Document:

Exhibit 10.7

                    AMENDED AND RESTATED CUSTODIAL AGREEMENT

PARTICIPANT:      UBS REAL ESTATE SECURITIES INC.

ADDRESS:          1285 AVENUE OF THE AMERICAS
                  NEW YORK, NEW YORK 10019
                  ATTENTION:  GEORGE A. MANGIARACINA
                  ATTENTION:  ROBERT CARPENTER

CUSTODIAN:        DEUTSCHE BANK NATIONAL TRUST COMPANY

ADDRESS:          1761 EAST SAINT ANDREW PLACE
                  SANTA ANA, CALIFORNIA 92705
                  ATTENTION: MORTGAGE CUSTODY - AH030C

SELLER:           AMERICAN HOME MORTGAGE INVESTMENT CORP.

ADDRESS:          520 BROADHOLLOW ROAD
                  MELVILLE, NEW YORK  11747
                  ATTENTION:  STEPHEN A. HOZIE, CHIEF FINANCIAL OFFICER

SELLER:           AMERICAN HOME MORTGAGE ACCEPTANCE, INC.

ADDRESS:          520 BROADHOLLOW ROAD
                  MELVILLE, NEW YORK 11747
                  ATTENTION:  STEPHEN A. HOZIE, CHIEF FINANCIAL OFFICER

SELLER:           AMERICAN HOME MORTGAGE HOLDINGS, INC.

ADDRESS:          520 BROADHOLLOW ROAD
                  MELVILLE, NEW YORK  11747
                  ATTENTION:  STEPHEN A. HOZIE, CHIEF FINANCIAL OFFICER

SELLER:           AMERICAN HOME MORTGAGE CORP.

ADDRESS:          520 BROADHOLLOW ROAD
                  MELVILLE, NEW YORK 11747
                  ATTENTION: MICHAEL STRAUSS, PRESIDENT

<PAGE>

SELLER:           COLUMBIA NATIONAL, INCORPORATED

ADDRESS:          520 BROADHOLLOW ROAD
                  MELVILLE, NEW YORK 11747
                  ATTENTION:  MICHAEL STRAUSS, PRESIDENT
                  ATTENTION: STEPHEN A. HOZIE, CHIEF FINANCIAL OFFICER

DATE:             February 6, 2004

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                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----

SECTION 1.  DEFINITIONS ...................................................    2

SECTION 2.  DELIVERY OF DOCUMENTS .........................................    7

SECTION 3.  CUSTODIAN AS CUSTODIAN FOR, AND BAILEE OF,
            PARTICIPANT AND ASSIGNEES .....................................    9

SECTION 4.  CERTIFICATION OF RECEIPT BY CUSTODIAN .........................   10

SECTION 5.  CUSTODIAN'S FEES AND EXPENSES; SUCCESSOR CUSTODIAN ............   12

SECTION 6.  DEFAULT .......................................................   14

SECTION 7.  ACCESS TO DOCUMENTS ...........................................   15

SECTION 8.  ASSIGNMENT BY PARTICIPANT .....................................   16

SECTION 9.  INSURANCE .....................................................   16

SECTION 10. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
            CUSTODIAN .....................................................   16

SECTION 11. INDEMNIFICATION BY CUSTODIAN ..................................   17

SECTION 12. NO ADVERSE INTERESTS ..........................................   17

SECTION 13. AMENDMENTS ....................................................   17

SECTION 14. RECORDATION OF AGREEMENT ......................................   17

SECTION 15. EXECUTION IN COUNTERPARTS .....................................   17

SECTION 16. AGREEMENT FOR EXCLUSIVE BENEFIT OF PARTIES; ASSIGNMENT ........   18

SECTION 17. EFFECT OF INVALIDITY OF PROVISIONS ............................   18

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SECTION 18. GOVERNING LAW .................................................   18

SECTION 19. CONSENT TO SERVICE ............................................   18

SECTION 20. SUBMISSION TO JURISDICTION ....................................   18

SECTION 21. JURISDICTION NOT EXCLUSIVE ....................................   18

SECTION 22. WAIVER OF JURY TRIAL ..........................................   19

SECTION 23. NOTICES .......................................................   19

SECTION 24. AUTHENTICATION ................................................   19

SECTION 25. CONSTRUCTION ..................................................   19

SECTION 26. EFFECT OF AMENDMENT AND RESTATEMENT ...........................   19

Exhibit A    Participation Certificate

Exhibit B-1  Warehouse Lender's Release

Exhibit B-2  Seller's Release

Exhibit C-1  GNMA Document List

Exhibit C-2  FNMA Document List

Exhibit C-3  FHLMC Document List

Exhibit D    Limited Power of Attorney

Exhibit E    Wire Instructions

Exhibit F    Confirmation of Payment

Exhibit G    Form of Electronic Tracking Agreement

<PAGE>

                    AMENDED AND RESTATED CUSTODIAL AGREEMENT

            THIS AGREEMENT, dated as of the date set forth on the cover page
hereof, among UBS Real Estate Securities Inc. (the "Participant"), Deutsche Bank
National Trust Company as Custodian (the "Custodian"), and each of the Sellers
whose names are set forth on the cover page hereof (the "Seller", and
collectively, the "Sellers").

            WHEREAS, the Purchaser; American Home Mortgage Holdings, Inc.,
American Home Mortgage Corp. and Columbia National, Incorporated (in such
capacity, the "Original American Home Parties"); and the Custodian are parties
to the Custodial Agreement, dated as of July 25, 2003 as amended, supplemented
or otherwise modified prior to the date hereof (the "Original Custodial
Agreement");

            WHEREAS, in connection with the Original Custodial Agreement, the
Participant agreed to purchase, from time to time, at its sole election from the
related Seller, participation certificates (the "Participation Certificates")
representing 100% ownership interest in certain residential first mortgage loans
(the "Mortgage Loans") pursuant to the terms and conditions of a Mortgage Loan
Participation Agreement dated as of the date set forth on the cover page thereof
(the "Participation Agreement") among the Participant and the Sellers;

            WHEREAS, the related Seller is obligated to service the Mortgage
Loans pursuant to the terms and conditions of the Participation Agreement;

            WHEREAS, in connection with the Original Custodial Agreement, the
Purchaser, the Original American Home Parties and the Custodian desire to amend
and restate the Original Custodial Agreement as provided herein;

            WHEREAS, the Participant desires to have the Custodian (1) take
possession of the mortgage notes evidencing the Mortgage Loans, along with
certain other documents specified herein, as the custodian for and bailee of the
Participant or any assignees of the Participant in accordance with the terms and
conditions hereof and (2) act as authenticating agent for the Participation
Certificates;

            WHEREAS, the related Seller will cause the Mortgage Loans evidenced
by a Participation Certificate to back a Security (as defined below), which the
Participant or its designee will receive in substitution for the related
Participation Certificate;

            WHEREAS, upon an assignment by the Participant to an assignee
relating to the financing of the Participant's purchase of Participation
Certificates, the rights of the Participant under this Agreement shall be
exercisable solely by such assignee; and

            NOW, THEREFORE, the parties, intending to be legally bound, agree as
follows:

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            Section 1. Definitions.

            As used in this Agreement, the following terms shall have the
following meanings:

            "Applicable Agency": GNMA, FNMA or FHLMC, as applicable.

            "Applicable Agency Documents": As defined in Section 2(b).

            "Assigned Mortgage Loans": As defined in Section 3(b).

            "Assignee": Any person to whom the Participant makes an assignment.

            "Assignment of Mortgage": An assignment of mortgage.

            "Authentication Date": The date mutually agreed between Participant
and Seller, with prior written notice to the Custodian, on which the Custodian
is to authenticate the Participation Certificates.

            "Business Day": Any day other than (a) a Saturday, Sunday or other
day on which banks located in the City of New York, New York or the city in
which the office of the Custodian is located are authorized or obligated by law
or executive order to be closed, or (b) any day on which UBS Real Estate
Securities Inc. is closed for business, provided that notice thereof shall have
been given not less than seven calendar days prior to such day.

            "Certification": As defined in Section 4.

            "Custodian": The Custodian set forth on the cover page hereof and
its permitted successors hereunder.

            "Discount": With respect to each Participation Certificate, the
amount of the adjustment to the Trade Price of the related Security agreed upon
by the related Seller and Participant to reserve for the possibility that such
Seller may be unable to perform its obligations under the Participation
Agreement in accordance with their terms.

            "Electronic Agent": The electronic agent identified in the
Electronic Tracking Agreement.

            "Electronic Tracking Agreement": The Electronic Tracking Agreement,
if any, substantially in the form set forth in Exhibit G hereto, dated as of the
date hereof, among the Participant, the related Seller, an electronic agent and
Mortgage Electronic Registration Systems, Inc., as the same shall be amended,
supplemented or otherwise modified from time to time; provided that if no
Mortgage Loans are or will be MERS Designated Mortgage Loans, all references
herein to the Electronic Tracking Agreement shall be disregarded.

            "Exhibit B-1 Letter": As defined in Section 2(a).

            "Exhibit B-2 Letter": As defined in Section 2(a).

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            "Exhibit F Letter": A letter substantially in the form of Exhibit F.

            "FHA": The Federal Housing Administration or any successor thereto.

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

            "FHLMC Guide": The Freddie Mac Sellers' and Servicers' Guide, as
such Guide may hereafter from time to time be amended.

            "FHLMC Mortgage Loan": With respect to any FHLMC Participation
Certificate or any FHLMC Security, a mortgage loan that is in Strict Compliance
with the eligibility requirements specified for the applicable FHLMC Program
described in the FHLMC Guide.

            "FHLMC Participation Certificate": With respect to the FHLMC
Program, a certificate, in the form of Exhibit A, issued by the related Seller
and authenticated by the Custodian, evidencing the 100% undivided ownership
interest in the Mortgage Loans that are either (a) set forth on a copy of the
FHLMC Form 11 (Mortgage Submission Schedule) attached to such Participation
Certificate or (b) identified on a computer tape compatible with MIDANET as
belonging to the mortgage loan pool described in such Participation Certificate.

            "FHLMC Program": The FHLMC Home Mortgage Guarantor Program or the
FHLMC FHA/VA Home Mortgage Guarantor Program, as such Programs are described in
the FHLMC Guide.

            "FHLMC Security": A modified pass-through mortgage-backed
participation certificate, evidenced by a book-entry credit made by a Securities
Intermediary that is a participant of the Federal Reserve Bank of New York,
issued and guaranteed, with respect to timely payment of interest and ultimate
payment of principal, by FHLMC and backed by a pool of FHLMC Mortgage Loans, in
substantially the principal amount and with substantially the other terms as
specified with respect to such FHLMC Security in the related Takeout Commitment,
if any.

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

            "FNMA Guide": The Fannie Mae MBS Selling and Servicing Guide, as
such Guide may hereafter from time to time be amended.

            "FNMA Mortgage Loan": With respect to any FNMA Participation
Certificate or any FNMA Security, a mortgage loan that is in Strict Compliance
with the eligibility requirements specified for the applicable FNMA Program
described in the FNMA Guide.

            "FNMA Participation Certificate": With respect to the FNMA Program,
a certificate, in the form of Exhibit A, issued by the related Seller and
authenticated by the Custodian and evidencing the 100% undivided ownership
interest in the Mortgage Loans set forth on Fannie Mae Form 2005 (Schedule of
Mortgages).

                                      -3-
<PAGE>

            "FNMA Program": The FNMA Guaranteed Mortgage-Backed Securities
Programs, as described in the FNMA Guide.

            "FNMA Security": An ownership interest in a pool of FNMA Mortgage
Loans, evidenced by a book-entry credit made by a Securities Intermediary that
is a participant of the Federal Reserve Bank of New York, in substantially the
principal amount and with substantially the other terms as specified with
respect to such FNMA Security in the related Takeout Commitment, if any.

            "GNMA": Government National Mortgage Association or any successor
thereto.

            "GNMA Guide": The GNMA Mortgage-Backed Securities Guide I or II, as
such Guide may hereafter from time to time be amended.

            "GNMA Mortgage Loan": With respect to any GNMA Participation
Certificate or any GNMA Security, a mortgage loan that is in Strict Compliance
with the eligibility requirements specified for the applicable GNMA Program in
the applicable GNMA Guide.

            "GNMA Participation Certificate": With respect to the GNMA Program,
a certificate, in the form of Exhibit A, issued by the related Seller and
authenticated by the Custodian and evidencing the 100% undivided ownership
interest in the Mortgage Loans set forth on the Form HUD 11706 (Schedule of
Pooled Mortgages).

            "GNMA Program": The GNMA Mortgage-Backed Securities Programs, as
described in a GNMA Guide.

            "GNMA Security": A fully-modified pass-through mortgage-backed
certificate guaranteed by GNMA, evidenced by a book-entry credit made by a
Securities Intermediary that is a participant of The Depository Trust Company
and backed by a pool of GNMA Mortgage Loans, in substantially the principal
amount and with substantially the other terms as specified with respect to such
GNMA Security in the related Takeout Commitment, if any.

            "HUD": The United States Department of Housing and Urban Development
or any successor thereto.

            "Initial Purchase Price": With respect to each Participation
Certificate, the Trade Price of the Security to be backed by the Mortgage Loans
evidenced by the Participation Certificate less the Discount.

            "Interim Funder": With respect to each MERS Designated Mortgage
Loan, the Person named on the MERS(R) System as the interim funder pursuant to
the MERS Procedures Manual.

            "Limited Power": As defined in Section 3(d).

            "MERS Designated Mortgage Loan": MERS Designated Mortgage Loan shall
have the meaning assigned to such term in Section 3 of the Electronic Tracking
Agreement;

                                      -4-
<PAGE>

provided that no Mortgage Loan shall be considered a MERS Designated
Mortgage Loan unless an Electronic Tracking Agreement shall have been entered
into.

            "MERS Identification Number": The eighteen-digit number permanently
assigned to each MERS Designated Mortgage Loan.

            "MERS Procedures Manual": The MERS Procedures Manual attached as
Exhibit B to the Electronic Tracking Agreement, as it may be amended,
supplemented or modified from time to time.

            "MERS Report": The schedule listing MERS Designated Mortgage Loans
and other information prepared by the Electronic Agent pursuant to the
Electronic Tracking Agreement.

            "MERS(R) System": The Electronic Agent's mortgage electronic
registry system, as more particularly described in the MERS Procedures Manual.

            "MIDANET": The FHLMC automated system by which sellers and servicers
of mortgage loans to FHLMC transfer mortgage summary and record data or mortgage
accounting and servicing information from their computer system or service
bureau to FHLMC, as more fully described in the FHLMC Guide.

            "Mortgage": A mortgage, deed of trust or other security instrument
securing a Mortgage Note.

            "Mortgage File": As defined in Section 2(a).

            "Mortgage Loan": A GNMA Mortgage Loan, a FNMA Mortgage Loan or a
FHLMC Mortgage Loan.

            "Mortgage Loan Schedule": As defined in Section 2(a).

            "Mortgage Note": A promissory note evidencing a Mortgage Loan.

            "Mortgaged Property": The property subject to the lien of the
Mortgage securing a Mortgage Note.

            "Participant": UBS Real Estate Securities Inc. and its successors in
interest, including, but not limited to, any lender, designee or Assignee to
whom a Participation Certificate or a Security shall be pledged or assigned.

            "Participation Agreement": As defined in the recitals hereof.

            "Participation Certificate": A GNMA Participation Certificate, a
FNMA Participation Certificate or a FHLMC Participation Certificate.

            "Securities Intermediary": As defined in Section 8-102(a)(14) of the
Uniform Commercial Code.

                                      -5-
<PAGE>

            "Security": A GNMA Security, a FNMA Security or a FHLMC Security.

            "Strict Compliance" shall mean compliance of the Sellers and the
Mortgage Loans with the requirements of the GNMA, FNMA or FHLMC Guide, as
applicable and as amended by any agreements between the Seller and the
Applicable Agency, sufficient to enable the Seller to issue and GNMA to
guarantee, or FNMA or FHLMC to issue and guarantee a Security, provided,
however, that until copies of any such agreements between the related Seller and
the Applicable Agency have been provided to the Participant by such Seller, such
agreements shall be deemed, as between such Seller and the Participant, not to
amend the requirements of the GNMA, FNMA or FHLMC Guide as applicable.

            "Successor Servicer": An entity, that is a GNMA-approved issuer, a
GNMA-approved servicer, a FHA-approved mortgagee, a VA-approved lender, a
FNMA-approved lender or FHLMC-approved seller/servicer, as applicable, in good
standing and designated by Participant, to replace the related Seller as issuer
and servicer, mortgagee or seller/servicer of the Mortgage Loans or the
Securities related thereto.

            "Takeout Commitment": A trade confirmation from the Takeout Investor
to the related Seller confirming the details of a forward trade between the
Takeout Investor and such Seller with respect to one or more Securities, which
trade confirmation shall be enforceable and in full force and effect, and shall
be validly and effectively assigned to Participant pursuant to a trade
assignment, and relate to pools of Mortgage Loans that satisfy the
"good-delivery guidelines" of The Bond Market Association as set forth in the
Association's Uniform Practices Manual.

            "Takeout Investor": A securities dealer or other financial
institution, acceptable to Participant, who has made a Takeout Commitment.

            "Trade Price": The price specified in a Takeout Commitment at which
a Takeout Investor is obligated to purchase the Security specified in such
Takeout Commitment.

            "Warehouse Lender": Any lender providing financing to the related
Seller for the purpose of originating Mortgage Loans, which lender has a
security interest in such Mortgage Loans as collateral for the obligations of
such Seller to such lender.

            "Warehouse Payment": As defined in Section 3(c).

            "Wire Instructions": The wire instructions set forth in a letter, in
the form of Exhibit E, executed by the related Seller and the Warehouse Lender,
receipt of which has been acknowledged by the Participant.

                                      -6-
<PAGE>

            Section 2. Delivery of Documents. (a) The related Seller has
delivered and released, or will deliver and release, to the Custodian the
documents identified in the succeeding paragraph pertaining to each of the
Mortgage Loans identified in the Mortgage Loan Schedule ("Mortgage Loan
Schedule") attached to each Participation Certificate that may be issued from
time to time pursuant to the Participation Agreement. A copy of each such
Mortgage Loan Schedule has been, or will be, delivered by the related Seller to
the Custodian at or before the time of delivery to the Custodian of such
documents related to the Mortgage Loans identified in such Mortgage Loan
Schedule. In addition, with respect to MERS Designated Mortgage Loans, the
related Seller has delivered, or will deliver, to the Custodian the related MERS
Report.

            No Participation Certificate shall be authenticated hereunder unless
the related Seller shall have delivered to the Custodian the related Mortgage
Loan Schedule and each of the following with respect to the Mortgage Loans
identified in such Mortgage Loan Schedule:

            (i)   The original Mortgage Note endorsed, "Pay to the order of
                  ______________________________, without recourse" and signed
                  in the name of the related Seller by an authorized officer;

            (ii)  A Mortgage meeting one of the following requirements:

                  (A) The original Mortgage bearing evidence that the Mortgage
      has been duly recorded in the records of the jurisdiction in which the
      Mortgaged Property is located; or

                  (B) A copy of the Mortgage together with an officer's
      certificate (which may be a blanket officer's certificate of the related
      Seller covering all such Mortgage Loans), or a certificate from the
      recorder's office, certifying that such copy represents a true and correct
      reproduction of the original Mortgage and that such original has been duly
      recorded or delivered for recordation in the appropriate records of the
      jurisdiction in which the Mortgaged Property is located; or

                  (C) With respect to each MERS Designated Mortgage Loan, the
      requirements set forth in the Electronic Tracking Agreement have been
      satisfied;

            (iii) Except in the case of a MERS Designated Mortgage Loan, an
                  Assignment of Mortgage to GNMA, FNMA or FHLMC, as applicable,
                  in recordable form but unrecorded (which Assignment of
                  Mortgage may be in the form of a blanket assignment of two or
                  more such Mortgage Loans to the extent permitted by applicable
                  law) signed in the name of the related Seller by an authorized
                  officer;

            (iv)  If the related Seller did not originate a Mortgage Loan, all
                  necessary intervening assignments to show a complete chain of
                  title from the originating mortgagee to the related Seller
                  (or, in the case of a MERS Designated Mortgage Loan, Mortgage
                  Electronic Registration Systems, Inc.);

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<PAGE>

            (v)   Except in the case of a MERS Designated Mortgage Loan, a
                  second Assignment of Mortgage, in blank, in recordable form
                  but unrecorded (which Assignment of Mortgage may be in the
                  form of a blanket assignment of two or more such Mortgages to
                  the extent permitted by applicable law and the GNMA, FNMA or
                  FHLMC Guide, as applicable) signed in the name of the related
                  Seller by an authorized officer; and

            (vi)  a letter (an "Exhibit B-1 Letter") substantially in the form
                  of Exhibit B-1, from any Warehouse Lender having a security
                  interest in the Mortgage Loans (except when the Warehouse
                  Lender is the Participant) or, if there is no Warehouse Lender
                  with respect to such Mortgage Loans, a letter (an "Exhibit B-2
                  Letter") substantially in the form of Exhibit B-2, from the
                  related Seller, addressed to Participant, releasing any and
                  all right, title and interest in such Mortgage Loans.

            The Mortgage Loan documents referred to in clause (i), (ii), (iii),
(iv) and (v) of this Section 2(a), are referred to herein as the "Mortgage
File", provided, however, that upon transmission by the Custodian by overnight
courier of the document referenced in clause (i) of Section 2(a) to FHLMC when
the related Seller has appointed FHLMC as custodian, the Mortgage File shall not
include the document referenced in clause (i) of Section 2(a). Such Seller shall
promptly deliver to the Custodian all additional original documents evidencing
an assumption or modification of a Mortgage Loan approved by such Seller.

            (b) In addition, the related Seller shall (i) on the date of this
Agreement, deliver to Custodian a certificate as to the incumbency and signature
of each officer of such Seller executing any document in connection with this
Agreement or the Participation Agreement and, thereafter, whenever there is a
change in such certificate; and (ii) in respect of each Mortgage Loan identified
in each Mortgage Loan Schedule and, at least one (1) Business Day for up to 250
Mortgage Loans (with an additional Business Day for each additional set of 250
Mortgage Loans) prior to the Authentication Date, (A) deliver to the Custodian
for transmission to GNMA, FNMA or FHLMC, as the case may be, the documents
listed in Exhibit C-1, Exhibit C-2 or Exhibit C-3, as applicable (the
"Applicable Agency Documents"), which documents shall be fully completed and
executed and sufficient to permit GNMA, FNMA or FHLMC, as the case may be, to
deliver a Security in respect of the related Mortgage Loans, and (B) deliver to
Participant a copy of the Seller's letter to Custodian listing all Applicable
Agency Documents delivered by such Seller to the Custodian with respect to such
Participation Certificate and in compliance with this Section 2(b).

            (c) The Custodian, in accordance with the provisions of Section 4,
shall deliver to GNMA, FNMA or FHLMC, as the case may be, within one (1)
Business Day of Certification (as defined below) the Applicable Agency
Documents, fully completed and executed and sufficient to permit GNMA, FNMA or
FHLMC, as the case may be, to deliver a Security in respect of the related
Mortgage Loans. If the Custodian, for any reason whatsoever, is unable to
complete and/or deliver the Applicable Agency Documents in compliance with this
Section 2(c), the Custodian shall give prompt oral notice thereof to the
Participant, followed by

                                      -8-
<PAGE>

written notice specifying the reason(s) therefor, which notice shall be
delivered via facsimile transmission on the same day that oral notice is given.

            Section 3. Custodian as Custodian for, and Bailee of, Participant
and Assignees. (a) With respect to each Mortgage Note and each Assignment of
Mortgage (except with respect to MERS Designated Mortgage Loans) and all other
documents constituting each Mortgage File which are delivered to the Custodian
or which at any time come into the possession of the Custodian, the Custodian,
subject to the provisions of paragraphs (b) and (c) of this Section, shall act
solely in the capacity of custodian for, and bailee of, the Participant. The
Custodian shall hold all documents constituting the Mortgage File received by it
for the exclusive use and benefit of the Participant, and shall make disposition
thereof only in accordance with the written instructions furnished by the
Participant. The Custodian shall segregate and maintain continuous custody of
all documents constituting the Mortgage File received by it in secure and
fire-resistant facilities in accordance with customary standards for such
custody and shall mark the file folders therefor to indicate that the Mortgage
File is being held for the Participant. Notwithstanding anything in this Section
3 to the contrary, upon delivery of a Security to the Participant or its
designee, the Custodian shall automatically cease to hold the related Mortgage
File on behalf of the Participant, and this Agreement shall thereupon cease to
be of any effect with respect thereto. The Custodian shall not be responsible to
verify (i) the validity, legality, recordability, enforceability, sufficiency,
due authorization or genuineness of any document in each Mortgage File or any of
the Mortgage Loans or (ii) the collectability, insurability, effectiveness or
suitability of any Mortgage Loan.

            (b) With respect to each Participation Certificate and/or each
related Mortgage Note, Assignment of Mortgage and related Security, the
Participant shall, upon assigning, pledging or granting a security interest
therein to an Assignee, notify the Custodian and such Assignee in writing that
it has assigned, pledged or granted a security interest in each Participation
Certificate and/or each related Mortgage Note, Assignment of Mortgage and
related Security to such Assignee. Subject to any limitations in any agreement
between such Assignee and the Participant, such Assignee, upon notice, as
provided in Section 16, may (i) require the Custodian to act with respect to the
related Mortgage File solely in the capacity of custodian for, and bailee of,
such Assignee, (ii) require the Custodian to hold such Mortgage File for the
exclusive use and benefit of such Assignee, (iii) assume the rights of
Participant under this Agreement to furnish written instructions to the
Custodian as to the disposition of such Mortgage File and such rights shall be
exercisable solely by such Assignee, (iv) require the Custodian to give such
Assignee written acknowledgement to the effect set forth in clauses (i), (ii)
and (iii), and (v) take all such actions under the Electronic Tracking Agreement
which are necessary to effectuate any of the foregoing. The failure of the
Custodian to give the written acknowledgement referred to in clause (iv) above
shall not affect the validity of such assignment, pledge or grant of a security
interest. The effects of the Participant's notice to the Custodian set forth in
clauses (i) to (iii) above shall continue until the Custodian is otherwise
notified in writing by such Assignee, except that upon the delivery of the
Security to the Participant or its designee, the Custodian shall automatically
cease to hold the Mortgage File on behalf of the Assignee, and this Agreement
shall thereupon cease to be of any effect with respect thereto. Mortgage Notes
and Assignments of Mortgages as to which the Participant has assigned, pledged
or granted a

                                      -9-
<PAGE>

security interest to an Assignee are sometimes referred to in this Agreement as
"Assigned Mortgage Loans."

            (c) The related Seller and the Participant acknowledge that the
Warehouse Lender, if any, identified from time to time in each Exhibit B-1
Letter to be received by the Custodian pursuant to Section 2(a), is a Warehouse
Lender for the related Seller. Such Seller and the Participant acknowledge that,
in accordance with the terms of each Exhibit B-1 Letter to be received by the
Custodian pursuant to Section 2(a) (except when the Warehouse Lender is the
Participant), pursuant to which each such Warehouse Lender conditionally
releases its security interest in Mortgage Loans referred to in the related
Exhibit B-1 Letter, such release shall not be effective until the funds referred
to in such Exhibit B-1 Letter (a "Warehouse Payment") are received in accordance
with the Wire Instructions. Until receipt of a Warehouse Payment, the interest
of the related Warehouse Lender in such Mortgage Loans shall continue and remain
in full force and effect, and the Participant shall have no interest in the
Mortgage Loans which is not subordinate to the interest of each Warehouse Lender
in such Mortgage Loans. The related Seller and the Participant acknowledge and
agree to the foregoing arrangements.

            (d) In order to enable the Custodian to make the Certification
described in Section 4, Participant shall provide the Custodian with such
information as it requests to complete the forms referenced in this subsection
(upon which information the Custodian may conclusively rely) and shall, promptly
after the execution of this Agreement, deliver to Custodian a limited power of
attorney, in the form of Exhibit D (the "Limited Power"), authorizing the
Custodian, as attorney-in-fact of the Participant, upon receipt of Exhibit F
Letter, if applicable (i) to complete a new form HUD 11711A (Release of Security
Interest), Fannie Mae Form 2004 (Security Release Certification), FHLMC Form 939
(Security Settlement Information and Delivery Authorization) or FHLMC Form 996
(Warehouse Lender Release of Security Interest), as applicable, naming the
Participant as the "warehouse lender" on each such form with respect to the
applicable Mortgage Loans; (ii) to substitute such completed forms for the
corresponding forms, if any, previously delivered to the Custodian by the
related Seller, naming a person other than the Participant as "warehouse
lender;" and (iii) to include such completed substituted forms among the
documents to be delivered by the Custodian pursuant to Section 4(ii).

            Section 4. Certification of Receipt by Custodian. Prior to
authenticating a Participation Certificate, the Custodian shall ascertain that
all documents required to be delivered to it pursuant to Section 2 in respect of
each Mortgage Loan Schedule are in its possession and shall certify (the
"Certification") to Participant that:

            (i)   As to each Mortgage Loan listed in such Mortgage Loan
                  Schedule, (A) all documents required to be delivered to it
                  pursuant to Section 2(a) and (b) are in its possession, (B)
                  such documents have been reviewed by it and appear regular on
                  their face and relate to such Mortgage Loan, (C) based only on
                  its examination of the foregoing documents, the information
                  set forth in the Mortgage Loan Schedule respecting such
                  Mortgage Loan is correct, (D) such Participation Certificate
                  is the only outstanding Participation Certificate
                  authenticated by it related to the specified mortgage pool (E)
                  each Mortgage Note appears on its face to have been

                                      -10-
<PAGE>

                  endorsed as provided in Section 2 and (F) each such Mortgage
                  Loan is listed on a schedule attached to an Exhibit B-1 Letter
                  or Exhibit B-2 Letter, as the case may be.

            (ii)  As to such Mortgage Loan Schedule, (A) the Applicable Agency
                  Documents were received from the related Seller and have been
                  reviewed by it, have been completed, appear regular on their
                  face and relate to such Mortgage Loan Schedule, (B) either (x)
                  such documents have been transmitted by the Custodian by
                  overnight courier to GNMA, FNMA or FHLMC, as applicable or (y)
                  upon receipt by the Custodian of the applicable Exhibit F
                  Letter, the Applicable Agency Documents will be transmitted by
                  the Custodian on the same day as such receipt, by overnight
                  courier, to GNMA, FNMA or FHLMC, as applicable, and (C) with
                  respect to the written instructions for delivery of the
                  Securities to be issued with respect to such Mortgage Loans as
                  set forth in the copies, delivered or to be delivered in
                  completed form to GNMA, FNMA or FHLMC, as applicable, of (x)
                  form HUD 11705 (Schedule of Subscribers) with respect to the
                  GNMA Program, (y) Fannie Mae Form 2014 (Delivery Schedule)
                  with respect to the FNMA Program or (z) FHLMC Form 939
                  (Settlement and Information Multiple Registration Form) with
                  respect to the FHLMC Program, such instructions for delivery
                  are identical to the instructions for delivery of such
                  Securities set forth in the copies of such forms delivered to
                  the Participant.

            As to each MERS Designated Mortgage Loan, the Custodian shall verify
the related "MERS Identification Number" listed on the related Mortgage Note,
the Mortgage Loan Schedule and the MERS Report.

            Upon receipt of all the documents required to be delivered to it
pursuant to Section 2, Custodian shall execute the Participation Certificate and
deliver to Participant by overnight courier the fully completed Participation
Certificate and Mortgage Loan Schedule attached thereto, a copy of each Exhibit
B-1 Letter or Exhibit B-2 Letter and a fully completed copy of (i) Form HUD
11705 (Schedule of Subscribers), (ii) Fannie Mae Form 2014 (Delivery Schedule)
or (iii) a copy of FHLMC Form 381 (Contract Delivery Summary) and a copy of
FHLMC Form 939 (Settlement and Information Multiple Registration Form), as the
case may be, designating the Participant as the party authorized to receive the
Securities, executed by the related Seller and relating to the Securities to be
backed by the Mortgage Loans. The execution by the Custodian of each
Participation Certificate shall constitute an express representation and
warranty by the Custodian to the Participant that the Custodian has performed
the Certification with respect to the Participation Certificate, the Mortgage
Loans evidenced thereby and the documents referenced in Section 2 received from
the related Seller in connection therewith.

            (iii) So long as the Custodian holds a Mortgage File on behalf of
                  the Participant, in the event the Custodian discovers any
                  nonconformity with the review criteria under this Section 4
                  with respect to such Mortgage File or the related forms, the
                  Custodian shall give prompt oral notice of such

                                      -11-
<PAGE>

                  defect to the related Seller and the Participant, followed by
                  a written specification thereof.

            Section 5. Custodian's Fees and Expenses; Successor Custodian. (a)
It is understood that the Custodian will charge such fees for its services under
this Agreement as are set forth in a separate agreement between the Custodian
and the related Seller, the payment of which, together with the Custodian's
expenses in connection herewith, shall be solely the obligation of the related
Seller. The Custodian has no lien on, and shall not attempt to place a lien on,
any of the Mortgage Loans or proceeds thereof to secure the payment of its fees.

            (b) The Custodian or any successor Custodian may resign at any time
by giving thirty (30) days' written notice to the related Seller and the
Participant. Such resignation shall take effect upon (i) the appointment of a
successor Custodian by the related Seller, which successor Custodian shall be a
bank or trust company acceptable to the Participant, each Assignee and to GNMA,
FNMA or FHLMC, as applicable, and (ii) delivery of all the Mortgage Files to the
successor Custodian. If a successor is not appointed within such 30 day notice
period, the Custodian may petition a court of competent jurisdiction to appoint
a successor Custodian.

            (c) The related Seller may (and shall, upon the written request of
the Participant) at any time remove and discharge the Custodian or any successor
Custodian thereafter appointed from the performance of its duties under this
Agreement by written notice from such Seller to the Custodian or the successor
Custodian, with copies to the Participant. Such removal shall take effect upon
(i) the appointment of a successor Custodian by such Seller, which Custodian
shall be a bank or trust company acceptable to the Participant, each Assignee
and to GNMA, FNMA or FHLMC, as applicable, and (ii) delivery of all the Mortgage
Files to the successor Custodian.

            (d) In the event of any such resignation or removal, the Custodian
shall, at the expense of the related Seller, promptly transfer to the successor
Custodian within thirty (30) days all Mortgage Files being administered under
this Agreement and the successor Custodian shall hold such Mortgage Files in
accordance with this Agreement. In the event of any such appointment, the
related Seller shall be responsible for the fees of the successor Custodian.

            (e) The related Seller agrees to indemnify, reimburse and hold
harmless the Custodian, its directors, officers, employees and agents from and
against any and all liability, loss and expense, including counsel fees and
disbursements arising from or connected with the Custodian's execution and
performance of this Agreement including but not limited to claims of third
parties, including the Participant, except in the case of loss, liability or
expenses resulting from the gross negligence or willful misconduct on the part
of the Custodian. The foregoing indemnification shall survive the earlier
resignation or removal of the Custodian and termination or assignment of this
Agreement.

            (f) The standard of care to be exercised by Custodian in the
performance of its duties under this Agreement shall be to exercise the same
degree of care as Custodian exercises when it holds mortgage loan documents as
security for similar mortgage warehouse customers. Custodian is an agent, bailee
and custodian only and is not intended to be, nor shall it be

                                      -12-
<PAGE>

construed to be (except only as agent, bailee and custodian), a representative,
trustee or fiduciary of or for either the related Seller, the Agency,
Participant or Assignee. The Custodian shall not be bound in any way by any
agreement or contract other than this Agreement and the exhibits and schedules
hereto and any other agreement to which it is a party. The Custodian shall not
be required to ascertain or inquire as to the performance or observance of any
of the conditions or agreements to be performed or observed by any other party,
except as specifically provided in this Agreement and the exhibits and schedules
hereto. The Custodian disclaims any responsibility for the validity or accuracy
of the recitals to this Agreement and any representations and warranties
contained herein, unless specifically identified as recitals, representations or
warranties of the Custodian.

            (i)   Throughout the term of this Agreement, other than as
                  specifically set forth in this Agreement, the Custodian shall
                  have no responsibility ascertaining or verifying the value,
                  legality, collectibility, sufficiency, due authorization,
                  insurability, enforceability, effectiveness or suitability of
                  any collateral, the title of any party therein, the validity
                  or adequacy of the security afforded thereby, or the validity
                  of this Agreement (except as to Custodian's authority to enter
                  into this Agreement and to perform its obligations hereunder).

            (ii)  No provision of this Agreement shall require the Custodian to
                  expend or risk own funds or otherwise incur any financial
                  liability in the performance of any of its duties hereunder or
                  in the exercise of any of its rights and powers, if, in its
                  sole judgment, it shall believe that repayment of such funds
                  or indemnity satisfactory to it against such risk or liability
                  is not assured to it.

            (iii) The Custodian is not responsible for preparing or filing any
                  reports or returns relating to federal, state or local income
                  taxes with respect to this Agreement, other than for the
                  Custodian's compensation or for reimbursement of expenses.

            (iv)  Neither the Custodian nor any of its directors, attorneys,
                  agents, and employees shall be liable with respect to any
                  action taken or omitted to be taken in accordance with the
                  written direction, instruction, acknowledgement, consent or
                  any other communication from the Participant.

            (v)   If the Custodian requests written instruction from the
                  Participant with respect to any action or omission in
                  connection with this Agreement, the Custodian shall be
                  entitled (without incurring any liability therefore) to
                  refrain from taking such action unless and until Custodian
                  receives written instructions from the Participant.

            (vi)  In the event that (i) the Participant, one of the Sellers or
                  the Custodian shall be served by a third party with any type
                  of levy, attachment, writ or court order with respect to any
                  Mortgage File or any document included

                                      -13-
<PAGE>

                  within a Mortgage File or (ii) a third party shall institute
                  any court proceeding by which any Mortgage File or a document
                  included within a Mortgage File shall be required to be
                  delivered otherwise than in accordance with the provisions of
                  this Custodial Agreement, the party receiving such service
                  shall promptly deliver or cause to be delivered to the other
                  parties to this Custodial Agreement copies of all court
                  papers, orders, documents and other materials concerning such
                  proceedings. The Custodian shall, to the extent permitted by
                  law and any court order, continue to hold and maintain all
                  Mortgage Files that are the subject of such proceedings
                  pending an order of a court of competent jurisdiction
                  permitting or directing disposition thereof. Upon final
                  determination of such court, and if permitted by such
                  determination, the Custodian shall dispose of such Mortgage
                  File or any document included within such Mortgage File as
                  directed in writing by the Participant in writing, which shall
                  give a direction consistent with such court determination. The
                  Custodian shall have no obligation to monitor or appear in any
                  such proceeding on behalf of or in the name of the Participant
                  or any of the Sellers. Expenses and fees (including, without
                  limitation, attorney's fees) of the Custodian incurred as a
                  result of such proceedings shall be borne by the Sellers.

            (vii) The Custodian may consult with counsel and the advice or any
                  opinion of counsel shall be full and complete authorization
                  and protection in respect of any action taken or omitted by it
                  hereunder in good faith in accordance with such advice or
                  opinion of counsel.

            (viii) In the absence of bad faith on the part of the Custodian, the
                  Custodian may conclusively rely, as to the truth of the
                  statements and the correctness of the opinions expressed
                  therein, upon any request, instructions, certificate, opinion
                  or other document furnished to the Custodian, reasonably
                  believed by the Custodian to be genuine and to have been
                  signed or presented by the proper party or parties.

            (ix)  In no event shall the Custodian or its directors, officers,
                  agents and employees be held liable for any special, indirect
                  or consequential damages resulting from any action taken or
                  omitted to be taken by it or them hereunder or in connection
                  herewith even if advised of the possibility of such damages.

            Section 6. Default. If the related Seller fails to fulfill any of
its obligations under the Participation Agreement, the Electronic Tracking
Agreement or hereunder or in connection with the exercise by Participant of any
remedy pursuant to Section 3(c) of the Participation Agreement then, subject to
the provisions of Section 3(b), the Participant may, by written notice to the
Custodian, at the Seller's expense (a) require the Custodian to complete the
endorsements on the Mortgage Notes held by the Custodian and/or (b) require the
Custodian to deliver to Participant or Successor Servicer the Mortgage Files to
which the failure relates and

                                      -14-
<PAGE>

(c) take such actions under the Electronic Tracking Agreement on behalf of the
Purchaser as are necessary to effectuate the foregoing.

            Section 7. Access to Documents. Upon reasonable prior written notice
to the Custodian, the Participant (and with respect to Assigned Mortgage Loans,
each Assignee) and their agents, accountants, attorneys and auditors will be
permitted during normal business hours to examine and copy the Mortgage Files,
documents, records and other papers in possession of or under the control of the
Custodian relating to any or all of the Mortgage Loans in which the Participant
has an interest. Upon the written request of the Participant (and with respect
to Assigned Mortgage Loans, each Assignee) and at the cost and expense of the
Participant, the Custodian shall provide the Participant (and with respect to
Assigned Mortgage Loans, each Assignee) with copies of the Mortgage Notes,
Mortgages, Assignment of Mortgages and other documents relating to any of the
Mortgage Loans in which the Participant (and with respect to Assigned Mortgage
Loans, each Assignee) has an interest.

                                      -15-
<PAGE>

            Section 8. Assignment by Participant. The Participant may assign,
pledge or grant a security interest in any or all of its rights under this
Agreement and the Electronic Tracking Agreement to one or more Assignees in
connection with the assignment, pledge or grant of a security interest in a
Participation Certificate, and/or related Mortgage Notes, Assignments of
Mortgages and related Security. In addition to the notice required by Section
3(b), the Participant shall give written notice thereof to the related Seller
and the Custodian. The failure of the Participant to give such notice shall not
affect the validity of any such assignment, pledge or grant of a security
interest. If the Participant does, however, fail to give such notice to the
related Seller and the Custodian, then the Assignee may give such notice to such
Seller and the Custodian. Upon receipt of such notice by the related Seller and
the Custodian, copies of all communications required to be sent hereunder to the
Participant shall be sent to both the Participant and each Assignee (at its
address set forth in such notice of assignment). Subject to any limitations in
any agreement between such Assignee and the Participant, such Assignee may, upon
notice as provided in Section 16 hereof, directly enforce and exercise such
rights under this Agreement that have been assigned or pledged to it or are the
subject of a security interest granted to it and, until otherwise notified by
such Assignee, the Participant shall no longer have any of such rights.

            Section 9. Insurance. The Custodian shall, at its own expense,
maintain at all times during the existence of this Agreement (a) fidelity
insurance, (b) theft of documents insurance, (c) forgery insurance and (d)
errors and omissions insurance. All such insurance shall be in amounts, with
standard coverage and subject to deductibles, all as is customary for insurance
typically maintained by banks which act as custodians and be in such amounts and
a certificate of the respective insurer as to each such policy, with a copy of
such policy attached, shall be furnished to the Participant, upon request.

            Section 10. Representations, Warranties and Covenants of the
Custodian. The Custodian hereby represents and warrants to, and covenants with,
the Sellers and the Participant that, as of the date hereof and at all times
while Custodian is performing services under this Agreement:

            (a) The Custodian is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization and fully
satisfies the requirements for acting as a GNMA custodian, a FNMA custodian and
a FHLMC custodian, and

            (b) The Custodian has the full power and authority to hold each
Mortgage Loan and to execute, deliver and perform, and to enter into and
consummate all transactions contemplated by, this Agreement, has duly authorized
the execution, delivery and performance of this Agreement and has duly executed
and delivered this Agreement, and this Agreement constitutes a legal, valid and
binding obligation of the Custodian, enforceable against it in accordance with
its terms except as the enforcement thereof may be limited by applicable
receivership, conservatorship or similar debtor relief laws and except that
certain equitable remedies may not be available regardless of whether
enforcement is sought in equity or law.

            (c) Neither the execution and delivery by the Custodian of this
Agreement, nor the consummation by the Custodian of any of the transactions
contemplated hereby, nor the

                                      -16-
<PAGE>

fulfillment by the Custodian of the terms hereof, will conflict with, or
violate, result in a material breach of or constitute a material default (with
or without notice or lapse of time, or both) under any term or provision of the
Certificate of Incorporation, By-laws or similar governing document of the
Custodian or any governmental rule applicable to the Custodian.

            Section 11. Indemnification by Custodian. The Custodian agrees to
indemnify and hold the Sellers and Participant, and their respective designees
harmless against any and all liabilities, obligations, losses, damages,
penalties, actions, judgements, suits, costs, or out-of-pocket expenses,
including reasonable attorney's fees, that may be imposed on, incurred by, or
asserted against it or them in any way relating to or arising out of the
Custodian's gross negligence or willful misconduct or any breach of the
covenants, conditions, representations or warranties contained herein or, solely
with respect to Participant, Custodian's failure to produce a Mortgage Note,
Assignment of Mortgage or any other document related to a Mortgage Loan that as
in its possession pursuant to Section 2 within two (2) Business Days after
required or requested by the Participant, and provided, that (i) Custodian
previously delivered to the Participant a Certification with respect to such
document (other than any Mortgage Loan identified in the exception report
annexed thereto as not covered by such certification); (ii) such document has
not been delivered to another party or at another party's direction in
accordance with the terms of this Agreement; and (iii) such document was held by
the Custodian on behalf of the Participant. The foregoing indemnification shall
survive any termination or assignment of this Agreement.

            Section 12. No Adverse Interests. By its acceptance of each Mortgage
File, the Custodian covenants and warrants to the Participant that the Custodian
holds no adverse interests, by way of security or otherwise, in the related
Mortgage Loan and the Custodian hereby waives and releases any such interest in
such Mortgage Loan which it, acting as Custodian, has or which it may thereafter
acquire prior to the time of release of such Mortgage Loan from the terms of
this Agreement.

            Section 13. Amendments. This Agreement may be amended from time to
time only by written agreement of the Sellers, the Participant and the Custodian
except that, if this Agreement or any Participation Certificate shall have been
assigned by Participant, no amendment shall affect any Mortgage Loans that
relate to Participation Certificates that have been so assigned. Participant
shall give at least five (5) days' prior written notice to each Assignee of any
proposed amendment to this Agreement and shall furnish each Assignee with a copy
of each such amendment within five days after it is executed and delivered.

            Section 14. Recordation of Agreement. To the extent permitted by
applicable law, this Agreement shall be filed and/or recorded by any Seller at
its expense in all appropriate public offices on direction by the Participant
accompanied by an opinion of counsel to the Participant (who may also be counsel
employed by the Participant) to the effect that such filing and/or recordation
would materially and beneficially affect the interests of the Participant.

            Section 15. Execution in Counterparts. This Agreement may be
executed in any number of counterparts, each of which shall be deemed an
original, but all of which shall constitute one and the same instrument.

                                      -17-
<PAGE>

            Section 16. Agreement for Exclusive Benefit of Parties; Assignment.
This Agreement is for the exclusive benefit of the parties hereto and their
respective successors and permitted assigns hereunder and shall not be deemed to
give any legal or equitable right, remedy or claim to any other person
whatsoever. This Agreement shall bind the parties hereto and their respective
successors, but, except as provided in Section 8, shall not be assigned or
pledged by any party without the prior written consent of the other parties.
Written notice from an Assignee to the Custodian (with a copy to the
Participant) that the Participant has defaulted in any material respect under
any funding or loan agreement relating to the financing of the Participant's
purchase of Participation Certificates shall be conclusive for all purposes of
this Agreement and after receipt of such notice, the Custodian shall act in
accordance with the written instructions of the Assignee with respect to the
related Mortgage Files.

            Section 17. Effect of Invalidity of Provisions. In case any one or
more of the provisions contained in this Agreement should be or become invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein or therein shall in
no way be affected, prejudiced or disturbed thereby.

            Section 18. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO CONFLICT OF LAWS RULES.

            Section 19. Consent to Service. Each party irrevocably consents to
the service of process by registered or certified mail, postage prepaid, to it
at its address given in or pursuant to Section 23.

            Section 20. Submission to Jurisdiction. With respect to any claim
arising out of this Agreement each party (a) irrevocably submits to the
nonexclusive jurisdiction of the courts of the State of New York and the United
States District Court located in the Borough of Manhattan in New York City, and
(b) irrevocably waives (i) 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 court, (ii) any claim that any such suit, action or
proceeding brought in any such court has been brought in any inconvenient forum
and (iii) 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.

            Section 21. Jurisdiction Not Exclusive. Nothing herein will be
deemed to preclude either party hereto from bringing an action or proceeding in
respect of this Agreement in any other jurisdiction other than as set forth in
Section 20.

                                      -18-
<PAGE>

            Section 22. Waiver of Jury Trial. Each party hereto irrevocably
waives, to the fullest extent permitted by applicable law, any and all right to
trial by jury in any legal proceeding arising out of or relating to this
Agreement, any other agreement or the transactions contemplated hereby or
thereby.

            Section 23. Notices. Any notices, consents, directions and other
communications given under this Agreement shall be in writing and shall be
deemed to have been duly given when personally delivered at, or mailed by
first-class mail, postage prepaid and sent to the addresses of the parties
hereto set forth on the cover page hereof or such other address as any party
shall give in a notice to the other parties pursuant to this Section.

            Section 24. Authentication. No Participation Certificate shall be
valid unless authenticated by the manual signature of an authorized officer of
the Custodian. The Custodian hereby acknowledges that each time it authenticates
a Participation Certificate, it is making an express representation and warranty
to the Participant that it has performed the Certification as specified in
Section 4.

            Section 25. Construction. The headings in this Agreement are for
convenience only and are not intended to influence its construction. References
to Sections and Exhibits in this Agreement are to the Sections of and Exhibits
to this Agreement. The Exhibits are part of this Agreement. In this Agreement,
the singular includes the plural, the plural the singular, and the words "and"
and "or" are used in the conjunctive or disjunctive as the sense and
circumstances may require.

            Section 26. Effect of Amendment and Restatement. Upon the execution
of this Agreement and the Purchase Agreement by all parties hereto and thereto,
the Original Custodial Agreement shall be amended, restated and superseded in
its entirety by this Agreement. The parties hereto acknowledge and agree that
(a) the liens and security interests granted under the Original Custodial
Agreement are in full force and effect and, upon the amendment and restatement
of the Original Custodial Agreement and the related documents, such liens and
security interests secure and continue to secure the payment and performance of
Seller's obligations under this Agreement and the related documents, and (b)
upon the effectiveness of such amendment and restatement, all outstanding
Mortgage Loans under, and as defined in, the Original Custodial Agreement, shall
be deemed to be outstanding as Mortgage Loans hereunder mutatis mutandis, in
each case on the terms and conditions set forth in this Agreement.

                   [SIGNATURES COMMENCE ON FOLLOWING PAGE]

                                      -19-
<PAGE>

            IN WITNESS WHEREOF, the Sellers, Purchaser and Custodian have caused
this Agreement to be duly executed as of the date and year first above written.

                                    AMERICAN HOME MORTGAGE
                                      INVESTMENT CORP.

                                    By: /s/ Michael Strauss
                                       ---------------------------------
                                       Name:  Michael Strauss
                                       Title: President

                                    AMERICAN HOME MORTGAGE
                                      ACCEPTANCE, INC.

                                    By: /s/ Michael Strauss
                                       ---------------------------------
                                       Name:  Michael Strauss
                                       Title: President

                                    AMERICAN HOME MORTGAGE HOLDINGS,
                                         INC., as Seller

                                    By: /s/ Michael Strauss
                                       ---------------------------------
                                       Name:  Michael Strauss
                                       Title: President

                                    AMERICAN HOME MORTGAGE CORP., as Seller

                                    By: /s/ Michael Strauss
                                       ---------------------------------
                                       Name:  Michael Strauss
                                       Title: President

<PAGE>

                                    COLUMBIA NATIONAL, INCORPORATED, as Seller

                                    By: /s/ Michael Strauss
                                       ---------------------------------
                                       Name:  Michael Strauss
                                       Title: President

                                    UBS REAL ESTATE SECURITIES INC.,
                                         as Purchaser

                                    By:      /s/ George A. Mangiaracina
                                        --------------------------------
                                          Name: George A. Mangiaracina
                                          Title: Managing Director

                                    By:      /s/ Robert Carpenter
                                          ------------------------------
                                          Name: Robert Carpenter
                                          Title: Director

                                    DEUTSCHE BANK NATIONAL TRUST
                                         COMPANY, as Custodian

                                    By:      /s/ Andrew Hays
                                          ------------------------------
                                          Name:   Andrew Hays
                                          Title:  Associate

                                    By:      /s/ Jerome W. Harney
                                          ------------------------------
                                          Name:  Jerome W. Harney
                                          Title: Vice PresidentExhibit 10.8

                    AMENDED AND RESTATED EMPLOYMENT AGREEMENT

            This Amended and Restated Employment Agreement (this "Agreement") is
made as of April 27, 2004, by and between American Home Mortgage Holdings, Inc.,
a Delaware corporation (the "Company"), and John A. Johnston (the "Executive").

            WHEREAS, reference is made to that certain Agreement and Plan of
Merger, dated as of December 29, 1999, by and among the Company, American Home
Mortgage Sub I, Inc., Marina Mortgage Company, Inc. ("Marina") and the
stockholders of Marina listed on the signature pages thereto (the "Merger
Agreement");

            WHEREAS, in connection with the Merger Agreement, the Company and
the Executive previously entered into that certain Employment Agreement, dated
as of December 29, 1999 (the "Original Employment Agreement"), by and between
the Company and the Executive, and that certain Non-Competition Agreement, dated
as of December 29, 1999 (the "Non-Competition Agreement"), by and between the
Company and the Executive;

            WHEREAS, the Company desires to continue to assure itself of the
services of the Executive, upon the terms and conditions hereinafter set forth;

            WHEREAS,  the Executive  desires to continue to be employed by the
Company, upon the terms and conditions hereinafter set forth; and

            WHEREAS, it is the intention of the Company and the Executive that,
as of the Effective Date (as hereinafter defined), this Agreement shall
supersede and replace in full any and all other agreements between the parties
with respect to the subject matter hereof, including, but not limited to, the
Original Employment Agreement and the Non-Competition Agreement;

            NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Company and the Executive
hereby agree as follows:

            1. Definitions. Unless defined elsewhere in this Agreement,
capitalized terms contained herein shall have the meanings set forth or
incorporated by reference in Section 18 hereof.

            2. Employment. The Company agrees to employ the Executive, and the
Executive hereby accepts such employment by the Company and/or any subsidiary or
affiliate of the Company, during the term set forth in Section 3 hereof and upon
the other terms and conditions of this Agreement.

<PAGE>

            3. Term.

            (a) The term of this Agreement shall commence as of January 1, 2004
(the "Effective Date"), and, subject to Section 3(b) hereof, shall terminate at
the close of business on the fifth anniversary of such date (the "Fifth
Anniversary").

            (b) The term of this Agreement set forth in Section 3(a) hereof
shall be extended or further extended, as the case may be, without any action by
the Company or the Executive, on the Fifth Anniversary and on each subsequent
anniversary of the date thereof, for an additional period of one year, until
either party gives a Notice of Termination (as defined in Section 7(g) hereof)
to the other party twelve months in advance of any such anniversary of the
Effective Date, in the manner set forth in Section 15 hereof, that the term in
effect when such notice is given is not to be extended or further extended, as
the case may be, beyond the year following the next anniversary of the Effective
Date. If the Executive shall continue in the full-time employment of the Company
after the Fifth Anniversary, such continued employment shall be subject to the
terms and conditions of this Agreement, including, without limitation, the
continuation of the Executive's compensation hereunder, except to the extent
that the parties hereto mutually agree in writing to revise any of the terms
hereof.

            4. Position, Duties and Responsibilities, Rights.

            (a) From the Effective Date until the Fifth Anniversary, the
Executive shall serve as, and be elected to and hold the office and title of,
President, Western Division, of the Company. As such, the Executive shall report
only to the Chief Executive Officer of the Company, and shall have all of the
powers and duties usually incident to the office of President of the Western
Division of the Company, and shall have powers to perform such other reasonable
additional duties as may from time to time be lawfully assigned to the Executive
by the Chief Executive Officer of the Company. Among other duties, the Executive
shall be responsible for profit and loss and sales management for the Company's
Western Division.

            (b) During the term of this Agreement, the Executive agrees to
devote substantially all of the Executive's time, efforts and skills to the
affairs of the Company during the Company's normal business hours, except for
vacations, illness and incapacity, but nothing in this Agreement shall preclude
the Executive from devoting reasonable periods to (i) manage the Executive's
personal investments, (ii) participate in professional, educational, public
interest, charitable, civic or community activities, including activities
sponsored by trade organizations, and (iii) serve as a director or member of an
advisory committee of any corporation not in competition with the Company or any
of its subsidiaries or affiliates, or as an officer, trustee or director of any
charitable, educational, philanthropic, civic, social or industry organizations,
or as a speaker or arbitrator; provided, however, that the performance of the
Executive's duties or responsibilities in any of such capacities does not
materially interfere with the regular performance of the Executive's duties and
responsibilities hereunder.

            5. Place of Performance. In connection with the Executive's
employment by the Company, the Executive shall be based at the principal
executive offices of the Company's Western Division, and shall not be required
to be absent therefrom on travel status or otherwise

                                      -2-
<PAGE>

for more than a reasonable time each year as necessary or appropriate for the
performance of the Executive's duties hereunder.

            6. Compensation. During the term of this Agreement, the Executive
shall be compensated by the Company as follows:

            (a) Base Salary. The Company shall pay the Executive, and the
Executive agrees to accept, a base salary in the amount of not less than
$400,000 per year, which amount may be increased by the Company in its sole
discretion (the "Base Salary"). The Base Salary shall be paid in 24 equal
bi-monthly installments; provided, however, in the event that the Company
changes its normal payroll cycle, such payment installments will be adjusted
accordingly.

            (b) Payments under Section 2.4(f) of the Merger Agreement. The
Company shall pay the Executive any amounts due under Section 2.4 of the Merger
Agreement on the terms and subject to the conditions set forth in the Merger
Agreement. In lieu of the Company's obligation to make such payments under
Section 2.4 of the Merger Agreement, the Company agrees to make such payments
under this Agreement. Section 2.4(f) of the Merger Agreement and any defined
terms used in said section and defined in the Merger Agreement shall be deemed
incorporated by reference herein. The Company agrees to treat any payments of
such amounts in all respects as if they had been paid pursuant to the Merger
Agreement.

            (c) Performance-Based Compensation.

                  (i) Volume Override Payment.

                        (A) Subject to the provisions of Section 6(c)(iii)
            below, for each fiscal year of the Company during the term of this
            Agreement, the Executive shall receive in cash an amount equal to
            one-quarter (0.25) of a basis point of Origination Volume of loan
            production of the Western Division (the "Volume Override Payment"),
            which Volume Override Payment may be adjusted in respect of a given
            fiscal year in accordance with Section 6(c)(ii) hereof.

                        (B) The Volume Override Payment provided in Section
            6(c)(i) hereof shall be subject to adjustment as follows:

                        (1) For the fiscal year ended December 31, 2004, the
                  Volume Override Payment shall be increased by the Payment
                  Multiplier; and

                        (2) For all fiscal years subsequent to the fiscal year
                  ended December 31, 2004, but during the term of this
                  Agreement, the Volume Override Payment may, in the sole
                  discretion of the Chief Executive Officer, be increased by a
                  multiplier (which, if any, may be equal to, greater than or
                  less than the Payment Multiplier) to be determined in good
                  faith by the Chief Executive Officer; provided, however, that
                  in no event shall the Chief Executive Officer be obligated to
                  increase the Volume Override Payment by any multiplier in
                  respect of any such fiscal year.

                                      -3-
<PAGE>

                  (ii) Profit Participation Payment.

                        (A) Subject to the provisions of Section 6(c)(iii)
            below, for each fiscal year of the Company during the term of this
            Agreement, the Executive shall receive three and one-quarter percent
            (3.25%) of the difference between any Profits of the Western
            Division less the amount of the Invested Capital Charge (the "Profit
            Participation Payment").

                        (B) The Profit Participation Payment provided in Section
            6(c)(ii) hereof shall be subject to adjustment as follows:

                        (1) For the fiscal year ended December 31, 2004, the
                  Profit Participation Payment shall be increased by the Payment
                  Multiplier; and

                        (2) For all fiscal years subsequent to the fiscal year
                  ended December 31, 2004, but during the term of this
                  Agreement, the Profit Participation Payment may, in the sole
                  discretion of the Chief Executive Officer, be increased by a
                  multiplier (which, if any, may be equal to, greater than or
                  less than the Payment Multiplier) to be determined in good
                  faith by the Chief Executive Officer; provided, however, that
                  in no event shall the Chief Executive Officer be obligated to
                  increase the Profit Participation Payment by any multiplier in
                  respect of any such fiscal year.

                  (iii) Payment of Volume Override Payment and Profit
      Participation Payment.

                        (A) Notwithstanding any other provisions contained in
            this Agreement or otherwise, the aggregate Volume Override Payment
            and Profit Participation Payment, if any, due the Executive in
            respect of any fiscal year during the term of this Agreement, shall
            be reduced by any amounts payable to the Executive under Section
            6(b) above for such fiscal year.

                        (B) The Company shall calculate and pay any Volume
            Override Payment and/or Profit Participation Payment due the
            Executive on an annual basis and any such payments shall be paid in
            a lump sum no later than March 31 of the fiscal year that
            immediately follows the fiscal year to which such payment relates.

                  (iv) Determination of Volume Override Payment and Profit
      Participation Payment. Within 60 days after the end of each fiscal year
      during the term of this Agreement, the Company shall determine the amount
      of any Volume Override Payment and Profit Participation Payment due to the
      Executive (a "Payment Determination") and furnish the Payment
      Determination to the Executive together with information respecting the
      basis for such Payment Determination. After receipt of the Payment
      Determination, the Executive may request from the Company an audit of the
      Payment Determination (a "Payment Audit"), which Payment Audit shall be
      performed by the Company's independent public accountants at such time.
      Any request by the Executive for a Payment Audit must be in writing and
      must be received by the Company within 30 days of the Executive's receipt
      of the Payment Determination. The Company

                                      -4-
<PAGE>

      shall bear the cost of any Payment Audit requested by the Executive under
      this Section 6(c)(iv); provided, however, that if the Volume Override
      Payment or Profit Participation Payment determined by the Company's
      independent public accountants after conducting the Payment Audit is not
      more than one percent (1%) greater than amount of the Volume Override
      Payment or Profit Participation Payment in the Payment Determination, the
      Executive shall bear the full cost of the Payment Audit.

            (d) Payments under Section 2.4(e) of the Merger Agreement. The
Company shall continue to pay the Executive any amounts due to the Executive
under Section 2.4(e) of the Merger Agreement on the terms and conditions set
forth in the Merger Agreement.

            (e) Perquisites and Reimbursement of Expenses. During the term of
this Agreement, the Executive shall be entitled to (i) perquisites, including,
without limitation, an office and secretarial and clerical staff, and (ii)
fringe benefits, including, without limitation, health insurance, in each case
at least equal to, and on the same terms and conditions as, those attached to
the Executive's office on the date hereof, as the same may be improved from time
to time during the term of this Agreement, as well as to reimbursement, upon
proper accounting, of all reasonable expenses and disbursements incurred by the
Executive in the course of the Executive's duties.

            (f) Dependents and Beneficiaries. The Executive and the Executive's
dependents and beneficiaries shall be entitled to all benefits and service
credit for benefits during the term of this Agreement to which senior officers
of the Company and their dependents and beneficiaries are entitled as the result
of the employment of such officers during the term of this Agreement under the
terms of employee plans and practices of the Company and its subsidiaries and
affiliates, including, without limitation, any pension plans, profit sharing
plans, any non-qualified deferred compensation plans and related "rabbi" trusts,
the Company's life insurance plans, its disability benefit plans, its vacation
and holiday pay plans, its medical, dental and welfare plans, and other present
or successor plans and practices of the Company and its subsidiaries and
affiliates for which senior officers, their dependents and beneficiaries are
eligible, and to all payments and other benefits under any such plan or practice
subsequent to the term of this Agreement as a result of participation in such
plan or practice during the term of this Agreement.

            7. Termination of Employment.

            (a) The term of this Agreement shall terminate upon the death of the
Executive.

            (b) The Company may terminate the Executive's employment during the
term of this Agreement for Cause as provided in Section 7(b)(i) hereof or in the
event of Disability as provided in Section 7(b)(ii) hereof.

                  (i) This Agreement shall be considered terminated for "Cause"
            only:

                        (A) if the Executive willfully fails to substantially
            perform the duties assigned to him by the Chief Executive Officer,
            other than by reason of a Disability;

                                      -5-
<PAGE>

                        (B) if the Executive is grossly negligent or engages in
            gross misconduct in the performance of the Executive's duties
            hereunder;

                        (C) if the Executive knowingly engages in an act of
            dishonesty, an act of fraud or embezzlement, or any conduct
            resulting in a felony conviction; or

                        (D) if the Executive violates the provisions of Section
            9 hereof,

      and, in the case of each of clauses (A), (B) (C) and (D) above, the
      applicable conditions set forth in Section 7(f) hereof are satisfied.

            Anything in this Section 7(b) to the contrary notwithstanding, the
      Executive's employment shall in no event be considered terminated by the
      Company for Cause if termination takes place as the result of bad judgment
      or negligence on the part of the Executive other than gross negligence or
      willful or reckless misconduct.

                  (ii) The term "Disability" as used in this Agreement means an
      accident or physical or mental illness which prevents the Executive from
      substantially performing the Executive's duties hereunder for six
      consecutive months. The term of this Agreement shall end as of the close
      of business on the last day of such six-month period but without prejudice
      to any payments due to the Executive in respect of disability under this
      Agreement or any plan or practice of the Company. The amount of any
      payments payable under Section 6(a)(i) or (b)(i) hereof during such
      six-month period shall be reduced by any payments to which the Executive
      may be entitled for the same period because of disability under any
      disability or pension plan or arrangement of the Company or any subsidiary
      or affiliate thereof.

            (c) The Executive may terminate the Executive's employment during
the term of this Agreement for Good Reason. For purposes of this Agreement,
"Good Reason" shall mean (i) a reduction of the Executive's rate of compensation
or any other failure by the Company to comply with Section 6 hereof; (ii)
failure by the Company to comply with Section 5 hereof; (iii) failure by the
Company to obtain the assumption of, and the agreement to perform, this
Agreement by any successor as contemplated in Section 11(a) hereof; or (iv) such
reduction described in the foregoing clause (i) or failure or breach described
in the foregoing clauses (ii) or (iii), as the case may be, is not cured within
30 days after receipt by the Company of written notice from the Executive
describing such event.

            (d) In accordance with Section 3(b) hereof, the Company or the
Executive may terminate the Executive's employment under this Agreement by
delivering a Notice of Termination to the other party stating that the term of
this Agreement in effect when such notice is given is not to be extended or
further extended, as the case may be, beyond the Fifth Anniversary or the year
following the applicable anniversary of the Effective Date.

            (e) Notwithstanding anything to the contrary set forth herein, the
Company shall have the right to terminate the Executive's employment for any
reason other than Cause at any time, subject to the consequences of such
termination as set forth in Section 8 hereof.

                                      -6-
<PAGE>

            (f) In no event shall the Company be entitled to terminate the
Executive's employment during the term of this Agreement for Cause pursuant to
Section 7(b) hereof, unless and until all of the following take place, provided
that Sections 7(f)(i) through (iii) shall not apply to any termination for Cause
pursuant to Section 7(b)(i)(C):

                  (i) the Secretary of the Company gives written notice to the
      Executive (the "Warning Notice") setting forth (A) the specific
      provision(s) of this Agreement that the Executive is alleged to have
      failed to satisfy, (B) the acts or omissions alleged to constitute such
      failure, (C) the date on which the Executive shall be given a reasonable
      opportunity to appear before and be heard by the Board of Directors of the
      Company concerning the allegations, which date shall be not less than 30,
      nor more than 90, days after the Executive's receipt of the Warning
      Notice, and (D) the loss of rights under this Agreement that shall occur
      unless the Executive diligently and in good faith takes reasonable steps
      to remedy such failure within 30 days after the Executive's receipt of the
      Warning Notice;

                  (ii) the Executive does not diligently and in good faith take
      all reasonable steps to remedy such failure within 30 days after the
      Executive's receipt of the Warning Notice; and

                  (iii) the Executive is given a reasonable opportunity to
      appear before and be heard by the Board of Directors concerning the
      allegations, in accordance with the Warning Notice.

            (g) Any termination by the Company pursuant to Section 7(b) hereof,
by the Executive pursuant to Section 7(c) hereof, or by the Company or the
Executive pursuant to Section 7(d) hereof, shall be communicated by a Notice of
Termination to the other party hereto. For purposes of this Agreement, "Notice
of Termination" shall mean (i) with respect to termination pursuant to Sections
7(b) or 7(c) hereof, a written notice which indicates the specific termination
provision(s) in this Agreement relied upon and sets forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of the
Executive's employment under the provision(s) so indicated, and (ii) with
respect to termination pursuant to Section 7(d) hereof, written notice by one
party to the other party that the term of this Agreement in effect when such
notice is given is not to be extended or further extended, as the case may be,
beyond the Fifth Anniversary or the year following the applicable anniversary of
the Effective Date, which notice must be given twelve months in advance of the
Fifth Anniversary or the applicable anniversary of the Effective Date.

            (h) "Date of Termination" shall mean (i) if the Executive's
employment is terminated by the Executive's death, the date of the Executive's
death, (ii) if the Executive's employment is terminated pursuant to Section
7(b)(ii) hereof, 30 days after Notice of Termination is given (provided that the
Executive shall not have returned to the performance of the Executive's duties
on a full-time basis during such 30-day period), and (iii) if the Executive's
employment is terminated for any other reason, the date on which Notice of
Termination is given.

                                      -7-
<PAGE>

            8. Compensation on Termination. The parties recognize and agree
that, if the Company terminates the Executive's employment during the term of
this Agreement other than pursuant to Section 7(b) hereof, or if the Executive
terminates the Executive's employment during the term of this Agreement for Good
Reason pursuant to Section 7(c) hereof, the actual damages to the Executive
would be difficult if not impossible to ascertain and agree that the Executive's
sole remedy shall be a right to receive amounts determined and paid in
accordance with the provisions of this Section 8. The Executive shall not be
required to mitigate the amount of any payment provided for in this Section 8 by
seeking other employment or otherwise, nor shall any compensation earned by the
Executive in other employment or otherwise reduce the amount of any payment
provided for in this Section 8.

            (a) If the Company shall terminate the Executive's employment during
the term of this Agreement other than pursuant to Section 7(b) hereof, or if the
Executive shall terminate the Executive's employment during the term of this
Agreement for Good Reason pursuant to Section 7(c) hereof, or if the Executive's
employment shall terminate by reason of the Company electing not to extend or
further extend the term of this Agreement pursuant to Section 3(b) hereof, then,
as severance pay or liquidated damages or both:

                  (i) the Company shall pay to the Executive the Executive's
      Base Salary at the rate in effect at the time Notice of Termination is
      given for a period of three (3) years from the Date of Termination,
      together with any other amounts payable to the Executive under Section 6
      hereof for periods prior to the Date of Termination (the Base Salary
      payable to the Executive after termination of employment under this
      Section 8(a)(i) shall be paid in 24 equal bi-monthly installments per
      year, in accordance with the Company's normal payroll cycle; provided,
      however, in the event that the Company changes its normal payroll cycle,
      such payment installments will be adjusted accordingly);

                  (ii) the Company shall make any payments if and when due to
      the Executive under Sections 6(b) and 6(d) hereof; and

                  (iii) for a period of three (3) years from the Date of
      Termination, the Executive and his dependents and beneficiaries shall be
      entitled to receive health insurance from the Company on the same terms
      and conditions as the Executive's health insurance in effect at the time
      Notice of Termination is given.

            (b) If the Executive's employment terminates under any circumstance
that does not entitle the Executive to payments under Section 8(a) hereof
(including a termination by reason of the death or Disability of the Executive,
or by reason of the Executive electing not to extend or further extend the term
of this Agreement pursuant to Sections 3(b) and 7(d) hereof), the Executive (i)
shall not be entitled to receive any compensation under Section 6 accruing after
the date of such termination (other than any payments due under Sections 6(b)
and 6(d) hereof), and (ii) shall be (x) subject to the Non-Competition
Restrictions (as defined in Section 9 hereof) for a period of three (3) years
from the Date of Termination and (y) subject to the Non-Solicitation
Restrictions (as defined in Section 9 hereof) for a period of eight (8) years
from the Date of Termination; provided, however, that if the termination is a
result of the death or

                                      -8-
<PAGE>

Disability of the Executive, the Executive shall be entitled to payments under
Sections 6(b) and 6(d) hereof as if the Executive were still in the employ of
the Company.

            9. Non-Competition; Non-Solicitation.

            (a) The Executive agrees that for the period ending on the Fifth
Anniversary or for such longer period of time if the Executive is employed by
the Company in accordance with Section 3(b) hereof or as may be extended under
this Section 9 (the "Non-Competition Period"), the Executive shall not, directly
or indirectly (whether as a sole proprietor, partner or venturer, stockholder,
director, officer, employee, consultant or in any other capacity as principal or
agent or through any Person, subsidiary, affiliate or employee acting as nominee
or agent):

                  (i) conduct or engage in or be interested in or associated
      with any Person which conducts or engages in the AHM Business (as
      hereinafter defined) within the United States;

                  (ii) take any action, directly or indirectly, to finance,
      guarantee or provide any other material assistance to any Person engaged
      in the AHM Business;

                  (iii) solicit, contact or accept business of any client or
      counterparty whom the Company served or conducted business with or whose
      name became known to the Executive as a potential client or counterparty
      while in the employ of the Company or during the Non-Competition Period;
      or

                  (iv) influence or attempt to influence any Person that is a
      contracting party with the Company at any time during the Non-Competition
      Period to terminate any written or oral agreement with the Company.

            The restrictions set forth in paragraphs (i) through (iv) of this
Section 9(a) shall be collectively referred to herein as the "Non-Competition
Restrictions." For purposes of this Agreement, the term "AHM Business" shall
mean the residential mortgage lending or residential mortgage brokerage business
as conducted by the Company and any business involving the supply of services
substantially similar to services provided by the Company at the time of the
termination of the Executive's employment.

            (b) The Executive agrees that for the period ending on the Fifth
Anniversary or for such longer period of time if the Executive is employed by
the Company in accordance with Section 3(b) hereof or as may be extended under
this Section 9 (the "Non-Solicitation Period"), the Executive shall not, whether
for the Executive's own account or in conjunction with or on behalf of any other
Person, solicit or entice away from the Company any officer, employee or
customer of the Company or any subsidiary or affiliate of the Company during the
Non-Solicitation Period nor engage, hire, employ, or induce the employment of
any such Person whether or not such officer, employee or customer would commit a
breach of contract by reason of leaving service or transferring business. The
restrictions set forth in this Section 9(b) shall be collectively referred to
herein as the "Non-Solicitation Restrictions."

            (c) The restrictive provisions hereof shall not prohibit the
Executive from (i) having an equity interest in the securities of any entity
engaged in the AHM Business or any

                                      -9-
<PAGE>

business with respect to which the Executive obtained confidential or
proprietary data or information, which entity's securities are listed on the New
York Stock Exchange, the American Stock Exchange or the Nasdaq National Market,
to the extent that such interest does not exceed one percent (1%) of the
outstanding equity interests of such entity or (ii) with the prior written
consent of the Company, serving as a director or other advisor to any other
Person.

            (d) The Executive agrees that the covenants and restrictions
contained in this Section 9 are reasonable covenants and restrictions under the
circumstances, and further agrees that if in the opinion of a court of competent
jurisdiction, such restraint is not reasonable in any respect, such court shall
have the right, power and authority to excise or modify such provision or
provisions of these covenants which as to such court shall appear not
reasonable, including, but not limited to, the right, power and authority to
reduce the periods during which the Executive is subject to the restrictions set
forth in this Section 9, and to enforce the remainder thereof as so amended.

            (e) Notwithstanding anything herein to the contrary, if either the
Executive or the Company shall terminate the Executive's employment during the
term of this Agreement for any reason, including, but not limited to, the
election by the Company or the Executive not to extend or further extend the
term of this Agreement pursuant to Sections 3(b) and 7(d) hereof, the Executive
shall be subject to the Non-Competition Restrictions set forth in this Section 9
for a period of three (3) years from the Date of Termination.

            (f) Notwithstanding anything herein to the contrary, if either the
Executive or the Company shall terminate the Executive's employment during the
term of this Agreement for any reason, including, but not limited to, the
election by the Company or the Executive not to extend or further extend the
term of this Agreement pursuant to Sections 3(b) and 7(d) hereof, the Executive
shall be subject to the Non-Solicitation Restrictions set forth in this Section
9 for a period of eight (8) years from the Date of Termination.

            (g) The Non-Competition Agreement shall be terminated as of the
Effective Date of this Agreement.

            10. Indemnification. The Company shall indemnify the Executive to
the fullest extent permitted by the General Corporation Law of the State of
Delaware, as amended from time to time.

            11. Successors; Binding Agreement.

            (a) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the extent
that the Company would be required to perform it if no such succession had taken
place; provided, however, that no such agreement with a successor shall release
the Company without the Executive's express written consent. Failure of the
Company to obtain such agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle the Executive
to compensation from the Company in the same amount and on the same terms as the
Executive would be entitled to hereunder if the Executive's

                                      -10-
<PAGE>

employment were terminated by the Company other than pursuant to Section 7(b)
hereof, except that for purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed the Date of
Termination.

            (b) If the Executive should die while any amounts are due and
payable to the Executive hereunder, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of the Agreement to the
Executive's devisees, legatee or other designee or, if there be no such
designee, to the Executive's estate.

            (c) Except as to withholding of any tax under the laws of the United
States or any state or locality, neither this Agreement nor any right or
interest hereunder nor any amount payable at any time hereunder shall be subject
in any manner to alienation, sale, transfer, assignment, pledge, attachment or
other legal process, or encumbrance of any kind by the Executive or the
beneficiaries of the Executive or by legal representatives without the Company's
prior written consent, nor shall there be any right of set-off or counterclaim
in respect of any debts or liabilities of the Executive, the Executive's
beneficiaries or legal representatives against any right or interest hereunder
or any amount payable at any time hereunder to the Executive, the Executive's
beneficiaries or legal representatives; provided, however, that nothing in this
Section 11 shall preclude the Executive from designating a beneficiary to
receive any benefit payable on the Executive's death, or the legal
representatives of the Executive from assigning any rights hereunder to the
Person or Persons entitled thereto under the Executive's will or, in case of
intestacy, to the Person or Persons entitled thereto under the laws of intestacy
applicable to the Executive's estate.

            12. Parties. This Agreement shall be binding upon and shall inure to
the benefit of the Company and the Executive, the Executive's heirs,
beneficiaries and legal representatives.

            13. Entire Agreement; Amendment.

            (a) This Agreement contains the entire understanding of the parties
with respect to the subject matter hereof and supersedes any and all other
agreements between the parties with respect to the subject matter hereof,
including, but not limited to, the Original Employment Agreement and the
Non-Competition Agreement.

            (b) Any amendment of this Agreement shall not be binding unless in
writing and signed by both (i) an officer or director of the Company duly
authorized to do so and (ii) the Executive.

            14. Enforceability. In the event that any provision of this
Agreement is determined to be invalid or unenforceable, the remaining terms and
conditions of this Agreement shall be unaffected and shall remain in full force
and effect, and any such determination of invalidity or enforceability shall not
affect the validity or enforceability of any other provision of this Agreement.

            15. Notices. All notices which may be necessary or proper for either
the Company or the Executive to give to the other shall be in writing and shall
be sent by hand delivery, registered or certified mail, return receipt
requested, overnight courier or facsimile, if to

                                      -11-
<PAGE>

the Executive, to him at [ADDRESS OMITTED], Attention: John A. Johnston,
Facsimile: [(___) ________], with a copy to King, Holmes, Paterno & Berliner,
LLP, 1900 Avenue of the Stars, 25th Floor, Los Angeles, California 90067,
Attention: Keith Holmes, Esq., Facsimile: (310) 282-8903, and, if to the
Company, to it at its principal executive offices at 520 Broadhollow Road,
Melville, New York 11747, Attention: General Counsel, Facsimile: (800) 209-7276,
with a copy to Cadwalader, Wickersham & Taft LLP, 100 Maiden Lane, New York, New
York 10038, Attention: Louis J. Bevilacqua, Esq., Facsimile: (212) 504-6666, and
shall be deemed given when sent, provided that any Notice of Termination or
other notice given pursuant to Section 7 shall be deemed given only when
received. Either party may by like notice to the other party change the address
at which the Executive or it is to receive notices hereunder.

            16. Governing Law. THIS AGREEMENT IS EXECUTED IN THE STATE OF NEW
YORK AND SHALL BE GOVERNED BY, AND BE ENFORCEABLE IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS OF
LAWS THEREOF.

            17. Effective Date. This Agreement shall become effective as of
January 1, 2004.

            18. Definitions. The following terms, when capitalized in this
Agreement, shall have the meanings set forth or incorporated by reference in
this Section 18.

            (a) "Alt-A Loans" shall mean alternate "A" mortgage loans.

            (b) "Applicable Reference Price" shall mean (i) with respect to
loans (other than HELOC Loans) that will be sold to a third party and not held,
in securitized or whole-loan form, by AHMIC or any affiliate or subsidiary
thereof, the highest price quoted by any one of the Reference Banks (expressed
as a percentage of par) for best efforts delivery and a delivery window not less
than, but closest to, the lock-in period granted by the secondary marketing desk
of AHMIC (or its affiliate or subsidiary, as the case may be) at the time the
loan is locked; (ii) with respect to loans that will be held by AHMIC or any
affiliate or subsidiary thereof (other than loans designated by the Company as
Alt-A Loans and subprime loans), including loans held in securitized or
whole-loan form, the price posted by AHMIC (or its affiliate or subsidiary, as
the case may be) with respect to each such loan, plus the Principal Financial
Branch Acquisition Adjustment; (iii) with respect to loans that have been
designated by the Company as Alt-A Loans or subprime loans and will be held by
AHMIC or any affiliate or subsidiary thereof, in securitized or whole-loan form,
the price posted by AHMIC (or its affiliate or subsidiary, as the case may be)
with respect to each such loan, plus 0.375% of the principal amount of such
loan, plus the Principal Financial Branch Acquisition Adjustment; and (iv) with
respect to all HELOC Loans, whether or not such loans are sold to a third party
or held, in securitized or whole-loan form, by AHMIC or any affiliate or
subsidiary thereof, 100.625% of the original funded balance at the time of the
closing of such loan.

            (c) "AHMIC" means American Home Mortgage Investment Corp., a
Maryland corporation and the parent company of the Company.

            (d) "Base Salary" shall have the meaning set forth in Section 6(a)
hereof.

                                      -12-
<PAGE>

            (e) "Board of Directors" means the Board of Directors of the
Company, as constituted from time to time.

            (f) "Borrower Price" with respect to a loan shall mean (i) with
respect to all loans other than HELOC Loans, 100% of the principal amount of
such loan, minus any points, whether denominated as origination fees or
discounts, paid by the borrower in connection with such loan, and (ii) with
respect to HELOC Loans, 100% of the original funded balance at the time of the
closing of such loan, minus any points, whether denominated as origination fees
or discounts, paid by the borrower in connection with such loan.

            (g) "Cause" shall have the meaning set forth in Section 7(b)(i)
hereof.

            (h) "Company" means American Home Mortgage Holdings, Inc., a
Delaware corporation, and any successors to its business and/or assets, which
executes and delivers an agreement provided for in Section 11(a) or which
otherwise becomes bound by all the terms and conditions of this Agreement by
operation of law.

            (i) "Credit Loss" shall mean the Company's good faith estimate of
the loss it incurs if the Company is forced to repurchase a loan or the Company
is forced to indemnify a loan. The sum of the losses for such repurchased and
indemnified loans at the end of the applicable time period will be equal to the
credit losses for such period.

            (j) "Date of Termination" shall have the meaning set forth in
Section 7(h) hereof.

            (k) "Disability" shall have the meaning set forth in Section
7(b)(ii) hereof.

            (l) "Excluded Acquisition" shall mean any Western Division
Acquisition proposed by the Company which the Executive believes is not in his
best interests, and with respect to which the Executive, as soon as practicable
prior to the Company's completion of such acquisition, notifies the Company in
writing that such acquisition should not be treated as a Western Division
Acquisition for purposes of this Agreement. With respect to an Excluded
Acquisition, (i) the Invested Capital Charge shall not be increased to take into
account any capital outlays incurred by the Company in connection with such
Excluded Acquisition, and (ii) the retail sales channel branches and retail
channel sales personnel acquired in connection with such Excluded Acquisition
shall not be included in the term "Western Division" for purposes of determining
any compensation due the Executive under Section 6 hereof.

            (m) "Expenses" shall include all direct and allocated costs charged
to the Western Division, including, but not limited to, (i) employment costs,
such as wages, salaries, commissions, overrides, profit participation and
profit-sharing type costs (including, but not limited to, the Profit
Participation Payment payable to the Executive hereunder), payroll taxes,
employee benefits and all other employment expenses; (ii) Credit Losses; (iii)
costs to determine a borrower's eligibility for a loan, including appraisals,
credit reports, automated underwriting fees, social security checks and other
investigation fees; (iv) costs of marketing, including advertising, promotion
and public relations; (v) other costs for loan origination and processing,
including copying, messenger and overnight delivery and office consumables; (vi)
costs of running branches and offices, including rent, insurance, utilities,
office maintenance and upkeep

                                      -13-
<PAGE>

and depreciation; (vii) allocated costs for corporate overhead not to exceed
$585 per loan, provided, however, that if a loan is a second lien that is closed
concurrently with a first lien, such corporate overhead costs shall not exceed
$195 per loan, or, if a loan is a second or third lien downpayment assistance
loan provided by the State of California or a political subdivision thereof, or
a government housing assistance program through the State of California or any
municipality thereof, such corporate overhead costs shall be zero; and (viii)
Invested Capital Charges; and all of such Expenses shall be calculated according
to the Company's standard practices as may be amended from time to time.

            (n) "Good Reason" shall have the meaning set forth in Section 7(c)
hereof.

            (o) "HELOC Loan" shall mean a home equity line of credit.

            (p) "Invested Capital Charge" initially shall equal the amount of
$500,000, but shall be adjusted in the event that the Company engages in one or
more Western Division Acquisitions during a given fiscal year, such that the
Invested Capital Charge shall be increased to take into account any capital
outlays incurred by the Company in connection with such Western Division
Acquisition(s), with any such increase in the Invested Capital Charge to be
determined in good faith by the Chief Executive Officer prior to the
consummation of such Western Division Acquisition(s); provided, however, that
the Invested Capital Charge shall not include any capital outlays incurred by
the Company in connection with an Excluded Acquisition.

            (q) "Merger Agreement" shall have the meaning set forth in the
recitals.

            (r) "Net Interest Income" shall mean (i) for the fiscal year ending
December 31, 2004, 16 basis points per loan, and (ii) for all subsequent fiscal
years, an amount determined in good faith by the Chief Executive Officer.

            (s) "Non-Competition Agreement" shall have the meaning set forth in
the recitals.

            (t) "Non-Competition Period" shall have the meaning set forth in
Section 9(a) hereof.

            (u) "Non-Competition Restrictions" shall have the meaning set forth
in Section 9(a) hereof.

            (v) "Non-Solicitation Period" shall have the meaning set forth in
Section 9(b) hereof.

            (w) "Non-Competition Restrictions" shall have the meaning set forth
in Section 9(b) hereof.

            (x) "Notice of Termination" shall have the meaning set forth in
Section 7(g) hereof.

                                      -14-
<PAGE>

            (y) "Original Employment Agreement" shall have the meaning set forth
in the recitals.

            (z) "Origination Volume" shall mean the dollar volume of Western
Division loan originations.

            (aa) "Payment Audit" shall have the meaning set forth in Section
6(c)(iv) hereof.

            (bb) "Payment Determination" shall have the meaning set forth in
Section 6(c)(iv) hereof.

            (cc) "Payment Multiplier" shall, for the fiscal year ended December
31, 2004, equal 1.75 (i.e., multiplied by 1.75).

            (dd) "Per Loan Revenue" for each loan shall be the sum of (i) the
product of the difference between the Applicable Reference Price for the loan
(expressed as a percentage of par) less the Borrower Price for such loan
(expressed as a percentage of par) and (x) with respect to all loans other than
HELOC Loans, the loan's principal amount, and (y) with respect to HELOC Loans,
the original funded balance at the time of the closing of such loan, all at the
time such loan is last locked; (ii) all fees (excluding points included in the
price paid by the borrower that are included in (i) above) charged the borrower
by the Company in connection with the borrower's loan application and loan
closing (but excluding fees associated with the Company's ongoing ownership of
the borrower's loan after the closing of the loan) including, but not limited
to, servicing of the borrower's loan, or delivery of any services or financing
or products for the borrower; (iii) fees earned from brokering loan applications
to outside companies; (iv) the Secondary Allocation; and (v) Net Interest Income
on loans held for sale.

            (ee) "Person" means any individual, corporation, partnership,
limited liability company, limited duration company, trust or other entity of
any nature whatsoever.

            (ff) "Principal Financial Branch Acquisition Adjustment" shall equal
(i) with respect to the branches of the Western Division listed on Schedule I
hereto, the amount set forth opposite each such branch on Schedule I hereto, and
(ii) with respect to all other branches of the Western Division, zero.

            (gg) "Profit Participation Payment" shall have the meaning set forth
in Section 6(c)(ii) hereof.

            (hh) "Profits" means, with respect to the Western Division, for any
measurement period, the sum of the Per Loan Revenue for all loans that were
funded by the Company during the measurement period, or were brokered by the
Company and closed by another lender during the measurement period, and in all
cases, were originated by the Western Division, minus Expenses.

            (ii) "Reference Banks" shall mean Chase Manhattan Mortgage, Citicorp
Mortgage, Countrywide Credit Corp., Washington Mutual and Wells Fargo Mortgage.

                                      -15-
<PAGE>

            (jj) "Reference Price Verification" shall have the meaning set forth
in Section 19 hereof.

            (kk) "Secondary Allocation" shall mean (i) for the fiscal year
ending December 31, 2004, 20 basis points per loan, and (ii) for all subsequent
fiscal years, an amount determined in good faith by the Chief Executive Officer.

            (ll) "Volume Override Payment" shall have the meaning set forth in
Section 6(c)(i) hereof.

            (mm) "Western Division" shall include all of the Company's retail
channel branches and retail channel sales personnel designated by the Chief
Executive Officer as part of the Western Division of the Company; provided,
however, that the Western Division shall not include MortgageSelect or any other
unit or division of the Company that reports to the Company's Alternative
Division; and provided, further, that the Western Division may from time to time
be expanded or reduced (by state or otherwise) by the Chief Executive Officer to
reflect the operational needs of the Company; and provided, further, that for
purposes of determining any compensation due the Executive under Section 6
hereof, the term "Western Division" shall not include the retail channel
branches and retail channel sales personnel acquired in connection with any
Excluded Acquisition.

            (nn) "Western Division Acquisition" means any acquisition, except
for an Excluded Acquisition, by the Company of any company, business, mortgage
origination pipeline, group of employees or other assets, whether by merger,
acquisition, asset purchase or any other transaction, that is designated by the
Chief Executive Officer as a Western Division Acquisition.

            19. Reference Price Verification. Not more than twelve times in any
year during the term of this Agreement, the Executive shall be entitled to
request information from the Company in order to verify the Applicable Reference
Price with respect to a given loan (a "Reference Price Verification"). The
Executive shall send any request for a Reference Price Verification to the
Company in writing. Upon receipt of such request, the Company's capital markets
group shall furnish information to the Executive in order to verify that the
Applicable Reference Price with respect to such loan was established in
accordance with the terms of this Agreement.

                           [Signature Page to Follow]

                                      -16-
<PAGE>

            IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.

                                       AMERICAN HOME MORTGAGE
                                         HOLDINGS, INC.

                                       By:   /s/ Michael Strauss
                                          --------------------------------------
                                          Name:   Michael Strauss
                                          Title:  Chief Executive Officer and
                                                  President

                                       EXECUTIVE

                                         /s/ John A. Johnston
                                       -----------------------------------------
                                       John A. Johnston

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