

                  (ii) to reimburse itself for (a) Advances and Servicing
Advances to the extent of amounts received on the related Mortgage Loan which
represent payments of (x) principal and/or interest respecting which any such
Advance was made or (y) Condemnation Proceeds, Insurance Proceeds or Liquidation
Proceeds respecting which any such Servicing Advance was made; or (b) any
unreimbursed Advances to the extent of funds held in the Collection Account for
future distributions that were not included in Available Funds for the preceding
Distribution Date; provided, however, any funds so applied will be replaced by
the Servicer by deposit in the Collection Account no later than one Business Day
prior to the Distribution Date on which such funds are required to be
distributed;

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

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

                  (v) to pay to itself as servicing compensation (a) any
interest earned on funds in the Collection Account (all such interest to be
withdrawn monthly not later than each

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Servicer Remittance Date) and (b) the Servicing Fee from that portion of any
payment or recovery as to interest to a particular Mortgage Loan to the extent
not retained pursuant to Section 3.04(ii);

                  (vi) to pay or reimburse itself for any amounts payable or
paid pursuant to Section 6.03 (and not otherwise previously reimbursed) and to
reimburse itself as set forth in Section 9.01(c); and

                  (vii) to clear and terminate the Collection Account upon the
termination of this Agreement.

      The foregoing requirements for withdrawal from the Collection Account
shall be exclusive. In the event the Servicer shall deposit in the Collection
Account any amount not required to be deposited therein, it may at any time
withdraw such amount from the Collection Account, any provision herein to the
contrary notwithstanding.

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

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

      The Servicer shall deposit in the Escrow Account on a daily basis within
two Business Days of receipt, and retain therein, (i) all Escrow Payments
collected on account of the Mortgage Loans, for the purpose of effecting timely
payment of any such items as required under the terms of this Agreement, and
(ii) all Insurance Proceeds which are to be applied to the restoration or repair
of any Mortgaged Property. The Servicer shall make withdrawals therefrom only to
effect such payments as are required under this Agreement, and for such other
purposes as shall be set forth in, or in accordance with, Section 3.07. The
Servicer shall be entitled to retain any interest paid on funds deposited in the
Escrow Account by the depository institution other than interest on escrowed
funds required by law to be paid to the Mortgagor and, to the extent required by
the related Mortgage Loan or Applicable Regulations, the Servicer shall pay
interest on escrowed funds to the Mortgagor notwithstanding that the Escrow
Account is non-interest bearing or that interest paid thereon is insufficient
for such purposes.

      Section 3.07 Permitted Withdrawals From Escrow Account.

      Withdrawals from the Escrow Account may be made by the Servicer (i) to
effect timely payments of ground rents, taxes, assessments, water rates, fire,
flood and hazard insurance premiums, Primary Insurance Policy premiums, if
applicable, and comparable items, (ii) to reimburse the Servicer for any
Servicing Advance made by the Servicer with respect to a related Mortgage Loan
but only from amounts received on the related Mortgage Loan which represent late
payments or Late Collections of Escrow Payments thereunder, (iii) to refund to
the Mortgagor any funds as may be determined to be overages, (iv) for transfer
to the Collection Account in accordance with the terms of this Agreement, (v)
for application to restoration or repair of the Mortgaged Property, (vi) to pay
to the Servicer, or to the Mortgagor to the extent

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required by the related Mortgage Loan or Applicable Regulations, any interest
paid on the funds deposited in the Escrow Account, (vii) to clear and terminate
the Escrow Account on the termination of this Agreement, (viii) to transfer to
the Collection Account any insurance proceeds, or (ix) in the case of FHA Loans,
for transfer to the Collection Account, fire and hazard insurance proceeds and
Escrow Payments with respect to any Mortgage Loan where the FHA, as the case may
be, has directed application of such funds as a credit against the proceeds of
the FHA Insurance Contract. As part of its servicing duties, the Servicer shall
pay to the Mortgagor interest on funds in the Escrow Account, to the extent
required by the related Mortgage Loan or Applicable Regulations, and to the
extent that interest earned on funds in the Escrow Account is insufficient,
shall pay such interest from its own funds, without any reimbursement therefor.

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

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

      With respect to each first lien Mortgage Loan, the Servicer shall maintain
accurate records reflecting the status of ground rents, taxes, assessments,
water rates and other charges which are or may become a lien upon the Mortgaged
Property and the status of Primary Insurance Policy premiums and fire, flood and
hazard insurance coverage and shall obtain, from time to time, all bills for the
payment of such charges (including renewal premiums) and shall effect payment
thereof prior to the applicable penalty or termination date and at a time
appropriate for securing maximum discounts allowable, employing for such purpose
deposits of the Mortgagor in the Escrow Account which shall have been estimated
and accumulated by the Servicer in amounts sufficient for such purposes, as
allowed under the terms of the Mortgage or Applicable Regulations. To the extent
that a Mortgage does not provide for Escrow Payments, the Servicer shall (i)
determine whether any such payments are made by the Mortgagor in a manner and at
a time that is necessary to avoid the loss of the Mortgaged Property due to a
tax sale or the foreclosure as a result of a tax lien and (ii) ensure that all
insurance required to be maintained on the Mortgaged Property pursuant to this
Agreement is maintained. If any such payment has not been made and the Servicer
receives notice of a tax lien with respect to the Mortgage Loan being imposed,
the Servicer will, to the extent required to avoid loss of the Mortgaged
Property, advance or cause to be advanced funds necessary to discharge such lien
on the Mortgaged Property. The 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 from its own
funds to effect such payments.

      The Servicer, on behalf of the Trustee, as mortgagee, will maintain in
full force and effect (to the extent a Mortgage Loan has a Primary Insurance
Policy) a Primary Insurance Policy issued by a Qualified Insurer with respect to
each Mortgage Loan for which such coverage is required. Such coverage will be
maintained until the Combined Loan-to-Value Ratio of the related Mortgage Loan
is reduced to 80% or less. The Servicer will not cancel or refuse to renew any
Primary Insurance Policy in effect on the Closing Date that is required to be
kept in force under this Agreement unless a replacement Primary Insurance Policy
for such cancelled or non-

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renewed policy is obtained from and maintained with a Qualified Insurer. The
Servicer shall not take any action which would result in non-coverage under any
applicable Primary Insurance Policy of any loss which, but for the actions of
the Servicer, would have been covered thereunder. In connection with any
assumption or substitution agreement entered into or to be entered into pursuant
to Section 3.14, the Servicer shall promptly notify the insurer under the
related Primary Insurance Policy, if any, of such assumption or substitution of
liability in accordance with the terms of such policy and shall take all actions
which may be required by such insurer as a condition to the continuation of
coverage under the Primary Insurance Policy. If such Primary Insurance Policy is
terminated as a result of such assumption or substitution of liability, the
Servicer shall obtain a replacement Primary Insurance Policy as provided above.

      In connection with its activities as servicer, the Servicer agrees to
prepare and present, on behalf of itself and the Trustee, claims to the insurer
under any Primary Insurance Policy in a timely fashion in accordance with the
terms of such policies and, in this regard, to take such action as shall be
necessary to permit recovery under any Primary Insurance Policy respecting a
defaulted Mortgage Loan. Pursuant to Section 3.04, any amounts collected by the
Servicer under any Primary Insurance Policy shall be deposited in the Collection
Account, subject to withdrawal pursuant to Section 3.05.

      Section 3.09 Transfer of Accounts.

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

      Section 3.10 Maintenance of Hazard Insurance.

      The Servicer shall cause to be maintained for each first lien Mortgage
Loan fire and hazard insurance with extended coverage as is customary in the
area where the Mortgaged Property is located in an amount which is at least
equal to the lesser of (i) the amount necessary to fully compensate for any
damage or loss to the improvements which are a part of such property on a
replacement cost basis, (ii) the Principal Balance of the Mortgage Loan, in each
case in an amount not less than such amount as is necessary to prevent the
Mortgagor and/or the Mortgagee from becoming a co-insurer or (iii) the amount
required under applicable HUD/FHA regulations. If the Mortgaged Property is in
an area identified in the Federal Register by the Flood Emergency Management
Agency as having special flood hazards and flood insurance has been made
available, the Servicer will cause to be maintained a flood insurance policy
meeting the requirements of the current guidelines of the Federal Insurance
Administration with a generally acceptable insurance carrier, in an amount
representing coverage not less than the least of (i) the Principal Balance of
the Mortgage Loan, (ii) the maximum insurable value of the improvements securing
such Mortgage Loan or (iii) the maximum amount of insurance which is available
under the Flood Disaster Protection Act of 1973, as amended. The Servicer shall
also maintain on the REO Property for the benefit of the Certificateholders, (x)
fire and hazard insurance with extended coverage in an amount which is at least
equal to the replacement cost of the improvements which are a part of such
property, (y) public liability insurance and, (z) to the extent required and
available under the Flood Disaster Protection Act of 1973, as amended, flood

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insurance in an amount as provided above. Any amounts collected by the Servicer
under any such policies other than amounts to be deposited in the Escrow Account
and applied to the restoration or repair of the Mortgaged Property or REO
Property, or released to the Mortgagor in accordance with the Servicer's normal
servicing procedures, shall be deposited in the Collection Account, subject to
withdrawal pursuant to Section 3.05. It is understood and agreed that no
earthquake or other additional insurance is required to be maintained by the
Servicer or the Mortgagor or maintained on property acquired in respect of the
Mortgage Loan, other than pursuant to such Applicable Regulations as shall at
any time be in force and as shall require such additional insurance. All such
policies shall be endorsed with standard mortgagee clauses with loss payable to
the Servicer and shall provide for at least thirty days prior written notice of
any cancellation, reduction in the amount of or material change in coverage to
the Servicer. The Servicer shall not interfere with the Mortgagor's freedom of
choice in selecting either his insurance carrier or agent, provided, however,
that the Servicer shall not accept any such insurance policies from insurance
companies unless such companies currently reflect a general policy rating of
B:VI or better in Best's Key Rating Guide and are licensed to do business in the
state wherein the property subject to the policy is located.

      Section 3.11 Maintenance of Mortgage Impairment Insurance Policy.

      In the event that the Servicer shall obtain and maintain a blanket policy
issued by an insurer that has a general policy rating of B:VI or better in
Best's Key Rating Guide insuring against hazard losses on all of the Mortgage
Loans, then, to the extent such policy provides coverage in an amount equal to
the amount required pursuant to Section 3.10 and otherwise complies with all
other requirements of Section 3.10, it shall conclusively be deemed to have
satisfied its obligations as set forth in Section 3.10, it being understood and
agreed that such policy may contain a deductible clause, in which case the
Servicer shall, in the event that there shall not have been maintained on the
related Mortgaged Property or REO Property a policy complying with Section 3.10,
and there shall have been a loss which would have been covered by such policy,
deliver to the Trustee for deposit in the Distribution Account the amount not
otherwise payable under the blanket policy because of such deductible clause,
which amount shall not be reimbursable to the Servicer from the Trust Fund. In
connection with its activities as servicer of the Mortgage Loans, the Servicer
agrees to prepare and present, on behalf of the Trustee, claims under any such
blanket policy in a timely fashion in accordance with the terms of such policy.
Upon request of the Trustee, the Servicer shall cause to be delivered to the
Trustee a certified true copy of such policy and a statement from the insurer
thereunder that such policy shall in no event be terminated or materially
modified without thirty days prior written notice to the Trustee.

      Section 3.12 Fidelity Bond, Errors and Omissions Insurance.

      The Servicer shall maintain, at its own expense, a blanket fidelity bond
(the "Fidelity Bond") and an errors and omissions insurance policy, with broad
coverage with financially responsible companies on all officers, employees or
other persons acting in any capacity with regard to the Mortgage Loans to handle
funds, money, documents and papers relating to the Mortgage Loans. The Fidelity
Bond and errors and omissions insurance shall be in the form of the Mortgage
Banker's Blanket Bond and shall protect and insure the Servicer against losses,
including forgery, theft, embezzlement, fraud, errors and omissions and
negligent acts of such

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persons. Such Fidelity Bond shall also protect and insure the Servicer against
losses in connection with the failure to maintain any insurance policies
required pursuant to this Agreement and the release or satisfaction of a
Mortgage Loan without having obtained payment in full of the indebtedness
secured thereby. No provision of this Section 3.12 requiring the Fidelity Bond
and errors and omissions insurance shall diminish or relieve the Servicer from
its duties and obligations as set forth in this Agreement. The minimum coverage
under any such bond and insurance policy shall be at least equal to the
corresponding amounts required by Fannie Mae in the Fannie Mae MBS Selling and
Servicing Guide or by Freddie Mac in the Freddie Mac Servicer's Guide. Upon
request of the Trustee, the Servicer shall cause to be delivered to the
requesting party a certified true copy of the Fidelity Bond and errors and
omissions insurance policy and a statement from the surety and the insurer that
such Fidelity Bond and errors and omissions insurance policy shall in no event
be terminated or materially modified without thirty days' prior written notice
to the Trustee.

      Section 3.13 Title, Management and Disposition of REO Property and Certain
Delinquent Mortgage Loans.

            (a) In the event that title to a Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be taken (pursuant to a limited power of attorney to be provided by the
Trustee to the Servicer) in the name of the Trustee, on behalf of the
Certificateholders, or in the event the Trustee is not authorized or permitted
to hold title to real property in the state where the REO Property is located,
or would be adversely affected under the "doing business" or tax laws of such
state by so holding title, the deed or certificate of sale shall be taken in the
name of such Person or Persons as shall be consistent with an Opinion of Counsel
obtained by the Servicer from an attorney duly licensed to practice law in the
state where the REO Property is located. Any Person or Persons holding such
title other than the Trustee shall acknowledge in writing that such title is
being held as nominee for the benefit of the Trustee.

            (b) In the event that the Trust Fund acquires any REO Property as
aforesaid or otherwise in connection with a default or imminent default on a
Mortgage Loan, the Servicer shall dispose of such REO Property before the end of
the third calendar year beginning after the year of its acquisition by the Trust
Fund for purposes of Section 860G(a)(8) of the Code or if the Trust Fund has
received (at the expense of the Trust Fund) from the Internal Revenue Service an
extension of the period during which it may hold such REO Property without such
REO Property failing to be treated as "foreclosure property" (within the meaning
of Section 860G(a)(8) of the Code), before the end of such extension, unless the
Servicer obtains an Opinion of Counsel, addressed to the Servicer and the
Trustee, to the effect that the holding by the Trust Fund of such REO Property
subsequent to such period will not: (i) result in the imposition of any tax on
"prohibited transactions" as defined in Section 860F of the Code; or (ii) cause
any REMIC constituting part of the Trust Fund to fail to qualify as a REMIC at
any time that any Certificates are outstanding, in which case the Trust Fund may
continue to hold such REO Property (subject to any conditions contained in such
Opinion of Counsel). The Servicer shall be entitled to be reimbursed from the
Collection Account for any costs incurred in obtaining such Opinion of Counsel,
as provided in Section 3.05.

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

      The Servicer shall manage, conserve, protect and operate each REO Property
for the Certificateholders and the Trust Fund solely for the purpose of its
prompt disposition and sale in a manner which does not cause such REO Property
to fail to qualify as "foreclosure property" within the meaning of Section
860G(a)(8) of the Code or result in the receipt by the related REMIC of any
"income from non-permitted assets" within the meaning of Section 860F(a)(2)(B)
of the Code, or any "net income from foreclosure property" which is subject to
taxation under the REMIC Provisions. The Servicer shall cause each REO Property
to be inspected promptly upon the acquisition of title thereto and shall cause
each REO Property to be inspected at least annually thereafter. The Servicer
shall make or cause to be made a written report of each such inspection. Such
reports shall be retained in the Mortgage Servicing File and copies thereof
shall be forwarded by the Servicer to the Trustee upon request. The Servicer
shall attempt to sell the same (and may temporarily rent the same) on such terms
and conditions as the Servicer deems to be in the best interest of the
Certificateholders and the Trust Fund.

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

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

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

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

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

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unreimbursed Servicing Advances with respect to the REO Property or the related
Mortgage Loan, the Servicer, upon an REO Disposition of such REO Property, shall
be entitled to reimbursement for any related unreimbursed Servicing Advances
from proceeds received in connection with such REO Disposition. The proceeds
from the REO Disposition, net of any payment to the Servicer as provided above,
shall be deposited in the Collection Account for distribution on the succeeding
Servicer Remittance Date in accordance with Section 4.01.

      Any REO Disposition shall be for cash only (unless changes in the REMIC
Provisions made subsequent to the Startup Day allow a sale for other
consideration and an Opinion of Counsel is obtained by the Servicer to the
effect that such sale shall not cause any REMIC constituting part of the Trust
Fund to fail to qualify as a REMIC).

            (c) The Servicer may write-off any Second Lien Mortgage Loan that
has been Delinquent for a period of 180 days or more if the Servicer determines
that any amount that could be recoved on such Mortgage Loan would be less than
the cost required to achieve such recovery.

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

      When a Mortgaged Property has been or is about to be conveyed by the
Mortgagor, the Servicer shall, to the extent it has knowledge of such conveyance
or prospective conveyance, exercise its rights to accelerate the maturity of the
related Mortgage Loan under any "due-on-sale" clause contained in the related
Mortgage or Mortgage Note; provided, however, that the Servicer shall not
exercise any such right if the "due-on-sale" clause, in the reasonable belief of
the Servicer, is not enforceable under applicable law. An Opinion of Counsel at
the expense of the Servicer (which expense shall constitute a Servicing Advance)
delivered to the Trustee and the Depositor to the foregoing effect shall
conclusively establish the reasonableness of such belief. In such event, the
Servicer shall make reasonable efforts to enter into an assumption and
modification agreement with the Person to whom such property has been or is
about to be conveyed, pursuant to which such Person becomes liable under the
Mortgage Note and, unless prohibited by applicable law or the Mortgage, the
Mortgagor remains liable thereon. If the foregoing is not permitted under
applicable law, the Servicer is authorized to enter into a substitution of
liability agreement with such Person, pursuant to which the original Mortgagor
is released from liability and such Person is substituted as Mortgagor and
becomes liable under the Note. In addition to the foregoing, the Servicer shall
not be required to enforce any "due-on-sale" clause if, in the reasonable
judgment of the Servicer, entering into an assumption and modification agreement
with a person to whom such Mortgaged Property shall be conveyed and releasing
the original Mortgagor from liability would be in the best interests of the
Certificateholders. The Mortgage Loan, as assumed, shall conform in all respects
to the requirements, representations and warranties of this Agreement. The
Servicer shall notify the Trustee that any such assumption or substitution
agreement has been completed by forwarding to the Trustee (or the Custodian, as
the case may be) the original copy of such assumption or substitution agreement
(indicating the Mortgage File to which it relates) which copy shall be added by
the Trustee (or the Custodian, as the case may be) to the related Mortgage File
and which shall, for all purposes, be considered a part of such Mortgage File to
the same extent as all other documents and instruments constituting a part
thereof. The Servicer shall be responsible for recording any such assumption or
substitution agreements. In connection with any such

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assumption or substitution agreement, the Monthly Payment on the related
Mortgage Loan shall not be changed but shall remain as in effect immediately
prior to the assumption or substitution, the stated maturity or outstanding
principal amount of such Mortgage Loan shall not be changed nor shall any
required monthly payments of principal or interest be deferred or forgiven. Any
fee collected by the Servicer for consenting to any such conveyance or entering
into an assumption or substitution agreement shall be retained by or paid to the
Servicer as additional servicing compensation.

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

      Section 3.15 Notification of Adjustments.

      On each Adjustment Date, the Servicer shall make Mortgage Interest Rate
adjustments for each Group II Mortgage Loan in compliance with the requirements
of the related Mortgage and Mortgage Note and Applicable Regulations. The
Servicer shall execute and deliver the notices required by each Mortgage and
Mortgage Note and Applicable Regulations regarding Mortgage Interest Rate
adjustments. The Servicer also shall provide timely notification to the Trustee
of all applicable data and information regarding such Mortgage Interest Rate
adjustments and the Servicer's methods of implementing such Mortgage Interest
Rate adjustments. Upon the discovery by the Servicer, the Trustee that the
Servicer has failed to adjust or has incorrectly adjusted a Mortgage Interest
Rate or a Monthly Payment pursuant to the terms of the related Mortgage Note and
Mortgage, the Servicer shall deliver to the Trustee for deposit in the
Distribution Account from its own funds the amount of any interest loss caused
thereby without reimbursement therefor; provided, however, the Servicer shall be
held harmless with respect to any Mortgage Interest Rate adjustments made by any
servicer prior to the Servicer.

      Section 3.16 Optional Purchases of Mortgage Loans by Servicer.

      The Servicer (or an affiliate of the Servicer) may, at its option,
repurchase a Mortgage Loan or REO Property which becomes 120 or more days
Delinquent or for which the Servicer has accepted a deed in lieu of foreclosure,
during the period commencing on the first day of the calendar quarter succeeding
the calendar quarter in which the Initial Delinquency Date occurred with respect
to such Mortgage Loan and ending on the last Business Day of such calendar
quarter. If the Servicer (or an affiliate of the Servicer) does not exercise its
purchase right with respect to a Mortgage Loan during the period specified in
the preceding sentence, such Mortgage Loan shall thereafter again become
eligible for purchase pursuant to the preceding sentence only after the Mortgage
Loan ceases to be 120 days or more Delinquent and thereafter becomes 120 days
Delinquent again. The "Initial Delinquency Date" of a Mortgage Loan shall mean
the date on which the Mortgage Loan first became 120 days Delinquent. Prior to
repurchase pursuant to this Section 3.16, the Servicer shall be required to
continue to make monthly advances pursuant to Section 4.07. The Servicer shall
not use any procedure in selecting Mortgage Loans to be repurchased which is
materially adverse to the interests of the Certificateholders. The Servicer
shall purchase such (i) delinquent Mortgage Loan at a price equal to the
Principal Balance of the

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Mortgage Loan plus accrued interest thereon at the Mortgage Interest Rate from
the date to which interest has last been paid to the Trust Fund to the date of
purchase plus any unreimbursed Servicing Advances and Advances or (ii) REO
Property at its fair market value as determined in good faith by the Servicer.
Any such repurchase of a Mortgage Loan or REO Property pursuant to this Section
3.16(a) shall be accomplished by delivery to the Trustee for deposit in the
Distribution Account of the amount of the purchase price. The Trustee shall
immediately effectuate the conveyance of such delinquent Mortgage Loan or REO
Property to the Servicer to the extent necessary, including the prompt delivery
of all documentation to the Servicer.

      Section 3.17 Trustee to Cooperate; Release of Files.

            (a) Upon the payment in full of any Mortgage Loan (including any
liquidation of such Mortgage Loan through foreclosure or otherwise, or the
receipt by the Servicer of a notification that payment in full will be escrowed
in a manner customary for such purposes), the Servicer shall deliver to the
Trustee (or the Custodian as the case may be) two executed copies of a completed
"Request for Release" in the form of Exhibit E. Upon receipt of such Request for
Release of Documents, the Trustee (or the Custodian as the case may be) shall
promptly release the related Mortgage File, in trust to (i) the Servicer, or
(ii) such other party identified in the related Request for Release. Upon any
such payment in full, or the receipt of such notification that such funds have
been placed in escrow, the Servicer shall direct the Trustee in writing to
execute an instrument of satisfaction (or assignment of Mortgage without
recourse) regarding the Mortgaged Property relating to such Mortgage, which
instrument of satisfaction or assignment, as the case may be, shall be delivered
to the Person or Persons entitled thereto against receipt therefor of payment in
full, it being understood and agreed that no expense incurred in connection with
such instrument of satisfaction or assignment, as the case may be, shall be
chargeable to the Collection Account. In lieu of executing any such satisfaction
or assignment, as the case may be, the Servicer may prepare and submit to the
Trustee a satisfaction (or assignment without recourse, if requested by the
Person or Persons entitled thereto) in form for execution by the Trustee with
all requisite information completed by the Servicer; in such event, the Trustee
shall execute and acknowledge such satisfaction or assignment, as the case may
be, and deliver the same with the related Mortgage File, as aforesaid.

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

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

      Section 3.18 Servicing Compensation.

      As compensation for its activities hereunder, the Servicer shall be
entitled to retain the amount of the Servicing Fee with respect to each Mortgage
Loan (including REO Properties). The Servicer shall be entitled to retain
additional servicing compensation in the form of release fees, bad check
charges, assumption fees, modification or extension fees, late payment charges,
customary real-estate referral fees or any other service-related fees, Insurance
Proceeds and Liquidation Proceeds not required to be deposited in the Collection
Account or the Distribution Account and similar items, to the extent collected
from Mortgagors.

      Section 3.19 Annual Statement as to Compliance.

            (a) The Servicer, at its own expense, will deliver to the Trustee
and the Depositor, not later than March 15 of each year, commencing in 2005, a
Servicing Officer's certificate stating, as to each signer thereof, that (i) a
review of the activities of the Servicer during such preceding fiscal year (or
such shorter period in the case of the first such report) and of performance
under this Agreement has been made under such officers' supervision, and (ii) to
the best of such officers' knowledge, based on such review, the Servicer has
fulfilled all its obligations under this Agreement for such year, or, if there
has been a default in the fulfillment of all such obligations, specifying each
such default known to such officers and the nature and status thereof including
the steps being taken by the Servicer to remedy such default.

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

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      Section 3.20 Annual Independent Certified Public Accountants' Reports.

            (a) Not later than March 15 of each year, commencing in 2005, the
Servicer, at its expense, shall cause a nationally recognized firm of
independent certified public accountants to furnish to the Trustee and the
Depositor a report stating that (i) it has obtained a letter of representation
regarding certain matters from the management of the Servicer which includes an
assertion that the Servicer has complied with certain minimum residential
mortgage loan servicing standards, identified in either the Uniform Single
Attestation Program for Mortgage Bankers established by the Mortgage Bankers
Association of America or the Audit Program for Mortgages serviced by Freddie
Mac, with respect to the servicing of residential mortgage loans during the most
recently completed fiscal year and (ii) on the basis of an examination conducted
by such firm in accordance with standards established by the American Institute
of Certified Public Accountants, such representation is fairly stated in all
material respects, subject to such exceptions and other qualifications that may
be appropriate. Immediately upon receipt of such report, the Servicer shall
furnish a copy of such report to the Trustee, the Depositor and each Rating
Agency. Copies of such statement shall be provided by the Trustee to any
Certificateholder upon request at the Servicer's expense, provided that such
statement is delivered by the Servicer to the Trustee.

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

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

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

      Section 3.22 Reserved.

      Section 3.23 Obligations of the Servicer in Respect of Compensating
Interest.

      Not later than the close of business on each Servicer Remittance Date, the
Servicer shall deliver to the Trustee for deposit in the Distribution Account an
amount ("Compensating Interest") equal to the lesser of (A) the aggregate of the
Prepayment Interest Shortfalls on the Actuarial Mortgage Loans for the related
Distribution Date resulting from Principal Prepayments on the Actuarial Mortgage
Loans during the related Prepayment Period and (B) 50% of its aggregate
Servicing Fee received in the related Collection Period. The Servicer shall
apply Compensating Interest to offset any Prepayment Interest Shortfalls on the
Actuarial Mortgage

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Loans. The Servicer shall not have the right to reimbursement for any amounts
remitted to the Trustee in respect of Compensating Interest. Such amounts so
remitted shall be included in the Available Funds and distributed therewith on
the next Distribution Date. The Servicer shall not be obligated to pay
Compensating Interest with respect to Prepayment Interest Shortfalls on Simple
Interest Mortgage Loans or Relief Act Interest Shortfalls.

      Section 3.24 Obligations of the Servicer in Respect of Mortgage Interest
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 Interest Rates, Monthly Payments or Principal Balances that were made
by the Servicer in a manner not consistent with the terms of the related
Mortgage Note and this Agreement, the Servicer, upon discovery or receipt of
notice thereof, immediately shall deliver to the Trustee for deposit in the
Distribution Account from its own funds the amount of any such shortfall and
shall indemnify and hold harmless the Trust Fund, the Trustee, the Depositor and
any successor servicer in respect of any such liability. Such indemnities shall
survive the termination or discharge of this Agreement.

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

            (a) The Servicer may direct any depository institution maintaining
the Collection Account to invest the funds in the Collection 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 Trustee is the
obligor thereon, and (ii) no later than the date on which such funds are
required to be withdrawn from such account pursuant to this Agreement, if the
Trustee is the obligor thereon. In the absence of such direction, funds in the
Collection Account shall remain uninvested. All such Permitted Investments shall
be held to maturity, unless payable on demand. Any investment of funds in the
Collection Account shall be made in the name of the Trustee or the Servicer, as
applicable (in its capacity as such) or in the name of a nominee of the Trustee.
The Trustee shall be entitled to sole possession (except with respect to
investment direction of funds held in the Collection Account) over each such
investment and the income thereon, and any certificate or other instrument
evidencing any such investment shall be delivered directly to the Trustee or its
agent, together with any document of transfer necessary to transfer title to
such investment to the Trustee or its nominee. In the event amounts on deposit
in the Collection Account are at any time invested in a Permitted Investment
payable on demand, the Trustee shall at the direction of the Servicer:

            (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

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

            (b) All income and gain realized from the investment of funds in the
Collection Account shall be for the benefit of the Servicer. The Servicer shall
deposit in the Collection Account 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. Funds on deposit in the Distribution Account will
remain uninvested.

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

      The Trustee shall not in any way be held liable by reason of any
insufficiency in any Account held by the Trustee resulting from any investment
loss on any Permitted Investment included therein (except to the extent that the
Trustee is the obligor and has defaulted thereon).

      Section 3.26 Liability of Servicer; Indemnification.

            (a) Subject to clause (b) below and Section 6.03, the Servicer
(except the Trustee if it is required to succeed the Servicer hereunder)
indemnifies and holds the Trustee, the Seller, the Depositor and each
Certificateholder harmless against any and all claims, losses, penalties, fines,
forfeitures, reasonable legal fees and related costs, judgments, and any other
costs, fees and expenses that the Trustee, the Depositor and any
Certificateholder may sustain in any way related to the failure of the Servicer
to perform its duties and service the Mortgage Loans in compliance with the
Servicing Standards. The Servicer shall immediately notify the Trustee, the
Depositor and each Certificateholder if a claim is made that may result in such
claims, losses, penalties, fines, forfeitures, legal fees or related costs,
judgments, or any other costs, fees and expenses, and the Servicer shall assume
(with the consent of the Trustee) the defense of any such claim and pay all
expenses in connection therewith, including reasonable counsel fees, and
promptly pay, discharge and satisfy any judgment or decree which may be entered
against the Servicer, Trustee, the Depositor and/or Certificateholder in respect
of such claim. The provisions of this Section 3.26 shall survive the termination
of this Agreement and the payment of the outstanding Certificates.

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

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any specific liability imposed on the Servicer for a breach of the Servicing
Standard, or against any liability which would otherwise be imposed by reason of
its respective willful misfeasance, bad faith, fraud or negligence in the
performance of its duties or by reasons of negligent disregard of its respective
obligations or duties hereunder.

      The Depositor, the Servicer, the Seller and any director, officer,
employee or agent of the Depositor, the Seller or the Servicer, may rely in good
faith on any document of any kind which, prima facie, is properly executed and
submitted by any appropriate Person with respect to any matters arising
hereunder. The Depositor, the Servicer, the Seller, and any director, officer,
employee or agent of the Depositor, the Seller or the Servicer shall be
indemnified and held harmless by the Trust Fund against any loss, liability or
expense incurred in connection with any legal action relating to this Agreement
or the Certificates, other than any loss, liability or expense incurred in
connection with any legal action incurred by reason of its respective
misfeasance, bad faith, fraud or negligence, a breach of a representation or
warranty hereunder or (in the case of the Servicer) a breach of the Servicing
Standard in the performance of its respective duties or by reason of negligent
disregard of its respective obligations or duties hereunder. Neither the
Depositor, the Seller nor the Servicer shall be under any obligation to appear
in, prosecute or defend any legal action unless such action is related to its
respective duties under this Agreement and in its opinion does not expose it to
any expense or liability; provided, however, that the Depositor, the Seller or
the Servicer may in its discretion undertake any action related to its
obligations hereunder 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.

      Section 3.27 Reports of Foreclosure and Abandonment of Mortgaged
Properties.

      On or before the last day of February of each year beginning in 2005, the
Servicer shall file the reports of foreclosure and abandonment of any Mortgaged
Property required by Section 6050J of the Code with the Internal Revenue Service
and provide an Officer's Certificate certifying its compliance with this Section
3.27 to the Trustee. The reports from the Servicer shall be in form and
substance sufficient to meet the reporting requirements imposed by such Section
6050J.

      Section 3.28 Protection of Assets.

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

                        (1) borrow money or issue debt;

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

                        (3) engage in any business or activities.

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

      Section 3.29 Periodic Filings.

            (a) The Trustee and the Servicer shall reasonably cooperate with the
Depositor in connection with the Trust's satisfying the reporting requirements
under the Exchange Act. Without limiting the generality of the foregoing, the
Trustee shall prepare on behalf of the Trust any monthly Current Reports on Form
8-K (each, a "Monthly Form 8-K") and Annual Reports on Form 10-K customary for
similar securities as required by the Exchange Act and the rules and regulations
of the Securities and Exchange Commission thereunder, and the Trustee shall sign
(other than any Annual Reports on Form 10-K) and file (via the Securities and
Exchange Commission's Electronic Data Gathering and Retrieval System) such forms
on behalf of the Trust. The Servicer shall sign any Annual Reports on Form 10-K.

            (b) Each Monthly Form 8-K shall be filed by the Trustee within 15
days after each Distribution Date (commencing on the Distribution Date occurring
in March 2005 and ending with the Distribution Date following the filing of the
Form 15 Suspension Notification as set forth in Section 3.29(h) hereof),
including a copy of the statement set forth in Section 4.06(a) hereof for such
Distribution Date as an exhibit thereto. Prior to March 30th of each year (or
such earlier date as may be required by the Exchange Act and the rules and
regulations of the Securities and Exchange Commission), the Trustee shall file a
Form 10-K, in substance as required by applicable law or applicable Securities
and Exchange Commission staff's interpretations. Such Form 10-K shall include as
exhibits the Servicer's annual statement of compliance described under Section
3.19 and the accountant's report described under Section 3.20, in each case to
the extent they have been timely delivered to the Trustee. If they are not so
timely delivered, the Trustee shall file an amended Form 10-K including such
documents as exhibits reasonably promptly after they are delivered to the
Trustee. The Form 10-K shall also include a certification in the form attached
hereto as Exhibit N (the "Certification"), which shall be signed by the senior
officer of the Servicer in charge of servicing.

            (c) The Trustee shall sign a certification (in the form attached
hereto as Exhibit O) for the benefit of the Servicer and its officers, directors
and Affiliates (provided, however, that the Trustee shall not undertake an
analysis of the accountant's report attached as an exhibit to the Form 10-K). No
later than the 20th day prior to the latest date on which the Form 10-K is
permitted to be filed, without regard to extension (or if such day is not a
Business Day, the immediately preceding Business Day), the Trustee shall deliver
to the Servicer (i) such certification and (ii) a completed Form 10-K to be
executed by the Servicer. No later than the 10th day prior to the latest date on
which the Form 10-K is permitted to be filed, without regard to extension (or if
such day is not a Business Day, the immediately preceding Business Day), the
Servicer shall deliver the signed Form 10-K and the signed Certification to be
filed to the Trustee. In addition, the Trustee shall indemnify and hold harmless
the Servicer and its officers, directors and Affiliates from and against any
losses, damages, penalties, fines, forfeitures, reasonable and necessary legal
fees and related costs, judgments and other costs and expenses arising out of
the Trustee's failure to deliver the certification (in the form attached hereto
as Exhibit O) pursuant to this Section 3.29(c) or any inaccuracy in such
certification, other than any

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losses, damages, penalties, fines, forfeitures, reasonable and necessary legal
fees and related costs, judgments and other costs and expenses arising out of
the Servicer's breach of its obligations under this Agreement. If the
indemnification provided for herein is unavailable or insufficient to hold
harmless the Servicer and its officers, directors and Affiliates, then the
Trustee shall contribute to the amount paid or payable by the Servicer, its
officers, directors or Affiliates as a result of the losses, claims, damages or
liabilities of the Servicer, its officers, directors or Affiliates in such
proportion as is appropriate to reflect the relative fault of the Servicer and
its officers, directors and Affiliates on the one hand and the Trustee on the
other.

            (d) The Servicer shall indemnify and hold harmless the Trustee and
its officers, directors and Affiliates from and against any losses, damages,
penalties, fines, forfeitures, reasonable and necessary legal fees and related
costs, judgments and other costs and expenses arising out of the Servicer's
failure to sign and deliver either the Certification or the Form 10-K within the
time frame provided in Section 3.29(c), other than any losses, damages,
penalties, fines, forfeitures, reasonable and necessary legal fees and related
costs, judgments and other costs and expenses arising out of the Trustee's
breach of its obligations under this Agreement. If the indemnification provided
for herein is unavailable or insufficient to hold harmless the Trustee and its
officers, directors and Affiliates, then the Servicer shall contribute to the
amount paid or payable by the Trustee, its officers, directors or Affiliates as
a result of the losses, claims, damages or liabilities of the Trustee, its
officers, directors or Affiliates in such proportion as is appropriate to
reflect the relative fault of the Trustee and its officers, directors and
Affiliates on the one hand and the Servicer on the other.

            (e) If the Securities and Exchange Commission issues additional
interpretative guidance or promulgates additional rules or regulations, or if
other changes in applicable law occur, that would require the reporting
arrangements, or the allocation of responsibilities with respect thereto,
described in this Section 3.29, to be conducted differently than as described,
the Depositor, Servicer and Trustee will reasonably cooperate to amend the
provisions of this Section 3.29 in order to comply with such amended reporting
requirements and such amendment of this Section 3.29. Any such amendment shall
be made in accordance with the first paragraph of Section 11.01 without further
consent of the Certificateholders and without the requirement to deliver (i)
notice in writing to the Depositor, the Servicer and the Trustee from the Rating
Agencies that such action will not result in the reduction or withdrawal of the
rating of any outstanding Class of Certificates with respect to which it is a
Rating Agency, or (ii) an Opinion of Counsel delivered to the Servicer and the
Trustee. Such amendment may result in the reduction of the reports filed by the
Trustee on behalf of the Trust under the Exchange Act. Notwithstanding the
foregoing, none of the Depositor, Servicer or Trustee shall be obligated to
enter into any amendment pursuant to this Section 3.29 that adversely affects
its obligations and immunities under this Agreement.

            (f) In filing any Monthly Form 8-K or Form 10-K, the Trustee shall
not undertake any analysis of, and shall have no responsibility for, any
financial information, accountant's report, certification or other matter
contained therein, except for computations performed by the Trustee and
reflected in the statement set forth in Section 4.06(a) hereof.

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

            (h) Prior to January 30 of the first year in which the Trustee is
able to do so under applicable law, the Trustee shall file a Form 15 Suspension
Notification with respect to the Trust.

      Section 3.30 Advance Facility.

            (a) The Servicer is hereby authorized to enter into a financing or
other facility (any such arrangement, an "Advance Facility"), the documentation
for which complies with Section 3.30(e) below, under which (1) the Servicer
assigns or pledges its rights under this Agreement to be reimbursed for any or
all Advances and/or Servicing Advances to (i) a Person, which may be a
special-purpose bankruptcy-remote entity (an "SPV"), (ii) a Person, which may
simultaneously assign or pledge such rights to an SPV or (iii) a lender (a
"Lender"), which, in the case of any Person or SPV of the type described in
either of the preceding clauses (i) or (ii), may directly or through other
assignees and/or pledgees, assign or pledge such rights to a Person, which may
include a trustee acting on behalf of holders of debt instruments (any such
Person or any such Lender, an "Advance Financing Person"), and/or (2) an Advance
Financing Person agrees to fund all the Advances and/or Servicing Advances
required to be made by the Servicer pursuant to this Agreement. No consent of
the Trustee, Certificateholders or any other party shall be required before the
Servicer may enter into an Advance Facility nor shall the Trustee or the
Certificateholders be a third party beneficiary of any obligation of an Advance
Financing Person to the Servicer. Notwithstanding the existence of any Advance
Facility under which an Advance Financing Person agrees to fund Advances and/or
Servicing Advances, (A) the Servicer (i) shall remain obligated pursuant to this
Agreement to make Advances and/or Servicing Advances pursuant to and as required
by this Agreement and (ii) shall not be relieved of such obligations by virtue
of such Advance Facility and (B) neither the Advance Financing Person nor any
Servicer's Assignee (as hereinafter defined) shall have any right to proceed
against or otherwise contact any Mortgagor for the purpose of collecting any
payment that may be due with respect to any related Mortgage Loan or enforcing
any covenant of such Mortgagor under the related Mortgage Loan documents.

            (b) If the Servicer enters into an Advance Facility, the Servicer
and the related Advance Financing Person shall deliver to the Trustee at the
address set forth in Section 11.05 hereof a written notice (an "Advance Facility
Notice"), stating (a) the identity of the Advance Financing Person and (b) the
identity of the Person (the "Servicer's Assignee") that will, subject to Section
3.30(c) hereof, have the right to make withdrawals from the Collection Account
pursuant to Section 3.05 hereof to reimburse previously unreimbursed Advances
and/or Servicing Advances ("Advance Reimbursement Amounts"). Advance
Reimbursement Amounts (i) shall consist solely of amounts in respect of Advances
and/or Servicing Advances for which the Servicer would be permitted to reimburse
itself in accordance with Section 3.05 hereof, assuming the Servicer had made
the related Advance(s) and/or Servicing Advance(s) and (ii) shall not consist of
amounts payable to a successor Servicer in accordance with Section 3.05 hereof
to the extent permitted under Section 3.30(e) below.

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            (c) Notwithstanding the existence of an Advance Facility, the
Servicer, on behalf of the Advance Financing Person and the Servicer's Assignee,
shall be entitled to receive reimbursements of Advances and/or Servicing
Advances in accordance with Section 3.05 hereof, which entitlement may be
terminated by the Advance Financing Person pursuant to a written notice to the
Trustee in the manner set forth in Section 11.05 hereof. Upon receipt of such
written notice, the Servicer shall no longer be entitled to receive
reimbursement for any Advance Reimbursement Amounts and the Servicer's Assignee
shall immediately have the right to receive from the Collection Account all
Advance Reimbursement Amounts. Notwithstanding the foregoing, and for the
avoidance of doubt, (i) the Servicer and/or the Servicer's Assignee shall only
be entitled to reimbursement of Advance Reimbursement Amounts hereunder from
withdrawals from the Collection Account pursuant to Section 3.05 of this
Agreement and shall not otherwise be entitled to make withdrawals of, or
receive, Advance Reimbursement Amounts that shall be deposited in the
Distribution Account pursuant to Section 3.04(b) hereof, and (ii) none of the
Trustee or the Certificateholders shall have any right to, or otherwise be
entitled to, receive any Advance Reimbursement Amounts to which the Servicer or
Servicer's Assignee, as applicable, shall be entitled pursuant to Section 3.05
hereof. An Advance Facility may be terminated by the joint written direction of
the Servicer and the related Advance Financing Person. Written notice of such
termination shall be delivered to the Trustee in the manner set forth in Section
11.05 hereof. None of the Depositor or the Trustee shall, as a result of the
existence of any Advance Facility, have any additional duty or liability with
respect to the calculation or payment of any Advance Reimbursement Amount, nor,
as a result of the existence of any Advance Facility, shall the Depositor or the
Trustee have any additional responsibility to track or monitor the
administration of the Advance Facility or the payment of Advance Reimbursement
Amounts to the Servicer's Assignee. The Servicer shall indemnify the Depositor,
the Trustee, any successor Servicer and the Trust Fund for any claim, loss,
liability or damage resulting from any claim by the related Advance Financing
Person, except to the extent that such claim, loss, liability or damage resulted
from or arose out of negligence, recklessness or willful misconduct on the part
of the Depositor, the Trustee or any successor Servicer, as the case may be, or
failure by the successor Servicer or the Trustee, as the case may be, to remit
funds as required by this Agreement or the commission of an act or omission to
act by the successor Servicer or the Trustee, as the case may be, and the
passage of any applicable cure or grace period, such that a Servicer Event of
Termination under this Agreement occurs or such entity is subject to termination
for cause under this Agreement. The Servicer shall maintain and provide to any
successor Servicer and, upon request, the Trustee a detailed accounting on a
loan-by-loan basis as to amounts advanced by, pledged or assigned to, and
reimbursed to any Advance Financing Person. The successor Servicer shall be
entitled to rely on any such information provided by the predecessor Servicer,
and the successor Servicer shall not be liable for any errors in such
information.

            (d) As between a predecessor Servicer and its Advance Financing
Person, on the one hand, and a successor Servicer and its Advance Financing
Person, if any, on the other hand, Advance Reimbursement Amounts on a
loan-by-loan basis with respect to each Mortgage Loan as to which an Advance
and/or Servicing Advance shall have been made and be outstanding shall be
allocated on a "first-in, first out" basis. In the event the Servicer's Assignee
shall have received some or all of an Advance Reimbursement Amount related to
Advances and/or Servicing Advances that were made by a Person other than such
predecessor Servicer or

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its related Advance Financing Person in error, then such Servicer's Assignee
shall be required to remit any portion of such Advance Reimbursement Amount to
each Person entitled to such portion of such Advance Reimbursement Amount.
Without limiting the generality of the foregoing, the Servicer shall remain
entitled to be reimbursed by the Advance Financing Person for all Advances
and/or Servicing Advances funded by the Servicer to the extent the related
Advance Reimbursement Amounts have not been assigned or pledged to such Advance
Financing Person or Servicer's Assignee.

            (f) For purposes of any Officer's Certificate of the Servicer made
pursuant to Section 4.07(d), any Nonrecoverable Advance referred to therein may
have been made by such Servicer or any predecessor Servicer. In making its
determination that any Advance or Servicing Advance theretofore made has become
a Nonrecoverable Advance, the Servicer shall apply the same criteria in making
such determination regardless of whether such Advance or Servicing Advance shall
have been made by the Servicer or any predecessor Servicer.

            (a) (g) Any amendment to this Section 3.30 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 3.30, including
amendments to add provisions relating to a successor Servicer, may be entered
into by the Trustee, the Depositor and the Servicer without the consent of any
Certificateholder, provided such amendment complies with Section 11.01 hereof.
All reasonable costs and expenses (including attorneys' fees) of each party
hereto of any such amendment shall be borne solely by the Servicer. The parties
hereto hereby acknowledge and agree that: (a) the Advances and/or Servicing
Advances financed by and/or pledged to an Advance Financing Person under any
Advance Facility are obligations owed to the Servicer payable only from the cash
flows and proceeds received under this Agreement for reimbursement of Advances
and/or Servicing Advances only to the extent provided herein, and the Trustee
and the Trust are not, as a result of the existence of any Advance Facility,
obligated or liable to repay any Advances and/or Servicing Advances financed by
the Advance Financing Person; (b) the Servicer will be responsible for remitting
to the Advance Financing Person the applicable amounts collected by it as
reimbursement for Advances and/or Servicing Advances funded by the Advance
Financing Person, subject to the provisions of this Agreement; and (c) the
Trustee shall not have any responsibility to track or monitor the administration
of the financing arrangement between the Servicer and any Advance Financing
Person.

                                   ARTICLE IV

                                  FLOW OF FUNDS

      Section 4.01 Interest Distributions.

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

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

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                  (ii) concurrently, as follows:

                        (A) from the Group I Interest Remittance Amount,
sequentially to (x) Component A-IO-1 and (y) the Class AF-1 Certificates, the
applicable Accrued Certificate Interest for such Distribution Date; and

                        (B) from the Group II Interest Remittance Amount,
sequentially to (x) Component A-IO-2 and (y) the Class AV-1, Class AV-2 and
Class AV-3 Certificates, pro rata, the applicable Accrued Certificate Interest
for such Distribution Date;

                  (iii) concurrently, as follows:

                        (A) from the Group I Interest Remittance Amount,
sequentially to (x) Component A-IO-1 and (y) the Class AF-1 Certificates, the
applicable Interest Carry Forward Amount for such Distribution Date for
Component A-IO-1 and the Class AF-1 Certificates, respectively; and

                        (B) from the Group II Interest Remittance Amount,
sequentially to (x) Component A-IO-2 and (y) the Class AV-1, Class AV-2 and
Class AV-3 Certificates, pro rata, the applicable Interest Carry Forward Amount
for such Distribution Date for Component A-IO-2 and the Class AV-1, Class AV-2
and Class AV-3 Certificates, respectively;

                  (iv) concurrently, as follows:

                        (A) from the Group I Interest Remittance Amount,
sequentially, to (x) Component A-IO-2 and (y) the Class AV-1, Class AV-2 and
Class AV-3 Certificates, pro rata, any unpaid Accrued Certificate Interest and
Interest Carry Forward Amount for each such Class for such Distribution Date;
and

                        (B) from the Group II Interest Remittance Amount,
sequentially, to (x) Component A-IO-1 and (y) Class AF-1 Certificates, any
unpaid Accrued Certificate Interest and Interest Carry Forward Amount for each
such Class for such Distribution Date;

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

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

                  (vii) to the Class M-3 Certificates, the Accrued Certificate
Interest thereon for such Distribution Date;

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

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

                  (x) to the Class B-3 Certificates, the Accrued Certificate
Interest thereon for such Distribution Date;

                  (xi) to the Class B-4 Certificates, the Accrued Certificate
Interest thereon for such Distribution Date; and

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

      Section 4.02 Distributions of Principal and Monthly Excess Cashflow
Amounts.

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

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

                        (A) concurrently, as follows:

                              (1) the Group I Principal Distribution Amount to
the Class AF-1 Certificates, until the Certificate Principal Balance thereof has
been reduced to zero; and

                              (2) the Group II Principal Distribution Amount,
concurrently, pro rata, as follows: (a) to the Class AV-1 Certificates, until
the Certificate Principal Balance thereof has been reduced to zero; and (b)
sequentially, the Class AV-2 and Class AV-3 Certificates, in that order, until
the Certificate Principal Balances thereof have been reduced to zero;

                        (B) concurrently, as follows:

                              (1) the Group I Principal Distribution Amount
remaining after distributions pursuant to priority (A)(1) above, concurrently,
pro rata, as follows: (a) to the Class AV-1 Certificates, until the Certificate
Principal Balance thereof has been reduced to zero; and (b) sequentially, to the
Class AV-2 and Class AV-3 Certificates, in that order, until the Certificate
Principal Balances thereof have been reduced to zero; and

                              (2) the Group II Principal Distribution Amount
remaining after distributions pursuant to priority (A)(2) above, to the Class
AF-1 Certificates, until the Certificate Principal Balance thereof has been
reduced to zero;

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                        (C) to the Holders of the Class M-1 Certificates, 100%
of the remaining Principal Distribution Amount for such Distribution Date, until
the Certificate Principal Balance of the Class M-1 Certificates has been reduced
to zero;

                        (D) to the Holders of the Class M-2 Certificates, 100%
of the remaining Principal Distribution Amount, until the Certificate Principal
Balance of the Class M-2 Certificates has been reduced to zero;

                        (E) to the Holders of the Class M-3 Certificates, 100%
of the remaining Principal Distribution Amount, until the Certificate Principal
Balance of the Class M-3 Certificates has been reduced to zero;

                        (F) to the Holders of the Class B-1 Certificates, 100%
of the remaining Principal Distribution Amount, until the Certificate Principal
Balance of the Class B-1 Certificates has been reduced to zero;

                        (G) to the Holders of the Class B-2 Certificates, 100%
of the remaining Principal Distribution Amount, until the Certificate Principal
Balance of the Class B-2 Certificates has been reduced to zero

                        (H) to the Holders of the Class B-3 Certificates, 100%
of the remaining Principal Distribution Amount, until the Certificate Principal
Balance of the Class B-3 Certificates has been reduced to zero;

                        (I) to the Holders of the Class B-4 Certificates, 100%
of the remaining Principal Distribution Amount, until the Certificate Principal
Balance of the Class B-4 Certificates has been reduced to zero; and

                        (J) any amount of the Principal Distribution Amount
remaining after making all of the distributions in clauses (A), (B), (C), (D),
(E), (F), (G), (H) and (I) shall be applied as set forth in Section 4.02(b).

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

                        (A) concurrently as follows:

                              (1) the Group I Principal Distribution Amount to
the Class AF-1 Certificates, until the Certificate Principal Balance thereof has
been reduced to zero; and

                              (2) the Group II Principal Distribution Amount
concurrently, pro rata, as follows (a) the Class AV-1 Certificates, until the
Certificate Principal Balance thereof is reduced to zero and (b) sequentially,
to the Class AV-2 and Class AV-3 Certificates, in that order, until the
Certificate Principal Balances thereof have been reduced to zero;

                        (B) concurrently, as follows:

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                              (1) the Group I Principal Distribution Amount
remaining after distributions pursuant to priority (A)(1) above, concurrently,
pro rata, as follows (a) the Class AV-1 Certificates, until the Certificate
Principal Balance thereof is reduced to zero and (b) sequentially, to the Class
AV-2 and Class AV-3 Certificates, in that order, until the Certificate Principal
Balances thereof have been reduced to zero; and

                              (2) the Group II Principal Distribution Amount
remaining after distributions pursuant to priority (A)(2) above, to the Class
AF-1 Certificates, until the Certificate Principal Balance thereof has been
reduced to zero;

                        (C) the lesser of (x) the excess of (i) the Principal
Distribution Amount over (ii) the sum of the amount distributed to the Class A
Certificates in clauses (A) and (B) above and (y) the Class M-1 Principal
Distribution Amount will be distributed to the Class M-1 Certificates, until the
Certificate Principal Balance thereof has been reduced to zero;

                        (D) the lesser of (x) the excess of (i) the Principal
Distribution Amount over (ii) the sum of the amount distributed to the Class A
Certificates in clauses (A) and (B) above and the amount distributed to the
Class M-1 Certificates in clause (C) above and (y) the Class M-2 Principal
Distribution Amount will be distributed to the Class M-2 Certificates, until the
Certificate Principal Balance thereof has been reduced to zero;

                        (E) the lesser of (x) the excess of (i) the Principal
Distribution Amount over (ii) the sum of the amount distributed to the Class A
Certificates in clauses (A) and (B) above, the amount distributed to the Class
M-1 Certificates in clause (C) above and the amount distributed to the Class M-2
Certificates in clause (D) above and (y) the Class M-3 Principal Distribution
Amount will be distributed to the Class M-3 Certificates, until the Certificate
Principal Balance thereof has been reduced to zero;

                        (F) the lesser of (x) the excess of (i) the Principal
Distribution Amount over (ii) the sum of the amount distributed to the Class A
Certificates pursuant to clauses (A) and (B) above, the amount distributed to
the Class M-1 Certificates pursuant to clause (C) above, the amount distributed
to the Class M-2 Certificates pursuant to clause (D) above and the amount
distributed to the Class M-3 Certificates pursuant to clause (E) above and (y)
the Class B-1 Principal Distribution Amount will be distributed to the Class B-1
Certificates, until the Certificate Principal Balance thereof has been reduced
to zero;

                        (G) the lesser of (x) the excess of (i) the Principal
Distribution Amount over (ii) the sum of the amount distributed to the Class A
Certificates pursuant to clauses (A) and (B) above, the amount distributed to
the Class M-1 Certificates pursuant to clause (C) above, the amount distributed
to the Class M-2 Certificates pursuant to clause (D) above, the amount
distributed to the Class M-3 Certificates pursuant to clause (E) above and the
amount distributed to the Class B-1 Certificates pursuant to clause (F) above
and (y) the Class B-2 Principal Distribution Amount will be distributed to the
Class B-2 Certificates, until the Certificate Principal Balance thereof has been
reduced to zero;

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                        (H) the lesser of (x) the excess of (i) the Principal
Distribution Amount over (ii) the sum of the amount distributed to the Class A
Certificates pursuant to clauses (A) and (B) above, the amount distributed to
the Class M-1 Certificates pursuant to clause (C) above, the amount distributed
to the Class M-2 Certificates pursuant to clause (D) above, the amount
distributed to the Class M-3 Certificates pursuant to clause (E) above, the
amount distributed to the Class B-1 Certificates pursuant to clause (F) above
and the amount distributed to the Class B-2 Certificates pursuant to clause (G)
above and (y) the Class B-3 Principal Distribution Amount will be distributed to
the Class B-3 Certificates, until the Certificate Principal Balance thereof has
been reduced to zero;

                        (I) the lesser of (x) the excess of (i) the Principal
Distribution Amount over (ii) the sum of the amount distributed to the Class A
Certificates pursuant to clauses (A) and (B) above, the amount distributed to
the Class M-1 Certificates pursuant to clause (C) above, the amount distributed
to the Class M-2 Certificates pursuant to clause (D) above, the amount
distributed to the Class M-3 Certificates pursuant to clause (E) above, the
amount distributed to the Class B-1 Certificates pursuant to clause (F) above,
the amount distributed to the Class B-2 Certificates pursuant to clause (G)
above and the amount distributed to the Class B-3 Certificates pursuant to
clause (H) above and (y) the Class B-4 Principal Distribution Amount will be
distributed to the Class B-4 Certificates, until the Certificate Principal
Balance thereof has been reduced to zero; and

                        (J) any amount of the Principal Distribution Amount
remaining after making all of the distributions in clauses (A), (B), (C), (D),
(E), (F), (G), (H) and (I) above shall be applied as set forth in Section
4.02(b).

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

                  (i) to pay any remaining unpaid Accrued Certificate Interest
for such Distribution Date, pro rata, among the Class AF-1, Class AV-1, Class
AV-2, Class AV-3 and Class A-IO Certificates;

                  (ii) to pay any remaining Interest Carry Forward Amounts for
the classes of Class A Certificates, if any, pro rata, among the Class AF-1,
Class AV-1, Class AV-2, Class AV-3 and Class A-IO Certificates;

                  (iii) to pay the Extra Principal Distribution Amount for such
Distribution Date in accordance with Section 4.02(a);

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

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

                  (vi) to pay the Class M-1 Realized Loss Amortization Amount
for such Distribution Date;

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                  (vii) to pay any remaining unpaid Accrued Certificate Interest
for such Distribution Date for the Class M-2 Certificates;

                  (viii) to pay the remaining Class M-2 Interest Carry Forward
Amount, if any;

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

                  (x) to pay any remaining unpaid Accrued Certificate Interest
for such Distribution Date for the Class M-3 Certificates;

                  (xi) to pay the remaining Class M-3 Interest Carry Forward
Amount, if any;

                  (xii) to pay the Class M-3 Realized Loss Amortization Amount
for such Distribution Date;

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

                  (xiv) to pay the remaining Class B-1 Interest Carry Forward
Amount, if any;

                  (xv) to pay the Class B-1 Realized Loss Amortization Amount
for such Distribution Date;

                  (xvi) to pay any remaining unpaid Accrued Certificate Interest
for such Distribution Date for the Class B-2 Certificates;

                  (xvii) to pay the remaining Class B-2 Interest Carry Forward
Amount, if any;

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

                  (xix) to pay any remaining unpaid Accrued Certificate Interest
for such Distribution Date for the Class B-3 Certificates;

                  (xx) to pay the remaining Class B-3 Interest Carry Forward
Amount, if any;

                  (xxi) to pay the Class B-3 Realized Loss Amortization Amount
for such Distribution Date;

                  (xxii) to pay any remaining unpaid Accrued Certificate
Interest for such Distribution Date for the Class B-4 Certificates;

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                  (xxiii) to pay the remaining Class B-4 Interest Carry Forward
Amount, if any;

                  (xxiv) to pay the Class B-4 Realized Loss Amortization Amount
for such Distribution Date;

                  (xxv) to pay the Class R Excess Interest Amount for such
Distribution Date;

                  (xxvi) to pay the Class R Excess Interest Carryforward Amount
for such Distribution Date;

                  (xxvii) concurrently, to the Class AV-1, Class AV-2 and Class
AV-3 Certificates, pro rata, the aggregate amount of any LIBOR Carryover Amount
due to such Certificates;

                  (xxviii) sequentially, to the Class M-1, Class M-2, Class M-3,
Class B-1, Class B-2, Class B-3 and Class B-4 Certificates, in that order, any
LIBOR Carryover Amount due to such Certificates;

                  (xxix) to pay the Class N Certificates, from the remaining
amount distributable on the Class X/N Interest, (A) the Accrued Certificate
Interest for the Class N Certificates, (B) the unpaid Interest Carry Forward
Amount for the Class N Certificates and (C) any remaining Monthly Excess
Cashflow Amount to reduce the Class N Notional Amount, until the Class N
Notional Amount has been reduced to zero; and

                  (xxx) to the Class X Certificates, the Class X Distributable
Amount for such Distribution Date.

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

            (c) On each Distribution Date, all prepayment penalties (including
amounts deposited in connection with the full or partial waiver of such
prepayment penalties pursuant to Section 3.01) shall be allocated to the Class N
Certificates (first as payments of Accrued Certificate Interest for the Class N
Certificates, then as payments in respect of the unpaid Interest Carry Forward
Amount for the Class N Certificates and finally as payments in respect of the
Class N Notional Amount) for so long as the Notional Amount of the Class N
Certificates is greater than zero pursuant to Section 4.02(b)( xxix) above and
this Section 4.02(c)), and to the Class X Certificates after the Class N
Notional Amount has been reduced to zero.

            (d) Any amounts distributed to the Certificates in respect of LIBOR
Carryover Amounts pursuant to Sections 4.02(b)(xxvii) and (xxviii) shall first
be deemed distributed by REMIC 4 as a distribution in respect of the REMIC 4
Class X/N Interest, to REMIC 5 and distributed thereby as a distribution to the
REMIC 5 Class X/N Interest, and then distributed to the Certificates from the
Grantor Trust as payments on notional principal contracts in the nature of cap
contracts.

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            (e) Any amounts distributed to the Class B-4 Certificates pursuant
to Section 4.01 or this Section 4.02, other than LIBOR Carryover Amounts, shall
be deemed distributed by REMIC 4 in respect of the REMIC 4 B-4 Interest, then
paid to REMIC 6 and distributed thereby as a distribution in respect of the
REMIC 6 B-4 Interest.

      Section 4.03 Allocation of Losses.

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

      Special Hazard Losses will be allocated as described above, provided that
if the cumulative amount of such losses, as of any date of determination,
exceeds the greatest of (i) 1.0% of the Pool Balance as of the Cut-off Date,
(ii) two times the amount of the principal balance of the largest Mortgage Loan
as of the date of determination and (iii) an amount equal to the aggregate
principal balances of the Mortgage Loans in the largest zip-code concentration
in the State of California as of the date of determination, such losses will be
allocated among the Class M-1, Class M-2, Class M-3, Class B-1, Class B-2, Class
B-3 and Class B-4 Certificates, pro rata, based on their respective Certificate
Principal Balances.

      Section 4.04 Method of Distribution.

      The Trustee shall make distributions in respect of a Distribution Date to
each Certificateholder of record on the related Record Date (other than as
provided in Section 10.01 respecting the final distribution), in the case of
Certificateholders of the Certificates, by wire transfer in immediately
available funds to the account of the Person entitled thereto if such Person
shall have so notified the Trustee in writing at least five Business Days prior
to the Record Date immediately prior to such Distribution Date and is the
registered owner of such Certificates the aggregate initial Certificate
Principal Balance or Notional Amount of which is in excess of $5,000,000, or by
check mailed by first class mail to the address of the Person entitled thereto,
as such name and address shall appear on the Certificate Register, provided that
the Trustee may deduct a reasonable wire transfer fee from any payment made by
wire transfer. Distributions among Certificateholders shall be made in
proportion to the Percentage Interests evidenced by the Certificates held by
such Certificateholders.

      Section 4.05 Distributions on Book-Entry Certificates.

      Each distribution with respect to a Book-Entry Certificate shall be paid
to the Depository, which shall credit the amount of such distribution to the
accounts of its Depository Participants in accordance with its normal
procedures. Each Depository Participant shall be responsible for disbursing such
distribution to the Certificate Owners that it represents and to each indirect

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

      Section 4.06 Statements.

            (a) On each Distribution Date, based, as applicable, on the Mortgage
Loan information contained in the Remittance Report, the Trustee shall prepare
and post on its website at www.jpmorgan.com/sfr, a statement as to the
distributions made on such Distribution Date:

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

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

                  (iii) the Overcollateralization Amount, the
Overcollateralization Release Amount, the Overcollateralization Deficiency and
the Targeted Overcollateralization Amount as of such Distribution Date and the
Monthly Excess Interest Amount and Monthly Excess Cashflow Amount for such
Distribution Date;

                  (iv) the aggregate amount of servicing compensation received
by the Servicer during the related Collection Period;

                  (v) the aggregate amount of Advances for the related
Collection Period;

                  (vi) the Pool Balance and the Loan Group Balance for each Loan
Group at the close of business at the end of the related Collection Period;

                  (vii) separately stated for each Loan Group, the number,
weighted average remaining term to maturity and weighted average Mortgage
Interest Rate of the Mortgage Loans as of the related Due Date;

                  (viii) separately stated for each Loan Group, the number and
aggregate unpaid principal balance of Mortgage Loans (a) 30 to 59 days past due
on a contractual basis, (b) 60 to 89 days past due on a contractual basis, (c)
90 or more days past due on a contractual basis, (d) as to which foreclosure
proceedings have been commenced and (e) in bankruptcy as of the close of
business on the last day of the calendar month preceding such Distribution Date;

                  (ix) separately stated for each Loan Group, with respect to
any Mortgage Loan that became an REO Property during the preceding calendar
month, the loan

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number of such Mortgage Loan, the unpaid principal balance and the Principal
Balance of such Mortgage Loan as of the date it became an REO Property;

                  (x) separately stated for each Loan Group, the book value of
any REO Property as of the close of business on the last Business Day of the
calendar month preceding the Distribution Date, and, cumulatively, the total
number and cumulative principal balance of all REO Properties as of the close of
business of the last day of the preceding Collection Period;

                  (xi) separately stated for each Loan Group, the aggregate
amount of Principal Prepayments made during the related Prepayment Period;

                  (xii) the aggregate amount of prepayment penalties collected
(including amounts deposited in connection with the full or partial waiver of
such prepayment penalties pursuant to Section 3.01) during the related
Collection Period and the amounts thereof allocable to the Class N Certificates
and the Class X Certificates;

                  (xiii) separately stated for each Loan Group, the aggregate
amount of Realized Losses incurred during the related Collection Period and the
cumulative amount of Realized Losses;

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

                  (xv) the Accrued Certificate Interest in respect of each Class
of Offered Certificates and Class B-4 Certificates for such Distribution Date,
separately identifying the portions thereof attributable to LIBOR Carryover
Amounts, and the respective portions thereof, if any, remaining unpaid following
the distributions made in respect of such Certificates on such Distribution
Date;

                  (xvi) the aggregate amount of any Prepayment Interest
Shortfalls for such Distribution Date, to the extent not covered by payments by
the Servicer pursuant to Section 3.23;

                  (xvii) [Reserved];

                  (xviii) [Reserved];

                  (xix) the amount of the Trustee Fee paid;

                  (xx) the LIBOR Carryover Amounts distributed on such
Distribution Date and the portion thereof covered by withdrawals from the
Reserve Account and the amounts remaining after giving effect to distributions
thereof on such Distribution Date;

                  (xxi) any Overcollateralization Deficiency after giving effect
to the distribution of principal on such Distribution Date;

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                  (xxii) whether a Trigger Event has occurred and is continuing,
and the cumulative Realized Losses, as a percentage of the original Pool
Balance;

                  (xxiii) the Available Funds;

                  (xxiv) the rate at which interest accrues for each Class of
Certificates for such Distribution Date;

                  (xxv) the Liquidation Report for such Distribution Date;

                  (xxvi) the aggregate Principal Balance of Mortgage Loans
purchased by the Servicer or Seller during the related Collection Period and
indicating the Section of this Agreement requiring or allowing the purchase of
each such Mortgage Loan; and

                  (xxvii) the aggregate Principal Balance of the Mortgage Loans
repurchased by the Servicer (or an affiliate) during the related Collection
Period in connection with Section 3.16.

      Parties that are unable to use http://www.jpmorgan.com/sfr are entitled to
have a paper copy mailed to them via first class mail by calling the Trustee at
(212) 623-5600 and indicating such. The Trustee 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 Trustee shall
provide timely and adequate notification to all above parties regarding any such
changes.

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

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

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

            (c) On each Distribution Date, the Trustee shall make available to
the Residual Certificateholders a copy of the reports made available to the
Regular Certificateholders in respect of such Distribution Date with such other
information as the Trustee deems necessary or appropriate. Such obligation of
the Trustee shall be deemed to have been satisfied to the extent that
substantially comparable information shall be prepared and furnished to Residual

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Certificateholders by the Trustee pursuant to any requirements of the Code as
from time to time in force.

      Section 4.07 Remittance Reports; Advances.

            (a) On the second Business Day following each Determination Date but
in no event less than four Business Days prior to the related Distribution Date,
the Servicer shall deliver to the Trustee by telecopy (or by such other means as
the Servicer and the Trustee may agree from time to time) a Remittance Report
with respect to the related Distribution Date. On the same date, the Servicer
shall forward to the Trustee by overnight mail a computer readable magnetic tape
or diskette or in such other medium as may be agreed between the Servicer and
the Trustee containing the information set forth in such Remittance Report with
respect to the related Distribution Date. Not later than the close of business
New York time on the Servicer Remittance Date, the Servicer shall deliver or
cause to be delivered to the Trustee in addition to the information provided on
the Remittance Report, such other information reasonably available to it with
respect to the Mortgage Loans as the Trustee may reasonably request or order in
order for the Trustee to perform the calculations necessary to make the
distributions contemplated by Section 4.01, 4.02 and 4.03 and to prepare the
statements to Certificateholders contemplated by Section 4.06. The Trustee shall
not be responsible to recompute, recalculate or verify any information provided
to it by the Servicer.

            (b) The amount of Advances to be made by the Servicer for any
Distribution Date shall equal, subject to Section 4.07(d), the sum of (i) the
aggregate amount of Monthly Payments (net of the related Servicing Fee), due
during the related Collection Period in respect of the Actuarial Mortgage Loans,
which Monthly Payments were delinquent on a contractual basis as of the close of
business on the related Determination Date and (ii) with respect to each REO
Property, which REO Property was acquired during or prior to the related
Prepayment Period and as to which such REO Property an REO Disposition did not
occur during the related Prepayment Period, an amount equal to the excess, if
any, of the interest portion of Monthly Payments (net of the related Servicing
Fee) that would have been due on the related Due Date in respect of the related
Mortgage Loans, over the net income from such REO Property deposited in the
Collection Account pursuant to Section 3.13 for distribution on such
Distribution Date. 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 the such Balloon Mortgage
Loan. The Servicer shall not be obligated to make any Advance with respect to
Simple Interest Mortgage Loans and shall not make any Advances with respect to
the principal portion of the Monthly Payments that would have been due on the
related Due Date with respect to REO Properties or Second Lien Mortgage Loans.

      On or before the close of business New York time on the Servicer
Remittance Date, the Servicer shall remit in immediately available funds to the
Trustee for deposit in the Distribution Account an amount equal to the aggregate
amount of Advances, if any, to be made in respect of the Mortgage Loans and REO
Properties for the related Distribution Date either (i) from its own funds or
(ii) from the Collection Account, to the extent of funds held therein for future
distribution (in which case it will cause to be made an appropriate entry in the
records of the Collection Account that amounts held for future distribution have
been, as permitted by this

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Section 4.07, used by the Servicer in discharge of any such Advance) or (iii) in
the form of any combination of (i) and (ii) aggregating the total amount of
Advances to be made by the Servicer with respect to the Mortgage Loans and REO
Properties. In addition, the Servicer shall have the right to reimburse itself
for any such Advance from amounts held from time to time in the Collection
Account to the extent such amounts are not then required to be distributed. Any
amounts held for future distribution and so used shall be appropriately
reflected in the Servicer's records and replaced by the Servicer by deposit in
the Collection Account on or before any future Servicer Remittance Date to the
extent that the Available Funds for the related Distribution Date (determined
without regard to Advances to be made on the Servicer Remittance Date) shall be
less than the total amount that would be distributed to the Classes of
Certificateholders pursuant to Section 4.01 and 4.02 on such Distribution Date
if such amounts held for future distributions had not been so used to make
Advances. The Trustee will provide notice to the Servicer by telecopy by the
close of business on any Servicer Remittance Date in the event that the amount
remitted by the Servicer to the Trustee on such date is less than the Advances
required to be made by the Servicer for the related Distribution Date, as set
forth in the related Remittance Report.

            (c) The obligation of the Servicer to make such Advances is
mandatory, notwithstanding any other provision of this Agreement but subject to
(d) below, and, with respect to any Mortgage Loan or REO Property, shall
continue until the earlier of such time as the Trust acquires title to the
related Mortgaged Property or such Mortgage Loan is paid in full by the
Mortgagor or disposed of by the Trust, or until the recovery of all Liquidation
Proceeds thereon.

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

      Section 4.08 REMIC Distributions.

            (a) REMIC 6. All amounts deemed distributed in respect of the REMIC
4 B-4 Interest shall be treated as received by REMIC 6 then distributed by REMIC
6 in respect of the REMIC 6 B-4 Interest. All allocations of Applied Realized
Loss Amounts and Realized Loss Amortization Amounts to the REMIC 4 B-4 Interest
shall result in similar allocations to the REMIC 6 B-4 Interest. If on any
Distribution Date the Class Principal Balance of the Class B-4 Certificates is
increased pursuant to the last sentence of the definition of "Certificate
Principal Balance", then there shall be an equivalent increase in the principal
amount of the REMIC 6 B-4 Interest on such Distribution Date.

            (b) REMIC 5. All amounts deemed distributed in respect of the REMIC
4 X/N Interest shall be treated as received by REMIC 5 then distributed by REMIC
5 in respect of the REMIC 5 X/N Interest. All allocations of Applied Realized
Loss Amounts and Realized Loss Amortization Amounts to the REMIC 4 X/N Interest
shall result in similar allocations to the REMIC 5 X/N Interest.

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            (c) REMIC 4. On each Distribution Date, REMIC 4 shall be deemed to
have received the amounts deemed distributed in respect of the REMIC 3 Regular
Interests and the REMIC 2 IO Interests. Principal, interest, shortfalls and
Realized Losses shall be deemed paid to and allocated among the REMIC 4 Regular
Interests in the same manner as such items (other than payments to the Cap
Carryover Certificates in respect of LIBOR Carryover Amounts, which shall be
deemed paid in respect of the REMIC 4 X/N Interest if made pursuant to Section
4.02(b)(xxvii) or (xxviii)) are paid or allocated in respect of the related
Certificates (the REMIC 4 AV-1 Interest being related to the Class AV-1
Certificates, the REMIC 4 AV-2 Interest being related to the Class AV-2
Certificates, the REMIC 4 AV-3 Interest being related to the Class AV-3
Certificates, the REMIC 4 M-1 Interest being related to the Class M-1
Certificates, the REMIC 4 M-2 Interest being related to the Class M-2
Certificates, the REMIC 4 M-3 Interest being related to the Class M-3
Certificates, the REMIC 4 B-1 Interest being related to the Class B-1
Certificates, the REMIC 4 B-2 Interest being related to the Class B-2
Certificates, the REMIC 4 B-3 Interest being related to the Class B-3
Certificates and the REMIC 4 B-4 Interest being related to the Class B-4
Certificates). On each Distribution Date, principal shall be paid to, Realized
Losses shall be allocated to and accrued but unpaid interest shall be added to
the principal amount of the REMIC 4 X/N Interest so that such principal amount
shall equal the excess of (i) the Pool Balance as of the close of the related
Collection Period over (ii) the aggregate Certificate Principal Balance of each
Class of Certificates on such Distribution Date after all principal payments
have been made and Realized Losses have been allocated to such Certificates
(other than the Class X or Class N Certificates). The portion of Available Funds
remaining in REMIC 4 on a Distribution Date after all distributions have been
made to the REMIC 4 Regular Interests shall be distributed to the Class R
Certificates in respect of the Class R-4 Interest. If on any Distribution Date
the Class Principal Balance of any Class of Certificates is increased pursuant
to the last sentence of the definition of "Certificate Principal Balance", then
there shall be an equivalent increase in the principal amounts of the REMIC 4
Regular Interests, with each Corresponding REMIC 4 Regular Interest having an
increase in its principal amount equal to the increase in the Class Principal
Balance of the Corresponding Cap Carryover Certificates.

            (d) REMIC 3. On each Distribution Date, REMIC 3 shall be deemed to
have received the amounts deemed distributed in respect of the REMIC 2 Regular
Interests other than the REMIC 2 IO Interests. Amounts with respect to interest
shall accrue on the REMIC 3 Regular Interests at the rates specified in the
Preliminary Statement. Payments and Realized Losses shall be allocated among the
REMIC 3 Regular Interests so that (i) each of the Marker Interests shall have a
principal balance equal to 25% of the principal balance of the related REMIC 4
Regular Interest (with the Class AF-1 Certificates being related to the Class
LT3-AF1 Interest, the REMIC 4 AV-1 Interest being related to the Class LT3-AV1
Interest, the REMIC 4 AV-2 Interest being related to the Class LT3-AV2 Interest,
the REMIC 4 AV-3 Interest being related to the Class LT3-AV3 Interest, the REMIC
4 M-1 Interest being related to the Class LT3-M1 Interest, the REMIC 4 M-2
Interest being related to the Class LT3-M2 Interest, the REMIC 4 M-3 Interest
being related to the Class LT3-M3 Interest, the REMIC 4 B-1 Interest being
related to the Class LT3-B1 Interest, the REMIC 4 B-2 Interest being related to
the Class LT3-B2 Interest, the REMIC 4 B-3 Interest being related to the Class
LT3-B3 Interest and the REMIC 4 B-4 Interest being related to the Class LT3-B4
Interest), (ii) the Class LT3-X1 Interest has a principal balance equal to the
excess of (x) 50% of the remaining principal balance of the Mortgage Loans over
(y) the aggregate principal balance of the Marker Interests (if necessary to

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reflect an increase in overcollateralization, accrued and unpaid interest on the
Class LT3-X1 interest may be added to its principal amount to achieve this
result) and (iii) the aggregate principal amount of the Class LT3-IA Interest,
Class LT3-IB Interest, Class LT3-IIA Interest, Class LT3-IIB Interest and the
Class LT3-X2 Interest shall equal 50% of the remaining principal balance of the
Mortgage loans. Distributions and Realized Losses allocated to the REMIC 3
Regular Interests described in clause (iii) of the preceding sentence will be
allocated among such REMIC 3 Regular Interests in the following manner: (x)
distributions shall be deemed made to such REMIC 3 Regular Interests first, so
as to keep the principal balance of the each such REMIC 3 Regular Interest with
"B" at the end of its designation equal to 0.05% of the aggregate scheduled
principal balance of the Mortgage Loans in the related Loan Group; second, to
such REMIC 3 Regular Interests with "A" at the end of its designation so that
the uncertificated principal balance of each such REMIC 3 Regular Interest is
equal to 0.05% of the excess of (I) the aggregate scheduled principal balance of
the Mortgage Loans in the related Loan Group over (II) the aggregate principal
balance of the Class AF-1 Certificates, in the case of Loan Group I, or the
Class AV-1, Class AV-2 and Class AV-3 Certificates, in the case of Loan Group II
(except that if 0.05% of any such excess is greater than the principal amount of
the corresponding REMIC 3 Regular Interest with "A" at the end of its
designation, the least amount of principal shall be distributed to such REMIC 3
Regular Interests with "A" at the end of its designation such that the REMIC 3
Subordinated Balance Ratio is maintained) and finally, any remaining
distributions of principal to the Class LT3-X2 Interest and (y) Realized Losses
shall be allocated among the REMIC 3 Regular Interests described in clause (iii)
of the preceding sentence in the following manner: (x) Realized Losses shall be
deemed allocated to such REMIC 3 Regular Interests first, so as to keep the
principal balance of the each such REMIC 3 Regular Interest with "B" at the end
of its designation equal to 0.05% of the aggregate scheduled principal balance
of the Mortgage Loans in the related Loan Group; second, to such REMIC 3 Regular
Interests with "A" at the end of its designation so that the uncertificated
principal balance of each such REMIC 3 Regular Interest is equal to 0.05% of the
excess of (I) the aggregate scheduled principal balance of the Mortgage Loans in
the related Loan Group over (II) the aggregate principal balance of the Class
AF-1 Certificates, in the case of Loan Group I, or the Class AV-1, Class AV-2
and Class AV-3 Certificates, in the case of Loan Group II (except that if 0.05%
of any such excess is greater than the principal amount of the corresponding
REMIC 3 Regular Interest with "A" at the end of its designation, the least
amount of Realized Losses shall be allocated to such REMIC 3 Regular Interests
with "A" at the end of its designation such that the REMIC 3 Subordinated
Balance Ratio is maintained) and finally, any remaining Realized Losses to the
Class LT3-X2 Interest. Notwithstanding the preceding two sentences, however,
Realized Losses not allocated to any Class of Certificates will not be allocated
to any REMIC 3 Regular Interests. All computations with respect to the REMIC 3
Regular Interests shall be taken out to ten decimal places. Any portion of
Available Funds remaining in REMIC 3 on a Distribution Date after distributions
to the REMIC 3 Regular Interests shall be distributed to the Class R
Certificates in respect of the Class R-3 Interest. If on any Distribution Date
the Class Principal Balance of any Class of Certificates is increased pursuant
to the last sentence of the definition of "Certificate Principal Balance", then
there shall be an equivalent increase in the principal amounts of the REMIC 3
Regular Interests, with such increase allocated (before the making of
distributions and the allocation of losses on the REMIC 3 Regular Interests on
such Distribution Date) among the REMIC 3 Regular Interests so that, to the
greatest extent possible, (i) each of the Marker Interests has a principal
balance equal to 25% of the principal balance of the related

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REMIC 4 Regular Interest, (ii) the Class LT3-X1 Interest has a principal balance
equal to the excess of (x) 50% of the remaining principal balance of the
Mortgage Loans over (y) the aggregate principal balance of the Marker Interests
and (iii) the aggregate principal amount of the Class LT3-IA Interest, Class
LT3-IB Interest, Class LT3-IIA Interest, Class LT3-IIB Interest and Class LT3-X2
Interest shall equal 50% of the remaining principal balance of the Mortgage
Loans. Allocations in connection with clause (iii) shall be made so that, to the
greatest extent possible, (a) the principal balance of each REMIC 3 Regular
Interest with "B" at the end of its designation equals 0.05% of the aggregate
scheduled principal balance of the Mortgage Loans in related Loan Group, (b) the
principal balance of each REMIC 3 Regular Interest with "A" at the end of its
designation equals 0.05% of the excess of (x) the aggregate scheduled principal
balance of the Mortgage Loans in related Loan Group over (y) the aggregate
principal balance of the Class AF-1 Certificates in the case of the Class LT3-IA
Interest, or the Class AV-1, Class AV-2 and Class AV-3 Certificates in the case
of the Class LT3-IIA Interest and (c) any remaining allocations are made to the
Class LT3-X2 Interest.

            (e) REMIC 2. On each Distribution Date, the REMIC 2 Regular
Interests shall receive distributions of interest and principal equal in the
aggregate to amounts distributable pursuant to Sections 4.01 and 4.02 (other
than to the Class R Certificates) from amounts on deposit in the Distribution
Account. Such amounts with respect to interest shall accrue at the rate
specified in the Preliminary Statement with respect to each REMIC 2 Regular
Interest. Any shortfalls of interest on the Group I Mortgage Loans will be
allocated, first, to the Class LT2-I-X Interest, then to the remaining REMIC 2
Regular Interests (other than the REMIC 2 IO Interests) designated with a "I" in
numerical order and finally to the REMIC 2 Regular Interests designated with
both a "I" and an "IO". Any shortfalls of interest on the Group II Mortgage
Loans will be allocated, first, to the Class LT2-II-X Interest, then to the
remaining REMIC 2 Regular Interests (other than the REMIC 2 IO Interests)
designated with a "II" in numerical order and finally to the REMIC 2 Regular
Interests designated with both a "II" and an "IO". Amounts in reduction of
principal balance of the REMIC 2 Regular Interests in respect of Loan Group I
shall be allocated first, to the Class LT2-I-X Interest and then to the
remaining REMIC 2 Regular Interests (other than the REMIC 2 IO Interests) with
the designation "I" in numerical order, so that the principal balance of each
REMIC 2 Regular Interest (other than the REMIC 2 IO Interests) designated with a
"I" is equal to the principal balance of the REMIC 1 Regular Interest designated
with a "I" that has the same numerical designation. Amounts in reduction of
principal balance of the REMIC 2 Regular Interests in respect of Loan Group II
shall be allocated first, to the Class LT2-II-X Interest and then to the
remaining REMIC 2 Regular Interests (other than the REMIC 2 IO Interests) with
the designation "II" in numerical order, so that the principal balance of each
REMIC 2 Regular Interest (other than the REMIC 2 IO Interests) designated with a
"II" is equal to the principal balance of the REMIC 1 Regular Interest
designated with a "II" that has the same numerical designation. Realized Losses
in respect of principal shall be allocated in the same manner as amounts in
reduction of principal balance. Such amounts with respect to principal and any
Realized Losses with respect to principal shall reduce the principal balances of
the REMIC 2 Regular Interests so that (i) in the aggregate, such balances
correspond to the Pool Balance of the Mortgage Loans as of the last day of the
related Collection Period, (ii) in the aggregate, the principal balances of the
REMIC 2 Regular Interests with the designation "I" correspond to the Pool
Balance of the Group I Mortgage Loans as of the last day of the related
Collection Period and (iii) in the aggregate, the principal balances of the
REMIC 2 Regular Interests with the designation "II" correspond to the

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Pool Balance of the Group II Mortgage Loans as of the last day of the related
Collection Period. Amounts in the Distribution Account deemed distributed in
respect of the REMIC 2 Regular Interests shall be treated as held by REMIC 3 (in
the case of amounts deemed distributed in respect of REMIC 2 Regular Interests
other than the REMIC 2 IO Interests) and by REMIC 4 (in the case of amounts
deemed distributed in respect of the REMIC 2 IO Interests) for distribution in
accordance with Section 4.08(d) and Section 4.08(c) respectively. Any amounts
remaining in REMIC 2 on a Distribution Date after distributions on the REMIC 2
Regular Interests shall be distributed to the Class R Certificates in respect of
the Class R-2 Interest. If on any Distribution Date the Class Principal Balance
of any Class of Certificates is increased pursuant to the last sentence of the
definition of "Certificate Principal Balance", then there shall be an equivalent
increase in the principal amount of the REMIC 2 Regular Interests (other than
the REMIC 2 IO Interests), with such increase allocated (x) in the case of
increases in Certificate Principal Balance resulting from a Recovery in respect
of a Mortgage Loan in Loan Group I, to the Class LT2-I-1 through LT2-I-30
Interests in numerical order (that is, starting with Class LT2-I-1 Interest) so
that the increase in principal amount to each such REMIC 2 Regular Interest
equals the lesser of (i) the amount of any previous realized losses allocated to
such REMIC 2 Regular Interest not previously offset by distributions or
increases in the principal amount of such REMIC 2 Regular Interest and (ii) the
aggregate increase in Certificate Principal Balance on such Distribution Date
resulting from Recoveries in respect of Mortgage Loans in Loan Group I, as
reduced by any prior increases on such Distribution Date in the principal amount
of REMIC 2 Regular Interests having a "I" in their designation and (y) in the
case of increases in Certificate Principal Balance resulting from a Recovery in
respect of a Mortgage Loan in Loan Group II, to the Class LT2-II-1 through
LT2-II-30 Interests in numerical order (that is, starting with Class LT2-II-1
Interest) so that the increase in principal amount to each such REMIC 2 Regular
Interest equals the lesser of (i) the amount of any previous realized losses
allocated to such REMIC 2 Regular Interest not previously offset by
distributions or increases in the principal amount of such REMIC 2 Regular
Interest and (ii) the aggregate increase in Certificate Principal Balance on
such Distribution Date resulting from Recoveries in respect of Mortgage Loans in
Loan Group II, as reduced by any prior increases on such Distribution Date in
the principal amount of REMIC 2 Regular Interests having a "II" in their
designation.

            (f) REMIC 1. On each Distribution Date, the REMIC 1 Regular
Interests shall receive distributions of interest and principal equal in the
aggregate to amounts distributable pursuant to Sections 4.01 and 4.02 (other
than to the Class R Certificates) from amounts on deposit in the Distribution
Account. Such amounts with respect to interest shall accrue at the rate
specified in the Preliminary Statement with respect to each REMIC 1 Regular
Interest. Any shortfalls of interest on the Group I Mortgage Loans will be
allocated, first, to the Class LT1-I-X Interest then to the remaining REMIC 1
Regular Interests designated with a "I" in numerical order. Any shortfalls of
interest on the Group II Mortgage Loans will be allocated, first, to the Class
LT1-II-X Interest then to the remaining REMIC 1 Regular Interests designated
with a "II" in numerical order. Amounts in reduction of principal balance of the
REMIC 1 Regular Interests in respect of Loan Group I shall be allocated first,
to the Class LT1-I-X Interest and then to the remaining REMIC 1 Regular
Interests with the designation "I" in numerical order. Amounts in reduction of
principal balance of the REMIC 1 Regular Interests in respect of Loan Group II
shall be allocated first, to the Class LT1-II-X Interest and then to the
remaining REMIC 1 Regular Interests with the designation "II" in numerical
order. Realized Losses in respect of principal shall be allocated in the same
manner as amounts in reduction of

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principal balance. Such amounts with respect to principal and any Realized
Losses with respect to principal shall reduce the principal balances of the
REMIC 1 Regular Interests so that (i) in the aggregate, such balances correspond
to the Pool Balance of the Mortgage Loans as of the last day of the related
Collection Period, (ii) in the aggregate, the principal balances of the REMIC 1
Regular Interests with the designation "I" correspond to the Pool Balance of the
Group I Mortgage Loans as of the last day of the related Collection Period and
(iii) in the aggregate, the principal balances of the REMIC 1 Regular Interests
with the designation "II" correspond to the Pool Balance of the Group II
Mortgage Loans as of the last day of the related Collection Period. Amounts in
the Distribution Account deemed distributed in respect of the REMIC 1 Regular
Interests shall be treated as held by REMIC 2 for distribution in accordance
with Section 4.08(e). Any amounts remaining in REMIC 1 on a Distribution Date
after distributions on the REMIC 1 Regular Interests shall be distributed to the
Class R Certificates in respect of the Class R-1 Interest. If on any
Distribution Date the Class Principal Balance of any Class of Certificates is
increased pursuant to the last sentence of the definition of "Certificate
Principal Balance", then there shall be an equivalent increase in the principal
amount of the REMIC 1 Regular Interests, with such increase allocated (x) in the
case of increases in Certificate Principal Balance resulting from a Recovery in
respect of a Mortgage Loan in Loan Group I, to the Class LT1-I-1 through
LT1-I-30 Interests in numerical order (that is, starting with Class LT1-I-1
Interest) so that the increase in principal amount to each such REMIC 1 Regular
Interest equals the lesser of (i) the amount of any previous realized losses
allocated to such REMIC 1 Regular Interest not previously offset by
distributions or increases in the principal amount of such REMIC 1 Regular
Interest and (ii) the aggregate increase in Certificate Principal Balance on
such Distribution Date resulting from Recoveries in respect of Mortgage Loans in
Loan Group I, as reduced by any prior increases on such Distribution Date in the
principal amount of REMIC 1 Regular Interests having a "I" in their designation
and (y) in the case of increases in Certificate Principal Balance resulting from
a Recovery in respect of a Mortgage Loan in Loan Group II, to the Class LT1-II-1
through LT1-II-30 Interests in numerical order (that is, starting with Class
LT1-II-1 Interest) so that the increase in principal amount to each such REMIC 1
Regular Interest equals the lesser of (i) the amount of any previous realized
losses allocated to such REMIC 1 Regular Interest not previously offset by
distributions or increases in the principal amount of such REMIC 1 Regular
Interest and (ii) the aggregate increase in Certificate Principal Balance on
such Distribution Date resulting from Recoveries in respect of Mortgage Loans in
Loan Group II, as reduced by any prior increases on such Distribution Date in
the principal amount of REMIC 1 Regular Interests having a "II" in their
designation.

            (g) All prepayment penalties (including amounts deposited in
connection with the full or partial waiver of prepayment penalties pursuant to
Section 3.01) shall be distributed from REMIC 1 to REMIC 2 in respect of the
LT1-I-30 Interest (in the case or prepayment penalties in respect of Group I
Mortgage Loans) or the Class LT1-II-30 Interest (in the case of prepayment
penalties in respect of Group II Mortgage Loans), from REMIC 2 to REMIC 3 in
respect of the Class LT2-I-30 Interest (in the case of prepayment penalties in
respect of Group I Mortgage Loans) or the Class LT2-II-30 Interest (in the case
of prepayment penalties in respect of Group II Mortgage Loans), from REMIC 3 to
REMIC 4 in respect of the Class LT3-X1 Interest, from REMIC 4 to REMIC 5 in
respect of the REMIC 4 X/N Interest, and from REMIC 5 to the Class X/N Interest
in respect of the REMIC 5 X/N Interest.

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

                                   ARTICLE V

                                THE CERTIFICATES

      Section 5.01 The Certificates.

      Each of the Class AF-1, Class AV-1, Class AV-2, Class AV-3, Class A-IO,
Class M-1, Class M-2, Class M-3, Class B-1, Class B-2, Class B-3, Class B-4,
Class N, Class X, Class R and Class R-X Certificates shall be substantially in
the forms annexed hereto as exhibits, and shall, on original issue, be executed
by the Trustee and authenticated and delivered by the Certificate Registrar to
or upon the receipt of a Written Order to Authenticate from the Depositor
concurrently with the sale and assignment to the Trustee of the Trust Fund. Each
Class of the Offered Certificates and the Class B-4 Certificates shall be
initially evidenced by one or more Certificates representing a Percentage
Interest with a minimum dollar (or notional amount) denomination of $25,000 and
integral multiples of $1 in excess thereof. The Class N, Class X and Class R
Certificates are issuable only in minimum Percentage Interests of 10%. The Class
R-X Certificates are issuable only in minimum Percentage Interests of 50%.

      The Certificates shall be executed on behalf of the Trust by manual or
facsimile signature on behalf of the Trustee by a Responsible Officer.
Certificates bearing the manual or facsimile signatures of individuals who were,
at the time when such signatures were affixed, authorized to sign on behalf of
the Trustee shall bind the Trust, notwithstanding that such individuals or any
of them have ceased to be so authorized prior to the authentication and delivery
of such Certificates or did not hold such offices at the date of such
Certificate. No Certificate shall be entitled to any benefit under this
Agreement or be valid for any purpose, unless such Certificate shall have been
manually authenticated by the Certificate Registrar substantially in the form
provided for herein, and such authentication upon any Certificate shall be
conclusive evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder. All Certificates shall be dated the date
of their authentication. Subject to Section 5.02(c), the Offered Certificates
and the Class B-4 Certificates shall be Book-Entry Certificates. The Class N,
Class X, Class R and Class R-X Certificates shall not be Book-Entry Certificates
but shall be issued in fully registered certificate form.

      The Class B-4 Certificates sold in offshore transactions in reliance on
Regulation S shall be issued initially in the form of one or more permanent
global certificates in definitive, fully registered form without interest
coupons with the applicable legends set forth in Exhibit B-4 hereto added to the
forms of such Certificates (each, a "Book-Entry Regulation S Global Security"),
which shall be deposited on behalf of the Holders of such Certificates
represented thereby with the Certificate Registrar, as custodian for DTC and
registered in the name of a nominee of DTC, duly executed and authenticated by
the Certificate Registrar as hereinafter provided. The aggregate principal
amounts of the Book-Entry Regulation S Global Securities

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may from time to time be increased or decreased by adjustments made on the
records of the Certificate Registrar or DTC or its nominee, as the case may be,
as hereinafter provided.

      Section 5.02 Registration of Transfer and Exchange of Certificates.

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

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

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

            (b) Upon original issuance, the Book-Entry Certificates shall be
issued in the form of one or more typewritten certificates, to be delivered to
the Depository, the initial Depository, by, or on behalf of, the Depositor; or
to, and deposited with the Certificate Custodian, on behalf of the Depository,
if directed to do so pursuant to instructions from the Depository. Except as
provided in paragraph (c) below, the Book-Entry Certificates shall at all times
remain registered in the name of the Depository or its nominee and at all times:
(i) registration of such Certificates may not be transferred by the Trustee
except to another Depository; (ii) the Depository shall maintain book-entry
records with respect to the Certificate Owners and with respect to ownership and
transfers of such Certificates; (iii) ownership and transfers of registration of
such Certificates on the books of the Depository shall be governed by applicable
rules established by the Depository; (iv) the Depository may collect its usual
and

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customary fees, charges and expenses from its Depository Participants; (v) the
Trustee shall for all purposes deal with the Depository as representative of the
Certificate Owners of the Certificates for purposes of exercising the rights of
Holders under this Agreement, and requests and directions for and votes of such
representative shall not be deemed to be inconsistent if they are made with
respect to different Certificate Owners; (vi) the Trustee may rely and shall be
fully protected in relying upon information furnished by the Depository with
respect to its Depository Participants and furnished by the Depository
Participants with respect to indirect participating firms and Persons shown on
the books of such indirect participating firms as direct or indirect Certificate
Owners; and (vii) the direct participants of the Depository shall have no rights
under this Agreement under or with respect to any of the Certificates held on
their behalf by the Depository, and the Depository may be treated by the Trustee
and their agents, employees, officers and directors as the absolute owner of the
Certificates for all purposes whatsoever.

      All transfers by Certificate Owners of Book-Entry Certificates shall be
made in accordance with the procedures established by the Depository Participant
or brokerage firm representing such Certificate Owners. Each Depository
Participant shall only transfer Book-Entry Certificates of Certificate Owners
that it represents or of brokerage firms for which it acts as agent in
accordance with the Depository's normal procedures. The parties hereto are
hereby authorized to execute a Letter of Representations with the Depository or
take such other action as may be necessary or desirable to register a Book-Entry
Certificate to the Depository. In the event of any conflict between the terms of
any such Letter of Representation and this Agreement, the terms of this
Agreement shall control.

            (c) If (i)(x) the Depository or the Depositor advises the Trustee in
writing that the Depository is no longer willing or able to discharge properly
its responsibilities as Depository and (y) the Trustee or the Depositor is
unable to locate a qualified successor, (ii) the Depositor, at its sole option,
with the consent of the Trustee, elects to terminate the book-entry system
through the Depository or (iii) after the occurrence of a Servicer Event of
Termination, the Certificate Owners of each Class of Book-Entry Certificates
representing Percentage Interests of such Classes aggregating not less than 51%
advises the Trustee and Depository through the Financial Intermediaries and the
Depository Participants in writing that the continuation of a book-entry system
through the Depository to the exclusion of definitive, fully registered
certificates (the "Definitive Certificates") to Certificate Owners is no longer
in the best interests of the Certificate Owners. Upon surrender to the
Certificate Registrar of the Book-Entry Certificates by the Depository,
accompanied by registration instructions from the Depository for registration,
the Trustee shall, at the Depositor's expense, in the case of (ii) above, or the
Seller's expense, in the case of (i) and (iii) above, execute on behalf of the
Trust and the Certificate Registrar shall authenticate the Definitive
Certificates. Neither the Depositor nor the Trustee shall be liable for any
delay in delivery of such instructions and may conclusively rely on, and shall
be protected in relying on, such instructions. Upon the issuance of Definitive
Certificates, the Trustee, the Certificate Registrar, the Servicer, any Paying
Agent and the Depositor shall recognize the Holders of the Definitive
Certificates as Certificateholders hereunder.

            (d) No transfer, sale, pledge or other disposition of any Private
Certificate shall be made unless such disposition is exempt from the
registration requirements of the Securities Act of 1933, as amended (the "1933
Act"), and any applicable state securities laws or is made in accordance with
the 1933 Act and laws. In the event of any such transfer, other than

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the initial transfer of the Private Certificates by the Depositor, (i) unless
such transfer is made in reliance upon Rule 144A (as evidenced by the investment
letter delivered to the Certificate Registrar, in substantially the form
attached hereto as Exhibit J) under the 1933 Act, the Certificate Registrar and
the Depositor may require a written Opinion of Counsel (which may be in-house
counsel) acceptable to and in form and substance reasonably satisfactory to the
Certificate Registrar and the Depositor that such transfer may be made pursuant
to an exemption, describing the applicable exemption and the basis therefor,
from the 1933 Act or is being made pursuant to the 1933 Act, which Opinion of
Counsel shall not be an expense of the Certificate Registrar, the Trustee or the
Depositor or (ii) the Certificate Registrar shall require the transferor to
execute a transferor certificate (in substantially the form attached hereto as
Exhibit L) and the transferee to execute an investment letter (in substantially
the form attached hereto as Exhibit J) acceptable to and in form and substance
reasonably satisfactory to the Depositor and the Certificate Registrar
certifying to the Depositor and the Certificate Registrar the facts surrounding
such transfer, which investment letter shall not be an expense of the
Certificate Registrar or the Depositor. The Holder of a Private Certificate
desiring to effect such transfer shall, and does hereby agree to, indemnify the
Certificate Registrar and the Depositor against any liability that may result if
the transfer is not so exempt or is not made in accordance with such federal and
state laws.

      By acceptance of a Regulation S Global Security, whether upon original
issuance or subsequent transfer, each Holder of such a Certificate acknowledges
the restrictions on the transfer of such Certificate set forth thereon and
agrees that it will only transfer such a Certificate as provided herein. In
addition, each Holder of a Regulation S Global Security shall be deemed to have
represented and warranted to the Depositor, the Certificate Registrar and any of
their respective successors that: (i) such Person is not a "U.S. person" within
the meaning of Regulation S and was, at the time the buy order was originated,
outside the United States and (ii) such Person understands that such
Certificates have not been registered under the Securities Act and that (x)
until the expiration of the 40-day distribution compliance period (within the
meaning of Regulation S), no offer, sale, pledge or other transfer of such
Certificates or any interest therein shall be made in the United States or to or
for the account or benefit of a U.S. person (each as defined in Regulation S),
(y) if in the future it decides to offer, resell, pledge or otherwise transfer
such Certificates, such Certificates may be offered, resold, pledged or
otherwise transferred only (A) to a person which the seller reasonably believes
is a "qualified institutional buyer" (a "QIB") as defined in Rule 144A under the
Securities Act, that is purchasing such Certificates for its own account or for
the account of a qualified institutional buyer to which notice is given that the
transfer is being made in reliance on Rule 144A or (B) in an offshore
transaction (as defined in Regulation S) in compliance with the provisions of
Regulation S, in each case in compliance with the requirements of this
Agreement; and it will notify such transferee of the transfer restrictions
specified in this Section.

      The beneficial ownership (as determined for federal income tax purposes)
of a Class N or Class X Certificate shall not be transferred to a non-United
States Person unless (i) such beneficial ownership is transferred to a
non-United States Person who will at all times be a Proportionate Holder and
provides the Certificate Registrar with a representation and covenant to such
effect and (ii) the Certificate Registrar has received, in the manner required
by applicable Treasury regulations (and with all required attachments,
including, where the non-United States Person is providing a Form W-8IMY, Forms
W-8BEN or W-9 from all persons treated as

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beneficially owning an interest in the Class X or Class N Certificate through
such non-U.S. Person either directly, through an intermediary or through another
entity that is treated as a partnership for U.S. federal income tax purposes), a
properly completed Internal Revenue Service Form W-8IMY, Form W-8BEN or Form
W-8ECI from such non-United States Person. No Class N or Class X Certificate may
be pledged or used as collateral for any obligation if it would cause any
portion of the Trust Fund to be treated as a taxable mortgage pool under Section
7701(i) of the Code.

      No transfer of an ERISA-Restricted Certificate shall be made unless the
Certificate Registrar shall have received either (i) a representation from the
transferee of such Certificate, acceptable to and in form and substance
satisfactory to the Certificate Registrar and the Depositor, (such requirement
is satisfied only by the Certificate Registrar's receipt of a representation
letter from the transferee substantially in the form of Exhibit I hereto, as
appropriate), to the effect that such transferee is not an employee benefit plan
or arrangement subject to Title I of ERISA or a plan subject to Section 4975 of
the Code or provisions of other federal, state or local law substantially
similar to the foregoing provisions of ERISA or the Code ("Similar Law"), nor a
person acting on behalf of any such plan or arrangement nor using the assets of
any such plan or arrangement to effect such transfer or (ii) (except in the case
of a Class R, Class R-X, Class X or Class N Certificate), a representation that
the purchaser is an insurance company which is purchasing such Certificates with
funds contained in an "insurance company general account" (as such term is
defined in Section V(e) of Prohibited Transaction Class Exemption 95-60 ("PTCE
95-60") and that the purchase and holding of such Certificates are covered under
Sections I and III of PTCE 95-60 or (iii) (except in the case of a Class R or
Class R-X Certificate) in the case of any such ERISA Restricted Certificate
presented for registration in the name of an employee benefit plan subject to
Title I of ERISA or a plan or arrangement subject to Section 4975 of the Code
(or comparable provisions of any subsequent enactments) or Similar Law, or a
trustee of any such plan or any other person acting on behalf of any such plan
or arrangement or using such plan's or arrangement's assets, an Opinion of
Counsel satisfactory to the Certificate Registrar (which shall not be an expense
of the Certificate Registrar, the Trustee, the Servicer or the Depositor), to
the effect that the purchase and holding of such ERISA Restricted Certificate
will not result in the assets of the Trust being deemed to be "plan assets" and
subject to the prohibited transaction provisions of ERISA, the Code or Similar
Law and will not subject the Certificate Registrar or the Trustee to any
obligation in addition to those expressly undertaken in this Agreement or to any
liability. For purposes of the Class M-1, Class M-2, Class M-3 Class B-1, Class
B-2, Class B-3 and Class B-4 Certificates, the representations in clause (i) or
(ii) of the preceding sentence shall be deemed to have been made to the
Certificate Registrar by the acceptance by a Certificate Owner of the beneficial
interest in any such Class of ERISA-Restricted Certificates, unless the
Certificate Registrar shall have received from the transferee an alternative
representation acceptable in form and substance to the Certificate Registrar and
the Depositor. Notwithstanding anything else to the contrary herein, any
purported transfer of an ERISA-Restricted Certificate to or on behalf of an
employee benefit plan subject to ERISA, the Code or Similar Law without the
delivery to the Certificate Registrar of an Opinion of Counsel satisfactory to
the Certificate Registrar (which shall not be an expense of the Certificate
Registrar, the Trustee, the Servicer or the Depositor) as described above shall
be void and of no effect.

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      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 appointed the Depositor or its designee as its attorney-in-fact to
negotiate the terms of any mandatory sale under clause (v) below and to execute
all instruments of transfer and to do all other things necessary in connection
with any such sale, and the rights of each Person acquiring any Ownership
Interest in a Residual Certificate are expressly subject to the following
provisions:

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

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

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

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

                        (B) a covenant of the proposed transferee to the effect
that the proposed transferee agrees to be bound by and to abide by the transfer
restrictions applicable to the Residual Certificates.

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

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

                  (vi) If any Person other than a Permitted Transferee acquires
any Ownership Interest in a Residual Certificate in violation of the
restrictions in this Section, then the Trustee will provide to the Internal
Revenue Service, and to the persons specified in Sections 860E(e)(3) and (6) of
the Code, information needed to compute the tax imposed under Section 860E(e)(5)
of the Code on transfers of residual interests to disqualified organizations.
The Trustee shall be entitled to reasonable compensation for providing such
information from the person to whom it is provided.

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

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

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

      Section 5.03 Mutilated, Destroyed, Lost or Stolen Certificates.

      If (i) any mutilated Certificate is surrendered to the Certificate
Registrar or the Certificate Registrar receives evidence to its satisfaction of
the destruction, loss or theft of any Certificate and (ii) there is delivered to
the Trustee, the Depositor and the Certificate Registrar such security or
indemnity as may be required by them to save each of them harmless, then, in the
absence of notice to the Trustee or the Certificate Registrar that such
Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute on behalf of the Trust, and the Certificate Registrar shall authenticate
and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost
or

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stolen Certificate, a new Certificate of like tenor and Percentage Interest.
Upon the issuance of any new Certificate under this Section, the Trustee or the
Certificate Registrar may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation thereto and any
other expenses (including the fees and expenses of the Trustee and the
Certificate Registrar) in connection therewith. Any duplicate Certificate issued
pursuant to this Section, shall constitute complete and indefeasible evidence of
ownership in the Trust, as if originally issued, whether or not the lost, stolen
or destroyed Certificate shall be found at any time.

      Section 5.04 Persons Deemed Owners.

      The Servicer, the Depositor, the Trustee, the Certificate Registrar, any
Paying Agent and any agent of the Servicer, the Depositor, the Certificate
Registrar, any Paying Agent or the Trustee may treat the Person, including a
Depository, in whose name any Certificate is registered as the owner of such
Certificate for the purpose of receiving distributions pursuant to Section 4.01
and 4.02 and for all other purposes whatsoever, and none of the Servicer, the
Trust, the Trustee, any Paying Agent nor any agent of any of them shall be
affected by notice to the contrary.

      Section 5.05 Appointment of Paying Agent.

      The Paying Agent shall make distributions to Certificateholders from the
Distribution Account pursuant to Section 4.01 and 4.02 and shall report the
amounts of such distributions to the Trustee. The duties of the Paying Agent may
include the obligation (i) to withdraw funds from the Collection Account
pursuant to Section 3.05 and for the purpose of making the distributions
referred to above and (ii) to distribute statements and provide information to
Certificateholders as required hereunder. The Paying Agent hereunder shall at
all times be an entity duly incorporated and validly existing under the laws of
the United States of America or any state thereof, authorized under such laws to
exercise corporate trust powers and subject to supervision or examination by
federal or state authorities. The Paying Agent shall initially be the Trustee.
The Trustee may appoint a successor to act as Paying Agent, which appointment
shall be reasonably satisfactory to the Depositor and the Rating Agencies. The
Trustee as Paying Agent shall be subject to the same standards of care,
limitations on liability and rights to indemnity as the Trustee, and the
provisions of Sections 8.01, 8.02, 8.03, 8.04, 8.05, 8.14, 8.15 and 8.16 shall
apply to the Paying Agent to the same extent as they apply to the Trustee. Any
Paying Agent appointed in accordance with this Section 5.05 may at any time
resign by giving at least 30 days' advance written notice of resignation to the
Trustee, the Servicer and the Depositor, such resignation to become effective
upon appointment of a successor Paying Agent.

                                   ARTICLE VI

                   THE SELLER, THE SERVICER AND THE DEPOSITOR

      Section 6.01 Liability of the Seller, the Servicer and the Depositor.

      The Seller and the Servicer shall be liable in accordance herewith only to
the extent of the obligations specifically imposed upon and undertaken by the
Seller or Servicer, as the case may

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

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

      Any entity into which the Seller, the Servicer or the Depositor may be
merged or consolidated, or any entity resulting from any merger, conversion or
consolidation to which the Seller, the Servicer or the Depositor shall be a
party, or any corporation succeeding to the business of the Seller, the Servicer
or the Depositor, shall be the successor of the Seller, the Servicer or the
Depositor, as the case may be, hereunder, without the execution or filing of any
paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding; provided, however, that the successor
Servicer shall satisfy all the requirements of Section 7.02 with respect to the
qualifications of a successor Servicer.

      Section 6.03 Limitation on Liability of the Servicer and Others.

      Neither the Servicer nor any of the directors or officers or employees or
agents of the Servicer shall be under any liability to the Trust or the
Certificateholders for any action taken or for refraining from the taking of any
action by the Servicer in good faith pursuant to this Agreement, or for errors
in judgment; provided, however, that this provision shall not protect the
Servicer or any such Person against any liability which would otherwise be
imposed by reason of its willful misfeasance, bad faith or gross negligence in
the performance of duties of the Servicer or by reason of its reckless disregard
of its obligations and duties of the Servicer hereunder; provided, further, that
this provision shall not be construed to entitle the Servicer to indemnity in
the event that amounts advanced by the Servicer to retire any senior lien exceed
Liquidation Proceeds (in excess of related liquidation expenses) realized with
respect to the related Mortgage Loan. The Servicer and any director or officer
or employee or agent of the Servicer may rely in good faith on any document of
any kind prima facie properly executed and submitted by any Person respecting
any matters arising hereunder. The Servicer and any director or officer or
employee or agent of the Servicer shall be indemnified by the Trust and held
harmless against any loss, liability or expense incurred in connection with any
legal action relating to this Agreement or the Certificates, other than any
loss, liability or expense incurred by reason of its willful misfeasance, bad
faith or negligence in the performance of duties hereunder or by reason of its
reckless disregard of obligations and duties hereunder. The Servicer may
undertake any such action which it may deem necessary or desirable in respect of
this Agreement, and the rights and duties of the parties hereto and the
interests of the Certificateholders hereunder. In such event, the reasonable
legal expenses and costs of such action and any liability resulting therefrom
shall be expenses, costs and liabilities of the Trust and the Servicer shall be
entitled to pay such expenses from the proceeds of the Trust or to be reimbursed
therefor pursuant to Section 3.05 upon presentation to the Trustee of
documentation of such expenses, costs and liabilities. The Servicer's right to
indemnity or reimbursement pursuant to this Section shall survive any
resignation or termination of the Servicer pursuant to Section 6.04 or 7.01 with
respect to any losses, expenses, costs or liabilities arising prior to such
resignation or termination (or arising from events that occurred prior to such
resignation or termination). This paragraph shall apply to the Servicer solely
in its capacity as Servicer hereunder and in no other capacities.

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<PAGE>
      Section 6.04 Servicer Not to Resign.

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

      The Trustee and the Depositor hereby specifically (i) consent to the
pledge and assignment by the Servicer of all the Servicer's right, title and
interest in, to and under this Agreement to the Servicing Rights Pledgee, for
the benefit of certain lenders, and (ii) provided that no Servicer Event of
Termination exists, agree that upon delivery to the Trustee by the Servicing
Rights Pledgee of a letter signed by the Servicer whereunder the Servicer shall
resign as Servicer under this Agreement, the Trustee shall appoint the Servicing
Rights Pledgee or its designee as successor Servicer, provided that at the time
of such appointment, the Servicing Rights Pledgee or such designee meets the
requirements of a successor Servicer pursuant to Section 7.02(a) and agrees to
be subject to the terms of this Agreement. If, pursuant to any provision hereof,
the duties of the Servicer are transferred to a successor, the entire amount of
the Servicing Fee and other compensation payable to the Servicer pursuant hereto
shall thereafter be payable to such successor.

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      Section 6.05 Delegation of Duties. In the ordinary course of business, the
Servicer at any time may delegate any of its duties hereunder to any Person,
including any of its Affiliates, who agrees to conduct such duties in accordance
with standards comparable to those set forth in Section 3.01. Such delegation
shall not relieve the Servicer of its liabilities and responsibilities with
respect to such duties and shall not constitute a resignation within the meaning
of Section 6.04. The Servicer shall provide the Trustee and the Rating Agencies
with 60 days prior written notice prior to the delegation of any of its duties
to any Person other than any of the Servicer's Affiliates or their respective
successors and assigns.

                                  ARTICLE VII

                                     DEFAULT

      Section 7.01 Servicer Events of Termination.

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

                  (i) (A) The failure by the Servicer to make any required
Advance; or (B) any other failure by the Servicer to deposit in the Collection
Account or Distribution Account any deposit required to be made under the terms
of this Agreement which continues unremedied for a period of one Business Day
after the date upon which written notice of such failure shall have been given
to the Servicer by the Trustee or by any Holder of a Regular Certificate
evidencing at least 25% of the Voting Rights; or

                  (ii) The failure by the Servicer to make any required
Servicing Advance which failure continues unremedied for a period of 30 days, or
the failure by the Servicer duly to observe or perform, in any material respect,
any other covenants, obligations or agreements of the Servicer as set forth in
this Agreement, which failure continues unremedied for a period of 30 days,
after the date (A) on which written notice of such failure, requiring the same
to be remedied, shall have been given to the Servicer by the Trustee or by any
Holder of a Regular Certificate evidencing at least 25% of the Voting Rights or
(B) actual knowledge of such failure by a Servicing Officer of the Servicer; or

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

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

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

                  (v) The aggregate amount of cumulative Realized Losses
incurred since the Cut-off Date through the last day of the related Collection
Period divided by the Pool Balance as of the Cut-off Date exceeds the applicable
percentages set forth below with respect to such Distribution Date:

<TABLE>
<CAPTION>
        DISTRIBUTION DATE OCCURRING IN                    PERCENTAGE
        ------------------------------                    ----------
<S>                                                       <C>
        March 2007 through February 2008                    4.00%
        March 2008 through February 2009                    5.50%
        March 2009 through February 2010                    6.50%
        March 2010 through February 2011                    7.00%
        March 2011 and thereafter                           8.00%
</TABLE>

            (b) Then, and in each and every such case, so long as a Servicer
Event of Termination shall not have been remedied within the applicable grace
period, (x) with respect solely to clause (i)(A) above, if such Advance is not
made by 2:00 P.M., New York time, on the Business Day immediately following the
Servicer Remittance Date, the Trustee may terminate all of the rights and
obligations of the Servicer under this Agreement and the Trustee, or a successor
servicer appointed in accordance with Section 7.02, shall immediately make such
Advance and assume, pursuant to Section 7.02, the duties of a successor Servicer
and (y) in the case of (i)(B), (ii), (iii), (iv) and (v) above, the Trustee
shall, at the direction of the Holders of each Class of Regular Certificates
evidencing Percentage Interests aggregating not less than 51%, by notice then
given in writing to the Servicer (and to the Trustee if given by Holders of
Certificates), terminate all of the rights and obligations of the Servicer as
servicer under this Agreement. Any such notice to the Servicer shall also be
given to each Rating Agency, the Depositor and the Seller. On or after the
receipt by the Servicer (and by the Trustee if such notice is given by the
Holders) of such written notice, all authority and power of the Servicer under
this Agreement, whether with respect to the Certificates or the Mortgage Loans
or otherwise, 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 to execute and deliver, on behalf of the Servicer, as attorney-in-fact
or otherwise, any and all documents and other instruments, and to do or
accomplish all other acts or things necessary or appropriate to effect the
purposes of such notice of termination, whether to complete the transfer and
endorsement of each Mortgage Loan and Related Documents or otherwise. The
Servicer agrees to cooperate with the Trustee (or the applicable successor
Servicer) in effecting the termination of the responsibilities and rights of the
Servicer hereunder, including, without limitation, the delivery to the Trustee
of all documents and records requested by it to enable it to assume the
Servicer's functions under this Agreement within ten Business Days subsequent to
such notice, the transfer within one Business Day subsequent to such notice to
the Trustee (or the applicable successor Servicer) for the administration by it
of all cash amounts that shall at the time be held by the Servicer and to be
deposited by it in the Collection Account, the Distribution Account, any REO

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Account or any Escrow Account or that have been deposited by the Servicer in
such accounts or thereafter received by the Servicer with respect to the
Mortgage Loans or any REO Property received by the Servicer. All reasonable
costs and expenses (including attorneys' fees) incurred in connection with
transferring the servicing to the successor Servicer and amending this Agreement
to reflect such succession as Servicer pursuant to this Section shall be paid by
the predecessor Servicer (or if the predecessor Servicer is the Trustee, the
initial Servicer) upon presentation of reasonable documentation of such costs
and expenses.

      Section 7.02 Trustee to Act; Appointment of Successor.

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

      In the event of a Servicer Event of Termination, notwithstanding anything
to the contrary above, the Trustee and the Depositor hereby agree that upon
delivery to the Trustee by the Servicing Rights Pledgee of a letter signed by
the Servicer within ten Business Days of when

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<PAGE>
notification of such event shall have been provided to the Trustee, whereunder
the Servicer shall resign as Servicer under this Agreement, the Servicing Rights
Pledgee or its designee shall be appointed as successor Servicer (provided that
at the time of such appointment the Servicing Rights Pledgee or such designee
meets the requirements of a successor Servicer set forth above) and the
Servicing Rights Pledgee agrees to be subject to the terms of this Agreement.

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

      Section 7.03 Waiver of Defaults.

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

      Section 7.04 Notification to Certificateholders.

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

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

      Section 7.05 Survivability of Servicer Liabilities.

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

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<PAGE>
                                  ARTICLE VIII

                                   THE TRUSTEE

      Section 8.01 Duties of Trustee.

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

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

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

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

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

                  (iii) the Trustee shall not be personally liable with respect
to any action taken, suffered or omitted to be taken by it in good faith in
accordance with the direction of the Majority Certificateholders relating to the
time, method and place of conducting any proceeding

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<PAGE>
for any remedy available to the Trustee or exercising or omitting to exercise
any trust or power conferred upon the Trustee under this Agreement; and

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

      The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it, and
none of the provisions contained in this Agreement shall in any event require
the Trustee to perform, or be responsible for the manner of performance of, any
of the obligations of the Servicer under this Agreement, except during such
time, if any, as the Trustee shall be the successor to, and be vested with the
rights, duties, powers and privileges of, the Servicer in accordance with the
terms of this Agreement; provided, however, the Trustee shall not seek
reimbursement or repayment of any of its expenses from the Trust Fund except in
connection with expenses that would constitute "unanticipated expenses" under
Treasury Regulation 1.860G-1(b)(3)(ii).

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

      The Trustee shall have no duty hereunder with respect to any complaint,
claim, demand, notice or other document it may receive or which may be alleged
to have been delivered to or served upon it by the parties as a consequence of
the assignment of any Mortgage Loan hereunder; provided, however, that the
Trustee shall promptly remit to the Servicer upon receipt any such complaint,
claim, demand, notice or other document (i) which is delivered to the Trustee at
its Corporate Trust Office; (ii) of which a Responsible Officer has actual
knowledge and (iii) which contains information sufficient to permit the Trustee
to make a determination that the real property to which such document relates to
is a Mortgaged Property.

      Section 8.02 Certain Matters Affecting the Trustee.

            (a) Except as otherwise provided in Section 8.01:

                  (i) the Trustee may request and rely upon, and shall be
protected in acting or refraining from acting upon, any resolution, Officer's
Certificate, certificate of auditors

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<PAGE>
or any other certificate, statement, instrument, opinion, report, notice,
request, consent, order, appraisal, bond or other paper or document reasonably
believed by it to be genuine and to have been signed or presented by the proper
party or parties;

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

                  (iii) the Trustee shall not be under any obligation to
exercise any of the rights or powers vested in it by this Agreement, or to
institute, conduct or defend any litigation hereunder or in relation hereto, at
the request, order or direction of the Certificateholders pursuant to the
provisions of this Agreement, unless such Certificateholders shall have offered
to the Trustee reasonable security or indemnity against the costs, expenses and
liabilities which may be incurred therein or thereby; the right of the Trustee
to perform any discretionary act enumerated in this Agreement shall not be
construed as a duty, and the Trustee shall not be answerable for other than its
negligence or willful misconduct in the performance of any such act;

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

                  (v) prior to the occurrence of a Servicer Event of Termination
and after the curing of all Servicer Events of Termination which may have
occurred, the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond or other paper
or documents, unless requested in writing to do so by the Majority
Certificateholder; provided, however, that if the payment within a reasonable
time to the Trustee of the costs, expenses or liabilities likely to be incurred
by it in the making of such investigation is, in the opinion of the Trustee not
reasonably assured to the Trustee by the security afforded to it by the terms of
this Agreement, the Trustee may require reasonable indemnity against such cost,
expense or liability as a condition to such proceeding. The reasonable expense
of every such examination shall be paid by the Servicer or, if paid by the
Trustee shall be reimbursed by the Servicer upon demand. Nothing in this clause
(v) shall derogate from the obligation of the Servicer to observe any applicable
law prohibiting disclosure of information regarding the Mortgagors;

                  (vi) the Trustee shall not be accountable, shall have any
liability or make any representation as to any acts or omissions hereunder of
the Servicer until such time as the Trustee may be required to act as Servicer
pursuant to Section 7.02;

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

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

      Section 8.03 Trustee Not Liable for Certificates or Mortgage Loans.

      The recitals contained herein and in the Certificates (other than the
authentication of the Trustee on the Certificates) shall be taken as the
statements of the Seller, and the Trustee does not assumes any responsibility
for the correctness of the same. The Trustee makes no representations as to the
validity or sufficiency of this Agreement or of the Certificates (other than the
signature and authentication of the Trustee on the Certificates) or of any
Mortgage Loan or Related Document. The Trustee shall not be accountable for the
use or application by the Servicer, or for the use or application of any funds
paid to the Servicer in respect of the Mortgage Loans or deposited in or
withdrawn from the Collection Account by the Servicer. The Trustee shall not at
any time have any responsibility or liability for or with respect to the
legality, validity and enforceability of any Mortgage or any Mortgage Loan, or
the perfection and priority of any Mortgage or the maintenance of any such
perfection and priority, or for or with respect to the sufficiency of the Trust
or its ability to generate the payments to be distributed to Certificateholders
under this Agreement, including, without limitation: the existence, condition
and ownership of any Mortgaged Property; the existence and enforceability of any
hazard insurance thereon (other than if the Trustee shall assume the duties of
the Servicer pursuant to Section 7.02); the validity of the assignment of any
Mortgage Loan to the Trustee or of any intervening assignment; the completeness
of any Mortgage Loan; the performance or enforcement of any Mortgage Loan (other
than if the Trustee shall assume the duties of the Servicer pursuant to Section
7.02); the compliance by the Depositor, the Seller or the Servicer with any
warranty or representation made under this Agreement or in any related document
or the accuracy of any such warranty or representation prior to the Trustee's
receipt of notice or other discovery of any non-compliance therewith or any
breach thereof; any investment of monies by or at the direction of the Servicer
or any loss resulting therefrom, it being understood that the Trustee shall
remain responsible for any Trust property that it may hold in its individual
capacity; the acts or omissions of any of the Servicer (other than if the
Trustee shall assume the duties of the Servicer pursuant to Section 7.02), or
any Mortgagor; any action of the Servicer (other than if the Trustee shall
assume the duties of the Servicer pursuant to Section 7.02), taken in the name
of the Trustee; the failure of the Servicer to act or perform any duties
required of it as agent of the Trustee hereunder; or any action by the Trustee
taken at the instruction of the Servicer (other than if the Trustee shall assume
the duties of the Servicer pursuant to Section 7.02); provided, however, that
the foregoing shall not relieve the Trustee of its obligation to perform its
duties under this Agreement. The Trustee shall not have any responsibility for
filing any financing or continuation statement in any public office at any time
or to otherwise perfect or maintain the perfection of any security interest or
lien granted to it hereunder.

      Section 8.04 Trustee May Own Certificates.

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

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      Section 8.05 Seller to Pay Trustee Fees and Expenses.

      The Trustee shall withdraw from the Distribution Account on each
Distribution Date and pay to itself the Trustee Fee pursuant to Section 4.01(i)
and, to the extent the Interest Remittance Amount is at any time insufficient
for such purpose, the Seller shall pay such fees as reasonable compensation
(which shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust) for all services rendered by it
in the execution of the trusts hereby created and in the exercise and
performance of any of the powers and duties hereunder of the Trustee, and the
Seller will pay or reimburse the Trustee upon their request for all reasonable
expenses, disbursements and advances incurred or made by the Trustee in
accordance with any of the provisions of this Agreement (including the
reasonable compensation and the expenses and disbursements of its counsel and of
all persons not regularly in its employ) except any such expense, disbursement
or advance as may arise from such party's negligence or bad faith or which is
the responsibility of Certificateholders, the Trustee hereunder. Notwithstanding
any other provision of this Agreement, including Section 2.03(a) and Section
2.04, to the contrary, the Seller covenants and agrees to indemnify the Trustee
and its officers, directors, employees and agents from, and hold each of them
harmless against, any and all losses, liabilities, damages, claims or expenses
incurred in connection with (a) any legal action relating to this Agreement, the
Certificates or incurred in connection with the administration of the Trust,
other than with respect to a party, any loss, liability or expense incurred by
reason of willful misfeasance, bad faith or negligence of such party in the
performance of its duties hereunder or by reason of such party's reckless
disregard of obligations and duties hereunder and (b) the second paragraph of
Section 2.01. Anything in this Agreement to the contrary notwithstanding, in no
event shall the Trustee be liable for special, indirect or consequential loss or
damage of any kind whatsoever (including but not limited to lost profits), even
if the Trustee has been advised of the likelihood of such loss or damage and
regardless of the form of action. The Trustee and any director, officer,
employee or agent of the Trustee shall be indemnified, to the extent not paid by
the Seller pursuant to this Section, by the Trust Fund and held harmless against
any loss, liability or expense (not including expenses, disbursements and
advances incurred or made by the Trustee, in the ordinary course of the
Trustee's performance in accordance with the provisions of this Agreement)
incurred by the Trustee or such party arising out of or in connection with the
acceptance or administration of its duties under this Agreement, other than any
loss, liability or expense incurred by reason of willful misfeasance, bad faith
or negligence in the performance by the Trustee of its duties under this
Agreement or by reason of the reckless disregard of the Trustee's obligations
and duties under this Agreement. This section shall survive termination of this
Agreement or the resignation or removal of any Trustee hereunder.

      Section 8.06 Eligibility Requirements for Trustee.

      The Trustee hereunder shall at all times be a Department of Housing and
Urban Development and Federal Housing Administration approved mortgagee, an
entity duly organized and validly existing under the laws of the United States
of America or any state thereof, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
$50,000,000 and a minimum long-term debt rating of BBB by Fitch and S&P and a
long term debt rating of at least A1 or better by Moody's, and subject to
supervision or examination by federal or state authority. If such entity
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining

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authority, then for the purposes of this Section 8.06, the combined capital and
surplus of such entity shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. The principal
office of the Trustee (other than the initial Trustee) shall be in a state with
respect to which an Opinion of Counsel has been delivered to such Trustee at the
time such Trustee is appointed Trustee to the effect that the Trust will not be
a taxable entity under the laws of such state. In case at any time the Trustee
shall cease to be eligible in accordance with the provisions of this Section
8.06, the Trustee shall resign immediately in the manner and with the effect
specified in Section 8.07.

      Section 8.07 Resignation or Removal of Trustee.

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

      If at any time the Trustee shall cease to be eligible in accordance with
the provisions of Section 8.06 and shall fail to resign after written request
therefor by the Depositor, or if at any time the Trustee shall be legally unable
to act, or shall be adjudged a bankrupt or insolvent, or a receiver of the
Trustee or of its property shall be appointed, or any public officer shall take
charge or control of the Trustee or of its property or affairs for the purpose
of rehabilitation, conservation or liquidation, then the Depositor may remove
the Trustee. If the Depositor or the Servicer removes the Trustee under the
authority of the immediately preceding sentence, the Depositor shall promptly
appoint a successor Trustee by written instrument, in duplicate, one copy of
which instrument shall be delivered to the Trustee so removed and one copy to
the successor Trustee.

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

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

      Section 8.08 Successor Trustee.

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

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Depositor, the Servicer and the predecessor Trustee shall execute and deliver
such instruments and do such other things as may reasonably be required for
fully and certainly vesting and confirming in the successor Trustee all such
rights, powers, duties and obligations.

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

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

      Section 8.09 Merger or Consolidation of Trustee.

      Any entity into which the Trustee may be merged or converted or with which
it may be consolidated, or any entity resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any entity succeeding to
the business of the Trustee, shall be the successor of the Trustee hereunder,
provided such entity shall be eligible under the provisions of Section 8.06 and
8.08, without the execution or filing of any paper or any further act on the
part of any of the parties hereto, anything herein to the contrary
notwithstanding.

      Section 8.10 Appointment of Co-Trustee or Separate Trustee.

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

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

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

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

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

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

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

      Section 8.11 Limitation of Liability.

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

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      Section 8.12 Trustee May Enforce Claims Without Possession of
Certificates.

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

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

      Section 8.13 Suits for Enforcement.

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

      Section 8.14 Waiver of Bond Requirement.

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

      Section 8.15 Waiver of Inventory, Accounting and Appraisal Requirement.

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

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      Section 8.16 Compliance with National Housing Act of 1934.

      In performing its duties hereunder with respect to FHA Loans, the Trustee
shall comply with all requirements of the National Housing Act of 1934, as
amended.

                                   ARTICLE IX

                     REMIC AND GRANTOR TRUST ADMINISTRATION

      Section 9.01 REMIC Administration.

            (a) The Trustee shall make or cause to be made REMIC elections for
each of REMIC 1, REMIC 2, REMIC 3, REMIC 4, REMIC 5 and REMIC 6 as set forth in
the Preliminary Statement on Forms 1066 or other appropriate federal tax or
information return for the taxable year ending on the last day of the calendar
year in which the Certificates are issued. The regular interests and residual
interest in each REMIC shall be as designated in the Preliminary Statement.

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

            (c) The Servicer shall pay any and all tax related expenses (not
including taxes) of each REMIC, including but not limited to any professional
fees or expenses related to audits or any administrative or judicial proceedings
with respect to such REMIC that involve the Internal Revenue Service or state
tax authorities, but only to the extent that (i) such expenses are ordinary or
routine expenses, including expenses of a routine audit but not expenses of
litigation (except as described in (ii)); or (ii) such expenses or liabilities
(including taxes and penalties) are attributable to the negligence or willful
misconduct of the Servicer in fulfilling its duties hereunder. The Servicer
shall be entitled to reimbursement of expenses to the extent provided in clause
(i) above from the Collection Account, but only to the extent that such expenses
are "unanticipated expenses" under Treasury Regulations Section
1.860G-1(b)(3)(ii).

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

            (e) The Holder of the Residual Certificates with respect to each
REMIC holding the largest Percentage Interest shall be the "tax matters person"
as defined in the REMIC Provisions (the "Tax Matters Person") with respect to
the applicable REMIC or REMICs, and the Trustee is irrevocably designated as and
shall act as attorney-in-fact and agent for such Tax Matters Person for each
REMIC. The Trustee, as agent for the Tax Matters Person, shall perform, on
behalf of each REMIC, all reporting and other tax compliance duties that are the
responsibility of such REMIC under the Code, the REMIC Provisions, or other
compliance guidance issued by the Internal Revenue Service or any state or local
taxing authority. Among its other duties, if required by the Code, the REMIC
Provisions, or other such guidance, the Trustee, as agent for the Tax Matters
Person, shall provide (i) to the Treasury or other governmental authority such
information as is necessary for the application of any tax relating to

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the transfer of a Residual Certificate to any disqualified person or
organization and (ii) to the Certificateholders such information or reports as
are required by the Code or REMIC Provisions.

            (f) The Trustee, the Servicer, and the Holders of Certificates shall
take any action or cause any REMIC to take any action necessary to create or
maintain the status of such REMIC as a REMIC under the REMIC Provisions and
shall assist each other as necessary to create or maintain such status. Neither
the Trustee, the Servicer, nor the Holder of any Residual Certificate shall take
any action or cause any REMIC to take any action or fail to take (or fail to
cause to be taken) any action that, under the REMIC Provisions, if taken or not
taken, as the case may be, could (i) endanger the status of such REMIC as a
REMIC or (ii) result in the imposition of a tax upon such REMIC (including but
not limited to the tax on prohibited transactions as defined in Code Section
860F(a)(2) and the tax on prohibited contributions set forth on Section 860G(d)
of the Code) (either such event, an "Adverse REMIC Event") unless such action or
failure to take such action is expressly permitted under the terms of this
Agreement or the Trustee and the Servicer have received an Opinion of Counsel
(at the expense of the party seeking to take such action) to the effect that the
contemplated action will not endanger such status or result in the imposition of
such a tax. In addition, prior to taking any action with respect to any REMIC or
the assets therein, or causing such REMIC to take any action, which is not
expressly permitted under the terms of this Agreement, any Holder of a Residual
Certificate will consult with the Trustee and the Servicer, or their respective
designees, in writing, with respect to whether such action could cause an
Adverse REMIC Event to occur with respect to such REMIC, and no such Person
shall take any such action or cause such REMIC to take any such action as to
which the Trustee or the Servicer has advised it in writing that an Adverse
REMIC Event could occur.

            (g) Each Holder of a Residual Certificate shall pay when due its pro
rata share of any and all taxes imposed on any REMIC by federal or state
governmental authorities. To the extent that such REMIC taxes are not paid by
Residual Certificateholders, the Trustee shall pay any remaining REMIC taxes out
of current or future amounts otherwise distributable to the Holder of the
Residual Certificate in each REMIC or, if no such amounts are available, out of
other amounts held in the Collection Account, and shall reduce amounts otherwise
payable to Holders of the REMIC Regular Interests or the Certificates, as the
case may be.

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

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

            (j) Neither the Trustee nor the Servicer shall enter into any
arrangement by which any REMIC will receive a fee or other compensation for
services.

            (k) On or before April 15 of each calendar year beginning in 2005,
the Servicer shall deliver to the Trustee and each Rating Agency an Officer's
Certificate stating the Servicer's compliance with the provisions of this
Section 9.01.

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            (l) The Trustee shall treat the rights of the Cap Carryover
Certificates to receive LIBOR Carryover Amounts as a right in interest rate cap
contracts written by the Holder of the Class X/N Interest, in favor of the
Holders of the Cap Carryover Certificates, and the Trustee shall account for
such as property held separate and apart from the regular interests it holds in
each of the REMICs created hereunder. This provision is intended to satisfy the
requirements of Treasury Regulations Section 1.860G-2(i) for the treatment of
property rights coupled with regular interests to be separately respected and
shall be interpreted consistent with such regulation. On each Distribution Date,
to the extent the Cap Carryover Certificates receive payments in respect of
LIBOR Carryover Amounts pursuant to Section 4.02(b)(xxvii) or (xxviii), such
interest will be treated as distributed to the REMIC 4 X/N Interest, then on the
REMIC 5 X/N Interest and then paid to the respective Class of Cap Carryover
Certificates pursuant to the related interest rate cap agreement.

            (m) [RESERVED]

            (n) In the event that the beneficial ownership of the Class N
Certificates and the Class X Certificates is held by a single Person for federal
income tax purposes, such Person shall be treated as the beneficial owner of the
Class X/N Interest and the REMIC 5 Regular Interest represented thereby. In the
event that beneficial ownership of the Class N and the Class X Certificates is
held by two or more Persons for tax purposes, the Trustee shall treat the Class
N Certificateholders and the Class X Certificateholders as partners in a
partnership that owns the Class X/N Interest and the REMIC 5 Regular Interest
represented thereby for federal income tax purposes and shall not treat the
Class N and Class X Certificates as an interest in any REMIC created hereunder.
By acquiring the Class N Certificates and the Class X Certificates, the
respective Holders will agree to treat the Class N Certificates and the Class X
Certificates in the manner described in the preceding sentence for federal
income tax purposes in the event that the beneficial ownership of the Class N
Certificates and the Class X Certificates is separated. In such event, (i) a
separate capital account shall be established and maintained for each Holder of
a Class N or Class X Certificate in accordance with Treasury Regulations Section
1.704-1(b)(2)(iv), which shall be credited with income or gain and debited by
any expenses or losses and distributions allocable to such Certificates, (ii)
the Class N Certificates shall be allocated income in an amount equal to
interest at the Pass-Through Rate thereon and any original issue discount that
would be reportable thereon if the Class N Certificate were a debt instrument
issued on the date ownership of the Class N and Class X Certificates is
separated, with a principal balance equal to its Notional Amount, (iii) the
Class X and Class N Certificates shall be allocated income with respect to all
prepayment penalties (including amounts in connection with the full or partial
waiver of such prepayment penalties or premiums pursuant to Section 3.01) in
accordance with the allocation of such amounts pursuant to Section 4.02(c), to
the extent not allocated pursuant to Section 9.01(n)(ii) above, (iv) the Class X
and Class N Certificates shall be allocated accruals (under any reasonable
method) of any "cap premiums" deemed received on the date ownership of the Class
X and Class N Certificates is separated in respect of the obligation of the
Class X/N Interest to pay LIBOR Carryover Amounts, shall be allocated expense in
respect of such LIBOR Carryover Amounts based on which one of such Classes
economically bears such expense and shall be allocated all income associated
with the Yield Maintenance Agreement under any reasonable method and shall be
allocated all items of deduction or expense associated with distributions to the
Trustee pursuant to Section 3.04(f)(i)(B) hereof based on which one of such
Classes economically bears such expense, (v) the Class X Certificates shall be
allocated all

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remaining income and any expenses and Realized Losses with respect to the Class
X/N Interest, until the capital account of the Class X Certificates is reduced
to zero, and any remaining expenses or losses shall be allocated to the Class N
Certificates, (vi) neither the Class N Certificates nor the Class X Certificates
shall be responsible for restoring any deficit to its capital account, (vii)
upon termination of the Trust Fund pursuant to Article X, all amounts available
for distribution to Holders of the Class N and Class X Certificates shall be
distributed in accordance with their positive capital account balances, first to
the Class N Certificates until their Notional Amount and any accrued but unpaid
interest thereon are reduced to zero, and then to the Class X Certificates, and
(viii) the Trustee shall maintain books and records with respect to the
partnership on a calendar year basis (unless a different taxable year shall be
required by the Code) and shall prepare or cause to be prepared, and cause the
Holder of the largest Percentage Interest of the Class X Certificates to sign
and file or cause to be filed all federal and state tax and information returns
for the partnership, and shall furnish or cause to be furnished Schedule K-1 to
the Holders of the Class N and Class X Certificates at the time required by the
Code. Unless otherwise directed by a majority of the Percentage Interests of the
Class X and Class N Certificates, the Trustee shall not make an election under
Section 754 of the Code. The Holder of the largest Percentage Interest of the
Class X Certificates, by acceptance of its Class X Certificate, agrees to act as
"tax matters partner" (within the meaning of Section 6231(a)(7) of the Code) and
to sign and timely file all federal and state partnership tax and information
returns prepared by the Trustee pursuant to this Section 9.01(n).

      Section 9.02 Prohibited Transactions and Activities.

      Neither the Seller, the Depositor, the Servicer nor the Trustee shall
sell, dispose of, or substitute for any of the Mortgage Loans, except in a
disposition pursuant to (i) the foreclosure of a Mortgage Loan, (ii) the
bankruptcy of the Trust Fund, (iii) the termination of any REMIC pursuant to
Article X of this Agreement, (iv) a substitution pursuant to Article II of this
Agreement or (v) a repurchase of Mortgage Loans pursuant to Article II of this
Agreement, nor acquire any assets for any REMIC constituting part of the Trust
Fund, nor sell or dispose of any investments in the Distribution Account for
gain, nor accept any contributions to any REMIC constituting part of the Trust
Fund after the Closing Date, unless it has received an Opinion of Counsel (at
the expense of the party causing such sale, disposition, or substitution) that
such disposition, acquisition, substitution, or acceptance will not (a) affect
adversely the status of such REMIC as a REMIC or of the interests therein other
than the Residual Certificates as the regular interests therein, (b) affect the
distribution of interest or principal on the Certificates, (c) result in the
encumbrance of the assets transferred or assigned to the Trust Fund (except
pursuant to the provisions of this Agreement) or (d) cause such REMIC to be
subject to a tax on prohibited transactions or prohibited contributions pursuant
to the REMIC Provisions.

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

      In the event that any REMIC formed hereunder fails to qualify as a REMIC,
loses its status as a REMIC, or incurs federal, state or local taxes as a result
of a prohibited transaction or prohibited contribution under the REMIC
Provisions due to the negligent performance by the Servicer of its duties and
obligations set forth herein, the Servicer shall indemnify the Holder of the
related Residual Certificate against any and all losses, claims, damages,
liabilities or expenses ("Losses") resulting from such negligence; provided,
however, that the Servicer shall

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not be liable for any such Losses attributable to the action or inaction of the
Trustee, the Depositor or the Holder of such Residual Certificate, as
applicable, nor for any such Losses resulting from misinformation provided by
the Holder of such Residual Certificate on which the Servicer has relied. The
foregoing shall not be deemed to limit or restrict the rights and remedies of
the Holder of such Residual Certificate now or hereafter existing at law or in
equity. Notwithstanding the foregoing, however, in no event shall the Servicer
have any liability (1) for any action or omission that is taken in accordance
with and in compliance with the express terms of, or which is expressly
permitted by the terms of, this Agreement, (2) for any Losses other than arising
out of a negligent performance by the Servicer of its duties and obligations set
forth herein, and (3) for any special or consequential damages to
Certificateholders (in addition to payment of principal and interest on the
Certificates).

      Section 9.04 REO Property.

            (a) Subject to compliance with applicable laws and regulations as
shall at any time be in force, and notwithstanding any other provision of this
Agreement, the Servicer, acting on behalf of the Trust hereunder, shall not
rent, lease, or otherwise earn income on behalf of any REMIC constituting part
of the Trust Fund with respect to any REO Property which might cause such REO
Property to fail to qualify as "foreclosure" property within the meaning of
section 860G(a)(8) of the Code or result in the receipt by any REMIC
constituting part of the Trust Fund of any "income from non-permitted assets"
within the meaning of section 860F(a)(2) of the Code or any "net income from
foreclosure property" which is subject to tax under the REMIC Provisions unless
the Servicer has advised, or has caused the applicable Servicer to advise, the
Trustee in writing to the effect that, under the REMIC Provisions, such action
would not adversely affect the status of any REMIC constituting part of the
Trust Fund as a REMIC and any income generated for such REMIC by the REO
Property would not result in the imposition of a tax upon such REMIC.

            (b) The Servicer shall make reasonable efforts to sell any REO
Property for its fair market value. In any event, however, the Servicer shall
dispose of any REO Property before the close of the third calendar year
beginning after the year of its acquisition by the Trust Fund unless the
Servicer has received a grant of extension from the Internal Revenue Service to
the effect that, under the REMIC Provisions and any relevant proposed
legislation and under applicable state law, any REMIC constituting part of the
Trust Fund may hold REO Property for a longer period without adversely affecting
its REMIC status or causing the imposition of a Federal or state tax upon any
REMIC. If the Servicer has received such an extension, then the Servicer shall
continue to attempt to sell the REO Property for its fair market value as
determined in good faith by the Servicer for such longer period as such
extension permits (the "Extended Period"). If the Servicer has not received such
an extension and the Servicer is unable to sell the REO Property within 33
months after its acquisition by the Trust Fund or if the Servicer has received
such an extension, and the Servicer is unable to sell the REO Property within
the period ending three months before the close of the Extended Period, the
Servicer shall, before the end of the applicable period, (i) purchase such REO
Property at a price equal to the REO Property's fair market value as determined
in good faith by the Servicer or (ii) auction the REO Property to the highest
bidder (which may be the Servicer) in an auction reasonably designed to produce
a fair price prior to the expiration of the applicable period.

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      Section 9.05 Grantor Trust Administration.

      The parties intend that the portions of the Trust Fund consisting of the
REMIC 5 X/N Interest, the Yield Maintenance Agreement, the Reserve Account and
the obligation to pay such LIBOR Carryover Amounts, shall be treated as a
"grantor trust" under the Code, and the provisions hereof shall be interpreted
consistently with this intention. In furtherance of such intention, the Trustee
shall furnish or cause to be furnished (i) to the Holders of the Cap Carryover
Certificates and (ii) to the Holder of the Class X and Class N Certificates (if
there is a single beneficial owner thereof) or to itself on behalf of the
partnership comprised of the Holders of the Class X and Class N Certificates (if
there are two or more beneficial owners thereof), and shall file or cause to be
filed with the Internal Revenue Service together with Form 1041 or such other
form as may be applicable, indicating their allocable shares of income with
respect to the property held by the Grantor Trust, at the time or times and in
the manner required by the Code.

                                   ARTICLE X

                                   TERMINATION

      Section 10.01 Termination.

            (a) The respective obligations and responsibilities of the Seller,
the Servicer, the Depositor, the Trustee and the Certificate Registrar created
hereby (other than the obligation of the Trustee to make certain payments to
Certificateholders after the final Distribution Date and the obligation of the
Servicer to send certain notices as hereinafter set forth) shall terminate upon
notice to the Trustee upon the earliest of (i) the Distribution Date on which
the Certificate Principal Balance of each Class of Certificates has been reduced
to zero, (ii) the final payment or other liquidation of the last Mortgage Loan
in the Trust Fund, and (iii) the optional purchase by the Servicer of the
Mortgage Loans as described below. Notwithstanding the foregoing, in no event
shall the trust created hereby continue beyond the expiration of 21 years from
the death of the last survivor of the descendants of Joseph P. Kennedy, the late
ambassador of the United States to the Court of St. James, living on the date
hereof.

      The Servicer (or an Affiliate) may, at its option, terminate the Mortgage
Loans in the Trust Fund and retire the Certificates on the next succeeding
Distribution Date upon which the current Pool Balance is less than 10% of the
Pool Balance of the Mortgage Loans as of the Cut-off Date by purchasing all of
the outstanding (i) Mortgage Loans in the Trust Fund at a price equal to the sum
of the outstanding Principal Balance of the Mortgage Loans and except to the
extent previously advanced by the Servicer, accrued and unpaid interest thereon
at the weighted average of the Mortgage Interest Rates through the end of the
Collection Period preceding the final Distribution Date plus unreimbursed
Servicing Advances, Advances and any unpaid Servicing Fees allocable to such
Mortgage Loans plus any costs or damages incurred by the Trust Fund in
connection with any violation by such Mortgage Loan of any predatory or abusive
lending laws and (ii) REO Properties in the Trust Fund at a price equal to their
fair market value as determined in good faith by the Servicer (the "Termination
Price"). Notwithstanding the foregoing, the Servicer (or an Affiliate) may not
exercise its optional purchase right unless any Reimbursement Amount owed to the
Trust pursuant to Section 2.03 hereof has been paid.

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      In connection with any such purchase pursuant to the preceding paragraph,
the Servicer shall deliver to the Trustee for deposit in the Distribution
Account all amounts then on deposit in the Collection Account (less amounts
permitted to be withdrawn by the Servicer pursuant to Section 3.07), which
deposit shall be deemed to have occurred immediately following such purchase.

      Any such purchase shall be accomplished by delivery to the Trustee for
deposit into the Distribution Account as part of Available Funds on the
Determination Date before such Distribution Date of the Termination Price.

            (b) Notice of any termination, specifying the Distribution Date
(which shall be a date that would otherwise be a Distribution Date) upon which
the Certificateholders may surrender their Certificates to the Trustee for
payment of the final distribution and cancellation, shall be given promptly by
the Trustee upon the Trustee receiving notice of such date from the Servicer, by
letter to the Certificateholders mailed not earlier than the 15th day of the
month preceding the month of such final distribution and not later than the 15th
day of the month of such final distribution specifying (1) the Distribution Date
upon which final distribution of the Certificates will be made upon presentation
and surrender of such Certificates at the office or agency of the Trustee
therein designated, (2) the amount of any such final distribution and (3) that
the Record Date otherwise applicable to such Distribution Date is not
applicable, distributions being made only upon presentation and surrender of the
Certificates at the office or agency of the Trustee therein specified. Not less
than five (5) Business Days prior to such Determination Date relating to such
Distribution Date, the Trustee shall notify the Seller of the amount of any
unpaid Reimbursement Amount owed to the Trust.

            (c) Upon presentation and surrender of the Certificates, the Trustee
shall cause to be distributed to the Holders of the Certificates on the
Distribution Date for such final distribution, in proportion to the Percentage
Interests of their respective Class and to the extent that funds are available
for such purpose, an amount equal to the amount required to be distributed to
such Holders in accordance with the provisions of Sections 4.01 and 4.02 for
such Distribution Date.

            (d) In the event that all Certificateholders shall not surrender
their Certificates for final payment and cancellation on or before such final
Distribution Date, the Trustee shall promptly following such date cause all
funds in the Distribution Account not distributed in final distribution to
Certificateholders to be withdrawn therefrom and credited to the remaining
Certificateholders by depositing such funds in a separate escrow account for the
benefit of such Certificateholders, and the Servicer (if the Servicer has
exercised its right to purchase the Mortgage Loans) or the Trustee (in any other
case) shall give a second written notice to the remaining Certificateholders, to
surrender their Certificates for cancellation and receive the final distribution
with respect thereto. If within nine months after the second notice all the
Certificates shall not have been surrendered for cancellation, the Class R
Certificateholders shall be entitled to all unclaimed funds and other assets
which remain subject hereto and the Trustee upon transfer of such funds shall be
discharged of any responsibility for such funds, and such Certificateholders
shall look to the Class R Certificateholders for payment.

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      Section 10.02 Additional Termination Requirements.

            (a) In the event that the Servicer exercises its purchase option as
provided in Section 10.01, the Trust shall be terminated in accordance with the
following additional requirements, unless the Trustee shall have been furnished
with an Opinion of Counsel to the effect that the failure of the Trust to comply
with the requirements of this Section will not (i) result in the imposition of
taxes on "prohibited transactions" of the Trust as defined in Section 860F of
the Code or (ii) cause any REMIC constituting part of the Trust Fund to fail to
qualify as a REMIC at any time that any Certificates are outstanding:

                  (i) The Trustee shall designate a date within 90 days prior to
the final Distribution Date as the date of adoption of plans of complete
liquidation of each of the remaining REMICs included in the Trust Fund and shall
specify such date in the final federal income tax return of each REMIC;

                  (ii) After the date of adoption of such plans of complete
liquidation and at or prior to the final Distribution Date, the Trustee shall
sell all of the assets of the Trust to the Servicer for cash; and

                  (iii) At the time of the making of the final payment on the
Certificates, the Trustee shall distribute or credit, or cause to be distributed
or credited in the following order of priority (A) (i) to the Holders of each of
the Class AF-1, Class AV-1, Class AV-2 and Class AV-3 Certificates, pro rata and
(ii) to the Class M-1, Class M-2, Class M-3 Class B-1, Class B-2, Class B-3 and
Class B-4 Certificates, the related Certificate Principal Balance, as
applicable, plus one month's interest thereon at the applicable Pass-Through
Rate, (B) (i) to the Class R Certificates, the Class R Excess Interest Amount of
any remaining Monthly Excess Interest and (ii) to the Class N and Class X
Certificates in respect of the Class X/N Interest, the amount of any remaining
Monthly Excess Cash Flow Amounts not previously distributed thereon and not
distributed to the Class R Certificates, (C) to the remaining REMIC Regular
Interests the amounts allocable thereto pursuant to Section 4.08 and (D) to the
Class R Certificateholders, all cash on hand in respect of the related REMIC or
REMICs after such payment (other than cash retained to meet claims) and the
Trust shall terminate at such time.

            (b) By their acceptance of Certificates, the Holders thereof hereby
agree to appoint the Trustee as their attorney in fact to: (i) designate such
date of adoption of plans of complete liquidation and (ii) to take such other
action in connection therewith as may be reasonably required to carry out such
plans of complete liquidation all in accordance with the terms hereof.

                                   ARTICLE XI

                            MISCELLANEOUS PROVISIONS

      Section 11.01 Amendment.

      This Agreement may be amended from time to time by the Seller, the
Depositor, the Servicer and the Trustee; and without the consent of the
Certificateholders, (i) to cure any ambiguity, (ii) to correct or supplement any
provisions herein which may be defective or

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inconsistent with any other provisions herein, (iii) to make any other
provisions with respect to matters or questions arising under this Agreement,
which shall not be inconsistent with the provisions of this Agreement or (iv) to
comply with any requirements imposed by the Code; provided, however, that any
such action listed in clause (i) through (iv) above shall not adversely affect
in any respect the interests of any Certificateholder, as evidenced by (i)
notice in writing to the Depositor, the Servicer and the Trustee from the Rating
Agencies that such action will not result in the reduction or withdrawal of the
rating of any outstanding Class of Certificates with respect to which it is a
Rating Agency, or (ii) an Opinion of Counsel delivered to the Servicer and the
Trustee.

      In addition, this Agreement may be amended from time to time by Seller,
the Depositor, the Servicer and the Trustee, with the consent of the Majority
Certificateholders for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Holders of Certificates; provided,
however, that no such amendment or waiver shall (x) reduce in any manner the
amount of, or delay the timing of, payments on the Certificates which are
required to be made on any Certificate without the consent of the Holder of such
Certificate, (y) adversely affect in any material respect the interests of the
Holders of any Class of Certificates in a manner other than as described in
clause (x) above, without the consent of the Holders of Certificates of such
Class evidencing at least a 66 2/3% Percentage Interest in such Class, or (z)
reduce the percentage of Voting Rights required by clause (y) above without the
consent of the Holders of all Certificates of such Class then outstanding. Upon
approval of an amendment, a copy of such amendment shall be sent to the Rating
Agencies. Prior to the execution of any amendment to this Agreement, the Trustee
shall be entitled to receive and rely upon an Opinion of Counsel (at the expense
of the Person seeking such amendment) stating that the execution of such
amendment is authorized or permitted by this Agreement. The Trustee may, but
shall not be obligated to, enter into any such amendment which affects the
Trustee's own rights, duties or immunities under this Agreement.

      Notwithstanding any provision of this Agreement to the contrary, the
Trustee shall not consent to any amendment to this Agreement unless it shall
have first received an Opinion of Counsel, delivered by (and at the expense of)
the Person seeking such Amendment, to the effect that such amendment will not
result in the imposition of a tax on any REMIC constituting part of the Trust
Fund pursuant to the REMIC Provisions or cause any REMIC constituting part of
the Trust to fail to qualify as a REMIC at any time that any Certificates are
outstanding and that the amendment is being made in accordance with the terms
hereof.

      Promptly after the execution of any such amendment the Trustee shall
furnish, at the expense of the Person that requested the amendment if such
Person is the Seller or the Servicer (but in no event at the expense of the
Trustee), otherwise at the expense of the Trust, a copy of such amendment and
the Opinion of Counsel referred to in the immediately preceding paragraph to the
Servicer and each Rating Agency.

      It shall not be necessary for the consent of Certificateholders under this
Section 11.01 to approve the particular form of any proposed amendment; instead
it shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of

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evidencing the authorization of the execution thereof by Certificateholders
shall be subject to such reasonable regulations as the Trustee may prescribe.

      Section 11.02 Recordation of Agreement; Counterparts.

      To the extent permitted by applicable law, this Agreement is subject to
recordation in all appropriate public offices for real property records in all
the counties or other comparable jurisdictions in which any or all of the
properties subject to the Mortgages are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Servicer at the expense of the Trust, but only upon direction of
Certificateholders, accompanied by an Opinion of Counsel to the effect that such
recordation materially and beneficially affects the interests of the
Certificateholders.

      For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall together constitute but
one and the same instrument.

      Section 11.03 Limitation on Rights of Certificateholders.

      The death or incapacity of any Certificateholder shall not (i) operate to
terminate this Agreement or the Trust, (ii) entitle such Certificateholder's
legal representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of the Trust, or (iii)
otherwise affect the rights, obligations and liabilities of the parties hereto
or any of them.

      Except as expressly provided for herein, no Certificateholder shall have
any right to vote or in any manner otherwise control the operation and
management of the Trust, or the obligations of the parties hereto, nor shall
anything herein set forth or contained in the terms of the Certificates be
construed so as to constitute the Certificateholders from time to time as
partners or members of an association; nor shall any Certificateholder be under
any liability to any third person by reason of any action taken by the parties
to this Agreement pursuant to any provision hereof.

      No Certificateholder shall have any right by virtue of any provision of
this Agreement to institute any suit, action or proceeding in equity or at law
upon or under or with respect to this Agreement, unless such Holder previously
shall have given to the Trustee a written notice of default and of the
continuance thereof, as herein provided, and unless also the Holders of
Certificates entitled to at least 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 whatever by virtue of any
provision of this Agreement to affect, disturb or prejudice the rights of the
Holders of any other of such

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Certificates, or to obtain or seek to obtain priority over or preference to any
other such Holder, which priority or preference is not otherwise provided for
herein, or to enforce any right under this Agreement, except in the manner
herein provided and for the equal, ratable and common benefit of all
Certificateholders. For the protection and enforcement of the provisions of this
Section 11.03 each and every Certificateholder and the Trustee shall be entitled
to such relief as can be given either at law or in equity.

      Section 11.04 Governing Law; Jurisdiction.

      This Agreement shall be construed in accordance with the laws of the State
of New York, and the obligations, rights and remedies of the parties hereunder
shall be determined in accordance with such laws. With respect to any claim
arising out of this Agreement, each party irrevocably submits to the exclusive
jurisdiction of the courts of the State of New York and the United States
District Court located in the Borough of Manhattan in The City of New York, and
each party irrevocably waives any objection which it may have at any time to the
laying of venue of any suit, action or proceeding arising out of or relating
hereto brought in any such courts, irrevocably waives any claim that any such
suit, action or proceeding brought in any such court has been brought in any
inconvenient forum and further irrevocably waives the right to object, with
respect to such claim, suit, action or proceeding brought in any such court,
that such court does not have jurisdiction over such party, provided that
service of process has been made by any lawful means.

      Section 11.05 Notices.

      All directions, demands and notices hereunder shall be in writing and
shall be deemed to have been duly given if personally delivered at or mailed by
first class mail, postage prepaid, or by express delivery service, to (a) in the
case of the Seller, Credit-Based Asset Servicing and Securitization LLC, 335
Madison Avenue, 19th Floor, New York, New York 10017, Attention: Director -
Mortgage Finance (telecopy number (212) 850-7760), or such other address or
telecopy number as may hereafter be furnished to the Depositor and the Trustee
in writing by the Seller, (b) in the case of the Trustee, JPMorgan Chase Bank,
JPMorgan Chase Bank, 4 New York Plaza, 6th Floor, New York, New York 10004-2477,
Attention: Institutional Trust Services/Global Debt, MLMI C-BASS 2004-CB2, or
such other address as may hereafter be furnished to the Depositor, the Seller
and the Servicer in writing by the Trustee, (c) in the case of the Depositor,
Merrill Lynch Mortgage Investors, Inc., 250 Vesey Street, 4 World Financial
Center, 10th Floor, New York, New York 10080, Attention: Asset-Backed Finance,
or such other address as may be furnished to the Seller, the Servicer and the
Trustee in writing by the Depositor, and (d) in the case of the Servicer, Litton
Loan Servicing LP, 4828 Loop Central Drive, Houston, Texas 77081, Attention:
Janice McClure, or such other address as may be furnished to the Seller, the
Depositor and the Trustee in writing by the Servicer. Any notice required or
permitted to be mailed to a Certificateholder shall be given by first class
mail, postage prepaid, at the address of such Holder as shown in the Certificate
Register. Notice of any Servicer Event of Termination shall be given by telecopy
and by certified mail. Any notice so mailed within the time prescribed in this
Agreement shall be conclusively presumed to have duly been given when mailed,
whether or not the Certificateholder receives such notice. A copy of any notice
required to be telecopied hereunder shall also be mailed to the appropriate
party in the manner set forth above.

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<PAGE>
      Section 11.06 Severability of Provisions.

      If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall for any reason whatsoever be held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement or of the Certificates or the rights of the Holders thereof.

      Section 11.07 Article and Section References.

      All article and section references used in this Agreement, unless
otherwise provided, are to articles and sections in this Agreement.

      Section 11.08 Notice to the Rating Agencies.

            (a) Each of the Trustee and the Servicer shall be obligated to use
its best reasonable efforts promptly to provide notice to the Rating Agencies
with respect to each of the following of which a Responsible Officer of the
Trustee or the Servicer, as the case may be, has actual knowledge:

                  (i) any material change or amendment to this Agreement;

                  (ii) the occurrence of any Servicer Event of Termination that
has not been cured or waived;

                  (iii) the resignation or termination of the Servicer or the
Trustee;

                  (iv) the final payment to Holders of the Certificates of any
Class;

                  (v) any change in the location of any Account; and

                  (vi) if the Trustee is acting as successor Servicer pursuant
to Section 7.02 hereof, any event that would result in the inability of the
Trustee to make Advances.

                  (vii) In addition, the Servicer shall promptly furnish to each
Rating Agency copies of the following:

                        (A) each annual statement as to compliance described in
Section 3.19 hereof;

                        (B) each annual independent public accountants'
servicing report described in Section 3.20 hereof; and

                        (C) each notice delivered pursuant to Section 7.01(a)
hereof which relates to the fact that the Servicer has not made an Advance.

      Any such notice pursuant to this Section 11.08 shall be in writing and
shall be deemed to have been duly given if personally delivered or mailed by
first class mail, postage prepaid, or by express delivery service to Moody's
Investors Service, Inc., 99 Church Street, New York, New

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York 10007, Attention: Managing Director, Residential Mortgage-Backed
Securities; Fitch Ratings, One State Street Plaza, New York, New York 10004,
Attention: Managing Director, Residential Mortgage-Backed Securities; and
Standard & Poor's, a division of The McGraw-Hill Companies, Inc., 55 Water
Street, New York, New York 10041, Attention: Mortgage Surveillance Group.

      Section 11.09 Further Assurances.

      Notwithstanding any other provision of this Agreement, neither the Regular
Certificateholders, nor the Trustee shall have any obligation to consent to any
amendment or modification of this Agreement unless they have been provided
reasonable security or indemnity against their out-of-pocket expenses (including
reasonable attorneys' fees) to be incurred in connection therewith.

      Section 11.10 Section 11.10 Benefits of Agreement.

      Nothing in this Agreement or in the Certificates, expressed or implied,
shall give to any Person, other than the Certificateholders and the parties
hereto and their successors hereunder, any benefit or any legal or equitable
right, remedy or claim under this Agreement.

      Section 11.11 Acts of Certificateholders.

            (a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by the
Certificateholders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Certificateholders in person or by
agent duly appointed in writing; and such action shall become effective when
such instrument or instruments are delivered to the Trustee, the Seller and the
Servicer. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "act" of the
Certificateholders signing such instrument or instruments. Proof of execution of
any such instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Agreement and conclusive in favor of the
Trustee and the Trust, if made in the manner provided in this Section 11.11.

            (b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of a notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Whenever
such execution is by a signer acting in a capacity other than his or her
individual capacity, such certificate or affidavit shall also constitute
sufficient proof of his authority.

            (c) Any request, demand, authorization, direction, notice, consent,
waiver or other action by any Certificateholder shall bind every future Holder
of such Certificate and the Holder of every Certificate issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof, in
respect of anything done, omitted or suffered to be done by the Trustee or the
Trust in reliance thereon, whether or not notation of such action is made upon
such Certificate.

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                      [SIGNATURE PAGES IMMEDIATELY FOLLOW]

                                      149
<PAGE>
      IN WITNESS WHEREOF, the Seller, the Depositor, the Servicer and the
Trustee have caused their names to be signed hereto by their respective officers
thereunto duly authorized, all as of the day and year first above written.

                              MERRILL LYNCH MORTGAGE INVESTORS, INC.,
                                 as Depositor

                              By:____________________________________________
                              Name: Theodore Bouloukos
                              Title: Vice President

                              CREDIT-BASED ASSET SERVICING AND
                                 SECURITIZATION LLC, as Seller

                              By:____________________________________________
                              Name: Stephanie Sparvero
                              Title: Vice President

                              LITTON LOAN SERVICING LP, as Servicer

                              By:____________________________________________
                              Name: Janice McClure
                              Title: Senior Vice President

                              JPMORGAN CHASE BANK, not in its individual
                                 capacity but solely as Trustee for the 2004-CB2
                                 Trust, C-BASS Mortgage Loan Asset-Backed
                                 Certificates, Series 2004-CB2

                              By:____________________________________________
                              Name: Diane E. Wallace
                              Title: Assistant Vice President

<PAGE>
                                   EXHIBIT A-1

                      [FORM OF THE CLASS AF-1 CERTIFICATE]

      UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
      THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
      TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
      AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN
      SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
      (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
      REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE,
      OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
      INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
      HEREIN.

      FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS
      BENEFICIAL OWNERSHIP OF A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
      INVESTMENT CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS
      860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
      "CODE").

                 C-BASS MORTGAGE LOAN ASSET-BACKED CERTIFICATES
                           SERIES 2004-CB2, CLASS AF-1

evidencing a beneficial ownership interest in a portion of a Trust Fund
consisting primarily of a pool of conventional fixed-rate and adjustable-rate
one- to four-family first and second lien mortgage loans formed and sold by

                     MERRILL LYNCH MORTGAGE INVESTORS, INC.

<TABLE>
<S>                                             <C>
Series 2004-CB2, Class AF-1                     Original Class Certificate Principal
                                                Balance of the Class AF-1 Certificates
                                                as of the Closing Date:
                                                $142,109,000.00
Pass-Through Rate: 3.608%(1)

Date of Pooling and Servicing Agreement and     Initial Certificate Principal Balance:
Cut-off Date: February 1, 2004                  $142,109,000.00
First Distribution Date: March 25, 2004         Servicer: Litton Loan Servicing LP

No.                                             Trustee:  JPMorgan Chase Bank

CUSIP: 12489W HT 4                              Closing Date:  March 12, 2004
</TABLE>

----------
(1) Subject to a cap as described in the Agreement

                                     A-1-1
<PAGE>
ISIN: US12489WHT45

      DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
      CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
      OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE LESS
      THAN THE AMOUNT SHOWN ABOVE.

      THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
      MERRILL LYNCH MORTGAGE INVESTORS, INC., THE SERVICER, THE TRUSTEE OR ANY
      OF THEIR AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED BY ANY AGENCY OR
      INSTRUMENTALITY OF THE UNITED STATES.

      This certifies that CEDE & CO. is the registered owner of a Percentage
Interest (obtained by dividing the Initial Certificate Principal Balance of this
Certificate by the Original Class Certificate Principal Balance of the Class
AF-1 Certificates) in that certain beneficial ownership interest evidenced by
all the Class AF-1 Certificates in the Trust Fund created pursuant to a Pooling
and Servicing Agreement, dated as specified above (the "Agreement"), among
Merrill Lynch Mortgage Investors, Inc. (hereinafter called the "Depositor,"
which term includes any successor entity under the Agreement), Credit-Based
Asset Servicing and Securitization LLC (the "Seller"), the Servicer and the
Trustee, a summary of certain of the pertinent provisions of which is set forth
hereafter. To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.

      Pursuant to the terms of the Agreement, distributions will be made on the
25th day of each month or, if such 25th day is not a Business Day, the Business
Day immediately following (a "Distribution Date"), commencing on the first
Distribution Date specified above, to the Person in whose name this Certificate
is registered on the Business Day immediately preceding such Distribution Date
(the "Record Date"), from funds in the Distribution Account in an amount equal
to the product of the Percentage Interest evidenced by this Certificate and the
amount required to be distributed to the Holders of Class AF-1 Certificates on
such Distribution Date pursuant to the Agreement provided, however, that if any
Class AF-1 Certificate becomes a Definitive Certificate, the Record Date for
such Certificate will be the last Business Day of the month immediately
preceding the month in which the related Distribution Date occurs.

      All distributions to the Holder of this Certificate under the Agreement
will be made or caused to be made by or on behalf of the Trustee by wire
transfer in immediately available funds to the account of the Person entitled
thereto if such Person shall have so notified the Certificate Registrar in
writing at least five Business Days prior to the Record Date immediately prior
to such Distribution Date and is the registered owner of Class AF-1 Certificates
the aggregate Initial Certificate Principal Balance of which is in excess of
$5,000,000, or by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register, provided that the Certificate Registrar may deduct a reasonable wire
transfer fee from any payment made by wire transfer. Notwithstanding the

                                     A-1-2
<PAGE>
above, the final distribution on this Certificate will be made after due notice
by the Trustee of the pendency of such distribution and only upon presentation
and surrender of this Certificate at the office or agency appointed by the
Trustee for that purpose as provided in the Agreement.

      The Class AF-1 Pass-Through Rate on each Distribution Date will the per
annum rate specified above, subject to increase as provided in the Agreement.
Interest will accrue on the Class AF-1 Certificates during each Interest Accrual
Period at a rate equal to the lesser of (i) the Class AF-1 Pass-Through Rate and
(ii) the Group I Cap for such Distribution Date.

      This Certificate is one of a duly authorized issue of Certificates
designated as C-BASS Mortgage Loan Asset-Backed Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class AF-1 Certificates.

      The Class AF-1 Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

      The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee, the Seller and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicer, the Seller and the Trustee with the consent of the Holders of
Certificates entitled to the Voting Rights identified in the agreement. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange herefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.

      As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies appointed by the Trustee as provided in the Agreement, duly
endorsed by, or accompanied by an assignment in the form below or other written
instrument of transfer in form satisfactory to the Trustee and the Certificate
Registrar duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

      The Certificates are issuable in fully registered form only without
coupons in Classes and denominations 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.

                                     A-1-3
<PAGE>
      No service charge will be made for any such registration of transfer or
exchange of Certificates, but the Certificate Registrar may require payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any transfer or exchange of Certificates.

      The Depositor, the Servicer, the Trustee, any Paying Agent and the
Certificate Registrar and any agent of the Depositor, the Servicer, the Trustee,
any Paying Agent or the Certificate Registrar may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and none of
the Depositor, the Servicer, the Trustee, the Certificate Registrar, any Paying
Agent nor any such agent shall be affected by notice to the contrary.

      The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant to
the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the Trust
Fund of all Mortgage Loans and all property acquired in respect of such Mortgage
Loans. The Agreement permits, but does not require, the party designated in the
Agreement to purchase from the Trust Fund all 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
Principal Balance of the Mortgage Loans at the time of purchase being 10% or
less of the Cut-off Date Aggregate Principal Balance.

      The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.

      Unless the certificate of authentication hereon has been executed by the
Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                     A-1-4
<PAGE>
      IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.

Dated: March 12, 2004

                                               JPMORGAN CHASE BANK, as
                                               Trustee

                                               By:______________________________
                                                      Authorized Officer

                          CERTIFICATE OF AUTHENTICATION

      This is one of the Certificates referred to in the within-mentioned
Agreement.

                                               JPMORGAN CHASE BANK,
                                                  as Certificate Registrar

                                               By:______________________________
                                                     Authorized Signatory

Date of authentication: March 12, 2004

                                     A-1-5
<PAGE>
                                  ABBREVIATIONS

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

TEN COM  -  as tenants in common            UNIF GIFT MIN ACT -  Custodian
                                                                 (Cust) (Minor)
TEN ENT  -  as tenants by the entireties                         under Uniform
                                                                 Gifts to Minors
JT TEN   -  as joint tenants with right                          Act
            of survivorship and not as
            tenants in common                                    _______________
                                                                      (State)

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

                                     A-1-6
<PAGE>
                                   ASSIGNMENT

      FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)

a Percentage Interest equal to ____% evidenced by the within asset-backed
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.

      I (we) further direct the Certificate Registrar to issue a new Certificate
of a like Percentage Interest and Class to the above named assignee and deliver
such Certificate to the following address:

________________________________________________________________________________

Dated:

                                           _____________________________________
                                           Signature by or on behalf of assignor

                                           _____________________________________
                                           Signature Guaranteed

                            DISTRIBUTION INSTRUCTIONS

      The assignee should include the following for purposes of distribution:

      Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to _____________________________________________________________
________________________________________________________________________________
for the account of _______________________________, account number ____________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to ______________________________________
This information is provided by _______________________________________________,
the assignee named above, or ____________________________________, as its agent.

                                     A-1-7
<PAGE>
                                   EXHIBIT A-2

                      [FORM OF THE CLASS AV-1 CERTIFICATE]

      UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
      THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
      TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
      AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN
      SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
      (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
      REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE,
      OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
      INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
      HEREIN.

      FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS
      BENEFICIAL OWNERSHIP OF A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
      INVESTMENT CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS
      860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
      "CODE") AND CERTAIN OTHER PROPERTY.

                 C-BASS MORTGAGE LOAN ASSET-BACKED CERTIFICATES
                           SERIES 2004-CB2, CLASS AV-1

evidencing a beneficial ownership interest in a portion of a Trust Fund
consisting primarily of a pool of conventional fixed-rate and adjustable-rate
one- to four-family first and second lien mortgage loans formed and sold by

                     MERRILL LYNCH MORTGAGE INVESTORS, INC.

<TABLE>
<S>                                             <C>
Series 2004-CB2, Class AV-1                     Original Class Certificate Principal
                                                Balance of the Class AV-1 Certificates
                                                as of the Closing Date: $100,336,000.00
Pass-Through Rate: Variable(1)

Date of Pooling and Servicing Agreement and     Initial Certificate Principal Balance:
Cut-off Date: February 1, 2004                  $100,336,000.00
First Distribution Date: March 25, 2004         Servicer: Litton Loan Servicing LP

No.                                             Trustee: JPMorgan Chase Bank
</TABLE>

----------
(1) Subject to a cap as described in the Agreement.

                                     A-2-1
<PAGE>
CUSIP: 12489W HU 1                          Closing Date:  March 12, 2004

ISIN: US12489WHU18

      DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
      CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
      OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE LESS
      THAN THE AMOUNT SHOWN ABOVE.

      THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
      MERRILL LYNCH MORTGAGE INVESTORS, INC., THE SERVICER, THE TRUSTEE OR ANY
      OF THEIR AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED BY ANY AGENCY OR
      INSTRUMENTALITY OF THE UNITED STATES.

      This certifies that CEDE & CO. is the registered owner of a Percentage
Interest (obtained by dividing the Initial Certificate Principal Balance of this
Certificate by the Original Class Certificate Principal Balance of the Class
AV-1 Certificates) in that certain beneficial ownership interest evidenced by
all the Class AV-1 Certificates in the Trust Fund created pursuant to a Pooling
and Servicing Agreement, dated as specified above (the "Agreement"), among
Merrill Lynch Mortgage Investors, Inc. (hereinafter called the "Depositor,"
which term includes any successor entity under the Agreement), Credit-Based
Asset Servicing and Securitization LLC (the "Seller"), the Servicer and the
Trustee, a summary of certain of the pertinent provisions of which is set forth
hereafter. To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.

      Pursuant to the terms of the Agreement, distributions will be made on the
25th day of each month or, if such 25th day is not a Business Day, the Business
Day immediately following (a "Distribution Date"), commencing on the first
Distribution Date specified above, to the Person in whose name this Certificate
is registered on the Business Day immediately preceding such Distribution Date
(the "Record Date"), from funds in the Distribution Account in an amount equal
to the product of the Percentage Interest evidenced by this Certificate and the
amount required to be distributed to the Holders of Class AV-1 Certificates on
such Distribution Date pursuant to the Agreement provided, however, that if any
Class AV-1 Certificate becomes a Definitive Certificate, the Record Date for
such Certificate will be the last Business Day of the month immediately
preceding the month in which the related Distribution Date occurs.

      All distributions to the Holder of this Certificate under the Agreement
will be made or caused to be made by or on behalf of the Trustee by wire
transfer in immediately available funds to the account of the Person entitled
thereto if such Person shall have so notified the Certificate Registrar in
writing at least five Business Days prior to the Record Date immediately prior
to

                                     A-2-2
<PAGE>
such Distribution Date and is the registered owner of Class AV-1 Certificates
the aggregate Initial Certificate Principal Balance of which is in excess of
$5,000,000, or by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register, provided that the Certificate Registrar may deduct a reasonable wire
transfer fee from any payment made by wire transfer. Notwithstanding the above,
the final distribution on this Certificate will be made after due notice by the
Trustee of the pendency of such distribution and only upon presentation and
surrender of this Certificate at the office or agency appointed by the Trustee
for that purpose as provided in the Agreement.

      The Class AV-1 Pass-Through Rate on each Distribution Date will be a rate
per annum equal to the least of (i) LIBOR as of the related LIBOR Determination
Date, plus the Class AV-1 Certificate Margin, (ii) the Group II Cap and (iii)
the Group II Maximum Rate Cap.

      This Certificate is one of a duly authorized issue of Certificates
designated as C-BASS Mortgage Loan Asset-Backed Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class AV-1 Certificates.

      The Class AV-1 Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

      The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee, the Seller and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicer, the Seller and the Trustee with the consent of the Holders of
Certificates entitled to the Voting Rights identified in the agreement. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange herefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.

      As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies appointed by the Trustee as provided in the Agreement, duly
endorsed by, or accompanied by an assignment in the form below or other written
instrument of transfer in form satisfactory to the Trustee and the Certificate
Registrar duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

      The Certificates are issuable in fully registered form only without
coupons in Classes and denominations specified in the Agreement. As provided in
the Agreement and subject to certain

                                     A-2-3
<PAGE>
limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.

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

      The Depositor, the Servicer, the Trustee, any Paying Agent and the
Certificate Registrar and any agent of the Depositor, the Servicer, the Trustee,
any Paying Agent or the Certificate Registrar may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and none of
the Depositor, the Servicer, the Trustee, the Certificate Registrar, any Paying
Agent nor any such agent shall be affected by notice to the contrary.

      The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant to
the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the Trust
Fund of all Mortgage Loans and all property acquired in respect of such Mortgage
Loans. The Agreement permits, but does not require, the party designated in the
Agreement to purchase from the Trust Fund all 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
Principal Balance of the Mortgage Loans at the time of purchase being 10% or
less of the Cut-off Date Aggregate Principal Balance.

      The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.

      Unless the certificate of authentication hereon has been executed by the
Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                     A-2-4
<PAGE>
      IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.

Dated: March 12, 2004

                                               JPMORGAN CHASE BANK, as
                                               Trustee

                                               By:______________________________
                                                       Authorized Officer

                          CERTIFICATE OF AUTHENTICATION

      This is one of the Certificates referred to in the within-mentioned
Agreement.

                                               JPMORGAN CHASE BANK,
                                                 as Certificate Registrar

                                               By:______________________________
                                                       Authorized Signatory

Date of authentication: March 12, 2004

                                     A-2-5
<PAGE>
                                  ABBREVIATIONS

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

TEN COM - as tenants in common             UNIF GIFT MIN ACT  -  Custodian
                                                                 (Cust) (Minor)
TEN ENT - as tenants by the entireties                           under Uniform
                                                                 Gifts to Minors
JT TEN  - as joint tenants with right                            Act
          of survivorship and not as
          tenants in common                                      _______________
                                                                     (State)

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

                                     A-2-6
<PAGE>
                                   ASSIGNMENT

      FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)

a Percentage Interest equal to ____% evidenced by the within asset-backed
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.

      I (we) further direct the Certificate Registrar to issue a new Certificate
of a like Percentage Interest and Class to the above named assignee and deliver
such Certificate to the following address:

________________________________________________________________________________

Dated:

                                           _____________________________________
                                           Signature by or on behalf of assignor

                                           _____________________________________
                                           Signature Guaranteed

                            DISTRIBUTION INSTRUCTIONS

      The assignee should include the following for purposes of distribution:

      Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to _____________________________________________________________
________________________________________________________________________________
for the account of __________________________, account number __________, or, if
mailed by check, to ___________________________________________________________.
Applicable statements should be mailed to ______________________________________
This information is provided by _______________________________________________,
the assignee named above, or ____________________________________, as its agent.

                                     A-2-7
<PAGE>
                                   EXHIBIT A-3

                        [FORM OF CLASS A-V2 CERTIFICATE]

      UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
      THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
      TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
      AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN
      SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
      (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
      REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE,
      OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
      INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
      HEREIN.

      FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS
      BENEFICIAL OWNERSHIP OF A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
      INVESTMENT CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS
      860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
      "CODE") AND CERTAIN OTHER PROPERTY.

                 C-BASS MORTGAGE LOAN ASSET-BACKED CERTIFICATES
                           SERIES 2004-CB2, CLASS AV-2

evidencing a beneficial ownership interest in a portion of a Trust Fund
consisting primarily of a pool of conventional fixed-rate and adjustable-rate
one- to four-family first and second lien mortgage loans formed and sold by

                     MERRILL LYNCH MORTGAGE INVESTORS, INC.

<TABLE>
<S>                                             <C>
Series 2004-CB2, Class AV-2                     Original Class Certificate Principal
                                                Balance of the Class AV-2 Certificates
                                                as of the Closing Date: $66,038,000.00
Pass-Through Rate:  Variable(1)

Date of Pooling and Servicing Agreement and     Initial Certificate Principal Balance:
Cut-off Date:February 1, 2004                   $66,038,000.00
First Distribution Date: March 25, 2004         Servicer: Litton Loan Servicing LP

No.                                             Trustee: JPMorgan Chase Bank
</TABLE>

----------
(1) Subject to a cap as described in the Agreement.

                                     A-3-1
<PAGE>
CUSIP: 12489W HV 9                          Closing Date: March 12, 2004

ISIN: US12489WHV90

      DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
      CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
      OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE LESS
      THAN THE AMOUNT SHOWN ABOVE.

      THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
      MERRILL LYNCH MORTGAGE INVESTORS, INC., THE SERVICER, THE TRUSTEE OR ANY
      OF THEIR AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED BY ANY AGENCY OR
      INSTRUMENTALITY OF THE UNITED STATES.

      This certifies that CEDE & CO. is the registered owner of a Percentage
Interest (obtained by dividing the Initial Certificate Principal Balance of this
Certificate by the Original Class Certificate Principal Balance of the Class
AV-2 Certificates) in that certain beneficial ownership interest evidenced by
all the Class AV-2 Certificates in the Trust Fund created pursuant to a Pooling
and Servicing Agreement, dated as specified above (the "Agreement"), among
Merrill Lynch Mortgage Investors, Inc. (hereinafter called the "Depositor,"
which term includes any successor entity under the Agreement), Credit-Based
Asset Servicing and Securitization LLC (the "Seller"), the Servicer and the
Trustee, a summary of certain of the pertinent provisions of which is set forth
hereafter. To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.

      Pursuant to the terms of the Agreement, distributions will be made on the
25th day of each month or, if such 25th day is not a Business Day, the Business
Day immediately following (a "Distribution Date"), commencing on the first
Distribution Date specified above, to the Person in whose name this Certificate
is registered on the Business Day immediately preceding such Distribution Date
(the "Record Date"), from funds in the Distribution Account in an amount equal
to the product of the Percentage Interest evidenced by this Certificate and the
amount required to be distributed to the Holders of Class AV-2 Certificates on
such Distribution Date pursuant to the Agreement provided, however, that if any
Class AV-2 Certificate becomes a Definitive Certificate, the Record Date for
such Certificate will be the last Business Day of the month immediately
preceding the month in which the related Distribution Date occurs.

      All distributions to the Holder of this Certificate under the Agreement
will be made or caused to be made by or on behalf of the Trustee by wire
transfer in immediately available funds to the account of the Person entitled
thereto if such Person shall have so notified the Certificate Registrar in
writing at least five Business Days prior to the Record Date immediately prior
to

                                     A-3-2
<PAGE>
such Distribution Date and is the registered owner of Class AV-2 Certificates
the aggregate Initial Certificate Principal Balance of which is in excess of
$5,000,000, or by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register, provided that the Certificate Registrar may deduct a reasonable wire
transfer fee from any payment made by wire transfer. Notwithstanding the above,
the final distribution on this Certificate will be made after due notice by the
Trustee of the pendency of such distribution and only upon presentation and
surrender of this Certificate at the office or agency appointed by the Trustee
for that purpose as provided in the Agreement.

      The Class AV-2 Pass-Through Rate on each Distribution Date will be a rate
per annum equal to the least of (i) LIBOR as of the related LIBOR Determination
Date, plus the Class AV-2 Certificate Margin, (ii) the Group II Cap and (iii)
the Group II Maximum Rate Cap.

      This Certificate is one of a duly authorized issue of Certificates
designated as C-BASS Mortgage Loan Asset-Backed Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class AV-2 Certificates.

      The Class AV-2 Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

      The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee, the Seller and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicer, the Seller and the Trustee with the consent of the Holders of
Certificates entitled to the Voting Rights identified in the agreement. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange herefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.

      As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies appointed by the Trustee as provided in the Agreement, duly
endorsed by, or accompanied by an assignment in the form below or other written
instrument of transfer in form satisfactory to the Trustee and the Certificate
Registrar duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

      The Certificates are issuable in fully registered form only without
coupons in Classes and denominations specified in the Agreement. As provided in
the Agreement and subject to certain

                                     A-3-3
<PAGE>
limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.

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

      The Depositor, the Servicer, the Trustee, any Paying Agent and the
Certificate Registrar and any agent of the Depositor, the Servicer, the Trustee,
any Paying Agent or the Certificate Registrar may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and none of
the Depositor, the Servicer, the Trustee, the Certificate Registrar, any Paying
Agent nor any such agent shall be affected by notice to the contrary.

      The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant to
the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the Trust
Fund of all Mortgage Loans and all property acquired in respect of such Mortgage
Loans. The Agreement permits, but does not require, the party designated in the
Agreement to purchase from the Trust Fund all 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
Principal Balance of the Mortgage Loans at the time of purchase being 10% or
less of the Cut-off Date Aggregate Principal Balance.

      The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.

      Unless the certificate of authentication hereon has been executed by the
Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                     A-3-4
<PAGE>
      IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.

Dated: March 12, 2004

                                               JPMORGAN CHASE BANK, as
                                               Trustee

                                               By:______________________________
                                                      Authorized Officer

                          CERTIFICATE OF AUTHENTICATION

      This is one of the Certificates referred to in the within-mentioned
Agreement.

                                               JPMORGAN CHASE BANK,
                                                      as Certificate Registrar

                                               By:______________________________
                                                       Authorized Signatory
Date of authentication: March 12, 2004

                                     A-3-5
<PAGE>
                                  ABBREVIATIONS

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

TEN COM  -  as tenants in common           UNIF GIFT MIN ACT - Custodian
                                                               (Cust) (Minor)
TEN ENT  -  as tenants by the entireties                       under  Uniform
                                                               Gifts to Minors
JT TEN   -  as joint tenants with right                        Act
            of survivorship and not as
            tenants in common                                  _________________
                                                                     (State)

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

                                     A-3-6
<PAGE>
                                   ASSIGNMENT

      FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)

a Percentage Interest equal to ____% evidenced by the within asset-backed
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.

      I (we) further direct the Certificate Registrar to issue a new Certificate
of a like Percentage Interest and Class to the above named assignee and deliver
such Certificate to the following address:

________________________________________________________________________________

Dated:

                                           _____________________________________
                                           Signature by or on behalf of assignor

                                           _____________________________________
                                           Signature Guaranteed

                            DISTRIBUTION INSTRUCTIONS

      The assignee should include the following for purposes of distribution:

      Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to _____________________________________________________________
________________________________________________________________________________
for the account of _________________________, account number ___________, or, if
mailed by check, to ___________________________________________________________.
Applicable statements should be mailed to ______________________________________
This information is provided by _______________________________________________,
the assignee named above, or ____________________________________, as its agent.

                                     A-3-7
<PAGE>
                                   EXHIBIT A-4

                        [FORM OF CLASS AV-3 CERTIFICATE]

      UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
      THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
      TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
      AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN
      SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
      (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
      REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE,
      OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
      INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
      HEREIN.

      FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS
      BENEFICIAL OWNERSHIP OF A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
      INVESTMENT CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS
      860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
      "CODE") AND CERTAIN OTHER PROPERTY.

                 C-BASS MORTGAGE LOAN ASSET-BACKED CERTIFICATES
                           SERIES 2004-CB2, CLASS AV-3

evidencing a beneficial ownership interest in a portion of a Trust Fund
consisting primarily of a pool of conventional fixed-rate and adjustable-rate
one- to four-family first and second lien mortgage loans formed and sold by

                     MERRILL LYNCH MORTGAGE INVESTORS, INC.

<TABLE>
<S>                                             <C>
Series 2004-CB2, Class AV-3                     Original Class Certificate Principal
                                                Balance of the Class AV-3 Certificates
                                                as of the Closing Date: $34,809,000.00
Pass-Through Rate:  Variable(1)

Date of Pooling and Servicing Agreement and     Initial Certificate Principal Balance:
Cut-off Date: February 1, 2004                  $34,809,000.00
First Distribution Date:  March 25, 2004        Servicer: Litton Loan Servicing LP

No.                                             Trustee: JPMorgan Chase Bank
</TABLE>

----------
(1)   Subject to a cap as described in the Agreement

                                     A-4-1
<PAGE>
CUSIP: 12489W HW 7                                  Closing Date: March 12, 2004
ISIN: US12489WHW73

      DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
      CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
      OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE LESS
      THAN THE AMOUNT SHOWN ABOVE.

      THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
      MERRILL LYNCH MORTGAGE INVESTORS, INC., THE SERVICER, THE TRUSTEE OR ANY
      OF THEIR AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED BY ANY AGENCY OR
      INSTRUMENTALITY OF THE UNITED STATES.

      This certifies that CEDE & CO. is the registered owner of a Percentage
Interest (obtained by dividing the Initial Certificate Principal Balance of this
Certificate by the Original Class Certificate Principal Balance of the Class
AV-3 Certificates) in that certain beneficial ownership interest evidenced by
all the Class AV-3 Certificates in the Trust Fund created pursuant to a Pooling
and Servicing Agreement, dated as specified above (the "Agreement"), among
Merrill Lynch Mortgage Investors, Inc. (hereinafter called the "Depositor,"
which term includes any successor entity under the Agreement), Credit-Based
Asset Servicing and Securitization LLC (the "Seller"), the Servicer and the
Trustee, a summary of certain of the pertinent provisions of which is set forth
hereafter. To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.

      Pursuant to the terms of the Agreement, distributions will be made on the
25th day of each month or, if such 25th day is not a Business Day, the Business
Day immediately following (a "Distribution Date"), commencing on the first
Distribution Date specified above, to the Person in whose name this Certificate
is registered on the Business Day immediately preceding such Distribution Date
(the "Record Date"), from funds in the Distribution Account in an amount equal
to the product of the Percentage Interest evidenced by this Certificate and the
amount required to be distributed to the Holders of Class AV-3 Certificates on
such Distribution Date pursuant to the Agreement provided, however, that if any
Class AV-3 Certificate becomes a Definitive Certificate, the Record Date for
such Certificate will be the last Business Day of the month immediately
preceding the month in which the related Distribution Date occurs.

      All distributions to the Holder of this Certificate under the Agreement
will be made or caused to be made by or on behalf of the Trustee by wire
transfer in immediately available funds to the account of the Person entitled
thereto if such Person shall have so notified the Certificate Registrar in
writing at least five Business Days prior to the Record Date immediately prior
to

                                     A-4-2
<PAGE>
such Distribution Date and is the registered owner of Class AV-3 Certificates
the aggregate Initial Certificate Principal Balance of which is in excess of
$5,000,000, or by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register, provided that the Certificate Registrar may deduct a reasonable wire
transfer fee from any payment made by wire transfer. Notwithstanding the above,
the final distribution on this Certificate will be made after due notice by the
Trustee of the pendency of such distribution and only upon presentation and
surrender of this Certificate at the office or agency appointed by the Trustee
for that purpose as provided in the Agreement.

      The Class AV-3 Pass-Through Rate on each Distribution Date will be a rate
per annum equal to the least of (i) LIBOR as of the related LIBOR Determination
Date, plus the Class AV-3 Certificate Margin, (ii) the Group II Cap and (iii)
the Group II Maximum Rate Cap.

      This Certificate is one of a duly authorized issue of Certificates
designated as C-BASS Mortgage Loan Asset-Backed Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class AV-3 Certificates.

      The Class AV-3 Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

      The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee, the Seller and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicer, the Seller and the Trustee with the consent of the Holders of
Certificates entitled to the Voting Rights identified in the agreement. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange herefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.

      As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies appointed by the Trustee as provided in the Agreement, duly
endorsed by, or accompanied by an assignment in the form below or other written
instrument of transfer in form satisfactory to the Trustee and the Certificate
Registrar duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

      The Certificates are issuable in fully registered form only without
coupons in Classes and denominations specified in the Agreement. As provided in
the Agreement and subject to certain

                                     A-4-3
<PAGE>
limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.

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

      The Depositor, the Servicer, the Trustee, any Paying Agent and the
Certificate Registrar and any agent of the Depositor, the Servicer, the Trustee,
any Paying Agent or the Certificate Registrar may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and none of
the Depositor, the Servicer, the Trustee, the Certificate Registrar, any Paying
Agent nor any such agent shall be affected by notice to the contrary.

      The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant to
the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the Trust
Fund of all Mortgage Loans and all property acquired in respect of such Mortgage
Loans. The Agreement permits, but does not require, the party designated in the
Agreement to purchase from the Trust Fund all 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
Principal Balance of the Mortgage Loans at the time of purchase being 10% or
less of the Cut-off Date Aggregate Principal Balance.

      The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.

      Unless the certificate of authentication hereon has been executed by the
Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                     A-4-4
<PAGE>
      IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.

Dated: March 12, 2004

                                           JPMORGAN CHASE BANK, as
                                           Trustee

                                           By: _________________________________
                                                    Authorized Officer

                          CERTIFICATE OF AUTHENTICATION

      This is one of the Certificates referred to in the within-mentioned
Agreement.

                                           JPMORGAN CHASE BANK,
                                              as Certificate Registrar

                                           By: _________________________________
                                                    Authorized Signatory

Date of authentication: March 12, 2004

                                     A-4-5
<PAGE>
                                  ABBREVIATIONS

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

TEN COM - as tenants in common              UNIF GIFT MIN ACT -  Custodian
                                                                 (Cust) (Minor)
TEN ENT - as tenants by the entireties                           under Uniform
                                                                 Gifts to Minors
JT TEN  - as joint tenants with right of                         Act
          survivorship and not as tenants                        _______________
          in common                                                  (State)

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

                                     A-4-6
<PAGE>
                                   ASSIGNMENT

      FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto (Please print or typewrite name, address including postal zip
code, and Taxpayer Identification Number of assignee)
________________________________________________________________________________
________________________________________________________________________________
a Percentage Interest equal to ____% evidenced by the within asset-backed
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.

      I (we) further direct the Certificate Registrar to issue a new Certificate
of a like Percentage Interest and Class to the above named assignee and deliver
such Certificate to the following address:

________________________________________________________________________________

Dated:

                                         _____________________________________
                                         Signature by or on behalf of assignor

                                         _____________________________________
                                         Signature Guaranteed

                            DISTRIBUTION INSTRUCTIONS

      The assignee should include the following for purposes of distribution:

      Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to _____________________________________________________________
________________________________________________________________________________
for the account of _____________________________, account number ________, or,
if mailed by check, to ________________________________________________________.
Applicable statements should be mailed to ______________________________________
_____________________________________________ This information is provided by
_____________________________________________, the assignee named above, or
_____________________________________________, as its agent.

                                     A-4-7
<PAGE>
                                   EXHIBIT A-5

                        [FORM OF CLASS A-IO CERTIFICATE]

      UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
      THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
      TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
      AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN
      SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
      (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
      REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE,
      OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
      INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
      HEREIN.

      FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS
      BENEFICIAL OWNERSHIP OF A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
      INVESTMENT CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS
      860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
      "CODE").

                 C-BASS MORTGAGE LOAN ASSET-BACKED CERTIFICATES
                           SERIES 2004-CB2, CLASS A-IO

evidencing a beneficial ownership interest in a portion of a Trust Fund
consisting primarily of a pool of conventional fixed-rate and adjustable-rate
one- to four-family first and second lien mortgage loans formed and sold by

                     MERRILL LYNCH MORTGAGE INVESTORS, INC.

<TABLE>
<S>                                             <C>
Series 2004-CB2, Class A-IO                     Original Class Certificate Principal Balance of
                                                the Class A-IO Certificates as of the Closing
                                                Date: $418,649,977.00
Pass-Through Rate: 1.50%(1)
Date of Pooling and Servicing Agreement and     Initial Notional Balance: $418,649,977.00
Cut-off Date: February 1, 2004
First Distribution Date:  March 25, 2004        Servicer: Litton Loan Servicing LP

No.                                             Trustee: JPMorgan Chase Bank

CUSIP: 12489W HX 5                              Closing Date: March 12, 2004
</TABLE>

----------
(1)   Subject to a cap as described in the Agreement.

                                     A-5-1
<PAGE>
ISIN: US12489WHX56

      THE NOTIONAL AMOUNT OF THIS CERTIFICATE WILL BE REDUCED IN THE MANNER
      DESCRIBED IN THE AGREEMENT. ACCORDINGLY, THE OUTSTANDING NOTIONAL AMOUNT
      OF THIS CERTIFICATE AT ANY TIME MAY BE LESS THAN THE INITIAL NOTIONAL
      AMOUNT REPRESENTED HEREBY.

      THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
      MERRILL LYNCH MORTGAGE INVESTORS, INC., THE SERVICER, THE TRUSTEE OR ANY
      OF THEIR AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED BY ANY AGENCY OR
      INSTRUMENTALITY OF THE UNITED STATES.

      This certifies that CEDE & CO. is the registered owner of a Percentage
Interest (obtained by dividing the Initial Notional Amount of this Certificate
by the Original Class A-IO Notional Amount) in that certain beneficial ownership
interest evidenced by all the Class A-IO Certificates in the Trust Fund created
pursuant to a Pooling and Servicing Agreement, dated as specified above (the
"Agreement"), among Merrill Lynch Mortgage Investors, Inc. (hereinafter called
the "Depositor," which term includes any successor entity under the Agreement),
Credit-Based Asset Servicing and Securitization LLC (the "Seller"), the Servicer
and the Trustee a summary of certain of the pertinent provisions of which is set
forth hereafter. To the extent not defined herein, the capitalized terms used
herein have the meanings assigned in the Agreement. This Certificate is issued
under and is subject to the terms, provisions and conditions of the Agreement,
to which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.

      Pursuant to the terms of the Agreement, distributions will be made on the
25th day of each month or, if such 25th day is not a Business Day, the Business
Day immediately following (a "Distribution Date"), commencing on the first
Distribution Date specified above, to the Person in whose name this Certificate
is registered on the last Business Day of the month immediately preceding the
month in which the related Distribution Date occurs (the "Record Date"), from
funds in the Distribution Account in an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount required to be
distributed to the Holders of Class A-IO Certificates on such Distribution Date
pursuant to the Agreement.

      All distributions to the Holder of this Certificate under the Agreement
will be made or caused to be made by or on behalf of the Trustee by wire
transfer in immediately available funds to the account of the Person entitled
thereto if such Person shall have so notified the Certificate Registrar in
writing at least five Business Days prior to the Record Date immediately prior
to such Distribution Date and is the registered owner of Class A-IO Certificates
the aggregate Initial Notional Amount of which is in excess of $5,000,000, or by
check mailed by first class mail to the address of the Person entitled thereto,
as such name and address shall appear on the Certificate Register, provided that
the Certificate Registrar may deduct a reasonable wire transfer fee from any
payment made by wire transfer. Notwithstanding the above, the final distribution
on this Certificate will be made after due notice by the Trustee of the pendency
of such

                                     A-5-2
<PAGE>
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose as provided in the
Agreement.

      The Notional Amount of the Class A-IO Certificates is comprised of two
components, the Component A-IO-1 and the Component A-IO-2. The Pass-Through Rate
will be equal to (i) on or prior to the Distribution Date in August 2006, 1.50%
per annum on each Component of the Class A-IO Certificates, subject, in the case
of Component A-IO-1, to a cap equal to the Group I Net Rate, and, in the case of
the Component A-IO-2, to a cap equal to the Group II Net Rate, and (ii) after
the Distribution Date in August 2006, 0%.

      This Certificate is not entitled to distributions of principal.

      This Certificate is one of a duly authorized issue of Certificates
designated as C-BASS Mortgage Loan Asset-Backed Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class A-IO Certificates.

      The Class A-IO Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

      The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee, the Seller and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicer, the Seller and the Trustee with the consent of the Holders of
Certificates entitled to the Voting Rights identified in the agreement. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange herefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.

      As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies appointed by the Trustee as provided in the Agreement, duly
endorsed by, or accompanied by an assignment in the form below or other written
instrument of transfer in form satisfactory to the Trustee and the Certificate
Registrar duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

      The Certificates are issuable in fully registered form only without
coupons in Classes and denominations 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

                                     A-5-3
<PAGE>
in authorized denominations evidencing the same aggregate Percentage Interest,
as requested by the Holder surrendering the same.

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

      The Depositor, the Servicer, the Trustee, any Paying Agent and the
Certificate Registrar and any agent of the Depositor, the Servicer, the Trustee,
any Paying Agent or the Certificate Registrar may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and none of
the Depositor, the Servicer, the Trustee, the Certificate Registrar, any Paying
Agent nor any such agent shall be affected by notice to the contrary.

      The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant to
the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the Trust
Fund of all Mortgage Loans and all property acquired in respect of such Mortgage
Loans. The Agreement permits, but does not require, the party designated in the
Agreement to purchase from the Trust Fund all 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
Principal Balance of the Mortgage Loans at the time of purchase being 10% or
less of the Cut-off Date Aggregate Principal Balance.

      The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.

      Unless the certificate of authentication hereon has been executed by the
Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                     A-5-4
<PAGE>
      IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.

Dated: March 12, 2004

                                             JPMORGAN CHASE BANK, as
                                             Trustee

                                             By: _______________________________
                                                      Authorized Officer

                          CERTIFICATE OF AUTHENTICATION

      This is one of the Certificates referred to in the within-mentioned
Agreement.

                                             JPMORGAN CHASE BANK,
                                                as Certificate Registrar

                                             By: _______________________________
                                                      Authorized Signatory

Date of authentication: March 12, 2004

                                     A-5-5
<PAGE>
                                  ABBREVIATIONS

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

TEN COM - as tenants in common               UNIF GIFT MIN ACT - Custodian
                                                                 (Cust) (Minor)
TEN ENT - as tenants by the entireties                           under Uniform
                                                                 Gifts to Minors
JT TEN  - as joint  tenants  with right of                       Act
          survivorship  and not as tenants                       _______________
          in common                                                  (State)

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

                                     A-5-6
<PAGE>
                                   ASSIGNMENT

      FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)

a Percentage Interest equal to ____% evidenced by the within asset-backed
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.

      I (we) further direct the Certificate Registrar to issue a new Certificate
of a like Percentage Interest and Class to the above named assignee and deliver
such Certificate to the following address:

________________________________________________________________________________

Dated:

                                      _____________________________________
                                      Signature by or on behalf of assignor

                                      _____________________________________
                                      Signature Guaranteed

                            DISTRIBUTION INSTRUCTIONS

      The assignee should include the following for purposes of distribution:

Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to _____________________________________________________________
___________________________________________________________ for the account of
_____________________________________, account number _____________, or, if
mailed by check, to ______________________________________________. Applicable
statements should be mailed to _________________________________________________
This information is provided by ______________________________________, the
assignee named above, or _____________________________________________, as its
agent.

                                     A-5-7
<PAGE>
                                   EXHIBIT B-1

                         [FORM OF CLASS B-1 CERTIFICATE]

      UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
      THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
      TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
      AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN
      SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
      (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
      REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE,
      OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
      INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
      HEREIN.

      THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A, CLASS
      M-1, CLASS M-2 AND CLASS M-3 CERTIFICATES AS DESCRIBED IN THE AGREEMENT
      REFERRED TO HEREIN.

      EXCEPT AS PROVIDED IN SECTION 5.02(D) OF THE AGREEMENT REFERRED TO HEREIN,
      THIS CERTIFICATE MAY NOT BE PURCHASED BY OR TRANSFERRED TO ANY PERSON THAT
      HAS NOT DELIVERED A REPRESENTATION LETTER STATING EITHER (A) THAT THE
      TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT
      SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974,
      AS AMENDED ("ERISA"), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF
      1986, AS AMENDED (THE "CODE"), OR PROVISIONS OF OTHER FEDERAL, STATE OR
      LOCAL LAW WHICH IS, TO A MATERIAL EXTENT, SIMILAR TO THE FOREGOING
      PROVISIONS OF ERISA OR THE CODE (COLLECTIVELY, A "PLAN"), AND IS NOT
      ACTING ON BEHALF OF OR INVESTING THE ASSETS OF A PLAN OR (B) THE
      TRANSFEREE IS AN INSURANCE COMPANY AND THE SOURCE OF FUNDS USED TO
      PURCHASE THIS CERTIFICATE IS AN "INSURANCE COMPANY GENERAL ACCOUNT" (AS
      SUCH TERM IS DEFINED IN SECTION V(E) OF PROHIBITED TRANSACTION CLASS
      EXEMPTION 95-60 ("PTCE 95-60")) AND THAT THE PURCHASE AND HOLDING OF THE
      CERTIFICATE ARE COVERED UNDER SECTIONS I AND III OF PTCE 95-60. EACH
      PERSON WHO ACQUIRES THIS CERTIFICATE OR ANY INTEREST THEREIN SHALL BE
      DEEMED TO HAVE MADE THE REPRESENTATIONS REQUIRED BY THE REPRESENTATION
      LETTER REFERRED TO IN THE PRECEDING SENTENCE, UNLESS

                                     B-1-1
<PAGE>
      SUCH PERSON SHALL HAVE PROVIDED SUCH REPRESENTATION LETTER REFERRED TO IN
      THE PRECEDING SENTENCE TO THE CERTIFICATE REGISTRAR. THE AGREEMENT
      PROVIDES THAT ANY ATTEMPTED OR PURPORTED TRANSFER IN VIOLATION OF THESE
      TRANSFER RESTRICTIONS WILL BE NULL AND VOID AND WILL VEST NO RIGHTS IN ANY
      PURPORTED TRANSFEREE.

      FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS
      BENEFICIAL OWNERSHIP OF A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
      INVESTMENT CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS
      860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
      "CODE") AND CERTAIN OTHER PROPERTY.

                                     B-1-2
<PAGE>
                 C-BASS MORTGAGE LOAN ASSET-BACKED CERTIFICATES
                           SERIES 2004-CB2, CLASS B-1

evidencing a beneficial ownership interest in a portion of a Trust Fund
consisting primarily of a pool of conventional fixed-rate and adjustable-rate
one- to four-family first and second lien mortgage loans formed and sold by

                     MERRILL LYNCH MORTGAGE INVESTORS, INC.

<TABLE>
<S>                                            <C>
Series 2004-CB2, Class B-1                     Original Class Certificate Principal Balance of
                                               the Class B-1 Certificates as of the Closing
                                               Date: $5,233,000.00
Pass-Through Rate: Variable(1)

Date of Pooling and Servicing Agreement and    Initial Certificate Principal Balance:
Cut-off Date: February 1, 2004                 $5,233,000.00
First Distribution Date: March 25, 2004        Servicer: Litton Loan Servicing LP

No.                                            Trustee: JPMorgan Chase Bank

CUSIP: 12489W JB 1                             Closing Date: March 12, 2004

ISIN: US12489WJB19
</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.

      THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
      MERRILL LYNCH MORTGAGE INVESTORS, INC., THE SERVICER, THE TRUSTEE OR ANY
      OF THEIR AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED BY ANY AGENCY OR
      INSTRUMENTALITY OF THE UNITED STATES.

      This certifies that CEDE & CO. is the registered owner of a Percentage
Interest (obtained by dividing the Initial Certificate Principal Balance of this
Certificate by the Original Class Certificate Principal Balance of the Class B-1
Certificates) in that certain beneficial ownership interest evidenced by all the
Class B-1 Certificates in the Trust Fund created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among Merrill
Lynch Mortgage Investors, Inc. (hereinafter called the "Depositor," which term
includes any successor entity under the Agreement), Credit-Based Asset Servicing
and Securitization LLC (the "Seller"), the Servicer and the Trustee, a summary
of certain of the pertinent provisions of which is set forth hereafter. To the
extent not defined herein, the capitalized terms used herein

----------
(1)   Subject to a cap as described in the Agreement.

                                     B-1-3
<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 (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"), from funds in the Distribution Account in an amount equal
to the product of the Percentage Interest evidenced by this Certificate and the
amount required to be distributed to the Holders of Class B-1 Certificates on
such Distribution Date pursuant to the Agreement provided, however, that if any
Class B-1 Certificate becomes a Definitive Certificate, the Record Date for such
Certificate will be the last Business Day of the month immediately preceding the
month in which the related Distribution Date occurs.

      All distributions to the Holder of this Certificate under the Agreement
will be made or caused to be made by or on behalf of the Trustee by wire
transfer in immediately available funds to the account of the Person entitled
thereto if such Person shall have so notified the Certificate Registrar in
writing at least five Business Days prior to the Record Date immediately prior
to such Distribution Date and is the registered owner of Class B-1 Certificates
the aggregate Initial Certificate Principal Balance of which is in excess of
$5,000,000, or by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register, provided that the Certificate Registrar may deduct a reasonable wire
transfer fee from any payment made by wire transfer. Notwithstanding the above,
the final distribution on this Certificate will be made after due notice by the
Trustee of the pendency of such distribution and only upon presentation and
surrender of this Certificate at the office or agency appointed by the Trustee
for that purpose as provided in the Agreement.

      The Class B-1 Pass-Through Rate on each Distribution Date will be a rate
per annum equal to the least of (i) LIBOR as of the related LIBOR Determination
Date, plus the Class B-1 Certificate Margin, (ii) the Subordinate Rate Cap and
(iii) the Subordinate Maximum Rate Cap.

      This Certificate is one of a duly authorized issue of Certificates
designated as C-BASS Mortgage Loan Asset-Backed Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class B-1 Certificates.

      The Class B-1 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.

      This Certificate is subordinated in right of payment to the Class A, Class
M-1, Class M-2 and Class M-3 Certificates as described in the Agreement.

                                     B-1-4
<PAGE>
      The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee, the Seller and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicer, the Seller and the Trustee with the consent of the Holders of
Certificates entitled to the Voting Rights identified in the agreement. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange herefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.

      As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies appointed by the Trustee as provided in the Agreement, duly
endorsed by, or accompanied by an assignment in the form below or other written
instrument of transfer in form satisfactory to the Trustee and the Certificate
Registrar duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

      The Certificates are issuable in fully registered form only without
coupons in Classes and denominations specified in the Agreement. As provided in
the Agreement and subject to certain limitations therein set forth, Certificates
are exchangeable for new Certificates of the same Class in authorized
denominations evidencing the same aggregate Percentage Interest, as requested by
the Holder surrendering the same.

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

      The Depositor, the Servicer, the Trustee, any Paying Agent and the
Certificate Registrar and any agent of the Depositor, the Servicer, the Trustee,
any Paying Agent or the Certificate Registrar may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and none of
the Depositor, the Servicer, the Trustee, the Certificate Registrar, any Paying
Agent nor any such agent shall be affected by notice to the contrary.

      The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant to
the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the Trust
Fund of all Mortgage Loans and all property acquired in respect of such Mortgage
Loans. The Agreement permits, but does not require, the party designated in the
Agreement to purchase from the Trust Fund all Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as

                                     B-1-5
<PAGE>
provided in the Agreement. The exercise of such right will effect early
retirement of the Certificates; however, such right to purchase is subject to
the aggregate Principal Balance of the Mortgage Loans at the time of purchase
being 10% or less of the Cut-off Date Aggregate Principal Balance.

      The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.

      Unless the certificate of authentication hereon has been executed by the
Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                     B-1-6
<PAGE>
      IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.

Dated: March 12, 2004

                                           JPMORGAN CHASE BANK, as
                                           Trustee

                                           By: _________________________________
                                                    Authorized Officer

                          CERTIFICATE OF AUTHENTICATION

      This is one of the Certificates referred to in the within-mentioned
Agreement.

                                           JPMORGAN CHASE BANK,
                                              as Certificate Registrar

                                           By: _________________________________
                                                    Authorized Signatory

Date of authentication: March 12, 2004

                                     B-1-7
<PAGE>
                                  ABBREVIATIONS

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

TEN COM - as tenants in common              UNIF GIFT MIN ACT - Custodian
                                                                (Cust) (Minor)
TEN ENT - as tenants by the entireties                          under Uniform
                                                                Gifts to Minors
JT TEN  - as joint tenants with right of                        Act
          survivorship and not as tenants
          in common                                             ________________
                                                                     (State)

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

                                     B-1-8
<PAGE>
                                   ASSIGNMENT

      FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)

a Percentage Interest equal to ____% evidenced by the within asset-backed
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.

      I (we) further direct the Certificate Registrar to issue a new Certificate
of a like Percentage Interest and Class to the above named assignee and deliver
such Certificate to the following address:

________________________________________________________________________________

Dated:

                                       _____________________________________
                                       Signature by or on behalf of assignor

                                       _____________________________________
                                       Signature Guaranteed

                            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-1-9
<PAGE>
                                   EXHIBIT B-2

                         [FORM OF CLASS B-2 CERTIFICATE]

      UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
      THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
      TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
      AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN
      SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
      (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
      REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE,
      OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
      INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
      HEREIN.

      THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A, CLASS
      M-1, CLASS M-2, CLASS M-3 AND CLASS B-1 CERTIFICATES AS DESCRIBED IN THE
      AGREEMENT REFERRED TO HEREIN.

      THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
      AS AMENDED (THE "1933 ACT"), OR THE SECURITIES LAWS OF ANY STATE. ANY
      RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE WITHOUT SUCH
      REGISTRATION MAY BE MADE ONLY IN A TRANSACTION THAT DOES NOT REQUIRE SUCH
      REGISTRATION AND IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF THE
      AGREEMENT REFERRED TO HEREIN.

      EXCEPT AS PROVIDED IN SECTION 5.02(D) OF THE AGREEMENT EXCEPT AS PROVIDED
      IN SECTION 5.02(D) OF THE AGREEMENT REFERRED TO HEREIN, THIS CERTIFICATE
      MAY NOT BE PURCHASED BY OR TRANSFERRED TO ANY PERSON THAT HAS NOT
      DELIVERED A REPRESENTATION LETTER STATING EITHER (A) THAT THE TRANSFEREE
      IS NOT AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT SUBJECT TO
      TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
      ("ERISA"), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS
      AMENDED (THE "CODE"), OR PROVISIONS OF OTHER FEDERAL, STATE OR LOCAL LAW
      WHICH IS, TO A MATERIAL EXTENT, SIMILAR TO THE FOREGOING PROVISIONS OF
      ERISA OR THE CODE (COLLECTIVELY, A "PLAN"), AND IS NOT ACTING ON BEHALF OF
      OR INVESTING THE ASSETS OF A PLAN OR (B) THE TRANSFEREE IS AN INSURANCE
      COMPANY

                                     B-2-1
<PAGE>
      AND THE SOURCE OF FUNDS USED TO PURCHASE THIS CERTIFICATE IS AN "INSURANCE
      COMPANY GENERAL ACCOUNT" (AS SUCH TERM IS DEFINED IN SECTION V(E) OF
      PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 ("PTCE 95-60")) AND THAT THE
      PURCHASE AND HOLDING OF THE CERTIFICATE ARE COVERED UNDER SECTIONS I AND
      III OF PTCE 95-60. EACH PERSON WHO ACQUIRES THIS CERTIFICATE OR ANY
      INTEREST THEREIN SHALL BE DEEMED TO HAVE MADE THE REPRESENTATIONS REQUIRED
      BY THE REPRESENTATION LETTER REFERRED TO IN THE PRECEDING SENTENCE, UNLESS
      SUCH PERSON SHALL HAVE PROVIDED SUCH REPRESENTATION LETTER REFERRED TO IN
      THE PRECEDING SENTENCE TO THE CERTIFICATE REGISTRAR. THE AGREEMENT
      PROVIDES THAT ANY ATTEMPTED OR PURPORTED TRANSFER IN VIOLATION OF THESE
      TRANSFER RESTRICTIONS WILL BE NULL AND VOID AND WILL VEST NO RIGHTS IN ANY
      PURPORTED TRANSFEREE.

      FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS
      BENEFICIAL OWNERSHIP OF A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
      INVESTMENT CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS
      860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
      "CODE") AND CERTAIN OTHER PROPERTY.

                                     B-2-2
<PAGE>
                 C-BASS MORTGAGE LOAN ASSET-BACKED CERTIFICATES
                           SERIES 2004-CB2, CLASS B-2

evidencing a beneficial ownership interest in a portion of a Trust Fund
consisting primarily of a pool of conventional fixed-rate and adjustable-rate
one- to four-family first and second lien mortgage loans formed and sold by

                                       MERRILL LYNCH MORTGAGE INVESTORS, INC.

<TABLE>
<S>                                            <C>
Series 2004-CB2, Class B-2                     Original Class Certificate Principal Balance of
                                               the Class B-2 Certificates as of the Closing
                                               Date: $5,233,000.00
Pass-Through Rate: Variable(1)

Date of Pooling and Servicing Agreement and    Initial Certificate Principal Balance:
Cut-off Date: Febraury 1, 2004
First Distribution Date: March 25, 2004        Servicer: Litton Loan Servicing LP
                                               $5,233,000.00
No.                                            Trustee: JPMorgan Chase Bank

CUSIP: 12489W JC 9                             Closing Date:  March 12, 2004

ISIN: US12489WJC91
</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.

      THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
      MERRILL LYNCH MORTGAGE INVESTORS, INC., THE SERVICER, THE TRUSTEE OR ANY
      OF THEIR AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED BY ANY AGENCY OR
      INSTRUMENTALITY OF THE UNITED STATES.

      This certifies that CEDE & CO. is the registered owner of a Percentage
Interest (obtained by dividing the Initial Certificate Principal Balance of this
Certificate by the Original Class Certificate Principal Balance of the Class B-2
Certificates) in that certain beneficial ownership interest evidenced by all the
Class B-2 Certificates in the Trust Fund created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among Merrill
Lynch Mortgage Investors, Inc. (hereinafter called the "Depositor," which term
includes any successor entity under the Agreement), Credit-Based Asset Servicing
and Securitization LLC (the "Seller"), the Servicer and the Trustee, a summary
of certain of the pertinent provisions of which is set forth hereafter. To the
extent not defined herein, the capitalized terms used herein have the meanings
assigned in the Agreement. This Certificate is issued under and is subject to

----------
(1)   Subject to a cap as described in the Agreement.

                                     B-2-3
<PAGE>
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 Business Day immediately preceding such Distribution Date
(the "Record Date"), from funds in the Distribution Account in an amount equal
to the product of the Percentage Interest evidenced by this Certificate and the
amount required to be distributed to the Holders of Class B-2 Certificates on
such Distribution Date pursuant to the Agreement provided, however, that if any
Class B-2 Certificate becomes a Definitive Certificate, the Record Date for such
Certificate will be the last Business Day of the month immediately preceding the
month in which the related Distribution Date occurs.

      All distributions to the Holder of this Certificate under the Agreement
will be made or caused to be made by or on behalf of the Trustee by wire
transfer in immediately available funds to the account of the Person entitled
thereto if such Person shall have so notified the Certificate Registrar in
writing at least five Business Days prior to the Record Date immediately prior
to such Distribution Date and is the registered owner of Class B-2 Certificates
the aggregate Initial Certificate Principal Balance of which is in excess of
$5,000,000, or by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register, provided that the Certificate Registrar may deduct a reasonable wire
transfer fee from any payment made by wire transfer. Notwithstanding the above,
the final distribution on this Certificate will be made after due notice by the
Trustee of the pendency of such distribution and only upon presentation and
surrender of this Certificate at the office or agency appointed by the Trustee
for that purpose as provided in the Agreement.

      The Class B-2 Pass-Through Rate on each Distribution Date will be a rate
per annum equal to the least of (i) LIBOR as of the related LIBOR Determination
Date, plus the Class B-2 Certificate Margin, (ii) the Subordinate Rate Cap and
(iii) the Subordinate Maximum Rate Cap.

      This Certificate is one of a duly authorized issue of Certificates
designated as C-BASS Mortgage Loan Asset-Backed Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class B-2 Certificates.

      The Class B-2 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.

      This Certificate is subordinated in right of payment to the Class A, Class
M-1, Class M-2, Class M-3 and Class B-1 Certificates as described in the
Agreement.

      The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee, the

                                     B-2-4
<PAGE>
Seller and the rights of the Certificateholders under the Agreement at any time
by the Depositor, the Servicer, the Seller and the Trustee with the consent of
the Holders of Certificates entitled to the Voting Rights identified in the
agreement. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.

      As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies appointed by the Trustee as provided in the Agreement, duly
endorsed by, or accompanied by an assignment in the form below or other written
instrument of transfer in form satisfactory to the Trustee and the Certificate
Registrar duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

      The Certificates are issuable in fully registered form only without
coupons in Classes and denominations specified in the Agreement. As provided in
the Agreement and subject to certain limitations therein set forth, Certificates
are exchangeable for new Certificates of the same Class in authorized
denominations evidencing the same aggregate Percentage Interest, as requested by
the Holder surrendering the same.

      No transfer of this Certificate shall be made unless that transfer is made
pursuant to an effective registration statement under the 1933 Act and effective
registration or qualification under applicable state securities laws, or is made
in a transaction that does not require such registration or qualification. In
the event that a transfer is to be made without registration or qualification
(i) the Certificateholder desiring to effect the transfer and such
Certificateholder's prospective transferee shall each execute a representation
letter in the form described by the Agreement certifying to the Certificate
Registrar the facts surrounding the transfer, and (ii) unless such transfer is
made in reliance upon Rule 144A under the 1933 Act, the Depositor and the
Certificate Registrar may require an Opinion of Counsel satisfactory to them
that such transfer may be made without such registration or qualification, which
Opinion of Counsel shall not be an expense of the Depositor, the Trustee or the
Certificate Registrar, in their respective capacities as such. None of the
Depositor, the Certificate Registrar or the Trustee is obligated to register or
qualify the Class of Certificates specified on the face hereof under the 1933
Act or any other securities law or to take any action not otherwise required
under the Agreement to permit the transfer of such Certificates without
registration or qualification. Any such Certificateholder desiring to effect
such transfer shall, and does hereby agree to, indemnify the Trustee, the
Depositor, the Certificate Registrar and the 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. Each Person who acquires this Certificate or an
interest therein shall be deemed to have made the representations required by
the representation letter referred to in this paragraph, unless such Person
shall have provided such representation letter referred to in this paragraph to
the Certificate Registrar.

                                     B-2-5
<PAGE>
      No service charge will be made for any such registration of transfer or
exchange of Certificates, but the Certificate Registrar may require payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any transfer or exchange of Certificates.

      The Depositor, the Servicer, the Trustee, any Paying Agent and the
Certificate Registrar and any agent of the Depositor, the Servicer, the Trustee,
any Paying Agent or the Certificate Registrar may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and none of
the Depositor, the Servicer, the Trustee, the Certificate Registrar, any Paying
Agent nor any such agent shall be affected by notice to the contrary.

      The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant to
the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the Trust
Fund of all Mortgage Loans and all property acquired in respect of such Mortgage
Loans. The Agreement permits, but does not require, the party designated in the
Agreement to purchase from the Trust Fund all 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
Principal Balance of the Mortgage Loans at the time of purchase being 10% or
less of the Cut-off Date Aggregate Principal Balance.

      The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.

      Unless the certificate of authentication hereon has been executed by the
Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                     B-2-6
<PAGE>
      IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.

Dated: March 12, 2004

                                           JPMORGAN CHASE BANK, as
                                           Trustee

                                           By: _________________________________
                                                    Authorized Officer

                                           CERTIFICATE OF AUTHENTICATION

      This is one of the Certificates referred to in the within-mentioned
Agreement.

                                           JPMORGAN CHASE BANK,
                                              as Certificate Registrar

                                           By: _________________________________
                                                    Authorized Signatory

Date of authentication: March 12, 2004

                                     B-2-7
<PAGE>
                                  ABBREVIATIONS

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

TEN COM - as tenants in common              UNIF GIFT MIN ACT - Custodian
                                                                (Cust) (Minor)
TEN ENT - as tenants by the entireties                          under Uniform
                                                                Gifts to Minors
JT TEN  - as joint tenants with right of                        Act
          survivorship and not as tenants                       ________________
          in common                                                  (State)

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

                                     B-2-8
<PAGE>
                                   ASSIGNMENT

      FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)

a Percentage Interest equal to ____% evidenced by the within asset-backed
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.

      I (we) further direct the Certificate Registrar to issue a new Certificate
of a like Percentage Interest and Class to the above named assignee and deliver
such Certificate to the following address:

________________________________________________________________________________

Dated:

                                      _____________________________________
                                      Signature by or on behalf of assignor

                                      _____________________________________
                                      Signature Guaranteed

                            DISTRIBUTION INSTRUCTIONS

      The assignee should include the following for purposes of distribution:

Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to _____________________________________________________________
________________________________________________________________________________
for the account of ________________________________, account number ___________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to ______________________________________
This information is provided by _______________________________________________,
the assignee named above, or __________________________________________________,
as its agent.

                                     B-2-9
<PAGE>
                                   EXHIBIT B-3

                         [FORM OF CLASS B-3 CERTIFICATE]

      UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
      THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
      TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
      AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN
      SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
      (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
      REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE,
      OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
      INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
      HEREIN.

      THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A, CLASS
      M-1, CLASS M-2, CLASS M-3, CLASS B-1 AND CLASS B-2 CERTIFICATES AS
      DESCRIBED IN THE AGREEMENT REFERRED TO HEREIN.

      THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
      AS AMENDED (THE "1933 ACT"), OR THE SECURITIES LAWS OF ANY STATE. ANY
      RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE WITHOUT SUCH
      REGISTRATION MAY BE MADE ONLY IN A TRANSACTION THAT DOES NOT REQUIRE SUCH
      REGISTRATION AND IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF THE
      AGREEMENT REFERRED TO HEREIN.

      EXCEPT AS PROVIDED IN SECTION 5.02(D) OF THE AGREEMENT REFERRED TO HEREIN,
      THIS CERTIFICATE MAY NOT BE PURCHASED BY OR TRANSFERRED TO ANY PERSON THAT
      HAS NOT DELIVERED A REPRESENTATION LETTER STATING EITHER (A) THAT THE
      TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT
      SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974,
      AS AMENDED ("ERISA"), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF
      1986, AS AMENDED (THE "CODE"), OR PROVISIONS OF OTHER FEDERAL, STATE OR
      LOCAL LAW WHICH IS, TO A MATERIAL EXTENT, SIMILAR TO THE FOREGOING
      PROVISIONS OF ERISA OR THE CODE (COLLECTIVELY, A "PLAN"), AND IS NOT
      ACTING ON BEHALF OF OR INVESTING THE ASSETS OF A PLAN OR (B) THE
      TRANSFEREE IS AN INSURANCE COMPANY AND THE SOURCE OF FUNDS USED TO
      PURCHASE THIS

                                     B-3-1
<PAGE>
      CERTIFICATE IS AN "INSURANCE COMPANY GENERAL ACCOUNT" (AS SUCH TERM IS
      DEFINED IN SECTION V(E) OF PROHIBITED TRANSACTION CLASS EXEMPTION 95-60
      ("PTCE 95-60")) AND THAT THE PURCHASE AND HOLDING OF THE CERTIFICATE ARE
      COVERED UNDER SECTIONS I AND III OF PTCE 95-60. EACH PERSON WHO ACQUIRES
      THIS CERTIFICATE OR ANY INTEREST THEREIN SHALL BE DEEMED TO HAVE MADE THE
      REPRESENTATIONS REQUIRED BY THE REPRESENTATION LETTER REFERRED TO IN THE
      PRECEDING SENTENCE, UNLESS SUCH PERSON SHALL HAVE PROVIDED SUCH
      REPRESENTATION LETTER REFERRED TO IN THE PRECEDING SENTENCE TO THE
      CERTIFICATE REGISTRAR. THE AGREEMENT PROVIDES THAT ANY ATTEMPTED OR
      PURPORTED TRANSFER IN VIOLATION OF THESE TRANSFER RESTRICTIONS WILL BE
      NULL AND VOID AND WILL VEST NO RIGHTS IN ANY PURPORTED TRANSFEREE.

      FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS
      BENEFICIAL OWNERSHIP OF A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
      INVESTMENT CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS
      860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
      "CODE") AND CERTAIN OTHER PROPERTY.

                                     B-3-2
<PAGE>
                 C-BASS MORTGAGE LOAN ASSET-BACKED CERTIFICATES
                           SERIES 2004-CB2, CLASS B-3

evidencing a beneficial ownership interest in a portion of a Trust Fund
consisting primarily of a pool of conventional fixed-rate and adjustable-rate
one- to four-family first and second lien mortgage loans formed and sold by

                     MERRILL LYNCH MORTGAGE INVESTORS, INC.

<TABLE>
<S>                                            <C>
Series 2004-CB2, Class B-3                     Original Class Certificate Principal Balance of
                                               the Class B-3 Certificates as of the Closing
                                               Date: $5,233,000.00
Pass-Through Rate:  Variable(1)

Date of Pooling and Servicing Agreement and    Initial Certificate Principal Balance:
Cut-off Date: February 1, 2004                 $5,233,000.00
First Distribution Date:  March 25, 2004       Servicer: Litton Loan Servicing LP

No.                                            Trustee: JPMorgan Chase Bank

CUSIP: 12489W JD 7                             Closing Date: March 12, 2004

ISIN: US12489WJD74
</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.

      THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
      MERRILL LYNCH MORTGAGE INVESTORS, INC., THE SERVICER, THE TRUSTEE OR ANY
      OF THEIR AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED BY ANY AGENCY OR
      INSTRUMENTALITY OF THE UNITED STATES.

      This certifies that CEDE & CO. is the registered owner of a Percentage
Interest (obtained by dividing the Initial Certificate Principal Balance of this
Certificate by the Original Class Certificate Principal Balance of the Class B-3
Certificates) in that certain beneficial ownership interest evidenced by all the
Class B-3 Certificates in the Trust Fund created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among Merrill
Lynch Mortgage Investors, Inc. (hereinafter called the "Depositor," which term
includes any successor entity under the Agreement), Credit-Based Asset Servicing
and Securitization LLC (the "Seller"), the Servicer and the Trustee, a summary
of certain of the pertinent provisions of which is set forth hereafter. To the
extent not defined herein, the capitalized terms used herein have the meanings
assigned in the Agreement. This Certificate is issued under and is subject to

----------
(1)   Subject to a cap as described in the Agreement.

                                     B-3-3
<PAGE>
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 Business Day immediately preceding such Distribution Date
(the "Record Date"), from funds in the Distribution Account in an amount equal
to the product of the Percentage Interest evidenced by this Certificate and the
amount required to be distributed to the Holders of Class B-3 Certificates on
such Distribution Date pursuant to the Agreement provided, however, that if any
Class B-3 Certificate becomes a Definitive Certificate, the Record Date for such
Certificate will be the last Business Day of the month immediately preceding the
month in which the related Distribution Date occurs.

      All distributions to the Holder of this Certificate under the Agreement
will be made or caused to be made by or on behalf of the Trustee by wire
transfer in immediately available funds to the account of the Person entitled
thereto if such Person shall have so notified the Certificate Registrar in
writing at least five Business Days prior to the Record Date immediately prior
to such Distribution Date and is the registered owner of Class B-3 Certificates
the aggregate Initial Certificate Principal Balance of which is in excess of
$5,000,000, or by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register, provided that the Certificate Registrar may deduct a reasonable wire
transfer fee from any payment made by wire transfer. Notwithstanding the above,
the final distribution on this Certificate will be made after due notice by the
Trustee of the pendency of such distribution and only upon presentation and
surrender of this Certificate at the office or agency appointed by the Trustee
for that purpose as provided in the Agreement.

      The Class B-3 Pass-Through Rate on each Distribution Date will be a rate
per annum equal to the least of (i) LIBOR as of the related LIBOR Determination
Date, plus the Class B-3 Certificate Margin, (ii) the Subordinate Rate Cap and
(iii) the Subordinate Maximum Rate Cap.

      This Certificate is one of a duly authorized issue of Certificates
designated as C-BASS Mortgage Loan Asset-Backed Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class B-3 Certificates.

      The Class B-3 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.

      This Certificate is subordinated in right of payment to the Class A, Class
M-1, Class M-2, Class M-3, Class B-1 and Class B-2 Certificates as described in
the Agreement.

      The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee, the

                                     B-3-4
<PAGE>
Seller and the rights of the Certificateholders under the Agreement at any time
by the Depositor, the Servicer, the Seller and the Trustee with the consent of
the Holders of Certificates entitled to the Voting Rights identified in the
agreement. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.

      As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies appointed by the Trustee as provided in the Agreement, duly
endorsed by, or accompanied by an assignment in the form below or other written
instrument of transfer in form satisfactory to the Trustee and the Certificate
Registrar duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

      The Certificates are issuable in fully registered form only without
coupons in Classes and denominations specified in the Agreement. As provided in
the Agreement and subject to certain limitations therein set forth, Certificates
are exchangeable for new Certificates of the same Class in authorized
denominations evidencing the same aggregate Percentage Interest, as requested by
the Holder surrendering the same.

      No transfer of this Certificate shall be made unless that transfer is made
pursuant to an effective registration statement under the 1933 Act and effective
registration or qualification under applicable state securities laws, or is made
in a transaction that does not require such registration or qualification. In
the event that a transfer is to be made without registration or qualification
(i) the Certificateholder desiring to effect the transfer and such
Certificateholder's prospective transferee shall each execute a representation
letter in the form described by the Agreement certifying to the Certificate
Registrar the facts surrounding the transfer, and (ii) unless such transfer is
made in reliance upon Rule 144A under the 1933 Act, the Depositor and the
Certificate Registrar may require an Opinion of Counsel satisfactory to them
that such transfer may be made without such registration or qualification, which
Opinion of Counsel shall not be an expense of the Depositor, the Trustee or the
Certificate Registrar, in their respective capacities as such. None of the
Depositor, the Certificate Registrar or the Trustee is obligated to register or
qualify the Class of Certificates specified on the face hereof under the 1933
Act or any other securities law or to take any action not otherwise required
under the Agreement to permit the transfer of such Certificates without
registration or qualification. Any such Certificateholder desiring to effect
such transfer shall, and does hereby agree to, indemnify the Trustee, the
Depositor, the Certificate Registrar and the 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. Each Person who acquires this Certificate or an
interest therein shall be deemed to have made the representations required by
the representation letter referred to in this paragraph, unless such Person
shall have provided such representation letter referred to in this paragraph to
the Certificate Registrar.

                                     B-3-5
<PAGE>
      No service charge will be made for any such registration of transfer or
exchange of Certificates, but the Certificate Registrar may require payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any transfer or exchange of Certificates.

      The Depositor, the Servicer, the Trustee, any Paying Agent and the
Certificate Registrar and any agent of the Depositor, the Servicer, the Trustee,
any Paying Agent or the Certificate Registrar may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and none of
the Depositor, the Servicer, the Trustee, the Certificate Registrar, any Paying
Agent nor any such agent shall be affected by notice to the contrary.

      The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant to
the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the Trust
Fund of all Mortgage Loans and all property acquired in respect of such Mortgage
Loans. The Agreement permits, but does not require, the party designated in the
Agreement to purchase from the Trust Fund all 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
Principal Balance of the Mortgage Loans at the time of purchase being 10% or
less of the Cut-off Date Aggregate Principal Balance.

      The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.

      Unless the certificate of authentication hereon has been executed by the
Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                     B-3-6
<PAGE>
      IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.

Dated: March 12, 2004

                                           JPMORGAN CHASE BANK, as
                                           Trustee

                                           By: _________________________________
                                                    Authorized Officer

                          CERTIFICATE OF AUTHENTICATION

      This is one of the Certificates referred to in the within-mentioned
Agreement.

                                           JPMORGAN CHASE BANK,
                                              as Certificate Registrar

                                           By: _________________________________
                                                    Authorized Signatory

Date of authentication: March 12, 2004

                                     B-3-7
<PAGE>
                                  ABBREVIATIONS

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

TEN COM - as tenants in common              UNIF GIFT MIN ACT - Custodian
                                                                (Cust) (Minor)
TEN ENT - as tenants by the entireties                          under Uniform
                                                                Gifts to Minors
JT TEN  - as joint  tenants  with right of                      Act
          survivorship  and not as tenants                      ________________
          in common                                                 (State)

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

                                     B-3-8
<PAGE>
                                   ASSIGNMENT

      FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)

a Percentage Interest equal to ____% evidenced by the within asset-backed
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.

      I (we) further direct the Certificate Registrar to issue a new Certificate
of a like Percentage Interest and Class to the above named assignee and deliver
such Certificate to the following address:

________________________________________________________________________________

Dated:

                                      _____________________________________
                                      Signature by or on behalf of assignor

                                      _____________________________________
                                      Signature Guaranteed

                            DISTRIBUTION INSTRUCTIONS

      The assignee should include the following for purposes of distribution:

Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to _____________________________________________________________
________________________________________________________________________________
for the account of ________________________________, account number ___________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to ______________________________________
This information is provided by _______________________________________________,
the assignee named above, or __________________________________________________,
as its agent.

                                     B-3-9
<PAGE>
                                  EXHIBIT B-4-1

                     [FORM OF CLASS B-4 (144A) CERTIFICATE]

SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS (I) A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT", AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED AND (II) RIGHTS TO PAYMENTS UNDER CERTAIN
INTEREST RATE CAP AGREEMENTS.

THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN MERRILL
LYNCH MORTGAGE INVESTORS, INC. ("MLMI"), THE TRUSTEE OR ANY SERVICER REFERRED TO
BELOW OR ANY OF THEIR AFFILIATES. NEITHER THIS CERTIFICATE, THE REMIC REGULAR
INTEREST REPRESENTED HEREBY NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED OR
INSURED BY MLMI, THE TRUSTEE, ANY SERVICER OR BY ANY OF THEIR AFFILIATES OR BY
ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.

FOLLOWING THE INITIAL ISSUANCE OF THE CERTIFICATES, THE PRINCIPAL BALANCE OF
THIS CERTIFICATE MAY BE DIFFERENT FROM THE ORIGINAL DENOMINATION SHOWN BELOW.
ANYONE ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS CURRENT PRINCIPAL BALANCE BY
INQUIRY OF THE TRUSTEE.

THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 , AS
AMENDED (THE "1933 ACT") OR ANY STATE SECURITIES LAWS. NEITHER THIS CERTIFICATE
NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION, UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
REGISTRATION.

THE HOLDER OF THIS CERTIFICATE BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER SUCH CERTIFICATE ONLY (A) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE 1933 ACT OR (B) TO A
PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN
RULE 144A UNDER THE 1933 ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, SUBJECT TO THE TRUSTEE'S RIGHT
PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER TO REQUIRE THE DELIVERY OF A
CERTIFICATE OF TRANSFER IN THE FORM APPEARING IN THE POOLING AND SERVICING
AGREEMENT.

NO TRANSFER OF THIS CERTIFICATE SHALL BE REGISTERED UNLESS THE PROSPECTIVE
TRANSFEREE PROVIDES THE TRUSTEE AND THE DEPOSITOR

                                    B-4-1-1
<PAGE>
WITH (A) A CERTIFICATION TO THE EFFECT THAT SUCH TRANSFEREE IS NEITHER AN
EMPLOYEE BENEFIT PLAN SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED ("ERISA"), SECTION 4975 OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED (THE "CODE") OR STATE, LOCAL OR OTHER FEDERAL LAW
SUBSTANTIALLY SIMILAR TO THE FOREGOING PROVISIONS OF ERISA AND THE CODE
("SIMILAR LAW"), THE TRUSTEE OF ANY SUCH PLAN OR A PERSON ACTING ON BEHALF OF
ANY SUCH PLAN NOR A PERSON USING THE ASSETS OF ANY SUCH PLAN, (B) A
REPRESENTATION TO THE EFFECT THAT SUCH TRANSFEREE IS AN INSURANCE COMPANY THAT
IS PURCHASING THE CERTIFICATE WITH FUNDS CONTAINED IN AN "INSURANCE COMPANY
GENERAL ACCOUNT" AS DEFINED IN SECTION V(E) OF PROHIBITED TRANSACTION CLASS
EXEMPTION ("PTCE") 95-60 AND THE PURCHASE AND HOLDING OF THE CERTIFICATE ARE
COVERED UNDER SECTIONS I AND III OF PTCE 95-60 OR (C) AN OPINION OF COUNSEL
SATISFACTORY TO THE TRUSTEE AND THE DEPOSITOR, AND UPON WHICH THE TRUSTEE AND
THE DEPOSITOR SHALL BE ENTITLED TO RELY, TO THE EFFECT THAT THE PURCHASE AND
HOLDING OF SUCH CERTIFICATE BY THE PROSPECTIVE TRANSFEREE WILL NOT RESULT IN THE
ASSETS OF THE TRUST FUND BEING DEEMED TO BE PLAN ASSETS AND SUBJECT TO THE
PROHIBITED TRANSACTION PROVISIONS OF ERISA, THE CODE OR SIMILAR LAW AND WILL NOT
SUBJECT THE TRUSTEE OR THE DEPOSITOR TO ANY OBLIGATION IN ADDITION TO THOSE
UNDERTAKEN BY SUCH ENTITIES IN THE POOLING AND SERVICING AGREEMENT, WHICH
OPINION OF COUNSEL SHALL NOT BE AN EXPENSE OF THE TRUSTEE OR THE DEPOSITOR.

                                    B-4-1-2
<PAGE>
                 C-BASS MORTGAGE LOAN ASSET-BACKED CERTIFICATES
                           SERIES 2004-CB2, CLASS B-4

                                   (RULE 144A)

evidencing a beneficial ownership interest in a portion of a Trust Fund
consisting primarily of a pool of conventional fixed-rate and adjustable-rate
one- to four-family first and second lien mortgage loans formed and sold by

                     MERRILL LYNCH MORTGAGE INVESTORS, INC.

<TABLE>
<S>                                                          <C>
Series 2004-CB2, Class B-4                                   Original Class Certificate Principal Balance of
                                                             the Class B-4 Certificates as of the Closing
                                                             Date: $7,328,000.00
Pass-Through Rate: Variable(1)

Date of Pooling and Servicing Agreement and Cut-off Date:    Initial Certificate Principal Balance:
February 1, 2004                                             $7,328,000.00
First Distribution Date: March 25, 2004                      Servicer: Litton Loan Servicing LP

No.                                                          Trustee: JPMorgan Chase Bank

CUSIP: 12489W JE 5                                           Closing Date: March 12, 2004

ISIN: US12489WJE57
</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.

      THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
      MERRILL LYNCH MORTGAGE INVESTORS, INC., THE SERVICER, THE TRUSTEE OR ANY
      OF THEIR AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED BY ANY AGENCY OR
      INSTRUMENTALITY OF THE UNITED STATES.

      This certifies that CEDE & CO. is the registered owner of a Percentage
Interest (obtained by dividing the Initial Certificate Principal Balance of this
Certificate by the Original Class Certificate Principal Balance of the Class B-4
Certificates) in that certain beneficial ownership interest evidenced by all the
Class B-4 Certificates in the Trust Fund created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among Merrill
Lynch Mortgage Investors, Inc. (hereinafter called the "Depositor," which term
includes any successor entity under the Agreement), Credit-Based Asset Servicing
and Securitization LLC (the "Seller"), the Servicer and the Trustee, a summary
of certain of the pertinent provisions of

----------
(1)   Subject to a cap as described in the Agreement.

                                    B-4-1-3
<PAGE>
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 Business Day immediately preceding such Distribution Date
(the "Record Date"), from funds in the Distribution Account in an amount equal
to the product of the Percentage Interest evidenced by this Certificate and the
amount required to be distributed to the Holders of Class B-4 Certificates on
such Distribution Date pursuant to the Agreement provided, however, that if any
Class B-4 Certificate becomes a Definitive Certificate, the Record Date for such
Certificate will be the last Business Day of the month immediately preceding the
month in which the related Distribution Date occurs.

      All distributions to the Holder of this Certificate under the Agreement
will be made or caused to be made by or on behalf of the Trustee by wire
transfer in immediately available funds to the account of the Person entitled
thereto if such Person shall have so notified the Certificate Registrar in
writing at least five Business Days prior to the Record Date immediately prior
to such Distribution Date and is the registered owner of Class B-4 Certificates
the aggregate Initial Certificate Principal Balance of which is in excess of
$5,000,000, or by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register, provided that the Certificate Registrar may deduct a reasonable wire
transfer fee from any payment made by wire transfer. Notwithstanding the above,
the final distribution on this Certificate will be made after due notice by the
Trustee of the pendency of such distribution and only upon presentation and
surrender of this Certificate at the office or agency appointed by the Trustee
for that purpose as provided in the Agreement.

      The Class B-4 Pass-Through Rate on each Distribution Date will be a rate
per annum equal to the least of (i) LIBOR as of the related LIBOR Determination
Date, plus the Class B-4 Certificate Margin, (ii) the Subordinate Rate Cap and
(iii) the Subordinate Maximum Rate Cap.

      This Certificate is one of a duly authorized issue of Certificates
designated as C-BASS Mortgage Loan Asset-Backed Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class B-4 Certificates.

      The Class B-4 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.

      This Certificate is subordinated in right of payment to the Class A, Class
M-1, Class M-2, Class M-3, Class B-1, Class B-2 and Class B-3 Certificates as
described in the Agreement.

                                    B-4-1-4
<PAGE>
      The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee, the Seller and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicer, the Seller and the Trustee with the consent of the Holders of
Certificates entitled to the Voting Rights identified in the agreement. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange herefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.

      As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies appointed by the Trustee as provided in the Agreement, duly
endorsed by, or accompanied by an assignment in the form below or other written
instrument of transfer in form satisfactory to the Trustee and the Certificate
Registrar duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

      The Certificates are issuable in fully registered form only without
coupons in Classes and denominations specified in the Agreement. As provided in
the Agreement and subject to certain limitations therein set forth, Certificates
are exchangeable for new Certificates of the same Class in authorized
denominations evidencing the same aggregate Percentage Interest, as requested by
the Holder surrendering the same.

      No transfer of this Certificate shall be made unless that transfer is made
pursuant to an effective registration statement under the 1933 Act and effective
registration or qualification under applicable state securities laws, or is made
in a transaction that does not require such registration or qualification. In
the event that a transfer is to be made without registration or qualification
(i) the Certificateholder desiring to effect the transfer and such
Certificateholder's prospective transferee shall each execute a representation
letter in the form described by the Agreement certifying to the Certificate
Registrar the facts surrounding the transfer, and (ii) unless such transfer is
made in reliance upon Rule 144A under the 1933 Act, the Depositor and the
Certificate Registrar may require an Opinion of Counsel satisfactory to them
that such transfer may be made without such registration or qualification, which
Opinion of Counsel shall not be an expense of the Depositor, the Trustee or the
Certificate Registrar, in their respective capacities as such. None of the
Depositor, the Certificate Registrar or the Trustee is obligated to register or
qualify the Class of Certificates specified on the face hereof under the 1933
Act or any other securities law or to take any action not otherwise required
under the Agreement to permit the transfer of such Certificates without
registration or qualification. Any such Certificateholder desiring to effect
such transfer shall, and does hereby agree to, indemnify the Trustee, the
Depositor, the Certificate Registrar and the 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. Each Person who acquires this Certificate or an
interest therein shall be deemed to have made the representations required by
the representation letter referred to in this paragraph, unless

                                    B-4-1-5
<PAGE>
such Person shall have provided such representation letter referred to in this
paragraph to the Certificate Registrar.

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

      The Depositor, the Servicer, the Trustee, any Paying Agent and the
Certificate Registrar and any agent of the Depositor, the Servicer, the Trustee,
any Paying Agent or the Certificate Registrar may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and none of
the Depositor, the Servicer, the Trustee, the Certificate Registrar, any Paying
Agent nor any such agent shall be affected by notice to the contrary.

      The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant to
the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the Trust
Fund of all Mortgage Loans and all property acquired in respect of such Mortgage
Loans. The Agreement permits, but does not require, the party designated in the
Agreement to purchase from the Trust Fund all 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
Principal Balance of the Mortgage Loans at the time of purchase being 10% or
less of the Cut-off Date Aggregate Principal Balance.

      The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.

      Unless the certificate of authentication hereon has been executed by the
Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                    B-4-1-6
<PAGE>
      IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.

Dated: March 12, 2004

                                           JPMORGAN CHASE BANK, as
                                           Trustee

                                           By: _________________________________
                                                    Authorized Officer

                          CERTIFICATE OF AUTHENTICATION

      This is one of the Certificates referred to in the within-mentioned
Agreement.

                                           JPMORGAN CHASE BANK,
                                              as Certificate Registrar

                                           By: _________________________________
                                                    Authorized Signatory

Date of authentication: March 12, 2004

                                    B-4-1-7
<PAGE>
                                  ABBREVIATIONS

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

TEN COM - as tenants in common               UNIF GIFT MIN ACT - Custodian
                                                                 (Cust) (Minor)
TEN ENT - as tenants by the entireties                           under Uniform
                                                                 Gifts to Minors
JT TEN  - as joint tenants with right of                         Act
          survivorship and not as tenants                        _______________
          in common                                                  (State)

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

                                    B-4-1-8
<PAGE>
                                   ASSIGNMENT

      FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)

a Percentage Interest equal to ____% evidenced by the within asset-backed
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.

      I (we) further direct the Certificate Registrar to issue a new Certificate
of a like Percentage Interest and Class to the above named assignee and deliver
such Certificate to the following address:

________________________________________________________________________________

Dated:

                                      _____________________________________
                                      Signature by or on behalf of assignor

                                      _____________________________________
                                      Signature Guaranteed

                            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-4-1-9
<PAGE>
                                  EXHIBIT B-4-2

                     [FORM OF CLASS B-4 (REG S) CERTIFICATE]

SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS (I) A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT", AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED AND (II) RIGHTS TO PAYMENTS UNDER CERTAIN
INTEREST RATE CAP AGREEMENTS.

THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN MERRILL
LYNCH MORTGAGE INVESTORS, INC. ("MLMI"), THE TRUSTEE OR ANY SERVICER REFERRED TO
BELOW OR ANY OF THEIR AFFILIATES. NEITHER THIS CERTIFICATE, THE REMIC REGULAR
INTEREST REPRESENTED HEREBY NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED OR
INSURED BY MLMI, THE TRUSTEE, ANY SERVICER OR BY ANY OF THEIR AFFILIATES OR BY
ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.

FOLLOWING THE INITIAL ISSUANCE OF THE CERTIFICATES, THE PRINCIPAL BALANCE OF
THIS CERTIFICATE MAY BE DIFFERENT FROM THE ORIGINAL DENOMINATION SHOWN BELOW.
ANYONE ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS CURRENT PRINCIPAL BALANCE BY
INQUIRY OF THE TRUSTEE.

THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "1933 ACT") OR ANY STATE SECURITIES LAWS. NEITHER THIS CERTIFICATE
NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF WITHIN THE UNITED
STATES (AS DEFINED IN RULES 901 THROUGH 905 OF THE 1933 ACT ("REGULATION S")) OR
TO, OR FOR THE ACCOUNT OR BENEFIT OF, A U.S. PERSON (AS DEFINED IN REGULATION
S), IN THE ABSENCE OF SUCH REGISTRATION, UNLESS SUCH TRANSACTION IS EXEMPT FROM,
OR NOT SUBJECT TO, REGISTRATION.

THE HOLDER OF THIS CERTIFICATE BY ITS ACCEPTANCE HEREOF AGREES (A) THAT, UNTIL
THE EXPIRATION OF THE APPLICABLE "DISTRIBUTION COMPLIANCE PERIOD" WITHIN THE
MEANING OF REGULATION S, ANY OFFER, SALE, PLEDGE OR OTHER TRANSFER OF THIS
CERTIFICATE SHALL NOT BE MADE IN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, ANY U.S. PERSON (EACH AS DEFINED IN REGULATION S) AND (B) TO OFFER,
SELL, PLEDGE OR OTHERWISE TRANSFER THIS CERTIFICATE WITHIN THE UNITED STATES OR
TO, OR FOR THE ACCOUNT OR BENEFIT OF, A U.S. PERSON (EACH AS DEFINED IN
REGULATION S) ONLY (1) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN
DECLARED EFFECTIVE UNDER THE

                                    B-4-2-1
<PAGE>
1933 ACT OR (2) TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL
BUYER" AS DEFINED IN RULE 144A UNDER THE 1933 ACT THAT PURCHASES FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS
GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, SUBJECT TO THE
TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER TO REQUIRE THE
DELIVERY OF A CERTIFICATE OF TRANSFER IN THE FORM APPEARING IN THE POOLING AND
SERVICING AGREEMENT.

NO TRANSFER OF THIS CERTIFICATE SHALL BE REGISTERED UNLESS THE PROSPECTIVE
TRANSFEREE PROVIDES THE TRUSTEE AND THE DEPOSITOR WITH (A) A CERTIFICATION TO
THE EFFECT THAT SUCH TRANSFEREE IS NEITHER AN EMPLOYEE BENEFIT PLAN SUBJECT TO
TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
("ERISA"), SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE") OR STATE, LOCAL OR OTHER FEDERAL LAW SUBSTANTIALLY SIMILAR TO THE
FOREGOING PROVISIONS OF ERISA AND THE CODE ("SIMILAR LAW"), THE TRUSTEE OF ANY
SUCH PLAN OR A PERSON ACTING ON BEHALF OF ANY SUCH PLAN NOR A PERSON USING THE
ASSETS OF ANY SUCH PLAN, (B) A REPRESENTATION TO THE EFFECT THAT SUCH TRANSFEREE
IS AN INSURANCE COMPANY THAT IS PURCHASING THE CERTIFICATE WITH FUNDS CONTAINED
IN AN "INSURANCE COMPANY GENERAL ACCOUNT" AS DEFINED IN SECTION V(E) OF
PROHIBITED TRANSACTION CLASS EXEMPTION ("PTCE") 95-60 AND THE PURCHASE AND
HOLDING OF THE CERTIFICATE ARE COVERED UNDER SECTIONS I AND III OF PTCE 95-60 OR
(C) AN OPINION OF COUNSEL SATISFACTORY TO THE TRUSTEE AND THE DEPOSITOR, AND
UPON WHICH THE TRUSTEE AND THE DEPOSITOR SHALL BE ENTITLED TO RELY, TO THE
EFFECT THAT THE PURCHASE AND HOLDING OF SUCH CERTIFICATE BY THE PROSPECTIVE
TRANSFEREE WILL NOT RESULT IN THE ASSETS OF THE TRUST FUND BEING DEEMED TO BE
PLAN ASSETS AND SUBJECT TO THE PROHIBITED TRANSACTION PROVISIONS OF ERISA, THE
CODE OR SIMILAR LAW AND WILL NOT SUBJECT THE TRUSTEE OR THE DEPOSITOR TO ANY
OBLIGATION IN ADDITION TO THOSE UNDERTAKEN BY SUCH ENTITIES IN THE POOLING AND
SERVICING AGREEMENT, WHICH OPINION OF COUNSEL SHALL NOT BE AN EXPENSE OF THE
TRUSTEE OR THE DEPOSITOR.

                                    B-4-2-2
<PAGE>
                 C-BASS MORTGAGE LOAN ASSET-BACKED CERTIFICATES
                           SERIES 2004-CB2, CLASS B-4

                                 (REGULATION S)

evidencing a beneficial ownership interest in a portion of a Trust Fund
consisting primarily of a pool of conventional fixed-rate and adjustable-rate
one- to four-family first and second lien mortgage loans formed and sold by

                     MERRILL LYNCH MORTGAGE INVESTORS, INC.

<TABLE>
<S>                                                          <C>
Series 2004-CB2, Class B-4                                   Original Class Certificate Principal Balance of
                                                             the Class B-4 Certificates as of the Closing
                                                             Date: $0.00

Pass-Through Rate: Variable(1)
Date of Pooling and Servicing Agreement and Cut-off Date:    Initial Certificate Principal Balance:
February 1, 2004                                             $7,328,000.00
First Distribution Date: March 25, 2004                      Servicer: Litton Loan Servicing LP

No.                                                          Trustee: JPMorgan Chase Bank

CUSIP: U1492P AA 2                                           Closing Date:  March 12, 2004

ISIN: USU1492PAA22
</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.

      THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
      MERRILL LYNCH MORTGAGE INVESTORS, INC., THE SERVICER, THE TRUSTEE OR ANY
      OF THEIR AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED BY ANY AGENCY OR
      INSTRUMENTALITY OF THE UNITED STATES.

      This certifies that CEDE & CO. is the registered owner of a Percentage
Interest (obtained by dividing the Initial Certificate Principal Balance of this
Certificate by the Original Class Certificate Principal Balance of the Class B-4
Certificates) in that certain beneficial ownership interest evidenced by all the
Class B-4 Certificates in the Trust Fund created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among Merrill
Lynch Mortgage Investors, Inc. (hereinafter called the "Depositor," which term
includes any successor entity under the Agreement), Credit-Based Asset Servicing
and Securitization LLC (the "Seller"), the Servicer and the Trustee, a summary
of certain of the pertinent provisions of

----------
(1)   Subject to a cap as described in the Agreement.

                                    B-4-2-3
<PAGE>
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 Business Day immediately preceding such Distribution Date
(the "Record Date"), from funds in the Distribution Account in an amount equal
to the product of the Percentage Interest evidenced by this Certificate and the
amount required to be distributed to the Holders of Class B-4 Certificates on
such Distribution Date pursuant to the Agreement provided, however, that if any
Class B-4 Certificate becomes a Definitive Certificate, the Record Date for such
Certificate will be the last Business Day of the month immediately preceding the
month in which the related Distribution Date occurs.

      All distributions to the Holder of this Certificate under the Agreement
will be made or caused to be made by or on behalf of the Trustee by wire
transfer in immediately available funds to the account of the Person entitled
thereto if such Person shall have so notified the Certificate Registrar in
writing at least five Business Days prior to the Record Date immediately prior
to such Distribution Date and is the registered owner of Class B-4 Certificates
the aggregate Initial Certificate Principal Balance of which is in excess of
$5,000,000, or by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register, provided that the Certificate Registrar may deduct a reasonable wire
transfer fee from any payment made by wire transfer. Notwithstanding the above,
the final distribution on this Certificate will be made after due notice by the
Trustee of the pendency of such distribution and only upon presentation and
surrender of this Certificate at the office or agency appointed by the Trustee
for that purpose as provided in the Agreement.

      The Class B-4 Pass-Through Rate on each Distribution Date will be a rate
per annum equal to the least of (i) LIBOR as of the related LIBOR Determination
Date, plus the Class B-4 Certificate Margin, (ii) the Subordinate Rate Cap and
(iii) the Subordinate Maximum Rate Cap.

      This Certificate is one of a duly authorized issue of Certificates
designated as C-BASS Mortgage Loan Asset-Backed Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class B-4 Certificates.

      The Class B-4 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.

      This Certificate is subordinated in right of payment to the Class A, Class
M-1, Class M-2, Class M-3, Class B-1, Class B-2 and Class B-3 Certificates as
described in the Agreement.

                                    B-4-2-4
<PAGE>
      The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee, the Seller and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicer, the Seller and the Trustee with the consent of the Holders of
Certificates entitled to the Voting Rights identified in the agreement. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange herefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.

      As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies appointed by the Trustee as provided in the Agreement, duly
endorsed by, or accompanied by an assignment in the form below or other written
instrument of transfer in form satisfactory to the Trustee and the Certificate
Registrar duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

      The Certificates are issuable in fully registered form only without
coupons in Classes and denominations specified in the Agreement. As provided in
the Agreement and subject to certain limitations therein set forth, Certificates
are exchangeable for new Certificates of the same Class in authorized
denominations evidencing the same aggregate Percentage Interest, as requested by
the Holder surrendering the same.

      No transfer of this Certificate shall be made unless that transfer is made
pursuant to an effective registration statement under the 1933 Act and effective
registration or qualification under applicable state securities laws, or is made
in a transaction that does not require such registration or qualification. In
the event that a transfer is to be made without registration or qualification
(i) the Certificateholder desiring to effect the transfer and such
Certificateholder's prospective transferee shall each execute a representation
letter in the form described by the Agreement certifying to the Certificate
Registrar the facts surrounding the transfer, and (ii) unless such transfer is
made in reliance upon Rule 144A under the 1933 Act, the Depositor and the
Certificate Registrar may require an Opinion of Counsel satisfactory to them
that such transfer may be made without such registration or qualification, which
Opinion of Counsel shall not be an expense of the Depositor, the Trustee or the
Certificate Registrar, in their respective capacities as such. None of the
Depositor, the Certificate Registrar or the Trustee is obligated to register or
qualify the Class of Certificates specified on the face hereof under the 1933
Act or any other securities law or to take any action not otherwise required
under the Agreement to permit the transfer of such Certificates without
registration or qualification. Any such Certificateholder desiring to effect
such transfer shall, and does hereby agree to, indemnify the Trustee, the
Depositor, the Certificate Registrar and the 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. Each Person who acquires this Certificate or an
interest therein shall be deemed to have made the representations required by
the representation letter referred to in this paragraph, unless

                                    B-4-2-5
<PAGE>
such Person shall have provided such representation letter referred to in this
paragraph to the Certificate Registrar.

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

      The Depositor, the Servicer, the Trustee, any Paying Agent and the
Certificate Registrar and any agent of the Depositor, the Servicer, the Trustee,
any Paying Agent or the Certificate Registrar may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and none of
the Depositor, the Servicer, the Trustee, the Certificate Registrar, any Paying
Agent nor any such agent shall be affected by notice to the contrary.

      The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant to
the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the Trust
Fund of all Mortgage Loans and all property acquired in respect of such Mortgage
Loans. The Agreement permits, but does not require, the party designated in the
Agreement to purchase from the Trust Fund all 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
Principal Balance of the Mortgage Loans at the time of purchase being 10% or
less of the Cut-off Date Aggregate Principal Balance.

      The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.

      Unless the certificate of authentication hereon has been executed by the
Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                    B-4-2-6
<PAGE>
      IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.

Dated: March 12, 2004

                                           JPMORGAN CHASE BANK, as
                                           Trustee

                                           By: _________________________________
                                                    Authorized Officer

                          CERTIFICATE OF AUTHENTICATION

 This is one of the Certificates referred to in the within-mentioned Agreement.

                                           JPMORGAN CHASE BANK,
                                              as Certificate Registrar

                                           By: _________________________________
                                                    Authorized Signatory

Date of authentication: March 12, 2004

                                    B-4-2-7
<PAGE>
                                  ABBREVIATIONS

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

TEN COM - as tenants in common               UNIF GIFT MIN ACT - Custodian
                                                                 (Cust) (Minor)
TEN ENT - as tenants by the entireties                           under Uniform
                                                                 Gifts to Minors
JT TEN  - as joint tenants with right of                         Act
          survivorship and not as tenants                        _______________
          in common                                                  (State)

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

                                    B-4-2-8
<PAGE>
                                   ASSIGNMENT

      FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)

a Percentage Interest equal to ____% evidenced by the within asset-backed
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.

      I (we) further direct the Certificate Registrar to issue a new Certificate
of a like Percentage Interest and Class to the above named assignee and deliver
such Certificate to the following address:

________________________________________________________________________________

Dated:

                                      _____________________________________
                                      Signature by or on behalf of assignor

                                      _____________________________________
                                      Signature Guaranteed

                            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-4-2-9
<PAGE>
                                  EXHIBIT C-1-1

                          [FORM OF CLASS R CERTIFICATE]

      THIS CERTIFICATE MAY NOT BE TRANSFERRED TO A NON-UNITED STATES PERSON.

      FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS THE
      "RESIDUAL INTEREST" IN FOUR SEPARATE "REAL ESTATE MORTGAGE INVESTMENT
      CONDUITS," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND
      860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE").

      THIS CLASS R CERTIFICATE IS SUBORDINATE TO THE OFFERED CERTIFICATES OF
      THIS SERIES TO THE EXTENT DESCRIBED HEREIN AND IN THE AGREEMENT REFERRED
      TO HEREIN.

      THIS CLASS R CERTIFICATE WILL NOT BE ENTITLED TO PAYMENTS UNTIL SUCH TIME
      AS DESCRIBED IN THE AGREEMENT REFERRED TO HEREIN.

      THIS CLASS R CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR THE SECURITIES
      LAWS OF ANY STATE. ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS
      CERTIFICATE WITHOUT SUCH REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN
      A TRANSACTION THAT DOES NOT REQUIRE SUCH REGISTRATION OR QUALIFICATION AND
      IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF THE AGREEMENT
      REFERRED TO HEREIN.

      THIS CLASS R CERTIFICATE MAY NOT BE PURCHASED BY OR TRANSFERRED TO AN
      EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT SUBJECT TO TITLE I
      OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
      ("ERISA"), OR SECTION 4975 OF THE CODE OR PROVISIONS OF OTHER FEDERAL,
      STATE OR LOCAL LAW WHICH IS, TO A MATERIAL EXTENT, SIMILAR TO THE
      FOREGOING PROVISIONS OF ERISA OR THE CODE (COLLECTIVELY, A "PLAN"), OR A
      PERSON ACTING ON BEHALF OF OR INVESTING THE ASSETS OF A PLAN.

      ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CLASS R CERTIFICATE MAY
      BE MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES (1) AN AFFIDAVIT TO THE
      CERTIFICATE REGISTRAR THAT SUCH TRANSFEREE IS NOT (A) THE UNITED STATES,
      ANY STATE OR POLITICAL SUBDIVISION THEREOF, ANY

                                    C-1-1-1
<PAGE>
      FOREIGN GOVERNMENT, ANY INTERNATIONAL ORGANIZATION, OR ANY AGENCY OR
      INSTRUMENTALITY OF ANY OF THE FOREGOING, (B) ANY ORGANIZATION (OTHER THAN
      A COOPERATIVE DESCRIBED IN SECTION 521 OF THE CODE) WHICH IS EXEMPT FROM
      THE TAX IMPOSED BY CHAPTER 1 OF THE CODE UNLESS SUCH ORGANIZATION IS
      SUBJECT TO THE TAX IMPOSED BY SECTION 511 OF THE CODE, (C) ANY
      ORGANIZATION DESCRIBED IN SECTION 1381(A)(2)(C) OF THE CODE (ANY SUCH
      PERSON DESCRIBED IN THE FOREGOING CLAUSES (A), (B) OR (C) BEING
      HEREINAFTER REFERRED TO AS A "DISQUALIFIED ORGANIZATION"), OR (D) AN AGENT
      OF A DISQUALIFIED ORGANIZATION AND (2) NO PURPOSE OF SUCH TRANSFER IS TO
      IMPEDE THE ASSESSMENT OR COLLECTION OF TAX, AND (3) SUCH TRANSFEREE
      SATISFIES CERTAIN ADDITIONAL CONDITIONS RELATING TO THE FINANCIAL
      CONDITION OF THE PROPOSED TRANSFEREE. NOTWITHSTANDING THE REGISTRATION IN
      THE CERTIFICATE REGISTER OR ANY TRANSFER, SALE OR OTHER DISPOSITION OF
      THIS CLASS R CERTIFICATE TO A DISQUALIFIED ORGANIZATION OR AN AGENT OF A
      DISQUALIFIED ORGANIZATION, SUCH REGISTRATION SHALL BE DEEMED TO BE OF NO
      LEGAL FORCE OR EFFECT WHATSOEVER AND SUCH PERSON SHALL NOT BE DEEMED TO BE
      A CERTIFICATEHOLDER FOR ANY PURPOSE HEREUNDER, INCLUDING, BUT NOT LIMITED
      TO, THE RECEIPT OF DISTRIBUTIONS ON THIS CERTIFICATE. EACH HOLDER OF A
      CLASS R CERTIFICATE BY ACCEPTANCE OF THIS CERTIFICATE SHALL BE DEEMED TO
      HAVE CONSENTED TO THE PROVISIONS OF THIS PARAGRAPH AND THE PROVISIONS OF
      SECTION 5.02(D) OF THE AGREEMENT REFERRED TO HEREIN. ANY PERSON THAT IS A
      DISQUALIFIED ORGANIZATION IS PROHIBITED FROM ACQUIRING BENEFICIAL
      OWNERSHIP OF THIS CLASS R CERTIFICATE.

                                    C-1-1-2
<PAGE>
                 C-BASS MORTGAGE LOAN ASSET-BACKED CERTIFICATES
                            SERIES 2004-CB2, CLASS R

evidencing a beneficial ownership interest in a portion of a Trust Fund
consisting primarily of a pool of conventional fixed-rate and adjustable-rate
one- to four-family first and second lien mortgage loans formed and sold by

                     MERRILL LYNCH MORTGAGE INVESTORS, INC.

Series 2004-CB2, Class R                      Servicer: Litton Loan Servicing LP

Date of Pooling and Servicing Agreement and
Cut-off Date: February 1, 2004                Trustee: JPMorgan Chase Bank
First Distribution Date: March 25, 2004       Closing Date: March 12, 2004

No.

Percentage Interest:  100%

      THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
      MERRILL LYNCH MORTGAGE INVESTORS, INC., THE SERVICER, THE TRUSTEE OR ANY
      OF THEIR AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED BY ANY AGENCY OR
      INSTRUMENTALITY OF THE UNITED STATES.

      This certifies that Residual Interest Investments, L.P. is the registered
owner of a Percentage Interest set forth above in that certain beneficial
ownership interest evidenced by all the Class R Certificates in the Trust Fund
created pursuant to a Pooling and Servicing Agreement, dated as specified above
(the "Agreement"), among Merrill Lynch Mortgage Investors, Inc. (hereinafter
called the "Depositor," which term includes any successor entity under the
Agreement), Credit-Based Asset Servicing and Securitization LLC (the "Seller"),
the Servicer and the Trustee, a summary of certain of the pertinent provisions
of which is set forth hereafter. To the extent not defined herein, the
capitalized terms used herein have the meanings assigned in the Agreement. This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.

      Pursuant to the terms of the Agreement, distributions will be made on the
25th day of each month or, if such 25th day is not a Business Day, the Business
Day immediately following (a "Distribution Date"), commencing on the first
Distribution Date specified above, to the Person in whose name this Certificate
is registered on the last Business Day of the month immediately preceding the
month in which the related Distribution Date occurs (the "Record Date"), from
funds in the Distribution Account in an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount required to be
distributed to the Holders of Class 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 or on behalf of the Trustee by wire
transfer in immediately available funds to the account of the Person entitled
thereto if such Person shall have so notified the Certificate

                                    C-1-1-3
<PAGE>
Registrar in writing at least five Business Days prior to the Record Date
immediately prior to such Distribution Date and is the registered owner of Class
R Certificates the aggregate Percentage Interest of which is in excess of a 66%
Percentage Interest of the Class R Certificates, or by check mailed by first
class mail to the address of the Person entitled thereto, as such name and
address shall appear on the Certificate Register, provided that the Certificate
Registrar may deduct a reasonable wire transfer fee from any payment made by
wire transfer. Notwithstanding the above, the final distribution on this
Certificate will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose as provided in the
Agreement.

      This Certificate is one of a duly authorized issue of Certificates
designated as C-BASS Mortgage Loan Asset-Backed Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
the Percentage Interest specified on the face hereof.

      The Class R Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

      The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee, the Seller and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicer, the Seller and the Trustee with the consent of the Holders of
Certificates entitled to the Voting Rights identified in the agreement. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange herefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.

      As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies appointed by the Trustee as provided in the Agreement, duly
endorsed by, or accompanied by an assignment in the form below or other written
instrument of transfer in form satisfactory to the Trustee and the Certificate
Registrar duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

      The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.

                                    C-1-1-4
<PAGE>
      No transfer of this Certificate shall be made unless that transfer is made
pursuant to an effective registration statement under the 1933 Act and effective
registration or qualification under applicable state securities laws, or is made
in a transaction that does not require such registration or qualification. In
the event that a transfer is to be made without registration or qualification
(i) the Certificateholder desiring to effect the transfer and such
Certificateholder's prospective transferee shall each execute a representation
letter in the form described by the Agreement certifying to the Certificate
Registrar the facts surrounding the transfer, and (ii) unless such transfer is
made in reliance upon Rule 144A under the 1933 Act, the Depositor and the
Certificate Registrar may require an Opinion of Counsel satisfactory to them
that such transfer may be made without such registration or qualification, which
Opinion of Counsel shall not be an expense of the Depositor, the Trustee or the
Certificate Registrar, in their respective capacities as such. None of the
Depositor, the Certificate Registrar or the Trustee is obligated to register or
qualify the Class of Certificates specified on the face hereof under the 1933
Act or any other securities law or to take any action not otherwise required
under the Agreement to permit the transfer of such Certificates without
registration or qualification. Any such Certificateholder desiring to effect
such transfer shall, and does hereby agree to, indemnify the Trustee, the
Depositor, the Certificate Registrar and the Servicer against any liability that
may result if the transfer is not so exempt or is not made in accordance with
such federal and state laws.

      No transfer of a Certificate or any interest therein may be made to
employee benefit plans and certain other retirement plans and arrangements,
including individual retirement accounts and annuities, Keogh plans and
collective investment funds and separate accounts in which such plans, accounts
or arrangements are invested that are subject to the fiduciary responsibility
provisions of ERISA and Section 4975 of the Code ("Plans") or any person who is
directly or indirectly purchasing the Certificate or interest therein on behalf
of, as named fiduciary of, as trustee of, or with assets of a Plan.

      The Holder of this Certificate, by its acceptance hereof, shall be deemed
for all purposes to have consented to the provisions of Section 5.02 of the
Agreement and to any amendment of the Agreement deemed necessary by counsel of
the Depositor to ensure that the transfer of this Certificate to any Person
other than a Permitted Transferee or any other Person will not cause any REMIC
provided for in the Trust Agreement to cease to qualify as a REMIC or cause the
imposition of a tax upon the Trust.

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

      The Depositor, the Servicer, the Trustee, any Paying Agent and the
Certificate Registrar and any agent of the Depositor, the Servicer, the Trustee,
any Paying Agent or the Certificate Registrar may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and none of
the Depositor, the Servicer, the Trustee, the Certificate Registrar, any Paying
Agent nor any such agent shall be affected by notice to the contrary.

                                    C-1-1-5
<PAGE>
      The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant to
the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the Trust
Fund of all Mortgage Loans and all property acquired in respect of such Mortgage
Loans. The Agreement permits, but does not require, the party designated in the
Agreement to purchase from the Trust Fund all 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
Principal Balance of the Mortgage Loans at the time of purchase being 10% or
less of the Cut-off Date Aggregate Principal Balance.

      The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.

      Unless the certificate of authentication hereon has been executed by the
Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                    C-1-1-6
<PAGE>
      IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.

Dated: March 12, 2004

                                           JPMORGAN CHASE BANK, as
                                           Trustee

                                           By: _________________________________
                                                    Authorized Officer

                          CERTIFICATE OF AUTHENTICATION

      This is one of the Certificates referred to in the within-mentioned
Agreement.

                                           JPMORGAN CHASE BANK,
                                                    as Certificate Registrar

                                           By: _________________________________
                                                    Authorized Signatory

Date of authentication: March 12, 2004

                                    C-1-1-7
<PAGE>
                                  ABBREVIATIONS

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

TEN COM - as tenants in common               UNIF GIFT MIN ACT - Custodian
                                                                 (Cust) (Minor)
TEN ENT - as tenants by the entireties                           under Uniform
                                                                 Gifts to Minors
JT TEN  - as joint tenants with right of                         Act
          survivorship and not as tenants                        _______________
          in common                                                  (State)

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

                                    C-1-1-8
<PAGE>
                                   ASSIGNMENT

      FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)

a Percentage Interest equal to ____% evidenced by the within asset-backed
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.

      I (we) further direct the Certificate Registrar to issue a new Certificate
of a like Percentage Interest and Class to the above named assignee and deliver
such Certificate to the following address:

________________________________________________________________________________

Dated:

                                      _____________________________________
                                      Signature by or on behalf of assignor

                                      _____________________________________
                                      Signature Guaranteed

                            DISTRIBUTION INSTRUCTIONS

      The assignee should include the following for purposes of distribution:

Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to _____________________________________________________________
________________________________________________________________________________
for the account of ________________________________, account number ___________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to ______________________________________
This information is provided by _______________________________________________,
the assignee named above, or __________________________________________________,
as its agent.

                                    C-1-1-9
<PAGE>
                                  EXHIBIT C-1-2

                         [FORM OF CLASS R-X CERTIFICATE]

      THIS CERTIFICATE MAY NOT BE TRANSFERRED TO A NON-UNITED STATES PERSON.

      FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS THE
      "RESIDUAL INTEREST" IN TWO SEPARATE "REAL ESTATE MORTGAGE INVESTMENT
      CONDUITS," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND
      860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE").

      THIS CLASS R-X CERTIFICATE IS SUBORDINATE TO THE OFFERED CERTIFICATES OF
      THIS SERIES TO THE EXTENT DESCRIBED HEREIN AND IN THE AGREEMENT REFERRED
      TO HEREIN.

      THIS CLASS R-X CERTIFICATE WILL NOT BE ENTITLED TO PAYMENTS UNTIL SUCH
      TIME AS DESCRIBED IN THE AGREEMENT REFERRED TO HEREIN.

      THIS CLASS R-X CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR THE SECURITIES
      LAWS OF ANY STATE. ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS
      CERTIFICATE WITHOUT SUCH REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN
      A TRANSACTION THAT DOES NOT REQUIRE SUCH REGISTRATION OR QUALIFICATION AND
      IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF THE AGREEMENT
      REFERRED TO HEREIN.

      THIS CLASS R-X CERTIFICATE MAY NOT BE PURCHASED BY OR TRANSFERRED TO AN
      EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT SUBJECT TO TITLE I
      OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
      ("ERISA"), OR SECTION 4975 OF THE CODE OR PROVISIONS OF OTHER FEDERAL,
      STATE OR LOCAL LAW WHICH IS, TO A MATERIAL EXTENT, SIMILAR TO THE
      FOREGOING PROVISIONS OF ERISA OR THE CODE (COLLECTIVELY, A "PLAN"), OR A
      PERSON ACTING ON BEHALF OF OR INVESTING THE ASSETS OF A PLAN.

      ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CLASS R-X CERTIFICATE
      MAY BE MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES (1) AN AFFIDAVIT TO
      THE CERTIFICATE REGISTRAR THAT SUCH TRANSFEREE IS NOT (A) THE UNITED
      STATES, ANY STATE OR POLITICAL SUBDIVISION THEREOF, ANY

                                    C-1-2-1
<PAGE>
      FOREIGN GOVERNMENT, ANY INTERNATIONAL ORGANIZATION, OR ANY AGENCY OR
      INSTRUMENTALITY OF ANY OF THE FOREGOING, (B) ANY ORGANIZATION (OTHER THAN
      A COOPERATIVE DESCRIBED IN SECTION 521 OF THE CODE) WHICH IS EXEMPT FROM
      THE TAX IMPOSED BY CHAPTER 1 OF THE CODE UNLESS SUCH ORGANIZATION IS
      SUBJECT TO THE TAX IMPOSED BY SECTION 511 OF THE CODE, (C) ANY
      ORGANIZATION DESCRIBED IN SECTION 1381(A)(2)(C) OF THE CODE (ANY SUCH
      PERSON DESCRIBED IN THE FOREGOING CLAUSES (A), (B) OR (C) BEING
      HEREINAFTER REFERRED TO AS A "DISQUALIFIED ORGANIZATION"), OR (D) AN AGENT
      OF A DISQUALIFIED ORGANIZATION AND (2) NO PURPOSE OF SUCH TRANSFER IS TO
      IMPEDE THE ASSESSMENT OR COLLECTION OF TAX, AND (3) SUCH TRANSFEREE
      SATISFIES CERTAIN ADDITIONAL CONDITIONS RELATING TO THE FINANCIAL
      CONDITION OF THE PROPOSED TRANSFEREE. NOTWITHSTANDING THE REGISTRATION IN
      THE CERTIFICATE REGISTER OR ANY TRANSFER, SALE OR OTHER DISPOSITION OF
      THIS CLASS R-X 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 A
      CLASS R-X CERTIFICATE BY ACCEPTANCE OF THIS CERTIFICATE SHALL BE DEEMED TO
      HAVE CONSENTED TO THE PROVISIONS OF THIS PARAGRAPH AND THE PROVISIONS OF
      SECTION 5.02(D) OF THE AGREEMENT REFERRED TO HEREIN. ANY PERSON THAT IS A
      DISQUALIFIED ORGANIZATION IS PROHIBITED FROM ACQUIRING BENEFICIAL
      OWNERSHIP OF THIS CLASS R-X CERTIFICATE.

                                    C-1-2-2
<PAGE>
                 C-BASS MORTGAGE LOAN ASSET-BACKED CERTIFICATES
                           SERIES 2004-CB2, CLASS R-X

evidencing a beneficial ownership interest in a portion of a Trust Fund
consisting primarily of a pool of conventional fixed-rate and adjustable-rate
one- to four-family first and second lien mortgage loans formed and sold by

                     MERRILL LYNCH MORTGAGE INVESTORS, INC.

Series 2004-CB2, Class R-X                    Servicer: Litton Loan Servicing LP

Date of Pooling and Servicing Agreement and
Cut-off Date: February 1, 2004                Trustee: JPMorgan Chase Bank
First Distribution Date: March 25, 2004       Closing Date: March 12, 2004

No.

Percentage Interest:  100%

      THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
      MERRILL LYNCH MORTGAGE INVESTORS, INC., THE SERVICER, THE TRUSTEE OR ANY
      OF THEIR AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED BY ANY AGENCY OR
      INSTRUMENTALITY OF THE UNITED STATES.

      This certifies that Paul Vianna is the registered owner of a Percentage
Interest set forth above in that certain beneficial ownership interest evidenced
by all the Class R-X Certificates in the Trust Fund created pursuant to a
Pooling and Servicing Agreement, dated as specified above (the "Agreement"),
among Merrill Lynch Mortgage Investors, Inc. (hereinafter called the
"Depositor," which term includes any successor entity under the Agreement),
Credit-Based Asset Servicing and Securitization LLC (the "Seller"), the Servicer
and the Trustee, a summary of certain of the pertinent provisions of which is
set forth hereafter. To the extent not defined herein, the capitalized terms
used herein have the meanings assigned in the Agreement. This Certificate is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.

      Pursuant to the terms of the Agreement, distributions will be made on the
25th day of each month or, if such 25th day is not a Business Day, the Business
Day immediately following (a "Distribution Date"), commencing on the first
Distribution Date specified above, to the Person in whose name this Certificate
is registered on the last Business Day of the month immediately preceding the
month in which the related Distribution Date occurs (the "Record Date"), from
funds in the Distribution Account in an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount required to be
distributed to the Holders of Class R-X Certificates on such Distribution Date
pursuant to the Agreement.

      All distributions to the Holder of this Certificate under the Agreement
will be made or caused to be made by or on behalf of the Trustee by wire
transfer in immediately available funds to the account of the Person entitled
thereto if such Person shall have so notified the Certificate Registrar in
writing at least five Business Days prior to the Record Date immediately prior
to such Distribution Date and is the registered owner of Class R-X Certificates
the aggregate Percentage Interest of which is in excess of a 66% Percentage
Interest of the Class R-X Certificates, or by check mailed by first class mail
to the address of the Person entitled thereto, as such name and address shall
appear on the Certificate Register, provided that the Certificate

                                    C-1-2-3
<PAGE>
Registrar may deduct a reasonable wire transfer fee from any payment made by
wire transfer. Notwithstanding the above, the final distribution on this
Certificate will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose as provided in the
Agreement.

      This Certificate is one of a duly authorized issue of Certificates
designated as C-BASS Mortgage Loan Asset-Backed Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
the Percentage Interest specified on the face hereof.

      The Class R-X Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

      The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee, the Seller and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicer, the Seller and the Trustee with the consent of the Holders of
Certificates entitled to the Voting Rights identified in the agreement. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange herefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.

      As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies appointed by the Trustee as provided in the Agreement, duly
endorsed by, or accompanied by an assignment in the form below or other written
instrument of transfer in form satisfactory to the Trustee and the Certificate
Registrar duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

      The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, Certificates are exchangeable for

                                    C-1-2-4
<PAGE>
new Certificates of the same Class in authorized denominations evidencing the
same aggregate Percentage Interest, as requested by the Holder surrendering the
same.

      No transfer of this Certificate shall be made unless that transfer is made
pursuant to an effective registration statement under the 1933 Act and effective
registration or qualification under applicable state securities laws, or is made
in a transaction that does not require such registration or qualification. In
the event that a transfer is to be made without registration or qualification
(i) the Certificateholder desiring to effect the transfer and such
Certificateholder's prospective transferee shall each execute a representation
letter in the form described by the Agreement certifying to the Certificate
Registrar the facts surrounding the transfer, and (ii) unless such transfer is
made in reliance upon Rule 144A under the 1933 Act, the Depositor and the
Certificate Registrar may require an Opinion of Counsel satisfactory to them
that such transfer may be made without such registration or qualification, which
Opinion of Counsel shall not be an expense of the Depositor, the Trustee or the
Certificate Registrar, in their respective capacities as such. None of the
Depositor, the Certificate Registrar or the Trustee is obligated to register or
qualify the Class of Certificates specified on the face hereof under the 1933
Act or any other securities law or to take any action not otherwise required
under the Agreement to permit the transfer of such Certificates without
registration or qualification. Any such Certificateholder desiring to effect
such transfer shall, and does hereby agree to, indemnify the Trustee, the
Depositor, the Certificate Registrar and the Servicer against any liability that
may result if the transfer is not so exempt or is not made in accordance with
such federal and state laws.

      No transfer of a Certificate or any interest therein may be made to
employee benefit plans and certain other retirement plans and arrangements,
including individual retirement accounts and annuities, Keogh plans and
collective investment funds and separate accounts in which such plans, accounts
or arrangements are invested that are subject to the fiduciary responsibility
provisions of ERISA and Section 4975 of the Code ("Plans") or any person who is
directly or indirectly purchasing the Certificate or interest therein on behalf
of, as named fiduciary of, as trustee of, or with assets of a Plan.

      The Holder of this Certificate, by its acceptance hereof, shall be deemed
for all purposes to have consented to the provisions of Section 5.02 of the
Agreement and to any amendment of the Agreement deemed necessary by counsel of
the Depositor to ensure that the transfer of this Certificate to any Person
other than a Permitted Transferee or any other Person will not cause any REMIC
provided for in the Trust Agreement to cease to qualify as a REMIC or cause the
imposition of a tax upon the Trust.

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

      The Depositor, the Servicer, the Trustee, any Paying Agent and the
Certificate Registrar and any agent of the Depositor, the Servicer, the Trustee,
any Paying Agent or the Certificate Registrar may treat the Person in whose name
this Certificate is registered as the owner hereof

                                    C-1-2-5
<PAGE>
for all purposes, and none of the Depositor, the Servicer, the Trustee, the
Certificate Registrar, any Paying Agent nor any such agent shall be affected by
notice to the contrary.

      The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant to
the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the Trust
Fund of all Mortgage Loans and all property acquired in respect of such Mortgage
Loans. The Agreement permits, but does not require, the party designated in the
Agreement to purchase from the Trust Fund all 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
Principal Balance of the Mortgage Loans at the time of purchase being 10% or
less of the Cut-off Date Aggregate Principal Balance.

      The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.

      Unless the certificate of authentication hereon has been executed by the
Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                    C-1-2-6
<PAGE>
      IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.

Dated: March 12, 2004

                                           JPMORGAN CHASE BANK, as
                                           Trustee

                                           By: _________________________________
                                                    Authorized Officer

                          CERTIFICATE OF AUTHENTICATION

      This is one of the Certificates referred to in the within-mentioned
Agreement.

                                           JPMORGAN CHASE BANK,
                                              as Certificate Registrar

                                           By: _________________________________
                                                    Authorized Signatory

Date of authentication: March 12, 2004

                                    C-1-2-7
<PAGE>
                                  ABBREVIATIONS

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

TEN COM - as tenants in common               UNIF GIFT MIN ACT - Custodian
                                                                 (Cust) (Minor)
TEN ENT - as tenants by the entireties                           under Uniform
                                                                 Gifts to Minors
JT TEN  - as joint tenants with right of                         Act
          survivorship and not as tenants                        _______________
          in common                                                  (State)

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

                                    C-1-2-8
<PAGE>
                                   ASSIGNMENT

      FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)

a Percentage Interest equal to ____% evidenced by the within asset-backed
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.

      I (we) further direct the Certificate Registrar to issue a new Certificate
of a like Percentage Interest and Class to the above named assignee and deliver
such Certificate to the following address:

________________________________________________________________________________

Dated:

                                      _____________________________________
                                      Signature by or on behalf of assignor

                                      _____________________________________
                                      Signature Guaranteed

                            DISTRIBUTION INSTRUCTIONS

      The assignee should include the following for purposes of distribution:

Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to _____________________________________________________________
________________________________________________________________________________
for the account of ________________________________, account number ___________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to ______________________________________
This information is provided by _______________________________________________,
the assignee named above, or __________________________________________________,
as its agent.

                                    C-1-2-9
<PAGE>
                                   EXHIBIT C-2

                         [FORM OF CLASS M-1 CERTIFICATE]

      UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
      THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
      TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
      AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN
      SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
      (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
      REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE,
      OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
      INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
      HEREIN.

      THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A
      CERTIFICATES AS DESCRIBED IN THE AGREEMENT REFERRED TO HEREIN.

      EXCEPT AS PROVIDED IN SECTION 5.02(D) OF THE AGREEMENT REFERRED TO HEREIN,
      THIS CERTIFICATE MAY NOT BE PURCHASED BY OR TRANSFERRED TO ANY PERSON THAT
      HAS NOT DELIVERED A REPRESENTATION LETTER STATING EITHER (A) THAT THE
      TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT
      SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974,
      AS AMENDED ("ERISA"), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF
      1986, AS AMENDED (THE "CODE"), OR PROVISIONS OF OTHER FEDERAL, STATE OR
      LOCAL LAW WHICH IS, TO A MATERIAL EXTENT, SIMILAR TO THE FOREGOING
      PROVISIONS OF ERISA OR THE CODE (COLLECTIVELY, A "PLAN"), AND IS NOT
      ACTING ON BEHALF OF OR INVESTING THE ASSETS OF A PLAN OR (B) THE
      TRANSFEREE IS AN INSURANCE COMPANY AND THE SOURCE OF FUNDS USED TO
      PURCHASE THIS CERTIFICATE IS AN "INSURANCE COMPANY GENERAL ACCOUNT" (AS
      SUCH TERM IS DEFINED IN SECTION V(E) OF PROHIBITED TRANSACTION CLASS
      EXEMPTION 95-60 ("PTCE 95-60")) AND THAT THE PURCHASE AND HOLDING OF THE
      CERTIFICATE ARE COVERED UNDER SECTIONS I AND III OF PTCE 95-60. EACH
      PERSON WHO ACQUIRES THIS CERTIFICATE OR ANY INTEREST THEREIN SHALL BE
      DEEMED TO HAVE MADE THE REPRESENTATIONS REQUIRED BY THE REPRESENTATION
      LETTER REFERRED TO IN THE PRECEDING SENTENCE, UNLESS SUCH PERSON SHALL
      HAVE PROVIDED SUCH REPRESENTATION

                                     C-2-1
<PAGE>
      LETTER REFERRED TO IN THE PRECEDING SENTENCE TO THE CERTIFICATE REGISTRAR.
      THE AGREEMENT PROVIDES THAT ANY ATTEMPTED OR PURPORTED TRANSFER IN
      VIOLATION OF THESE TRANSFER RESTRICTIONS WILL BE NULL AND VOID AND WILL
      VEST NO RIGHTS IN ANY PURPORTED TRANSFEREE.

      FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS
      BENEFICIAL OWNERSHIP OF A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
      INVESTMENT CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS
      860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
      "CODE") AND CERTAIN OTHER PROPERTY.

                                     C-2-2
<PAGE>
                 C-BASS MORTGAGE LOAN ASSET-BACKED CERTIFICATES
                           SERIES 2004-CB2, CLASS M-1

evidencing a beneficial ownership interest in a portion of a Trust Fund
consisting primarily of a pool of conventional fixed-rate and adjustable-rate
one- to four-family first and second lien mortgage loans formed and sold by

                     MERRILL LYNCH MORTGAGE INVESTORS, INC.

<TABLE>
<S>                                                          <C>
Series 2004-CB2, Class M-1                                   Original Class Certificate Principal Balance of
                                                             the Class M-1 Certificates as of the Closing
                                                             Date: $24,072,000.00
Pass-Through Rate: Variable(1)
Date of Pooling and Servicing Agreement and Cut-off Date:    Initial Certificate Principal Balance:
February 1, 2004                                             $24,072,000.00
First Distribution Date:  March 25, 2004                     Servicer: Litton Loan Servicing LP

No.                                                          Trustee: JPMorgan Chase Bank

CUSIP: 12489W HY 3                                           Closing Date: March 12, 2004

ISIN: US12489WHY30
</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.

      THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
      MERRILL LYNCH MORTGAGE INVESTORS, INC., THE SERVICER, THE TRUSTEE OR ANY
      OF THEIR AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED BY ANY AGENCY OR
      INSTRUMENTALITY OF THE UNITED STATES.

      This certifies that CEDE & CO. is the registered owner of a Percentage
Interest (obtained by dividing the Initial Certificate Principal Balance of this
Certificate by the Original Class Certificate Principal Balance of the Class M-1
Certificates) in that certain beneficial ownership interest evidenced by all the
Class M-1 Certificates in the Trust Fund created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among Merrill
Lynch Mortgage Investors, Inc. (hereinafter called the "Depositor," which term
includes any successor entity under the Agreement), Credit-Based Asset Servicing
and Securitization LLC (the "Seller"), the Servicer and the Trustee, a summary
of certain of the pertinent provisions of which is set forth hereafter. To the
extent not defined herein, the capitalized terms used herein have the meanings
assigned in the Agreement. This Certificate is issued under and is subject to

----------
(1)   Subject to a cap as described in the Agreement.

                                     C-2-3
<PAGE>
the terms, provisions and conditions of the Agreement, to which Agreement the
Holder of this Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.

      Pursuant to the terms of the Agreement, distributions will be made on the
25th day of each month or, if such 25th day is not a Business Day, the Business
Day immediately following (a "Distribution Date"), commencing on the first
Distribution Date specified above, to the Person in whose name this Certificate
is registered on the last Business Day of the month immediately preceding the
month in which the related Distribution Date occurs (the "Record Date"), from
funds in the Distribution Account in an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount required to be
distributed to the Holders of Class M-1 Certificates on such Distribution Date
pursuant to the Agreement.

      All distributions to the Holder of this Certificate under the Agreement
will be made or caused to be made by or on behalf of the Trustee by wire
transfer in immediately available funds to the account of the Person entitled
thereto if such Person shall have so notified the Certificate Registrar in
writing at least five Business Days prior to the Record Date immediately prior
to such Distribution Date and is the registered owner of Class M-1 Certificates
the aggregate Initial Certificate Principal Balance of which is in excess of
$5,000,000, or by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register, provided that the Certificate Registrar may deduct a reasonable wire
transfer fee from any payment made by wire transfer. Notwithstanding the above,
the final distribution on this Certificate will be made after due notice by the
Trustee of the pendency of such distribution and only upon presentation and
surrender of this Certificate at the office or agency appointed by the Trustee
for that purpose as provided in the Agreement.

      The Class M-1 Pass-Through Rate on each Distribution Date will be a rate
per annum equal to the least of (i) LIBOR as of the related LIBOR Determination
Date, plus the Class M-1 Certificate Margin, (ii) the Subordinate Rate Cap and
(iii) the Subordinate Maximum Rate Cap.

      This Certificate is one of a duly authorized issue of Certificates
designated as C-BASS Mortgage Loan Asset-Backed Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class M-1 Certificates.

      The Class M-1 Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage 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.

      This Certificate is subordinated in right of payment to the Class A
Certificates as described in the Agreement.

      The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee, the Seller and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicer, the Seller and the Trustee with the consent of the Holders of
Certificates entitled to

                                     C-2-4
<PAGE>
the Voting Rights identified in the agreement. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.

      As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies appointed by the Trustee as provided in the Agreement, duly
endorsed by, or accompanied by an assignment in the form below or other written
instrument of transfer in form satisfactory to the Trustee and the Certificate
Registrar duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

      The Certificates are issuable in fully registered form only without
coupons in Classes and denominations specified in the Agreement. As provided in
the Agreement and subject to certain limitations therein set forth, Certificates
are exchangeable for new Certificates of the same Class in authorized
denominations evidencing the same aggregate Percentage Interest, as requested by
the Holder surrendering the same.

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

      The Depositor, the Servicer, the Trustee, any Paying Agent and the
Certificate Registrar and any agent of the Depositor, the Servicer, the Trustee,
any Paying Agent or the Certificate Registrar may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and none of
the Depositor, the Servicer, the Trustee, the Certificate Registrar, any Paying
Agent nor any such agent shall be affected by notice to the contrary.

      The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant to
the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the Trust
Fund of all Mortgage Loans and all property acquired in respect of such Mortgage
Loans. The Agreement permits, but does not require, the party designated in the
Agreement to purchase from the Trust Fund all 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
Principal Balance of the Mortgage Loans at the time of purchase being 10% or
less of the Cut-off Date Aggregate Principal Balance.

                                     C-2-5
<PAGE>
      The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.

      Unless the certificate of authentication hereon has been executed by the
Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                     C-2-6
<PAGE>
      IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.

Dated: March 12, 2004

                                           JPMORGAN CHASE BANK, as
                                           Trustee

                                           By: _________________________________
                                                    Authorized Officer

                          CERTIFICATE OF AUTHENTICATION

      This is one of the Certificates referred to in the within-mentioned
Agreement.

                                           JPMORGAN CHASE BANK,
                                                    as Certificate Registrar

                                           By: _________________________________
                                                    Authorized Signatory

Date of authentication: March 12, 2004

                                     C-2-7
<PAGE>
                                  ABBREVIATIONS

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

TEN COM - as tenants in common               UNIF GIFT MIN ACT - Custodian
                                                                 (Cust) (Minor)
TEN ENT - as tenants by the entireties                           under Uniform
                                                                 Gifts to Minors
JT TEN  - as joint tenants with right of                         Act
          survivorship and not as tenants                        _______________
          in common                                                  (State)

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

                                     C-2-8
<PAGE>
                                   ASSIGNMENT

      FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)

a Percentage Interest equal to ____% evidenced by the within asset-backed
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.

      I (we) further direct the Certificate Registrar to issue a new Certificate
of a like Percentage Interest and Class to the above named assignee and deliver
such Certificate to the following address:

________________________________________________________________________________

Dated:

                                      _____________________________________
                                      Signature by or on behalf of assignor

                                      _____________________________________
                                      Signature Guaranteed

                            DISTRIBUTION INSTRUCTIONS

      The assignee should include the following for purposes of distribution:

Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to _____________________________________________________________
________________________________________________________________________________
for the account of ________________________________, account number ___________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to ______________________________________
This information is provided by _______________________________________________,
the assignee named above, or __________________________________________________,
as its agent.

                                     C-2-9
<PAGE>
                                   EXHIBIT C-3

                         [FORM OF CLASS M-2 CERTIFICATE]

      UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
      THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
      TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
      AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN
      SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
      (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
      REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE,
      OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
      INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
      HEREIN.

      THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A AND
      CLASS M-1 CERTIFICATES AS DESCRIBED IN THE AGREEMENT REFERRED TO HEREIN.

      EXCEPT AS PROVIDED IN SECTION 5.02(D) OF THE AGREEMENT REFERRED TO HEREIN,
      THIS CERTIFICATE MAY NOT BE PURCHASED BY OR TRANSFERRED TO ANY PERSON THAT
      HAS NOT DELIVERED A REPRESENTATION LETTER STATING EITHER (A) THAT THE
      TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT
      SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974,
      AS AMENDED ("ERISA"), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF
      1986, AS AMENDED (THE "CODE"), OR PROVISIONS OF OTHER FEDERAL, STATE OR
      LOCAL LAW WHICH IS, TO A MATERIAL EXTENT, SIMILAR TO THE FOREGOING
      PROVISIONS OF ERISA OR THE CODE (COLLECTIVELY, A "PLAN"), AND IS NOT
      ACTING ON BEHALF OF OR INVESTING THE ASSETS OF A PLAN OR (B) THE
      TRANSFEREE IS AN INSURANCE COMPANY AND THE SOURCE OF FUNDS USED TO
      PURCHASE THIS CERTIFICATE IS AN "INSURANCE COMPANY GENERAL ACCOUNT" (AS
      SUCH TERM IS DEFINED IN SECTION V(E) OF PROHIBITED TRANSACTION CLASS
      EXEMPTION 95-60 ("PTCE 95-60")) AND THAT THE PURCHASE AND HOLDING OF THE
      CERTIFICATE ARE COVERED UNDER SECTIONS I AND III OF PTCE 95-60. EACH
      PERSON WHO ACQUIRES THIS CERTIFICATE OR ANY INTEREST THEREIN SHALL BE
      DEEMED TO HAVE MADE THE REPRESENTATIONS REQUIRED BY THE REPRESENTATION
      LETTER REFERRED TO IN THE PRECEDING SENTENCE, UNLESS SUCH PERSON SHALL
      HAVE PROVIDED SUCH REPRESENTATION

                                     C-3-1
<PAGE>
      LETTER REFERRED TO IN THE PRECEDING SENTENCE TO THE CERTIFICATE REGISTRAR.
      THE AGREEMENT PROVIDES THAT ANY ATTEMPTED OR PURPORTED TRANSFER IN
      VIOLATION OF THESE TRANSFER RESTRICTIONS WILL BE NULL AND VOID AND WILL
      VEST NO RIGHTS IN ANY PURPORTED TRANSFEREE.

      FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS
      BENEFICIAL OWNERSHIP OF A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
      INVESTMENT CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS
      860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
      "CODE") AND CERTAIN OTHER PROPERTY.

                 C-BASS MORTGAGE LOAN ASSET-BACKED CERTIFICATES
                           SERIES 2004-CB2, CLASS M-2

evidencing a beneficial ownership interest in a portion of a Trust Fund
consisting primarily of a pool of conventional fixed-rate and adjustable-rate
one- to four-family first and second lien mortgage loans formed and sold by

                     MERRILL LYNCH MORTGAGE INVESTORS, INC.

<TABLE>
<S>                                            <C>
Series 2004-CB2, Class M-2                     Original Class Certificate Principal Balance of
                                               the Class M-2 Certificates as of the Closing
                                               Date: $20,932,000.00
Pass-Through Rate: Variable(1)

Date of Pooling and Servicing Agreement and    Initial Certificate Principal Balance:
Cut-off Date: February 1, 2004                 $20,932,000.00
First Distribution Date: March 25, 2004        Servicer: Litton Loan Servicing LP

No.                                            Trustee: JPMorgan Chase Bank

CUSIP: 12489W HZ 0                             Closing Date: March 12, 2004

ISIN: US12489WHZ05
</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.

      THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
      MERRILL LYNCH MORTGAGE INVESTORS, INC.,

----------
(1)   Subject to a cap as described in the Agreement.

                                     C-3-2
<PAGE>
      THE SERVICER, THE TRUSTEE OR ANY OF THEIR AFFILIATES. THIS CERTIFICATE IS
      NOT GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.

      This certifies that CEDE & CO. is the registered owner of a Percentage
Interest (obtained by dividing the Initial Certificate Principal Balance of this
Certificate by the Original Class Certificate Principal Balance of the Class M-2
Certificates) in that certain beneficial ownership interest evidenced by all the
Class M-2 Certificates in the Trust Fund created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among Merrill
Lynch Mortgage Investors, Inc. (hereinafter called the "Depositor," which term
includes any successor entity under the Agreement), Credit-Based Asset Servicing
and Securitization LLC (the "Seller"), the Servicer and the Trustee, a summary
of certain of the pertinent provisions of which is set forth hereafter. To the
extent not defined herein, the capitalized terms used herein have the meanings
assigned in the Agreement. This Certificate is issued under and is subject to
the terms, provisions and conditions of the Agreement, to which Agreement the
Holder of this Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.

      Pursuant to the terms of the Agreement, distributions will be made on the
25th day of each month or, if such 25th day is not a Business Day, the Business
Day immediately following (a "Distribution Date"), commencing on the first
Distribution Date specified above, to the Person in whose name this Certificate
is registered on the last Business Day of the month immediately preceding the
month in which the related Distribution Date occurs (the "Record Date"), from
funds in the Distribution Account in an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount required to be
distributed to the Holders of Class M-2 Certificates on such Distribution Date
pursuant to the Agreement.

      All distributions to the Holder of this Certificate under the Agreement
will be made or caused to be made by or on behalf of the Trustee by wire
transfer in immediately available funds to the account of the Person entitled
thereto if such Person shall have so notified the Certificate Registrar in
writing at least five Business Days prior to the Record Date immediately prior
to such Distribution Date and is the registered owner of Class M-2 Certificates
the aggregate Initial Certificate Principal Balance of which is in excess of
$5,000,000, or by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register, provided that the Certificate Registrar may deduct a reasonable wire
transfer fee from any payment made by wire transfer. Notwithstanding the above,
the final distribution on this Certificate will be made after due notice by the
Trustee of the pendency of such distribution and only upon presentation and
surrender of this Certificate at the office or agency appointed by the Trustee
for that purpose as provided in the Agreement.

      The Class M-2 Pass-Through Rate on each Distribution Date will be a rate
per annum equal to the least of (i) LIBOR as of the related LIBOR Determination
Date, plus the Class M-2 Certificate Margin, (ii) the Subordinate Rate Cap and
(iii) the Subordinate Maximum Rate Cap.

      This Certificate is one of a duly authorized issue of Certificates
designated as C-BASS Mortgage Loan Asset-Backed Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class M-2 Certificates.

                                     C-3-3
<PAGE>
      The Class M-2 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.

      This Certificate is subordinated in right of payment to the Class A and
Class M-1 Certificates as described in the Agreement.

      The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee, the Seller and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicer, the Seller and the Trustee with the consent of the Holders of
Certificates entitled to the Voting Rights identified in the agreement. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange herefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.

      As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies appointed by the Trustee as provided in the Agreement, duly
endorsed by, or accompanied by an assignment in the form below or other written
instrument of transfer in form satisfactory to the Trustee and the Certificate
Registrar duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

      The Certificates are issuable in fully registered form only without
coupons in Classes and denominations specified in the Agreement. As provided in
the Agreement and subject to certain limitations therein set forth, Certificates
are exchangeable for new Certificates of the same Class in authorized
denominations evidencing the same aggregate Percentage Interest, as requested by
the Holder surrendering the same.

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

      The Depositor, the Servicer, the Trustee, any Paying Agent and the
Certificate Registrar and any agent of the Depositor, the Servicer, the Trustee,
any Paying Agent or the Certificate Registrar may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and none of
the Depositor, the Servicer, the Trustee, the Certificate Registrar, any Paying
Agent nor any such agent shall be affected by notice to the contrary.

                                     C-3-4
<PAGE>
      The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant to
the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the Trust
Fund of all Mortgage Loans and all property acquired in respect of such Mortgage
Loans. The Agreement permits, but does not require, the party designated in the
Agreement to purchase from the Trust Fund all 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
Principal Balance of the Mortgage Loans at the time of purchase being 10% or
less of the Cut-off Date Aggregate Principal Balance.

      The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.

      Unless the certificate of authentication hereon has been executed by the
Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                     C-3-5
<PAGE>
      IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.

Dated: March 12, 2004

                                           JPMORGAN CHASE BANK, as
                                           Trustee

                                           By: _________________________________
                                                    Authorized Officer

                          CERTIFICATE OF AUTHENTICATION

      This is one of the Certificates referred to in the within-mentioned
Agreement.

                                           JPMORGAN CHASE BANK,
                                                    as Certificate Registrar

                                           By: _________________________________
                                                    Authorized Signatory

Date of authentication: March 12, 2004

                                     C-3-6
<PAGE>
                                  ABBREVIATIONS

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

TEN COM - as tenants in common               UNIF GIFT MIN ACT - Custodian
                                                                 (Cust) (Minor)
TEN ENT - as tenants by the entireties                           under Uniform
                                                                 Gifts to Minors
JT TEN  - as joint tenants with right of                         Act
          survivorship and not as tenants                        _______________
          in common                                                  (State)

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

                                     C-3-7
<PAGE>
                                   ASSIGNMENT

      FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)

a Percentage Interest equal to ____% evidenced by the within asset-backed
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.

      I (we) further direct the Certificate Registrar to issue a new Certificate
of a like Percentage Interest and Class to the above named assignee and deliver
such Certificate to the following address:

________________________________________________________________________________

Dated:

                                      _____________________________________
                                      Signature by or on behalf of assignor

                                      _____________________________________
                                      Signature Guaranteed

                            DISTRIBUTION INSTRUCTIONS

      The assignee should include the following for purposes of distribution:

Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to _____________________________________________________________
________________________________________________________________________________
for the account of ________________________________, account number ___________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to ______________________________________
This information is provided by _______________________________________________,
the assignee named above, or __________________________________________________,
as its agent.

                                     C-3-8
<PAGE>
                                   EXHIBIT C-4

                        [FORM OF CLASS M-3 CERTIFICATES]

      UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
      THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
      TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
      AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN
      SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
      (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
      REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE,
      OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
      INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
      HEREIN.

      THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A, CLASS
      M-1 AND CLASS M-2 CERTIFICATES AS DESCRIBED IN THE AGREEMENT REFERRED TO
      HEREIN.

      EXCEPT AS PROVIDED IN SECTION 5.02(D) OF THE AGREEMENT REFERRED TO HEREIN,
      THIS CERTIFICATE MAY NOT BE PURCHASED BY OR TRANSFERRED TO ANY PERSON THAT
      HAS NOT DELIVERED A REPRESENTATION LETTER STATING EITHER (A) THAT THE
      TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT
      SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974,
      AS AMENDED ("ERISA"), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF
      1986, AS AMENDED (THE "CODE"), OR PROVISIONS OF OTHER FEDERAL, STATE OR
      LOCAL LAW WHICH IS, TO A MATERIAL EXTENT, SIMILAR TO THE FOREGOING
      PROVISIONS OF ERISA OR THE CODE (COLLECTIVELY, A "PLAN"), AND IS NOT
      ACTING ON BEHALF OF OR INVESTING THE ASSETS OF A PLAN OR (B) THE
      TRANSFEREE IS AN INSURANCE COMPANY AND THE SOURCE OF FUNDS USED TO
      PURCHASE THIS CERTIFICATE IS AN "INSURANCE COMPANY GENERAL ACCOUNT" (AS
      SUCH TERM IS DEFINED IN SECTION V(E) OF PROHIBITED TRANSACTION CLASS
      EXEMPTION 95-60 ("PTCE 95-60")) AND THAT THE PURCHASE AND HOLDING OF THE
      CERTIFICATE ARE COVERED UNDER SECTIONS I AND III OF PTCE 95-60. EACH
      PERSON WHO ACQUIRES THIS CERTIFICATE OR ANY INTEREST THEREIN SHALL BE
      DEEMED TO HAVE MADE THE REPRESENTATIONS REQUIRED BY THE REPRESENTATION
      LETTER REFERRED TO IN THE PRECEDING SENTENCE, UNLESS SUCH PERSON SHALL
      HAVE PROVIDED SUCH REPRESENTATION

                                     C-4-1
<PAGE>
      LETTER REFERRED TO IN THE PRECEDING SENTENCE TO THE CERTIFICATE REGISTRAR.
      THE AGREEMENT PROVIDES THAT ANY ATTEMPTED OR PURPORTED TRANSFER IN
      VIOLATION OF THESE TRANSFER RESTRICTIONS WILL BE NULL AND VOID AND WILL
      VEST NO RIGHTS IN ANY PURPORTED TRANSFEREE.

      FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS
      BENEFICIAL OWNERSHIP OF A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
      INVESTMENT CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS
      860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
      "CODE") AND CERTAIN OTHER PROPERTY.

                 C-BASS MORTGAGE LOAN ASSET-BACKED CERTIFICATES
                           SERIES 2004-CB2, CLASS M-3

evidencing a beneficial ownership interest in a portion of a Trust Fund
consisting primarily of a pool of conventional fixed-rate and adjustable-rate
one- to four-family first and second lien mortgage loans formed and sold by

                     MERRILL LYNCH MORTGAGE INVESTORS, INC.

<TABLE>
<S>                                             <C>
Series 2004-CB2, Class M-3                      Original Class Certificate Principal Balance of
                                                the Class M-3 Certificates as of the Closing
                                                Date: $5,233,000.00
Pass-Through Rate: Variable(1)

Date of Pooling and Servicing Agreement and     Initial Certificate Principal Balance:
Cut-off Date: February 1, 2004                  $5,233,000.00
First Distribution Date: March 25, 2004         Servicer: Litton Loan Servicing LP

No.                                             Trustee: JPMorgan Chase Bank

CUSIP: 12489W JA 3                              Closing Date: March 12, 2004

ISIN: US12489WJA36
</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.

      THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
      MERRILL LYNCH MORTGAGE INVESTORS, INC.,

----------
(1)   Subject to a cap as described in the Agreement.

                                     C-4-2
<PAGE>
      THE SERVICER, THE TRUSTEE OR ANY OF THEIR AFFILIATES. THIS CERTIFICATE IS
      NOT GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.

      This certifies that CEDE & CO. is the registered owner of a Percentage
Interest (obtained by dividing the Initial Certificate Principal Balance of this
Certificate by the Original Class Certificate Principal Balance of the Class M-3
Certificates) in that certain beneficial ownership interest evidenced by all the
Class M-3 Certificates in the Trust Fund created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among Merrill
Lynch Mortgage Investors, Inc. (hereinafter called the "Depositor," which term
includes any successor entity under the Agreement), Credit-Based Asset Servicing
and Securitization LLC (the "Seller"), the Servicer and the Trustee, a summary
of certain of the pertinent provisions of which is set forth hereafter. To the
extent not defined herein, the capitalized terms used herein have the meanings
assigned in the Agreement. This Certificate is issued under and is subject to
the terms, provisions and conditions of the Agreement, to which Agreement the
Holder of this Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.

      Pursuant to the terms of the Agreement, distributions will be made on the
25th day of each month or, if such 25th day is not a Business Day, the Business
Day immediately following (a "Distribution Date"), commencing on the first
Distribution Date specified above, to the Person in whose name this Certificate
is registered on the last Business Day of the month immediately preceding the
month in which the related Distribution Date occurs (the "Record Date"), from
funds in the Distribution Account in an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount required to be
distributed to the Holders of Class M-3 Certificates on such Distribution Date
pursuant to the Agreement.

      All distributions to the Holder of this Certificate under the Agreement
will be made or caused to be made by or on behalf of the Trustee by wire
transfer in immediately available funds to the account of the Person entitled
thereto if such Person shall have so notified the Certificate Registrar in
writing at least five Business Days prior to the Record Date immediately prior
to such Distribution Date and is the registered owner of Class M-3 Certificates
the aggregate Initial Certificate Principal Balance of which is in excess of
$5,000,000, or by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register, provided that the Certificate Registrar may deduct a reasonable wire
transfer fee from any payment made by wire transfer. Notwithstanding the above,
the final distribution on this Certificate will be made after due notice by the
Trustee of the pendency of such distribution and only upon presentation and
surrender of this Certificate at the office or agency appointed by the Trustee
for that purpose as provided in the Agreement.

      The Class M-3 Pass-Through Rate on each Distribution Date will be a rate
per annum equal to the least of (i) LIBOR as of the related LIBOR Determination
Date, plus the Class M-3 Certificate Margin, (ii) the Subordinate Rate Cap and
(iii) the Subordinate Maximum Rate Cap.

      This Certificate is one of a duly authorized issue of Certificates
designated as C-BASS Mortgage Loan Asset-Backed Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class M-3 Certificates.

                                     C-4-3
<PAGE>
      The Class M-3 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.

      This Certificate is subordinated in right of payment to the Class A, Class
M-1 and Class M-2 Certificates as described in the Agreement.

      The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee, the Seller and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicer, the Seller and the Trustee with the consent of the Holders of
Certificates entitled to the Voting Rights identified in the agreement. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange herefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.

      As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies appointed by the Trustee as provided in the Agreement, duly
endorsed by, or accompanied by an assignment in the form below or other written
instrument of transfer in form satisfactory to the Trustee and the Certificate
Registrar duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

      The Certificates are issuable in fully registered form only without
coupons in Classes and denominations specified in the Agreement. As provided in
the Agreement and subject to certain limitations therein set forth, Certificates
are exchangeable for new Certificates of the same Class in authorized
denominations evidencing the same aggregate Percentage Interest, as requested by
the Holder surrendering the same.

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

      The Depositor, the Servicer, the Trustee, any Paying Agent and the
Certificate Registrar and any agent of the Depositor, the Servicer, the Trustee,
any Paying Agent or the Certificate Registrar may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and none of
the Depositor, the Servicer, the Trustee, the Certificate Registrar, any Paying
Agent nor any such agent shall be affected by notice to the contrary.

                                     C-4-4
<PAGE>
      The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant to
the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the Trust
Fund of all Mortgage Loans and all property acquired in respect of such Mortgage
Loans. The Agreement permits, but does not require, the party designated in the
Agreement to purchase from the Trust Fund all 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
Principal Balance of the Mortgage Loans at the time of purchase being 10% or
less of the Cut-off Date Aggregate Principal Balance.

      The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.

      Unless the certificate of authentication hereon has been executed by the
Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                     C-4-5
<PAGE>
      IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.

Dated: March 12, 2004

                                           JPMORGAN CHASE BANK, as
                                           Trustee

                                           By: _________________________________
                                                    Authorized Officer

                          CERTIFICATE OF AUTHENTICATION

      This is one of the Certificates referred to in the within-mentioned
Agreement.

                                           JPMORGAN CHASE BANK,
                                               as Certificate Registrar

                                           By: _________________________________
                                                    Authorized Signatory

Date of authentication: March 12, 2004

                                     C-4-6
<PAGE>
                                  ABBREVIATIONS

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

TEN COM - as tenants in common               UNIF GIFT MIN ACT - Custodian
                                                                 (Cust) (Minor)
TEN ENT - as tenants by the entireties                           under Uniform
                                                                 Gifts to Minors
JT TEN  - as joint tenants with right of                         Act
          survivorship and not as tenants                        _______________
          in common                                                  (State)

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

                                     C-4-7
<PAGE>
                                   ASSIGNMENT

      FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)

a Percentage Interest equal to ____% evidenced by the within asset-backed
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.

      I (we) further direct the Certificate Registrar to issue a new Certificate
of a like Percentage Interest and Class to the above named assignee and deliver
such Certificate to the following address:

________________________________________________________________________________

Dated:

                                      _____________________________________
                                      Signature by or on behalf of assignor

                                      _____________________________________
                                      Signature Guaranteed

                            DISTRIBUTION INSTRUCTIONS

      The assignee should include the following for purposes of distribution:

Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to _____________________________________________________________
________________________________________________________________________________
for the account of ________________________________, account number ___________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to ______________________________________
This information is provided by _______________________________________________,
the assignee named above, or __________________________________________________,
as its agent.

                                     C-4-8
<PAGE>
                                   EXHIBIT C-5

                          [FORM OF CLASS X CERTIFICATE]

      FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A DIRECT
      OR INDIRECT BENEFICIAL INTEREST IN A "REGULAR INTEREST" IN A "REAL ESTATE
      MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
      SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
      (THE "CODE") AND THE OBLIGATION TO MAKE CERTAIN PAYMENTS.

      THIS CLASS X CERTIFICATE IS SUBORDINATE TO THE OFFERED CERTIFICATES OF
      THIS SERIES TO THE EXTENT DESCRIBED HEREIN AND IN THE AGREEMENT REFERRED
      TO HEREIN.

      THIS CLASS X CERTIFICATE WILL NOT BE ENTITLED TO PAYMENTS UNTIL SUCH TIME
      AS DESCRIBED IN THE AGREEMENT REFERRED TO HEREIN.

      THIS CLASS X CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR THE SECURITIES
      LAWS OF ANY STATE. ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS
      CERTIFICATE WITHOUT SUCH REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN
      A TRANSACTION THAT DOES NOT REQUIRE SUCH REGISTRATION OR QUALIFICATION AND
      IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF THE AGREEMENT
      REFERRED TO HEREIN.

      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 IN THE AGREEMENT.

                                     C-5-1
<PAGE>
                 C-BASS MORTGAGE LOAN ASSET-BACKED CERTIFICATES
                            SERIES 2004-CB2, CLASS X

evidencing a beneficial ownership interest in a portion of a Trust Fund
consisting primarily of a pool of conventional fixed-rate and adjustable-rate
one- to four-family first and second lien mortgage loans formed and sold by

                     MERRILL LYNCH MORTGAGE INVESTORS, INC.

Series 2004-CB2, Class X                      Servicer: Litton Loan Servicing LP
Date of Pooling and Servicing Agreement and
Cut-off Date: February 1, 2004                Trustee: JPMorgan Chase Bank
First Distribution Date: March 25, 2004       Closing Date: March 12, 2004

CUSIP: 12489W JG 0
ISIN: US12489WJG06
Percentage Interest: 100%

      THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
      MERRILL LYNCH MORTGAGE INVESTORS, INC., THE SERVICER, THE TRUSTEE OR ANY
      OF THEIR AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED BY ANY AGENCY OR
      INSTRUMENTALITY OF THE UNITED STATES.

      This certifies that Merrill Lynch, Pierce, Fenner & Smith Incorporated is
the registered owner of a Percentage Interest set forth above in that certain
beneficial ownership interest evidenced by all the Class X Certificates in the
Trust Fund created pursuant to a Pooling and Servicing Agreement, dated as
specified above (the "Agreement"), among Merrill Lynch Mortgage Investors, Inc.
(hereinafter called the "Depositor," which term includes any successor entity
under the Agreement), Credit-Based Asset Servicing and Securitization LLC (the
"Seller"), the Servicer and the Trustee, a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.

      Pursuant to the terms of the Agreement, distributions will be made on the
25th day of each month or, if such 25th day is not a Business Day, the Business
Day immediately following (a "Distribution Date"), commencing on the first
Distribution Date specified above, to the Person in whose name this Certificate
is registered on the last Business Day of the month immediately preceding the
month in which the related Distribution Date occurs (the "Record Date"), from
funds in the Distribution Account in an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount required to be
distributed to the Holders of Class X Certificates on such Distribution Date
pursuant to the Agreement.

      All distributions to the Holder of this Certificate under the Agreement
will be made or caused to be made by or on behalf of the Trustee by wire
transfer in immediately available funds

                                     C-5-2
<PAGE>
to the account of the Person entitled thereto if such Person shall have so
notified the Certificate Registrar in writing at least five Business Days prior
to the Record Date immediately prior to such Distribution Date and is the
registered owner of Class X Certificates the aggregate Initial Certificate
Principal Balance of which is in excess of a 66% Percentage Interest of the
Class X Certificates, or by check mailed by first class mail to the address of
the Person entitled thereto, as such name and address shall appear on the
Certificate Register, provided that the Certificate Registrar may deduct a
reasonable wire transfer fee from any payment made by wire transfer.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose as provided in the Agreement.

      This Certificate is one of a duly authorized issue of Certificates
designated as C-BASS Mortgage Loan Asset-Backed Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
the Percentage Interest specified on the face hereof.

      The Class X Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

      The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee, the Seller and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicer, the Seller and the Trustee with the consent of the Holders of
Certificates entitled to the Voting Rights identified in the agreement. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange herefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.

      As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies appointed by the Trustee as provided in the Agreement, duly
endorsed by, or accompanied by an assignment in the form below or other written
instrument of transfer in form satisfactory to the Trustee and the Certificate
Registrar duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

      The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, Certificates are exchangeable for

                                     C-5-3
<PAGE>
new Certificates of the same Class in authorized denominations evidencing the
same aggregate Percentage Interest, as requested by the Holder surrendering the
same.

      No transfer of this Certificate shall be made unless that transfer is made
pursuant to an effective registration statement under the 1933 Act and effective
registration or qualification under applicable state securities laws, or is made
in a transaction that does not require such registration or qualification. In
the event that a transfer is to be made without registration or qualification
(i) the Certificateholder desiring to effect the transfer and such
Certificateholder's prospective transferee shall each execute a representation
letter in the form described by the Agreement certifying to the Certificate
Registrar the facts surrounding the transfer, and (ii) unless such transfer is
made in reliance upon Rule 144A under the 1933 Act, the Depositor and the
Certificate Registrar may require an Opinion of Counsel satisfactory to them
that such transfer may be made without such registration or qualification, which
Opinion of Counsel shall not be an expense of the Depositor, the Trustee or the
Certificate Registrar, in their respective capacities as such. None of the
Depositor, the Certificate Registrar or the Trustee is obligated to register or
qualify the Class of Certificates specified on the face hereof under the 1933
Act or any other securities law or to take any action not otherwise required
under the Agreement to permit the transfer of such Certificates without
registration or qualification. Any such Certificateholder desiring to effect
such transfer shall, and does hereby agree to, indemnify the Trustee, the
Depositor, the Certificate Registrar and the Servicer against any liability that
may result if the transfer is not so exempt or is not made in accordance with
such federal and state laws.

      No transfer of a Certificate or any interest therein may be made to
employee benefit plans and certain other retirement plans and arrangements,
including individual retirement accounts and annuities, Keogh plans and
collective investment funds and separate accounts in which such plans, accounts
or arrangements are invested that are subject to the fiduciary responsibility
provisions of ERISA and Section 4975 of the Code ("Plans") or any person who is
directly or indirectly purchasing the Certificate or interest therein on behalf
of, as named fiduciary of, as trustee of, or with assets of a Plan.

      No service charge will be made for any such registration of transfer or
exchange of Certificates, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.

      The Depositor, the Servicer, the Trustee, any Paying Agent and the
Certificate Registrar and any agent of the Depositor, the Servicer, the Trustee,
any Paying Agent or the Certificate Registrar may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and none of
the Depositor, the Servicer, the Trustee, the Certificate Registrar, any Paying
Agent nor any such agent shall be affected by notice to the contrary.

      The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant to
the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement

                                     C-5-4
<PAGE>
at a price determined as provided in the Agreement from the Trust Fund of all
Mortgage Loans and all property acquired in respect of such Mortgage Loans. The
Agreement permits, but does not require, the party designated in the Agreement
to purchase from the Trust Fund all 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 Principal Balance of
the Mortgage Loans at the time of purchase being 10% or less of the Cut-off Date
Aggregate Principal Balance.

      The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.

      Unless the certificate of authentication hereon has been executed by the
Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                     C-5-5
<PAGE>
      IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.

Dated: March 12, 2004

                                           JPMORGAN CHASE BANK, as
                                           Trustee

                                           By: _________________________________
                                                    Authorized Officer

                          CERTIFICATE OF AUTHENTICATION

      This is one of the Certificates referred to in the within-mentioned
Agreement.

                                           JPMORGAN CHASE BANK,
                                                    as Certificate Registrar

                                           By: _________________________________
                                                    Authorized Signatory

Date of authentication: March 12, 2004

                                     C-5-6
<PAGE>
                                  ABBREVIATIONS

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

TEN COM - as tenants in common               UNIF GIFT MIN ACT - Custodian
                                                                 (Cust) (Minor)
TEN ENT - as tenants by the entireties                           under Uniform
                                                                 Gifts to Minors
JT TEN  - as joint tenants with right of                         Act
          survivorship and not as tenants                        _______________
          in common                                                  (State)

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

                                     C-5-7
<PAGE>
                                   ASSIGNMENT

      FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)

a Percentage Interest equal to ____% evidenced by the within asset-backed
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.

      I (we) further direct the Certificate Registrar to issue a new Certificate
of a like Percentage Interest and Class to the above named assignee and deliver
such Certificate to the following address:

________________________________________________________________________________

Dated:

                                      _____________________________________
                                      Signature by or on behalf of assignor

                                      _____________________________________
                                      Signature Guaranteed

                            DISTRIBUTION INSTRUCTIONS

      The assignee should include the following for purposes of distribution:

Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to _____________________________________________________________
________________________________________________________________________________
for the account of ________________________________, account number ___________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to ______________________________________
This information is provided by _______________________________________________,
the assignee named above, or __________________________________________________,
as its agent.

                                     C-5-8
<PAGE>
                                   EXHIBIT C-6

                          [FORM OF CLASS N CERTIFICATE]

      FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A DIRECT
      OR INDIRECT BENEFICIAL INTEREST IN A "REGULAR INTEREST" IN A "REAL ESTATE
      MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
      SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
      (THE "CODE") AND THE OBLIGATION TO MAKE CERTAIN PAYMENTS.

      THIS CLASS N CERTIFICATE IS SUBORDINATE TO THE OFFERED CERTIFICATES OF
      THIS SERIES TO THE EXTENT DESCRIBED HEREIN AND IN THE AGREEMENT REFERRED
      TO HEREIN.

      THIS CLASS N CERTIFICATE WILL NOT BE ENTITLED TO PAYMENTS UNTIL SUCH TIME
      AS DESCRIBED IN THE AGREEMENT REFERRED TO HEREIN.

      THIS CLASS N CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR THE SECURITIES
      LAWS OF ANY STATE. ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS
      CERTIFICATE WITHOUT SUCH REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN
      A TRANSACTION THAT DOES NOT REQUIRE SUCH REGISTRATION OR QUALIFICATION AND
      IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF THE AGREEMENT
      REFERRED TO HEREIN.

      THIS CLASS N CERTIFICATE MAY NOT BE PURCHASED BY OR TRANSFERRED TO AN
      EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT SUBJECT TO TITLE I
      OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
      ("ERISA"), OR SECTION 4975 OF THE CODE OR PROVISIONS OF OTHER FEDERAL,
      STATE OR LOCAL LAW WHICH IS, TO A MATERIAL EXTENT, SIMILAR TO THE
      FOREGOING PROVISIONS OF ERISA OR THE CODE (COLLECTIVELY, A "PLAN"), OR A
      PERSON ACTING ON BEHALF OF OR INVESTING THE ASSETS OF A PLAN.

                                     C-6-1
<PAGE>
                 C-BASS MORTGAGE LOAN ASSET-BACKED CERTIFICATES
                            SERIES 2004-CB2, CLASS N

evidencing a beneficial ownership interest in a portion of a Trust Fund
consisting primarily of a pool of conventional fixed-rate and adjustable-rate
one- to four-family first and second lien mortgage loans formed and sold by

                                       MERRILL LYNCH MORTGAGE INVESTORS, INC.

<TABLE>
<S>                                              <C>
Series 2004-CB2, Class N                         Original Class Certificate Notional Balance of
                                                 the Class N Certificates as of the Closing
                                                 Date: $15,800,000.00
Pass-Through Rate: 0.00%                         Initial Notional Amount: $15,800,000.00

Date of Pooling and Servicing Agreement and      Servicer: Litton Loan Servicing LP
Cut-off Date: February 1, 2004
First Distribution Date: March 25, 2004          Trustee: JPMorgan Chase Bank

CUSIP: 12489W JF 2                               Closing Date: March 12, 2004
ISIN: US12489WJF23
</TABLE>

      THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
      MERRILL LYNCH MORTGAGE INVESTORS, INC., THE SERVICER, THE TRUSTEE OR ANY
      OF THEIR AFFILIATES. THIS CERTIFICATE IS NOT GUARANTEED BY ANY AGENCY OR
      INSTRUMENTALITY OF THE UNITED STATES.

      This certifies that Merrill Lynch, Pierce, Fenner & Smith Incorporated is
the registered owner of a Percentage Interest (obtained by dividing the Initial
Notional Amount of this Certificate by the Original Class N Notional Amount) in
that certain beneficial ownership interest evidenced by all the Class N
Certificates in the Trust Fund created pursuant to a Pooling and Servicing
Agreement, dated as specified above (the "Agreement"), among Merrill Lynch
Mortgage Investors, Inc. (hereinafter called the "Depositor," which term
includes any successor entity under the Agreement), Credit-Based Asset Servicing
and Securitization LLC (the "Seller"), the Servicer and the Trustee, a summary
of certain of the pertinent provisions of which is set forth hereafter. To the
extent not defined herein, the capitalized terms used herein have the meanings
assigned in the Agreement. This Certificate is issued under and is subject to
the terms, provisions and conditions of the Agreement, to which Agreement the
Holder of this Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.

      Pursuant to the terms of the Agreement, distributions will be made on the
25th day of each month or, if such 25th day is not a Business Day, the Business
Day immediately following (a "Distribution Date"), commencing on the first
Distribution Date specified above, to the Person in whose name this Certificate
is registered on the last Business Day of the month immediately preceding the
month in which the related Distribution Date occurs or the Closing Date in the
case of the first Distribution Date (the "Record Date"), from funds in the
Distribution Account in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to the Holders of Class N Certificates on such Distribution Date pursuant to the
Agreement.

                                     C-6-2
<PAGE>
      All distributions to the Holder of this Certificate under the Agreement
will be made or caused to be made by or on behalf of the Trustee by wire
transfer in immediately available funds to the account of the Person entitled
thereto if such Person shall have so notified the Certificate Registrar in
writing at least five Business Days prior to the Record Date immediately prior
to such Distribution Date and is the registered owner of Class N Certificates
the aggregate Initial Certificate Principal Balance of which is in excess of a
66% Percentage Interest of the Class N Certificates, or by check mailed by first
class mail to the address of the Person entitled thereto, as such name and
address shall appear on the Certificate Register, provided that the Certificate
Registrar may deduct a reasonable wire transfer fee from any payment made by
wire transfer. Notwithstanding the above, the final distribution on this
Certificate will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose as provided in the
Agreement.

      The Pass-Through Rate for this Class N Certificates on each Distribution
Date will be the per annum rate specified above.

      This Certificate is one of a duly authorized issue of Certificates
designated as C-BASS Mortgage Loan Asset-Backed Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
the Percentage Interest specified on the face hereof.

      The Class N Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

      The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Servicer, the Trustee, the Seller and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the
Servicer, the Seller and the Trustee with the consent of the Holders of
Certificates entitled to the Voting Rights identified in the agreement. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such Holder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange herefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.

      As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies appointed by the Trustee as provided in the Agreement, duly
endorsed by, or accompanied by an assignment in the form below or other written
instrument of transfer in form satisfactory to the Trustee and the Certificate
Registrar duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in

                                     C-6-3
<PAGE>
authorized denominations evidencing the same aggregate Percentage Interest will
be issued to the designated transferee or transferees.

      The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.

      No transfer of this Certificate shall be made unless that transfer is made
pursuant to an effective registration statement under the 1933 Act and effective
registration or qualification under applicable state securities laws, or is made
in a transaction that does not require such registration or qualification. In
the event that a transfer is to be made without registration or qualification
(i) the Certificateholder desiring to effect the transfer and such
Certificateholder's prospective transferee shall each execute a representation
letter in the form described by the Agreement certifying to the Certificate
Registrar the facts surrounding the transfer, and (ii) unless such transfer is
made in reliance upon Rule 144A under the 1933 Act, the Depositor and the
Certificate Registrar may require an Opinion of Counsel satisfactory to them
that such transfer may be made without such registration or qualification, which
Opinion of Counsel shall not be an expense of the Depositor, the Trustee or the
Certificate Registrar, in their respective capacities as such. None of the
Depositor, the Certificate Registrar or the Trustee is obligated to register or
qualify the Class of Certificates specified on the face hereof under the 1933
Act or any other securities law or to take any action not otherwise required
under the Agreement to permit the transfer of such Certificates without
registration or qualification. Any such Certificateholder desiring to effect
such transfer shall, and does hereby agree to, indemnify the Trustee, the
Depositor, the Certificate Registrar and the Servicer against any liability that
may result if the transfer is not so exempt or is not made in accordance with
such federal and state laws.

      No transfer of a Certificate or any interest therein may be made to
employee benefit plans and certain other retirement plans and arrangements,
including individual retirement accounts and annuities, Keogh plans and
collective investment funds and separate accounts in which such plans, accounts
or arrangements are invested that are subject to the fiduciary responsibility
provisions of ERISA and Section 4975 of the Code ("Plans") or any person who is
directly or indirectly purchasing the Certificate or interest therein on behalf
of, as named fiduciary of, as trustee of, or with assets of a Plan.

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

      The Depositor, the Servicer, the Trustee, any Paying Agent and the
Certificate Registrar and any agent of the Depositor, the Servicer, the Trustee,
any Paying Agent or the Certificate Registrar may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and none of
the Depositor, the Servicer, the Trustee, the Certificate Registrar, any Paying
Agent nor any such agent shall be affected by notice to the contrary.

                                     C-6-4
<PAGE>
      The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant to
the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the Trust
Fund of all Mortgage Loans and all property acquired in respect of such Mortgage
Loans. The Agreement permits, but does not require, the party designated in the
Agreement to purchase from the Trust Fund all 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
Principal Balance of the Mortgage Loans at the time of purchase being 10% or
less of the Cut-off Date Aggregate Principal Balance.

      The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.

      Unless the certificate of authentication hereon has been executed by the
Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                     C-6-5
<PAGE>
      IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.

Dated: March 12, 2004

                                           JPMORGAN CHASE BANK, as
                                           Trustee

                                           By: _________________________________
                                                    Authorized Officer

                          CERTIFICATE OF AUTHENTICATION

      This is one of the Certificates referred to in the within-mentioned
Agreement.

                                           JPMORGAN CHASE BANK,
                                              as Certificate Registrar

                                           By: _________________________________
                                                    Authorized Signatory

Date of authentication: March 12, 2004

                                     C-6-6
<PAGE>
                                  ABBREVIATIONS

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

TEN COM - as tenants in common               UNIF GIFT MIN ACT - Custodian
                                                                 (Cust) (Minor)
TEN ENT - as tenants by the entireties                           under Uniform
                                                                 Gifts to Minors
JT TEN  - as joint tenants with right of                         Act
          survivorship and not as tenants                        _______________
          in common                                                  (State)

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

                                     C-6-7
<PAGE>
                                   ASSIGNMENT

      FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)

a Percentage Interest equal to ____% evidenced by the within asset-backed
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.

      I (we) further direct the Certificate Registrar to issue a new Certificate
of a like Percentage Interest and Class to the above named assignee and deliver
such Certificate to the following address:

________________________________________________________________________________

Dated:

                                      _____________________________________
                                      Signature by or on behalf of assignor

                                      _____________________________________
                                      Signature Guaranteed

                            DISTRIBUTION INSTRUCTIONS

      The assignee should include the following for purposes of distribution:

Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to _____________________________________________________________
________________________________________________________________________________
for the account of ________________________________, account number ___________,
or, if mailed by check, to ____________________________________________________.
Applicable statements should be mailed to ______________________________________
This information is provided by _______________________________________________,
the assignee named above, or __________________________________________________,
as its agent.

                                     C-6-8
<PAGE>
                                   EXHIBIT F-1

                     FORM OF TRUSTEE'S INITIAL CERTIFICATION

                                                                Date

Merrill Lynch Mortgage Investors, Inc.
4 World Financial Center, 10th Floor
New York, New York 10080

Litton Loan Servicing LP
4828 Loop Central Drive
Houston, Texas  77081

      Re:   Pooling and Servicing Agreement (the "Pooling and Servicing
            Agreement"), dated as of February 1, 2004 among Merrill Lynch
            Mortgage Investors, Inc., as depositor, Credit-Based Asset Servicing
            and Securitization LLC, as seller, Litton Loan Servicing LP, as
            servicer, and JPMorgan Chase Bank, as trustee with respect to C-BASS
            Mortgage Loan Asset-Backed Certificates, Series 2004-CB2.

Ladies and Gentlemen:

      In accordance with Section 2.02 of the Pooling and Servicing Agreement,
the undersigned, as Trustee, hereby certifies that it received confirmation from
the Custodian that the Custodian has received the documents listed in Section
2.01 of the Pooling and Servicing Agreement for each Mortgage File pertaining to
each Mortgage Loan listed on Schedule A, to the Pooling and Servicing Agreement,
subject to any exceptions noted on Schedule I hereto.

      Capitalized words and phrases used herein and not otherwise defined herein
shall have the respective meanings assigned to them in the Pooling and Servicing
Agreement. This Certificate is subject in all respects to the terms of Section
2.02 of the Pooling and Servicing Agreement and the Pooling and Servicing
Agreement sections cross-referenced therein.

                                           JPMORGAN CHASE BANK,
                                                    as Trustee

                                           By: _________________________
                                           Name:
                                           Title:

                                     F-1-1
<PAGE>
                                   EXHIBIT F-2

                      FORM OF TRUSTEE'S FINAL CERTIFICATION

                                                                [Date]

Merrill Lynch Mortgage Investors, Inc.
4 World Financial Center, 10th Floor
New York, New York 10080

Litton Loan Servicing LP
4828 Loop Central Drive
Houston, Texas  77081

Re:   Pooling and Servicing Agreement (the "Pooling and Servicing Agreement"),
      dated as of February 1, 2004 among Merrill Lynch Mortgage Investors, Inc.,
      as depositor, Credit-Based Asset Servicing and Securitization LLC, as
      seller, Litton Loan Servicing LP, as servicer, and JPMorgan Chase Bank, as
      trustee with respect to C-BASS Mortgage Loan Asset-Backed Certificates,
      Series 2004-CB2

Ladies and Gentlemen:

      In accordance with Section 2.02 of the Pooling and Servicing Agreement,
the undersigned, as Trustee, hereby certifies that as to each Mortgage Loan
listed in the Mortgage Loan Schedule (other than any Mortgage Loan paid in full
or listed on Schedule I hereto) it received confirmation from the Custodian that
the Custodian has received the applicable documents listed in Section 2.01 of
the Pooling and Servicing Agreement.

      The undersigned hereby certifies that as to each Mortgage Loan identified
on the Mortgage Loan Schedule, other than any Mortgage Loan listed on Schedule I
hereto, it has reviewed the documents listed above and has determined that each
such document appears to be complete and, based on an examination of such
documents, the information set forth in the Mortgage Loan Schedule is correct.

      Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Pooling and Servicing Agreement. This
Certificate is qualified in all respects by the terms of said Pooling and
Servicing Agreement.

                                           JPMORGAN CHASE BANK,
                                                    as Trustee

                                           By: _________________________
                                           Name:
                                           Title:

                                     F-2-1
<PAGE>
                                   EXHIBIT F-3

                        FORM OF RECEIPT OF MORTGAGE NOTE

                                                                Date

Merrill Lynch Mortgage Investors, Inc.
4 World Financial Center, 10th Floor
New York, New York 10080

      Re:   C-BASS Mortgage Loan Asset-Backed Certificates, Series 2004-CB2

Ladies and Gentlemen:

      Pursuant to Section 2.01 of the Pooling and Servicing Agreement, dated as
of February 1, 2004, among Merrill Lynch Mortgage Investors, Inc., as depositor,
Credit-Based Asset Servicing and Securitization LLC, as seller, Litton Loan
Servicing LP, as servicer, and JPMorgan Chase Bank, as trustee, we hereby
acknowledge the receipt of the original Mortgage Note (a copy of which is
attached hereto as Exhibit 1) with any exceptions thereto listed on Exhibit 2.

                                           JPMORGAN CHASE BANK,
                                                as Trustee

                                           By: _________________________
                                           Name:
                                           Title:

                                     F-3-1
<PAGE>
                                    EXHIBIT G

                        MORTGAGE LOAN PURCHASE AGREEMENT

                             [INTENTIONALLY OMITTED]

                                      G-1
<PAGE>
                                    EXHIBIT H

                           FORM OF LOST NOTE AFFIDAVIT

      Personally appeared before me the undersigned authority to administer
oaths, ______________________ who first being duly sworn deposes and says:
Deponent is ______________________ of ______________________________, successor
by merger to _________________________________________ ("Seller") and who has
personal knowledge of the facts set out in this affidavit.

      On ___________________, _________________________ did execute and deliver
a promissory note in the principal amount of $__________.

      That said note has been misplaced or lost through causes unknown and is
presently lost and unavailable after diligent search has been made. Seller's
records show that an amount of principal and interest on said note is still
presently outstanding, due, and unpaid, and Seller is still owner and holder in
due course of said lost note.

      Seller executes this Affidavit for the purpose of inducing JPMorgan Chase
Bank, as trustee on behalf of C-BASS Mortgage Loan Asset-Backed Certificates,
Series 2004-CB2, to accept the transfer of the above described loan from Seller.

      Seller agrees to indemnify and hold harmless JPMorgan Chase Bank, Merrill
Lynch Mortgage Investors, Inc. and J.P. Morgan Securities, Inc. for any losses
incurred by such parties resulting from the above described promissory note has
been lost or misplaced.

                                                By: _________________________
                                                _____________________________

STATE OF       )
               )    SS:
COUNTY OF      )

      On this ____ day of _______ 20__, before me, a Notary Public, in and for
said County and State, appeared ________________________, who acknowledged the
extension of the foregoing and who, having been duly sworn, states that any
representations therein contained are true.

      Witness my hand and Notarial Seal this ____ day of _______ 20__.

                                                _____________________________
                                                _____________________________

My commission expires _____________.

                                      H-1
<PAGE>
                                    EXHIBIT I

                          FORM OF ERISA REPRESENTATION

                                                                Date

JPMorgan Chase Bank
Institutional Trust Services
4 New York Plaza, 6th Floor
New York, New York 10004

Merrill Lynch Mortgage Investors, Inc.
4 World Financial Center, 10th Floor
New York, New York 10080

      Re:   C-BASS Mortgage Loan Asset-Backed Certificates, Series 2004-CB2

Ladies and Gentlemen:

      1. [The undersigned is the ______________________ of (the "Transferee") a
[corporation duly organized] and existing under the laws of __________, on
behalf of which he makes this affidavit.] [The undersigned, ___________________,
is the transferee (the "Transferee").]

      2. The Transferee hereby acknowledges that under the terms of the Pooling
and Servicing Agreement (the "Agreement") among Merrill Lynch Mortgage
Investors, Inc., as depositor (the "Depositor"), Credit-Based Asset Servicing
and Securitization LLC, as seller, Litton Loan Servicing LP, as servicer, and
JPMorgan Chase Bank, as trustee (the "Trustee"), no transfer of the
ERISA-Restricted Certificates shall be permitted to be made to any person unless
the Depositor and the Certificate Registrar (as defined in the Agreement) have
received a certificate from such transferee in the form hereof.

      3. The Transferee either (x) (i) is not an employee benefit plan subject
to Title I of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or Section 4975 of the Internal Revenue Code of 1986, as amended (the
"Code") or provisions of other federal, state or local law substantially similar
to the foregoing provisions of ERISA or the Code, ("Similar Law") the Trustee of
any such plan or a person acting on behalf of any such plan nor a person using
the assets of any such plan or (ii) (except in the case of the Class R, Class
R-Q, Class X or Class N Certificates) is an insurance company which is
purchasing such Certificates with funds contained in an "insurance company
general account" (as such term is defined in Section V(e) of Prohibited
Transaction Class Exemption 95-60 ("PTCE 95-60") and that the purchase and
holding of such Certificates are covered under Sections I and III of PTCE 95-60
or (y) (except in the case of a Class R and Class R-Q Certificate) shall deliver
to the Certificate Registrar and the Depositor an opinion of counsel (a "Benefit
Plan Opinion") satisfactory to the Certificate Registrar, and upon which the
Certificate Registrar and the Depositor shall be entitled to rely, to the effect
that the purchase or holding of such Certificate by the Transferee will not
result in the assets of the Trust Fund being deemed to be plan assets and
subject to the prohibited

                                      I-1
<PAGE>
transaction provisions of ERISA, the Code or Similar Law and will not subject
the Trustee or the Depositor to any obligation in addition to those undertaken
by such entities in the Pooling and Servicing Agreement, which opinion of
counsel shall not be an expense of the Trustee or the Depositor.

      Capitalized terms used but not defined herein shall have the meanings
ascribed to such terms in the Agreement.

      IN WITNESS WHEREOF, the Transferee has executed this certificate.

                                             ___________________________
                                             [Transferee]

                                             ___________________________
                                             By:
                                             Name:
                                             Title:

                                      I-2
<PAGE>
                                    EXHIBIT J

                    FORM OF INVESTMENT LETTER [NON-RULE 144A]

                                                                [DATE]

Merrill Lynch Mortgage Investors, Inc.
4 World Financial Center, 10th Floor
New York, New York 10080

JPMorgan Chase Bank
Institutional Trust Services
4 New York Plaza, 6th Floor
New York, New York 10004

      Re:   C-BASS Mortgage Loan Asset-Backed Certificates, Series 2004-CB2

Ladies and Gentlemen:

      In connection with our acquisition of the C-BASS Mortgage Loan
Asset-Backed Certificates, Series 2004-CB2 (the "Certificates"), we certify that
(a) we understand that the Certificates are not being registered under the
Securities Act of 1933, as amended (the "Act"), or any state securities laws and
are being transferred to us in a transaction that is exempt from the
registration requirements of the Act and any such laws, (b) we are an
"accredited investor," as defined in Regulation D under the Act, and have such
knowledge and experience in financial and business matters that we are capable
of evaluating the merits and risks of investments in the Certificates, (c) we
have had the opportunity to ask questions of and receive answers from the
Depositor concerning the purchase of the Certificates and all matters relating
thereto or any additional information deemed necessary to our decision to
purchase the Certificates, (d) we are acquiring the Certificates for investment
for our own account and not with a view to any distribution of such Certificates
(but without prejudice to our right at all times to sell or otherwise dispose of
the Certificates in accordance with clause (g) below), (e) we agree that the
Certificates must be held indefinitely by us and we acknowledge that we are able
to bear the economic risk of investment in the Certificates, (f) we have not
offered or sold any Certificates to, or solicited offers to buy any Certificates
from, any person, or otherwise approached or negotiated with any person with
respect thereto, or taken any other action which would result in a violation of
Section 5 of the Act, (g) we will not sell, transfer or otherwise dispose of any
Certificates unless (1) such sale, transfer or other disposition is made
pursuant to an effective registration statement under the Act or is exempt from
such registration requirements, and if requested, we will at our expense provide
an opinion of counsel satisfactory to the addressees of this Certificate that
such sale, transfer or other disposition may be made pursuant to an exemption
from the Act, (2) the purchaser or transferee of such Certificate has executed
and delivered to you a certificate to substantially the same effect as this
certificate, and (3) the purchaser or transferee has otherwise complied with any
conditions for transfer set forth in the Pooling and Servicing Agreement and (h)
we acknowledge that the Certificates will bear a legend setting forth the
applicable restrictions on transfer.

                                      J-1
<PAGE>
                                             Very truly yours,

                                             [NAME OF TRANSFEREE]

                                             By: _______________________________
                                                      Authorized Officer

                                      J-2
<PAGE>
                       FORM OF RULE 144A INVESTMENT LETTER

                                                                [DATE]

Merrill Lynch Mortgage Investors, Inc.
4 World Financial Center, 10th Floor
New York, New York 10080

JPMorgan Chase Bank
Institutional Trust Services
4 New York Plaza, 6th Floor
New York, New York 10004

      Re:   C-BASS Mortgage Loan Asset-Backed Certificates, Series 2004-CB2

Ladies and Gentlemen:

      In connection with our acquisition of the C-BASS Mortgage Loan
Asset-Backed Certificates, Series 2004-CB2 (the "Certificates"), we certify that
(a) we understand that the Certificates are not being registered under the
Securities Act of 1933, as amended (the "Act"), or any state securities laws and
are being transferred to us in a transaction that is exempt from the
registration requirements of the Act and any such laws, (b) we have had the
opportunity to ask questions of and receive answers from the Depositor
concerning the purchase of the Certificates and all matters relating thereto or
any additional information deemed necessary to our decision to purchase the
Certificates, (c) we have not, nor has anyone acting on our behalf offered,
transferred, pledged, sold or otherwise disposed of the Certificates, any
interest in the Certificates or any other similar security to, or solicited any
offer to buy or accept a transfer, pledge or other disposition of the
Certificates, any interest in the Certificates or any other similar security
from, or otherwise approached or negotiated with respect to the Certificates,
any interest in the Certificates or any other similar security with, any person
in any manner, or made any general solicitation by means of general advertising
or in any other manner, or taken any other action, that would constitute a
distribution of the Certificates under the Securities Act or that would render
the disposition of the Certificates a violation of Section 5 of the Securities
Act or require registration pursuant thereto, nor will act, nor has authorized
or will authorize any person to act, in such manner with respect to the
Certificates, (d) we are a "qualified institutional buyer" as that term is
defined in Rule 144A under the Securities Act and have completed either of the
forms of certification to that effect attached hereto as Annex 1 or Annex 2. We
are aware that the sale to us is being made in reliance on Rule 144A. We are
acquiring the Certificates for our own account or for resale pursuant to Rule
144A and further, understand that such Certificates may be resold, pledged or
transferred only (i) to a person reasonably believed to be a qualified
institutional buyer that purchases for its own account or for the account of a
qualified institutional buyer to whom notice is given that the resale, pledge or
transfer is being made in reliance on Rule 144A, or (ii) pursuant to another
exemption from registration under the Securities Act.

                                      J-3
<PAGE>
                                             Very truly yours,

                                             [NAME OF TRANSFEREE]

                                             By: _______________________________
                                                      Authorized Officer

                                      J-4
<PAGE>
                                                            ANNEX 1 TO EXHIBIT J

            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A

          [For Transferees Other Than Registered Investment Companies]

      The undersigned (the "Buyer") hereby certifies as follows to the parties
listed in the Rule 144A Transferee Certificate to which this certification
relates with respect to the Certificates described therein:

      i. As indicated below, the undersigned is the President, Chief Financial
Officer, Senior Vice President or other executive officer of the Buyer.

      ii. In connection with purchases by the Buyer, the Buyer is a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act of 1933, as amended ("Rule 144A") because (i) the Buyer owned and/or
invested on a discretionary basis $_____(1) in securities (except for the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year (such amount being calculated in accordance with Rule 144A and (ii)
the Buyer satisfies the criteria in the category marked below.

            ___ Corporation, etc. The Buyer is a corporation (other than a bank,
            savings and loan association or similar institution), Massachusetts
            or similar business trust, partnership, or charitable organization
            described in Section 501(c)(3) of the Internal Revenue Code of 1986,
            as amended.

            ___ Bank. The Buyer (a) is a national bank or banking institution
            organized under the laws of any State, territory or the District of
            Columbia, the business of which is substantially confined to banking
            and is supervised by the State or territorial banking commission or
            similar official or is a foreign bank or equivalent institution, and
            (b) has an audited net worth of at least $25,000,000 as demonstrated
            in its latest annual financial statements, a copy of which is
            attached hereto.

            ___ Savings and Loan. The Buyer (a) is a savings and loan
            association, building and loan association, cooperative bank,
            homestead association or similar institution, which is supervised
            and examined by a State or Federal authority having supervision over
            any such institutions or is a foreign savings and loan association
            or equivalent institution and (b) has an audited net worth of at
            least $25,000,000 as demonstrated in its latest annual financial
            statements, a copy of which is attached hereto.

----------
(1)   Buyer must own and/or invest on a discretionary basis at least $______ in
      securities unless Buyer is a dealer, and, in that case, Buyer must own
      and/or invest on a discretionary basis at least $______ in securities.

                                      J-5
<PAGE>
            ___ Broker-dealer. The Buyer is a dealer registered pursuant to
            Section 15 of the Securities Exchange Act of 1934.

            ___ Insurance Company. The Buyer is an insurance company whose
            primary and predominant business activity is the writing of
            insurance or the reinsuring of risks underwritten by insurance
            companies and which is subject to supervision by the insurance
            commissioner or a similar official or agency of a State, territory
            or the District of Columbia.

            ___ State or Local Plan. The Buyer is a plan established and
            maintained by a State, its political subdivisions, or any agency or
            instrumentality of the State or its political subdivisions, for the
            benefit of its employees.

            ___ ERISA Plan. The Buyer is an employee benefit plan within the
            meaning of Title I of the Employee Retirement Income Security Act of
            1974.

            ___ Investment Advisor. The Buyer is an investment advisor
            registered under the Investment Advisors Act of 1940.

            ___ Small Business Investment Company. Buyer is a small business
            investment company licensed by the U.S. Small Business
            Administration under Section 301(c) or (d) of the Small Business
            Investment Act of 1958.

            ___ Business Development Company. Buyer is a business development
            company as defined in Section 202(a)(22) of the Investment Advisors
            Act of 1940.

      iii. The term "securities" as used herein does not include (i) securities
of issuers that are affiliated with the Buyer, (ii) securities that are part of
an unsold allotment to or subscription by the Buyer, if the Buyer is a dealer,
(iii) securities issued or guaranteed by the U.S. or any instrumentality
thereof, (iv) bank deposit notes and certificates of deposit, (v) loan
participations, (vi) repurchase agreements, (vii) securities owned but subject
to a repurchase agreement and (viii) currency, interest rate and commodity
swaps.

      iv. For purposes of determining the aggregate amount of securities owned
and/or invested on a discretionary basis by the Buyer, the Buyer used the cost
of such securities to the Buyer and did not include any of the securities
referred to in the preceding paragraph, except (i) where the Buyer reports its
securities holdings in its financial statements on the basis of their market
value, and (ii) no current information with respect to the cost of those
securities has been published. If clause (ii) in the preceding sentence applies,
the securities may be valued at market. Further, in determining such aggregate
amount, the Buyer may have included securities owned by subsidiaries of the
Buyer, but only if such subsidiaries are consolidated with the Buyer in its
financial statements prepared in accordance with generally accepted accounting
principles and if the investments of such subsidiaries are managed under the
Buyer's direction. However, such securities were not included if the Buyer is a
majority-owned, consolidated subsidiary of another enterprise and the Buyer is
not itself a reporting company under the Securities Exchange Act of 1934, as
amended.

                                      J-6
<PAGE>
      v. The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the Certificates
are relying and will continue to rely on the statements made herein because one
or more sales to the Buyer may be in reliance on Rule 144A.

      vi. Until the date of purchase of the Rule 144A Securities, the Buyer will
notify each of the parties to which this certification is made of any changes in
the information and conclusions herein. Until such notice is given, the Buyer's
purchase of the Certificates will constitute a reaffirmation of this
certification as of the date of such purchase. In addition, if the Buyer is a
bank or savings and loan is provided above, the Buyer agrees that it will
furnish to such parties updated annual financial statements promptly after they
become available.

                                             _____________________________
                                             Print Name of Buyer

                                             By: _________________________
                                             Name:
                                             Title:

                                             Date:

                                      J-7
<PAGE>
                                                            ANNEX 2 TO EXHIBIT J

            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A

           [For Transferees That are Registered Investment Companies]

      The undersigned (the "Buyer") hereby certifies as follows to the parties
listed in the Rule 144A Transferee Certificate to which this certification
relates with respect to the Certificates described therein:

      1. As indicated below, the undersigned is the President, Chief Financial
Officer or Senior Vice President of the Buyer or, if the Buyer is a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act of 1933, as amended ("Rule 144A") because Buyer is part of a Family of
Investment Companies (as defined below), is such an officer of the Adviser.

      2. In connection with purchases by Buyer, the Buyer is a "qualified
institutional buyer" as defined in SEC Rule 144A because (i) the Buyer is an
investment company registered under the Investment Company Act of 1940, as
amended and (ii) as marked below, the Buyer alone, or the Buyer's Family of
Investment Companies, owned at least $100,000,000 in securities (other than the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year. For purposes of determining the amount of securities owned by the
Buyer or the Buyer's Family of Investment Companies, the cost of such securities
was used, except (i) where the Buyer or the Buyer's Family of Investment
Companies reports its securities holdings in its financial statements on the
basis of their market value, and (ii) no current information with respect to the
cost of those securities has been published. If clause (ii) in the preceding
sentence applies, the securities may be valued at market.

            ___ The Buyer owned $______ in securities (other than the excluded
            securities referred to below) as of the end of the Buyer's most
            recent fiscal year (such amount being calculated in accordance with
            Rule 144A).

            ___ The Buyer is part of a Family of Investment Companies which
            owned in the aggregate $______ in securities (other than the
            excluded securities referred to below) as of the end of the Buyer's
            most recent fiscal year (such amount being calculated in accordance
            with Rule 144A).

      3. The term "Family of Investment Companies" as used herein means two or
more registered investment companies (or series thereof) that have the same
investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).

      4. The term "securities" as used herein does not include (i) securities of
issuers that are affiliated with the Buyer or are part of the Buyer's Family of
Investment Companies, (ii) securities issued or guaranteed by the U.S. or any
instrumentality thereof, (iii) bank deposit notes and certificates of deposit,
(iv) loan participations, (v) repurchase agreements, (vi) securities owned but
subject to a repurchase agreement and (vii) currency, interest rate and
commodity swaps.

                                      J-8
<PAGE>
      5. The Buyer is familiar with Rule 144A and understands that the parties
listed in the Rule 144A Transferee Certificate to which this certification
relates are relying and will continue to rely on the statements made herein
because one or more sales to the Buyer will be in reliance on Rule 144A. In
addition, the Buyer will only purchase for the Buyer's own account.

      6. Until the date of purchase of the Certificates, the undersigned will
notify the parties listed in the Rule 144A Transferee Certificate to which this
certification relates of any changes in the information and conclusions herein.
Until such notice is given, the Buyer's purchase of the Certificates will
constitute a reaffirmation of this certification by the undersigned as of the
date of such purchase.

                                             _________________________________
                                             Print Name of Buyer or Adviser

                                             By: _____________________________
                                             Name:
                                             Title:

                                             IF AN ADVISER:

                                             _________________________________
                                             Print Name of Buyer

                                             Date:

                                      J-9
<PAGE>
                                    EXHIBIT K

                 FORM OF RESIDUAL CERTIFICATE TRANSFER AFFIDAVIT

         C-BASS MORTGAGE LOAN ASSET-BACKED CERTIFICATES, SERIES 2004-CB2

STATE OF      )
              )  ss.:
COUNTY OF     )

      The undersigned, being first duly sworn, deposes and says as follows:

      1. The undersigned is [an officer of] ______________, the proposed
Transferee of an Ownership Interest in a [Class R and/or Class R-X Certificates]
(the "Residual Certificate") issued pursuant to the Pooling and Servicing
Agreement, (the "Agreement"), relating to the above-referenced Certificates,
among Merrill Lynch Mortgage Investors, Inc., as depositor, Credit-Based Asset
Servicing and Securitization LLC, as seller, Litton Loan Servicing LP, as
servicer, and JPMorgan Chase Bank, as trustee (the "Trustee"). Capitalized terms
used, but not defined herein shall have the meanings ascribed to such terms in
the Agreement. The Transferee has authorized the undersigned to make this
affidavit on behalf of the Transferee.

      2. The Transferee is, as of the date hereof, and will be, as of the date
of the transfer, a Permitted Transferee. The Transferee is acquiring the
Residual Certificate either (i) for its own account or (ii) as nominee, trustee
or agent for another Person who is a Permitted Transferee and has attached
hereto an affidavit from such Person in substantially the same form as this
affidavit. The Transferee has no knowledge that any such affidavit is false.

      3. The Transferee has been advised of, and understands that (i) a tax will
be imposed on Transfers of the Residual Certificate to Persons that are not
Permitted Transferees; (ii) such tax will be imposed on the transferor, or, if
such transfer is through an agent (which includes a broker, nominee or
middleman) for a Person that is not a Permitted Transferee, on the agent; and
(iii) the Person otherwise liable for the tax shall be relieved of liability for
the tax if the subsequent Transferee furnished to such Person an affidavit that
such subsequent Transferee is a Permitted Transferee and, at the time of
transfer, such Person does not have actual knowledge that the affidavit is
false.

      4. The Transferee has been advised of, and understands that a tax will be
imposed on a "pass-through entity" holding the Certificate if at any time during
the taxable year of the pass-through entity a Person that is not a Permitted
Transferee is the record Holder of an interest in such entity. The Transferee
understands that, other than in the case of an "electing large partnership"
under Section 775 of the Code, such tax will not be imposed for any period with
respect to which the record Holder furnishes to the pass-through entity an
affidavit that such record Holder is a Permitted Transferee and the pass-through
entity does not have actual knowledge that such affidavit is false. (For this
purpose, a "pass-through entity" includes a regulated investment company, a real
estate investment trust or common trust fund, a partnership, trust or estate,
and certain cooperatives and, except as may be provided in Treasury Regulations,
persons holding interests in pass-through entities as a nominee for another
Person.)

                                      K-1
<PAGE>
      5. The Transferee has reviewed the provisions of Section 5.02 of the
Agreement and understands the legal consequences of the acquisition of the
Residual Certificate including, without limitation, the restrictions on
subsequent Transfers and the provisions regarding voiding the transfer and
mandatory sales. The Transferee expressly agrees to be bound by and to abide by
the provisions of Section 5.02 of the Agreement and the restrictions noted on
the face of the Certificate. The Transferee understands and agrees that any
breach of any of the representations included herein shall render the transfer
to the Transferee contemplated hereby null and void.

      6. The Transferee agrees to require a transfer affidavit in the form of
this Affidavit from any Person to whom the Transferee attempts to transfer the
Residual Certificate, and in connection with any transfer by a Person for whom
the Transferee is acting as nominee, trustee or agent, and the Transferee will
not transfer the Residual Certificate or cause the Residual Certificate to be
transferred to any Person that the Transferee knows is not a Permitted
Transferee.

      7. The Transferee historically has paid its debts as they have become due.

      8. The Transferee does not have the intention to impede the assessment or
collection of any tax legally required to be paid with respect to the Residual
Certificate.

      9. The taxpayer identification number of the Transferee's nominee is
___________.

      10. The Transferee is a U.S. Person as defined in Code Section
7701(a)(30).

      11. The Transferee is aware that the Residual Certificate may be a
"noneconomic residual interest" within the meaning of Treasury Regulations
promulgated pursuant to the Code and that the transferor of a noneconomic
residual interest will remain liable for any taxes due with respect to the
income on such residual interest, unless no significant purpose of the transfer
was to impede the assessment or collection of tax.

      12. The Transferee will not cause income from the Residual Certificate to
be attributable to a foreign permanent establishment or fixed base, within the
meaning of an applicable income tax treaty, of the Transferee or any other
person.

      13. If the Transferee is purchasing the Residual Certificate in a transfer
intended to meet the safe harbor provisions of Treasury Regulations Sections
1.860E-1(c), the Transferee has executed and attached Attachment A hereto.

      14. The Transferee is not an employee benefit plan or arrangement,
including an individual retirement account, subject to ERISA, the Code or any
federal, state or local law which is similar to ERISA or the Code, and the
Transferee is not acting on behalf of such a plan or arrangement.

                                      * * *

                                      K-2
<PAGE>
      IN WITNESS WHEREOF, the Transferee has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by its
duly authorized officer this _____ day of ________________, ____.

                                             _________________________________
                                             Print Name of Transferee

                                             By: _____________________________
                                             Name:
                                             Title:

      Personally appeared before me the above-named
______________________________, known or proved to me to be the same person who
executed the foregoing instrument and to be the _______________________ of the
Transferee, and acknowledged that he executed the same as his free act and deed
and the free act and deed of the Transferee.

      Subscribed and sworn before me this _____ day of ___________________, ____

                                          _________________________________
                                                    NOTARY PUBLIC

                                          My Commission expires the ____ day of
                                          ______________, ____

                                      K-3
<PAGE>
                                  ATTACHMENT A

                                       to
      AFFIDAVIT PURSUANT TO SECTION 860E(e)(4) OF THE INTERNAL REVENUE CODE
                OF 1986, AS AMENDED, AND FOR NON-ERISA INVESTORS

Check the appropriate box:

|_|   The consideration paid to the Transferee to acquire the Residual
      Certificate equals or exceeds the excess of (a) the present value of the
      anticipated tax liabilities over (b) the present value of the anticipated
      savings associated with holding such Residual Certificate, in each case
      calculated in accordance with U.S. Treasury Regulations Sections
      1.860E-1(c)(7) and (8), computing present values using a discount rate
      equal to the short-term Federal rate prescribed by Section 1274(d) of the
      Code and the compounding period used by the Transferee.

                                       OR

|_|   The transfer of the Residual Certificate complies with U.S. Treasury
      Regulations Sections 1.860E-1(c)(5) and (6) and, accordingly:

      (i)   the Transferee is an "eligible corporation," as defined in U.S.
            Treasury Regulations Section 1.860E-1(c)(6)(i), as to which income
            from Residual Certificate will only be taxed in the United States;

      (ii)  at the time of the transfer, and at the close of the Transferee's
            two fiscal years preceding the year of the transfer, the Transferee
            had gross assets for financial reporting purposes (excluding any
            obligation of a person related to the Transferee within the meaning
            of U.S. Treasury Regulations Section 1.860E-1(c)(6)(ii)) in excess
            of $100 million and net assets in excess of $10 million;

      (iii) the Transferee will transfer the Residual Certificate only to
            another "eligible corporation," as defined in U.S. Treasury
            Regulations Section 1.860E-1(c)(6)(i), in a transaction that
            satisfies the requirements of Sections 1.860E-1(c)(4)(i), (ii) and
            (iii) and Section 1.860E-1(c)(5) of the U.S. Treasury Regulations;

      (iv)  the Transferee has determined the consideration paid to it to
            acquire the Residual Certificate based on reasonable market
            assumptions (including, but not limited to, borrowing and investment
            rates, prepayment and loss assumptions, expense and reinvestment
            assumptions, tax rates and other factors specific to the Transferee)
            that it has determined in good faith; and

      (v)   in the event of any transfer of the Residual Certificate by the
            Transferee, the Transferee will require its transferee to complete a
            representation in the form of this Attachment A as a condition of
            such transferee's purchase of the Residual Certificate.

                                      K-4
<PAGE>
                                    EXHIBIT L

                         FORM OF TRANSFEROR CERTIFICATE

                                                                [DATE]

Merrill Lynch Mortgage Investors, Inc.
4 World Financial Center, 10th Floor
New York, New York 10080

JPMorgan Chase Bank
Institutional Trust Services
4 New York Plaza, 6th Floor
New York, New York 10004

      Re:   C-BASS Mortgage Loan Asset-Backed Certificates, Series 2004-CB2

Ladies and Gentlemen:

      In connection with our disposition of the C-BASS Mortgage Loan
Asset-Backed Certificates, Series 2004-CB2 (the "Certificates"), we certify that
(a) we understand that the Certificates have not been registered under the
Securities Act of 1933, as amended (the "Act"), and are being disposed by us in
a transaction that is exempt from the registration requirements of the Act, (b)
we have not offered or sold any Certificates to, or solicited offers to buy any
Certificates from, any person, or otherwise approached or negotiated with any
person with respect thereto, in a manner that would be deemed, or taken any
other action which would result in, a violation of Section 5 of the Act, (c) to
the extent we are disposing of a Class [ ] Certificate, we have no knowledge the
Transferee is not a Permitted Transferee and (d) no purpose of the proposed
disposition of a Class [ ] Certificate is to impede the assessment or collection
of tax.

                                           Very truly yours,

                                           [_____________________]

                                           By: ______________________________

                                      L-1
<PAGE>
                                    EXHIBIT M

                    MONTHLY INFORMATION DELIVERED BY SERVICER

1.    With respect to the Mortgage Pool and each Loan Group, the number and
      Principal Balances of all Mortgage Loans which were the subject of
      Principal Prepayments during the related Prepayment Period.

2.    With respect to the Mortgage Pool and each Loan Group, the amount of all
      partial Principal Prepayments received by the Servicer during the related
      Prepayment Period.

3.    With respect to the Mortgage Pool and each Loan Group, the aggregate
      amount of principal portion of all Monthly Payments received during the
      related Collection Period.

4.    With respect to the Mortgage Pool and each Loan Group, the amount of
      interest received on the Mortgage Loans during the related Collection
      Period.

5.    With respect to the Mortgage Pool and each Loan Group, the aggregate
      amount of the Advances made and recovered with respect to such
      Distribution Date.

6.    With respect to the Mortgage Pool and each Loan Group, the delinquency and
      foreclosure information and the amount of Mortgage Loan Losses as of the
      close of business of the last day of the preceding Collection Period.

7.    With respect to the Mortgage Pool and each Loan Group, the weighted
      average maturity, the weighted average Mortgage Interest Rate and the
      weighted average Net Mortgage Interest Rate as of the last day of the
      preceding Collection Period preceding of the related Interest Accrual
      Period.

8.    The Servicing Fees paid and Servicing Fees accrued during the related
      Collection Period.

9.    The amount of all payments or reimbursements to the Servicer paid or to be
      paid since the prior Distribution Date (or in the case of the first
      Distribution Date, since the Closing Date).

10.   The Pool Balance and aggregate Principal Balance for each Loan Group.

11.   With respect to the Mortgage Pool and each Loan Group, the number of
      Mortgage Loans outstanding at the beginning and at the end of the related
      Collection Period.

12.   The aggregate interest accrued on the Mortgage Loans at their respective
      Mortgage Interest Rates for the related Collection Period.

13.   The amount deposited in the Collection Account which may not be withdrawn
      therefrom pursuant to an order of a United States Bankruptcy Court of
      competent jurisdiction imposing a stay pursuant to Section 362 of U.S.
      Bankruptcy Code.

                                      M-1
<PAGE>
14.   The aggregate Realized Losses since the Cut-off Date as of the end of the
      related Collection Period.

                                      M-2
<PAGE>
                                    EXHIBIT N

                              FORM OF CERTIFICATION

                   CERTIFICATION TO BE PROVIDED WITH FORM 10-K

                                 2004-CB2 TRUST,
         C-BASS MORTGAGE LOAN ASSET-BACKED CERTIFICATES, SERIES 2004-CB2

I, [identify the certifying individual], certify that:

1.    I have reviewed this annual report on Form 10-K, and all reports on Form
      8-K containing a copy of the monthly statement to certificateholders set
      forth in Section 4.06 of the Pooling and Servicing Agreement, dated as of
      February 1, 2004 (the "Agreement"), among Merrill Lynch Mortgage
      Investors, Inc., as depositor (the "Depositor"), Credit-Based Asset
      Servicing and Securitization LLC, as seller (the "Seller"), Litton Loan
      Servicing LP, as servicer (the "Servicer"), and JPMorgan Chase Bank, as
      trustee (the "Trustee"), filed in respect of periods included in the year
      covered by this annual report, of the 2004-CB2 Trust (the "Trust");

2.    Based on my knowledge, the information in these reports, taken as a whole,
      does not contain any untrue statement of a material fact or omit to state
      a material fact necessary to make the statements made, in light of the
      circumstances under which such statements were made, not misleading as of
      the last day of the period covered by this annual report;

3.    Based on my knowledge, the distribution or servicing information required
      to be provided to the Trustee by the Servicer under the Agreement for
      inclusion in these reports is included in these reports;

4.    I am responsible for reviewing the activities performed by the Servicer
      under the Agreement and based upon my knowledge and the annual compliance
      review required under the Agreement, and except as disclosed in the
      reports, the Servicer has fulfilled its obligations under the Agreement;
      and

5.    The reports disclose all significant deficiencies relating to the
      Servicer's compliance with the minimum servicing standards based upon the
      report provided by an independent public accountant, after conducting a
      review in compliance with the Uniform Single Attestation Program for
      Mortgage Bankers or similar procedure, as set forth in the Agreement, that
      is included in these reports.

6.    In giving the certifications above, I have reasonably relied on
      information provided to me by the following unaffiliated parties: JPMorgan
      Chase Bank.

                                           By: __________________________
                                           Name:
                                           Title:

                                      N-1
<PAGE>
                                    EXHIBIT O

       FORM OF CERTIFICATION TO BE PROVIDED BY THE TRUSTEE TO THE SERVICER

                                 2004-CB2 TRUST,
         C-BASS MORTGAGE LOAN ASSET-BACKED CERTIFICATES, SERIES 2004-CB2

      Reference is made to the Pooling and Servicing Agreement, dated as of
February 1, 2004 (the "Pooling Agreement"), by and among JPMorgan Chase Bank
(the "Trustee"), Credit-Based Asset Servicing and Securitization LLC, as seller,
Litton Loan Servicing LP, as servicer (the "Servicer") and Merrill Lynch
Mortgage Investors, Inc., as depositor (the "Depositor"). The Trustee hereby
certifies to the Servicer and its officers, directors and affiliates, and with
the knowledge and intent that they will rely upon this certification, that:

      (i)   The Trustee has reviewed the annual report on Form 10-K for the
            fiscal year [ ], and all reports on Form 8-K containing distribution
            reports filed in respect of periods included in the year covered by
            that annual report, relating to the above-referenced trust;

      (ii)  Subject to paragraph (iv), the distribution information in the
            distribution reports contained in all Monthly Form 8-K's included in
            the year covered by the annual report on Form 10-K for the calendar
            year [___], taken as a whole, does not contain any untrue statement
            of a material fact or omit to state a material fact required by the
            Pooling Agreement to be included therein and necessary to make the
            statements made, in light of the circumstances under which such
            statements were made, not misleading as of the last day of the
            period covered by that annual report;

      (iii) The distribution information required to be provided by the Trustee
            under the Pooling Agreement is included in these reports.

      (iv)  In compiling the distribution information and making the foregoing
            certifications, the Trustee has relied upon information furnished to
            it by the Servicer under the Agreement. The Trustee shall have no
            responsibility or liability for any inaccuracy in such reports
            resulting from information so provided by the Servicer.

Date:
                                           JPMorgan Chase Bank, as Trustee

                                           By:    ____________________________
                                           Name:  ____________________________
                                           Title: ____________________________

                                      O-1
<PAGE>
                                    EXHIBIT P

                       FORM OF YIELD MAINTENANCE AGREEMENT

                             [INTENTIONALLY OMITTED]

                                      P-1
<PAGE>
                                    EXHIBIT Q

                            FORM OF POWER OF ATTORNEY

RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO
LITTON LOAN SERVICING LP
4828 Loop Central Drive
Houston, Texas 77081
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"), Litton Loan Servicing LP (the "Servicer"), and the Trustee, dated
as of ______ 1, 200__ (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.

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
<PAGE>
      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 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.
<PAGE>
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, the Servicer, and the Trustee,
dated as of ___________ 1, 200__ (___________________ Mortgage Loan 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 _____ Mortgage Loan 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 ________________ Mortgage Loan 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 _____________________<PAGE>
                                                                     EXHIBIT 4.1

                     [FORM OF CONVERTIBLE SUBORDINATED NOTE]

NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION
OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED
UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED
BY THE SECURITIES. ANY TRANSFEREE OF THIS NOTE SHOULD CAREFULLY REVIEW THE TERMS
OF THIS NOTE, INCLUDING SECTIONS 3(c)(III) AND 19(a) HEREOF. THE PRINCIPAL
AMOUNT REPRESENTED BY THIS NOTE AND, ACCORDINGLY, THE SECURITIES ISSUABLE UPON
CONVERSION HEREOF MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE FACE HEREOF
PURSUANT TO SECTION 3(c)(III) OF THIS NOTE.

                          CONVERTIBLE SUBORDINATED NOTE

Issuance Date: March 25, 2004                      Principal: U.S. $[40,000,000]

         FOR VALUE RECEIVED, NOBLE INTERNATIONAL, LTD., a Delaware corporation
(the "COMPANY"), hereby promises to pay to the order of [INSERT HOLDER] or
registered assigns ("HOLDER") the amount set out above as the Principal (as
reduced pursuant to the terms hereof pursuant to redemption, conversion or
otherwise, the "PRINCIPAL") when due, whether upon the Maturity Date (as defined
below), acceleration, redemption or otherwise (in each case in accordance with
the terms hereof) and to pay interest ("INTEREST") on any outstanding Principal
at the rate of 4.00% per annum, subject to periodic adjustment pursuant to
Section 2 (the "INTEREST RATE"), from the date set out above as the Issuance
Date (the "ISSUANCE DATE") until the same becomes due and payable, whether upon
an Interest Date (as defined below), the Maturity Date, acceleration,
conversion, redemption or otherwise (in each case in accordance with the terms
hereof). This Convertible Subordinated Note (including all Convertible
Subordinated Notes issued in exchange, transfer or replacement hereof, this
"NOTE") is one of an issue of Convertible Subordinated Notes (collectively, the
"NOTES" and such other Convertible Subordinated Notes, the "OTHER NOTES") issued
on the Issuance Date pursuant to the Securities Purchase Agreement (as defined
below). Certain capitalized terms are defined in Section 29.

<PAGE>

                  (1) MATURITY. On the Maturity Date, the Holder shall surrender
this Note to the Company and the Company shall pay to the Holder an amount in
cash representing all outstanding Principal, accrued and unpaid Interest and
accrued and unpaid Late Charges, if any. The "ORIGINAL MATURITY DATE" shall be
March 31, 2007, as may be extended in accordance with Section 8 hereof or as
extended at the option of the Holder (i) in the event that, and for so long as,
an Event of Default (as defined in Section 4(a)) shall have occurred and be
continuing or any event shall have occurred and be continuing which with the
passage of time and the failure to cure would result in an Event of Default and
(ii) through the date that is ten days after the consummation of a Change of
Control (as defined in Section 5(a)) in the event that a Change of Control is
publicly announced or a Change of Control Notice (as defined in Section 5(a)) is
delivered prior to the Maturity Date (as may be extended, the "MATURITY DATE").

                  (2) INTEREST; INTEREST RATE. Interest on this Note shall
commence accruing on the Issuance Date and shall be computed on the basis of a
365-day year and actual days elapsed and shall be payable in arrears on the
first day of each Calendar Quarter and on the Maturity Date during the period
beginning on the Issuance Date and ending on, and including, the Maturity Date
(each, an "INTEREST DATE") with the first Interest Date being July 1, 2004.
Interest shall be payable on each Interest Date in cash. Prior to the payment of
Interest on an Interest Date, Interest on this Note shall accrue at the Interest
Rate and be payable by way of inclusion of the Interest in the Conversion Amount
in accordance with Section 3(b)(i). From and after the occurrence of an Event of
Default, the Interest Rate shall be increased to 11%. In the event that such
Event of Default is subsequently cured, the adjustment referred to in the
preceding sentence shall cease to be effective as of the date of such cure;
provided that the Interest as calculated at such increased rate during the
continuance of such Event of Default shall continue to apply to the extent
relating to the days after the occurrence of such Event of Default through and
including the date of cure of such Event of Default.

                  (3) CONVERSION OF NOTES. This Note shall be convertible into
shares of the Company's common stock, par value $0.001 per share (the "COMMON
STOCK"), on the terms and conditions set forth in this Section 3.

                           (a) Conversion Right. Subject to the provisions of
Section 3(d), at any time or times on or after the Issuance Date, the Holder
shall be entitled to convert any portion of the outstanding and unpaid
Conversion Amount (as defined below) in increments of at least $100,000 of
Principal (or such lesser amount if such amount represents the remaining
Principal amount) into fully paid and nonassessable shares of Common Stock in
accordance with Section 3(c), at the Conversion Rate (as defined below). The
Company shall not issue any fraction of a share of Common Stock upon any
conversion. If the issuance would result in the issuance of a fraction of a
share of Common Stock, the Company shall round such fraction of a share of
Common Stock up to the nearest whole share. The Company shall pay any and all
taxes that may be payable with respect to the issuance and delivery of Common
Stock upon conversion of any Conversion Amount.

                                       2
<PAGE>

                           (b) Conversion Rate. The number of shares of Common
Stock issuable upon conversion of any Conversion Amount pursuant to Section 3(a)
shall be determined by dividing (x) such Conversion Amount by (y) the Conversion
Price (as defined below) (the "CONVERSION RATE").

         (i) "CONVERSION AMOUNT" means the sum of (A) the portion of the
         Principal to be converted, redeemed or otherwise with respect to which
         this determination is being made, (B) accrued and unpaid Interest with
         respect to such Principal and (C) accrued and unpaid Late Charges with
         respect to such Principal and Interest.

         (ii) "CONVERSION PRICE" means, as of any Conversion Date (as defined
         below) or other date of determination, and subject to adjustment as
         provided herein, $32.00.

                           (c) Mechanics of Conversion.

         (i) Optional Conversion. To convert any Conversion Amount into shares
         of Common Stock on any date (a "CONVERSION DATE"), the Holder shall (A)
         transmit by facsimile (or otherwise deliver), for receipt on or prior
         to 11:59 p.m., New York Time, on such date, a copy of an executed
         notice of conversion in the form attached hereto as Exhibit I (the
         "CONVERSION NOTICE") to the Company and (B) if required by Section
         3(c)(iii), surrender this Note to a common carrier for delivery to the
         Company as soon as practicable on or following such date (or an
         indemnification undertaking with respect to this Note in the case of
         its loss, theft or destruction). On or before the first Business Day
         following the date of receipt of a Conversion Notice, the Company shall
         transmit by facsimile a confirmation of receipt of such Conversion
         Notice to the Holder and the Company's transfer agent (the "TRANSFER
         AGENT"). On or before the second Business Day following the date of
         receipt of a Conversion Notice (the "SHARE DELIVERY DATE"), the Company
         shall (X) credit such aggregate number of shares of Common Stock to
         which the Holder shall be entitled to the Holder's or its designee's
         balance account with Depository Trust Company ("DTC") through its
         Deposit Withdrawal Agent Commission system or (Y) if the Transfer Agent
         is not participating in DTC Fast Automated Securities Transfer Program,
         issue and deliver to the address as specified in the Conversion Notice,
         a certificate, registered in the name of the Holder or its designee,
         for the number of shares of Common Stock to which the Holder shall be
         entitled. If this Note is physically surrendered for conversion as
         required by Section 3(c)(iii) and the outstanding Principal of this
         Note is greater than the Principal portion of the Conversion Amount
         being converted, then the Company shall as soon as practicable and in
         no event later than three Business Days after receipt of this Note and
         at its own expense, issue and deliver to the holder a new Note (in
         accordance with Section 19(d)) representing the outstanding Principal
         not converted. The Person or Persons entitled to receive the shares of
         Common Stock issuable upon a conversion of this Note shall be treated
         for all purposes as the

                                       3
<PAGE>

         record holder or holders of such shares of Common Stock on the
         Conversion Date.

         (ii) Company's Failure to Timely Convert. If the Company shall fail to
         issue a certificate to the Holder or credit the Holder's balance
         account with DTC for the number of shares of Common Stock to which the
         Holder is entitled upon conversion of any Conversion Amount on or prior
         to the date which is five Business Days after the Conversion Date (a
         "CONVERSION FAILURE"), then (A) the Company shall pay damages to the
         Holder for each date of such Conversion Failure in an amount equal to
         1.0% of the product of (I) the sum of the number of shares of Common
         Stock not issued to the Holder on or prior to the Share Delivery Date
         and to which the Holder is entitled, and (II) the Closing Sale Price of
         the Common Stock on the Share Delivery Date and (B) the Holder, upon
         written notice to the Company, may void its Conversion Notice with
         respect to, and retain or have returned, as the case may be, any
         portion of this Note that has not been converted pursuant to such
         Conversion Notice; provided that the voiding of a Conversion Notice
         shall not affect the Company's obligations to make any payments which
         have accrued prior to the date of such notice pursuant to this Section
         3(c)(ii) or otherwise.

         (iii) Book-Entry. Notwithstanding anything to the contrary set forth
         herein, upon conversion of any portion of this Note in accordance with
         the terms hereof, the Holder shall not be required to physically
         surrender this Note to the Company unless (A) the full Conversion
         Amount represented by this Note is being converted or (B) the Holder
         has provided the Company with prior written notice (which notice may be
         included in a Conversion Notice) requesting physical surrender and
         reissue of this Note. The Holder and the Company shall maintain records
         showing the Principal, Interest and Late Charges converted and the
         dates of such conversions or shall use such other method, reasonably
         satisfactory to the Holder and the Company, so as not to require
         physical surrender of this Note upon conversion.

         (iv) Pro Rata Conversion; Disputes. In the event that the Company
         receives a Conversion Notice from more than one holder of Notes for the
         same Conversion Date and the Company can convert some, but not all, of
         such portions of the Notes submitted for conversion, the Company,
         subject to Section 3(d), shall convert from each holder of Notes
         electing to have Notes converted on such date a pro rata amount of such
         holder's portion of its Notes submitted for conversion based on the
         principal amount of Notes submitted for conversion on such date by such
         holder relative to the aggregate principal amount of all Notes
         submitted for conversion on such date. In the event of a dispute as to
         the number of shares of Common Stock issuable to the Holder in
         connection with a conversion of this Note, the Company shall issue to
         the Holder the number of shares of Common Stock not in dispute and
         resolve such dispute in accordance with Section 24.

                           (d) Limitations on Conversions.

         (i) Beneficial Ownership. The Company shall not effect any conversion
         of this Note,

                                       4
<PAGE>

         and the Holder of this Note shall not have the right to convert any
         portion of this Note pursuant to Section 3(a), to the extent that after
         giving effect to such conversion, the Holder (together with the
         Holder's affiliates) would beneficially own in excess of 9.99% of the
         number of shares of Common Stock outstanding immediately after giving
         effect to such conversion. For purposes of the foregoing sentence, the
         number of shares of Common Stock beneficially owned by the Holder and
         its affiliates shall include the number of shares of Common Stock
         issuable upon conversion of this Note with respect to which the
         determination of such sentence is being made, but shall exclude the
         number of shares of Common Stock which would be issuable upon (A)
         conversion of the remaining, nonconverted portion of this Note
         beneficially owned by the Holder or any of its affiliates and (B)
         exercise or conversion of the unexercised or nonconverted portion of
         any other securities of the Company (including, without limitation, any
         Other Notes or warrants) subject to a limitation on conversion or
         exercise analogous to the limitation contained herein beneficially
         owned by the Holder or any of its affiliates. Except as set forth in
         the preceding sentence, for purposes of this Section 3(d)(i),
         beneficial ownership shall be calculated in accordance with Section
         13(d) of the Securities Exchange Act of 1934, as amended. For purposes
         of this Section 3(d)(i), in determining the number of outstanding
         shares of Common Stock, the Holder may rely on the number of
         outstanding shares of Common Stock as reflected in (x) the Company's
         most recent Form 10-Q or Form 10-K, (y) a more recent public
         announcement by the Company or (z) any other notice by the Company or
         the Transfer Agent setting forth the number of shares of Common Stock
         outstanding. For any reason at any time, upon the written or oral
         request of the Holder, the Company shall within one Business Day
         confirm orally and in writing to the Holder the number of shares of
         Common Stock then outstanding. In any case, the number of outstanding
         shares of Common Stock shall be determined after giving effect to the
         conversion or exercise of securities of the Company, including this
         Note, by the Holder or its affiliates since the date as of which such
         number of outstanding shares of Common Stock was reported.

         (ii) Principal Market Regulation. The Company shall not be obligated to
         issue any shares of Common Stock upon conversion of this Note if the
         issuance of such shares of Common Stock would exceed that number of
         shares of Common Stock which the Company may issue upon conversion of
         the Notes without breaching the Company's obligations under the rules
         or regulations of the Principal Market (the "EXCHANGE CAP"), except
         that such limitation shall not apply in the event that the Company (A)
         obtains the approval of its stockholders as required by the applicable
         rules of the Principal Market for issuances of Common Stock in excess
         of such amount or (B) obtains a written opinion from outside counsel to
         the Company that such approval is not required, which opinion shall be
         reasonably satisfactory to the holders of the Notes representing at
         least a majority of the principal amounts of the Notes then
         outstanding. Until such approval or written opinion is obtained, no
         purchaser of the Notes pursuant to the Securities Purchase Agreement
         (the "PURCHASERS") shall be issued, upon conversion of Notes, shares of
         Common Stock in an amount greater than the product of the Exchange Cap
         multiplied by

                                       5
<PAGE>

         a fraction, the numerator of which is the principal amount of Notes
         issued to such Purchaser pursuant to the Securities Purchase Agreement
         on the Issuance Date and the denominator of which is the aggregate
         principal amount of all Notes issued to the Purchasers pursuant to the
         Securities Purchase Agreement on the Issuance Date (with respect to
         each Purchaser, the "EXCHANGE CAP ALLOCATION"). In the event that any
         Purchaser shall sell or otherwise transfer any of such Purchaser's
         Notes, the transferee shall be allocated a pro rata portion of such
         Purchaser's Exchange Cap Allocation, and the restrictions of the prior
         sentence shall apply to such transferee with respect to the portion of
         the Exchange Cap Allocation allocated to such transferee. In the event
         that any holder of Notes shall convert all of such holder's Notes into
         a number of shares of Common Stock which, in the aggregate, is less
         than such holder's Exchange Cap Allocation, then the difference between
         such holder's Exchange Cap Allocation and the number of shares of
         Common Stock actually issued to such holder shall be allocated to the
         respective Exchange Cap Allocations of the remaining holders of Notes
         on a pro rata basis in proportion to the aggregate principal amount of
         the Notes then held by each such holder.

                  (4) RIGHTS UPON EVENT OF DEFAULT.

                           (a) Event of Default. Each of the following events
shall constitute an "EVENT OF DEFAULT":

         (i) the failure of the applicable Registration Statement required to be
         filed pursuant to the Registration Rights Agreement to be declared
         effective by the SEC on or prior to the date that is 60 days after the
         applicable Effectiveness Deadline (as defined in the Registration
         Rights Agreement), or, while the applicable Registration Statement is
         required to be maintained effective pursuant to the terms of the
         Registration Rights Agreement, the effectiveness of the applicable
         Registration Statement lapses for any reason (including, without
         limitation, the issuance of a stop order) or is unavailable to any
         holder of the Notes for sale of all of such holder's Registrable
         Securities (as defined in the Registration Rights Agreement) in
         accordance with the terms of the Registration Rights Agreement, and
         such lapse or unavailability continues for a period of 10 consecutive
         Trading Days or for more than an aggregate of 30 Trading Days in any
         365-day period (other than days during an Allowable Grace Period (as
         defined in the Registration Rights Agreement));

         (ii) the suspension from trading or failure of the Common Stock to be
         listed on the Principal Market or The New York Stock Exchange, Inc. for
         a period of five consecutive Trading Days or for more than an aggregate
         of seven Trading Days in any 365-day period;

         (iii) the Company's (A) failure to cure a Conversion Failure by
         delivery of the required number of shares of Common Stock within ten
         (10) Business Days after the applicable Conversion Date or (B) notice,
         written or oral, to any holder of the Notes, including by

                                       6
<PAGE>

         way of public announcement or through any of its agents, at any time,
         of its intention not to comply with a request for conversion of any
         Notes into shares of Common Stock that is tendered in accordance with
         the provisions of the Notes;

         (iv) at any time following the tenth consecutive Business Day that the
         Holder's Authorized Share Allocation is less than the number of shares
         of Common Stock that the Holder would be entitled to receive upon a
         conversion of the full Conversion Amount of this Note (without regard
         to any limitations on conversion set forth in Section 3(d) or
         otherwise);

         (v) the Company's failure to pay to the Holder any amount of Principal,
         Interest, Late Charges or other amounts when and as due under this
         Note, the Securities Purchase Agreement, the Registration Rights
         Agreement or any other agreement, document, certificate or other
         instrument delivered in connection with the transactions contemplated
         hereby and thereby to which the Holder is a party, except, in the case
         of a failure to pay Interest and Late Charges when and as due, in which
         case only if such failure continues for a period of at least five
         Business Days;

         (vi) any default under, redemption of or acceleration prior to maturity
         of any Indebtedness (as defined below) of the Company or any of its
         Subsidiaries (as defined in Section 3(a) of the Securities Purchase
         Agreement) other than with respect to any Other Notes and the 1998
         Debentures; provided that in the case of a payment default of such
         Indebtedness, such default is not cured within applicable cure periods;
         further provided that in the case of a non-payment default of such
         Indebtedness that has not resulted in an acceleration or redemption of
         such Indebtedness prior to its maturity, only upon acceleration or
         redemption of such Indebtedness;

         (vii) the Company or any of its Subsidiaries, pursuant to or within the
         meaning of Title 11, U.S. Code, or any similar Federal or state law for
         the relief of debtors (collectively, "BANKRUPTCY LAW"), (A) commences a
         voluntary case, (B) consents to the entry of an order for relief
         against it in an involuntary case, (C) consents to the appointment of a
         receiver, trustee, assignee, liquidator or similar official (a
         "CUSTODIAN"), (D) makes a general assignment for the benefit of its
         creditors or (E) admits in writing that it is generally unable to pay
         its debts as they become due;

         (viii) a court of competent jurisdiction enters an order or decree
         under any Bankruptcy Law that (A) is for relief against the Company or
         any of its Subsidiaries in an involuntary case, (B) appoints a
         Custodian of the Company or any of its Subsidiaries or (C) orders the
         liquidation of the Company or any of its Subsidiaries;

         (ix) a final judgment or judgments for the payment of money aggregating
         in excess of $500,000 are rendered against the Company or any of its
         Subsidiaries and which judgments are not, within 60 days after the
         entry thereof, bonded, discharged or stayed

                                       7
<PAGE>

         pending appeal, or are not discharged within 60 days after the
         expiration of such stay; provided, however, that any judgment which is
         covered by insurance or an indemnity from a credit worthy party shall
         not be included in calculating the $500,000 amount set forth above so
         long as the Company provides the Holder a written statement from such
         insurer or indemnity provider (which written statement shall be
         reasonably satisfactory to the Holder) to the effect that such judgment
         is covered by insurance or an indemnity and the Company will receive
         the proceeds of such insurance or indemnity within 30 days of the
         issuance of such judgment;

         (x) the Company materially breaches any representation, warranty,
         covenant or other term or condition of the Securities Purchase
         Agreement, the Registration Rights Agreement, this Note, the Other
         Notes, or any other agreement, document, certificate or other
         instrument delivered in connection with the transactions contemplated
         thereby and hereby to which the Holder is a party, except, in the case
         of a breach of a covenant or other term or condition which is curable,
         only if such breach continues for a period of at least ten (10)
         consecutive Business Days;

         (xi) any breach or failure in any respect to comply with Section 15 of
         this Note;

         (xii) any Event of Default (as defined in the Other Notes) occurs with
         respect to any Other Notes; or

         (xiii) either of (x) the Total Debt to Total Capitalization Ratio shall
         exceed .55:1.00 or (y) the Total Debt to EBITDA Ratio shall exceed
         3.50:1.00.

                           (b) Redemption Right. Promptly after the occurrence
of an Event of Default with respect to this Note or any Other Note, the Company
shall deliver written notice thereof via facsimile and overnight courier (an
"EVENT OF DEFAULT NOTICE") to the Holder. At any time after the earlier of the
Holder's receipt of an Event of Default Notice and the Holder becoming aware of
an Event of Default, the Holder may require the Company to redeem all or any
portion of this Note by delivering written notice thereof (the "EVENT OF DEFAULT
REDEMPTION NOTICE") to the Company, which Event of Default Redemption Notice
shall indicate the portion of this Note the Holder is electing to redeem. Each
portion of this Note subject to redemption by the Company pursuant to this
Section 4(b) shall be redeemed by the Company at a price equal to the greater of
(i) the product of (x) the Conversion Amount to be redeemed and (y) the
Redemption Premium and (ii) the product of (A) the Conversion Rate with respect
to such Conversion Amount in effect at such time as the Holder delivers an Event
of Default Redemption Notice and (B) the Closing Sale Price of the Common Stock
on the date immediately preceding such Event of Default (the "EVENT OF DEFAULT
REDEMPTION PRICE"). Redemptions required by this Section 4(b) shall be made in
accordance with the provisions of Section 12.

                                       8
<PAGE>

                  (5) RIGHTS UPON CHANGE OF CONTROL.

                           (a) Change of Control. Each of the following events
shall constitute a "CHANGE OF CONTROL":

         (i) the consolidation, merger or other business combination (including,
         without limitation, a reorganization or recapitalization) of the
         Company with or into another Person (other than (A) a consolidation,
         merger or other business combination (including, without limitation,
         reorganization or recapitalization) in which holders of the Company's
         voting power immediately prior to the transaction continue after the
         transaction to hold, directly or indirectly, the voting power of the
         surviving entity or entities necessary to elect a majority of the
         members of the board of directors (or their equivalent if other than a
         corporation) of such entity or entities, or (B) pursuant to a migratory
         merger effected solely for the purpose of changing the jurisdiction of
         incorporation of the Company);

         (ii) the sale or transfer of all or substantially all of the Company's
         assets; or

         (iii) a purchase, tender or exchange offer made to and accepted by the
         holders of more than the 50% of the outstanding shares of Common Stock.

No sooner than 15 days nor later than 10 days prior to the consummation of a
Change of Control, but not prior to the public announcement of such Change of
Control, the Company shall deliver written notice thereof via facsimile and
overnight courier to the Holder (a "CHANGE OF CONTROL NOTICE").

                           (b) Assumption. Prior to the consummation of any
Change of Control, the Company will secure from any Person purchasing the
Company's assets or Common Stock or any successor resulting from such Change of
Control (in each case, an "ACQUIRING ENTITY") a written agreement (in form and
substance satisfactory to the holders of Notes representing at least a majority
of the aggregate principal amount of the Notes then outstanding) to deliver to
each holder of Notes in exchange for such Notes, a security of the Acquiring
Entity evidenced by a written instrument substantially similar in form and
substance to the Notes, including, without limitation, having a principal amount
and interest rate equal to the principal amounts and the interest rates of the
Notes held by such holder, and satisfactory to the holders of Notes representing
at least a majority of the principal amount of the Notes then outstanding. In
the event that an Acquiring Entity is directly or indirectly controlled by a
company or entity whose common stock or similar equity interest is listed,
designated or quoted on a securities exchange or trading market, the holders of
Notes representing at least a majority of the aggregate principal amount of the
Notes then outstanding may elect to treat such Person as the Acquiring Entity
for purposes of this Section 5(b).

                           (c) Redemption Right. At any time during the period
beginning after the Holder's receipt of a Change of Control Notice and ending on
the date of the consummation

                                       9
<PAGE>

of such Change of Control (or, in the event a Change of Control Notice is not
delivered at least 10 days prior to a Change of Control, at any time on or after
the date which is 10 days prior to a Change of Control and ending 10 days after
the consummation of such Change of Control), the Holder may require the Company
to redeem all or any portion of this Note by delivering written notice thereof
("CHANGE OF CONTROL REDEMPTION NOTICE") to the Company, which Change of Control
Redemption Notice shall indicate the Conversion Amount the Holder is electing to
redeem; provided, however, that the Company shall not be under any obligation to
redeem all or any portion of this Note or to deliver the applicable Change of
Control Redemption Price unless and until the applicable Change of Control is
consummated. The portion of this Note subject to redemption pursuant to this
Section 5(c) shall be redeemed by the Company at a price equal to the greater of
(i) the product of (x) the Conversion Amount being redeemed and (y) the quotient
determined by dividing (A) the Closing Sale Price of the Common Stock
immediately following the public announcement of such proposed Change of Control
by (B) the Conversion Price and (ii) 110% of the Conversion Amount being
redeemed (the "CHANGE OF CONTROL REDEMPTION PRICE"). Redemptions required by
this Section 5(c) shall be made in accordance with the provisions of Section 12
and shall have priority to payments to stockholders in connection with a Change
of Control.

                  (6) RIGHTS UPON ISSUANCE OF PURCHASE RIGHTS AND OTHER
CORPORATE EVENTS.

                           (a) Purchase Rights. If at any time the Company
grants, issues or sells any Options, Convertible Securities or rights to
purchase stock, warrants, securities or other property pro rata to the record
holders of any class of Common Stock (the "PURCHASE RIGHTS"), then the Holder
will be entitled to acquire, upon the terms applicable to such Purchase Rights,
the aggregate Purchase Rights which the Holder could have acquired if the Holder
had held the number of shares of Common Stock acquirable upon complete
conversion of this Note (without taking into account any limitations or
restrictions on the convertibility of this Note) immediately before the date on
which a record is taken for the grant, issuance or sale of such Purchase Rights,
or, if no such record is taken, the date as of which the record holders of
Common Stock are to be determined for the grant, issue or sale of such Purchase
Rights.

                           (b) Other Corporate Events. Prior to the consummation
of any recapitalization, reorganization, consolidation, merger, spin-off or
other business combination (other than a Change of Control) pursuant to which
holders of Common Stock are entitled to receive securities or other assets with
respect to or in exchange for Common Stock (a "CORPORATE EVENT"), the Company
shall make appropriate provision to insure that the Holder will thereafter have
the right to receive upon a conversion of this Note, (i) in addition to the
shares of Common Stock receivable upon such conversion, such securities or other
assets to which the Holder would have been entitled with respect to such shares
of Common Stock had such shares of Common Stock been held by the Holder upon the
consummation of such Corporate Event or (ii) in lieu of the shares of Common
Stock otherwise receivable upon such conversion, such securities or other assets
received by the holders of Common Stock in

                                       10
<PAGE>

connection with the consummation of such Corporate Event in such amounts as the
Holder would have been entitled to receive had this Note initially been issued
with conversion rights for the form of such consideration (as opposed to shares
of Common Stock) at a conversion rate for such consideration commensurate with
the Conversion Rate. Provision made pursuant to the preceding sentence shall be
in a form and substance satisfactory to the holders of Notes representing at
least a majority of the aggregate principal amount of the Notes then
outstanding.

                  (7) RIGHTS UPON ISSUANCE OF OTHER SECURITIES.

                           (a) Adjustment of Conversion Price upon Issuance of
Common Stock. If and whenever on or after the Issuance Date, the Company issues
or sells, or in accordance with this Section 7(a) is deemed to have issued or
sold, any shares of Common Stock (including the issuance or sale of shares of
Common Stock owned or held by or for the account of the Company, but excluding
shares of Common Stock deemed to have been issued or sold by the Company in
connection with any Excluded Security) for a consideration per share (the "NEW
SECURITIES ISSUANCE PRICE") less than a price (the "APPLICABLE PRICE") equal to
the Conversion Price in effect immediately prior to such issue or sale (the
foregoing a "DILUTIVE ISSUANCE"), then immediately after such Dilutive Issuance,
the Conversion Price then in effect shall be reduced to an amount (rounded to
the nearest cent) equal to the product of (A) the Conversion Price in effect
immediately prior to such Dilutive Issuance and (B) the quotient determined by
dividing (1) the sum of (I) the product derived by multiplying the Conversion
Price in effect immediately prior to such Dilutive Issuance and the number of
shares of Common Stock Deemed Outstanding immediately prior to such Dilutive
Issuance plus (II) the consideration, if any, received by the Company upon such
Dilutive Issuance, by (2) the product derived by multiplying (I) the Conversion
Price in effect immediately prior to such Dilutive Issuance by (II) the number
of shares of Common Stock Deemed Outstanding immediately after such Dilutive
Issuance. For purposes of determining the adjusted Conversion Price under this
Section 7(a), the following shall be applicable:

         (i) Issuance of Options. If the Company in any manner grants or sells
         any Options and the lowest price per share for which one share of
         Common Stock is issuable upon the exercise of any such Option or upon
         conversion or exchange or exercise of any Convertible Securities
         issuable upon exercise of such Option is less than the Applicable
         Price, then such share of Common Stock shall be deemed to be
         outstanding and to have been issued and sold by the Company at the time
         of the granting or sale of such Option for such price per share. For
         purposes of this Section 7(a)(i), the "lowest price per share for which
         one share of Common Stock is issuable upon the exercise of any such
         Option or upon conversion or exchange or exercise of any Convertible
         Securities issuable upon exercise of such Option" shall be equal to the
         sum of the lowest amounts of consideration (if any) received or
         receivable by the Company with respect to any one share of Common Stock
         upon granting or sale of the Option, upon exercise of the Option and
         upon conversion or exchange or exercise of any Convertible Security
         issuable upon exercise of such Option. No further adjustment of the
         Conversion Price shall be made upon the

                                       11
<PAGE>

         actual issuance of such Common Stock or of such Convertible Securities
         upon the exercise of such Options or upon the actual issuance of such
         Common Stock upon conversion or exchange or exercise of such
         Convertible Securities.

         (ii) Issuance of Convertible Securities. If the Company in any manner
         issues or sells any Convertible Securities and the lowest price per
         share for which one share of Common Stock is issuable upon such
         conversion or exchange or exercise thereof is less than the Applicable
         Price, then such share of Common Stock shall be deemed to be
         outstanding and to have been issued and sold by the Company at the time
         of the issuance of sale of such Convertible Securities for such price
         per share. For the purposes of this Section 7(a)(ii), the "price per
         share for which one share of Common Stock is issuable upon such
         conversion or exchange or exercise" shall be equal to the sum of the
         lowest amounts of consideration (if any) received or receivable by the
         Company with respect to any one share of Common Stock upon the issuance
         or sale of the Convertible Security and upon the conversion or exchange
         or exercise of such Convertible Security. No further adjustment of the
         Conversion Price shall be made upon the actual issuance of such Common
         Stock upon conversion or exchange or exercise of such Convertible
         Securities, and if any such issue or sale of such Convertible
         Securities is made upon exercise of any Options for which adjustment of
         the Conversion Price had been or are to be made pursuant to other
         provisions of this Section 7(a), no further adjustment of the
         Conversion Price shall be made by reason of such issue or sale.

         (iii) Change in Option Price or Rate of Conversion. If the purchase
         price provided for in any Options, the additional consideration, if
         any, payable upon the issue, conversion, exchange or exercise of any
         Convertible Securities, or the rate at which any Convertible Securities
         are convertible into or exchangeable or exercisable for Common Stock
         changes at any time, the Conversion Price in effect at the time of such
         change shall be adjusted to the Conversion Price which would have been
         in effect at such time had such Options or Convertible Securities
         provided for such changed purchase price, additional consideration or
         changed conversion rate, as the case may be, at the time initially
         granted, issued or sold. For purposes of this Section 7(a)(iii), if the
         terms of any Option or Convertible Security that was outstanding as of
         the Issuance Date are changed in the manner described in the
         immediately preceding sentence, then such Option or Convertible
         Security and the Common Stock deemed issuable upon exercise, conversion
         or exchange thereof shall be deemed to have been issued as of the date
         of such change. No adjustment shall be made if such adjustment would
         result in an increase of the Conversion Price then in effect.

         (iv) Calculation of Consideration Received. In case any Option is
         issued in connection with the issue or sale of other securities of the
         Company, together comprising one integrated transaction in which no
         specific consideration is allocated to such Options by the parties
         thereto, the Options will be deemed to have been issued for a
         consideration of $.01. If any Common Stock, Options or Convertible
         Securities are issued or sold or

                                       12
<PAGE>

         deemed to have been issued or sold for cash, the consideration received
         therefor will be deemed to be the net amount received by the Company
         therefor. If any Common Stock, Options or Convertible Securities are
         issued or sold for a consideration other than cash, the amount of the
         consideration other than cash received by the Company will be the fair
         value of such consideration, except where such consideration consists
         of securities, in which case the amount of consideration received by
         the Company will be the Closing Sale Price of such securities on the
         date of receipt. If any Common Stock, Options or Convertible Securities
         are issued to the owners of the non-surviving entity in connection with
         any merger in which the Company is the surviving entity, the amount of
         consideration therefor will be deemed to be the fair value of such
         portion of the net assets and business of the non-surviving entity as
         is attributable to such Common Stock, Options or Convertible
         Securities, as the case may be. The fair value of any consideration
         other than cash or securities will be determined jointly by the Company
         and the holders of Notes representing at least a majority of the
         principal amounts of the Notes then outstanding. If such parties are
         unable to reach agreement within ten days after the occurrence of an
         event requiring valuation (the "VALUATION EVENT"), the fair value of
         such consideration will be determined within five Business Days after
         the tenth day following the Valuation Event by an independent,
         reputable appraiser jointly selected by the Company and the holders of
         Notes representing at least a majority of the principal amounts of the
         Notes then outstanding. The determination of such appraiser shall be
         deemed binding upon all parties absent manifest error and the fees and
         expenses of such appraiser shall be borne equally by the Company, on
         the hand, and the holders of the Notes, on the other hand.

         (v) Record Date. If the Company takes a record of the holders of Common
         Stock for the purpose of entitling them (A) to receive a dividend or
         other distribution payable in Common Stock, Options or in Convertible
         Securities or (B) to subscribe for or purchase Common Stock, Options or
         Convertible Securities, then such record date will be deemed to be the
         date of the issue or sale of the shares of Common Stock deemed to have
         been issued or sold upon the declaration of such dividend or the making
         of such other distribution or the date of the granting of such right of
         subscription or purchase, as the case may be.

                           (b) Adjustment of Conversion Price upon Subdivision
or Combination of Common Stock. If the Company at any time subdivides (by any
stock split, stock dividend, recapitalization or otherwise) one or more classes
of its outstanding shares of Common Stock into a greater number of shares, the
Conversion Price in effect immediately prior to such subdivision will be
proportionately reduced. If the Company at any time combines (by combination,
reverse stock split or otherwise) one or more classes of its outstanding shares
of Common Stock into a smaller number of shares, the Conversion Price in effect
immediately prior to such combination will be proportionately increased.

                                       13
<PAGE>

                           (c) Other Events. If any event occurs of the type
contemplated by the provisions of this Section 7 but not expressly provided for
by such provisions (including, without limitation, the granting of stock
appreciation rights, phantom stock rights or other rights with equity features),
then the Company's Board of Directors will make an appropriate adjustment in the
Conversion Price so as to protect the rights of the Holder under this Note;
provided that no such adjustment will increase the Conversion Price as otherwise
determined pursuant to this Section 7.

                  (8) EXTENSION OF MATURITY DATE AT HOLDER'S OPTION. The Holder
shall have the right, in its sole discretion, to require that the Original
Maturity Date as to this Note (but not any other Note) be extended for a period
not to exceed three years from the Original Maturity Date, without the action of
any other Person, by delivering written notice thereof (a "HOLDER MATURITY DATE
EXTENSION NOTICE") to the Company at any time prior to the Original Maturity
Date, which Holder Maturity Date Extension Notice shall indicate the Maturity
Date, as so extended, of this Note. Within two Business Days of receipt of a
Holder Maturity Date Extension Notice, the Company shall inform all other
holders of Notes that such a notice has been received by the Company.

                  (9) COMPANY'S RIGHT OF MANDATORY CONVERSION. (a) Mandatory
Conversion. If at any time from and after March 23, 2006, the Weighted Average
Price of the Common Stock exceeds 200% of the Conversion Price as of the
Issuance Date (subject to appropriate adjustments for stock splits, stock
dividends, stock combinations and other similar transactions after the Issuance
Date) for each of any 15 consecutive Trading Days (the "MANDATORY CONVERSION
MEASURING PERIOD") and the Conditions to Mandatory Conversion (as set forth in
Section 9(c)) are satisfied or waived in writing by the Holder, the Company
shall have the right to require the Holder to convert all or any such portion of
the Conversion Amount of this Note designated in the Mandatory Conversion Notice
into fully paid, validly issued and nonassessable shares of Common Stock in
accordance with Section 3(c) hereof at the Conversion Rate as of the Mandatory
Conversion Date (as defined below) (a "MANDATORY CONVERSION"). The Company may
exercise its right to require conversion under this Section 9(a) by delivering
within not more than three Trading Days following the end of such Mandatory
Conversion Measuring Period a written notice thereof by facsimile and overnight
courier to all, but not less than all, of the holders of Notes and the Transfer
Agent (the "MANDATORY CONVERSION NOTICE" and the date all of the holders
received such notice is referred to as the "MANDATORY CONVERSION NOTICE DATE").
The Mandatory Conversion Notice shall be irrevocable.

                           (b) Pro Rata Conversion Requirement. If the Company
elects to cause a conversion of all or any portion of the Conversion Amount of
this Note pursuant to Section 9(a), then it must simultaneously take the same
action with respect to the Other Notes. If the Company elects to cause the
conversion of this Note pursuant to Section 9(a) (or similar provisions under
the Other Notes) with respect to less than all of the Conversion Amounts of the
Notes then outstanding, then the Company shall require conversion of a
Conversion Amount

                                       14
<PAGE>

from each of the holders of the Notes equal to the product of (I) the aggregate
Conversion Amount of Notes which the Company has elected to cause to be
converted pursuant to Section 9(a), multiplied by (II) the fraction, the
numerator of which is the sum of the aggregate principal amount of the Notes
purchased by such holder pursuant to the Securities Purchase Agreement and the
denominator of which is the sum of the aggregate principal amount of the Notes
and purchased by all holders pursuant to the Securities Purchase Agreement (such
fraction with respect to each holder is referred to as its "ALLOCATION
PERCENTAGE," and such amount with respect to each holder is referred to as its
"PRO RATA CONVERSION AMOUNT"). In the event that the initial holder of any Notes
shall sell or otherwise transfer any of such holder's Notes, the transferee
shall be allocated a pro rata portion of such holder's Allocation Percentage.
The Mandatory Conversion Notice shall state (i) the Trading Day selected for the
Mandatory Conversion in accordance with Section 9(a), which Trading Day shall be
at least 15 Business Days but not more than 60 Business Days following the
Mandatory Conversion Notice Date (the "MANDATORY CONVERSION DATE"), (ii) the
aggregate Conversion Amount of the Notes which the Company has elected to be
subject to mandatory conversion from all of the holders of the Notes pursuant to
this Section 9 (and analogous provisions under the Other Notes), (iii) each
holder's Pro Rata Conversion Amount of the Conversion Amount of the Notes the
Company has elected to cause to be converted pursuant to this Section 9 (and
analogous provisions under the Other Notes) and (iv) the number of shares of
Common Stock to be issued to such Holder as of the Mandatory Conversion Date.
All Conversion Amounts converted by the Holder after the Mandatory Conversion
Notice Date shall reduce the Conversion Amount of this Note required to be
converted on the Mandatory Conversion Date. If the Company has elected a
Mandatory Conversion, the mechanics of conversion set forth in Section 3(c)
shall apply, to the extent applicable, as if the Company and the Transfer Agent
had received from the Holder on the Mandatory Conversion Date a Conversion
Notice with respect to the Conversion Amount being converted pursuant to the
Mandatory Conversion.

                           (c) Conditions to Mandatory Conversion. For purposes
of this Section 9, "CONDITIONS TO MANDATORY CONVERSION" means the following
conditions: (i) during the period beginning on the date that is six months prior
to the Mandatory Conversion Date and ending on and including the Mandatory
Conversion Date (the "NOTICE MEASURING PERIOD"), the Company shall have
delivered shares of Common Stock upon any conversion of Conversion Amounts on a
timely basis as set forth in Section 3(c)(i); (ii) on each day during the period
beginning on the first Trading Day of the Mandatory Conversion Measuring Period
and ending on and including the Mandatory Conversion Date, the Common Stock
shall be listed on the Principal Market or The New York Stock Exchange, Inc. and
delisting or suspension by such market or exchange shall not have been
threatened either (A) in writing by such market or exchange or (B) by falling
below the minimum listing maintenance requirements of such market or exchange;
(iii) during the period beginning on the first Trading Day of the Notice
Measuring Period and ending on and including the Mandatory Conversion Date,
there shall not have occurred (x) the public announcement of a pending, proposed
or intended Change of Control which has not been abandoned, terminated or
consummated, (y) an Event of Default or (z) an event that with the passage of
time or giving of notice, and assuming it were not cured, would

                                       15
<PAGE>

constitute an Event of Default; (iv) on each day of the period beginning on the
date of delivery of the Mandatory Conversion Notice and ending on the Mandatory
Conversion Date either (x) the Registration Statement or Registration Statements
required pursuant to the Registration Rights Agreement shall be effective and
available for the sale for all of the Registrable Securities in accordance with
the terms of the Registration Rights Agreement or (y) all shares of Common Stock
issuable upon conversion of the Notes shall be eligible for sale without
restriction and without the need for registration under any applicable federal
or state securities laws; (v) on each day of the period beginning on the
Mandatory Conversion Date and ending thirty Trading Days thereafter either (x)
the Registration Statements required pursuant to the Registration Rights
Agreement shall be expected to be effective and available for the sale of at
least all of the Registrable Securities in accordance with the terms of the
Registration Rights Agreement or (y) all shares of Common Stock issuable upon
conversion of the Notes shall be eligible for sale without restriction and
without the need for registration under any applicable federal or state
securities laws; and (vi) the Company otherwise shall have been in material
compliance with and shall not have breached (unless subsequently cured by the
Company prior to the first Trading Day of the Notice Measuring Period), in any
material respect, any material provision, covenant, representation or warranty
of the Securities Purchase Agreement, the Registration Rights Agreement or any
of the Notes.

                  (10) NONCIRCUMVENTION. The Company hereby covenants and agrees
that the Company will not, by amendment of its Certificate of Incorporation or
through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities, or any other voluntary action, avoid
or seek to avoid the observance or performance of any of the terms of this Note,
and will at all times in good faith carry out all of the provisions of this Note
and take all action as may be required to protect the rights of the Holder of
this Note.

                  (11) RESERVATION OF AUTHORIZED SHARES.

                           (a) Reservation. The Company shall initially reserve
out of its authorized and unissued Common Stock a number of shares of Common
Stock for each of the Notes equal to 125% of the Conversion Rate with respect to
the Conversion Amount of each such Note as of the Issuance Date. Thereafter, the
Company, so long as any of the Notes are outstanding, shall take all action
necessary to reserve and keep available out of its authorized and unissued
Common Stock, solely for the purpose of effecting the conversion of the Notes,
110% of the number of shares of Common Stock as shall from time to time be
necessary to effect the conversion of all of the Notes then outstanding;
provided that at no time shall the number of shares of Common Stock so reserved
be less than the number of shares required to be reserved by the previous
sentence (without regard to any limitations on conversions) (the "REQUIRED
RESERVE AMOUNT"). The initial number of shares of Common Stock reserved for
conversions of the Notes and each increase in the number of shares so reserved
shall be allocated pro rata among the holders of the Notes based on the
principal amount of the Notes held by each holder at the time of Issuance Date
or increase in the number of reserved shares, as the case may be (the
"AUTHORIZED SHARE ALLOCATION"). In the event that a holder shall sell or
otherwise transfer any

                                       16
<PAGE>

of such holder's Notes, each transferee shall be allocated a pro rata portion of
such holder's Authorized Share Allocation. Any shares of Common Stock reserved
and allocated to any Person which ceases to hold any Notes shall be allocated to
the remaining holders of Notes, pro rata based on the principal amount of the
Notes then held by such holders.

                           (b) Insufficient Authorized Shares. If at any time
while any of the Notes remain outstanding the Company does not have a sufficient
number of authorized and unreserved shares of Common Stock to satisfy its
obligation to reserve for issuance upon conversion of the Notes at least a
number of shares of Common Stock equal to the Required Reserve Amount (an
"AUTHORIZED SHARE FAILURE"), then the Company shall as soon as practicable take
all action reasonably necessary to increase the Company's authorized shares of
Common Stock to an amount sufficient to allow the Company to reserve the
Required Reserve Amount for the Notes then outstanding. Without limiting the
generality of the foregoing sentence, as soon as practicable after the date of
the occurrence of an Authorized Share Failure, but in no event later than 60
days after the occurrence of such Authorized Share Failure, the Company shall
hold a meeting of its stockholders for the approval of an increase in the number
of authorized shares of Common Stock. In connection with such meeting, the
Company shall provide each stockholder with a proxy statement and shall use its
best efforts to solicit its stockholders' approval of such increase in
authorized shares of Common Stock and to cause its board of directors to
recommend to the stockholders that they approve such proposal.

                  (12) HOLDER'S REDEMPTIONS.

                           (a) Mechanics. In the event that the Holder has sent
an Event of default Redemption Notice or a Change of Control Redemption Notice
to the Company pursuant to Section 4(b) or Section 5(c), respectively (each, a
"REDEMPTION NOTICE"), the Holder shall promptly submit this Note to the Company.
The Company shall deliver the applicable Event of Default Redemption Price to
the Holder within five Business Days after the Company's receipt of the Holder's
Event of Default Redemption Notice. If the Holder has submitted a Change of
Control Redemption Notice in accordance with Section 5(c), the Company shall
deliver the applicable Change of Control Redemption Price to the Holder
concurrently with the consummation of such Change of Control if such notice is
received prior to the consummation of such Change of Control and within five
Business Days after the Company's receipt of such notice otherwise. In the event
of a redemption of less than all of the Conversion Amount of this Note, the
Company shall promptly cause to be issued and delivered to the Holder a new Note
(in accordance with Section 19(d)) representing the outstanding Principal which
has not been redeemed. In the event that the Company does not pay the Event of
Default Redemption Price or the Change of Control Redemption Price (each, the
"REDEMPTION PRICE"), as applicable, to the Holder (or deliver any Common Stock
to be issued pursuant to a Redemption Notice) within the time period required,
at any time thereafter and until the Company pays such unpaid Redemption Price
(and issues any Common Stock required pursuant to a Redemption Notice) in full,
the Holder shall have the option, in lieu of redemption, to require the Company
to promptly return to the Holder all or any portion of this Note representing
the Conversion Amount that was

                                       17
<PAGE>

submitted for redemption and for which the applicable Redemption Price (or any
Common Stock required to be issued pursuant to a Redemption Notice) (together
with any Late Charges thereon) has not been paid. Upon the Company's receipt of
such notice, (x) the Redemption Notice shall be null and void with respect to
such Conversion Amount, (y) the Company shall immediately return this Note, or
issue a new Note (in accordance with Section 19(d)) to the Holder representing
such Conversion Amount and (z) the Conversion Price of this Note or such new
Notes shall be adjusted to the lesser of (A) the Conversion Price as in effect
on the date on which the Redemption Notice is voided and (B) the lowest Closing
Bid Price during the period beginning on and including the date on which the
Redemption Notice is delivered to the Company and ending on and including the
date on which the Redemption Notice is voided. The Holder's delivery of a notice
voiding a Redemption Notice and exercise of its rights following such notice
shall not affect the Company's obligations to make any payments of Late Charges
which have accrued prior to the date of such notice with respect to the
Conversion Amount subject to such notice.

                           (b) Redemption by Other Holders. Upon the Company's
receipt of notice from any of the holders of the Other Notes for redemption or
repayment as a result of an event or occurrence substantially similar to the
events or occurrences described in Section 4(b) or Section 5(c) (each, an "OTHER
REDEMPTION Notice"), the Company shall immediately forward to the Holder by
facsimile a copy of such notice. If the Company receives a Redemption Notice and
one or more Other Redemption Notices during the seven Business Day period
beginning on and including the date which is three Business Days prior to the
Company's receipt of the Holder's Redemption Notice and ending on and including
the date which is three Business Days after the Company's receipt of the
Holder's Redemption Notice and the Company is unable to redeem all principal,
interest and other amounts designated in such Redemption Notice and such Other
Redemption Notices received during such seven Business Day period, then the
Company shall redeem a pro rata amount from each holder of the Notes (including
the Holder) based on the principal amount of the Notes submitted for redemption
pursuant to such Redemption Notice and such Other Redemption Notices received by
the Company during such seven Business Day period.

                  (13) Subordination to Senior Indebtedness.

                           (a) The Company covenants and agrees, and the Holder
likewise covenants and agrees, that this Note shall be issued subject to the
provisions of this Section 13 and to the extent and in the manner hereinafter
set forth in this Section 13, the indebtedness represented by this Note and the
payment of the principal amount and interest and Late Charges thereon, any
redemption amount, liquidated damages, fees, expenses or any other amounts in
respect of this Note are hereby expressly made subordinate and junior and
subject in right of payment to the prior payment in full in cash of all Senior
Indebtedness of the Company now outstanding or hereinafter incurred.

                           (b) No Payment if Default in Senior Indebtedness. No
payment on

                                       18
<PAGE>

account of principal of, premium, if any, or interest on this Note and any other
payment payable with respect to this Note shall be made, and no portion of this
Note shall be redeemed or purchased directly or indirectly by the Company, if at
the time of such payment or purchase or immediately after giving effect thereto,
(i) a default in the payment of principal, premium, if any, interest or other
obligations in respect of any Senior Indebtedness having either an outstanding
principal balance or a commitment to lend greater than $7,500,000 ("DESIGNATED
SENIOR Debt") occurs and is continuing (or, in the case of Senior Indebtedness
for which there is a period of grace, in the event of such a default that
continues beyond the period of grace, if any, specified in the instrument
evidencing such Senior Indebtedness) (a "PAYMENT DEFAULT"), unless and until
such Payment Default shall have been cured or waived or shall have ceased to
exist or (ii) the Company shall have received notice (a "PAYMENT BLOCKAGE
NOTICE") from the holder or holders of Designated Senior Debt that there exists
under such Senior Indebtedness a default, which shall not have been cured or
waived, permitting the holder or holders thereof to declare such Senior
Indebtedness due and payable, but only for the period (the "PAYMENT BLOCKAGE
PERIOD") commencing on the date of receipt of the Payment Blockage Notice and
ending on the earlier of (a) the date such default shall have been cured or
waived, or (b) (x) in the case of a Payment Blockage Notice delivered by any
Designated Senior Debt solely based on the occurrence of an Event of Default
under the Notes (i.e., based on the triggering of the cross default provisions
of such Designated Senior Debt solely as a result of an Event of Default under
the Notes) (a "CROSS DEFAULT PAYMENT BLOCKAGE"), the 180th day immediately
following the Company's receipt of such Payment Blockage Notice, and (y) in all
other circumstances, the 270th day immediately following the Company's receipt
of such Payment Blockage Notice. The Company shall resume payments on and
distributions in respect of this Note, including any past scheduled payments of
the principal of (and premium, if any) and interest on this Note to which the
Holder would have been entitled but for the provisions of this Section 13 in the
case of a Payment Default, within five (5) Business Days of the date upon which
such Payment Default is cured or waived or ceases to exist (and if payment is
made within such time period, any Event of Default with respect to such
nonpayment shall be cured). In addition, notwithstanding clauses (i) and (ii),
unless the holders of Designated Senior Debt shall have accelerated the maturity
of such Senior Indebtedness or there is a Payment Default, the Company shall
resume payments on this Note within (5) Business Days after the end of each
Payment Blockage Period (and if payment is made within such time period, any
Event of Default with respect to such nonpayment shall be cured). In any
consecutive 365-day period, there shall be (i) no more than three Payment
Blockage Notices given in the aggregate on this Note and the Other Notes,
irrespective of the number of defaults with respect to Designated Senior Debt
during such period, and (ii) at least 90 days during which no Payment Blockage
Period shall be in effect.

                           (c) Payment upon Dissolution, Etc.

         In the event of any bankruptcy, insolvency, reorganization,
receivership, composition, assignment for benefit of creditors or other similar
proceeding initiated by or against the Company or any dissolution or winding up
or total or partial liquidation or reorganization of the Company (being
hereinafter referred to as a "PROCEEDING"), the Holder agrees that such Holder

                                       19
<PAGE>

shall, upon request of a holder of Senior Indebtedness, and at such holder of
Senior Indebtedness' own expense, take all reasonable actions (including but not
limited to the execution and filing of documents and the giving of testimony in
any Proceeding, whether or not such testimony could have been compelled by
process) necessary to prove the full amount of all its claims in any Proceeding,
and the Holder shall not waive any claim in any Proceeding without the written
consent of such holder. If the Holder does not file a proper proof of claim or
proof of debt in the form required in any Proceeding at least thirty (30) days
before the expiration of the time to file such claim, the holders of any Senior
Indebtedness are hereby authorized to file an appropriate claim for and on
behalf of the Holder.

The Holder shall retain the right to vote and otherwise act with respect to the
claims under this Note (including, without limitation, the right to vote to
accept or reject any plan of partial or complete liquidation, reorganization,
arrangement, composition or extension); provided that the Holder shall not vote
with respect to any such plan or take any other action in any way so as to (i)
contest the validity of any Senior Indebtedness or any collateral therefor or
guaranties thereof, (ii) contest the relative rights and duties of any of the
lenders under the Senior Indebtedness established in any instruments or
agreement creating or evidencing the Senior Indebtedness with respect to any of
such collateral or guaranties, or (iii) contest the Holders' obligations and
agreements set forth in this Section 13.

Upon payment or distribution to creditors in a Proceeding of assets of the
Company of any kind or character, whether in cash, property or securities, all
principal and interest due upon any Senior Indebtedness shall first be paid in
full before the Holder shall be entitled to receive or, if received, to retain
any payment or distribution on account of this Note, and upon any such
Proceeding, any payment or distribution of assets of the Company of any kind or
character, whether in cash, property or securities, to which the Holder would be
entitled except for the provisions of this Section 13 shall be paid by the
Company or by any receiver, trustee in bankruptcy, liquidating trustee, agent or
other Person making such payment or distribution, or by the Holder who shall
have received such payment or distribution, directly to the holders of the
Senior Indebtedness (pro rata to each such holder on the basis of the respective
amounts of such Senior Indebtedness held by such holder) or their
representatives to the extent necessary to pay all such Senior Indebtedness in
full after giving effect to any concurrent payment or distribution to or for the
holders of such Senior Indebtedness, before any payment or distribution is made
to the Holder or any holders of the Notes.

                           (d) Payments on Notes.

Subject to Section 13(c), the Company may make regularly scheduled payments of
the principal of, and any interest or premium on, or any other payments on, this
Note, if at the time of payment, and immediately after giving effect thereto,
(i) there exists no Payment Default or a Payment Blockage Period and (ii) the
Company is permitted to make payments under Section 13(c).

                                       20
<PAGE>

                           (e) Certain Rights.

Nothing contained in this Section 13 or elsewhere in this Note is intended to or
shall impair, as among the Company, its creditors including the holders of
Senior Indebtedness and the Holder, the right, which is absolute and
unconditional, of the Holder to convert this Note in accordance herewith.

                           (f) Subrogation.

Subject to payment in full in cash of all Senior Indebtedness, the rights of the
Holder shall be subrogated to the rights of the holders of Senior Indebtedness
to receive payments or distributions of the assets of the Company made on such
Senior Indebtedness until all principal and interest on this Note shall be paid
in full in cash; and for purposes of such subrogation, no payments or
distributions to the holders of Senior Indebtedness of any cash, property or
securities to which the Holder would be entitled except for the subordination
provisions of this Section 13 shall, as between the Holder and the Company
and/or its creditors other than the holders of the Senior Indebtedness, be
deemed to be a payment on account of the Senior Indebtedness.

                           (g) Rights of Holders Unimpaired.

The provisions of this Section 13 are and are intended solely for the purposes
of defining the relative rights of the Holder and the holders of Senior
Indebtedness and nothing in this Section 13 shall impair, as between the Company
and the Holder, the obligation of the Company, which is unconditional and
absolute, to pay to the Holder the principal thereof (and premium, if any) and
interest thereon, in accordance with the terms of this Note.

                           (h) Holders of Senior Indebtedness.

These provisions regarding subordination will constitute a continuing offer to
all Persons who, in reliance upon such provisions, become holders of, or
continue to hold, Senior Indebtedness; such provisions are made for the benefit
of the holders of Senior Indebtedness, and such holders are hereby made obligees
under such provisions to the same extent as if they were named therein, and they
or any of them may proceed to enforce such subordination and no amendment or
modification of the provisions contained herein shall diminish the rights of
such holders unless such holders have agreed in writing thereto. The holders of
Senior Indebtedness may, at any time and from time to time, without the consent
of or notice to the Holder, without incurring responsibility to the Holder and
without impairing or releasing the subordination provisions of this Section 13,
(i) subject to the limitations set forth herein, increase the amount of, change
the manner, terms or place of payment of, or renew or alter, any Senior
Indebtedness, or otherwise amend, modify, restate or supplement the same, (ii)
sell, exchange or release any collateral mortgaged, pledged or otherwise
securing the Senior Indebtedness, (iii) release any Person liable in any manner
for the Senior Indebtedness and (iv) exercise or refrain from exercising any
rights against the Company or any other Person.

                                       21
<PAGE>

                           (i) Proceeds Held in Trust.

In the event that notwithstanding the foregoing, any payment or distribution of
assets of the Company of any kind or character, whether in cash, property or
securities (including, without limitation, by way of setoff or otherwise)
prohibited by the provisions hereof shall be received by the Holder before all
Senior Indebtedness if paid in full in cash, such payment or distribution shall
be held in trust for the benefit of and shall be paid over or delivered to the
holders of Senior Indebtedness, as their respective interests may appear, as
calculated by the Company, for application to, or to be held as collateral for,
the payment of any Senior Indebtedness remaining unpaid to the extent necessary
to pay all Senior Indebtedness in full in cash after giving effect to any
concurrent payment or distribution to or for the holders of such Senior
Indebtedness.

                           (j) Blockage of Remedies.

During any Payment Default or any Payment Blockage Period, if an Event of
Default has occurred and is continuing under this Note, the Holder will not
commence or join with any creditor of the Company in asserting or commencing any
proceedings to collect or enforce its rights hereunder or take any action to
foreclose or realize upon the indebtedness hereunder for a period beginning on
the date of such Event of Default and ending on the first to occur of (i) (x) in
connection with a Cross Default Payment Blockage, the date that is 180 days
following the date that the holders of the Senior Indebtedness are notified of
such Event of Default, and (y) in all other circumstances, the date that is 270
days following the date that the holders of the Senior Indebtedness are notified
of such Event of Default or (ii) the date such Payment Default is cured, waived
or ceases to exist or the date such Payment Blockage Period ends, as the case
may be; provided, however, that until all of the Senior Indebtedness shall have
been paid in full in cash, any payments, distributions or proceeds received by
the Holder resulting from the exercise of any action to collect or enforce any
right or remedy available to the Holder shall be subject to the terms of this
Note; provided further that the foregoing provisions of this Section 13(j) shall
not prevent or limit the Holder in any manner from pursuing any and all
remedies, including by way of commencing any action or proceeding, for specific
performance in connection with the circumstances giving rise to the Event of
Default set forth in Section 4(a)(iii) hereof.

                           (k) Subsequent Senior Indebtedness Requested
Modifications.

In connection with the incurrence of any future Senior Indebtedness, the Holder
agrees that it shall act reasonably and negotiate in good faith any
modifications to the provisions of this Section 13 reasonably requested by the
holder of such Senior Indebtedness; provided that nothing in this section shall
restrict the holders of Notes representing at least a majority of the aggregate
principal amount of the Notes then outstanding from changing or amending this
Section 13 pursuant to Section 17 hereof.

                                       22
<PAGE>

                  (14) VOTING RIGHTS. The Holder shall have no voting rights as
the holder of this Note, except as required by law, including but not limited to
the Delaware General Corporation Law, and as expressly provided in this Note.

                  (15) RANK; ADDITIONAL INDEBTEDNESS; LIENS.

                           (a) Rank. All payments due under this Note (a) shall
rank pari passu with all Other Notes and the 1998 Debentures ("PARI PASSU
INDEBTEDNESS"), (b) shall be subordinate in right of payment to the prior
payment of all existing and future Senior Indebtedness and (c) shall be senior
to all other Indebtedness of the Company and its Subsidiaries, other than Senior
Indebtedness and Pari Passu Indebtedness.

                           (b) Incurrence of Senior Indebtedness. So long as
this Note is outstanding, the Company shall not, and the Company shall not
permit any of its Subsidiaries to, directly or indirectly, incur or guarantee,
assume or suffer to exist any Indebtedness which shall rank senior to the Notes
other than Senior Indebtedness.

                           (c) Existence of Liens. So long as this Note is
outstanding, the Company shall not, and the Company shall not permit any of its
Subsidiaries to, directly or indirectly, allow or suffer to exist any mortgage,
lien, pledge, charge, security interest or other encumbrance upon or in any
property or assets (including accounts and contract rights) owned by the Company
or any of its Subsidiaries (collectively, "LIENS") other than Permitted Liens.
As used herein, "PERMITTED LIENS" means (i) Liens incurred to secure Senior
Indebtedness, (ii) Liens on fixed or capital assets acquired, constructed or
improved by the Company or any Subsidiary, to the extent of Indebtedness
incurred within thirty days for such acquisition, construction or improvement
and incurred within thirty days of such acquisition, construction or
improvement, (iii) purchase money Liens, or (iv) carriers', warehousemen's,
mechanics', materialmen's, repairmen's and other similar Liens imposed by law,
so long as payment on such Lines is not more than 30 days past due.

                           (d) Restricted Payments. The Company shall not, and
the Company shall not permit any of its Subsidiaries to, directly or indirectly,
redeem, defease, repurchase, repay or make any payments in respect of, by the
payment of cash or cash equivalents (in whole or in part, whether by way of open
market purchases, tender offers, private transactions or otherwise), all or any
portion of any Indebtedness, other than Senior Indebtedness or Pari Passu
Indebtedness, whether by way of payment in respect of principal of (or premium,
if any) or interest on, such Indebtedness if at the time such payment is due or
is otherwise made or, after giving effect to such payment, an event
constituting, or that with the passage of time and without being cured would
constitute, an Event of Default has occurred and is continuing.

                  (16) PARTICIPATION. The Holder, as the holder of this Note,
shall be entitled to such dividends paid and distributions made to the holders
of Common Stock to the extent that such dividends or distributions exceed in any
twelve-month period from the Issuance

                                       23
<PAGE>

Date until March 23, 2007, 48 cents per share (as adjusted for any stock splits,
stock dividends or recapitalizations following the Issuance Date) (the
"BENCHMARK"). The Holder, as the holder of this Note, shall be entitled to such
dividends paid and distributions made to the holders of Common Stock to the
extent that such dividends or distributions exceed the Benchmark (an "EXCESS
DISTRIBUTION"), in each such case to the extent of the Excess Distribution as if
the Holder had converted this Note into Common Stock (without regard to any
limitations on conversion herein or elsewhere) and had held such shares of
Common Stock on the record date for such dividends and distributions. Payments
(if any) under the preceding sentence shall be made concurrently with the
dividend or distribution to the holders of Common Stock.

                  (17) VOTE TO ISSUE, OR CHANGE THE TERMS OF, NOTES. The
affirmative vote at a meeting duly called for such purpose or the written
consent without a meeting, of the holders of Notes representing not less than a
majority of the aggregate principal amount of the then outstanding Notes, shall
be required for any change or amendment to this Note or the Other Notes provided
such change or amendment is consented to by the Company, which such consent may
be granted or withheld in the sole discretion of the Company.

                  (18) TRANSFER. This Note may be offered, sold, assigned or
transferred by the Holder without the consent of the Company, subject only to
the provisions of Section 2(f) of the Securities Purchase Agreement.

                  (19) REISSUANCE OF THIS NOTE.

                           (a) Transfer. If this Note is to be transferred, the
Holder shall surrender this Note to the Company, whereupon the Company will
forthwith issue and deliver upon the order of the Holder a new Note (in
accordance with Section 19(d)), registered as the Holder may request,
representing the outstanding Principal being transferred by the Holder and, if
less then the entire outstanding Principal is being transferred, a new Note (in
accordance with Section 19(d)) to the Holder representing the outstanding
Principal not being transferred. The Holder and any assignee, by acceptance of
this Note, acknowledge and agree that, by reason of the provisions of Section
3(c)(iii) and this Section 19(a), following conversion or redemption of any
portion of this Note, the outstanding Principal represented by this Note may be
less than the Principal stated on the face of this Note.

                           (b) Lost, Stolen or Mutilated Note. Upon receipt by
the Company of evidence reasonably satisfactory to the Company of the loss,
theft, destruction or mutilation of this Note, and, in the case of loss, theft
or destruction, of any indemnification undertaking by the Holder to the Company
in customary form and, in the case of mutilation, upon surrender and
cancellation of this Note, the Company shall execute and deliver to the Holder a
new Note (in accordance with Section 19(d)) representing the outstanding
Principal.

                           (c) Note Exchangeable for Different Denominations.
This Note is exchangeable, upon the surrender hereof by the Holder at the
principal office of the Company,

                                       24
<PAGE>

for a new Note or Notes (in accordance with Section 19(d) and in principal
amounts of at least $100,000) representing in the aggregate the outstanding
Principal of this Note, and each such new Note will represent such portion of
such outstanding Principal as is designated by the Holder at the time of such
surrender.

                           (d) Issuance of New Notes. Whenever the Company is
required to issue a new Note pursuant to the terms of this Note, such new Note
(i) shall be of like tenor with this Note, (ii) shall represent, as indicated on
the face of such new Note, the Principal remaining outstanding (or in the case
of a new Note being issued pursuant to Section 19(a) or Section 19(c), the
Principal designated by the Holder which, when added to the principal
represented by the other new Notes issued in connection with such issuance, does
not exceed the Principal remaining outstanding under this Note immediately prior
to such issuance of new Notes), (iii) shall have an issuance date, as indicated
on the face of such new Note, which is the same as the Issuance Date of this
Note, (iv) shall have the same rights and conditions as this Note, and (v) shall
represent accrued Interest and Late Charges on the Principal and Interest of
this Note, from the Issuance Date.

                  (20) REMEDIES, CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES
AND INJUNCTIVE RELIEF. The remedies provided in this Note shall be cumulative
and in addition to all other remedies available under this Note, the Securities
Purchase Agreement and the Registration Rights Agreement, at law or in equity
(including a decree of specific performance and/or other injunctive relief), and
nothing herein shall limit the Holder's right to pursue actual and consequential
damages for any failure by the Company to comply with the terms of this Note.
Amounts set forth or provided for herein with respect to payments, conversion
and the like (and the computation thereof) shall be the amounts to be received
by the Holder and shall not, except as expressly provided herein, be subject to
any other obligation of the Company (or the performance thereof). The Company
acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to the Holder and that the remedy at law for any such breach
may be inadequate. The Company therefore agrees that, in the event of any such
breach or threatened breach, the Holder shall be entitled, in addition to all
other available remedies, to an injunction restraining any breach, without the
necessity of showing economic loss and without any bond or other security being
required.

                  (21) PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER COSTS. If
(a) this Note is placed in the hands of an attorney for collection or
enforcement or is collected or enforced through any legal proceeding or the
Holder otherwise takes action to collect amounts due under this Note or to
enforce the provisions of this Note or (b) there occurs any bankruptcy,
reorganization, receivership of the Company or other proceedings affecting
Company creditors' rights and involving a claim under this Note, then the
Company shall pay the costs incurred by the Holder for such collection,
enforcement or action or in connection with such bankruptcy, reorganization,
receivership or other proceeding, including, but not limited to, attorneys' fees
and disbursements.

                                       25
<PAGE>

                  (22) CONSTRUCTION; HEADINGS. This Note shall be deemed to be
jointly drafted by the Company and all the Purchasers and shall not be construed
against any person as the drafter hereof. The headings of this Note are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Note.

                  (23) FAILURE OR INDULGENCE NOT WAIVER. No failure or delay on
the part of the Holder in the exercise of any power, right or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privilege.

                  (24) DISPUTE RESOLUTION. In the case of a dispute as to the
determination of the Redemption Price or the arithmetic calculation of the
Conversion Rate or the Redemption Price, the Company shall submit the disputed
determinations or arithmetic calculations via facsimile within one Business Day
of receipt of the Conversion Notice or Redemption Notice or other event giving
rise to such dispute, as the case may be, to the Holder. If the Holder and the
Company are unable to agree upon such determination or calculation within one
Business Day of such disputed determination or arithmetic calculation being
submitted to the Holder, then the Company shall, within one Business Day submit
via facsimile (a) the disputed determination of the Closing Bid Price or the
Closing Sale Price to an independent, reputable investment bank selected by the
Company and approved by the Holder or (b) the disputed arithmetic calculation of
the Conversion Rate or the Redemption Price to the Company's independent,
outside accountant. The Company, at the Company's expense, shall cause the
investment bank or the accountant, as the case may be, to perform the
determinations or calculations and notify the Company and the Holder of the
results no later than five Business Days from the time it receives the disputed
determinations or calculations. Such investment bank's or accountant's
determination or calculation, as the case may be, shall be binding upon all
parties absent demonstrable error.

                  (25) NOTICES; PAYMENTS.

                           (a) Notices. Whenever notice is required to be given
under this Note, unless otherwise provided herein, such notice shall be given in
accordance with Section 9(f) of the Securities Purchase Agreement. The Company
shall provide the Holder with prompt written notice of all actions taken
pursuant to this Note, including in reasonable detail a description of such
action and the reason therefore. Without limiting the generality of the
foregoing, the Company will give written notice to the Holder (i) immediately
upon any adjustment of the Conversion Price, setting forth in reasonable detail,
and certifying, the calculation of such adjustment and (ii) at least twenty days
prior to the date on which the Company closes its books or takes a record (A)
with respect to any dividend or distribution upon the Common Stock, (B) with
respect to any pro rata subscription offer to holders of Common Stock or (C) for
determining rights to vote with respect to any Change of Control, dissolution or
liquidation, provided in each case that such information shall be made known to
the public prior to or in conjunction with such notice being provided to the
Holder. Notwithstanding the foregoing,

                                       26
<PAGE>

Section 4(i) of the Securities Purchase Agreement shall apply to all notices
given pursuant to this Note.

                           (b) Payments. Whenever any payment of cash is to be
made by the Company to any Person pursuant to this Note, such payment shall be
made in lawful money of the United States of America by a check drawn on the
account of the Company and sent via overnight courier service to such Person at
such address as previously provided to the Company in writing (which address, in
the case of each of the Purchasers, shall initially be as set forth on the
Schedule of Buyers attached to the Securities Purchase Agreement); provided that
the Holder may elect to receive a payment of cash via wire transfer of
immediately available funds by providing the Company with prior written notice
setting out such request and the Holder's wire transfer instructions. Whenever
any amount expressed to be due by the terms of this Note is due on any day which
is not a Business Day, the same shall instead be due on the next succeeding day
which is a Business Day and, in the case of any Interest Date which is not the
date on which this Note is paid in full, the extension of the due date thereof
shall not be taken into account for purposes of determining the amount of
Interest due on such date. Any amount of Principal or other amounts due under
the Transaction Documents (as defined in the Securities Purchase Agreement)
which is not paid when due shall result in a late charge being incurred and
payable by the Company in an amount equal to interest on such amount at the rate
of 15% per annum from the date such amount was due until the same is paid in
full ("LATE CHARGE").

                  (26) CANCELLATION. After all Principal, accrued Interest and
other amounts at any time owed on this Note has been paid in full, this Note
shall automatically be deemed canceled, shall be surrendered to the Company for
cancellation and shall not be reissued.

                  (27) WAIVER OF NOTICE. To the extent permitted by law, the
Company hereby waives demand, notice, protest and all other demands and notices
in connection with the delivery, acceptance, performance, default or enforcement
of this Note and the Securities Purchase Agreement.

                  (28) GOVERNING LAW. This Note shall be construed and enforced
in accordance with, and all questions concerning the construction, validity,
interpretation and performance of this Note shall be governed by, the internal
laws of the State of New York, without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of New York or any other
jurisdictions) that would cause the application of the laws of any jurisdictions
other than the State of New York.

                  (29) CERTAIN DEFINITIONS. For purposes of this Note, the
following terms shall have the following meanings:

                           (a) "1998 DEBENTURES" means the Company's Debentures
issued under an Indenture dated as of July 23, 1998, between the Company and
American Stock Transfer & Trust Company, as trustee.

                                       27
<PAGE>

                           (b) "APPROVED STOCK PLAN" means any employee benefit,
option or incentive plan which has been approved by the Board of Directors of
the Company, pursuant to which the Company's securities may be issued to any
employee, consultant, officer or director for services provided to the Company.

                           (c) "BLOOMBERG" means Bloomberg Financial Markets.

                           (d) "BUSINESS DAY" means any day other than Saturday,
Sunday or other day on which commercial banks in The City of New York are
authorized or required by law to remain closed.

                           (e) "CALENDAR QUARTER" means each of: the period
beginning on and including January 1 and ending on and including March 31; the
period beginning on and including April 1 and ending on and including June 30;
the period beginning on and including July 1 and ending on and including
September 30; and the period beginning on and including October 1 and ending on
and including December 31.

                           (f) "CLOSING BID PRICE" and "CLOSING SALE PRICE"
means, for any security as of any date, the last closing bid price and last
closing trade price, respectively, for such security on the Principal Market, as
reported by Bloomberg, or, if the Principal Market begins to operate on an
extended hours basis and does not designate the closing bid price or the closing
trade price, as the case may be, then the last bid price or last trade price,
respectively, of such security prior to 4:00:00 p.m., New York Time, as reported
by Bloomberg, or, if the Principal Market is not the principal securities
exchange or trading market for such security, the last closing bid price or last
trade price, respectively, of such security on the principal securities exchange
or trading market where such security is listed or traded as reported by
Bloomberg, or if the foregoing do not apply, the last closing bid price or last
trade price, respectively, of such security in the over-the-counter market on
the electronic bulletin board for such security as reported by Bloomberg, or, if
no closing bid price or last trade price, respectively, is reported for such
security by Bloomberg, the average of the bid prices, or the ask prices,
respectively, of any market makers for such security as reported in the "pink
sheets" by Pink Sheets LLC (formerly the National Quotation Bureau, Inc.). If
the Closing Bid Price or the Closing Sale Price cannot be calculated for a
security on a particular date on any of the foregoing bases, the Closing Bid
Price or the Closing Sale Price, as the case may be, of such security on such
date shall be the fair market value as mutually determined by the Company and
the Holder. If the Company and the Holder are unable to agree upon the fair
market value of such security, then such dispute shall be resolved pursuant to
Section 24. All such determinations to be appropriately adjusted for any stock
dividend, stock split, stock combination or other similar transaction during the
applicable calculation period.

                           (g) "COMMON STOCK DEEMED OUTSTANDING" shall mean, at
any given time, the number of shares of Common Stock actually outstanding at
such time, plus (i) the

                                       28
<PAGE>

number of shares of Common Stock deemed to be outstanding pursuant to Sections
7(a)(i) and 7(a)(ii) hereof regardless of whether the Options or Convertible
Securities are actually exercisable at such time and (ii) plus the number of
shares of Common Stock underlying Options or Convertible Securities issued
pursuant to the Approved Stock Plans that are actually exercisable or
convertible at such time at an exercise price or conversion price that is less
than or equal to the per share fair market value of such underlying shares of
Common Stock, but excluding any shares of Common Stock owned or held by or for
the account of the Company or issuable upon conversion of the Notes or the Other
Notes.

                           (h) "CONTINGENT OBLIGATION" means, as to any Person,
any direct or indirect liability, contingent or otherwise, of that Person with
respect to any indebtedness, lease, dividend or other obligation of another
Person if the primary purpose or intent of the Person incurring such liability,
or the primary effect thereof, is to provide assurance to the obligee of such
liability that such liability will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holders of such liability
will be protected (in whole or in part) against loss with respect thereto.

                           (i) "CONVERTIBLE SECURITIES" means any stock or
securities (other than Options) directly or indirectly convertible into or
exercisable or exchangeable for Common Stock.

                           (j) "EBITDA" means, for any period for any Person,
the net income (or net loss) of such Person and its consolidated Subsidiaries,
determined in accordance with GAAP, plus (i) any provision for (or less any
benefit from) income taxes, (ii) any deduction for interest expense, net of
interest income and (iii) depreciation and amortization expense, and as adjusted
for the following items (to the extent that they are reflected in net income or
net loss): elimination of: (w) all extraordinary gains and losses determined in
accordance with GAAP, (x) gains and losses from sales or dispositions of
property and equipment or other fixed assets, (y) all non-recurring income and
expense items not incurred in the ordinary course of business to the extent
included in the determination of net income for the relevant determination
period and (z) foreign currency transaction gains and losses, to the extent
included in the determination of net income for the relevant determination
period. All determinations of the components of EBITDA shall be made in
accordance with GAAP and shall be derived from the Company's then most recently
filed Annual Report on Form 10-K or Quarterly Report on Form 10-Q, as
applicable, and shall be calculated based on the four Calendar Quarters
preceding the date of such calculation.

                           (k) "EXCLUDED SECURITIES" means any shares of Common
Stock issued or issuable: (i) in connection with any Approved Stock Plan; (ii)
upon conversion of the Notes and the Other Notes; and (iii) upon conversion of
any Options or Convertible Securities which are outstanding on the day
immediately preceding the Issuance Date, provided that the terms of such Options
or Convertible Securities are not amended, modified or changed on or after the
Issuance Date.

                                       29
<PAGE>

                           (l) "GAAP" means United States generally accepted
accounting principles, consistently applied.

                           (m) "INDEBTEDNESS" of any Person means, without
duplication (A) all indebtedness for borrowed money, (B) all obligations issued,
undertaken or assumed as the deferred purchase price of property or services
(other than trade payables entered into in the ordinary course of business), (C)
all reimbursement or payment obligations with respect to letters of credit,
surety bonds and other similar instruments, (D) all obligations evidenced by
notes, bonds, debentures or similar instruments, including obligations so
evidenced incurred in connection with the acquisition of property, assets or
businesses, (E) all indebtedness created or arising under any conditional sale
or other title retention agreement, or incurred as financing, in either case
with respect to any property or assets acquired with the proceeds of such
indebtedness (even though the rights and remedies of the seller or bank under
such agreement in the event of default are limited to repossession or sale of
such property), (F) all monetary obligations under any leasing or similar
arrangement which, in connection with generally accepted accounting principles,
consistently applied for the periods covered thereby, is classified as a capital
lease, (G) off-balance sheet liabilities retained in connection with asset
securitization programs, synthetic leases, sale and leaseback transactions or
other similar obligations arising with respect to any other transaction which is
the functional equivalent of or takes the place of borrowing but which does not
constitute a liability on the consolidated balance sheet of such Person and its
subsidiaries (except for the lease of the Company's facility in Kentucky), and
(H) all indebtedness referred to in clauses (A) through (G) above secured by (or
for which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any mortgage, lien, pledge, charge, security
interest or other encumbrance upon or in any property or assets (including
accounts and contract rights) owned by any Person, even though the Person which
owns such assets or property has not assumed or become liable for the payment of
such indebtedness, and (I) all Contingent Obligations in respect of indebtedness
or obligations of others of the kinds referred to in clauses (A) through (H)
above.

                           (n) "ISSUANCE DATE" means March 25, 2004.

                           (o) "OPTIONS" means any rights, warrants or options
to subscribe for or purchase Common Stock or Convertible Securities.

                           (p) "PERSON" means an individual, a limited liability
company, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization, any other entity and a government or any department
or agency thereof.

                           (q) "PRINCIPAL MARKET" means the Nasdaq National
Market.

                           (r) "REDEMPTION PREMIUM" means (i) in the case of the
Events of Default described in Section 4(a)(i) - (vi) and (ix) - (xiii), 120% or
(ii) in the case of the Events of Default described in Section 4(a)(vii) -
(viii), 100%.

                                       30
<PAGE>

                           (s) "REGISTRATION RIGHTS AGREEMENT" means that
certain registration rights agreement between the Company and the initial
holders of the Notes relating to the registration of the resale of the shares of
Common Stock issuable upon conversion of the Notes.

                           (t) "SEC" means the United States Securities and
Exchange Commission.

                           (u) "SECURITIES PURCHASE AGREEMENT" means that
certain securities purchase agreement between the Company and the initial
holders of the Notes pursuant to which the Company issued the Notes.

                           (v) "SENIOR INDEBTEDNESS" means the principal of (and
premium, if any), interest on, and all fees and other amounts (including,
without limitation, any reasonable costs, enforcement expenses (including
reasonable legal fees and disbursements), collateral protection expenses and
other reimbursement or indemnity obligations relating thereto) payable under the
agreements or instruments evidencing, any unaffiliated, third-party Indebtedness
of the Company and its Subsidiaries, whether now existing or hereafter arising
(together with any renewals, refundings, refinancings or other extensions
thereof), which is not made expressly subordinate in right of payment to the
Indebtedness evidenced by this Note and the Other Notes, provided that the
aggregate amount of such Senior Indebtedness (taking into account the maximum
amounts which may be advanced under the loan documents evidencing such Senior
Indebtedness) does not as of the date on which such Senior Indebtedness is
incurred exceed the product of (i) 2.5 and (ii) EBITDA (the "SENIOR INDEBTEDNESS
CAP"). Without limitation of the generality of the foregoing and subject to the
Senior Indebtedness Cap, Senior Indebtedness shall include the obligations of
the Company to its current senior secured lender, Comerica Bank and any
participants with Comerica Bank in such Indebtedness (the "COMERICA
OBLIGATIONS"), and the Comerica Obligations are designated as Senior
Indebtedness. The Company may from time to time designate by written notice to
the Holder the obligations, in addition to the Comerica Obligations, which
constitute Senior Indebtedness, and, provided that, at the time that the Senior
Indebtedness is incurred (or a commitment to lend any Senior Indebtedness is
made), the aggregate Senior Indebtedness of the Company does not exceed the
Senior Indebtedness Cap, Senior Indebtedness so designated shall continue to be
Senior Indebtedness notwithstanding any subsequent decline in the Company's
EBITDA.

                           (w) "TOTAL CAPITALIZATION" means, at any time, the
sum of (i) the sum of all amounts (without duplication) which, in accordance
with GAAP, would be included in the Company's stockholders' equity (excluding
unrealized gains or losses pursuant to GAAP) as required to be reported in the
Company's then most recent consolidated balance sheet, and (ii) Total Debt.

                           (x) "TOTAL DEBT" means, on any date, the outstanding
principal

                                       31
<PAGE>

amount of all Indebtedness of the Company and its Subsidiaries of the type
referred to in clauses (A), (C), (D), (F) and (G) of the definition of
"Indebtedness" along with any Contingent Obligation in respect of any of the
foregoing.

                           (y) "TOTAL DEBT TO EBITDA RATIO" means, as of the
last day of any Calendar Quarter, the ratio of (i) Total Debt outstanding on
such day to (ii) EBITDA on such day.

                           (z) "TOTAL DEBT TO TOTAL CAPITALIZATION RATIO" means,
as of the last day of any Calendar Quarter, the ratio of (i) Total Debt
outstanding on such day to (ii) Total Capitalization on such day.

                           (aa) "TRADING DAY" means any day on which the Common
Stock is traded on the Principal Market, or, if the Principal Market is not the
principal trading market for the Common Stock, then on the principal securities
exchange or securities market on which the Common Stock is then traded; provided
that "Trading Day" shall not include any day on which the Common Stock is
scheduled to trade on such exchange or market for less than 4.5 hours or any day
that the Common Stock is suspended from trading during the final hour of trading
on such exchange or market (or if such exchange or market does not designate in
advance the closing time of trading on such exchange or market, then during the
hour ending at 4:00:00 p.m., New York Time).

                           (bb) "WEIGHTED AVERAGE PRICE" means, for any security
as of any date, the dollar volume-weighted average price for such security on
the Principal Market during the period beginning at 9:30:01 a.m., New York Time
(or such other time as the Principal Market publicly announces is the official
open of trading), and ending at 4:00:00 p.m., New York Time (or such other time
as the Principal Market publicly announces is the official close of trading) as
reported by Bloomberg through its "Volume at Price" functions, or, if the
foregoing does not apply, the dollar volume-weighted average price of such
security in the over-the-counter market on the electronic bulletin board for
such security during the period beginning at 9:30:01 a.m., New York Time (or
such other time as such market publicly announces is the official open of
trading), and ending at 4:00:00 p.m., New York Time (or such other time as such
market publicly announces is the official close of trading) as reported by
Bloomberg, or, if no dollar volume-weighted average price is reported for such
security by Bloomberg for such hours, the average of the highest closing bid
price and the lowest closing ask price of any of the market makers for such
security as reported in the "pink sheets" by Pink Sheets LLC (formerly the
National Quotation Bureau, Inc.). If the Weighted Average Price cannot be
calculated for a security on a particular date on any of the foregoing bases,
the Weighted Average Price of such security on such date shall be the fair
market value as mutually determined by the Company and the Holder. If the
Company and the Holder are unable to agree upon the fair market value of such
security, then such dispute shall be resolved pursuant to Section 24. All such
determinations to be appropriately adjusted for any stock dividend, stock split,
stock combination or other similar transaction during the applicable calculation
period.

                                       32
<PAGE>

                            [SIGNATURE PAGE FOLLOWS]

                                       33
<PAGE>

         IN WITNESS WHEREOF, the Company has caused this Note to be duly
executed as of the Issuance Date set out above.

                                             NOBLE INTERNATIONAL, LTD.

                                             By:
                                                 -------------------------------
                                             Name: Michael C. Azar
                                             Title: Vice President and Secretary

<PAGE>

                                                                       EXHIBIT I

                            NOBLE INTERNATIONAL, LTD.
                                CONVERSION NOTICE

Reference is made to the Convertible Subordinated Note (the "NOTE") issued to
the undersigned by Noble International, Ltd. (the "COMPANY"). In accordance with
and pursuant to the Note, the undersigned hereby elects to convert the
Conversion Amount (as defined in the Note) of the Note indicated below into
shares of Common Stock, par value $0.001 per share (the "COMMON STOCK"), of the
Company as of the date specified below.

         Date of Conversion:
                            ----------------------------------------------------

         Aggregate Conversion Amount to be converted:
                                                     ---------------------------

The undersigned hereby certifies to the Company that the Company's conversion of
the amount set forth above in accordance with Section 3(a) of the Note will not
directly result in the undersigned (together with the undersigned's affiliates)
beneficially owning in excess of 9.99% of the number of shares of Common Stock
outstanding immediately after giving effect to such conversion, calculated in
accordance with Section 3(d)(i) of the Note.

Please confirm the following information:

         Conversion Price:
                          ------------------------------------------------------

         Number of shares of Common Stock to be issued:
                                                       -------------------------

Please issue the Common Stock into which the Note is being converted in the
following name and to the following address:

         Issue to:
                  --------------------------------------------------------------

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

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

         Facsimile Number:
                          ------------------------------------------------------

         Authorization:
                       ---------------------------------------------------------

                  By:
                     -----------------------------------------------------------

                                                Title:
                                                      --------------------------
Dated:
      --------------------------------------------------------------------------

<PAGE>

         Account Number:
                        --------------------------------------------------------
           (if electronic book entry transfer)

         Transaction Code Number:
                                 -----------------------------------------------
           (if electronic book entry transfer)

<PAGE>

                                 ACKNOWLEDGMENT

         The Company hereby acknowledges this Conversion Notice and hereby
directs [Transfer Agent] to issue the above indicated number of shares of Common
Stock in accordance with the Transfer Agent Instructions dated March 23, 2004
from the Company and acknowledged and agreed to by [Transfer Agent].

                                               NOBLE INTERNATIONAL, LTD.

                                               By:
                                                  ------------------------------
                                                  Name:
                                                  Title:

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