Document:

Exhibit 10.2

                             SUBSERVICING AGREEMENT

        This Subservicing Agreement (the "Agreement") is entered into and
effective as of the 1st day of February, 2002, by and between Nelnet Loan
Services, Inc., a Nebraska corporation, Aurora, Colorado, herein referred to as
"Nelnet" and EFS Services, Inc., an Indiana corporation, herein referred to as
"EFS."

        WHEREAS, EFS is in the loan servicing business in the State of Indiana,
and in the ordinary course of such business has processed and serviced loans to
student/parent borrowers (the "Education Loans") which are made and guaranteed
in accordance with the provisions of the Higher Education Act of 1965, as
amended (the "Education Act") (references hereinafter to the "Education Act"
include rules and regulations promulgated thereunder as in effect from time to
time); and

        WHEREAS, Nelnet has developed and/or has available to it the systems and
services to enable it to process and service Education Loans in accordance with
the Education Act; and those Guarantee Agencies as mutually agreed to by the
parties ("Guarantor(s)") shall be the Guarantor(s) for all Education Loans which
Nelnet presents for servicing hereunder; and

        WHEREAS, Nelnet has developed and/or has available to it the systems and
services to enable it to process and service Education Loans in accordance with
the Rules and Regulations (the "Regulations") promulgated by Guarantor
(references hereinafter to the "Regulations" include Rules and Regulations
promulgated thereunder as in effect from time to time); and

        WHEREAS, EFS has entered into a Loan Servicing Agreement (the "EFS
Servicing Agreement") with EMT Corp. ("EMT") dated May 15, 1998, under which EFS
acts as primary servicer for EMT and EMT in the ordinary course of its business
makes or acquires Education Loans; and

        WHEREAS, EFS desires to retain Nelnet to process and subservice
Education Loans beneficially owned by EMT.

        NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter set forth, the parties agree as follows:

        1. TERM.

        1.1 The term of this  Agreement  shall be from the date  first set forth
above until the earlier of (i)  termination of the Trust  Agreement  between EMT
and Zions First National Bank as successor trustee (the "Trustee"),  dated as of
May 15, 1998, as supplemented (the "Trust  Agreement"),  (ii) termination of the
EFS Servicing  Agreement,  (iii) early  termination  after  material  default by
Nelnet as provided in Section 15 of this Agreement, and (iv) the Education Loans
serviced under this Agreement are paid in full.
<PAGE>

        1.2 Upon the  termination of this  Agreement,  Nelnet shall turn over to
EFS all Education Loan files complete with all information contained therein and
all current  computer  information on the Education Loans under service pursuant
to this Agreement in such form or fashion as EFS shall reasonably  specify.  EFS
and  Nelnet  specifically  agree  that the format  used to  transfer  EFS's data
contains  confidential  and proprietary  trade secret  information  which is the
exclusive  property  of  Nelnet.  Nelnet  makes no claim  to the  specific  data
contained  in any  printout  given to EFS and  recognizes  that said data is the
exclusive  property of EFS. EFS and Nelnet agree,  however,  that all aspects of
the underlying  computer program,  algorithms,  methods of processing,  specific
design and layout,  report  format,  and the unique  processing  techniques  and
interactions  of the  various  aspects of  Nelnet's  computer  program are trade
secrets  of,   proprietary  to,  and  owned   exclusively  by  Nelnet.  At  such
deconversion,  a minimum  fee of $12.00 per  account  plus any other  reasonable
expenses  incurred  in  connection  with the  transfer  of such  files and other
information  shall  be paid  by  EFS.  The  confidentiality  provisions  of this
paragraph shall survive any termination or expiration of this Agreement.

        2. DELIVERY OF COMPLETED  EDUCATION  LOANS FOR SERVICING AND COLLECTION.
Subject to Nelnet's scheduling  requirements,  EMT may from time to time deliver
or cause to be  delivered to Nelnet  Education  Loans with respect to which loan
processing  has been  completed  and loan  proceeds  have been  disbursed to the
student/parent  borrowers  prior to the date of delivery  ("Completed  Education
Loans")  to be  serviced  pursuant  to the  terms of this  Agreement.  EMT shall
transmit to Nelnet all such loan  documentation  as required by Nelnet to enable
it to service the Completed Education Loans as provided herein.

        3.  SERVICING OF  COMPLETED  EDUCATION  LOANS.  Upon  acceptance  of any
Completed  Education Loan into Nelnet's  computer system and after the sale date
(if  applicable) of the Completed  Education  Loan to EMT,  Nelnet shall service
such Education Loan in accordance  with the Education Act, the  Regulations  and
the provisions of this Agreement, including the following:

        (a)     Nelnet shall take all steps  necessary to maintain the insurance
                and guarantees on Education Loans in full force at all times.

        (b)     Nelnet  shall  prepare and mail  directly to the  student/parent
                borrower  all  required  statements,  notices,  disclosures  and
                demands.

        (c)     Nelnet shall retain records of contacts, follow-ups,  collection
                efforts and correspondence regarding each Education Loan.

        (d)     Nelnet shall provide accounting for all transactions  related to
                individual  Education  Loans,  including,  but not  limited  to,
                accounting  for all payments of principal and interest upon such
                Education Loans.

        (e)     Nelnet shall process all deferments and forbearances.

        (f)     Nelnet  shall  process  all address  changes and update  address
                changes accordingly.

        (g)     Nelnet shall retain all documents  received by Nelnet pertaining
                to each Education Loan.

        (h)     When necessary and allowable by the Education Act,  Nelnet shall
                take  all  steps  necessary  to  file  a  claim  for  loss  with
                Guarantor,  and shall be responsible for all  communication  and
                contact with that agency  necessary or appropriate to accomplish
                the same.

                                       2
<PAGE>

        (i)     Nelnet shall  provide EMT a Manifest of  Education  Loans on all
                new  accounts,  accounts paid in full or converted to repayment,
                and provide any other information required by Guarantor.

        (j)     Nelnet shall provide such other  services as Nelnet  customarily
                provides and deems appropriate.

        4. ADDITIONAL SERVICING ACTIVITIES. At the request of EMT or EFS, Nelnet
agrees to perform additional  servicing  activities not required under the terms
of this Agreement for those Education  Loans  transferred to Nelnet as Completed
Education Loans which have not been  previously  serviced in accordance with the
Education Act and Regulations,  and which require additional  servicing activity
to attempt to maintain or reinstate the loans' principal and interest  guarantee
from the  Guarantor  ("Cure  Procedures").  Nelnet,  utilizing  Cure  Procedures
approved by the Guarantor, will use its best efforts to cure all prior servicing
defects.  Nelnet makes no  representation or warranty that the guarantee on each
Education  Loan  will be  reinstated  regardless  of Nelnet  following  the Cure
Procedures as approved by the Guarantor. EFS agrees to pay Nelnet those fees for
Cure  Services   described  in  Schedule  A  hereto  under  the  topic  entitled
"Additional Servicing Activity."

        5.  PORTFOLIOS  SUBJECT TO REJECTION BY NELNET.  EFS  acknowledges  that
certain loan  portfolio  types pose a risk of  financial  hardship for Nelnet to
service under this  Agreement.  Nelnet may in its  discretion,  prior to placing
such  loans in the  Nelnet  system,  reject  certain  loans  or loan  portfolios
("Rejected  Loans").  Nelnet shall provide EFS with reasonable advance notice as
to any Rejected Loans which Nelnet declines to place on its system. Nelnet shall
have no right to reject or decline loans after the loans are  transferred to the
Nelnet system.

        6. REPORTS TO EMT. On or before the 15th day of each month,  unless some
other time is provided  herein,  Nelnet shall  prepare and deliver to EMT, or to
such other person as EMT may  designate,  the following  reports with respect to
activity during the preceding month:

        (a)     As of the last day of each month,  an  unaudited  statement,  in
                reasonable  detail,  of all  transactions  during  that month on
                Completed Education Loans serviced by Nelnet for EMT;

        (b)     Processing Status Report (daily);

        (c)     Check Register (daily);

        (d)     Posting Ledger (daily/monthly);

        (e)     Statistical Report (monthly);

        (f)     Loan Ledger/Alpha Report (monthly);

        (g)     Guarantor Manifest (monthly);

                                       3
<PAGE>

        (h)     Delinquency Report (daily/monthly);

        (i)     Claims Activity Report (monthly).

        EMT shall receive at no cost one copy of each of the foregoing reports.
Nelnet will provide extra copies at the request of EMT. EFS shall reimburse
Nelnet its cost in producing such extra copies.

        7.  INTEREST  COMPUTATION.  Nelnet  shall  provide on a quarterly  basis
statistical data for the computation of interest and special allowance  billable
to the U.S.  Department of Education  for EMT's  Education  Loans.  Data will be
computed  commencing  with the date  Education  Loans  appear on the  records of
Nelnet.

        8. SERVICE FEE TO NELNET. EFS shall pay to Nelnet, on or before the 15th
day of each month, or within fifteen (15) days of billing statement,  for and in
consideration  of the services  performed by Nelnet  hereunder for the preceding
month, the fee provided for in Schedule A to this Agreement  ("Servicing  Fee").
The  Servicing  Fee shall be subject to change every  twelve (12)  months.  Such
change shall not result in an increase  that will exceed three  percent (3%) for
any twelve (12) month period.  In the event  Servicing  Fees are not paid within
thirty  (30) days of the  billing  statement,  EFS agrees  Nelnet  will have the
following rights to (a) withhold  transfer of borrower payments to the extent of
Servicing  Fees owed;  (b)  withhold  reports  otherwise  due; (c) impose a late
charge  of one and  one-half  percent  (l1/2%)  per  month  against  the  entire
outstanding  balance of the account  including  any prior late  charge;  and (d)
terminate  services with notice if nonpayment  persists for sixty (60) days from
billing or more.

               The parties agree that should Nelnet be required to make material
changes to its current servicing practices or servicing system due to changes to
the Education Act, Regulations, and/or business environment, or to other costs
beyond Nelnet's control, including but not limited to postal fees, Nelnet may
renegotiate the Servicing Fees with EFS to reasonably reflect those increased
costs at any time during the term of this Agreement.

        9. LOAN PAYMENTS.  Student/parent  borrowers will make all loan payments
to a third  party  lockbox  established  by Nelnet.  All cash  receipts  will be
remitted once a week to EMT or as Nelnet may otherwise reasonably request.

        10.  DISCLOSURE  OF  INFORMATION.   All  data,   information,   records,
correspondence,  reports or other  documentation  received by Nelnet pursuant to
this  Agreement  from EFS, EMT or the school which the student  attended or from
the student/parent  borrower, or prepared and maintained by Nelnet in the course
of its activities under this Agreement shall be released or divulged only to EFS
and EMT with  respect to  information  or  documents  relating  to a  particular
student/parent  borrower,  to that  student/parent  borrower,  or to such  other
parties as Nelnet  may be  directed  in  writing  by EFS or such  student/parent
borrower.  Nothing in this Section 10 shall affect Nelnet's or EFS's  obligation
to observe  applicable  law  prohibiting  disclosure  of  information  regarding
borrowers or the right of Nelnet or EFS not to disclose any information relating
to the strategic plans or opportunities of its student lending or loan servicing
business.

                                       4
<PAGE>

        11. INTELLECTUAL PROPERTY PROTECTION.  Notwithstanding  anything in this
Agreement to the  contrary,  it is the express  intention of the parties to this
Agreement that all right, title and interest of whatever nature in Nelnet's user
manuals,  training  materials,  all  computer  programs,  routines,  structures,
layout, report formats, together with all subsequent versions,  enhancements and
supplements to said programs,  all copyright  rights  (including both source and
object code) and all oral or written  information  relating to Nelnet's programs
conveyed in confidence by Nelnet to EFS pursuant to this Agreement  which is not
generally  known to the  public  and which  give  Nelnet an  advantage  over its
competitors who do not know or use such  information  (hereinafter  collectively
referred to as "Trade Secrets"), and all other forms of intellectual property of
whatever nature is and shall remain the sole and exclusive property of Nelnet.

        12.  INQUIRIES.  Nelnet  shall  answer  all  inquiries  received  by  it
pertaining to Education Loans, school status or refunds, and EFS shall cooperate
to the  extent  necessary  to gather  the  information  needed  to  answer  such
inquiries.  Such  inquiries  may be  referred  to the school  which the  student
borrower  attended  or  is  attending,  if  necessary.   Nelnet  shall  have  no
responsibility  for any disputes  between  student/parent  borrowers and schools
regarding tuition, registration, attendance, or quality of education/training.

        13. AGENT  AUTHORIZATION.  EFS hereby authorizes Nelnet to act on behalf
of and as  EMT's  agent  in the  application  processing  and  servicing  of EMT
Education  Loans.  Such  authorization  will  include  but not be limited to all
correspondence  and liaison  necessary  with  Guarantor  regarding EMT Education
Loans,  assignment of claims to Guarantor  and any/or all other  communications,
correspondence,  signatures or other acts appropriate to service EMT's Education
Loans in accordance with the Education Act and/or Regulations.

        14. LIABILITY OF NELNET.  Nelnet assumes no  responsibility or liability
for failure of EFS or EMT to exercise  reasonable  care or due diligence and the
results  thereof,  in making or servicing an Education  Loan prior to (a) Nelnet
processing  the  application  of  the  Education  Loan,  or (b)  placing  of the
Education Loan on Nelnet's  system and prior to the date EMT holds  ownership of
the  Education  Loan.  Nelnet also assumes no  liability  for the failure of any
student/parent  borrower to repay his or her loan, nor the failure of the United
States government to pay any principal,  interest, subsidy or special allowance,
nor for the  failure  of  Guarantor  to make  payment  of any  principal  and/or
interest on any of EMT's  Education  Loans.  Nelnet shall not be responsible for
consequences  of unreasonable  acts of any Guarantor.  In the event Nelnet shall
take any action or fail to take any action  which causes any  Education  Loan in
EMT's  portfolio to be denied the benefit of any  applicable  guarantee,  Nelnet
shall  have a  reasonable  time to cause the  benefits  of the  guarantee  to be
reinstated.  If the  guarantee is not  reinstated  within  twelve (12) months of
denial by  Guarantor,  Nelnet  shall pay EMT or Trustee  an amount  equal to the
outstanding  balance  plus  all  accrued  interest  and  other  fees  due on the
Education Loan to the date of purchase and thereupon  Nelnet shall be subrogated
to all rights of EMT respecting the applicable  Education Loan and title to such
Education  Loan will thereby be  transferred  to Nelnet or its  eligible  lender
trustee.  In such  event,  EMT  shall  perform  such  further  acts as  shall be
necessary or  appropriate  to subrogate  the Education  Loan to Nelnet.  For any
subrogated  Education  Loan for  which  the  guarantee  is fully  reinstated  by
Guarantor,  EFS  shall  cause  EMT to pay  Nelnet  an  amount  equal to the then
outstanding principal balance, plus all accrued interest due thereon,  whereupon
the subrogation rights of Nelnet shall terminate.  In such event,  Nelnet agrees
to perform such further  acts as shall be necessary or  appropriate  to reconvey
the Education Loan to EMT.

                                       5
<PAGE>

        15. TERMINATION OPTION. If at any time during the term of this Agreement
either  party  refuses or fails to perform in a material  fashion any portion of
this  Agreement,  and fails or refuses to correct  said action or lack of action
within  thirty (30) days after receipt of written  notice,  the other party may,
upon thirty (30) days written notice, terminate this Agreement.

        16.  INDEMNIFICATION.  EFS shall indemnify and hold Nelnet harmless from
and  against  all  claims,  liabilities,  losses,  damages,  costs and  expenses
(including reasonable attorney's fees) asserted against or incurred by Nelnet as
a result of Nelnet complying with any instruction or directive by EFS and Nelnet
shall  in like  manner  indemnify  EFS  for  any  miscompliance  with  any  such
instruction or directive by Nelnet.  EFS shall further indemnify and hold Nelnet
harmless from and against all claims,  liabilities,  losses,  damages, costs and
expenses (including  reasonable attorney's fees) asserted against or incurred by
Nelnet as a result of actions not the fault of or not caused by a negligent  act
of Nelnet, its agents or employees,  including all claims, liabilities,  losses,
damages  and  costs  caused  by or the fault of EFS,  a prior  holder,  owner or
lender,  a prior servicer or any other party connected in any manner to the loan
or loans resulting in the claim, liability, loss, damage or cost.

        17. STATUTE OF LIMITATIONS.  Any action for the breach of any provisions
of this Agreement shall be commenced  within two years after the cause of action
has occurred. A cause of action occurs when the breach occurs, regardless of the
aggrieved party's lack of knowledge of the breach.

        18. NOTICES.  All notices or communications by one of the parties hereto
to the other shall  respectfully  be addressed as follows:  EFS Services,  Inc.,
8425 Woodfield Crossing Boulevard, Suite 401, Indianapolis,  Indiana 46240-2495,
and Nelnet Loan  Services,  Inc.,  3015 South  Parker Road,  Suite 400,  Aurora,
Colorado  80014,  or to such other address as may be indicated from time to time
by one  of the  parties  to the  other  party.  Except  as  otherwise  expressly
provided,  any  notice  shall have been  deemed to have been given upon  mailing
thereof when mailed by registered or certified  mail,  and upon receipt in every
other case.

        19.  GOVERNING LAW. This Agreement is executed and delivered  within the
State of  Colorado,  and the parties  hereto  agree that is shall be  construed,
interpreted and applied in accordance with the laws of that State,  and that the
courts and authorities within the State of Colorado shall have sole jurisdiction
and venue over all controversies  which may arise with respect to the execution,
interpretation and compliance with this Agreement.

        20. CHANGES IN WRITING. This Agreement, including this provision hereof,
shall not be modified or changed in any manner  except only by a writing  signed
by all parties hereto.

        21. SEVERABILITY.  In the event a court of competent  jurisdiction finds
any  of  the  provisions  of  this  Agreement  to be so  overly  broad  as to be
unenforceable  or invalid for any other reason,  it is the parties'  intent that
such invalid provisions be reduced in scope or eliminated by the court, but only
to the extent  deemed  necessary by the court to render the  provisions  of this
Agreement reasonable and enforceable.

        22. PERSONS BOUND. This Agreement shall be binding upon and inure to the
benefit of the parties hereto, their legal  representatives,  heirs,  successors
and assigns.

                                       6
<PAGE>

        23.  ASSIGNMENT.  This  Agreement  shall not be assigned by either party
without the prior written consent of the other party, which consent shall not be
unreasonably withheld.

        24. MUTUAL RELEASE.  Each of the parties to this Agreement  releases the
other party from any and all  claims,  or causes of the other  arising  from any
event or transaction  occurring prior to the execution of this  Agreement.  This
release is an  independent  covenant  between the parties,  and will survive any
termination of this Agreement.

        25.  TITLES.  The  titles  used  in  this  Agreement  are  intended  for
convenience and reference only. They are not intended and shall not be construed
to be a  substantive  part of this  Agreement  or in any other way to affect the
validity, construction or effect of any of the provisions of this Agreement.

        26.  WAIVER.  The waiver or failure of either  party to  exercise in any
respect any
right provided for herein shall not be deemed a waiver of any further right
hereunder.

        27. CONFIDENTIALITY.

        27.1 EFS (subject to the  provisions of Section 10 hereof) agrees not to
disclose  any  provisions  or portions of this  Agreement,  "Trade  Secrets" (as
defined   below)   or   financial   information   (collectively,   "Confidential
Information")  concerning  or  belonging to Nelnet to any third party or use the
same in competition  with Nelnet.  For purposes of this Agreement,  Confidential
Information does not include "Nonpublic Personal Information" as defined in GLB.
"Trade  Secret"  shall mean the whole or any  portion or phase of any  technical
information,  design,  process,  procedure,  formula,  improvement,   algorithm,
method,  technique,  confidential  business or financial  information,  or other
information  relating to any business of Nelnet that is not  generally  known by
the public.  EFS and Nelnet  specifically agree that the format used to transfer
EFS's data contains  confidential and proprietary trade secret  information that
is the exclusive property of Nelnet.  Nelnet makes no claim to the specific data
contained in any printout given to Nelnet and  recognizes  that said data is the
exclusive  property of EFS. EFS and Nelnet agree,  however,  that all aspects of
the underlying  computer program,  algorithms,  methods of processing,  specific
design and layout,  report  format,  and the unique  processing  techniques  and
interactions  of the  various  aspects of  Nelnet's  computer  program are trade
secrets of, proprietary to, and owned exclusively by Nelnet.

        27.2 In  accordance  with  applicable  law, EFS agrees that in the event
Nelnet grants access to any Confidential Information, to forever thereafter keep
the same  confidential.  EFS also agrees to keep  Confidential  Information  and
material (both written and verbal) relating to Nelnet, any vendor or other party
transacting  business  with Nelnet.  EFS,  including its  respective  agents and
employees,  further  agrees not to release,  share,  use,  or disclose  the same
without the prior  written  permission  of Nelnet  except to only those of EFS's
employees,  agents,  or  advisors  having a need to know  the same for  purposes
related to this Agreement.

        27.3 EFS, its agents, employees, and advisors,  recognize the disclosure
of Confidential Information by EFS, or EFS's agents or advisors may give rise to
irreparable  injury to  Nelnet  inadequately  compensable  in  damages  and that
accordingly, Nelnet may seek and obtain injunctive relief or damages against the
disclosure or threatened  disclosure,  in addition to any other legal  remedies,
including attorney's fees, which may be available.  The parties agree,  however,
that the duty to  protect  Confidential  Information  shall  not  include  data,
information,  or materials  which EFS can  demonstrate is publicly  available by
other  than  unauthorized  disclosures  by other  parties.  All  confidentiality
requirements shall survive the termination or cancellation of this Agreement.

                                       7
<PAGE>

        28. FORCE  MAJEURE.  The  foregoing  provisions  of this  Agreement  are
subject to the following  limitation:  If by reason of a force majeure Nelnet is
unable  in whole  or in part to  carry  out any  agreement  on its  part  herein
contained,  Nelnet shall not be deemed in default during the continuance of such
inability.  The  term  "force  majeure"  as  used  herein  shall  mean,  without
limitation,  the following: acts of God, strikes,  lockouts, or other industrial
disturbances;  acts of public  enemies;  order or  restraint  of any kind of the
government  of the United  States of America or of the State of Colorado or City
of Aurora or any of their  departments,  agencies or officials,  or any civil or
military  authority;   insurrections;  riots;  landslides;  earthquakes;  fires;
storms;  droughts;  floods;  explosions;  breakage  or  accident  to  machinery,
equipment,  transmission  pipes or  canals;  or any  other  cause  or event  not
reasonably within the control of Nelnet.

        29. ENTIRE AGREEMENT.  This is the entire and exclusive statement of the
Agreement between the parties,  which supersedes and merges all prior proposals,
understandings  and all other  agreements oral and written,  between the parties
relating to this Agreement.

        30.  NELNET  AS  SUBSERVICER.  Nelnet  acknowledges  EFS as the  primary
servicer to EMT pursuant to the EFS Servicing Agreement. Nelnet agrees to act as
subservicer  of the  Education  Loans to be  serviced  under  the EFS  Servicing
Agreement. Furthermore, in the event EFS for any reason ceases to act as primary
servicer of the loans,  Nelnet agrees to service the  Education  Loans of EMT as
the servicer under the terms of the EFS Servicing Agreement and agrees to accept
assignment of the EFS Servicing  Agreement upon assignment  thereof by EFS. This
Section 30 shall survive termination of the Agreement.

        31. TRUSTEE AS THIRD PARTY BENEFICIARY. This Agreement has been made and
entered into not only for the benefit of EFS and Nelnet but also for the benefit
of the Trustee in  connection  with the financing of Education  Loans,  and upon
assignment by EFS to the Trustee, its provisions may be enforced not only by the
parties to this Agreement but by the Trustee. The foregoing creates a permissive
right on behalf of the Trustee, and the Trustee shall not be under any duties or
obligations hereunder.

               This Agreement shall inure to the benefit of the Trustee and its
successors and assigns. Without limiting the generality of the foregoing, all
representations, covenants and agreements in this Agreement which expressly
confer rights upon the Trustee shall be for the benefit of and run directly to,
the Trustee, and the Trustee shall be entitled to rely on and enforce such
representations, covenants and agreements to the same extent as if it were a
party hereto. The foregoing creates a permissive right on behalf of the Trustee,
and the Trustee shall not be under any duties or obligations hereunder.

               If there is an Event of Default under the Trust Agreement and the
Trustee forecloses on its security interest on the Education Loans, then the
Trustee shall assume all duties and obligations of Nelnet hereunder.

                  [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]

                                       8
<PAGE>

        IN WITNESS WHEREOF, the parties hereto have executed this Subservicing
Agreement as of the date first written above.

                                       NELNET LOAN SERVICES, INC.

                                       By:
                                             -----------------------------------
                                       Name:
                                             -----------------------------------
                                       Title:
                                              ----------------------------------

                                       EFS SERVICES, INC.

                                       By:
                                           -------------------------------------
                                       Name:
                                             -----------------------------------
                                       Title:
                                              ----------------------------------

                                       9
<PAGE>

                                  SCHEDULE "A"

                            FFELP LOAN SERVICING FEES

All fees shall be as set forth in the Servicing Agreement between EFS and EMT
Corp., which is incorporated herein by this reference.

                                       10ACE SECURITIES CORP.

                                    Depositor

                WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION

                  Master Servicer and Securities Administrator

                                       and

                         BANK ONE, NATIONAL ASSOCIATION

                                     Trustee

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

                         POOLING AND SERVICING AGREEMENT

                          Dated as of December 1, 2002

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

          ACE Securities Corp. Home Equity Loan Trust, Series 2002-HE3
                     Asset Backed Pass-Through Certificates

<PAGE>

<TABLE>
<CAPTION>

                                                     ARTICLE I

                                                    DEFINITIONS
<S>                                                                                                           <C>
SECTION 1.01.     Defined Terms.................................................................................5
                           Accepted Master Servicing Practices..................................................5
                           Account  ............................................................................5
                           Accrued Certificate Interest.........................................................5
                           Adjustable Rate Mortgage Loan........................................................6
                           Adjustment Date......................................................................6
                           Administration Fees..................................................................6
                           Administration Fee Rate..............................................................6
                           Affiliate............................................................................6
                           Aggregate Loss Severity Percentage...................................................6
                           Agreement............................................................................6
                           Assignment...........................................................................6
                           Assignment...........................................................................6
                           Available Distribution Amount........................................................7
                           Bankruptcy Code......................................................................7
                           Bankruptcy Loss......................................................................7
                           Book-Entry Certificate...............................................................7
                           Book-Entry Custodian.................................................................7
                           Business Day.........................................................................7
                           Cap Contract.........................................................................7
                           Cash-Out Refinancing.................................................................8
                           Certificate..........................................................................8
                           Certificate Factor...................................................................8
                           Certificate Margin...................................................................8
                           Certificateholder" or "Holder........................................................9
                           Certificate Owner....................................................................9
                           Certificate Principal Balance........................................................9
                           Certificate Register.................................................................9
                           Class    ............................................................................9
                           Class A Certificate.................................................................10
                           Class A Principal Distribution Amount...............................................10
                           Class A-1 Allocation Percentage.....................................................10
                           Class A-1 Certificate...............................................................10
                           Class A-1 Principal Distribution Amount.............................................10
                           Class A-2 Allocation Percentage.....................................................10
                           Class A-2 Principal Distribution Amount.............................................10
                           Class A-2 Certificates..............................................................11
                           Class A-2A Certificate..............................................................11
                           Class A-2B Certificate..............................................................11
                           Class A-2C Certificate..............................................................11
                           Class A-IO Certificate..............................................................11

                                                       -ii-

<PAGE>

                           Class A-IO Pass-Through Rate........................................................11
                           Class CE Certificate................................................................11
                           Class M Certificates................................................................11
                           Class M-1 Certificate...............................................................11
                           Class M-1 Principal Distribution Amount.............................................11
                           Class M-2 Certificate...............................................................12
                           Class M-2 Principal Distribution Amount.............................................12
                           Class M-3 Certificate...............................................................12
                           Class M-3 Principal Distribution Amount.............................................12
                           Class P Certificate.................................................................13
                           Class R Certificates................................................................13
                           Closing Date........................................................................13
                           Code     ...........................................................................13
                           Commission..........................................................................13
                           Compensating Interest...............................................................13
                           Corporate Trust Office..............................................................13
                           Corresponding Certificate...........................................................13
                           Credit Enhancement Percentage.......................................................13
                           Credit Risk Management Agreement....................................................14
                           Credit Risk Management Fee..........................................................14
                           Credit Risk Management Fee Rate.....................................................14
                           Credit Risk Manager.................................................................14
                           Custodial Agreement.................................................................14
                           Custodian...........................................................................14
                           Cut-off Date........................................................................14
                           Debt Service Reduction..............................................................14
                           Deficient Valuation.................................................................14
                           Definitive Certificates.............................................................14
                           Deleted Mortgage Loan...............................................................14
                           Delinquency Percentage..............................................................14
                           Depositor...........................................................................15
                           Depository..........................................................................15
                           Depository Institution..............................................................15
                           Depository Participant..............................................................15
                           Determination Date..................................................................15
                           Disqualified Organization...........................................................15
                           Distribution Account................................................................16
                           Distribution Account Deposit Date...................................................16
                           Distribution Date...................................................................16
                           Due Date ...........................................................................16
                           Due Period..........................................................................16
                           Eligible Account....................................................................16
                           ERISA    ...........................................................................16
                           Estate in Real Property.............................................................16
                           Excess Group Net WAC Pass-Through Rate Amount.......................................16
                           Excess Liquidation Proceeds.........................................................17

                                                       -iii-

<PAGE>

                           Excess Net WAC Rate Reserve Fund....................................................17
                           Excess Pool Net WAC Pass-Through Rate Amount........................................17
                           Expense Adjusted Mortgage Rate......................................................17
                           Extra Principal Distribution Amount.................................................17
                           Fairbanks...........................................................................17
                           Fairbanks Servicing Agreement.......................................................17
                           Fannie Mae..........................................................................18
                           FDIC     ...........................................................................18
                           Final Recovery Determination........................................................18
                           Fitch    ...........................................................................18
                           Freddie Mac.........................................................................18
                           Gross Margin........................................................................18
                           Group I Interest Remittance Amount..................................................18
                           Group I Mortgage Loans..............................................................18
                           Group I Principal Distribution Amount...............................................18
                           Group I Principal Remittance Amount.................................................19
                           Group II  Interest Remittance Amount................................................19
                           Group II Mortgage Loans.............................................................19
                           Group II Principal Distribution Amount..............................................19
                           Group II Principal Remittance Amount................................................19
                           Independent.........................................................................19
                           Index    ...........................................................................19
                           Insurance Proceeds..................................................................20
                           Interest Accrual Period.............................................................20
                           Interest Carry Forward Amount.......................................................20
                           Interest Determination Date.........................................................20
                           Interest Distribution Amount........................................................20
                           Interest Remittance Amount..........................................................20
                           Liquidation Event...................................................................21
                           Liquidation Proceeds................................................................21
                           Loan-to-Value Ratio.................................................................21
                           London Business Day.................................................................21
                           Loss Severity Percentage............................................................21
                           Marker Rate.........................................................................21
                           Master Servicer.....................................................................21
                           Master Servicer Collection Account..................................................22
                           Master Servicer Event of Default....................................................22
                           Master Servicer Fee Rate............................................................22
                           Master Servicing Fee................................................................22
                           Maximum II-LTZZ Uncertificated Interest Deferral Amount.............................22
                           Maximum Mortgage Rate...............................................................22
                           Mezzanine Certificate...............................................................22
                           Minimum Mortgage Rate...............................................................22
                           Monthly Payment.....................................................................22
                           Moody's  ...........................................................................23
                           Mortgage ...........................................................................23

                                                       -iv-

<PAGE>

                           Mortgage File.......................................................................23
                           Mortgage Loan.......................................................................23
                           Mortgage Loan Documents.............................................................23
                           Mortgage Loan Purchase Agreement....................................................23
                           Mortgage Loan Schedule..............................................................23
                           Mortgage Note.......................................................................25
                           Mortgage Rate.......................................................................25
                           Mortgaged Property..................................................................26
                           Mortgagor...........................................................................26
                           Net Monthly Excess Cashflow.........................................................26
                           Net Mortgage Rate...................................................................26
                           Net WAC Pass-Through Rate...........................................................26
                           Net WAC Rate Carryover Amount.......................................................27
                           Nonrecoverable P&I Advance..........................................................28
                           Nonrecoverable Servicing Advance....................................................28
                           Non-United States Person............................................................28
                           Notional Amount.....................................................................28
                           Offered Certificates................................................................28
                           Officers' Certificate...............................................................28
                           One-Month LIBOR.....................................................................28
                           One-Month LIBOR Pass-Through Rate...................................................29
                           Opinion of Counsel..................................................................29
                           Optional Termination Date...........................................................30
                           Overcollateralization Amount........................................................30
                           Overcollateralization Increase Amount...............................................30
                           Overcollateralization Reduction Amount..............................................30
                           Ownership Interest..................................................................30
                           P&I Advance.........................................................................30
                           Pass-Through Rate...................................................................30
                           Percentage Interest.................................................................31
                           Periodic Rate Cap...................................................................32
                           Permitted Investments...............................................................32
                           Permitted Transferee................................................................33
                           Person   ...........................................................................33
                           Plan     ...........................................................................33
                           Pool Net WAC Pass-Through Rate......................................................33
                           Prepayment Assumption...............................................................34
                           Prepayment Charge...................................................................34
                           Prepayment Interest Shortfall.......................................................34
                           Prepayment Period...................................................................34
                           Principal Prepayment................................................................34
                           Principal Distribution Amount.......................................................35
                           Principal Remittance Amount.........................................................35
                           Protected Account...................................................................35
                           Purchase Price......................................................................35
                           Qualified Substitute Mortgage Loan..................................................35

                                                        -v-

<PAGE>

                           Rate/Term Refinancing...............................................................36
                           Rating Agency or Rating Agencies....................................................36
                           Realized Loss.......................................................................36
                           Record Date.........................................................................37
                           Reference Banks.....................................................................37
                           Refinanced Mortgage Loan............................................................37
                           Regular Certificate.................................................................37
                           Regular Interest....................................................................37
                           Relief Act..........................................................................37
                           Relief Act Interest Shortfall.......................................................38
                           REMIC    ...........................................................................38
                           REMIC I  ...........................................................................38
                           REMIC I Regular Interest............................................................38
                           REMIC I Regular Interest I-LT1......................................................38
                           REMIC I Regular Interest I-LT2......................................................38
                           REMIC I Regular Interest I-LTIO-1...................................................39
                           REMIC I Regular Interest I-LTIO-2...................................................39
                           REMIC I Regular Interest I-LTP......................................................39
                           REMIC I Remittance Rate.............................................................39
                           REMIC II ...........................................................................39
                           REMIC II Interest Loss Allocation Amount............................................39
                           REMIC II Overcollateralization Amount...............................................39
                           REMIC II Principal Loss Allocation Amount...........................................40
                           REMIC II Regular Interest...........................................................40
                           REMIC II Regular Interest II-LTAA...................................................40
                           REMIC II Regular Interest II-LTA....................................................40
                           REMIC II Regular Interest II-LTA2A..................................................40
                           REMIC II Regular Interest II-LTA2B..................................................40
                           REMIC II Regular Interest II-LTA2C..................................................41
                           REMIC II Regular Interest II-LTIO-1A................................................41
                           REMIC II Regular Interest II-LTIO-1B................................................41
                           REMIC II Regular Interest II-LTIO-1C................................................41
                           REMIC II Regular Interest II-LTIO-2A................................................41
                           REMIC II Regular Interest II-LTIO-2B................................................41
                           REMIC II Regular Interest II-LTIO-2C................................................41
                           REMIC II Regular Interest II-LTM1...................................................41
                           REMIC II Regular Interest II-LTM2...................................................42
                           REMIC II Regular Interest II-LTM3...................................................42
                           REMIC II Regular Interest II-LTZZ...................................................42
                           REMIC II Regular Interest II-LTP....................................................42
                           REMIC II Remittance Rate............................................................42
                           REMIC II Required Overcollateralization Amount......................................43
                           REMIC III...........................................................................43
                           REMIC III Certificate...............................................................43
                           REMIC III Certificateholder.........................................................43
                           REMIC Provisions....................................................................43

                                                       -vi-

<PAGE>

                           Remittance Report...................................................................43
                           Rents from Real Property............................................................43
                           REO Disposition.....................................................................44
                           REO Imputed Interest................................................................44
                           REO Principal Amortization..........................................................44
                           REO Property........................................................................44
                           Required Overcollateralization Amount...............................................44
                           Reserve Fund........................................................................44
                           Reserve Interest Rate...............................................................44
                           Residential Dwelling................................................................44
                           Residual Certificate................................................................45
                           Residual Interest...................................................................45
                           Responsible Officer.................................................................45
                           S&P      ...........................................................................45
                           Scheduled Principal Balance.........................................................45
                           Securities Administrator............................................................46
                           Seller   ...........................................................................46
                           Senior Interest Distribution Amount.................................................46
                           Servicer ...........................................................................46
                           Servicer Remittance Date............................................................46
                           Servicing Advances..................................................................46
                           Servicing Agreement.................................................................46
                           Servicing Fee.......................................................................46
                           Servicing Fee Rate..................................................................46
                           Servicing Officer...................................................................47
                           Single Certificate..................................................................47
                           Startup Day.........................................................................47
                           Stated Principal Balance............................................................47
                           Stepdown Date.......................................................................48
                           Substitution Shortfall Amount.......................................................48
                           Tax Returns.........................................................................48
                           Telerate Page 3750..................................................................48
                           Termination Price...................................................................48
                           Terminator..........................................................................48
                           Transfer ...........................................................................48
                           Transferee..........................................................................48
                           Transferor..........................................................................48
                           Trigger Event.......................................................................48
                           Trust    ...........................................................................49
                           Trust REMIC.........................................................................49
                           Trustee  ...........................................................................49
                           Trust Fund..........................................................................49
                           Uncertificated Balance..............................................................49
                           Uncertificated Interest.............................................................49
                           Uncertificated Notional Amount......................................................49
                           Uncertificated REMIC Regular Interest...............................................50

                                                       -vii-

<PAGE>

                           Uninsured Cause.....................................................................50
                           United States Person................................................................50
                           Value    ...........................................................................50
                           Voting Rights.......................................................................51
                           Wells Fargo.........................................................................51
                           WFHM     ...........................................................................51
                           WFHM Servicing Agreement............................................................51
SECTION 1.02.     Allocation of Certain Interest Shortfalls....................................................51

                                                    ARTICLE II

                                           CONVEYANCE OF MORTGAGE LOANS;

SECTION 2.01.     Conveyance of the Mortgage Loans.............................................................53
SECTION 2.02.     Acceptance of REMIC I by Trustee.............................................................53
SECTION 2.03.     Repurchase or Substitution of Mortgage Loans.................................................54
SECTION 2.04.     [Reserved]...................................................................................56
SECTION 2.05.     Representations, Warranties and Covenants of the Master Servicer.............................56
SECTION 2.06.     Issuance of the REMIC I Regular Interests and the Class R-I Interest
                   ............................................................................................58
SECTION 2.07.     Conveyance of the REMIC I Regular Interests; Acceptance of REMIC
                  II by the Trustee............................................................................58
SECTION 2.08      Conveyance of the REMIC II Regular Interests; Acceptance of REMIC III by the Trustee ........58
SECTION 2.10.     Issuance of Class R Certificates.............................................................59
SECTION 2.11      Establishment of the Trust...................................................................59

                                                    ARTICLE III

                                           ADMINISTRATION AND SERVICING
                                          OF THE MORTGAGE LOANS; ACCOUNTS
SECTION 3.01.     Master Servicer..............................................................................60
SECTION 3.02.     REMIC-Related Covenants......................................................................61
SECTION 3.03.     Monitoring of Servicers......................................................................61
SECTION 3.04.     Fidelity Bond................................................................................62
SECTION 3.05.     Power to Act; Procedures.....................................................................62
SECTION 3.06.     Due-on-Sale Clauses; Assumption Agreements...................................................63
SECTION 3.07.     Release of Mortgage Files....................................................................63
SECTION 3.08.     Documents, Records and Funds in Possession of Master Servicer To Be Held
for Trustee....................................................................................................64
SECTION 3.09.     Standard Hazard Insurance and Flood Insurance Policies.......................................65
SECTION 3.10.     Presentment of Claims and Collection of Proceeds.............................................65
SECTION 3.11.     Maintenance of the Primary Mortgage Insurance Policies.......................................66

                                                      -viii-

<PAGE>

SECTION 3.12.     Trustee to Retain Possession of Certain Insurance Policies and Documents
................................................................................................................66
SECTION 3.13.     Realization Upon Defaulted Mortgage Loans....................................................67
SECTION 3.14.     Compensation for the Master Servicer.........................................................67
SECTION 3.15.     REO Property.................................................................................67
SECTION 3.16.     Annual Officer's Certificate as to Compliance................................................68
SECTION 3.17.     Annual Independent Accountant's Servicing Report.............................................69
SECTION 3.18.     Reports Filed with Securities and Exchange Commission........................................69
SECTION 3.19.     UCC..........................................................................................70
Obligation of the Master Servicer in respect of Prepayment Interest Shortfalls.................................70
SECTION 3.21.     Reserved.....................................................................................70
SECTION 3.22.     Protected Accounts...........................................................................70
SECTION 3.23.     Master Servicer Collection Account...........................................................71
SECTION 3.24.     Permitted Withdrawals and Transfers from the Master Servicer Collection
Account........................................................................................................73
SECTION 3.25.     Distribution Account.........................................................................73
SECTION 3.26.     Permitted Withdrawals and Transfers from the Distribution Account
................................................................................................................74
SECTION 3.27      Reserve Fund.................................................................................76
SECTION 3.28      Duties of the Credit Risk Manager............................................................77
SECTION 3.29      Limitation Upon Liability of the Credit Risk Manager.........................................78
SECTION 3.30      Removal of the Credit Risk Manager...........................................................78
SECTION 3.31      Prepayment Penalty Verification..............................................................79
SECTION 3.32      Servicing Advance Facility...................................................................79
SECTION 3.33.     Excess Net WAC Rate Reserve Fund.............................................................80

                                                    ARTICLE IV

                                          PAYMENTS TO CERTIFICATEHOLDERS
SECTION 4.01      Distributions................................................................................82
SECTION 4.02.     Statements to Certificateholders.............................................................92
SECTION 4.03.     Remittance Reports; P&I Advances.............................................................96
SECTION 4.04.     Allocation of Realized Losses................................................................97
SECTION 4.05.     Compliance with Withholding Requirements.....................................................98

                                                     ARTICLE V

                                                 THE CERTIFICATES
SECTION 5.01.     The Certificates.............................................................................99
SECTION 5.02.     Registration of Transfer and Exchange of Certificates.......................................101
SECTION 5.03.     Mutilated, Destroyed, Lost or Stolen Certificates...........................................105
SECTION 5.04.     Persons Deemed Owners.......................................................................106
SECTION 5.05.     Certain Available Information...............................................................106

                                                       -ix-

<PAGE>

                                                    ARTICLE VI

                                       THE DEPOSITOR AND THE MASTER SERVICER
SECTION 6.01.     Liability of the Depositor and the Master Servicer..........................................107
SECTION 6.02.     Merger or Consolidation of the Depositor or the Master Servicer.............................107
SECTION 6.03.     Limitation on Liability of the Depositor, the Master Servicer, the Servicers,
the Securities Administrator and Others.......................................................................107
SECTION 6.04      Limitation on Resignation of the Master Servicer............................................108
SECTION 6.05      Assignment of Master Servicing..............................................................108
SECTION 6.06      Rights of the Depositor in Respect of the Master Servicer...................................109

                                                    ARTICLE VII

                                                      DEFAULT
SECTION 7.01.     Master Servicer Events of Default...........................................................110
SECTION 7.02.     Trustee to Act; Appointment of Successor....................................................112
SECTION 7.03.     Notification to Certificateholders..........................................................112
SECTION 7.04.     Waiver of Master Servicer Events of Default.................................................113

                                                   ARTICLE VIII

                              CONCERNING THE TRUSTEE AND THE SECURITIES ADMINISTRATOR
SECTION 8.01.     Duties of Trustee and Securities Administrator..............................................114
SECTION 8.02.     Certain Matters Affecting Trustee and Securities Administrator..............................115
SECTION 8.03.     Trustee and Securities Administrator not Liable for Certificates or Mortgage
Loans.........................................................................................................117
SECTION 8.04.     Trustee and Securities Administrator May Own Certificates...................................117
SECTION 8.05.     Fees and Expenses of Trustee and Securities Administrator...................................117
SECTION 8.06.     Eligibility Requirements for Trustee and Securities Administrator...........................118
SECTION 8.07.     Resignation and Removal of Trustee and Securities Administrator.............................118
SECTION 8.08.     Successor Trustee or Securities Administrator...............................................119
SECTION 8.09.     Merger or Consolidation of Trustee or Securities Administrator..............................120
SECTION 8.10.     Appointment of Co-Trustee or Separate Trustee...............................................120
SECTION 8.11.     Appointment of Office or Agency.............................................................121
SECTION 8.12.     Representations and Warranties..............................................................121

                                                    ARTICLE IX

                                                    TERMINATION
SECTION 9.01.     Termination Upon Repurchase or Liquidation of All Mortgage Loans.
...............................................................................................................123
SECTION 9.02.     Additional Termination Requirements.........................................................125

                                                        -x-

<PAGE>

                                                     ARTICLE X

                                                 REMIC PROVISIONS
SECTION 10.01.             REMIC Administration...............................................................126
SECTION 10.02.             Prohibited Transactions and Activities.............................................128

                                          SECTION 10.03.Indemnification.

                                                    ARTICLE XI

                                             MISCELLANEOUS PROVISIONS
SECTION 11.01.             Amendment..........................................................................130
SECTION 11.02.             Recordation of Agreement; Counterparts.............................................131
SECTION 11.03.             Limitation on Rights of Certificateholders.........................................131
SECTION 11.04.             Governing Law......................................................................132
SECTION 11.05.             Notices............................................................................132
SECTION 11.06.             Severability of Provisions.........................................................133
SECTION 11.07.             Notice to Rating Agencies..........................................................133
SECTION 11.08.             Article and Section References.....................................................134
SECTION 11.09.             Grant of Security Interest.........................................................134
SECTION 11.10.             Third Party Beneficiaries..........................................................135

</TABLE>

                                                       -xi-

<PAGE>

<TABLE>
<CAPTION>

Exhibits

<S>               <C>
Exhibit A-1       Form of Class A Certificate
Exhibit A-2       Form of Class A-IO Certificate
Exhibit A-3       Form of Class M Certificate
Exhibit A-4       Form of Class CE Certificate
Exhibit A-5       Form of Class P Certificate
Exhibit A-6       Form of Class R Certificate
Exhibit           B-1 Form of Transferor Representation Letter and Form of
                  Transferee Representation Letter in Connection with Transfer
                  of the Class P Certificates, Class CE Certificates and
                  Residual Certificates Pursuant to Rule 144A Under the 1933 Act
Exhibit           B-2 Form of Transferor Representation Letter and Form of
                  Transferee Representation Letter in Connection with Transfer
                  of the Class P Certificates, Class CE Certificates and
                  Residual Certificates Pursuant to Rule 501 (a) Under the 1933
                  Act
Exhibit B-3       Form of Transfer Affidavit and Agreement and Form of Transferor Affidavit in
                  Connection with Transfer of Residual Certificates
Exhibit C         Form of Master Servicer Certification
Schedule 1        Mortgage Loan Schedule
Schedule 2        Prepayment Charge Schedule

</TABLE>

                                      -xii-

<PAGE>

                  This Pooling and Servicing Agreement, is dated and effective
as of December 1, 2002, among ACE SECURITIES CORP. as Depositor, WELLS FARGO
BANK MINNESOTA, NATIONAL ASSOCIATION as Master Servicer and as Securities
Administrator and BANK ONE, NATIONAL ASSOCIATION as Trustee.

                             PRELIMINARY STATEMENT:

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

                                     REMIC I

                  As provided herein, the Trustee will elect to treat the
segregated pool of assets consisting of the Mortgage Loans and certain other
related assets subject to this Agreement (other than the Reserve Fund and the
Net WAC Rate Reserve Fund) as a REMIC for federal income tax purposes, and such
segregated pool of assets will be designated as "REMIC I". The Class R-I
Interest will be the sole class of "residual interests" in REMIC I for purposes
of the REMIC Provisions (as defined herein). The following table irrevocably
sets forth the designation, the REMIC I Remittance Rate, the initial
Uncertificated Balance and, solely for purposes of satisfying Treasury
regulation Section 1.860G-1(a)(4)(iii), the "latest possible maturity date" for
each of the REMIC I Regular Interests (as defined herein). None of the REMIC I
Regular Interests will be certificated.

<TABLE>
<CAPTION>

                                   REMIC I                 Initial                   Latest Possible
       Designation             Remittance Rate        Uncertificated Balance         Maturity Date (1)
       -----------             ---------------        ---------------------          -----------------
<S>                            <C>                    <C>                            <C>
I-LT1                           Variable(2)             $  503,070,748.70            December 25, 2032
I-LTIO-1                        Variable(2)             $   55,897,000.00            December 25, 2032
I-LT2                           Variable(2)             $  124,762,104.28            December 25, 2032
I-LTIO-2                        Variable(2)             $   13,862,000.00            December 25, 2032
I-LTP                           Variable(2)             $          100.00            December 25, 2032
</TABLE>
___________________________

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

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

                                       -1-

<PAGE>

                                    REMIC II

                  As provided herein, the Trustee will elect to treat the
segregated pool of assets consisting of the REMIC I Regular Interests as a REMIC
for federal income tax purposes, and such segregated pool of assets will be
designated as "REMIC II". The Class R-II Interest will be the sole class of
"residual interests" in REMIC II for purposes of the REMIC Provisions. The
following table irrevocably sets forth the designation, the REMIC II Remittance
Rate, the initial Uncertificated Balance and, solely for purposes of satisfying
Treasury regulation Section 1.860G-1(a)(4)(iii), the "latest possible maturity
date" for each of the REMIC II Regular Interests (as defined herein). None of
the REMIC II Regular Interests will be certificated.

<TABLE>
<CAPTION>

                                                    Initial
                         REMIC II                Uncertificated         Latest Possible
    Designation      Remittance Rate               Balance            Maturity Date (1)
------------------ ----------------------- ---------------------- ----------------------
<S>                  <C>                   <C>                      <C>
II-LTAA                   Variable(2)      $  683,640,015.92         December 25, 2032
II-LTA1                   Variable(2)      $    4,678,560.00         December 25, 2032
II-LTA2A                  Variable(2)      $      300,000.00         December 25, 2032
II-LTA2B                  Variable(2)      $      600,270.00         December 25, 2032
II-LTA2C                  Variable(2)      $      260,000.00         December 25, 2032
II-LTM1                   Variable(2)      $      495,290.00         December 25, 2032
II-LTM2                   Variable(2)      $      324,380.00         December 25, 2032
II-LTM3                   Variable(2)      $      184,860.00         December 25, 2032
II-LTZZ                   Variable(2)      $    7,108,477.06         December 25, 2032
II-LTIO-1A                Variable(2)                     (3)            June 25, 2032
II-LTIO-1B                Variable(2)                     (3)            June 25, 2032
II-LTIO-1C                Variable(2)                     (3)            June 25, 2032
II-LTIO-2A                Variable(2)                     (4)            June 25, 2032
II-LTIO-2B                Variable(2)                     (4)            June 25, 2032
II-LTIO-2C                Variable(2)                     (4)            June 25, 2032
II-LTP                    Variable(2)     $           100.00         December 25, 2032
</TABLE>
___________________________

(1)  Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
     regulations, the Distribution Date immediately following the maturity date
     for the Mortgage Loan with the latest maturity date has been designated as
     the "latest possible maturity date" for each REMIC II Regular Interest.
(2)  Calculated in accordance with the definition of "REMIC II Remittance Rate"
     herein.
(3)  REMIC II Regular Interests II-LTIO-1A, II-LTIO-1B and II-LTIO-1C will not
     have Initial Uncertificated Balances, but will accrue interest on their
     Uncertificated Notional Amount outstanding from time to time, each of which
     shall equal the Initial Uncertified Balance of REMIC I Regular Interest
     I-LTIO-1.
(4)  REMIC II Regular Interests II-LTIO-2A, II-LTIO-2B and II-LTIO-2C will not
     have Initial Uncertificated Balances, but will accrue interest on their
     Uncertificated Notional Amount outstanding from time to time, each of which
     shall equal the Initial Uncertified Balance of REMIC I Regular Interest
     I-LTIO-2.

                                       -2-

<PAGE>

                                    REMIC III

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

<TABLE>
<CAPTION>

                                                 Initial Aggregate
                         Pass-Through           Certificate Principal        Latest Possible
        Designation         Rate                     Balance                 Maturity Date (1)
---------------------- ------------------- ---------------------------- ------------------------------
<S>                      <C>                     <C>                         <C>
Class A-1                 Variable(2)              $ 467,856,000.00           December 25, 2032
Class A-2A                Variable(2)              $  30,000,000.00           December 25, 2032
Class A-2B                Variable(2)              $  60,027,000.00           December 25, 2032
Class A-2C                Variable(2)              $  26,000,000.00           December 25, 2032
Class A-IO                Variable(2)                         N/A(3)              June 25, 2032
Class M-1                 Variable(2)              $  49,529,000.00           December 25, 2032
Class M-2                 Variable(2)              $  32,438,000.00           December 25, 2032
Class M-3                 Variable(2)              $  18,486,000.00           December 25, 2032
Class P                        N/A(5)              $         100.00           December 25, 2032
Class CE                       N/A(6)              $  13,255,852.98           December 25, 2032
_________________
</TABLE>

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

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

(3)  The Class A-IO Certificates do not have a Certificate Principal Balance but
     will receive all amounts distributed to REMIC II Regular Interest
     II-LTIO-1A , REMIC II Regular Interest II-LTIO-1B, REMIC II Regular
     Interest II-LTIO-1C, REMIC II Regular Interest II-LTIO-2A, REMIC II Regular
     Interest II-LTIO-2B and REMIC II Regular Interest II-LTIO-1C.

(4)  The Class P Certificates will not accrue interest.

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

         As of the Cut-off Date, the Group I Mortgage Loans had an aggregate
Scheduled Principal Balance equal to $558,967,748.70 and the Group II Mortgage
Loans had an aggregate Scheduled Principal Balance equal to $138,624,204.28.

                                       -3-

<PAGE>

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

                                       -4-

<PAGE>

                                    ARTICLE I

                                   DEFINITIONS

                  SECTION 1.01.             Defined Terms.

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

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

                  "Account": The Master Servicer Collection Account, the
Distribution Account and the Protected Account as the context may require.

                  "Accrued Certificate Interest": With respect to any Class A
Certificate, Class A-IO Certificate, Mezzanine Certificate or Class CE
Certificate and each Distribution Date, interest accrued during the related
Interest Accrual Period at the Pass-Through Rate for such Certificate for such
Distribution Date on the Certificate Principal Balance, in the case of the Class
A Certificates and the Mezzanine Certificates, or on the Notional Amount in the
case of the Class A-IO Certificates and the Class CE Certificates, of such
Certificate immediately prior to such Distribution Date. The Class P
Certificates are not entitled to distributions in respect of interest and,
accordingly, will not accrue interest. All distributions of interest on the
Class A Certificates and the Mezzanine Certificates will be calculated on the
basis of a 360-day year and the actual number of days in the applicable Interest
Accrual Period. All distributions of interest on the Class A-IO Certificates and
the Class CE Certificates will be based on a 360-day year consisting of twelve
30-day months. Accrued Certificate Interest with respect to each Distribution
Date, as to any Class A Certificate, Class A-IO Certificate, Mezzanine
Certificate or Class CE Certificate shall be reduced by an amount equal to the
portion allocable to such Certificate pursuant to Section 1.02 hereof, if any,
of the sum of (a) the aggregate Prepayment Interest Shortfall, if any, for such
Distribution Date to the extent not covered by payments pursuant to Section 3.20
and (b) the aggregate amount of any Relief Act Interest Shortfall, if any, for
such Distribution Date. In addition, Accrued Certificate Interest with respect
to each Distribution Date, as to any Class CE Certificate, shall be reduced by
an amount equal to the portion allocable to such Class CE Certificate of
Realized Losses, if any, pursuant to Section 1.02 and Section 4.04 hereof.
Notwithstanding the foregoing, for federal income tax purposes and under the
REMIC Provisions, the Accrued Certificate Interest for the Class A-IO
Certificates and any Distribution Date will be deemed to be 100% of the
Uncertificated Interest for REMIC II Regular Interest II-LTIO-1A , REMIC II
Regular Interest II-LTIO-1B, REMIC II Regular

                                       -5-

<PAGE>

Interest II-LTIO-1C, REMIC II Regular Interest II-LTIO-2A, REMIC II Regular
Interest II-LTIO-2B and REMIC II Regular Interest II-LTIO-1C for such
Distribution Date.

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

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

                  "Administration Fees": The sum of (i) the Master Servicing
Fee, (ii) the Servicing Fee and (iii) the Credit Risk Manager Fee.

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

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

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

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

                  "Assignment": An assignment of Mortgage, notice of transfer or
equivalent instrument, in recordable form, which is sufficient under the laws of
the jurisdiction wherein the related Mortgaged Property is located to reflect of
record the sale of the Mortgage, which assignment, notice of transfer or
equivalent instrument may be in the form of one or more blanket assignments
covering Mortgages secured by Mortgaged Properties located in the same county,
if permitted by law.

                  "Assignment Agreements": Shall mean (i) the Assignment,
Assumption and Recognition Agreement, dated as of December 10, 2002, among the
Seller, the Depositor and Fairbanks, pursuant to which the Fairbanks Servicing
Agreement was assigned to the Depositor and (ii) the Assignment, Assumption and
Recognition Agreement, dated as of December 10, 2002, among the Seller, the
Depositor and WFHM pursuant to which the WFHM Servicing Agreement was assigned
to the Depositor.

                                       -6-

<PAGE>

                  "Available Distribution Amount": With respect to any
Distribution Date, an amount equal to (1) the sum of (a) the aggregate of the
amounts on deposit in the Master Servicer Collection Account and Distribution
Account as of the close of business on the related Distribution Account Deposit
Date, (b) the aggregate of any amounts deposited in the Distribution Account by
the Master Servicer in respect of Prepayment Interest Shortfalls for such
Distribution Date pursuant to Section 3.20, (c) the aggregate of any P&I
Advances for such Distribution Date made by the applicable Servicer pursuant to
the related Servicing Agreement or the Master Servicer pursuant to Section 4.03
and (d) the aggregate of any P&I Advances made by the Trustee pursuant to
Section 7.02, reduced (to not less than zero) by (2) the portion of the amount
described in clause (1)(a) above that represents (i) Monthly Payments on the
Mortgage Loans received from a Mortgagor on or prior to the Determination Date
but due during any Due Period subsequent to the related Due Period, (ii)
Principal Prepayments on the Mortgage Loans received after the related
Prepayment Period (together with any interest payments received with such
Principal Prepayments to the extent they represent the payment of interest
accrued on the Mortgage Loans during a period subsequent to the related
Prepayment Period), (iii) Liquidation Proceeds and Insurance Proceeds received
in respect of the Mortgage Loans after the related Prepayment Period, (iv)
amounts reimbursable or payable to the Depositor, the Master Servicer, any
Servicer, the Trustee, the Securities Administrator or the Custodian pursuant to
Section 3.24 or Section 3.26 or otherwise payable in respect of extraordinary
Trust Fund expenses, (v) amounts deposited in the Master Servicer Collection
Account or the Distribution Account in error, (vi) the amount of any Prepayment
Charges collected or paid by the Servicers pursuant to the related Servicing
Agreement in connection with the Principal Prepayment of any of the Mortgage
Loans and (viii) amounts reimbursable to the Trustee or other successor Master
Servicer pursuant to Section 7.02.

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

                  "Bankruptcy Loss": With respect to any Mortgage Loan, a
Realized Loss resulting from a Deficient Valuation or Debt Service Reduction.

                  "Book-Entry Certificate": The Class A Certificates, the Class
A-IO Certificates and the Mezzanine Certificates for so long as the Certificates
of such Class shall be registered in the name of the Depository or its nominee.

                  "Book-Entry Custodian": The custodian appointed pursuant to
Section 5.01.

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

                  "Cap Contract": The Cap Contract between the Trustee and the
counterparty thereunder, for the benefit of the Holders of the Class A-2
Certificates and the Class M Certificates.

                                      -7-

<PAGE>

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

                  "Certificate": Any one of the Depositor's Asset Backed
Pass-Through Certificates, Series 2002-HE3, Class A-1, Class A-2A, Class A-2B,
Class A-2C, Class A-IO, Class M-1, Class M-2, Class M-3, Class P, Class CE and
Class R issued under this Agreement.

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

                  "Certificate Margin": With respect to the Class A-1
Certificates and, for purposes of the definition of "Marker Rate", REMIC II
Regular Interest II-LTA1, 0.51% in the case of each Distribution Date through
and including the Optional Termination Date and 1.02% in the case of each
Distribution Date thereafter.

                  With respect to the Class A-2A Certificates and, for purposes
of the definition of "Marker Rate", REMIC II Regular Interest II-LTA2A, 0.51% in
the case of each Distribution Date through and including the Optional
Termination Date and 1.02% in the case of each Distribution Date thereafter.

                  With respect to the Class A-2B Certificates and, for purposes
of the definition of "Marker Rate", REMIC II Regular Interest II-LTA2B, 0.220%
in the case of each Distribution Date through and including the Optional
Termination Date and 0.440% in the case of each Distribution Date thereafter.

                  With respect to the Class A-2C Certificates and, for purposes
of the definition of "Marker Rate", REMIC II Regular Interest II-LTA2C, 0.587%
in the case of each Distribution Date through and including the Optional
Termination Date and 1.174% in the case of each Distribution Date thereafter.

                  With respect to the Class M-1 Certificates and, for purposes
of the definition of "Marker Rate", REMIC II Regular Interest II-LTM1, 1.20% in
the case of each Distribution Date through and including the Optional
Termination Date and 1.80% in the case of each Distribution Date thereafter.

                  With respect to the Class M-2 Certificates and, for purposes
of the definition of "Marker Rate", REMIC II Regular Interest II-LTM2, 2.20% in
the case of each Distribution Date

                                       -8-

<PAGE>

through and including the Optional Termination Date and 3.30% in the case of
each Distribution Date thereafter.

                  With respect to the Class M-3 Certificates and, for purposes
of the definition of "Marker Rate", REMIC II Regular Interest II-LTM3, 3.51% in
the case of each Distribution Date through and including the Optional
Termination Date and 5.265% in the case of each Distribution Date thereafter.

                  "Certificateholder" or "Holder": The Person in whose name a
Certificate is registered in the Certificate Register, except that a
Disqualified Organization or a Non-United States Person shall not be a Holder of
a Residual Certificate for any purposes hereof, and solely for the purposes of
giving any consent pursuant to this Agreement, any Certificate registered in the
name of or beneficially owned by the Depositor, the Seller, the Master Servicer,
the Securities Administrator, the Trustee or any Affiliate thereof shall be
deemed not to be outstanding and the Voting Rights to which it is entitled shall
not be taken into account in determining whether the requisite percentage of
Voting Rights necessary to effect any such consent has been obtained, except as
otherwise provided in Section 11.01. The Trustee may conclusively rely upon a
certificate of the Depositor, the Seller, the Securities Administrator or the
Master Servicer in determining whether a Certificate is held by an Affiliate
thereof. All references herein to "Holders" or "Certificateholders" shall
reflect the rights of Certificate Owners as they may indirectly exercise such
rights through the Depository and participating members thereof, except as
otherwise specified herein; provided, however, that the Trustee shall be
required to recognize as a "Holder" or "Certificateholder" only the Person in
whose name a Certificate is registered in the Certificate Register.

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

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

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

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

                                       -9-

<PAGE>

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

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

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

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

                  "Class A-1 Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and on which a Trigger Event is
not in effect, the excess of (x) the Certificate Principal Balance of the Class
A-1 Certificates immediately prior to such Distribution Date over (y) the lesser
of (A) the product of (i) 67.40% and (ii) the aggregate Stated Principal Balance
of the Group I Mortgage Loans as of the last day of the related Due Period
(after giving effect to scheduled payments of principal due during the related
Due Period, to the extent received or advanced and unscheduled collections of
principal received during the related Prepayment Period) and (B) the aggregate
Stated Principal Balance of the Group I Mortgage Loans as of the last day of the
related Due Period (after giving effect to scheduled payments of principal due
during the related Due Period, to the extent received or advanced and
unscheduled collections of principal received during the related Prepayment
Period) minus $2,794,838.74.

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

                  "Class A-2 Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and on which a Trigger Event is
not in effect, the excess of (x) the Certificate Principal Balance of the Class
A-2 Certificates immediately prior to such Distribution Date over (y) the lesser
of (A) the product of (i) 67.40% and (ii) the aggregate Stated Principal Balance
of the Group II Mortgage Loans as of the last day of the related Due Period
(after giving effect to scheduled payments of principal due during the related
Due Period, to the extent received or advanced and unscheduled collections of
principal received during the related Prepayment Period) and (B) the aggregate
Stated Principal Balance of the Group II Mortgage Loans as of the last day of
the related Due Period (after giving effect to scheduled payments of principal
due during the related Due Period, to the extent received or advanced and
unscheduled collections of principal received during the related Prepayment
Period) minus $693,121.02.

                                      -10-

<PAGE>

                  "Class A-2 Certificates": The Class A-2A Certificates, Class
A-2B Certificates and Class A-2C Certificates.

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

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

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

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

                  "Class A-IO Pass-Through Rate": With respect to component
A-IO-1 of the Class A- IO Certificates and each Interest Accrual Period, (i)
5.50% per annum for the January 2003 through October 2003 Distribution Dates,
(ii) 4.50% per annum for the November 2003 through August 2004 Distribution
Dates, (iii) 3.50% per annum for the September 2004 through June 2005
Distribution Dates and (iv) 0.00% per annum thereafter. With respect to
component A-IO-2 of the Class A-IO Certificates and each Interest Accrual
Period, (i) 5.50% per annum for the January 2003 through October 2003
Distribution Dates, (ii) 4.50% per annum for the November 2003 through August
2004 Distribution Dates, (iii) 3.50% per annum for the September 2004 through
June 2005 Distribution Dates and (iv) 0.00% per annum thereafter.

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

                  "Class M Certificates": The Class M-1, Class M-2 and Class M-3
Certificates.

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

                  "Class M-1 Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and on which a Trigger Event is
not in effect, the excess of (x) the sum of (i) the Certificate Principal
Balance of the Class A Certificates (after taking into account the payment of
the Class A Principal Distribution Amount on such Distribution Date) and (ii)
the Certificate Principal Balance of the Class M-1 Certificates immediately
prior to such Distribution Date over (y) the lesser of (A) the product of (i)
81.60% and (ii) the aggregate Stated Principal Balance of the Mortgage Loans as
of the last day of the related Due Period (after giving effect to

                                      -11-

<PAGE>

scheduled payments of principal due during the related Due Period, to the extent
received or advanced and unscheduled collections of principal received during
the related Prepayment Period) and (B) the aggregate Stated Principal Balance of
the Mortgage Loans as of the last day of the related Due Period (after giving
effect to scheduled payments of principal due during the related Due Period, to
the extent received or advanced and unscheduled collections of principal
received during the related Prepayment Period) minus $3,487,959.76.

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

                  "Class M-2 Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and on which a Trigger Event is
not in effect, the excess of (x) the sum of (i) the Certificate Principal
Balance of the Class A Certificates (after taking into account the payment of
the Class A Principal Distribution Amount on such Distribution Date), (ii) the
Certificate Principal Balance of the Class M-1 Certificates (after taking into
account the payment of the Class M-1 Principal Distribution Amount on such
Distribution Date) and (iii) the Certificate Principal Balance of the Class M-2
Certificates immediately prior to such Distribution Date over (y) the lesser of
(A) the product of (i) 90.90% and (ii) the aggregate Stated Principal Balance of
the Mortgage Loans as of the last day of the related Due Period (after giving
effect to scheduled payments of principal due during the related Due Period, to
the extent received or advanced and unscheduled collections of principal
received during the related Prepayment Period) and (B) the aggregate Stated
Principal Balance of the Mortgage Loans as of the last day of the related Due
Period (after giving effect to scheduled payments of principal due during the
related Due Period, to the extent received or advanced and unscheduled
collections of principal received during the related Prepayment Period) minus
$3,487,959.76.

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

                  "Class M-3 Principal Distribution Amount": With respect to any
Distribution Date on or after the Stepdown Date and on which a Trigger Event is
not in effect, the excess of (x) the sum of (i) the Certificate Principal
Balance of the Class A Certificates (after taking into account the payment of
the Class A Principal Distribution Amount on such Distribution Date), (ii) the
Certificate Principal Balance of the Class M-1 Certificates (after taking into
account the payment of the Class M-1 Principal Distribution Amount on such
Distribution Date), (iii) the Certificate Principal Balance of the Class M-2
Certificates (after taking into account the payment of the Class M-2 Principal
Distribution Amount on such Distribution Date) and (iv) the Certificate
Principal Balance of the Class M-3 Certificates immediately prior to such
Distribution Date over (y) the lesser of (A) the product of (i) 96.20% and (ii)
the aggregate Stated Principal Balance of the Mortgage Loans as of the last day
of the related Due Period (after giving effect to scheduled payments of
principal due during the related Due Period, to the extent received or advanced
and unscheduled collections of principal received during the related Prepayment
Period) and (B) the aggregate Stated Principal Balance of the Mortgage Loans as
of the last day of the related Due Period (after giving effect to scheduled
payments of principal due during the related Due Period, to the extent received
or

                                      -12-

<PAGE>

advanced and unscheduled collections of principal received during the related
Prepayment Period) minus $3,487,959.76.

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

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

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

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

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

                  "Closing Date": December 10, 2002.

                  "Code": The Internal Revenue Code of 1986.

                  "Commission": The Securities and Exchange Commission.

                  "Compensating Interest": Shall mean (i) with respect to
Fairbanks, the meaning specified in the Fairbanks Servicing Agreement and (ii)
with respect to WFHM, WFHM's obligation to pay interest with respect to
Principal Prepayments as set forth in Section 4.04(viii) of the WFHM Servicing
Agreement.

                  "Corporate Trust Office": The principal corporate trust office
of the Trustee which office at the date of the execution of this instrument is
located at 1 Bank One Plaza, Mail Suite IL1- 0126, Chicago, Illinois 60670,
Attention: Global Corporate Trust Services, ACE Securities Corp., Series
2002-HE3, or at such other address as the Trustee may designate from time to
time by notice to the Certificateholders, the Depositor, the Securities
Administrator and the Master Servicer.

                  "Corresponding Certificate": With respect to REMIC II Regular
Interest II-LTA1, REMIC II Regular Interest II-LTA2A, REMIC II Regular Interest
II-LTA2B, REMIC II Regular Interest II-LTA2C, REMIC II Regular Interest II-LTM1,
REMIC II Regular Interest II-LTM2, REMIC II Regular Interest II-LTM3 and REMIC
II Regular Interest II-LTP, the Class A-1 Certificates, Class A-2A Certificates,
Class A-2B Certificates, Class A-2C Certificates, Class M-1 Certificates, Class
M-2 Certificates, Class M-3 Certificates and Class P Certificates, respectively.

                  "Credit Enhancement Percentage": For any Distribution Date,
the percentage equivalent of a fraction, the numerator of which is the sum of
the aggregate Certificate Principal Balances of the Mezzanine Certificates and
the Class CE Certificates, and the denominator of which is the aggregate Stated
Principal Balance of the Mortgage Loans, calculated after taking into account

                                      -13-

<PAGE>

distributions of principal on the Mortgage Loans and distribution of the
Principal Distribution Amount to the Certificates then entitled to distributions
of principal on such Distribution Date.

                  "Credit Risk Management Agreement": Each agreement between the
Credit Risk Manager and a Servicer or the Master Servicer, respectively, each
dated December 10, 2002.

                  "Credit Risk Management Fee": As to each Mortgage Loan and any
Distribution Date, an amount equal to one twelfth of the product of the Credit
Risk Management Fee Rate multiplied by the Scheduled Principal Balance of the
Mortgage Loans as of the Due Date in the preceding calendar month.

                  "Credit Risk Management Fee Rate": 0.015% per annum.

                  "Credit Risk Manager": The Murrayhill Company, a Colorado
corporation.

                  "Custodial Agreement" Shall mean the Custodial Agreement dated
as of December 1, 2002, among the Trustee, Wells Fargo as Custodian, Fairbanks
and WFHM as such agreement may be amended or supplemented from time to time, or
any other custodial agreement entered into after the date hereof with respect to
any Mortgage Loan subject to this Agreement.

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

                  "Cut-off Date": With respect to each Mortgage Loan, December
1, 2002. With respect to all Qualified Substitute Mortgage Loans, their
respective dates of substitution. References herein to the "Cut-off Date," when
used with respect to more than one Mortgage Loan, shall be to the respective
Cut-off Dates for such Mortgage Loans.

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

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

                  "Definitive Certificates": As defined in Section 5.01(b).

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

                  "Delinquency Percentage": As of the last day of the related
Due Period, the percentage equivalent of a fraction, the numerator of which is
the aggregate Stated Principal Balance of all Mortgage Loans that, as of the
last day of the previous calendar month, are 60 or more days

                                      -14-

<PAGE>

delinquent, are in foreclosure, have been converted to REO Properties or have
been discharged by reason of bankruptcy, and the denominator of which is the
aggregate Stated Principal Balance of the Mortgage Loans and REO Properties as
of the last day of the previous calendar month.

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

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

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

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

                  "Determination Date": With respect to each Distribution Date,
shall mean (i) with respect to Fairbanks, the 15th day of the calendar month on
which such Distribution Date occurs, or, if such 15th day is not a Business Day,
the Business Day immediately preceding such 15th day, and (ii) with respect to
WFHM, the Business Day preceding the applicable Servicer Remittance Date.

                  "Disqualified Organization": Any of the following: (i) the
United States, any State or political subdivision thereof, any possession of the
United States, or any agency or instrumentality of any of the foregoing (other
than an instrumentality which is a corporation if all of its activities are
subject to tax and, except for Freddie Mac, a majority of its board of directors
is not selected by such governmental unit), (ii) any foreign government, any
international organization, or any agency or instrumentality of any of the
foregoing, (iii) any organization (other than certain farmers' cooperatives
described in Section 521 of the Code) which is exempt from the tax imposed by
Chapter 1 of the Code (including the tax imposed by Section 511 of the Code on
unrelated business taxable income), (iv) rural electric and telephone
cooperatives described in Section 1381(a)(2)(C) of the Code, (v) an "electing
large partnership" and (vi) any other Person so designated by the Trustee based
upon an Opinion of Counsel that the holding of an Ownership Interest in a
Residual Certificate by such Person may cause any Trust REMIC or any Person
having an Ownership Interest in any Class of Certificates (other than such
Person) to incur a liability for any federal tax imposed

                                      -15-

<PAGE>

under the Code that would not otherwise be imposed but for the Transfer of an
Ownership Interest in a Residual Certificate to such Person. The terms "United
States," "State" and "international organization" shall have the meanings set
forth in Section 7701 of the Code or successor provisions.

                  "Distribution Account": The trust account or accounts created
and maintained by the Trustee pursuant to Section 3.25 in the name of the
Trustee for the benefit of the Certificateholders and designated "Bank One,
National Association, in trust for registered holders of ACE Securities Corp.
Home Equity Loan Trust, Series 2002-HE3". Funds in the Distribution Account
shall be held in trust for the Certificateholders for the uses and purposes set
forth in this Agreement. The Distribution Account must be an Eligible Account.

                  "Distribution Account Deposit Date": The Business Day prior to
such Distribution Date.

                  "Distribution Date": The 25th day of any month, or if such
25th day is not a Business Day, the Business Day immediately following such 25th
day, commencing in January 2003.

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

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

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

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

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

                  "Excess Group Net WAC Pass-Through Rate Amount": For any
Distribution Date and the Class A-1 Certificates, the positive excess, if any,
of (i) the amount of interest accrued on the Class A-1 Certificates for such
Distribution Date calculated at the Net WAC Pass-Through Rate for the Class A-1
Certificates over (ii) the amount of interest accrued on the Class A-1
Certificates at the Pool Net WAC Pass-Through Rate. For any Distribution Date
and the Class A-2A Certificates, the positive excess, if any, of (i) the amount
of interest accrued on the Class A-2A Certificates for such Distribution Date
calculated at the Net WAC Pass-Through Rate for the Class A-2A Certificates over
(ii) the amount of interest accrued on the Class A-2A Certificates at the Pool
Net WAC Pass-Through Rate. For any Distribution Date and the Class A-2B
Certificates, the positive excess, if any, of (i) the amount of interest accrued
on the Class A-2B Certificates for such Distribution Date calculated at the Net
WAC Pass-Through Rate for the Class A-2B Certificates over

                                      -16-

<PAGE>

(ii) the amount of interest accrued on the Class A-2B Certificates at the Pool
Net WAC Pass- Through Rate. For any Distribution Date and the Class A-2C
Certificates, the positive excess, if any, of (i) the amount of interest accrued
on the Class A-2C Certificates for such Distribution Date calculated at the Net
WAC Pass-Through Rate for the Class A-2C Certificates over (ii) the amount of
interest accrued on the Class A-2C Certificates at the Pool Net WAC Pass-Through
Rate.

                  "Excess Liquidation Proceeds": To the extent that such amount
is not required by law to be paid to the related mortgagor, the amount, if any,
by which Liquidation Proceeds with respect to a liquidated Mortgage Loan exceed
the sum of (i) the outstanding principal balance of such Mortgage Loan and
accrued but unpaid interest at the related Net Mortgage Rate through the last
day of the month in which the related Liquidation Event occurs, plus (ii)
related liquidation expenses or other amounts to which the related Servicer is
entitled to be reimbursed from Liquidation Proceeds with respect to such
liquidated Mortgage Loan pursuant to the related Servicing Agreement or Section
3.26 hereof.

                  "Excess Net WAC Rate Reserve Fund": As defined in Section
3.33.

                  "Excess Pool Net WAC Pass-Through Rate Amount": For any
Distribution Date and the Class A-1 Certificates, the positive excess, if any,
of (i) the amount of interest accrued on the Class A-1 Certificates for such
Distribution Date calculated at the Pool Net WAC Pass-Through Rate over (ii) the
amount of interest accrued on the Class A-1 Certificates at the Net WAC
Pass-Through Rate for the Class A-1 Certificates. For any Distribution Date and
the Class A-2A Certificates, the positive excess, if any, of (i) the amount of
interest accrued on the Class A-2A Certificates for such Distribution Date
calculated at the Pool Net WAC Pass-Through Rate over (ii) the amount of
interest accrued on such Class A-2A Certificates at the Net WAC Pass-Through
Rate for the Class A-2A Certificates. For any Distribution Date and the Class
A-2B Certificates, the positive excess, if any, of (i) the amount of interest
accrued on the Class A-2B Certificates for such Distribution Date calculated at
the Pool Net WAC Pass-Through Rate over (ii) the amount of interest accrued on
such Class A-2B Certificates at the Net WAC Pass-Through Rate for the Class A-2B
Certificates. For any Distribution Date and the Class A-2C Certificates, the
positive excess, if any, of (i) the amount of interest accrued on the Class A-2C
Certificates for such Distribution Date calculated at the Pool Net WAC
Pass-Through Rate over (ii) the amount of interest accrued on such Class A-2C
Certificates at the Net WAC Pass-Through Rate for the Class A-2C Certificates.

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

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

                  "Fairbanks": Shall mean Fairbanks Capital Corp., or any
successor thereto.

                  "Fairbanks Servicing Agreement": Shall mean the Servicing
Agreement, dated as of December 1, 2002, between the Seller and Fairbanks (as
modified pursuant to the related Assignment Agreement).

                                      -17-

<PAGE>

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

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

                  "Final Recovery Determination": With respect to any defaulted
Mortgage Loan or any REO Property (other than a Mortgage Loan or REO Property
purchased by the applicable Originator, the Seller or the Terminator pursuant to
or as contemplated by Section 2.03 or Section 9.01), a determination made by the
applicable Servicer pursuant to the related Servicing Agreement that all
Insurance Proceeds, Liquidation Proceeds and other payments or recoveries which
such Servicer, in its reasonable good faith judgment, expects to be finally
recoverable in respect thereof have been so recovered. The Master Servicer shall
maintain records, based on information provided by each Servicer, of each Final
Recovery Determination made thereby.

                  "Fitch": Fitch Ratings or any successor in interest.

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

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

                  "Group I Interest Remittance Amount": With respect to any
Distribution Date is that portion of the Available Distribution Amount for such
Distribution Date that represents interest received or advanced on the Group I
Mortgage Loans.

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

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

                                      -18-

<PAGE>

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

                  "Group II Interest Remittance Amount": With respect to any
Distribution Date is that portion of the Available Distribution Amount for such
Distribution Date that represents interest received or advanced on the Group II
Mortgage Loans.

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

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

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

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

                  "Index": With respect to each Adjustable Rate Mortgage Loan
and each related Adjustment Date, either (i) the average of the interbank
offered rates for six-month United States dollar deposits in the London market
as published in THE WALL STREET JOURNAL and as most recently available either
(a) as of the first Business Day 45 days prior to such Adjustment Date or (b) as
of

                                      -19-

<PAGE>

the first Business Day of the month preceding the month of such Adjustment Date,
as specified in the related Mortgage Note or (ii) the weekly average yield on
United States Treasury Securities adjusted to a constant maturity of one year,
as published in the FEDERAL RESERVE STATISTICAL RELEASE H.15(519) as most
recently announced as of a date 45 days prior to such Adjustment Date.

                  "Insurance Proceeds": Proceeds of any title policy, hazard
policy or other insurance policy covering a Mortgage Loan, to the extent such
proceeds are not to be applied to the restoration of the related Mortgaged
Property or released to the Mortgagor in accordance with the applicable
Servicing Agreement.

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

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

                  "Interest Determination Date": With respect to the Class A
Certificates, the Mezzanine Certificates, REMIC II Regular Interest II-LTA1,
REMIC II Regular Interest II-LTA2A, REMIC II Regular Interest II-LTA2B, REMIC II
Regular Interest II-LTA2C, REMIC II Regular Interest II-LTM1, REMIC II Regular
Interest II-LTM2 and REMIC II Regular Interest II-LTM3, and any Interest Accrual
Period therefor, the second London Business Day preceding the commencement of
such Interest Accrual Period.

                  "Interest Distribution Amount": With respect to any
Distribution Date and any Class A Certificates, any Mezzanine Certificates, any
Class A-IO Certificates and any Class CE Certificates, the aggregate Accrued
Certificate Interest on the Certificates of such Class for such Distribution
Date plus, solely for federal income tax purposes, the amount of the Excess
Group Net WAC Pass-Through Rate Amount, if any, for such Class for such
Distribution Date and reduced by the amount of Excess Pool Net WAC Pass-Through
Rate Amount, if any, for such Class for such Distribution Date.

                  "Interest Remittance Amount": With respect to any Distribution
Date, that portion of the Available Distribution Amount for such Distribution
Date that represents interest received or advanced on the Mortgage Loans.

                                      -20-

<PAGE>

                  "Liquidation Event": With respect to any Mortgage Loan, any of
the following events: (i) such Mortgage Loan is paid in full; (ii) a Final
Recovery Determination is made as to such Mortgage Loan or (iii) such Mortgage
Loan is removed from REMIC I by reason of its being purchased, sold or replaced
pursuant to or as contemplated by Section 2.03 or Section 9.01. With respect to
any REO Property, either of the following events: (i) a Final Recovery
Determination is made as to such REO Property or (ii) such REO Property is
removed from REMIC I by reason of its being purchased pursuant to Section 9.01.

                  "Liquidation Proceeds": The amount (other than Insurance
Proceeds or amounts received in respect of the rental of any REO Property prior
to REO Disposition) received by the applicable Servicer pursuant to the related
Servicing Agreement or the Master Servicer in connection with (i) the taking of
all or a part of a Mortgaged Property by exercise of the power of eminent domain
or condemnation, (ii) the liquidation of a defaulted Mortgage Loan through a
trustee's sale, foreclosure sale or otherwise, or (iii) the repurchase,
substitution or sale of a Mortgage Loan or an REO Property pursuant to or as
contemplated by Section 2.03 or Section 9.01.

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

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

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

                  "Marker Rate": With respect to the Class CE Certificates and
any Distribution Date, a per annum rate equal to two (2) times the weighted
average of the REMIC II Remittance Rate for each of the REMIC II Regular
Interests (other than REMIC II Regular Interest II-LTAA, REMIC II Regular
Interest II-LTP, REMIC II Regular Interest II-LTIO-1A, REMIC II Regular Interest
II-LTIO- 1B, REMIC II Regular Interest II-LTIO-1C, REMIC II Regular Interest
II-LTIO-2A, REMIC II Regular Interest II-LTIO-2B and REMIC II Regular Interest
II-LTIO-2C ), with the rate on each such REMIC II Regular Interest (other than
REMIC II Regular Interest II-LTZZ) subject to a cap equal to the lesser of (i)
the related One-Month LIBOR Pass-Through Rate and (ii) the Net WAC Pass-Through
Rate for the purpose of this calculation for such Distribution Date and with the
rate on REMIC II Regular Interest II-LTZZ subject to a cap of zero for the
purpose of this calculation; provided however, each such cap shall be multiplied
by a fraction the numerator of which is the actual number of days in the related
Interest Accrual Period and the denominator of which is 30.

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

                                      -21-

<PAGE>

                  "Master Servicer Collection Account": The account or accounts
created and maintained, or caused to be created and maintained, by the Master
Servicer pursuant to Section 3.23, which shall be denominated "Bank One,
National Association, as Trustee f/b/o holders of ACE Securities Corp. Home
Equity Loan Trust, Series 2002-HE3 - Master Servicer Collection Account". The
Collection Account must be an Eligible Account.

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

                  "Master Servicer Fee Rate": 0.01% per annum.

                  "Master Servicing Fee": With respect to each Mortgage Loan and
for any calendar month, an amount equal to one twelfth of the product of the
Master Servicer Fee Rate multiplied by the Scheduled Principal Balance of the
Mortgage Loans as of the Due Date in the preceding calendar month.

                  "Maximum II-LTZZ Uncertificated Interest Deferral Amount":
With respect to any Distribution Date, the excess of (i) accrued interest at the
REMIC II Remittance Rate applicable to REMIC II Regular Interest I-LTZZ for such
Distribution Date on a balance equal to the Uncertificated Balance of REMIC II
Regular Interest II-LTZZ minus the REMIC II Overcollateralization Amount, in
each case for such Distribution Date, over (ii) Uncertificated Interest on REMIC
II Regular Interest II-LTA1, REMIC II Regular Interest II-LTA2A, REMIC II
Regular Interest II-LTA2B, REMIC II Regular Interest II-LTA2C, REMIC II Regular
Interest II-LTM1, REMIC II Regular Interest II-LTM2 and REMIC II Regular
Interest II-LTM3 for such Distribution Date, with the rate on each such REMIC II
Regular Interest subject to a cap equal to the lesser of (i) the related
One-Month LIBOR Pass-Through Rate and (ii) the Net WAC Pass-Through Rate for the
purpose of this calculation for such Distribution Date; provided however, each
such cap shall be multiplied by a fraction the numerator of which is the actual
number of days in the related Interest Accrual Period and the denominator of
which is 30.

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

                  "Mezzanine Certificate": Any Class M-1 Certificate, Class M-2
Certificate or Class M-3 Certificate.

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

                  "Monthly Payment": With respect to any Mortgage Loan, the
scheduled monthly payment of principal and interest on such Mortgage Loan which
is payable by the related Mortgagor from time to time under the related Mortgage
Note, determined: (a) after giving effect to (i) any Deficient Valuation and/or
Debt Service Reduction with respect to such Mortgage Loan and (ii) any reduction
in the amount of interest collectible from the related Mortgagor pursuant to the
Relief Act; (b) without giving effect to any extension granted or agreed to by
the related Servicer under the

                                      -22-

<PAGE>

applicable Servicing Agreement; and (c) on the assumption that all other
amounts, if any, due under such Mortgage Loan are paid when due.

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

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

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

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

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

                  "Mortgage Loan Purchase Agreement": Shall mean the Mortgage
Loan Purchase Agreement dated as of December 10, 2002, between the Depositor and
the Seller.

                  "Mortgage Loan Schedule": As of any date, the list of Mortgage
Loans included in REMIC I on such date, separately identifying the Group I
Mortgage Loans and the Group II Mortgage Loans, attached hereto as Schedule 1.
The Mortgage Loan Schedule shall set forth the following information with
respect to each Mortgage Loan:

                      (i) the Mortgage Loan identifying number;

                      (ii) the Mortgagor's name;

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

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

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

                      (vi) the original months to maturity;

                      (vii) the stated remaining months to maturity from the
                      Cut-off Date based on the original amortization schedule;

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

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

                                      -23-

<PAGE>

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

                      (xi) the stated maturity date;

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

                      (xiii) the amount of the Monthly Payment due on the first
                      Due Date after the Cut-off Date;

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

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

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

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

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

                      (xix) a code indicating the purpose of the Mortgage Loan
                      (I.E., purchase financing, Rate/Term Refinancing, Cash-Out
                      Refinancing);

                      (xx) with respect to each Adjustable Rate Mortgage Loan,
                      the Maximum Mortgage Rate;

                      (xxi) with respect to each Adjustable Rate Mortgage Loan,
                      the Minimum Mortgage Rate;

                      (xxii) the Mortgage Rate at origination;

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

                      (xxiv) a code indicating the documentation program (I.E.,
                      Full Documentation, Limited Documentation, Stated Income
                      Documentation);

                      (xxv) the Index;

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

                                      -24-

<PAGE>

                      (xxvii) the risk grade;

                      (xxviii) the Value of the Mortgaged Property;

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

                      (xxx) the actual unpaid principal balance of the Mortgage
                      Loan as of the Cut-off Date;

                      (xxxi) if the related Mortgage Loan has a Prepayment
                      Charge and if so, the type and term of the related
                      Prepayment Charge; and

                      (xxxii) the rounding code (I.E., nearest 0.125%, next
                      highest 0.125%).

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

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

                    "Mortgage Rate": With respect to each Mortgage Loan, the
annual rate at which interest accrues on such Mortgage Loan from time to time in
accordance with the provisions of the related Mortgage Note, which rate with
respect to each Adjustable Rate Mortgage Loan (A) as of any date of
determination until the first Adjustment Date following the Cut-off Date shall
be the rate set forth in the Mortgage Loan Schedule as the Mortgage Rate in
effect immediately following the Cut-off Date and (B) as of any date of
determination thereafter shall be the rate as adjusted on the most recent
Adjustment Date equal to the sum, rounded to the nearest 0.125% as provided in
the Mortgage Note, of the Index, as most recently available as of a date prior
to the Adjustment Date as set forth in the related Mortgage Note, plus the
related Gross Margin; provided that the Mortgage Rate on such Adjustable Rate
Mortgage Loan on any Adjustment Date shall never be more than the lesser of (i)
the sum of the Mortgage Rate in effect immediately prior to the Adjustment Date
plus the related Periodic Rate Cap, if any, and (ii) the related Maximum
Mortgage Rate, and shall never be less than the greater of (i) the Mortgage Rate
in effect immediately prior to the Adjustment Date less the Periodic Rate Cap,
if any, and (ii) the related Minimum Mortgage Rate. With respect to each
Mortgage Loan that becomes an REO Property, as of any date of determination, the
annual rate determined in accordance with the immediately preceding sentence as
of the date such Mortgage Loan became an REO Property.

                                      -25-

<PAGE>

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

                    "Mortgagor": The obligor on a Mortgage Note.

                    "Net Monthly Excess Cashflow": With respect to any
Distribution Date, the sum of (i) any Overcollateralization Reduction Amount for
such Distribution Date and (ii) the excess of (x) the Available Distribution
Amount for such Distribution Date over (y) the sum for such Distribution Date of
(A) the aggregate Senior Interest Distribution Amounts payable to the holders of
the Class A Certificates and the Class A-IO Certificates, (B) the Interest
Distribution Amounts payable to the holders of the Mezzanine Certificates and
(C) the Principal Remittance Amount.

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

                    "Net WAC Pass-Through Rate": With respect to the Class A-1
Certificates and any Distribution Date, is a rate per annum equal to the product
of (x) (A) the weighted average of the Expense Adjusted Mortgage Rates on the
then outstanding Group I Mortgage Loans, weighted based on their Scheduled
Principal Balances as of the first day of the calendar month preceding the month
in which the Distribution Date occurs minus (B) the REMIC II Remittance Rate for
REMIC II Regular Interest II-LTIO-1A, REMIC II Regular Interest II-LTIO-1B and
REMIC II Regular Interest II-LTIO-1C immediately for such Distribution Date
multiplied by a fraction, the numerator of which is the Notional Amount of REMIC
II Regular Interest II-LTIO-1A, REMIC II Regular Interest II- LTIO-1B and REMIC
II Regular Interest II-LTIO-1C immediately prior to such Distribution Date and
the denominator of which is the aggregate Stated Principal Balance of the Group
I Mortgage Loans as of the first day of the month preceding the month of such
Distribution Date and (y) a fraction, the numerator of which is 30 and the
denominator of which is the actual number of days elapsed in the related
Interest Accrual Period. For federal income tax purposes, the economic
equivalent of such rate shall be expressed as the REMIC II Remittance Rate of
the REMIC II Regular Interest for which such Class of Certificates is the
Corresponding Certificate.

                    With respect to the Class A-2A Certificates, the Class A-2B
Certificates and the Class A-2C Certificates and any Distribution Date, is a
rate per annum equal to the product of (x)(A) the weighted average of the
Expense Adjusted Mortgage Rates on the then outstanding Group II Mortgage Loans,
weighted based on their Scheduled Principal Balances as of the first day of the
calendar month preceding the month in which the Distribution Date occurs minus
(B) the REMIC II Remittance Rate for REMIC II Regular Interest II-LTIO-2A, REMIC
II Regular Interest II-LTIO- 2B and REMIC II Regular Interest II-LTIO-2C for
such Distribution Date multiplied by a fraction, the numerator of which is the
Notional Amount for REMIC II Regular Interest II-LTIO-2A, REMIC II Regular
Interest II-LTIO-2B and REMIC II Regular Interest II-LTIO-2C immediately prior
to such Distribution Date and the denominator of which is the aggregate Stated
Principal Balance of the Group II Mortgage Loans as of the first day of the
month preceding the month of such Distribution Date and (y) a fraction, the
numerator of which is 30 and the denominator of which is the actual number of
days elapsed in the related Interest Accrual Period. For federal income tax
purposes, the

                                      -26-

<PAGE>

economic equivalent of such rate shall be expressed as the REMIC II Remittance
Rate of the REMIC II Regular Interest for which such Class of Certificates is
the Corresponding Certificate.

                    With respect to REMIC II Regular Interest II-LTIO-1A, REMIC
II Regular Interest II-LTIO-1B and REMIC II Regular Interest II-LTIO-1C and any
Distribution Date, will be a per annum rate equal to the weighted average of the
Expense Adjusted Mortgage Rates on the then outstanding Group I Mortgage Loans
weighted based on their Scheduled Principal Balances as of the first day of the
calendar month preceding the month in which the Distribution Date occurs.

                    With respect to REMIC II Regular Interest II-LTIO-2A, REMIC
II Regular Interest II-LTIO-2B and REMIC II Regular Interest II-LTIO-2C and any
Distribution Date, will be a per annum rate equal to the weighted average of the
Expense Adjusted Mortgage Rates on the then outstanding Group II Mortgage Loans
weighted based on their Scheduled Principal Balances as of the first day of the
calendar month preceding the month in which the Distribution Date occurs.

                    With respect to the Mezzanine Certificates and any
Distribution Date, is a rate per annum equal to the product of (x)(A) the
weighted average of the Expense Adjusted Mortgage Rates on the then outstanding
Mortgage Loans, weighted based on their Scheduled Principal Balances as of the
first day of the calendar month preceding the month in which the Distribution
Date occurs minus (B) the sum of (i) the REMIC II Remittance Rate for REMIC II
Regular Interest II-LTIO-1A, REMIC II Regular Interest II-LTIO-1B and REMIC II
Regular Interest II-LTIO-1C for such Distribution Date multiplied by a fraction,
the numerator of which is the Notional Amount for REMIC II Regular Interest
II-LTIO-1A, REMIC II Regular Interest II-LTIO-1B and REMIC II Regular Interest
II-LTIO-1C immediately prior to such Distribution Date and the denominator of
which is the aggregate Stated Principal Balance of the Group I Mortgage Loans as
of the first day of the month preceding the month of such Distribution Date and
(ii) the REMIC II Remittance Rate for REMIC II Regular Interest II-LTIO-2A,
REMIC II Regular Interest II-LTIO-2B and REMIC II Regular Interest II-LTIO-2C
for such Distribution Date multiplied by a fraction, the numerator of which is
the Notional Amount for REMIC II Regular Interest II-LTIO-2A, REMIC II Regular
Interest II-LTIO-2B and REMIC II Regular Interest II-LTIO-2C immediately prior
to such Distribution Date and the denominator of which is the aggregate Stated
Principal Balance of the Group II Mortgage Loans as of the first day of the
month preceding the month of such Distribution Date and (y) a fraction, the
numerator of which is 30 and the denominator of which is the actual number of
days elapsed in the related Interest Accrual Period. For federal income tax
purposes, the economic equivalent of such rate shall be expressed as the REMIC
II Remittance Rate of the REMIC II Regular Interest for which such Class of
Certificates is the Corresponding Certificate.

                    "Net WAC Rate Carryover Amount": With respect to the Class A
Certificates and the Mezzanine Certificates and any Distribution Date on which
the Pass-Through Rate is limited to the applicable Net WAC Pass-Through Rate, an
amount equal to the sum of (i) the excess of (x) the amount of interest the
Class A Certificates or any Class of Mezzanine Certificates would have been
entitled to receive on such Distribution Date if the applicable Net WAC
Pass-Through Rate would not have been applicable to such Certificates on such
Distribution Date over (y) the amount of interest paid on such Distribution Date
at the applicable Net WAC Pass-Through Rate plus (ii) the related Net WAC Rate
Carryover Amount for the previous Distribution Date not previously

                                      -27-

<PAGE>

distributed together with interest thereon at a rate equal to the Pass-Through
Rate for such class of Certificates for the most recently ended Interest Accrual
Period.

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

                    "Nonrecoverable Servicing Advance": Any Servicing Advance
previously made or proposed to be made in respect of a Mortgage Loan or REO
Property that, in the good faith business judgment of the applicable Servicer
pursuant to the related Servicing Agreement, will not or, in the case of a
proposed Servicing Advance, would not be ultimately recoverable from related
late payments, Insurance Proceeds or Liquidation Proceeds on such Mortgage Loan
or REO Property as provided herein.

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

                    "Notional Amount": With respect to the Class CE Certificates
and any Distribution Date, the Uncertificated Balance of the REMIC II Regular
Interests (other than REMIC II Regular Interest II-LTP) for such Distribution
Date. With respect to the Class A-IO Certificates an amount equal to the
Uncertificated Notional Amount for REMIC I Regular Interest I-LTIO-1 and REMIC I
Regular Interest I-LTIO-2.

                    "Offered Certificates" shall mean the Class A Certificates,
the Class A-IO Certificates and the Mezzanine Certificates, collectively.

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

                    "One-Month LIBOR": With respect to the Class A-1
Certificates, the Mezzanine Certificates, REMIC II Regular Interest II-LTA1A,
REMIC II Regular Interest II-LTA2A, REMIC II Regular Interest II-LTA2B, REMIC II
Regular Interest II-LTM1, REMIC II Regular Interest II-LTM2 and REMIC II Regular
Interest II-LTM3 and any Interest Accrual Period therefor, the rate determined
by the Securities Administrator on the related Interest Determination Date on
the basis of the offered rate for one-month U.S. dollar deposits, as such rate
appears on Telerate Page 3750 as of 11:00 a.m. (London time) on such Interest
Determination Date; provided that if such rate does not appear on Telerate Page
3750, the rate for such date will be determined on the basis of the offered
rates of the Reference Banks for one-month U.S. dollar deposits, as of 11:00
a.m. (London time) on such Interest Determination Date. In such event, the
Securities Administrator will request the principal London office of each of the
Reference Banks to provide a quotation of its rate. If on such Interest
Determination Date, two or more Reference Banks provide such offered quotations,
One-Month LIBOR for the related Interest Accrual Period shall be the arithmetic
mean of such

                                      -28-

<PAGE>

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

                    "One-Month LIBOR Pass-Through Rate": With respect to the
Class A-1 Certificates and, for purposes of the definition of "Marker Rate",
REMIC II Regular Interest II-LTA1, a per annum rate equal to One-Month LIBOR
plus the related Certificate Margin.

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

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

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

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

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

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

                    "Opinion of Counsel": A written opinion of counsel, who may,
without limitation, be salaried counsel for the Depositor, a Servicer, the
Securities Administrator or the Master Servicer, acceptable to the Trustee,
except that any opinion of counsel relating to (a) the qualification of any

                                      -29-

<PAGE>

of any REMIC as a REMIC or (b) compliance with the REMIC Provisions must be an
opinion of Independent counsel.

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

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

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

                    "Overcollateralization Reduction Amount": With respect to
any Distribution Date, is the lesser of (i) the amount by which the
Overcollateralization Amount exceeds the Required Overcollateralization Amount
and (ii) the Principal Remittance Amount.

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

                    "P&I Advance": As to any Mortgage Loan or REO Property, any
advance made by the applicable Servicer in respect of any Determination Date
pursuant to Section 5.03 of the related Servicing Agreement or in respect of any
Distribution Date by the Master Servicer or the Trustee (as successor Master
Servicer) pursuant to Section 4.03 (which advances shall not include interest
shortfalls due to bankruptcy proceedings or application of the Relief Act.)

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

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

                    With respect to the Class CE Certificates and any
Distribution Date, a rate per annum equal to the percentage equivalent of a
fraction, the numerator of which is the sum of the amounts calculated pursuant
to clauses (i) through (x) below, and the denominator of which is the aggregate

                                      -30-

<PAGE>

Uncertificated Balances of the REMIC II Regular Interests. For purposes of
calculating the Pass-Through Rate for the Class CE Certificates, the numerator
is equal to the sum of the following components:

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

                  (ii) the REMIC II Remittance Rate for REMIC II Regular
         Interest II-LTA1 minus the Marker Rate, applied to an amount equal to
         the Uncertificated Balance of REMIC II Regular Interest II-LTA1;

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

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

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

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

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

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

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

                  (x) 100% of the interest on REMIC II Regular Interest II-LTP.

                    "Percentage Interest": With respect to any Class of
Certificates (other than the Residual Certificates), the undivided percentage
ownership in such Class evidenced by such Certificate, expressed as a
percentage, the numerator of which is the initial Certificate Principal Balance
represented by such Certificate and the denominator of which is the aggregate
initial

                                      -31-

<PAGE>

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

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

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

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

                    (ii) demand and time deposits in, certificates of deposit
         of, or bankers' acceptances issued by, any Depository Institution;

                    (iii) repurchase obligations with respect to any security
         described in clause (i) above entered into with a Depository
         Institution (acting as principal);

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

                    (v) commercial paper (including both non-interest-bearing
         discount obligations and interest-bearing obligations payable on demand
         or on a specified date not more than 30 days

                                      -32-

<PAGE>

         after the date of acquisition thereof) that is rated by each Rating
         Agency that rates such securities in its highest short-term unsecured
         debt rating available at the time of such investment;

                    (vi) units of money market funds that have been rated "AAA"
         by S&P and "Aaa" by Moody's (or, if such Rating Agencies are no longer
         rating the Offered Certificates, comparable ratings by any other
         nationally recognized statistical rating agency then rating the Offered
         Certificates) including any such money market fund managed or advised
         by the Master Servicer, the Trustee or any of their Affiliates; and

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

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

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

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

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

                    "Pool Net WAC Pass-Through Rate": A per annum rate (not less
than zero) equal to the weighted average of:

                    (a) the REMIC I Remittance Rate with respect to REMIC I
         Regular Interest I-LT1 for such Distribution Date weighted on the basis
         of the Uncertificated Balance of REMIC I Regular Interest I-LT1;

                    (b) the REMIC I Remittance Rate with respect to REMIC I
         Regular Interest I-LT2 for such Distribution Date weighted on the basis
         of the Uncertificated Balance of REMIC I Regular Interest I-LT2;

                    (c) the REMIC I Remittance Rate with respect to REMIC I
         Regular Interest I-LTP for such Distribution Date weighted on the basis
         of the Uncertificated Balance of REMIC I Regular Interest I-LTP;

                                      -33-

<PAGE>

                    (d) the excess, if any, of (i) the Uncertificated REMIC I
Pass-Through Rate with respect to REMIC I Regular Interest I-LTIO-1 for such
Distribution Date over (ii) (A) in the case of the 1st Distribution Date through
the 10th Distribution Date, 5.5% per annum, (B) in the case of the 11th
Distribution Date through the 20th Distribution Date, 4.5% per annum, (C) in the
case of the 21st Distribution Date through the 30th Distribution Date, 3.5% per
annum and (D) in the case of any Distribution Date thereafter, 0.00% per annum,
weighted on the basis of the Uncertificated Balance of REMIC I Regular Interest
I-LTIO-1; and

                    (e) the excess, if any, of (i) the Uncertificated REMIC I
Pass-Through Rate with respect to REMIC I Regular Interest I-LTIO-2 for such
Distribution Date over (ii) (A) in the case of the 1st Distribution Date through
the 10th Distribution Date, 5.5% per annum, (B) in the case of the 11th
Distribution Date through the 20th Distribution Date, 4.5% per annum, (C) in the
case of the 21st Distribution Date through the 30th Distribution Date, 3.5% per
annum and (D) in the case of any Distribution Date thereafter, 0.00% per annum,
weighted on the basis of the Uncertificated Balance of REMIC I Regular Interest
I-LTIO-2.

                    "Prepayment Assumption": A prepayment rate for the Mortgage
Loans of 28% CPR. The Prepayment Assumption is used solely for determining the
accrual of original issue discount on the Certificates for federal income tax
purposes. A CPR (or Constant Prepayment Rate) represents an annualized constant
assumed rate of prepayment each month of a pool of mortgage loans relative to
its outstanding principal balance for the life of such pool.

                    "Prepayment Charge": With respect to any Principal
Prepayment, any prepayment premium, penalty or charge payable by a Mortgagor in
connection with any Principal Prepayment on a Mortgage Loan pursuant to the
terms of the related Mortgage Note, as set forth in Schedule 2 attached hereto.

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

                    "Prepayment Period": For any Distribution Date, (i) with
respect to WFHM, the calendar month preceding the calendar month in which such
Distribution Date occurs and (ii) with respect to Fairbanks, the period from the
16th day of the calendar month preceding the month in which the related
Distribution Date occurs through the 15th day of the month of such Distribution
Date.

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

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<PAGE>

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

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

                    "Protected Account": An account or accounts established and
maintained for the benefit of the Certificateholders by each Servicer with
respect to the related Mortgage Loans and with respect to REO Property pursuant
to the applicable Servicing Agreement.

                    "Purchase Price": With respect to any Mortgage Loan or REO
Property to be purchased pursuant to or as contemplated by Section 2.03 or
Section 9.01, and as confirmed by an Officers' Certificate from the Master
Servicer to the Trustee, an amount equal to the sum of (i) 100% of the Stated
Principal Balance thereof as of the date of purchase (or such other price as
provided in Section 9.01), (ii) in the case of (x) a Mortgage Loan, accrued
interest on such Stated Principal Balance at the applicable Net Mortgage Rate in
effect from time to time from the Due Date as to which interest was last covered
by a payment by the Mortgagor or a P&I Advance by the applicable Servicer or the
Master Servicer, which payment or P&I Advance had as of the date of purchase
been distributed pursuant to Section 4.01, through the end of the calendar month
in which the purchase is to be effected and (y) an REO Property, the sum of (1)
accrued interest on such Stated Principal Balance at the applicable Net Mortgage
Rate in effect from time to time from the Due Date as to which interest was last
covered by a payment by the Mortgagor or a P&I Advance by the applicable
Servicer or the Master Servicer through the end of the calendar month
immediately preceding the calendar month in which such REO Property was
acquired, plus (2) REO Imputed Interest for such REO Property for each calendar
month commencing with the calendar month in which such REO Property was acquired
and ending with the calendar month in which such purchase is to be effected, net
of the total of all net rental income, Insurance Proceeds, Liquidation Proceeds
and P&I Advances that as of the date of purchase had been distributed as or to
cover REO Imputed Interest in accordance with the applicable Servicing
Agreement, (iii) any unreimbursed Servicing Advances and P&I Advances (including
Nonrecoverable P&I Advances and Nonrecoverable Servicing Advances) and any
unpaid Servicing Fees or Master Servicing Fees allocable to such Mortgage Loan
or REO Property and (iv) in the case of a Mortgage Loan required to be purchased
pursuant to Section 2.03, expenses reasonably incurred or to be incurred by the
Master Servicer, the Servicers or the Trustee in respect of the breach or defect
giving rise to the purchase obligation.

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

                                      -35-

<PAGE>

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

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

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

                    "Realized Loss": With respect to each Mortgage Loan as to
which a Final Recovery Determination has been made, an amount (not less than
zero) equal to (i) the unpaid principal balance of such Mortgage Loan as of the
commencement of the calendar month in which the Final Recovery Determination was
made, plus (ii) accrued interest from the Due Date as to which interest was last
paid by the Mortgagor through the end of the calendar month in which such Final
Recovery Determination was made, calculated in the case of each calendar month
during such period (A) at an annual rate equal to the annual rate at which
interest was then accruing on such Mortgage Loan and (B) on a principal amount
equal to the Stated Principal Balance of such Mortgage Loan as of the close of
business on the Distribution Date during such calendar month, minus (v) the
proceeds, if any, received in respect of such Mortgage Loan during the calendar
month in which such Final Recovery Determination was made, net of amounts that
are payable therefrom to the applicable Servicer with respect to such Mortgage
Loan pursuant to Section 3.26(a).

                    With respect to any REO Property as to which a Final
Recovery Determination has been made, an amount (not less than zero) equal to
(i) the unpaid principal balance of the related Mortgage Loan as of the date of
acquisition of such REO Property on behalf of REMIC I, plus (ii)

                                      -36-

<PAGE>

accrued interest from the Due Date as to which interest was last paid by the
Mortgagor in respect of the related Mortgage Loan through the end of the
calendar month immediately preceding the calendar month in which such REO
Property was acquired, calculated in the case of each calendar month during such
period (A) at an annual rate equal to the annual rate at which interest was then
accruing on the related Mortgage Loan and (B) on a principal amount equal to the
Stated Principal Balance of the related Mortgage Loan as of the close of
business on the Distribution Date during such calendar month, plus (iii) REO
Imputed Interest for such REO Property for each calendar month commencing with
the calendar month in which such REO Property was acquired and ending with the
calendar month in which such Final Recovery Determination was made, minus (iv)
the aggregate of all unreimbursed P&I Advances and Servicing Advances.

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

                    With respect to each Mortgage Loan which has become the
subject of a Debt Service Reduction, the portion, if any, of the reduction in
each affected Monthly Payment attributable to a reduction in the Mortgage Rate
imposed by a court of competent jurisdiction. Each such Realized Loss shall be
deemed to have been incurred on the Due Date for each affected Monthly Payment.

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

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

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

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

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

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

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<PAGE>

                    "Relief Act Interest Shortfall": With respect to any
Distribution Date and any Mortgage Loan, any reduction in the amount of interest
collectible on such Mortgage Loan for the most recently ended calendar month as
a result of the application of the Relief Act or any similar state or local
laws.

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

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

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

                    "REMIC I Regular Interest I-LT1": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LT1
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

                    "REMIC I Regular Interest I-LT2": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LT2
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and

                                      -38-

<PAGE>

conditions hereof, in an aggregate amount equal to its initial Uncertificated
Balance as set forth in the Preliminary Statement hereto.

                    "REMIC I Regular Interest I-LTIO-1": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LTIO-1
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

                    "REMIC I Regular Interest I-LTIO-2": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LTIO-2
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

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

                    "REMIC I Remittance Rate": With respect to each REMIC I
Regular Interest and any Distribution Date, a per annum rate equal to the
weighted average of the Expense Adjusted Mortgage Rates of the Mortgage Loans.

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

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

                    "REMIC II Overcollateralization Amount": With respect to any
date of determination, (i) 1% of the aggregate Uncertificated Balances of the
REMIC II Regular Interests minus (ii) the aggregate of the Uncertificated
Balances of REMIC II Regular Interest II-LTA1, REMIC II Regular Interest
II-LTA2A, REMIC II Regular Interest II-LTA2B, REMIC II Regular Interest
II-LTA2C, REMIC II Regular Interest II-LTM1, REMIC II Regular Interest II-LTM2,
REMIC II Regular Interest II-LTM3 and REMIC Regular Interest II-LTP, in each
case as of such date of determination.

                                      -39-

<PAGE>

                    "REMIC II Principal Loss Allocation Amount": With respect to
any Distribution Date, an amount equal to (a) the product of (i) the aggregate
Stated Principal Balance of the Mortgage Loans and REO Properties then
outstanding and (ii) 1 minus a fraction, the numerator of which is two times the
aggregate of the Uncertificated Balances of REMIC II Regular Interest II-LTA1,
REMIC II Regular Interest II-LTA2A, REMIC II Regular Interest II-LTA2B, REMIC II
Regular Interest II-LTA2C, REMIC II Regular Interest II-LTM1, REMIC II Regular
Interest II-LTM2 and REMIC II Regular Interest II-LTM3 and the denominator of
which is the aggregate of the Uncertificated Balances of REMIC II Regular
Interest II-LTA, REMIC II Regular Interest II-LTM1, REMIC II Regular Interest
II-LTM2, REMIC II Regular Interest II-LTM3 and REMIC II Regular Interest
II-LTZZ.

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

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

                    "REMIC II Regular Interest II-LTA1": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II . REMIC II Regular Interest II-LTA1
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

                    "REMIC II Regular Interest II-LTA2A": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II . REMIC II Regular Interest
II-LTA2A shall accrue interest at the related REMIC II Remittance Rate in effect
from time to time, and shall be entitled to distributions of principal, subject
to the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.

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

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<PAGE>

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

                    "REMIC II Regular Interest II-LTIO-1A": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest
II-LTIO-1A shall accrue interest at the related REMIC II Remittance Rate on its
Uncertificated Notional Amount, as in effect from time to time. REMIC II Regular
Interest II-LTIO-1A has no principal balance and is not entitled to
distributions of principal.

                    "REMIC II Regular Interest II-LTIO-1B": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest
II-LTIO-1B shall accrue interest at the related REMIC II Remittance Rate on its
Uncertificated Notional Amount, as in effect from time to time. REMIC II Regular
Interest II-LTIO-1B has no principal balance and is not entitled to
distributions of principal.

                    "REMIC II Regular Interest II-LTIO-1C": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest
II-LTIO-1C shall accrue interest at the related REMIC II Remittance Rate on its
Uncertificated Notional Amount, as in effect from time to time. REMIC II Regular
Interest II-LTIO-1C has no principal balance and is not entitled to
distributions of principal.

                    "REMIC II Regular Interest II-LTIO-2A": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest
II-LTIO-2A shall accrue interest at the related REMIC II Remittance Rate on its
Uncertificated Notional Amount, as in effect from time to time. REMIC II Regular
Interest II-LTIO-2A has no principal balance and is not entitled to
distributions of principal.

                    "REMIC II Regular Interest II-LTIO-2B": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest
II-LTIO-2B shall accrue interest at the related REMIC II Remittance Rate on its
Uncertificated Notional Amount, as in effect from time to time. REMIC II Regular
Interest II-LTIO-2B has no principal balance and is not entitled to
distributions of principal.

                    "REMIC II Regular Interest II-LTIO-2C": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest
II-LTIO-2C shall accrue interest at the related REMIC II Remittance Rate on its
Uncertificated Notional Amount, as in effect from time to time. REMIC II Regular
Interest II-LTIO-2C has no principal balance and is not entitled to
distributions of principal.

                    "REMIC II Regular Interest II-LTM1": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LTM1
shall accrue interest at the related REMIC II Remittance Rate

                                      -41-

<PAGE>

in effect from time to time, and shall be entitled to distributions of
principal, subject to the terms and conditions hereof, in an aggregate amount
equal to its initial Uncertificated Balance as set forth in the Preliminary
Statement hereto.

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

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

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

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

                    "REMIC II Remittance Rate": With respect to the REMIC II
Regular Interests (other than REMIC II Regular Interest II-LTIO-1A, REMIC II
Regular Interest II-LTIO-1B, REMIC II Regular Interest II-LTIO-1C, REMIC II,
Regular Interest II-LTIO-2A, REMIC II Regular Interest II-LTIO-2B and REMIC II
Regular Interest II-LTIO-2C), a per annum rate equal to the Pool Net WAC
Pass-Through Rate.

                    With respect to REMIC II Regular Interest II-LTIO-1A, a per
annum rate equal to the lesser of (a) the weighted average of the Expense
Adjusted Mortgage Rate of the Group I Mortgage Loans and (b)(i) 1.00% per annum
from the 1st Distribution Date to and including the 10th Distribution Date and
(ii) 0.00% per annum for each Distribution Date thereafter.

                    With respect to REMIC II Regular Interest II-LTIO-1B, a per
annum rate equal to the lesser of (a) the weighted average of the Expense
Adjusted Mortgage Rate of the Group I Mortgage

                                      -42-

<PAGE>

Loans and (b)(i) 1.00% per annum from the 1st Distribution Date to and including
the 20th Distribution Date, and (ii) 0.00% per annum for each Distribution Date
thereafter.

                    With respect to REMIC II Regular Interest II-LTIO-1C, a per
annum rate equal to the lesser of (a) the weighted average of the Expense
Adjusted Mortgage Rate of the Group I Mortgage Loans and (b)(i) 3.50% per annum
from the 1st Distribution Date to and including the 30th Distribution Date, and
(iii) 0.00% per annum for each Distribution Date thereafter.

                    With respect to REMIC II Regular Interest II-LTIO-2A, a per
annum rate equal to the lesser of (a) the weighted average of the Expense
Adjusted Mortgage Rate of the Group II Mortgage Loans and (b) (i) 1.00% per
annum from the 1st Distribution Date to and including the 10th Distribution Date
and (ii) 0.00% per annum for each Distribution Date thereafter.

                    With respect to REMIC II Regular Interest II-LTIO-2B, a per
annum rate equal to the lesser of (a) the weighted average of the Expense
Adjusted Mortgage Rate of the Group II Mortgage Loans and (b)(i) 1.00% per annum
from the 1st Distribution Date to and including the 20th Distribution Date, and
(ii) 0.00% per annum for each Distribution Date thereafter.

                    With respect to REMIC II Regular Interest II-LTIO-1C, a per
annum rate equal to the lesser of (a) the weighted average of the Expense
Adjusted Mortgage Rate of the Group II Mortgage Loans and (b)(i) 3.50% per annum
from the 1st Distribution Date to and including the 30th Distribution Date, and
(iii) 0.00% per annum for each Distribution Date thereafter.

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

                    "REMIC III": The segregated pool of assets consisting of all
of the REMIC II Regular Interests conveyed in trust to the Trustee, for the
benefit of the REMIC III Certificateholders pursuant to Section 2.09, and all
amounts deposited therein, with respect to which a separate REMIC election is to
be made.

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

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

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

                    "Remittance Report": A report by the Securities
Administrator pursuant to Section 4.03.

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

                                                       -43-

<PAGE>

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

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

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

                    "REO Property": A Mortgaged Property acquired by a Servicer
on behalf of REMIC I through foreclosure or deed-in-lieu of foreclosure, as
described in and pursuant to the applicable Servicing Agreement.

                    "Required Overcollateralization Amount": With respect to any
Distribution Date (i) prior to the Stepdown Date, $13,254,247.011, (ii) on or
after the Stepdown Date provided a Trigger Event is not in effect, the greater
of (x) 3.80% of the aggregate Stated Principal Balance of the Mortgage Loans as
of the last day of the related Due Period and (y) $3,487,959.76, and (iii) on or
after the Stepdown Date and a Trigger Event is in effect, the Required
Overcollateralization Amount for the immediately preceding Distribution Date.

                    "Reserve Fund": A fund created pursuant to Section 3.27 of
this Agreement which shall be an asset of the Trust Fund but which shall not be
an asset of any Trust REMIC.

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

                    "Residential Dwelling": Any one of the following: (i) an
attached, detached or semi-detached one-family dwelling, (ii) an attached,
detached or semi-detached two- to four-family

                                      -44-

<PAGE>

dwelling, (iii) a one-family dwelling unit in a Fannie Mae eligible condominium
project, or (iv) an attached, detached or semi-detached one-family dwelling in a
planned unit development, none of which is a co-operative, mobile or
manufactured home (as defined in 42 United States Code, Section 5402(6)).

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

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

                    "Responsible Officer": When used with respect to the
Trustee, the Chairman or Vice Chairman of the Board of Directors (however
denominated), the Chairman or Vice Chairman of any Committee of the Board of
Directors, the President, the Chairman of any Committee on trust matters, any
vice president, any assistant vice president, the Secretary, any assistant
secretary, the Treasurer, any assistant treasurer, the Cashier, any assistant
cashier, any trust officer or assistant trust officer, the Controller and any
assistant controller or any other officer of the Trustee customarily performing
functions similar to those performed by any of the above designated officers and
in each case having direct responsibility for the administration of this
Agreement and, with respect to a particular matter, to whom such matter is
referred because of such officer's knowledge of and familiarity with the
particular subject.

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

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

                                      -45-

<PAGE>

(b) as of any Due Date subsequent to the occurrence of a Liquidation Event with
respect to such REO Property, zero.

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

                    "Seller": Deutsche Bank AG New York Branch or its successor
in interest, in its capacity as seller under the Mortgage Loan Purchase
Agreement and in its capacity as assignor under the Assignment Agreements.

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

                    "Servicer": Either Fairbanks or WFHM, as applicable, or any
successor appointed under the applicable Servicing Agreement.

                    "Servicer Remittance Date": With respect to each
Distribution Date shall mean the 18th day of the calendar month in which such
Distribution Date occurs or, if such 18th day is not a Business Day, the
Business Day immediately preceding such 18th day.

                    "Servicing Advances": The reasonable "out-of-pocket" costs
and expenses incurred by the applicable Servicer in connection with a default,
delinquency or other unanticipated event by the applicable Servicer in the
performance of its servicing obligations, including, but not limited to, the
cost of (i) the preservation, restoration and protection of a Mortgaged
Property, (ii) any enforcement or judicial proceedings, including foreclosures,
in respect of a particular Mortgage Loan and (iii) the management (including
reasonable fees in connection therewith) and liquidation of any REO Property. No
Servicer shall be required to make any Servicing Advance in respect of a
Mortgage Loan or REO Property that, in the good faith business judgment of such
Servicer, would not be ultimately recoverable from related Insurance Proceeds or
Liquidation Proceeds on such Mortgage Loan or REO Property as provided herein.

                    "Servicing Agreement:" Shall mean either the Fairbanks
Servicing Agreement or the WFHM Servicing Agreement.

                    "Servicing Fee": With respect to each Mortgage Loan and for
any calendar month, an amount equal to one twelfth of the product of the
Servicing Fee Rate multiplied by the Scheduled Principal Balance of the Mortgage
Loans as of the Due Date in the preceding calendar month. The Servicing Fee is
payable solely from collections of interest on the Mortgage Loans.

                    "Servicing Fee Rate": 0.50% per annum.

                                      -46-

<PAGE>

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

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

                    "Startup Day": With respect to each Trust REMIC, the day
designated as such pursuant to Section 10.01(b) hereof.

                    "Stated Principal Balance": With respect to any Mortgage
Loan: (a) as of any date of determination up to but not including the
Distribution Date on which the proceeds, if any, of a Liquidation Event with
respect to such Mortgage Loan would be distributed, the Scheduled Principal
Balance of such Mortgage Loan as of the Cut-off Date, as shown in the Mortgage
Loan Schedule, minus the sum of (i) the principal portion of each Monthly
Payment due on a Due Date subsequent to the Cut-off Date, to the extent received
from the Mortgagor or advanced by the applicable Servicer, the Master Servicer
or the Trustee (as successor Master Servicer) and distributed pursuant to
Section 4.01 on or before such date of determination, (ii) all Principal
Prepayments received after the Cut-off Date, to the extent distributed pursuant
to Section 4.01 on or before such date of determination, (iii) all Liquidation
Proceeds and Insurance Proceeds applied by the applicable Servicer as recoveries
of principal in accordance with the provisions of Section 3.26, to the extent
distributed pursuant to Section 4.01 on or before such date of determination,
and (iv) any Realized Loss incurred with respect thereto as a result of a
Deficient Valuation made during or prior to the Prepayment Period for the most
recent Distribution Date coinciding with or preceding such date of
determination; and (b) as of any date of determination coinciding with or
subsequent to the Distribution Date on which the proceeds, if any, of a
Liquidation Event with respect to such Mortgage Loan would be distributed, zero.
With respect to any REO Property: (a) as of any date of determination up to but
not including the Distribution Date on which the proceeds, if any, of a
Liquidation Event with respect to such REO Property would be distributed, an
amount (not less than zero) equal to the Stated Principal Balance of the related
Mortgage Loan as of the date on which such REO Property was acquired on behalf
of REMIC I, minus the sum of (i) if such REO Property was acquired before the
Distribution Date in any calendar month, the principal portion of the Monthly
Payment due on the Due Date in the calendar month of acquisition, to the extent
advanced by the applicable Servicer, the Master Servicer or the Trustee (as
successor Master Servicer) and distributed pursuant to Section 4.01 on or before
such date of determination, and (ii) the aggregate amount of REO Principal
Amortization in respect of such REO Property for all previously ended calendar
months, to the extent distributed pursuant to Section 4.01 on or before such
date of determination; and (b) as of any date of determination coinciding with
or subsequent to the Distribution Date on which the proceeds, if any, of a
Liquidation Event with respect to such REO Property would be distributed, zero.

                                      -47-

<PAGE>

                    "Stepdown Date": The earlier to occur of (i) the later to
occur of (a) the Distribution Date occurring in January 2006 and (b) the first
Distribution Date on which the Credit Enhancement Percentage (calculated for
this purpose only after taking into account distributions of principal on the
Mortgage Loans but prior to any distribution of the Principal Distribution
Amount to the Certificates then entitled to distributions of principal on such
Distribution Date) is equal to or greater than 32.60% and (ii) the first
Distribution Date on which the aggregate Certificate Principal Balance of the
Class A Certificates has been reduced to zero.

                    "Substitution Shortfall Amount": As defined in Section
2.03(f).

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

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

                    "Termination Price": As defined in Section 9.01.

                    "Terminator": As defined in Section 9.01.

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

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

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

                    "Trigger Event": A Trigger Event has occurred with respect
to a Distribution Date if either (x) the Delinquency Percentage exceeds 45% of
the Credit Enhancement Percentage or (y) the aggregate amount of Realized Losses
incurred since the Cut-off Date through the last day of the related Due Period
divided by the aggregate principal balance of the Mortgage Loans as of the
Cut-off exceeds the applicable percentages set forth below with respect to such
Distribution Date:

                    Distribution Date                                Percentage
                    -----------------                                ----------
                    January 2006 to December 2006                    3.25%
                    January 2007 to December 2007                    4.75%
                    January 2008 to December 2008                    6.00%
                    January 2009 and thereafter                      7.00%

                                      -48-

<PAGE>

                    "Trust": ACE Securities Corp., Home Equity Loan Trust,
Series 2002-HE3, the trust created hereunder.

                    "Trust REMIC": REMIC I, REMIC II or REMIC III.

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

                    "Trust Fund": Collectively, all of the assets of REMIC I,
REMIC II, REMIC III, the Reserve Fund and the Excess Net WAC Rate Reserve Fund,
and any amounts on deposit therein and any proceeds thereof.

                    "Uncertificated Balance": The amount of the Uncertificated
REMIC Regular Interests outstanding as of any date of determination. As of the
Closing Date, the Uncertificated Balance of each Uncertificated REMIC Regular
Interest shall equal the amount set forth in the Preliminary Statement hereto as
its initial uncertificated balance. On each Distribution Date, the
Uncertificated Balance of the Uncertificated REMIC Regular Interest shall be
reduced by all distributions of principal made on such Uncertificated REMIC
Regular Interest on such Distribution Date pursuant to Section 4.01 and, if and
to the extent necessary and appropriate, shall be further reduced on such
Distribution Date by Realized Losses as provided in Section 4.04 and the
Uncertificated Balance of REMIC II Regular Interest II-LTZZ shall be increased
by interest deferrals as provided in Section 4.01(a)(1)(B). The Uncertificated
Balance of each Uncertificated REMIC Regular Interest shall never be less than
zero.

                    "Uncertificated Interest": With respect to any REMIC I
Regular Interest or REMIC II Regular Interest for any Distribution Date, one
month's interest at the REMIC II Remittance Rate applicable to such REMIC I
Regular Interest or REMIC II Regular Interest for such Distribution Date,
accrued on the Uncertificated Balance or Uncertificated Notional Amount, as
applicable, thereof immediately prior to such Distribution Date. Uncertificated
Interest in respect of the REMIC I Regular Interests or REMIC II Regular
Interests shall accrue on the basis of a 360-day year consisting of twelve
30-day months. Uncertificated Interest with respect to each Distribution Date,
as to any Uncertificated REMIC Regular Interest, shall be reduced by an amount
equal to the sum of (a) the aggregate Prepayment Interest Shortfall, if any, for
such Distribution Date to the extent not covered by payments pursuant to Section
3.24 and (b) the aggregate amount of any Relief Act Interest Shortfall, if any
allocated, in each case, to such REMIC I Regular Interest or REMIC II Regular
Interest pursuant to Section 1.02. In addition, Uncertificated Interest with
respect to each Distribution Date, as to any Uncertificated REMIC Regular
Interest, shall be reduced by Realized Losses, if any, allocated to such
Uncertificated REMIC Regular Interest pursuant to Section 1.02 and Section 4.04.

                    "Uncertificated Notional Amount:" With respect to REMIC II
Regular Interest II- LTIO-1A, REMIC II Regular Interest II-LTIO-1B and REMIC II
Regular Interest II-LTIO-1C, an amount equal to the Uncertificated Balance of
REMIC I Regular Interest I-LTIO-1. With respect to REMIC II Regular Interest
II-LTIO-2A, REMIC II Regular Interest II-LTIO-2B and REMIC II Regular Interest
II-LTIO-2C, an amount equal to the Uncertificated Balance of REMIC I Regular
Interest I-LTIO-2.

                                      -49-

<PAGE>

                    "Uncertificated REMIC Regular Interest": A REMIC I Regular
Interest or a REMIC II Regular Interest.

                    "Uninsured Cause": Any cause of damage to a Mortgaged
Property such that the complete restoration of such property is not fully
reimbursable by the hazard insurance policies required to be maintained pursuant
to Section 3.09.

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

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

                                      -50-

<PAGE>

                    "Voting Rights": The portion of the voting rights of all of
the Certificates which is allocated to any such Certificate. With respect to any
date of determination, 97% of all Voting Rights will be allocated among the
holders of the Class A Certificates, the Mezzanine Certificates and the Class CE
Certificates in proportion to the then outstanding Certificate Principal
Balances of their respective Certificates, 1% of all Voting Rights will be
allocated to the holders of the Class A-IO Certificates in proportion to the
then outstanding Notional Amount of their Certificates, 1% of all Voting Rights
will be allocated to the holders of the Class P Certificates and 1/3 of 1% of
all Voting Rights will be allocated among the holders of each Class of Residual
Certificates. The Voting Rights allocated to each Class of Certificate shall be
allocated among Holders of each such Class in accordance with their respective
Percentage Interests as of the most recent Record Date.

                    "Wells Fargo": Wells Fargo Bank Minnesota, National
Association or any successor thereto.

                    "WFHM": Shall mean Wells Fargo Home Mortgage, Inc. or any
successor thereto.

                    "WFHM Servicing Agreement": Shall mean the Seller's
Warranties and Servicing Agreement, dated as of October 1, 2002, between the
Seller and WFHM (as modified pursuant to the related Assignment Agreement).

                    SECTION 1.02.           Allocation of Certain Interest
                                            Shortfalls.

                    For purposes of calculating the amount of Accrued
Certificate Interest and the amount of the Interest Distribution Amount for the
Class A Certificates, the Mezzanine Certificates, the Class A-IO Certificates
and the Class CE Certificates for any Distribution Date, (1) the aggregate
amount of any Prepayment Interest Shortfalls (to the extent not covered by
payments by the applicable Servicer under the related Servicing Agreement or by
the Master Servicer pursuant to Section 3.20 and any Relief Act Interest
Shortfalls incurred in respect of the Mortgage Loans for any Distribution Date
shall be allocated first, to the Class CE Certificates based on, and to the
extent of, one month's interest at the then applicable respective Pass-Through
Rate on the Notional Amount thereof and, thereafter, among the Class M-3
Certificates, the Class M-2 Certificates, the Class M-1 Certificates and the
Class A Certificates, in that order, in each case on a PRO RATA basis based on,
and to the extent of, one month's interest at the then applicable respective
Pass-Through Rate on the respective Certificate Principal Balance or Notional
Amount, as applicable of each such Certificate and (2) the aggregate amount of
any Realized Losses allocated to the Mezzanine Certificates and Net WAC Rate
Carryover Amounts paid to the Class A Certificates and the Mezzanine
Certificates incurred for any Distribution Date shall be allocated to the Class
CE Certificates on a PRO RATA basis based on, and to the extent of, one month's
interest at the then applicable respective Pass-Through Rate on the respective
Notional Amount thereof.

                    For purposes of calculating the amount of Uncertificated
Interest for the REMIC I Regular Interests for any Distribution Date, the
aggregate amount of any Prepayment Interest Shortfalls to the extent not covered
by payments pursuant to Section 3.20 and any Relief Act Interest Shortfalls
incurred in respect of the Mortgage Loans for any Distribution Date shall be
allocated (i) with respect to the Group I Mortgage Loans, first, to REMIC I
Regular Interest I-LT1 and then to REMIC I Regular Interest I-LTIO-1, in each
case to the extent of one month's interest at the then

                                      -51-

<PAGE>

applicable respective REMIC I Remittance Rate on the respective Uncertificated
Principal Balance of each such Uncertificated REMIC I Interest; and (ii) with
respect to the Group II Mortgage Loans, first, to REMIC I Regular Interest I-LT2
and then to REMIC I Regular Interest I-LTIO-2, in each case to the extent of one
month's interest at the then applicable respective REMIC I Remittance Rate on
the respective Uncertificated Balance of each such Uncertificated REMIC I
Interest.

                    For purposes of calculating the amount of Uncertificated
Interest for the REMIC II Regular Interests for any Distribution Date, the
aggregate amount of any Prepayment Interest Shortfalls (to the extent not
covered by payments by the applicable Servicer pursuant to the related Servicing
Agreement or the Master Servicer pursuant to Section 3.20) and any Relief Act
Interest Shortfalls incurred in respect of the Mortgage Loans for any
Distribution Date shall be allocated first, to Uncertificated Interest payable
to REMIC II Regular Interest II-LTAA and REMIC II Regular Interest II-LTZZ up to
an aggregate amount equal to the REMIC II Interest Loss Allocation Amount, 98%
and 2%, respectively, and thereafter among REMIC II Regular Interest II-LTAA,
REMIC II Regular Interest II-LTA1, REMIC II Regular Interest II-LTA2A, REMIC II
Regular Interest II- LTA2B, REMIC II Regular Interest II-LTA2C, REMIC II Regular
Interest II-LTM1, REMIC II Regular Interest II-LTM2, REMIC II Regular Interest
II-LTM3 and REMIC II Regular Interest II-LTZZ, PRO RATA based on, and to the
extent of, one month's interest at the then applicable respective REMIC I
Remittance Rate on the respective Uncertificated Balance of each such REMIC II
Regular Interest.

                                      -52-

<PAGE>

                                   ARTICLE II

                          CONVEYANCE OF MORTGAGE LOANS;
                        ORIGINAL ISSUANCE OF CERTIFICATES

                    SECTION 2.01.           Conveyance of the Mortgage Loans.

                    The Depositor, concurrently with the execution and delivery
hereof, does hereby transfer, assign, set over and otherwise convey to the
Trustee, on behalf of the Trust, without recourse, for the benefit of the
Certificateholders, all the right, title and interest of the Depositor,
including any security interest therein for the benefit of the Depositor, in and
to the Mortgage Loans identified on the Mortgage Loan Schedule, the rights of
the Depositor under the Mortgage Loan Purchase Agreement and the Assignment
Agreements (including, without limitation the right to enforce the obligations
of the other parties thereto thereunder), and all other assets included or to be
included in REMIC I. Such assignment includes all interest and principal
received by the Depositor or the applicable Servicer on or with respect to the
Mortgage Loans (other than payments of principal and interest due on such
Mortgage Loans on or before the Cut-off Date). The Depositor herewith delivers
to the Trustee executed copies of the Mortgage Loan Purchase Agreement, the
Servicing Agreements and Assignment Agreements.

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

                    SECTION 2.02.           Acceptance of REMIC I by Trustee.

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

                                      -53-

<PAGE>

                    SECTION 2.03.           Repurchase or Substitution of
                                            Mortgage Loans.

                    (a) Upon discovery or receipt of notice of any materially
defective document in, or that a document is missing from, a Mortgage File or of
a breach by the Seller of any representation, warranty or covenant under the
Mortgage Loan Purchase Agreement in respect of any Mortgage Loan that materially
and adversely affects the value of such Mortgage Loan or the interest therein of
the Certificateholders, the Trustee shall promptly notify the Seller and the
Master Servicer of such defect, missing document or breach and request that the
Seller deliver such missing document, cure such defect or breach within 60 days
from the date the Seller was notified of such missing document, defect or
breach, and if the Seller does not deliver such missing document or cure such
defect or breach in all material respects during such period, the Trustee shall
enforce the obligations of the Seller under the Mortgage Loan Purchase Agreement
to repurchase such Mortgage Loan from REMIC I at the Purchase Price within 90
days after the date on which the Seller was notified of such missing document,
defect or breach, if and to the extent that the Seller is obligated to do so
under the related Mortgage Loan Purchase Agreement. The Purchase Price for the
repurchased Mortgage Loan shall be deposited in the Master Servicer Collection
Account and the Trustee, upon receipt of written certification from the Master
Servicer of such deposit, shall release or cause the Custodian to release to the
Seller the related Mortgage File and the Trustee shall execute and deliver such
instruments of transfer or assignment, in each case without recourse, as the
Seller shall furnish to it and as shall be necessary to vest in the Seller any
Mortgage Loan released pursuant hereto, and the Trustee shall not have any
further responsibility with regard to such Mortgage File. In lieu of
repurchasing any such Mortgage Loan as provided above, if so provided in the
Mortgage Loan Purchase Agreement, the Seller may cause such Mortgage Loan to be
removed from REMIC I (in which case it shall become a Deleted Mortgage Loan) and
substitute one or more Qualified Substitute Mortgage Loans in the manner and
subject to the limitations set forth in Section 2.03(b). It is understood and
agreed that the obligation of the Seller to cure or to repurchase (or to
substitute for) any Mortgage Loan as to which a document is missing, a material
defect in a constituent document exists or as to which such a breach has
occurred and is continuing shall constitute the sole remedy respecting such
omission, defect or breach available to the Trustee and the Certificateholders.

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

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

                    As to any Deleted Mortgage Loan for which the Seller,
substitutes a Qualified Substitute Mortgage Loan or Loans, such substitution
shall be effected by the Seller delivering to the Trustee or the Custodian on
behalf of the Trustee, for such Qualified Substitute Mortgage Loan

                                      -54-

<PAGE>

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

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

                    In addition, the Seller shall obtain at its own expense and
deliver to the Trustee an Opinion of Counsel to the effect that such
substitution will not cause (a) any federal tax to be imposed on any Trust
REMIC, including without limitation, any federal tax imposed on "prohibited

                                      -55-

<PAGE>

transactions" under Section 860F(a)(1) of the Code or on "contributions after
the startup date" under Section 860G(d)(1) of the Code, or (b) any Trust REMIC
to fail to qualify as a REMIC at any time that any Certificate is outstanding.

                    (c) Upon discovery by the Depositor, the Seller, the Master
Servicer or the Trustee that any Mortgage Loan does not constitute a "qualified
mortgage" within the meaning of Section 860G(a)(3) of the Code, the party
discovering such fact shall within two Business Days give written notice thereof
to the other parties. In connection therewith, the Seller shall repurchase or,
subject to the limitations set forth in Section 2.03(f), substitute one or more
Qualified Substitute Mortgage Loans for the affected Mortgage Loan within 90
days of the earlier of discovery or receipt of such notice with respect to such
affected Mortgage Loan. Such repurchase or substitution shall be made by (i) the
Seller if the affected Mortgage Loan's status as a non-qualified mortgage is or
results from a breach of any representation, warranty or covenant made by the
Seller under the Mortgage Loan Purchase Agreement or (ii) the Depositor, if the
affected Mortgage Loan's status as a non-qualified mortgage is a breach of no
representation or warranty. Any such repurchase or substitution shall be made in
the same manner as set forth in Section 2.03(a). The Trustee shall reconvey to
the Seller the Mortgage Loan to be released pursuant hereto in the same manner,
and on the same terms and conditions, as it would a Mortgage Loan repurchased
for breach of a representation or warranty.

                    (d) With respect to a breach of the representations made
pursuant to Section 5(xiv) of the Mortgage Loan Purchase Agreement that
materially and adversely affects the value of such Mortgage Loan or the interest
therein of the Certificateholders, the Seller shall be required to take the
actions set forth in this Section 2.03.

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

                    SECTION 2.04.           [Reserved].

                    SECTION 2.05.           Representations, Warranties and
                                            Covenants of the Master Servicer.

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

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

                                      -56-

<PAGE>

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

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

                           (iv)     [Reserved];

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

                           (vi)     [Reserved];

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

                           (viii) There are no actions or proceedings against,
                    or investigations known to it of, the Master Servicer before
                    any court, administrative or other tribunal (A) that might
                    prohibit its entering into this Agreement, (B) seeking to
                    prevent the consummation

                                      -57-

<PAGE>

                    of the transactions contemplated by this Agreement or (C)
                    that might prohibit or materially and adversely affect the
                    performance by the Master Servicer of its obligations under,
                    or validity or enforceability of, this Agreement; and

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

                    It is understood and agreed that the representations,
warranties and covenants set forth in this Section 2.05 shall inure to the
benefit of the Trustee, the Depositor and the Certificateholders.

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

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

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

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

                    SECTION 2.08.           Conveyance of the REMIC II Regular
                                            Interests; Acceptance of REMIC III
                                            by the Trustee.

                                      -58-

<PAGE>

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

         SECTION 2.10.              Issuance of Class R Certificates.

         The Trustee acknowledges the assignment to it of the REMIC I Regular
Interests and the REMIC II Regular Interests and, concurrently therewith and in
exchange therefor, pursuant to the written request of the Depositor executed by
an officer of the Depositor, the Trustee has executed, authenticated and
delivered to or upon the order of the Depositor, the Class R Certificates in
authorized denominations. The Class R Certificates evidence ownership in the
Class R-I Interest, the Class R-II Interest and the Class R-III Interest.

         SECTION 2.11               Establishment of the Trust.

         The Depositor does hereby establish, pursuant to the further provisions
of this Agreement and the laws of the State of New York, an express trust to be
known, for convenience, as "ACE Securities Corp., Home Equity Loan Trust, Series
2002-HE3" and does hereby appoint Bank One, National Association, as Trustee in
accordance with the provisions of this Agreement.

                                      -59-

<PAGE>

                                   ARTICLE III

                          ADMINISTRATION AND SERVICING
                         OF THE MORTGAGE LOANS; ACCOUNTS

         SECTION 3.01. MASTER SERVICER. The Master Servicer shall supervise,
monitor and oversee the obligation of the Servicers to service and administer
their respective Mortgage Loans in accordance with the terms of the applicable
Servicing Agreement and shall have full power and authority to do any and all
things which it may deem necessary or desirable in connection with such master
servicing and administration. In performing its obligations hereunder, the
Master Servicer shall act in a manner consistent with Accepted Master Servicing
Practices. Furthermore, the Master Servicer shall oversee and consult with each
Servicer as necessary from time-to-time to carry out the Master Servicer's
obligations hereunder, shall receive, review and evaluate all reports,
information and other data provided to the Master Servicer by each Servicer and
shall cause each Servicer to perform and observe the covenants, obligations and
conditions to be performed or observed by such Servicer under the applicable
Servicing Agreement. The Master Servicer shall independently and separately
monitor each Servicer's servicing activities with respect to each related
Mortgage Loan, reconcile the results of such monitoring with such information
provided in the previous sentence on a monthly basis and coordinate corrective
adjustments to the Servicers' and Master Servicer's records, and based on such
reconciled and corrected information, prepare the statements specified in
Section 4.02 and any other information and statements required to be provided by
the Master Servicer hereunder. The Master Servicer shall reconcile the results
of its Mortgage Loan monitoring with the actual remittances of the Servicers to
the Master Servicer Collection Account pursuant to the applicable Servicing
Agreements.

         Notwithstanding anything in this Agreement, any Servicing Agreement or
any Credit Risk Management Agreement to the contrary, neither the Master
Servicer nor the applicable Servicer shall have any duty or obligation to
enforce any Credit Risk Management Agreement or to supervise, monitor or oversee
the activities of the Credit Risk Manager under its Credit Risk Management
Agreement with respect to any action taken or not taken by the applicable
Servicer or the Master Servicer pursuant to a recommendation of the Credit Risk
Manager.

         The Trustee shall furnish the Servicers and the Master Servicer with
any limited powers of attorney and other documents in form as provided to it
necessary or appropriate to enable the Servicers and the Master Servicer to
service and administer the related Mortgage Loans and REO Property. The Trustee
shall have no responsibility for any action of the Master Servicer or any
Servicer pursuant to any such limited power of attorney.

         The Trustee, the Custodian and the Securities Administrator shall
provide access to the records and documentation in possession of the Trustee,
the Custodian or the Securities Administrator regarding the related Mortgage
Loans and REO Property and the servicing thereof to the Certificateholders, the
FDIC, and the supervisory agents and examiners of the FDIC, such access being
afforded only upon reasonable prior written request and during normal business
hours at the office of the Trustee, the Custodian or the Securities
Administrator; provided, however, that, unless otherwise required by law, none
of the Trustee, the Custodian or the Securities Administrator shall be required
to provide access to such records and documentation if the provision thereof
would

                                      -60-

<PAGE>

violate the legal right to privacy of any Mortgagor. The Trustee, the Custodian
and the Securities Administrator shall allow representatives of the above
entities to photocopy any of the records and documentation and shall provide
equipment for that purpose at a charge that covers the Trustee's, the
Custodian's or the Securities Administrator's actual costs.

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

         SECTION 3.02. REMIC-RELATED COVENANTS. For as long as each REMIC shall
exist, the Trustee and the Securities Administrator shall act in accordance
herewith to assure continuing treatment of such REMIC as a REMIC, and the
Trustee and the Securities Administrator shall comply with any directions of the
Seller, the related Servicer or the Master Servicer to assure such continuing
treatment. In particular, the Trustee shall not (a) sell or permit the sale of
all or any portion of the Mortgage Loans or of any investment of deposits in an
Account unless such sale is as a result of a repurchase of the Mortgage Loans
pursuant to this Agreement or the Trustee has received a REMIC Opinion prepared
at the expense of the Trust Fund; and (b) other than with respect to a
substitution pursuant to the Mortgage Loan Purchase Agreements or the Assignment
Agreements or Section 2.03 of this Agreement, as applicable, accept any
contribution to any REMIC after the Startup Day without receipt of a Opinion of
Counsel stating that such contribution will not result in an Adverse REMIC Event
as deferred in Section 10.01(f) hereof.

         SECTION 3.03. MONITORING OF SERVICERS. (a) The Master Servicer shall be
responsible for monitoring the compliance by each Servicer with its duties under
the related Servicing Agreement. In the review of each Servicer's activities,
the Master Servicer may rely upon an officer's certificate of any Servicer with
regard to such Servicer's compliance with the terms of its Servicing Agreement.
In the event that the Master Servicer, in its judgment, determines that a
Servicer should be terminated in accordance with its Servicing Agreement, or
that a notice should be sent pursuant to such Servicing Agreement with respect
to the occurrence of an event that, unless cured, would constitute grounds for
such termination, the Master Servicer shall notify the Seller and the Trustee
thereof and the Master Servicer shall issue such notice or take such other
action as it deems appropriate.

                  (b) The Master Servicer, for the benefit of the Trustee and
the Certificateholders, shall enforce the obligations of each Servicer under the
related Servicing Agreement, and shall, in the event that a Servicer fails to
perform its obligations in accordance with the related Servicing Agreement,
subject to the preceding paragraph, terminate the rights and obligations of such
Servicer thereunder and act as servicer of the related Mortgage Loans or to
cause the Trustee to enter in to a new Servicing Agreement with a successor
Servicer selected by the Master Servicer; provided, however, it is understood
and acknowledged by the parties hereto that there will be a period of transition
(not to exceed 90 days) before the actual servicing functions can be fully
transferred to such successor Servicer. Such enforcement, including, without
limitation, the legal prosecution of

                                      -61-

<PAGE>

claims, termination of Servicing Agreements and the pursuit of other appropriate
remedies, shall be in such form and carried out to such an extent and at such
time as the Master Servicer, in its good faith business judgment, would require
were it the owner of the related Mortgage Loans. The Master Servicer shall pay
the costs of such enforcement at its own expense, provided that the Master
Servicer shall not be required to prosecute or defend any legal action except to
the extent that the Master Servicer shall have received reasonable indemnity for
its costs and expenses in pursuing such action.

                  (c) To the extent that the costs and expenses of the Master
Servicer related to any termination of a Servicer, appointment of a successor
Servicer or the transfer and assumption of servicing by the Master Servicer with
respect to any Servicing Agreement (including, without limitation, (i) all legal
costs and expenses and all due diligence costs and expenses associated with an
evaluation of the potential termination of the Servicer as a result of an event
of default by such Servicer and (ii) all costs and expenses associated with the
complete transfer of servicing, including all servicing files and all servicing
data and the completion, correction or manipulation of such servicing data as
may be required by the successor servicer to correct any errors or
insufficiencies in the servicing data or otherwise to enable the successor
servicer to service the Mortgage Loans in accordance with the related Servicing
Agreement) are not fully and timely reimbursed by the terminated Servicer, the
Master Servicer shall be entitled to reimbursement of such costs and expenses
from the Master Servicer Collection Account.

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

                  (e) If the Master Servicer acts as Servicer, it will not
assume liability for the representations and warranties of the Servicer, if any,
that it replaces.

         SECTION 3.04. FIDELITY BOND. The Master Servicer, at its expense, shall
maintain in effect a blanket fidelity bond and an errors and omissions insurance
policy, affording coverage with respect to all directors, officers, employees
and other Persons acting on such Master Servicer's behalf, and covering errors
and omissions in the performance of the Master Servicer's obligations hereunder.
The errors and omissions insurance policy and the fidelity bond shall be in such
form and amount generally acceptable for entities serving as master servicers or
trustees.

         SECTION 3.05. POWER TO ACT; PROCEDURES. The Master Servicer shall
master service the Mortgage Loans and shall have full power and authority,
subject to the REMIC Provisions and the provisions of Article X hereof, to do
any and all things that it may deem necessary or desirable in connection with
the master servicing and administration of the Mortgage Loans, including but not
limited to the power and authority (i) to execute and deliver, on behalf of the
Certificateholders and the Trustee, customary consents or waivers and other
instruments and documents, (ii) to consent to transfers of any Mortgaged
Property and assumptions of the Mortgage Notes and related Mortgages, (iii) to
collect any Insurance Proceeds and Liquidation Proceeds, and (iv) to effectuate
foreclosure or other conversion of the ownership of the Mortgaged Property
securing any Mortgage Loan, in each case, in accordance with the provisions of
this Agreement and the related Servicing Agreement, as applicable; provided,
however, that the Master Servicer shall not (and, consistent with its
responsibilities under Section 3.03, shall not permit any Servicer to) knowingly
or intentionally take

                                      -62-

<PAGE>

any action, or fail to take (or fail to cause to be taken) any action reasonably
within its control and the scope of duties more specifically set forth herein,
that, under the REMIC Provisions, if taken or not taken, as the case may be,
would cause REMIC I, REMIC II or REMIC III to fail to qualify as a REMIC or
result in the imposition of a tax upon the Trust Fund (including but not limited
to the tax on prohibited transactions as defined in Section 860F(a)(2) of the
Code and the tax on contributions to a REMIC set forth in Section 860G(d) of the
Code) unless the Master Servicer has received an Opinion of Counsel (but not at
the expense of the Master Servicer) to the effect that the contemplated action
will not would cause REMIC I, REMIC II or REMIC III to fail to qualify as a
REMIC or result in the imposition of a tax upon REMIC I, REMIC II or REMIC III,
as the case may be. The Trustee shall furnish the Master Servicer, upon written
request from a Servicing Officer, with any powers of attorney empowering the
Master Servicer or any Servicer to execute and deliver instruments of
satisfaction or cancellation, or of partial or full release or discharge, and to
foreclose upon or otherwise liquidate Mortgaged Property, and to appeal,
prosecute or defend in any court action relating to the Mortgage Loans or the
Mortgaged Property, in accordance with the applicable Servicing Agreement and
this Agreement, and the Trustee shall execute and deliver such other documents,
as the Master Servicer or applicable Servicer may request, to enable the Master
Servicer to master service and administer the Mortgage Loans and carry out its
duties hereunder, in each case in accordance with Accepted Master Servicing
Practices (and the Trustee shall have no liability for misuse of any such powers
of attorney by the Master Servicer or any Servicer). If the Master Servicer or
the Trustee has been advised that it is likely that the laws of the state in
which action is to be taken prohibit such action if taken in the name of the
Trustee or that the Trustee would be adversely affected under the "doing
business" or tax laws of such state if such action is taken in its name, the
Master Servicer shall join with the Trustee in the appointment of a co-trustee
pursuant to Section 8.10 hereof. In the performance of its duties hereunder, the
Master Servicer shall be an independent contractor and shall not, except in
those instances where it is taking action in the name of the Trustee, be deemed
to be the agent of the Trustee.

         SECTION 3.06. DUE-ON-SALE CLAUSES; ASSUMPTION AGREEMENTS. To the extent
provided in the applicable Servicing Agreement, to the extent Mortgage Loans
contain enforceable due-on- sale clauses, the Master Servicer shall cause the
Servicers to enforce such clauses in accordance with the applicable Servicing
Agreement. If applicable law prohibits the enforcement of a due-on-sale clause
or such clause is otherwise not enforced in accordance with the applicable
Servicing Agreement, and, as a consequence, a Mortgage Loan is assumed, the
original Mortgagor may be released from liability in accordance with the
applicable Servicing Agreement.

         SECTION 3.07. RELEASE OF MORTGAGE FILES. (a) Upon becoming aware of the
payment in full of any Mortgage Loan, or the receipt by any Servicer of a
notification that payment in full has been escrowed in a manner customary for
such purposes for payment to Certificateholders on the next Distribution Date,
the Servicer will, if required under the applicable Servicing Agreement,
promptly furnish to the Custodian, on behalf of the Trustee, two copies of a
request for release substantially in the form attached to the Custodial
Agreement attached to the signed by a Servicing Officer or in a mutually
agreeable electronic format which will, in lieu of a signature on its face,
originate from a Servicing Officer (which certification shall include a
statement to the effect that all amounts received in connection with such
payment that are required to be deposited in the Protected Account maintained by
the Master Servicer pursuant to Section 3.22 or by the applicable Servicer
pursuant to its Servicing Agreement have been or will be so deposited) and shall
request that the

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Custodian, on behalf of the Trustee, deliver to the applicable Servicer the
related Mortgage File. Upon receipt of such certification and request, the
Custodian, on behalf of the Trustee, shall promptly release the related Mortgage
File to the applicable Servicer and the Trustee and Custodian shall have no
further responsibility with regard to such Mortgage File. Upon any such payment
in full, each Servicer is authorized, to give, as agent for the Trustee, as the
mortgagee under the Mortgage that secured the Mortgage Loan, an instrument of
satisfaction (or assignment of mortgage without recourse) regarding the
Mortgaged Property subject to the Mortgage, which instrument of satisfaction or
assignment, as the case may be, shall be delivered to the Person or Persons
entitled thereto against receipt therefor of such payment, it being understood
and agreed that no expenses incurred in connection with such instrument of
satisfaction or assignment, as the case may be, shall be chargeable to the
Master Servicer Collection Account.

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

         SECTION 3.08. DOCUMENTS, RECORDS AND FUNDS IN POSSESSION OF MASTER
SERVICER TO BE HELD FOR TRUSTEE.

                  (a) The Master Servicer shall transmit and each Servicer (to
the extent required by the related Servicing Agreement) shall transmit to the
Trustee or Custodian such documents and instruments coming into the possession
of the Master Servicer or such Servicer from time to time as are required by the
terms hereof, or in the case of the Servicers, the applicable Servicing
Agreement, to be delivered to the Trustee or Custodian. Any funds received by
the Master Servicer or by a Servicer in respect of any Mortgage Loan or which
otherwise are collected by the Master Servicer or by a Servicer as Liquidation
Proceeds or Insurance Proceeds in respect of any Mortgage Loan shall be held for
the benefit of the Trustee and the Certificateholders subject to the Master
Servicer's right to retain or withdraw from the Master Servicer Collection
Account the Master Servicing Compensation and other amounts provided in this
Agreement, and to the right of each Servicer to retain its Servicing Fee and
other amounts as provided in the applicable Servicing Agreement. The Master
Servicer shall, and (to the extent provided in the applicable Servicing
Agreement) shall cause each Servicer to, provide access to information and
documentation regarding the Mortgage Loans to the Trustee, its agents and
accountants at any time upon reasonable request and during normal business
hours, and to Certificateholders that are savings and loan associations,

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banks or insurance companies, the Office of Thrift Supervision, the FDIC and the
supervisory agents and examiners of such Office and Corporation or examiners of
any other federal or state banking or insurance regulatory authority if so
required by applicable regulations of the Office of Thrift Supervision or other
regulatory authority, such access to be afforded without charge but only upon
reasonable request in writing and during normal business hours at the offices of
the Master Servicer designated by it. In fulfilling such a request the Master
Servicer shall not be responsible for determining the sufficiency of such
information.

                  (b) All Mortgage Files and funds collected or held by, or
under the control of, the Master Servicer, in respect of any Mortgage Loans,
whether from the collection of principal and interest payments or from
Liquidation Proceeds or Insurance Proceeds, shall be held by the Master Servicer
for and on behalf of the Trustee and the Certificateholders and shall be and
remain the sole and exclusive property of the Trustee; provided, however, that
the Master Servicer and each Servicer shall be entitled to setoff against, and
deduct from, any such funds any amounts that are properly due and payable to the
Master Servicer or such Servicer under this Agreement or the applicable
Servicing Agreement.

         SECTION 3.09. STANDARD HAZARD INSURANCE AND FLOOD INSURANCE POLICIES.

                  (a) For each Mortgage Loan, the Master Servicer shall enforce
any obligation of the Servicers under the related Servicing Agreements to
maintain or cause to be maintained standard fire and casualty insurance and,
where applicable, flood insurance, all in accordance with the provisions of the
related Servicing Agreements. It is understood and agreed that such insurance
shall be with insurers meeting the eligibility requirements set forth in the
applicable Servicing Agreement and that no earthquake or other additional
insurance is to be required of any Mortgagor or to be maintained on property
acquired in respect of a defaulted loan, other than pursuant to such applicable
laws and regulations as shall at any time be in force and as shall require such
additional insurance.

                  (b) Pursuant to Sections 3.22 and 3.23, any amounts collected
by the Master Servicer, or by any Servicer, under any insurance policies (other
than amounts to be applied to the restoration or repair of the property subject
to the related Mortgage or released to the Mortgagor in accordance with the
applicable Servicing Agreement) shall be deposited into the Master Servicer
Collection Account, subject to withdrawal pursuant to Sections 3.24 and 3.26.
Any cost incurred by the Master Servicer or any Servicer in maintaining any such
insurance if the Mortgagor defaults in its obligation to do so shall be added to
the amount owing under the Mortgage Loan where the terms of the Mortgage Loan so
permit; provided, however, that the addition of any such cost shall not be taken
into account for purposes of calculating the distributions to be made to
Certificateholders and shall be recoverable by the Master Servicer or such
Servicer pursuant to Sections 3.24 and 3.26.

         SECTION 3.10. PRESENTMENT OF CLAIMS AND COLLECTION OF PROCEEDS. The
Master Servicer shall (to the extent provided in the applicable Servicing
Agreement) cause the related Servicer to, prepare and present on behalf of the
Trustee and the Certificateholders all claims under the Insurance Policies and
take such actions (including the negotiation, settlement, compromise or
enforcement of the insured's claim) as shall be necessary to realize recovery
under such policies. Any proceeds disbursed to the Master Servicer (or disbursed
to a Servicer and remitted to the Master Servicer) in respect of such policies,
bonds or contracts shall be promptly deposited in the Master

                                      -65-

<PAGE>

Servicer Collection Account upon receipt, except that any amounts realized that
are to be applied to the repair or restoration of the related Mortgaged Property
as a condition precedent to the presentation of claims on the related Mortgage
Loan to the insurer under any applicable insurance policy need not be so
deposited (or remitted).

         SECTION 3.11. MAINTENANCE OF THE PRIMARY MORTGAGE INSURANCE POLICIES.

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

                  (b) The Master Servicer agrees to cause each Servicer (to the
extent required under the related Servicing Agreement) to present, on behalf of
the Trustee and the Certificateholders, claims to the insurer under any primary
mortgage insurance policies and, in this regard, to take such reasonable action
as shall be necessary to permit recovery under any primary mortgage insurance
policies respecting defaulted Mortgage Loans. Pursuant to Sections 3.22 and
3.23, any amounts collected by the Master Servicer or any Servicer under any
primary mortgage insurance policies shall be deposited in the Master Servicer
Collection Account, subject to withdrawal pursuant to Sections 3.24 and 3.26.

         SECTION 3.12. TRUSTEE TO RETAIN POSSESSION OF CERTAIN INSURANCE
POLICIES AND DOCUMENTS.

                  The Trustee or the applicable Custodian, shall retain
possession and custody of the originals (to the extent available) of any primary
mortgage insurance policies, or certificate of insurance if applicable, and any
certificates of renewal as to the foregoing as may be issued from time to time
as contemplated by this Agreement. Until all amounts distributable in respect of
the Certificates has been distributed in full and the Master Servicer otherwise
has fulfilled its obligations under this Agreement, the Trustee or the Custodian
shall also retain possession and custody of each Mortgage File in accordance
with and subject to the terms and conditions of this Agreement and the Custodial
Agreement. The Master Servicer shall promptly deliver or cause to be delivered
to the Trustee or the Custodian, upon the execution or receipt thereof the
originals of any primary mortgage insurance policies, any certificates of
renewal, and such other documents or instruments that constitute Mortgage Loan
Documents that come into the possession of the Master Servicer from time to
time.

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<PAGE>

         SECTION 3.13. REALIZATION UPON DEFAULTED MORTGAGE LOANS. The Master
Servicer shall cause each Servicer (to the extent required under the related
Servicing Agreement) to foreclose upon, repossess or otherwise comparably
convert the ownership of Mortgaged Properties securing such of the Mortgage
Loans as come into and continue in default and as to which no satisfactory
arrangements can be made for collection of delinquent payments, all in
accordance with the applicable Servicing Agreement.

         SECTION 3.14. COMPENSATION FOR THE MASTER SERVICER.

                  (a) In addition to the Master Servicer's right to receive its
Master Servicing Fee, pursuant to Article IV all income and gain realized from
any investment of funds in the Master Servicer Collection Account and the
Distribution Account shall be for the benefit of the Master Servicer as
compensation. Servicing compensation in the form of assumption fees, if any,
late payment charges, as collected, if any, or otherwise (but not including any
Prepayment Charges) shall be retained by the applicable Servicer and shall not
be deposited in the Protected Account. The Master Servicer will be entitled to
retain, as additional compensation, any interest remitted by a Servicer in
connection with a Principal Prepayment in full or otherwise in excess of amounts
required to be remitted to the Master Servicer Collection Account. The Master
Servicer shall be required to pay all expenses incurred by it in connection with
its activities hereunder and shall not be entitled to reimbursement therefor
except as provided in this Agreement.

                  (b) The amount of the aggregate compensation payable as set
forth in Section 3.14(a) (the "Master Servicing Compensation") to the Master
Servicer in respect of any Distribution Date shall be reduced in accordance with
Section 3.20.

         SECTION 3.15. REO PROPERTY.

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

                                      -67-

<PAGE>

Servicing Agreement, in accordance with the REMIC Provisions and in a manner
that does not result in a tax on "net income from foreclosure property" or cause
such REO Property to fail to qualify as "foreclosure property" within the
meaning of Section 860G(a)(8) of the Code.

                  (b) The Master Servicer shall, to the extent required by the
related Servicing Agreement, cause the applicable Servicer to deposit all funds
collected and received in connection with the operation of any REO Property in
the Protected Account.

                  (c) The Master Servicer and the applicable Servicer, upon the
final disposition of any REO Property, shall be entitled to reimbursement for
any related unreimbursed Monthly Advances and other unreimbursed advances as
well as any unpaid Servicing Fees from Liquidation Proceeds received in
connection with the final disposition of such REO Property; provided, that any
such unreimbursed Monthly Advances as well as any unpaid Servicing Fees may be
reimbursed or paid, as the case may be, prior to final disposition, out of any
net rental income or other net amounts derived from such REO Property.

                  (d) To the extent provided in the related Servicing Agreement,
the Liquidation Proceeds from the final disposition of the REO Property, net of
any payment to the Master Servicer and the applicable Servicer as provided above
shall be deposited in the Protected Account on or prior to the Determination
Date in the month following receipt thereof and be remitted by wire transfer in
immediately available funds to the Master Servicer for deposit into the related
Master Servicer Collection Account on the next succeeding Remittance Date.

         SECTION 3.16. ANNUAL OFFICER'S CERTIFICATE AS TO COMPLIANCE.

                  (a) The Master Servicer shall deliver to the Trustee and the
Rating Agencies on or before May 31 of each year, commencing on May 31, 2003, an
Officer's Certificate signed by a Servicing Officer, certifying that with
respect to the period ending December 31 of the prior year: (i) such Servicing
Officer has reviewed the activities of such Master Servicer during the preceding
calendar year or portion thereof and its performance under this Agreement, (ii)
to the best of such Servicing Officer's knowledge, based on such review, such
Master Servicer has performed and fulfilled its duties, responsibilities and
obligations under this Agreement in all material respects throughout such year,
or, if there has been a default in the fulfillment of any such duties,
responsibilities or obligations, specifying each such default known to such
Servicing Officer and the nature and status thereof, (iii) nothing has come to
the attention of such Servicing Officer to lead such Servicing Officer to
believe that any Servicer has failed to perform any of its duties,
responsibilities and obligations under its Servicing Agreement in all material
respects throughout such year, or, if there has been a material default in the
performance or fulfillment of any such duties, responsibilities or obligations,
specifying each such default known to such Servicing Officer and the nature and
status thereof.

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

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<PAGE>

         SECTION 3.17. ANNUAL INDEPENDENT ACCOUNTANT'S SERVICING REPORT. If the
Master Servicer has, during the course of any fiscal year, directly serviced any
of the Mortgage Loans, then the Master Servicer at its expense shall cause a
nationally recognized firm of independent certified public accountants to
furnish a statement to the Trustee, the Rating Agencies and the Seller on or
before May 31 of each year, commencing on May 31, 2003 to the effect that, with
respect to the most recently ended fiscal year, such firm has examined certain
records and documents relating to the Master Servicer's performance of its
servicing obligations under this Agreement and pooling and servicing and trust
agreements in material respects similar to this Agreement and to each other and
that, on the basis of such examination conducted substantially in compliance
with the audit program for mortgages serviced for Freddie Mac or the Uniform
Single Attestation Program for Mortgage Bankers, such firm is of the opinion
that the Master Servicer's activities have been conducted in compliance with
this Agreement, or that such examination has disclosed no material items of
noncompliance except for (i) such exceptions as such firm believes to be
immaterial, (ii) such other exceptions as are set forth in such statement and
(iii) such exceptions that the Uniform Single Attestation Program for Mortgage
Bankers or the Audit Program for Mortgages Serviced by Freddie Mac requires it
to report. Copies of such statements shall be provided to any Certificateholder
upon request by the Master Servicer, or by the Trustee at the expense of the
Master Servicer if the Master Servicer shall fail to provide such copies. If
such report discloses exceptions that are material, the Master Servicer shall
advise the Trustee whether such exceptions have been or are susceptible of cure,
and will take prompt action to do so.

         SECTION 3.18. REPORTS FILED WITH SECURITIES AND EXCHANGE COMMISSION.
(a) Within 15 days after each Distribution Date, the Master Servicer shall, in
accordance with industry standards, file with the Commission via the Electronic
Data Gathering and Retrieval System ("EDGAR"), a Form 8-K with a copy of the
statement to be furnished by the Securities Administrator to the
Certificateholders for such Distribution Date as an exhibit thereto. Prior to
January 30, 2003, the Master Servicer shall, in accordance with industry
standards, file a Form 15 Suspension Notice with respect to the Trust Fund, if
applicable. Prior to March 30, 2003 and annually thereafter (if required), the
Master Servicer shall file a Form 10-K, in substance conforming to industry
standards, with respect to the Trust Fund. Such Form 10K shall include, to the
extent available, as exhibits (i) each applicable Servicer's annual statement of
compliance described under the related Servicing Agreement, (ii) each applicable
Servicer's accountants report described under the related Servicing Agreement,
(iii) the Master Servicer's accountant's report described in Section 3.17, if
applicable, in each case to the extent timely delivered, if applicable, to the
Master Servicer, and (iv) a written certification (in the form attached hereto
as Exhibit C) signed by an officer of the Master Servicer that complies with the
Sarbanes-Oxley Act of 2002 as in effect on the date of this Agreement and the
August 27, 2002, Statement by the Staff of the Division of Corporation Finance
of the Commission Regarding Compliance by Asset-Backed Issuers with Exchange Act
Rules 13a- 14 and 15d-14 as in effect as of the date of this Agreement. If items
(i) and (ii) in the preceding sentence are not timely delivered, the Master
Servicer shall file an amended Form 10-K including such documents as exhibits
reasonably promptly after they are delivered to the Master Servicer. The
Depositor hereby grants to the Master Servicer a limited power of attorney to
execute and file each Form 8-K and Form 10-K on behalf of the Depositor. Such
power of attorney shall continue until either the earlier of (i) receipt by the
Master Servicer from the Depositor of written termination of such power of
attorney and (ii) the termination of the Trust Fund. The Depositor and the
Trustee

                                      -69-

<PAGE>

each agree to promptly furnish to the Master Servicer, from time to time upon
request, such further information, reports and financial statements within its
control related to this Agreement and the Mortgage Loans as the Master Servicer
reasonably deems appropriate to prepare and file all necessary reports with the
Commission. The Master Servicer will cooperate with the Depositor in connection
with any additional filings with respect to the Trust Fund as the Depositor
deems necessary under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). Copies of all reports filed by the Master Servicer under the
Exchange Act shall be sent to the Depositor.

                  (b) The Master Servicer shall indemnify and hold harmless the
Depositor, the Trustee and their respective officers, directors and Affiliates
from and against any losses, damages, penalties, fines, forfeitures, reasonable
and necessary legal fees and related costs, judgments and other costs and
expenses arising out of or based upon a breach of the Master Servicer's
obligations under this Section 3.18 or the Master Servicer's negligence, bad
faith or willful misconduct in connection therewith. Fees and expenses incurred
by the Master Servicer in connection with this Section 3.18 shall not be
reimbursable from the Trust Fund.

         SECTION 3.19. UCC. The Depositor agrees to file continuation statements
for any Uniform Commercial Code financing statements which the Seller has
informed the Depositor were filed on the Closing Date in connection with the
Trust. The Depositor shall file any financing statements or amendments thereto
required by any change in the Uniform Commercial Code.

         SECTION 3.20. OBLIGATION OF THE MASTER SERVICER IN RESPECT OF
PREPAYMENT INTEREST SHORTFALLS. The Master Servicer shall deposit in the Master
Servicer Collection Account not later than each Distribution Account Deposit
Date an amount equal to the lesser of (i) the aggregate amounts required to be
paid by the Servicers under the Servicing Agreements with respect to Prepayment
Interest Shortfalls attributable to Principal Prepayments on the related
Mortgage Loans for the related Distribution Date, and not so paid by the related
Servicers and (ii) the Master Servicing Compensation for such Distribution Date
without reimbursement therefor.

         SECTION 3.21. RESERVED.

         SECTION 3.22. PROTECTED ACCOUNTS. (a) The Master Servicer shall enforce
the obligation of each Servicer to establish and maintain a Protected Account in
accordance with the applicable Servicing Agreement, with records to be kept with
respect thereto on a Mortgage Loan by Mortgage Loan basis, into which accounts
shall be deposited within 48 hours (or as of such other time specified in the
related Servicing Agreement) of receipt all collections of principal and
interest on any Mortgage Loan and with respect to any REO Property received by a
Servicer, including Principal Prepayments, Insurance Proceeds, Liquidation
Proceeds, and advances made from the Servicer's own funds (less servicing
compensation as permitted by the applicable Servicing Agreement in the case of
any Servicer) and all other amounts to be deposited in the Protected Account.
Each Servicer is hereby authorized to make withdrawals from and deposits to the
related Protected Account for purposes required or permitted by the related
Servicing Agreement. To the extent provided in the related Servicing Agreement,
the Protected Account shall be held in a Designated Depository Institution and
segregated on the books of such institution in the name of the Trustee for the
benefit of Certificateholders.

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<PAGE>

                  (b) To the extent provided in the related Servicing Agreement,
amounts on deposit in a Protected Account may be invested in Permitted
Investments in the name of the Trustee for the benefit of Certificateholders
and, except as provided in the preceding paragraph, not commingled with any
other funds, such Permitted Investments to mature, or to be subject to
redemption or withdrawal, no later than the date on which such funds are
required to be withdrawn for deposit in the Master Servicer Collection Account,
and shall be held until required for such deposit. The income earned from
Permitted Investments made pursuant to this Section 3.22 shall be paid to the
related Servicer under the applicable Servicing Agreement, and the risk of loss
of moneys required to be distributed to the Certificateholders resulting from
such investments shall be borne by and be the risk of the related Servicer. The
related Servicer (to the extent provided in the Servicing Agreement) shall
deposit the amount of any such loss in the Protected Account within two Business
Days of receipt of notification of such loss but not later than the second
Business Day prior to the Distribution Date on which the moneys so invested are
required to be distributed to the Certificateholders.

                  (c) To the extent provided in the related Servicing Agreement
and subject to this Article III, on or before each Servicer Remittance Date, the
related Servicer shall withdraw or shall cause to be withdrawn from the
Protected Accounts and shall immediately deposit or cause to be deposited in the
Master Servicer Collection Account amounts representing the following
collections and payments (other than with respect to principal of or interest on
the Mortgage Loans due on or before the Cut-off Date):

                           (i) Monthly Payments on the Mortgage Loans received
                           or any related portion thereof advanced by the
                           Servicers pursuant to the Servicing Agreements which
                           were due on or before the related Due Date, net of
                           the amount thereof comprising the Servicing Fees;

                           (ii) Principal Prepayments, Liquidation Proceeds
                           received by the Servicers with respect to such
                           Mortgage Loans in the related Prepayment Period,
                           Compensating Interest and the amount of any related
                           Prepayment Charges; and

                           (iii)    Any amount to be used as a P&I Advance.

                  (d) Withdrawals may be made from an Account only to make
remittances as provided in Section 3.22(c), 3.23 and 3.24 or as otherwise
provided in the Servicing Agreements; to reimburse the Master Servicer or a
Servicer for P&I Advances which have been recovered by subsequent collection
from the related Mortgagor; to remove amounts deposited in error; to remove
fees, charges or other such amounts deposited on a temporary basis; or to clear
and terminate the account at the termination of this Agreement in accordance
with Section 9.01. As provided in Sections 3.22(c) and 3.23(b) or as otherwise
provided in the Servicing Agreements certain amounts otherwise due to the
Servicers may be retained by them and need not be deposited in the Master
Servicer Collection Account.

         SECTION 3.23. MASTER SERVICER COLLECTION ACCOUNT. (a) The Master
Servicer shall establish and maintain in the name of the Trustee, for the
benefit of the Certificateholders, the Master

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Servicer Collection Account as a segregated trust account or accounts. The
Master Servicer will deposit in the Master Servicer Collection Account as
identified by the Master Servicer and as received by the Master Servicer, the
following amounts:

                           (i) Any amounts withdrawn from a Protected Account;

                           (ii) Any P&I Advance and any amounts in respect of
                           Prepayment Interest Shortfalls;

                           (iii) Any Insurance Proceeds or Liquidation Proceeds
                           received by or on behalf of the Master Servicer;

                           (iv) The Repurchase Price with respect to any
                           Mortgage Loans purchased by the Seller pursuant to
                           Section 2.03 and all proceeds of any Mortgage Loans
                           or property acquired with respect thereto repurchased
                           by the Class CE Certificateholder or its designee
                           pursuant to Section 9.01;

                           (v) Any amounts required to be deposited with respect
                           to losses on investments of deposits in an Account;
                           and

                           (vi) Any other amounts received by or on behalf of
                           the Master Servicer and required to be deposited in
                           the Master Servicer Collection Account pursuant to
                           this Agreement.

                  (c) All amounts deposited to the Master Servicer Collection
Account shall be held by the Master Servicer in the name of the Trustee in trust
for the benefit of the Certificateholders in accordance with the terms and
provisions of this Agreement. The requirements for crediting the Master Servicer
Collection Account or the Distribution Account shall be exclusive, it being
understood and agreed that, without limiting the generality of the foregoing,
payments in the nature of late payment charges or assumption, tax service,
statement account or payoff, substitution, satisfaction, release and other like
fees and charges, need not be credited by the Master Servicer or the related
Servicer to the Distribution Account or the Master Servicer Collection Account,
as applicable. In the event that the Master Servicer shall deposit or cause to
be deposited to the Distribution Account any amount not required to be credited
thereto, the Trustee, upon receipt of a written request therefor signed by a
Servicing Officer of the Master Servicer, shall promptly transfer such amount to
the Master Servicer, any provision herein to the contrary notwithstanding.

                  (d) The amount at any time credited to the Master Servicer
Collection Account shall be invested, in the name of the Trustee, or its
nominee, for the benefit of the Certificateholders, in Permitted Investments as
directed by Master Servicer. All Permitted Investments shall mature or be
subject to redemption or withdrawal on or before, and shall be held until, the
Business Day immediately preceding the Distribution Date. Any and all investment
earnings from the Master Servicer Collection Account shall be paid to the Master
Servicer. The risk of loss of moneys required to be distributed to the
Certificateholders resulting from such investments shall be borne by and be the
risk of the Master Servicer. The Master Servicer shall deposit the amount of any
such loss in the Master Servicer Collection Account within two Business Days of
receipt of notification of such loss

                                      -72-

<PAGE>

but not later than the Business Day prior to the Distribution Date on which the
moneys so invested are required to be remitted to the Trustee.

         SECTION 3.24. PERMITTED WITHDRAWALS AND TRANSFERS FROM THE MASTER
SERVICER COLLECTION ACCOUNT. (a) The Master Servicer will, from time to time,
make or cause to be made such withdrawals or transfers from the Master Servicer
Collection Account as the Master Servicer has designated for such transfer or
withdrawal pursuant to the Servicing Agreements. The Master Servicer may clear
and terminate the Master Servicer Collection Account pursuant to Section 9.01
and remove amounts from time to time deposited in error.

                  (b) On an ongoing basis, the Master Servicer shall withdraw
from the Master Servicer Collection Account to pay itself as provided in Section
3.14 and to pay any expenses recoverable by the Trustee, the Securities
Administrator or the Master Servicer pursuant to Sections 3.03, 6.03, 8.05 and
10.01.

                  (c) In addition, on the Distribution Account Deposit Date, the
Master Servicer shall deposit in the Distribution Account (or remit to the
Trustee for deposit therein) any P&I Advances required to be made by the Master
Servicer with respect to the Mortgage Loans.

                  (d) No later than 3:00 p.m. New York time on each Distribution
Account Deposit Date, the Master Servicer will transfer to the Trustee in
immediately available funds for deposit in the Distribution Account, that
portion of the Available Distribution Amount (calculated without regard to the
references in clause (2) of the definition thereof to amounts that may be
withdrawn from the Distribution Account) for the related Distribution Date then
on deposit in the Master Servicer Collection Account; provided, however that if
the Distribution Account Deposit Date is deemed to occur on the Distribution
Date as provided in the proviso to the definition of Distribution Account
Deposit Date in Article I hereof, the Master Servicer shall transfer such funds
to the Trustee no later than 10:00 a.m. New York time on such Distribution
Account Deposit Date.

         SECTION 3.25. DISTRIBUTION ACCOUNT. (a) The Trustee shall establish and
maintain in the name of the Trustee, for the benefit of the Certificateholders,
the Distribution Account as a segregated trust account or accounts.

                  (b) All amounts deposited to the Distribution Account shall be
held by the Trustee in the name of the Trustee in trust for the benefit of the
Certificateholders in accordance with the terms and provisions of this
Agreement.

                  (c) The Distribution Account shall constitute a trust account
of the Trust Fund segregated on the books of the Trustee and held by the Trustee
in trust in its Corporate Trust Office, and the Distribution Account and the
funds deposited therein shall not be subject to, and shall be protected from,
all claims, liens, and encumbrances of any creditors or depositors of the
Trustee (whether made directly, or indirectly through a liquidator or receiver
of the Trustee). The amount at any time credited to the Distribution Account
shall be invested in the name of the Master Servicer, in such Permitted
Investments selected by the Master Servicer or deposited in demand deposits with
such depository institutions as selected by the Master Servicer, provided that
time deposits of such depository institutions would be a Permitted Investment.
All Permitted Investments shall mature or

                                      -73-

<PAGE>

be subject to redemption or withdrawal on or before, and shall be held until,
the next succeeding Distribution Date if the obligor for such Permitted
Investment is the Trustee or, if such obligor is any other Person, the Business
Day preceding such Distribution Date. All investment earnings on amounts on
deposit in the Distribution Account or benefit from funds uninvested therein
from time to time shall be for the account of the Master Servicer. The Master
Servicer shall be permitted to receive distribution of any and all investment
earnings from the Distribution Account on each Distribution Date. If there is
any loss on a Permitted Investment or demand deposit, the Master Servicer shall
deposit such amount in the Distribution Account. With respect to the
Distribution Account and the funds deposited therein, the Trustee shall take
such action as may be necessary to ensure that the Certificateholders shall be
entitled to the priorities afforded to such a trust account (in addition to a
claim against the estate of the Trustee) as provided by 12 U.S.C. ss. 92a(e),
and applicable regulations pursuant thereto, if applicable, or any applicable
comparable state statute applicable to state chartered banking corporations.

         SECTION 3.26. PERMITTED WITHDRAWALS AND TRANSFERS FROM THE DISTRIBUTION
ACCOUNT. (a) The Trustee will, from time to time on demand of the Master
Servicer or the Securities Administrator make or cause to be made such
withdrawals or transfers from the Distribution Account as the Master Servicer or
the Securities Administrator has designated for such transfer or withdrawal
pursuant to the Servicing Agreements for the following purposes, not in any
order of priority, (limited in the case of amounts due the Master Servicer to
those not withdrawn from the Master Servicer Collection Account in accordance
with the terms of this Agreement):

                           (i) to reimburse the Master Servicer or any Servicer
                           for any P&I Advance of its own funds or any advance
                           of such Servicer's own funds, the right of the Master
                           Servicer or a Servicer to reimbursement pursuant to
                           this subclause (i) being limited to amounts received
                           on a particular Mortgage Loan (including, for this
                           purpose, the Repurchase Price therefor, Insurance
                           Proceeds and Liquidation Proceeds) which represent
                           late payments or recoveries of the principal of or
                           interest on such Mortgage Loan respecting which such
                           P&I Advance or advance was made;

                           (ii) to reimburse the Master Servicer or any Servicer
                           from Insurance Proceeds or Liquidation Proceeds
                           relating to a particular Mortgage Loan for amounts
                           expended by the Master Servicer or such Servicer in
                           good faith in connection with the restoration of the
                           related Mortgaged Property which was damaged by an
                           Uninsured Cause or in connection with the liquidation
                           of such Mortgage Loan;

                           (iii) to reimburse the Master Servicer or any
                           Servicer from Insurance Proceeds relating to a
                           particular Mortgage Loan for insured expenses
                           incurred with respect to such Mortgage Loan and to
                           reimburse the Master Servicer or such Servicer from
                           Liquidation Proceeds from a particular Mortgage Loan
                           for Liquidation Expenses incurred with respect to
                           such Mortgage Loan; provided that the Master Servicer
                           or such Servicer shall not be entitled to
                           reimbursement for Liquidation Expenses with respect
                           to a Mortgage Loan to the extent that (i) any amounts
                           with respect to such Mortgage Loan were paid

                                      -74-

<PAGE>

                           as Excess Liquidation Proceeds pursuant to clause (x)
                           of this Subsection (a) to the Master Servicer or such
                           Servicer; and (ii) such Liquidation Expenses were not
                           included in the computation of such Excess
                           Liquidation Proceeds;

                           (iv) to pay the Master Servicer or any Servicer, as
                           appropriate, from Liquidation Proceeds or Insurance
                           Proceeds received in connection with the liquidation
                           of any Mortgage Loan, the amount which it or such
                           Servicer would have been entitled to receive under
                           subclause (x) of this Subsection (a) as servicing
                           compensation on account of each defaulted scheduled
                           payment on such Mortgage Loan if paid in a timely
                           manner by the related Mortgagor;

                           (v) to pay the Master Servicer or any Servicer from
                           the Repurchase Price for any Mortgage Loan, the
                           amount which it or such Servicer would have been
                           entitled to receive under subclause (x) of this
                           Subsection (a) as servicing compensation;

                           (vi) to reimburse the Master Servicer or any Servicer
                           for advances of funds, and the right to reimbursement
                           pursuant to this subclause being limited to amounts
                           received on the related Mortgage Loan (including, for
                           this purpose, the Repurchase Price therefor,
                           Insurance Proceeds and Liquidation Proceeds) which
                           represent late recoveries of the payments for which
                           such advances were made;

                           (vii) to reimburse the Master Servicer or any
                           Servicer for any Nonrecoverable P&I Advance or
                           Nonrecoverable Servicing Advance, after a Realized
                           Loss has been allocated with respect to the related
                           Mortgage Loan if the P&I Advance or Servicing Advance
                           has not been reimbursed pursuant to clauses (i) and
                           (vi);

                           (viii) to pay the Credit Risk Management Fee to the
                           Credit Risk Manager;

                           (ix) to pay the Servicing Fee to the Servicers and
                           the Master Servicing Fee to the Master Servicer for
                           such Distribution Date and the amount of any income
                           or gain realized from investments of funds on deposit
                           in the Distribution Account pursuant to Section 3.14
                           hereof; to reimburse the Master Servicer for
                           expenses, costs and liabilities incurred by and
                           reimbursable to it pursuant to Sections 3.03, 6.03
                           and 10.01;

                           (x) to pay to the Master Servicer, as additional
                           servicing compensation, any Excess Liquidation
                           Proceeds to the extent not retained by the related
                           Servicer;

                           (xi) to reimburse or pay any Servicer any such
                           amounts as are due thereto under the applicable
                           Servicing Agreement and have not been retained by or
                           paid to the Servicer, to the extent provided in the
                           related Servicing

                                      -75-

<PAGE>

                           Agreement, or to reimburse or pay any Advance
                           Facility Counterparty to the extent provided in
                           Section 3.32 hereof;

                           (xii) to reimburse the Trustee and the Securities
                           Administrator for expenses, costs and liabilities
                           incurred by or reimbursable to such parties pursuant
                           to this Agreement;

                           (xiii) to reimburse the Custodian for expenses, costs
                           and liabilities incurred or reimbursable to it
                           pursuant to the Custodial Agreement and the reimburse
                           the related Servicer all out-of-pocket expenses in
                           connection with any recording of an assignment of
                           Mortgage pursuant to Section 2(i) of the Custodial
                           Agreement;

                           (xiv) to remove amounts deposited in error; and

                           (xv) to clear and terminate the Distribution Account
                           pursuant to Section 9.01.

                  (b) The Master Servicer shall keep and maintain separate
accounting, on a Mortgage Loan by Mortgage Loan basis, for the purpose of
accounting for any reimbursement from the Distribution Account pursuant to
subclauses (i) through (vi), inclusive, and (viii) or with respect to any such
amounts which would have been covered by such subclauses had the amounts not
been retained by the Master Servicer without being deposited in the Distribution
Account under Section 3.23(b).

                  (c) On each Distribution Date, the Trustee shall distribute
the Available Distribution Amount to the Holders of the Certificates in
accordance with Section 4.01 and the applicable instructions of the Securities
Administrator.

                  SECTION 3.27 Reserve Fund.

                  (a) No later than the Closing Date, the Trustee shall
establish and maintain a separate, segregated trust account titled, "Reserve
Fund, Bank One, National Association, in trust for the registered holders of ACE
Securities Corp. Home Equity Loan Trust, Series 2002-HE3, Asset Backed
Pass-Through Certificates." On the Closing Date, the Depositor will deposit, or
cause to be deposited, into the Reserve Fund $1,000. In addition, the amount
deposited in the Reserve Fund shall be increased by any payments received by the
Trustee under the Cap Contract and deposited into Reserve Fund the for the
benefit of the Class A-2 Certificates and the Class M Certificates.

                  (b) On each Distribution Date as to which there is a Net WAC
Rate Carryover Amount payable to the Class A Certificates or the Mezzanine
Certificates, the Trustee has been directed by the Class CE Certificateholders
to, and therefore will, deposit into the Reserve Fund the amounts described in
Section 4.01(a)(4)(xii), rather than distributing such amounts to the Class CE
Certificateholders. On each such Distribution Date, the Trustee shall hold all
such amounts for the benefit of the Holders of the Class A Certificates and the
Mezzanine Certificates, and will distribute such amounts to the Holders of the
Class A Certificates and the Mezzanine Certificates in the

                                      -76-

<PAGE>

amounts and priorities set forth in Section 4.01(a). If no Net WAC Rate
Carryover Amounts are payable on a Distribution Date, the Trustee shall deposit
into the Reserve Fund on behalf of the Class CE Certificateholders, from amounts
otherwise distributable to the Class CE Certificateholders, an amount such that
when added to other amounts already on deposit in the Reserve Fund, the
aggregate amount on deposit therein is equal to $1,000.

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

                  (d) By accepting a Class CE Certificate, each Class CE
Certificateholder hereby agrees to direct the Trustee, and the Trustee hereby is
directed, to deposit into the Reserve Fund the amounts described above on each
Distribution Date as to which there is any Net WAC Rate Carryover Amount rather
than distributing such amounts to the Class CE Certificateholders. By accepting
a Class CE Certificate, each Class CE Certificateholder further agrees that such
direction is given for good and valuable consideration, the receipt and
sufficiency of which is acknowledged by such acceptance.

                  (e) At the direction of the Holders of a majority in
Percentage Interest in the Class CE Certificates, the Trustee shall direct any
depository institution maintaining the Reserve Fund to invest the funds in such
account in one or more Permitted Investments bearing interest or sold at a
discount, and maturing, unless payable on demand, (i) no later than the Business
Day immediately preceding the date on which such funds are required to be
withdrawn from such account pursuant to this Agreement, if a Person other than
the Trustee or an Affiliate manages or advises such investment, and (ii) no
later than the date on which such funds are required to be withdrawn from such
account pursuant to this Agreement, if the Trustee or an Affiliate manages or
advises such investment. If no investment direction of the Holders of a majority
in Percentage Interest in the Class CE Certificates with respect to the Reserve
Fund is received by the Trustee, the Trustee shall invest the funds in such
account in Permitted Investments managed by the Trustee or an Affiliate of the
kind described in clause (vi) of the definition of Permitted Investments. All
income and gain earned upon such investment shall be deposited into the Reserve
Fund.

                  (f) For federal tax return and information reporting, the
right of the Class A Certificateholders and the Mezzanine Certificateholders to
receive payments from the Reserve Fund in respect of any Net WAC Rate Carryover
Amount shall be assigned a value of zero.

                  SECTION 3.28 Duties of the Credit Risk Manager.

                                      -77-

<PAGE>

                  For and on behalf of the Depositor and the Trustee, the Credit
Risk Manager will provide reports and recommendations concerning Mortgage Loans
that are past due, as to which there has been commencement of foreclosure, as to
which there has been forbearance in exercise of remedies which are in default,
as to which a Mortgagor is the subject of bankruptcy, receivership, or an
arrangement of creditors, or as to which have become REO Properties, and as to
the collection of any Prepayment Charges with respect to the Mortgage Loans.
Such reports and recommendations will be based upon information provided to the
Credit Risk Manager pursuant to the Credit Risk Management Agreement and the
Credit Risk Manager shall look solely to the related Servicer for all
information and data (including loss and delinquency information and data) and
loan level information and data relating to the servicing of the Mortgage Loans.
If it is determined that the duties of the Credit Risk Manager hereunder are no
longer permissible under applicable law, the Depositor shall terminate the
Credit Risk Manager and cause the appointment of a successor Credit Risk
Manager. Upon any termination of the Credit Risk Manager or the appointment of a
successor Credit Risk Manager, the Depositor shall give written notice thereof
to the Master Servicer, the Servicers, the Trustee and each Rating Agency.
Notwithstanding the foregoing, the termination of the Credit Risk Manager
pursuant to this Section 3.28 shall not become effective until the appointment
of a successor Credit Risk Manager.

                  SECTION 3.29 Limitation Upon Liability of the Credit Risk
Manager.

                  Neither the Credit Risk Manager, nor any of the directors,
officers, employees or agents of the Credit Risk Manager, shall be under any
liability to the Trustee, the Certificateholders or the Depositor for any action
taken or for refraining from the taking of any action in good faith pursuant to
this Agreement, in reliance upon information provided by a Servicer under the
Credit Risk Management Agreement or of errors in judgment; provided, however,
that this provision shall not protect the Credit Risk Manager or any such person
against liability that would otherwise be imposed by reason of willful
malfeasance, bad faith or gross negligence in its performance of its duties
under this Agreement or the Credit Risk Management Agreement. The Credit Risk
Manager and any director, officer, employee or agent of the Credit Risk Manager
may rely in good faith on any document of any kind prima facie properly executed
and submitted by any Person respecting any matters arising hereunder, and may
rely in good faith upon the accuracy of information furnished by any Servicer
pursuant to the Credit Risk Management Agreement in the performance of its
duties thereunder and hereunder.

                  SECTION 3.30 Removal of the Credit Risk Manager.

         The Credit Risk Manager may be removed as Credit Risk Manager by
Certificateholders holding not less than 66 2/3% of the Voting Rights in the
Trust Fund, in the exercise of its or their sole discretion. The
Certificateholders shall provide written notice of the Credit Risk Manager's
removal to the Trustee. Upon receipt of such notice, the Trustee shall provide
written notice to the Credit Risk Manager of its removal, which shall be
effective upon receipt of such notice by the Credit Risk Manager.

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<PAGE>

                  SECTION 3.31 Prepayment Penalty Verification.

         On or prior to each Servicer Remittance Date, each Servicer shall, to
the extent provided in the respective Servicing Agreement, provide in an
electronic format acceptable to the Master Servicer the data necessary for the
Master Servicer to perform its verification duties set forth in this Section
3.31. The Master Servicer or a third party reasonably acceptable to the Master
Servicer and the Depositor (the "Verification Agent") will perform such
verification duties and will use its best efforts to issue its findings in a
report (the "Verification Report") delivered to the Master Servicer and the
Depositor within ten (10) Business Days following the related Distribution Date;
provided, however, that if the Verification Agent is unable to issue the
Verification Report within ten (10) Business Days following the Distribution
Date, the Verification Agent may issue and deliver to the Master Servicer and
the Depositor the Verification Report upon the completion of its verification
duties. The Master Servicer shall forward the Verification Report to the
respective Servicer and shall notify such Servicer if the Master Servicer has
determined that such Servicer did not deliver the appropriate Prepayment Charges
to the Master Servicer in accordance with the respective Servicing Agreement.
Such written notification from the Master Servicer shall include the loan
number, prepayment penalty code and prepayment penalty amount as calculated by
the Master Servicer or the Verification Agent, as applicable, of each Mortgage
Loan for which there is a discrepancy. If the respective Servicer agrees with
the verified amounts, such Servicer shall adjust the immediately succeeding
Remittance Report and the amount remitted to the Master Servicer with respect to
prepayments accordingly. If the respective Servicer disagrees with the
determination of the Master Servicer, such Servicer shall, within five (5)
Business Days of its receipt of the Verification Report, notify the Master
Servicer of such disagreement and provide the Master Servicer with detailed
information to support such Servicer's position. The respective Servicer and the
Master Servicer shall cooperate to resolve any discrepancy on or prior to the
immediately succeeding Servicer Remittance Date, and such Servicer will indicate
the effect of such resolution on the related Remittance Report and shall adjust
the amount remitted with respect to prepayments on such Servicer Remittance Date
accordingly.

         During such time as the respective Servicer and the Master Servicer are
resolving discrepancies with respect to the Prepayment Charges, no payments in
respect of any disputed Prepayment Charges will be remitted to the Master
Servicer Collection Account and the Master Servicer shall not be obligated to
remit such payments, unless otherwise required pursuant to Section 7.01 hereof.
In connection with such duties, the Master Servicer shall be able to rely solely
on the information provided to it by the respective Servicer in accordance with
this Section. The Master Servicer shall not be responsible for verifying the
accuracy of any of the information provided to it by the respective Servicer.

         SECTION 3.32 Servicing Advance Facility

         (a) Each Servicer is hereby authorized to enter into any facility with
any Person (any such Person, an "Advance Facility Counterparty") which provides
that the Servicer may pledge or sell its rights to receive reimbursement of P&I
Advances and Servicing Advances pursuant to this Agreement ("Advance
Reimbursement Rights") pursuant to credit facilities, repurchase facilities, or
similar facilities providing liquidity for the funding of Servicing Advances or
P&I Advances (collectively "Advances"), including facilities providing that such
Advance Facility Counterparty

                                      -79-

<PAGE>

may make all or a portion of the Advances (any such facility, an "Advance
Facility"), although no Advance Facility shall reduce or otherwise affect the
Servicer's obligations to fund such Advances. If so required pursuant to the
terms of an Advance Facility, to the extent that an Advance Facility
Counterparty makes all or a portion of any Advance, the Advance Facility
Counterparty and the Servicer shall provide the Master Servicer and the Trustee
with notice acknowledged by the Servicer that such Advance Facility Counterparty
is entitled to reimbursement, such Advance Facility Counterparty shall be
entitled to receive reimbursement pursuant to this Agreement for such amount to
the extent provided. Such notice from the Advance Facility Counterparty and the
Servicer must specify the amount of the reimbursement. The Trustee and the
Master Servicer shall be entitled to rely without independent investigation on
the Advance Facility Counterparty's statement with respect to the amount of any
reimbursement pursuant to this Section 3.31 and with respect to the Advance
Facility Counterparty's statement with respect to the Section of this Agreement
which permits the Advance to be reimbursed. An Advance Facility Counterparty
whose obligations are limited to the making of Advances will not be deemed to be
a Subservicer under this Agreement.

         (b) If so required pursuant to the terms of an Advance Facility, the
Servicer may direct, and if so directed the Trustee and the Master Servicer are
hereby authorized to and shall pay or cause to be paid to the Advance Facility
Counterparty (i) reimbursements for Advances; and (ii) all or such portion of
the Servicing Fee as may be so specified in the Advance Facility, that would
otherwise be payable to the Servicer pursuant to this Agreement or the Servicing
Agreement.

         (c) Upon request of the Servicer, the Trustee and the Master Servicer
agrees to execute such acknowledgments, certificates, and other documents
recognizing the interests of any Advance Facility Counterparty in such Advance
Reimbursement Rights as the Servicer may cause to be made subject to Advance
Facilities pursuant to this Section, and such other documents in connection with
such Advance Facilities as may be reasonably requested from time to time by any
Advance Facility Counterparty. The implementation of the arrangement described
in this Section shall not require the consent of Certificateholders, Certificate
Owners, the Master Servicer or the Trustee.

         (d) All Advances shall be deemed made and shall be reimbursed on a
basis of the length of time since such Advance was made (with the most
outstanding Advance being reimbursed first).

         SECTION 3.33. Excess Net WAC Rate Reserve Fund.

                  No later than the Closing Date, the Trustee shall establish
and maintain a separate, segregated trust account titled, "Net WAC Rate Reserve
Fund, Bank One, National Association, in trust for registered holders of ACE
Securities Corp. Home Equity Loan Trust, Series 2002-HE3."

                  On each Distribution Date as to which there is an Excess Group
Net WAC Pass- Through Rate Amount payable on the Class A Certificates or the
Class CE Certificates, the Trustee has been directed by the Class A
Certificateholders to, and therefore shall, deposit into the Excess Net WAC Rate
Reserve Fund, the Excess Pool Net WAC Pass-Through Rate Amount, rather than
distributing such amounts to the applicable Class A Certificateholders. On each
such Distribution Date, the Trustee shall hold all such amounts for the benefit
of the holders of the applicable Class A Certificates or the Class CE
Certificates, and shall distribute such amounts to the holders of the

                                      -80-

<PAGE>

applicable Class A Certificates and/or the Class CE Certificates to the extent
of the Excess Pool Net WAC Pass-Through Rate Amount.

                  For federal and state income tax purposes, the Class CE
Certificateholders will be deemed to be the owners of the Excess Net WAC Rate
Reserve Fund and all amounts deposited into the Excess Net WAC Rate Reserve Fund
shall be treated as amounts distributed by REMIC III to the holders of the Class
CE Certificates. Upon the termination of the Trust Fund, or the payment in full
of the Class A Certificates, all amounts remaining on deposit in the Excess Net
WAC Rate Reserve Fund shall be released by the Trust Fund and distributed to the
Class CE Certificateholders or their designees. The Excess Net WAC Rate Reserve
Fund shall be part of the Trust Fund but not part of any Trust REMIC and any
payments to the holders of the Class A Certificates or the Class CE Certificates
of Excess Group Net WAC Pass-Through Rate Amount will not be payments with
respect to a "regular interest" in a REMIC within the meaning of Code Section
860(G)(a)(1).

                  By accepting a Class A Certificate, such Certificateholders
hereby agree to direct the Trustee, and the Trustee hereby is directed, to
deposit into the Excess Net WAC Rate Reserve Fund the amounts described above on
each Distribution Date as to which there is any Excess Pool Net WAC Pass-Through
Rate Amount rather than distributing such amounts to the Class A
Certificateholders, as applicable. By accepting a Class A Certificate, each such
Certificateholder further agrees that such direction is given for good and
valuable consideration, the receipt and sufficiency of which is acknowledged by
such acceptance.

                  Amounts on deposit in the Excess Net WAC Rate Reserve Fund
will remain uninvested.

                  For federal tax return and information reporting, the right of
the Class A Certificateholders and the Class CE Certificates to receive payments
from the Excess Net WAC Rate Reserve Fund in respect of any Excess Pool Net WAC
Pass-Through Rate Amount shall be assigned a value of zero.

                                      -81-

<PAGE>

                                   ARTICLE IV

                         PAYMENTS TO CERTIFICATEHOLDERS

         SECTION 4.01 Distributions.

                  (a)(1)(A) On each Distribution Date, the following amounts, in
the following order of priority, shall be distributed by REMIC I to REMIC II on
account of the REMIC I Regular Interests or withdrawn from the Distribution
Account and distributed to the holders of the Class R Certificates, in respect
of the Class R-I Interest, as the case may be:

                  (i) first, to the Holders of REMIC I Regular Interest I-LTIO-1
         and REMIC I Regular Interest I-LTIO-2 in an amount equal to (A) the
         Uncertificated Interest for such Distribution Date, plus (B) any
         amounts in respect thereof remaining unpaid from previous Distribution
         Dates and second, to the Holders of REMIC I Regular Interest I-LT1,
         REMIC I Regular Interest I-LT2 and I-LTP, in an amount equal to (A) the
         Uncertificated Interest for such Distribution Date, plus (B) any
         amounts in respect thereof remaining unpaid from previous Distribution
         Dates;

                  (ii) to the Holders of the REMIC I Regular Interest I-LTP, on
         the Distribution Date immediately following the expiration of the
         latest Prepayment Charge term as identified on the Mortgage Loan
         Schedule or any Distribution Date thereafter until $100 has been
         distributed pursuant to this clause;

                  (iii) on each Distribution Date, the remainder of the
         Available Distribution Amount for such Distribution Date after the
         distributions made pursuant to clause (i) and clause (ii) above to the
         Holders of REMIC I Regular Interest I-LT1 and REMIC I Regular Interest
         I-LT2 until the Uncertificated Balance of REMIC I Regular Interest
         I-LT1 and REMIC I Regular Interest I-LT2 is reduced to zero; and

                  (iv) to the Holders of the Class R Certificates, in respect of
         the Class R-I Interest, any amounts remaining after the distributions
         pursuant to clauses (i) through (iii) above.

                  On each Distribution Date, all amounts representing Prepayment
Charges in respect of the Mortgage Loans received during the related Prepayment
Period will be distributed by REMIC I to the Holders of REMIC I Regular Interest
I-LTP. The payment of the foregoing amounts to the Holders of REMIC I Regular
Interest I-LTP shall not reduce the Uncertificated Balance thereof.

                  (B) On each Distribution Date, the following amounts, in the
following order of priority, shall be distributed by REMIC II to REMIC III on
account of the REMIC II Regular Interests or withdrawn from the Distribution
Account and distributed to the holders of the Class R Certificates, in respect
of the Class R-II Interest, as the case may be:

                                      -82-

<PAGE>

                  (i) first, to the Holders of REMIC II Regular Interest
         II-LTIO-1A, REMIC II Regular Interest II-LTIO-1B, REMIC II Regular
         Interest II-LTIO-1C, REMIC II Regular Interest II-LTIO-2A, REMIC II
         Regular Interest II-LTIO-2B and REMIC II Regular Interest II-LTIO-2C,
         PRO RATA, in an amount equal to (A) the Uncertificated Interest for
         each such REMIC II Regular Interest for such Distribution Date, plus
         (B) any amounts in respect thereof remaining unpaid from previous
         Distribution Dates and then to Holders of REMIC II Regular Interest
         II-LTAA, REMIC Regular Interest II-LTA1, REMIC II Regular Interest
         II-LTA2A, REMIC II Regular Interest II-LTA2B, REMIC II Regular Interest
         II-LTA2C, REMIC II Regular Interest II-LTM1, REMIC II Regular Interest
         II-LTM2, REMIC II Regular Interest II-LTM3, REMIC II Regular Interest
         II-LTZZ and REMIC II Regular Interest II-LTP, PRO RATA, in an amount
         equal to (A) the Uncertificated Interest for such Distribution Date,
         plus (B) any amounts in respect thereof remaining unpaid from previous
         Distribution Dates. Amounts payable as Uncertificated Interest in
         respect of REMIC II Regular Interest II-LTZZ shall be reduced when the
         REMIC II Overcollateralization Amount is less than the REMIC II
         Required Overcollateralization Amount, by the lesser of (x) the amount
         of such difference and (y) the Maximum II-LTZZ Uncertificated Interest
         Deferral Amount and such amount will be payable to the Holders of REMIC
         II Regular Interest II-LTA1, REMIC II Regular Interest II-LTA2A, REMIC
         II Regular Interest II-LTA2B, REMIC II Regular Interest II- LTA2C,
         REMIC II Regular Interest II-LTM1, REMIC II Regular Interest II-LTM2
         and REMIC II Regular Interest II-LTM3 in the same proportion as the
         Overcollateralization Increase Amount is allocated to the Corresponding
         Certificates;

                  (ii) second, to the Holders of REMIC II Regular Interests, in
         an amount equal to the remainder of the Available Funds for such
         Distribution Date after the distributions made pursuant to clause (i)
         above, allocated as follows:

                  (a) to the Holders of REMIC II Regular Interest II-LTAA,
98.00% of such remainder, until the Uncertificated Balance of such
Uncertificated REMIC II Regular Interest is reduced to zero;

                  (b) to the Holders of REMIC II Regular Interest II-LTA1, REMIC
II Regular Interest II-LTA2A, REMIC II Regular Interest II-LTA2B, REMIC II
Regular Interest II-LTA2C, REMIC II Regular Interest II-LTM1, REMIC II Regular
Interest II-LTM2 and REMIC II Regular Interest II-LTM3, 1.00% of such remainder,
in the same proportion as principal payments are allocated to the Corresponding
Certificates, until the Uncertificated Balances of such REMIC II Regular
Interests are reduced to zero;

                  (c) to the Holders of REMIC II Regular Interest II-LTZZ, 1.00%
of such remainder, until the Uncertificated Balance of such REMIC II Regular
Interest is reduced to zero;

                  (d) to the Holders of REMIC II Regular Interest II-LTP, on the
Distribution Date immediately following the expiration of the latest Prepayment
Charge as identified on the Prepayment Charge Schedule or any Distribution Date
thereafter until $100 has been distributed pursuant to this clause; then

                                      -83-

<PAGE>

                  (e) any remaining amount to the Holders of the Class R-II
Interest, in respect of the Class R-II Interest; and

                  (iii) third, to REMIC II Regular Interest II-LTP, 100% of the
         amount paid in respect of REMIC I Regular Interest I-LTP;

provided, however, that 98.00% and 2.00% of any principal payments that are
attributable to an Overcollateralization Reduction Amount shall be allocated to
Holders of REMIC II Regular Interest II-LTAA and REMIC II Regular Interest
II-LTZZ, respectively.

                  (2) On each Distribution Date, based upon instructions of the
Securities Administrator, the Trustee shall withdraw from the Distribution
Account an amount equal to the Group I Interest Remittance Amount and make the
following disbursements and transfers in the order of priority described below,
in each case to the extent of the Group I Interest Remittance Amount remaining
for such Distribution Date:

         FIRST, concurrently to the Holders of the Class A-1 Certificates and
         the Class A-IO Certificates (in respect of REMIC II Regular Interest
         II-LTIO-1A, REMIC II Regular Interest II-LTIO-1B and REMIC II Regular
         Interest II-LTIO-1C), the Senior Interest Distribution Amount allocable
         to each such class, on a PRO RATA basis based on the entitlement of
         each such class;

         SECOND, to the Holders of the Class A-2 Certificates and the Class A-IO
         Certificates (in respect of REMIC II Regular Interest II-LTIO-2A, REMIC
         II Regular Interest II-LTIO-2B and REMIC II Regular Interest
         II-LTIO-2C), the Senior Interest Distribution Amount allocable to each
         such class, on a PRO RATA basis based on the entitlement of each such
         Class, to the extent remaining unpaid after the distribution of the
         Group II Interest Remittance Amount as set forth in clause FIRST of
         Section 4.01(a)(3) below.

                  (3) On each Distribution Date, based upon instructions of the
Securities Administrator, the Trustee shall withdraw from the Distribution
Account an amount equal to the Group II Interest Remittance Amount and make the
following disbursements and transfers in the order of priority described below,
in each case to the extent of the Group II Interest Remittance Amount remaining
for such Distribution Date:

         FIRST, concurrently to the Holders of the Class A-2 Certificates and
         Class A-IO Certificates (in respect of REMIC II Regular Interest
         II-LTIO-2A, REMIC II Regular Interest II-LTIO-2B and REMIC II Regular
         Interest II-LTIO-2C), the Senior Interest Distribution Amount allocable
         to each such class, on a PRO RATA basis based on the entitlement of
         each such class; and

         SECOND, to the Holders of the Class A-1 Certificates and the Class A-IO
         Certificates (in respect of REMIC II Regular Interest II-LTIO-1A, REMIC
         II Regular Interest II-LTIO-1B and REMIC II Regular Interest
         II-LTIO-1C), the Senior Interest Distribution Amount allocable to each
         such class, on a PRO RATA basis based on the entitlement of each such
         Class,

                                      -84-

<PAGE>

         to the extent remaining unpaid after the distribution of the Group II
         Interest Remittance Amount as set forth in clause FIRST of Section
         4.01(a)(2) above.

                  (4) On each Distribution Date, based upon instructions of the
Securities Administrator, the Trustee shall withdraw from the Distribution
Account an amount equal to the Group I Interest Remittance Amount and the Group
II Interest Remittance Amount remaining and make the following disbursements and
transfers in the order of priority described below, in each case to the extent
of the Group I Interest Remittance Amount and Group II Interest Remittance
Amount remaining for such Distribution Date:

         FIRST, to the Holders of the Class M-1 Certificates, the Interest
         Distribution Amount allocable to the Class M-1 Certificates;

         SECOND, to the Holders of the Class M-2 Certificates, the Interest
         Distribution Amount allocable to the Class M-2 Certificates; and

         THIRD, to the Holders of the Class M-3 Certificates, the Interest
         Distribution Amount allocable to the Class M-3 Certificates; and

                  (5) On each Distribution Date (a) prior to the Stepdown Date
or (b) on which a Trigger Event is in effect, based upon instructions of the
Securities Administrator, the Trustee shall withdraw from the Distribution
Account an amount equal to the Group I Principal Distribution Amount and the
Group II Principal Distribution Amount and distribute to the Certificateholders
the following amounts, in the following order of priority:

                           (i) The Group I Principal Distribution Amount shall
         be distributed in the following order of priority:

                           FIRST, to the Holders of the Class A-1 Certificates,
                           until the Certificate Principal Balance of such class
                           has been reduced to zero; and

                           SECOND, concurrently (1) to the Holders of the Class
                           A-2A Certificates and (2) sequentially, in the
                           following order, to the Holders of the Class A-2B
                           Certificates and Class A-2C Certificates, on a PRO
                           RATA basis based on the entitlement of each such
                           class, after taking into account the distribution of
                           the Group II Principal Distribution Amount pursuant
                           to Section 4.01(a)(5)(ii) below, until the
                           Certificate Principal Balance of such class has been
                           reduced to zero.

                           (ii) The Group II Principal Distribution Amount shall
                           be distributed in the following order of priority:

                           FIRST, concurrently (1) to the Holders of the Class
                           A-2A Certificates and (2) sequentially, in the
                           following order, to the Holders of the Class A-2B
                           Certificates and Class A-2C Certificates, on a PRO
                           RATA basis based on the entitlement of each such
                           class, after taking into account the distribution of
                           the

                                      -85-

<PAGE>

                           Group II Principal Distribution Amount as described
                           below, until the Certificate Principal Balance of
                           such class has been reduced to zero.

                           (iii) The Group I Principal Distribution Amount and
         Group II Principal Distribution Amount remaining after distributions
         pursuant to Section 4.01(a)(5)(i) and (ii) above shall be distributed
         in the following order of priority:

                           FIRST, to the Holders of the Class M-1 Certificates,
                           until the Certificate Principal Balance of such Class
                           has been reduced to zero;

                           SECOND, to the Holders of the Class M-2 Certificates,
                           until the Certificate Principal Balance of such Class
                           has been reduced to zero; and

                           THIRD, to the Holders of the Class M-3 Certificates,
                           until the Certificate Principal Balance of such Class
                           has been reduced to zero; and

                  (6) On each Distribution Date (a) on or after the Stepdown
Date and (b) on which a Trigger Event is not in effect, based upon instructions
of the Securities Administrator, the Trustee shall withdraw from the
Distribution Account an amount equal to the Group I Principal Distribution
Amount and the Group II Principal Distribution Amount and distribute to the
Certificateholders the following amounts, in the following order of priority:

                  (i) The Group I Principal Distribution Amount shall be
         distributed in the following order of priority:

                           FIRST, to the Holders of the Class A-1 Certificates,
                           the lesser of (x) the Group I Principal Distribution
                           Amount and (y) the Class A-1 Principal Distribution
                           Amount , until the Certificate Principal Balance
                           thereof has been reduced to zero;

                           SECOND, concurrently, (i) to the Holders of the Class
                           A-2A Certificates and (ii) sequentially, in the
                           following order, to the Holders of the Class A-2B
                           Certificates and Class A-2C Certificates, on a PRO
                           RATA basis based on the entitlement of each such
                           class, after taking into account the distribution of
                           the Group II Principal Distribution Amount, pursuant
                           to Section 4.01(a)(6)(ii) below, until the
                           Certificate Principal Balance of each such class has
                           been reduced to zero; and

                           THIRD, concurrently, (i) to the Holders of the Class
                           A-2A Certificates and (ii) sequentially, in the
                           following order, to the Holders of the Class A-2B
                           Certificates and Class A-2C Certificates, on a PRO
                           RATA basis based on the entitlement of each such
                           class, after taking into account the distribution of
                           the Group II Principal Distribution Amount, pursuant
                           to Section 4.01(a)(6)(ii) below, up to an amount
                           equal to the amount, if any, of the Class A-2
                           Principal Distribution Amount remaining unpaid on
                           such Distribution Date,

                                      -86-

<PAGE>

                           until the Certificate Principal Balance of each such
                           class has been reduced to zero.

                  (ii) The Group II Principal Distribution Amount shall be
         distributed in the following order of priority:

                           FIRST, concurrently, (i) to the Holders of the Class
                           A-2A Certificates and (ii) sequentially, in the
                           following order, to the holders of the Class A-2B
                           Certificates and Class A-2C Certificates, the Class
                           A-2 Principal Distribution Amount, on a PRO RATA
                           basis based on the entitlement of each such class,
                           until the Certificate Principal Balance of each such
                           class has been reduced to zero;

                           SECOND, to the extent of the portion, if any, of the
                           Class A-2 Principal Distribution Amount remaining
                           undistributed pursuant to clause FIRST of Section
                           4.01(a)(6)(ii) above, to the Holders of the Class A-1
                           Certificates, after taking into account the
                           distribution of the Group I Principal Distribution
                           Amount pursuant to Section 4.01(a)(6)(i) above, until
                           the Certificate Principal Balance of such class has
                           been reduced to zero; and

                           THIRD, to the holders of the Class A-1 Certificates,
                           after taking into account the distribution of the
                           Group I Principal Distribution Amount pursuant to
                           Section 4.01(a)(6)(i) above, up to an amount equal to
                           the amount, if any, of the Class A-1 Principal
                           Distribution Amount remaining unpaid on such
                           Distribution Date, until the Certificate Principal
                           Balance of such class has been reduced to zero.

                  (iii) The Principal Distribution Amount remaining after
distributions pursuant to Section 4.01(a)(6)(i) and (ii) above shall be
distributed in the following order of priority:

                           FIRST, to the Class M-1 Certificates, the lesser of
                           (x) the remaining Principal Distribution Amount and
                           (y) the Class M-1 Principal Distribution Amount,
                           until the Certificate Principal Balance of such Class
                           has been reduced to zero;

                           SECOND, to the Class M-2 Certificates, the lesser of
                           (x) the excess of (i) the remaining Principal
                           Distribution Amount over (ii) the amount distributed
                           to the Holders of the Class M-1 Certificates pursuant
                           to clause FIRST above and (y) the Class M-2 Principal
                           Distribution Amount until the Certificate Principal
                           Balance of such Class has been reduced to zero; and

                           THIRD, to the Class M-3 Certificates, the lesser of
                           (x) the excess of (i) the remaining Principal
                           Distribution Amount over (ii) the sum of the amounts
                           distributed to the Holders of the Holders of the
                           Class M-1 Certificates pursuant to clause FIRST above
                           and to the Holders of the Class M-2 Certificates
                           pursuant to clause SECOND above and (y) the Class M-3
                           Principal Distribution Amount, until the Certificate
                           Principal Balance of such Class has been reduced to
                           zero; and

                                      -87-

<PAGE>

                  (7) On each Distribution Date, the Net Monthly Excess Cashflow
(or, in the case of clause (i) below, the Net Monthly Excess Cashflow exclusive
of any Overcollateralization Reduction Amount) shall be distributed as follows:

                           (i) to the Holders of the Class or Classes of
                           Certificates then entitled to receive distributions
                           in respect of principal, in an amount equal to any
                           Extra Principal Distribution Amount, payable to such
                           Holders in accordance with the priorities set forth
                           in (b) below;

                           (ii) to the Holders of the Class M-1 Certificates, in
                           an amount equal to the Interest Carry Forward Amount
                           allocable to such Class of Certificates;

                           (iii) to the Holders of the Class M-2 Certificates,
                           in an amount equal to the Interest Carry Forward
                           Amount allocable to such Class of Certificates;

                           (iv) to the Holders of the Class M-3 Certificates, in
                           an amount equal to the Interest Carry Forward Amount
                           allocable to such Class of Certificates;

                           (vi) to the Holders of the Class A Certificates and
                           the Class A-IO Certificates, in an amount equal to
                           the aggregate of any Prepayment Interest Shortfalls
                           (to the extent not covered by payments pursuant to
                           Section 3.20) and any Relief Act Interest Shortfall,
                           in each case that were allocated to such Class for
                           such Distribution Date and for any prior Distribution
                           Date, to the extent not previously reimbursed
                           pursuant to Section 1.02;

                           (vii) to the Holders of the Class M-1 Certificates,
                           in an amount equal to the aggregate of any Prepayment
                           Interest Shortfalls (to the extent not covered by
                           payments pursuant to Section 3.20) and any Relief Act
                           Interest Shortfall, in each case that were allocated
                           to such Class for such Distribution Date and for any
                           prior Distribution Date, to the extent not previously
                           reimbursed, pursuant to Section 1.02;

                           (viii) to the Holders of the Class M-2 Certificates,
                           in an amount equal to the aggregate of any Prepayment
                           Interest Shortfalls (to the extent not covered by
                           payments pursuant to Section 3.20) and any Relief Act
                           Interest Shortfall, in each case that were allocated
                           to such Class for such Distribution Date and for any
                           prior Distribution Date, to the extent not previously
                           reimbursed pursuant to Section 1.02;

                           (ix) to the Holders of the Class M-3 Certificates, in
                           an amount equal to the aggregate of any Prepayment
                           Interest Shortfalls (to the extent not covered by
                           payments pursuant to Section 3.20) and any Relief Act
                           Interest Shortfall, in each case that were allocated
                           to such Class for such Distribution Date and for any
                           prior Distribution Date, to the extent not previously
                           reimbursed pursuant to Section 1.02;

                                      -88-

<PAGE>

                           (xi) to the Reserve Fund from amounts otherwise
                           payable to the Class CE Certificates, and then from
                           the Reserve Fund to the Class A, Class M-1, Class M-2
                           and Class M-3 Certificates, in that order, in an
                           amount equal to the unpaid amount of any Net WAC Rate
                           Carryover Amount for each such Class for such
                           Distribution Date and any unpaid Net WAC Rate
                           Carryover Amount for each such Class for such
                           Distribution Date;

                           (xii) to the Reserve Fund, the amount required by
                           Section 3.27(b), after taking into account amounts
                           received under the Cap Contract;

                           (xiii) to the Holders of the Class CE Certificates,
                           the Interest Distribution Amount and any
                           Overcollateralization Reduction Amount for such
                           Distribution Date; and

                           (xiv) to the Holders of the Class R Certificates, in
                           respect of the Class R-III Interest, any remaining
                           amounts; provided that if such Distribution Date is
                           the Distribution Date immediately following the
                           expiration of the latest Prepayment Charge term as
                           identified on the Mortgage Loan Schedule or any
                           Distribution Date thereafter, then any such remaining
                           amounts will be distributed first, to the Holders of
                           the Class P Certificates, until the Certificate
                           Principal Balance thereof has been reduced to zero;
                           and second, to the Holders of the Class R.

         On each Distribution Date, after making the distributions of the
Available Distribution Amount as set forth above, the Trustee will FIRST,
withdraw from the Reserve Fund all income from the investment of funds in the
Reserve Fund and distribute such amount to the Holders of the Class CE
Certificates, and SECOND, withdraw from the Reserve Fund, to the extent of
amounts remaining on deposit therein, the amount of any Net WAC Rate Carryover
Amount for such Distribution Date and distribute such amount FIRST, to the Class
A Certificates; SECOND, to the Class M-1 Certificates, THIRD, to the Class M-2
Certificates, and FOURTH, to the Class M-3 Certificates, in each case to the
extent to the extent any Net WAC Rate Carryover Amount is allocable to each such
Class.

                  (b) (i) On each Distribution Date (a) prior to the Stepdown
Date or (b) on which a Trigger Event is in effect, the Extra Principal
Distribution Amount shall be distributed in the following order of priority;

                           FIRST, to the Holders of the Class A Certificates,
                           until the Certificate Principal Balance of each such
                           Class has been reduced to zero;

                           SECOND, to the Holders of the Class M-1 Certificates,
                           until the Certificate Principal Balance of such Class
                           has been reduced to zero;

                           THIRD, to the Holders of the Class M-2 Certificates,
                           until the Certificate Principal Balance of such Class
                           has been reduced to zero; and

                                      -89-

<PAGE>

                           FOURTH, to the Holders of the Class M-3 Certificates,
                           until the Certificate Principal Balance of such Class
                           has been reduced to zero.

                           (ii) On each Distribution Date (a) on or after the
                  Stepdown Date and (b) on which a Trigger Event is not in
                  effect, the Extra Principal Distribution Amount shall be
                  distributed in the following order of priority;

                           FIRST, (A) the lesser of (x) the Group I Principal
                           Distribution Amount and (y) the Class A-1 Principal
                           Distribution Amount, shall be distributed to the
                           Holders of the Class A-1 Certificates, until the
                           Certificate Principal Balance of such Class has been
                           reduced to zero, and (B) the lesser of (x) the Group
                           II Principal Distribution Amount and (y) the Class
                           A-2 Principal Distribution Amount, shall be
                           distributed concurrently (1) to the Holders of the
                           Class A- 2A Certificates (2) sequentially, to the
                           Holders of the Class A-2B Certificates and the Class
                           A-2C Certificates, on a PRO RATA basis based on the
                           entitlement of each such class, until the Certificate
                           Principal Balance of each such class has been reduced
                           to zero;

                           SECOND, the lesser of (x) the excess of (i) the
                           Principal Distribution Amount over (ii) the amount
                           distributed to the Holders of the Class A
                           Certificates pursuant to clause FIRST above and (y)
                           the Class M-1 Principal Distribution Amount, shall be
                           distributed to the Holders of the Class M-1
                           Certificates, until the Certificate Principal Balance
                           of such Class has been reduced to zero;

                           THIRD, the lesser of (x) the excess of (i) the
                           Principal Distribution Amount over (ii) the sum of
                           the amounts distributed to the Holders of the Class A
                           Certificates pursuant to clause FIRST above and to
                           the Holders of the Class M-1 Certificates pursuant to
                           clause SECOND above and (y) the Class M-2 Principal
                           Distribution Amount, shall be distributed to the
                           Holders of the Class M-2 Certificates, until the
                           Certificate Principal Balance of such Class has been
                           reduced to zero; and

                           FOURTH, the lesser of (x) the excess of (i) the
                           Principal Distribution Amount over (ii) the sum of
                           the amounts distributed to the Holders of the Class A
                           Certificates pursuant to clause FIRST above, to the
                           Holders of the Class M-1 Certificates pursuant to
                           clause SECOND above and to the Holders of the Class
                           M-2 Certificates pursuant to clause THIRD above and
                           (y) the Class M-3 Principal Distribution Amount,
                           shall be distributed to the Holders of the Class M-3
                           Certificates, until the Certificate Principal Balance
                           of such Class has been reduced to zero.

                  (c) On each Distribution Date, the Trustee shall withdraw any
amounts then on deposit in the Distribution Account that represent Prepayment
Charges shall distribute such amounts to the Class P Certificateholders as
described above.

                                      -90-

<PAGE>

                  (d) All distributions made with respect to each Class of
Certificates on each Distribution Date shall be allocated PRO RATA among the
outstanding Certificates in such Class based on their respective Percentage
Interests. Payments in respect of each Class of Certificates on each
Distribution Date will be made to the Holders of the respective Class of record
on the related Record Date (except as otherwise provided in Section 4.01(e) or
Section 9.01 respecting the final distribution on such Class), based on the
aggregate Percentage Interest represented by their respective Certificates, and
shall be made by wire transfer of immediately available funds to the account of
any such Holder at a bank or other entity having appropriate facilities
therefor, if such Holder shall have so notified the Trustee in writing at least
five Business Days prior to the Record Date immediately prior to such
Distribution Date and is the registered owner of Certificates having an initial
aggregate Certificate Principal Balance that is in excess of the lesser of (i)
$5,000,000 or (ii) two-thirds of the initial Certificate Principal Balance of
such Class of Certificates, or otherwise by check mailed by first class mail to
the address of such Holder appearing in the Certificate Register. The final
distribution on each Certificate will be made in like manner, but only upon
presentment and surrender of such Certificate at the Corporate Trust Office of
the Trustee or such other location specified in the notice to Certifcateholders
of such final distribution.

                  Each distribution with respect to a Book-Entry Certificate
shall be paid to the Depository, as Holder thereof, and the Depository shall be
responsible for crediting the amount of such distribution to the accounts of its
Depository Participants in accordance with its normal procedures. Each
Depository Participant shall be responsible for disbursing such distribution to
the Certificate Owners that it represents and to each indirect participating
brokerage firm (a "brokerage firm" or "indirect participating firm") for which
it acts as agent. Each brokerage firm shall be responsible for disbursing funds
to the Certificate Owners that it represents. None of the Trustee, the Trustee,
the Depositor, the Securities Administrator or the Master Servicer shall have
any responsibility therefor except as otherwise provided by this Agreement or
applicable law.

                  (e) The rights of the Certificateholders to receive
distributions in respect of the Certificates, and all interests of the
Certificateholders in such distributions, shall be as set forth in this
Agreement. None of the Holders of any Class of Certificates, the Trustee, the
Securities Administrator or the Master Servicer shall in any way be responsible
or liable to the Holders of any other Class of Certificates in respect of
amounts properly previously distributed on the Certificates.

                  (f) Except as otherwise provided in Section 9.01, whenever the
Trustee expects that the final distribution with respect to any Class of
Certificates will be made on the next Distribution Date, the Trustee shall, no
later than three (3) days before the related Distribution Date, mail to each
Holder on such date of such Class of Certificates a notice to the effect that:

                  (i) the Trustee expects that the final distribution with
         respect to such Class of Certificates will be made on such Distribution
         Date but only upon presentation and surrender of such Certificates at
         the office of the Trustee therein specified, and

                  (ii) no interest shall accrue on such Certificates from and
         after the end of the related Interest Accrual Period.

                                      -91-

<PAGE>

                  Any funds not distributed to any Holder or Holders of
Certificates of such Class on such Distribution Date because of the failure of
such Holder or Holders to tender their Certificates shall, on such date, be set
aside and held in trust by the Trustee and credited to the account of the
appropriate non-tendering Holder or Holders. If any Certificates as to which
notice has been given pursuant to this Section 4.01 (e) shall not have been
surrendered for cancellation within six months after the time specified in such
notice, the Trustee shall mail a second notice to the remaining non-tendering
Certificateholders to surrender their Certificates for cancellation in order to
receive the final distribution with respect thereto. If within one year after
the second notice all such Certificates shall not have been surrendered for
cancellation, the Trustee shall, directly or through an agent, mail a final
notice to the remaining non-tendering Certificateholders concerning surrender of
their Certificates but shall continue to hold any remaining funds for the
benefit of non-tendering Certificateholders. The costs and expenses of
maintaining the funds in trust and of contacting such Certificateholders shall
be paid out of the assets remaining in such trust fund. If within one year after
the final notice any such Certificates shall not have been surrendered for
cancellation, the Trustee shall pay to the Depositor all such amounts, and all
rights of non-tendering Certificateholders in or to such amounts shall thereupon
cease. No interest shall accrue or be payable to any Certificateholder on any
amount held in trust by the Trustee as a result of such Certificateholder's
failure to surrender its Certificate(s) for final payment thereof in accordance
with this Section 4.01(e). Any such amounts held in trust by the Trustee shall
be held in an Eligible Account and the Trustee may direct any depository
institution maintaining such account to invest the funds in one or more
Permitted Investments. All income and gain realized from the investment of funds
deposited in such accounts held in trust by the Trustee shall be for the benefit
of the Trustee; provided, however, that the Trustee shall deposit in such
account the amount of any loss of principal incurred in respect of any such
Permitted Investment made with funds in such accounts immediately upon the
realization of such loss.

                  (g) Notwithstanding anything to the contrary herein, in no
event shall the Certificate Principal Balance of a Class A Certificate or a
Mezzanine Certificate be reduced more than once in respect of any particular
amount both (a) allocated to such Certificate in respect of Realized Losses
pursuant to Section 4.04 and (b) distributed to the Holder of such Certificate
in reduction of the Certificate Principal Balance thereof pursuant to this
Section 4.01 from Net Monthly Excess Cashflow and (ii) in no event shall the
Uncertificated Balance of a REMIC Regular Interest be reduced more than once in
respect of any particular amount both (a) allocated to such REMIC Regular
Interest in respect of Realized Losses pursuant to Section 4.04 and (b)
distributed on such REMIC Regular Interest in reduction of the Uncertificated
Balance thereof pursuant to this Section 4.01.

         SECTION 4.02. Statements to Certificateholders.

         On each Distribution Date, the Securities Administrator shall provide
or make available, upon request to each Holder of the Regular Certificates, a
statement as to the distributions made on such Distribution Date setting forth:

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

                                      -92-

<PAGE>

         made on such Distribution Date to the Holders of the Class P
         Certificates allocable to Prepayment Charges;

                  (ii) the amount of the distribution made on such Distribution
         Date to the Holders of the Certificates of each Class allocable to
         interest;

                  (iii) the aggregate Servicing Fee received by each Servicer
         and Master Servicing Fee received by the Master Servicer during the
         related Due Period and such other customary information as the
         Securities Administrator deems necessary or desirable, or which a
         Certificateholder reasonably requests, to enable Certificateholders to
         prepare their tax returns;

                  (iv) the aggregate amount of P&I Advances for such
         Distribution Date;

                  (v) Reserved;

                  (vi) the number, aggregate principal balance, weighted average
         remaining term to maturity and weighted average Mortgage Rate of the
         Mortgage Loans as of the related Due Date;

                  (vii) the number and aggregate unpaid principal balance of
         Mortgage Loans (a) delinquent 30 to 59 days, (b) delinquent 60 to 89
         days, (c) delinquent 90 or more days, in each case, as of the last day
         of the preceding calendar month, (d) as to which foreclosure
         proceedings have been commenced and (e) with respect to which the
         related Mortgagor has filed for protection under applicable bankruptcy
         laws, with respect to whom bankruptcy proceedings are pending or with
         respect to whom bankruptcy protection is in force;

                  (viii) with respect to any Mortgage Loan that became an REO
         Property during the preceding calendar month, the loan number of such
         Mortgage Loan, the unpaid principal balance and the Scheduled Principal
         Balance of such Mortgage Loan;

                  (ix) the book value of any REO Property as of the close of
         business on the last Business Day of the calendar month preceding the
         Distribution Date;

                  (x) the aggregate amount of Principal Prepayments made during
         the related Prepayment Period and the aggregate amount of any
         Prepayment Charges (or payments by the Servicers in respect of any
         waived Prepayment Charges) received in respect thereof;

                  (xi) the aggregate amount of Realized Losses incurred during
         the related Prepayment Period (or, in the case of Bankruptcy Losses
         allocable to interest, during the related Due Period), separately
         identifying whether such Realized Losses constituted Bankruptcy Losses
         and the aggregate amount of Realized Losses incurred since the Closing
         Date;

                                      -93-

<PAGE>

                  (xii) the aggregate amount of extraordinary Trust Fund
         expenses withdrawn from the Master Servicer Collection Account or the
         Distribution Account for such Distribution Date;

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

                  (xiv) the Certificate Factor for each such Class of
         Certificates applicable to such Distribution Date;

                  (xv) the Interest Distribution Amount in respect of the Class
         A Certificates, the Class A-IO Certificates, the Mezzanine Certificates
         and the Class CE Certificates for such Distribution Date and the
         Interest Carry Forward Amount, if any, with respect to the Class A
         Certificates, the Class A-IO Certificates and the Mezzanine
         Certificates on such Distribution Date, and in the case of the Class A
         Certificates, the Class A-IO Certificates and the Mezzanine
         Certificates, separately identifying any reduction thereof due to
         allocations of Realized Losses, Prepayment Interest Shortfalls, Relief
         Act Interest Shortfalls and Net WAC Rate Carryover Amounts;

                  (xvi) the aggregate amount of any Prepayment Interest
         Shortfall for such Distribution Date, to the extent not covered by
         payments by the Master Servicer pursuant to Section 3.20;

                  (xvii) the aggregate amount of Relief Act Interest Shortfalls
         for such Distribution Date;

                  (xviii) the Required Overcollateralization Amount and the
         Credit Enhancement Percentage for such Distribution Date;

                  (xix) the Overcollateralization Increase Amount, if any, for
         such Distribution Date;

                  (xx) the Overcollateralization Reduction Amount, if any, for
         such Distribution Date;

                  (xxi) the Net WAC Rate Carryover Amount, if any, for such
         Distribution Date;

                  (xxii) the Net WAC Rate Carryover Amount, if any, outstanding
         after reimbursements therefor on such Distribution Date and and any
         amounts received under the Cap Contract;

                  (xxiii) the respective Pass-Through Rates applicable to the
         Class A Certificates, the Mezzanine Certificates and the Class CE
         Certificates for such Distribution Date and the Pass-Through Rate
         applicable to the Class A Certificates and the Mezzanine Certificates
         for the Distribution Date;

                                      -94-

<PAGE>

                  (xxiv) the balance of the Reserve Fund prior to the deposit or
         withdrawal of any amounts on such Distribution Date;

                  (xxv) the amount of any withdrawal from the Reserve Fund
         pursuant to Section 4.01(a)(7)(xii);

                  (xxvi) the balance of the Reserve Fund after all deposits and
         withdrawals on such Distribution Date;

                  (xxvii) the Loss Severity Percentage with respect to each
         Mortgage Loan; and

                  (xxviii) the Aggregate Loss Severity Percentage.

         The Securities Administrator will make such statement (and, at its
option, any additional files containing the same information in an alternative
format) available each month to the Certificateholders, the Trustee and the
Rating Agencies via the Securities Administrator's internet website. The
Securities Administrator's internet website shall initially be located at
http:\\www.ctslink.com and assistance in using the website can be obtained by
calling the Securities Administrator's customer service desk at 1-301-815-6600.
Parties that are unable to use the above distribution options are entitled to
have a paper copy mailed to them via first class mail by calling the customer
service desk and indicating such. The Securities Administrator shall have the
right to change the way such statements are distributed in order to make such
distribution more convenient and/or more accessible to the above parties and the
Securities Administrator shall provide timely and adequate notification to all
above parties regarding any such changes.

         In the case of information furnished pursuant to subclauses (i) through
(iii) above, the amounts shall be expressed as a dollar amount per Single
Certificate of the relevant Class.

         Within a reasonable period of time after the end of each calendar year,
the Trustee shall furnish to each Person who at any time during the calendar
year was a Holder of a Regular Certificate a statement containing the
information set forth in subclauses (i) through (iii) above, aggregated for such
calendar year or applicable portion thereof during which such person was a
Certificateholder. Such obligation of the Trustee shall be deemed to have been
satisfied to the extent that substantially comparable information shall be
provided by the Trustee pursuant to any requirements of the Code as from time to
time are in force.

         Within a reasonable period of time after the end of each calendar year,
the Trustee shall furnish to each Person who at any time during the calendar
year was a Holder of a Residual Certificate a statement setting forth the
amount, if any, actually distributed with respect to the Residual Certificates,
as appropriate, aggregated for such calendar year or applicable portion thereof
during which such Person was a Certificateholder.

         The Securities Administrator shall, upon request, furnish to each
Certificateholder, during the term of this Agreement, such periodic, special, or
other reports or information, whether or not provided for herein, as shall be
reasonable with respect to the Certificateholder, as applicable, or

                                      -95-

<PAGE>

otherwise with respect to the purposes of this Agreement, all such reports or
information to be provided at the expense of the Certificateholder, in
accordance with such reasonable and explicit instructions and directions as the
Certificateholder may provide.

         On each Distribution Date the Securities Administrator shall provide
Bloomberg Financial Markets, L.P. ("Bloomberg") CUSIP level factors for each
class of Certificates as of such Distribution Date, using a format and media
mutually acceptable to the Securities Administrator and Bloomberg.

         SECTION 4.03. Remittance Reports; P&I Advances.

                  (a) Two Business Days prior to each Distribution Date, the
Securities Administrator shall deliver to the Trustee by telecopy (or by such
other means as the Securities Administrator and the Trustee may agree from time
to time) a Remittance Report with respect to the related Distribution Date. The
Trustee shall not be responsible to recompute, recalculate or verify any
information provided to it by the Securities Administrator. Notwithstanding the
foregoing, in connection with any Principal Prepayment on any Mortgage Loan
listed on Schedule 1 hereto, the Master Servicer shall verify that the related
Prepayment Charge was delivered to the Master Servicer for deposit in the Master
Servicer Collection Account in the amount set forth on such Schedule 1 in
accordance with Section 3.31.

                  (b) If the Monthly Payment on a Mortgage Loan that was due on
a related Due Date and is delinquent other than as a result of interest
shortfalls due to bankruptcy proceedings or application of the Relief Act and
for which the related Servicer was required to make an advance pursuant to the
related Servicing Agreement exceeds the amount deposited in the Master Servicer
Collection Account which will be used for an advance with respect to such
Mortgage Loan, the Master Servicer will deposit in the Master Servicer
Collection Account not later than the Distribution Account Deposit Date
immediately preceding the related Distribution Date an amount equal to such
deficiency, net of the Servicing Fee for such Mortgage Loan except to the extent
the Master Servicer determines any such advance to be nonrecoverable from
Liquidation Proceeds, Insurance Proceeds or future payments on the Mortgage Loan
for which such P&I Advance was made. Any amounts held for future distribution
and so used shall be appropriately reflected in the Master Servicer's records
and replaced by the Master Servicer by deposit in the Master Servicer Collection
Account on or before any future Distribution Account Deposit Date to the extent
that the Available Distribution Amount for the related Distribution Date
(determined without regard to P&I Advances to be made on the Distribution
Account Deposit Date) shall be less than the total amount that would be
distributed to the Classes of Certificateholders pursuant to Section 4.01 on
such Distribution Date if such amounts held for future distributions had not
been so used to make P&I Advances. Subject to the foregoing, the Master Servicer
shall continue to make such P&I Advances through the date that the related
Servicer is required to do so under its Servicing Agreement. If applicable, on
the Distribution Account Deposit Date, the Master Servicer shall present an
Officer's Certificate to the Trustee (i) stating that the Master Servicer elects
not to make a Monthly Advance in a stated amount and (ii) detailing the reason
it deems the advance to be nonrecoverable. The Trustee will provide notice to
the Master Servicer by telecopy by the close of business on the Business Day
prior to the Distribution Date in the event that the amount remitted by the
Master Servicer to the Trustee on such

                                      -96-

<PAGE>

date is less than the P&I Advances required to be made by the Master Servicer
for the related Distribution Date.

         SECTION 4.04. Allocation of Realized Losses.

                  (a) No later than two Business Days prior to each Distribution
Date, the Master Servicer shall determine based solely on information provided
by the related Servicer as to each Mortgage Loan and REO Property: (i) the total
amount of Realized Losses, if any, incurred in connection with any Final
Recovery Determinations made during the related Prepayment Period; (ii) whether
and the extent to which such Realized Losses constituted Bankruptcy Losses; and
(iii) the respective portions of such Realized Losses allocable to interest and
allocable to principal. No later than two Business Days prior to each
Distribution Date, the Master Servicer shall also determine as to each Mortgage
Loan: (i) the total amount of Realized Losses, if any, incurred in connection
with any Deficient Valuations made during the related Prepayment Period; and
(ii) the total amount of Realized Losses, if any, incurred in connection with
Debt Service Reductions in respect of Monthly Payments due during the related
Due Period.

                  (b) All Realized Losses on the Mortgage Loans allocated to any
REMIC I Regular Interest pursuant to Section 4.04(c) on the Mortgage Loans shall
be allocated by the Master Servicer on each Distribution Date as follows: first,
to Net Monthly Excess Cashflow; second, to the Class CE Certificates, until the
Certificate Principal Balance thereof has been reduced to zero; third, to the
Class M-3 Certificates, until the Certificate Principal Balance thereof has been
reduced to zero; fourth, to the Class M-2 Certificates, until the Certificate
Principal Balance thereof has been reduced to zero; and fifth, to the Class M-1
Certificates, until the Certificate Principal Balance thereof has been reduced
to zero. All Realized Losses to be allocated to the Certificate Principal
Balances of all Classes on any Distribution Date shall be so allocated after the
actual distributions to be made on such date as provided above. All references
above to the Certificate Principal Balance of any Class of Certificates shall be
to the Certificate Principal Balance of such Class immediately prior to the
relevant Distribution Date, before reduction thereof by any Realized Losses, in
each case to be allocated to such Class of Certificates, on such Distribution
Date.

                  Any allocation of Realized Losses to a Mezzanine Certificate
on any Distribution Date shall be made by reducing the Certificate Principal
Balance thereof by the amount so allocated; any allocation of Realized Losses to
a Class CE Certificates shall be made by reducing the amount otherwise payable
in respect thereof pursuant to Section 4.01(a)(7)(xiii). No allocations of any
Realized Losses shall be made to the Certificate Principal Balances of the Class
A Certificates or the Class P Certificates.

                  As used herein, an allocation of a Realized Loss on a "pro
rata basis" among two or more specified Classes of Certificates means an
allocation on a pro rata basis, among the various Classes so specified, to each
such Class of Certificates on the basis of their then outstanding Certificate
Principal Balances prior to giving effect to distributions to be made on such
Distribution Date. All Realized Losses and all other losses allocated to a Class
of Certificates hereunder will be allocated among the, Certificates of such
Class in proportion to the Percentage Interests evidenced thereby.

                                      -97-

<PAGE>

                  (c) All Realized Losses on the Mortgage Loans shall be
allocated by the Trustee on each Distribution Date to REMIC I Regular Interest
I-LT1 and REMIC I Regular Interest I-LT2 until the Uncertificated Balances
thereof have been reduced to zero.

                  (d) All Realized Losses on the REMIC I Regular Interests shall
be allocated by the Trustee on each Distribution Date to the following REMIC II
Regular Interests in the specified percentages, as follows: first, to
Uncertificated Interest payable to the REMIC II Regular Interest II-LTAA and
REMIC II Regular Interest II-LTZZ up to an aggregate amount equal to the REMIC
II Interest Loss Allocation Amount, 98% and 2%, respectively; second, to the
Uncertificated Balances of the REMIC II Regular Interest II-LTAA and REMIC II
Regular Interest II-LTZZ up to an aggregate amount equal to the REMIC II
Principal Loss Allocation Amount, 98% and 2%, respectively; third, to the
Uncertificated Balances of REMIC II Regular Interest II-LTAA, REMIC II Regular
Interest II-LTM3 and REMIC II Regular Interest II-LTZZ, 98%, 1% and 1%,
respectively, until the Uncertificated Balance of REMIC II Regular Interest
II-LTM3 has been reduced to zero; fourth, to the Uncertificated Balances of
REMIC II Regular Interest II-LTAA, REMIC II Regular Interest II-LTM2 and REMIC
II Regular Interest II-LTZZ, 98%, 1% and 1%, respectively, until the
Uncertificated Balance of REMIC II Regular Interest II-LTM2 has been reduced to
zero; and fifth, to the Uncertificated Balances of REMIC II Regular Interest
II-LTAA, REMIC II Regular Interest II-LTM1 and REMIC II Regular Interest
II-LTZZ, 98%, 1% and 1%, respectively, until the Uncertificated Balance of REMIC
II Regular Interest II-LTM1 has been reduced to zero.

         SECTION 4.05. Compliance with Withholding Requirements.

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

                                      -98-

<PAGE>

                                    ARTICLE V

                                THE CERTIFICATES

         SECTION 5.01. The Certificates.

                  (a) The Certificates in the aggregate will represent the
entire beneficial ownership interest in the Mortgage Loans and all other assets
included in REMIC I.

                  The Certificates will be substantially in the forms annexed
hereto as Exhibits A-1 through A-6. The Certificates of each Class will be
issuable in registered form only, in denominations of authorized Percentage
Interests as described in the definition thereof. Each Certificate will share
ratably in all rights of the related Class.

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

                  (b) The Class A Certificates, the Class A-IO Certificates and
the Mezzanine Certificates shall initially be issued as one or more Certificates
held by the Book-Entry Custodian or, if appointed to hold such Certificates as
provided below, the Depository and registered in the name of the Depository or
its nominee and, except as provided below, registration of such Certificates may
not be transferred by the Trustee except to another Depository that agrees to
hold such Certificates for the respective Certificate Owners with Ownership
Interests therein. The Certificate Owners shall hold their respective Ownership
Interests in and to such Certificates through the book-entry facilities of the
Depository and, except as provided below, shall not be entitled to definitive,
fully registered Certificates ("Definitive Certificates") in respect of such
Ownership Interests. All transfers by Certificate Owners of their respective
Ownership Interests in the Book-Entry Certificates shall be made in accordance
with the procedures established by the Depository Participant or brokerage firm
representing such Certificate Owner. Each Depository Participant shall only
transfer the Ownership Interests in the Book-Entry Certificates of Certificate
Owners it represents or of brokerage firms for which it acts as agent in
accordance with the Depository's normal procedures. The Trustee is hereby
initially appointed as the Book-Entry Custodian and hereby agrees to act as such
in accordance herewith and in accordance with the agreement that it has with the
Depository authorizing it to act as such. The Book-Entry Custodian may, and, if
it is no longer qualified to act as such, the Book-Entry Custodian shall,
appoint, by a written instrument delivered to the Depositor, the Master Servicer
and, if the Trustee is not the

                                      -99-

<PAGE>

Book-Entry Custodian, the Trustee, any other transfer agent (including the
Depository or any successor Depository) to act as Book-Entry Custodian under
such conditions as the predecessor Book-Entry Custodian and the Depository or
any successor Depository may prescribe, provided that the predecessor Book-Entry
Custodian shall not be relieved of any of its duties or responsibilities by
reason of any such appointment of other than the Depository. If the Trustee
resigns or is removed in accordance with the terms hereof, the successor Trustee
or, if it so elects, the Depository shall immediately succeed to its
predecessor's duties as Book-Entry Custodian. The Depositor shall have the right
to inspect, and to obtain copies of, any Certificates held as Book-Entry
Certificates by the Book-Entry Custodian.

                  The Trustee, the Master Servicer, the Securities Administrator
and the Depositor may for all purposes (including the making of payments due on
the Book-Entry Certificates) deal with the Depository as the authorized
representative of the Certificate Owners with respect to the Book-Entry
Certificates for the purposes of exercising the rights of Certificateholders
hereunder. The rights of Certificate Owners with respect to the Book-Entry
Certificates shall be limited to those established by law and agreements between
such Certificate Owners and the Depository Participants and brokerage firms
representing such Certificate Owners. Multiple requests and directions from, and
votes of, the Depository as Holder of the Book-Entry Certificates with respect
to any particular matter shall not be deemed inconsistent if they are made with
respect to different Certificate Owners. The Trustee may establish a reasonable
record date in connection with solicitations of consents from or voting by
Certificateholders and shall give notice to the Depository of such record date.

                  If (i)(A) the Depositor advises the Trustee in writing that
the Depository is no longer willing or able to properly discharge its
responsibilities as Depository, and (B) the Depositor is unable to locate a
qualified successor, (ii) the Depositor at its option advises the Trustee in
writing that it elects to terminate the book-entry system through the Depository
or (iii) after the occurrence of a Master Servicer Event of Default, Certificate
Owners representing in the aggregate not less than 51% of the Ownership
Interests of the Book-Entry Certificates advise the Trustee through the
Depository, in writing, that the continuation of a book-entry system through the
Depository is no longer in the best interests of the Certificate Owners, the
Trustee shall notify all Certificate Owners, through the Depository, of the
occurrence of any such event and of the availability of Definitive Certificates
to Certificate Owners requesting the same. Upon surrender to the Trustee of the
Book-Entry Certificates by the Book-Entry Custodian or the Depository, as
applicable, accompanied by registration instructions from the Depository for
registration of transfer, the Trustee shall cause the Definitive Certificates to
be issued. Such Definitive Certificates will be issued in minimum denominations
of $10,000 except that any beneficial ownership that was represented by a
Book-Entry Certificate in an amount less than $10,000 immediately prior to the
issuance of a Definitive Certificate shall be issued in a minimum denomination
equal to the amount represented by such Book-Entry Certificate. None of the
Depositor, the Master Servicer or the Trustee shall be liable for any delay in
the delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the issuance of Definitive
Certificates all references herein to obligations imposed upon or to be
performed by the Depository shall be deemed to be imposed upon and performed by
the Trustee, to the extent applicable with respect to such Definitive
Certificates, and the Trustee shall recognize the Holders of the Definitive
Certificates as Certificateholders hereunder.

                                      -100-

<PAGE>

         SECTION 5.02. Registration of Transfer and Exchange of Certificates.

                  (a) The Trustee shall cause to be kept at one of the offices
or agencies to be appointed by the Trustee in accordance with the provisions of
Section 8.11, a Certificate Register for the Certificates in which, subject to
such reasonable regulations as it may prescribe, the Trustee shall provide for
the registration of Certificates and of transfers and exchanges of Certificates
as herein provided.

                  (b) No transfer of any Class CE Certificate, Class P
Certificate or Residual Certificate shall be made unless that transfer is made
pursuant to an effective registration statement under the Securities Act of
1933, as amended (the "1933 Act"), and effective registration or qualification
under applicable state securities laws, or is made in a transaction that does
not require such registration or qualification. In the event that such a
transfer of a Class CE Certificate, Class P Certificate or Residual Certificate
is to be made without registration or qualification (other than in connection
with the initial transfer of any such Certificate by the Depositor), the Trustee
shall require receipt of: (i) if such transfer is purportedly being made in
reliance upon Rule 144A under the 1933 Act, written certifications from the
Certificateholder desiring to effect the transfer and from such
Certificateholder's prospective transferee, substantially in the form attached
hereto as Exhibit B-1; (ii) if such transfer is purportedly being made in
reliance upon Rule 501(a) under the 1933 Act, written certifications from the
Certificateholder desiring to effect the transfer and from such
Certificateholder's prospective transferee, substantially in the form attached
hereto as Exhibit B-2 and (iii) in all other cases, an Opinion of Counsel
satisfactory to the Trustee that such transfer may be made without such
registration or qualification (which Opinion of Counsel shall not be an expense
of the Trust Fund or of the Depositor, the Trustee, the Securities
Administrator, the Master Servicer in its capacity as such or any Servicer),
together with copies of the written certification(s) of the Certificateholder
desiring to effect the transfer and/or such Certificateholder's prospective
transferee upon which such Opinion of Counsel is based, if any. Neither of the
Depositor nor the Trustee is obligated to register or qualify any such
Certificates under the 1933 Act or any other securities laws or to take any
action not otherwise required under this Agreement to permit the transfer of
such Certificates without registration or qualification. Any Certificateholder
desiring to effect the transfer of any such Certificate shall, and does hereby
agree to, indemnify the Trustee, the Depositor, the Securities Administrator and
the Master Servicer against any liability that may result if the transfer is not
so exempt or is not made in accordance with such federal and state laws.

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

                                      -101-

<PAGE>

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

                  Each Transferee of a Mezzanine Certificate will be deemed to
have represented by virtue of its purchase or holding of such Certificate (or
interest therein) that either (a) such Transferee is not a Plan or purchasing
such Certificate with Plan Assets, (b) it has acquired and is holding such
Certificate in reliance on Prohibited Transaction Exemption ("PTE") 94-84 or FAN
97-03E, as amended by PTE 97-34, 62 Fed. Reg. 39021 (July 21, 1997), PTE
2000-58, 65 Fed. Reg. 67765 (November 13, 2000) and PTE 2002-41, 67 Fed. Reg.
54487 (August 22, 2002) (the "Exemption"), and that it understands that there
are certain conditions to the availability of the Exemption including that such
Certificate must be rated, at the time of purchase, not lower than "BBB-" (or
its equivalent) by a Rating Agency or (c) the following conditions are
satisfied: (i) such Transferee is an insurance company, (ii) the source of funds
used to purchase or hold such Certificate (or interest therein) is an "insurance
company general account" (as defined in U.S. Department of Labor Prohibited
Transaction Class Exemption ("PTCE") 95-60, and (iii) the conditions set forth
in Sections I and III of PTCE 95-60 have been satisfied. If any Mezzanine
Certificate or any interest therein is acquired or held in violation of the
conditions described in this paragraph, the next preceding permitted beneficial
owner will be treated as the beneficial owner of that Mezzanine Certificate,
retroactive to the date of transfer to the purported beneficial owner. Any
purported beneficial owner whose acquisition or holding of any such certificate
or interest therein was effected in violation of the conditions described in
this paragraph shall indemnify and hold harmless the Depositor, the Trustee, the
Securities Administrator, the Master Servicer, the Servicers, and the Trust Fund
from and against any and all liabilities, claims, costs or expenses incurred by
those parties as a result of that acquisition or holding.

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

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

                                    (B) In connection with any proposed Transfer
                           of any Ownership Interest in a Residual Certificate,
                           the Trustee shall require delivery to it, and

                                      -102-

<PAGE>

                           shall not register the Transfer of any Residual
                           Certificate until its receipt of, an affidavit and
                           agreement (a "Transfer Affidavit and Agreement," in
                           the form attached hereto as Exhibit B-3) from the
                           proposed Transferee, in form and substance
                           satisfactory to the Trustee, representing and
                           warranting, among other things, that such Transferee
                           is a Permitted Transferee, that it is not acquiring
                           its Ownership Interest in the Residual Certificate
                           that is the subject of the proposed Transfer as a
                           nominee, trustee or agent for any Person that is not
                           a Permitted Transferee, that for so long as it
                           retains its Ownership Interest in a Residual
                           Certificate, it will endeavor to remain a Permitted
                           Transferee, and that it has reviewed the provisions
                           of this Section 5.02(d) and agrees to be bound by
                           them.

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

                                    (D) Each Person holding or acquiring any
                           Ownership Interest in a Residual Certificate shall
                           agree (x) to require a Transfer Affidavit and
                           Agreement from any other Person to whom such Person
                           attempts to transfer its Ownership Interest in a
                           Residual Certificate and (Y) not to transfer its
                           Ownership Interest unless it provides a Transferor
                           Affidavit (in the form attached hereto as Exhibit
                           B-2) to the Trustee stating that, among other things,
                           it has no actual knowledge that such other Person is
                           not a Permitted Transferee.

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

                           (ii) The Trustee will register the Transfer of any
                  Residual Certificate only if it shall have received the
                  Transfer Affidavit and Agreement and all of such other
                  documents as shall have been reasonably required by the
                  Trustee as a condition to such registration. In addition, no
                  Transfer of a Residual Certificate shall be made unless the
                  Trustee shall have received a representation letter from the
                  Transferee of such Certificate to the effect that such
                  Transferee is a Permitted Transferee.

                           (iii) (A) If any purported Transferee shall become a
                  Holder of a Residual Certificate in violation of the
                  provisions of this Section 5.02(d), then the last preceding
                  Permitted Transferee shall be restored, to the extent
                  permitted by law, to

                                      -103-

<PAGE>

                  all rights as holder thereof retroactive to the date of
                  registration of such Transfer of such Residual Certificate.
                  The Trustee shall be under no liability to any Person for any
                  registration of Transfer of a Residual Certificate that is in
                  fact not permitted by this Section 5.02(d) or for making any
                  payments due on such Certificate to the holder thereof or for
                  taking any other action with respect to such holder under the
                  provisions of this Agreement.

                                    (B) If any purported Transferee shall become
                           a holder of a Residual Certificate in violation of
                           the restrictions in this Section 5.02(d) and to the
                           extent that the retroactive restoration of the rights
                           of the holder of such Residual Certificate as
                           described in clause (iii)(A) above shall be invalid,
                           illegal or unenforceable, then the Trustee shall have
                           the right, without notice to the holder or any prior
                           holder of such Residual Certificate, to sell such
                           Residual Certificate to a purchaser selected by the
                           Trustee on such terms as the Trustee may choose. Such
                           purported Trustee shall promptly endorse and deliver
                           each Residual Certificate in accordance with the
                           instructions of the Trustee. Such purchaser may be
                           the Trustee itself or any Affiliate of the Trustee.
                           The proceeds of such sale, net of the commissions
                           (which may include commissions payable to the Trustee
                           or its Affiliates), expenses and taxes due, if any,
                           will be remitted by the Trustee to such purported
                           Transferee. The terms and conditions of any sale
                           under this clause (iii)(B) shall be determined in the
                           sole discretion of the Trustee, and the Trustee shall
                           not be liable to any Person having an Ownership
                           Interest in a Residual Certificate as a result of its
                           exercise of such discretion.

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

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

                                    (A) written notification from each Rating
                           Agency to the effect that the modification, addition
                           to or elimination of such provisions will not cause

                                      -104-

<PAGE>

                           such Rating Agency to downgrade its then-current
                           ratings of any Class of Certificates; and

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

                  (e) Subject to the preceding subsections, upon surrender for
registration of transfer of any Certificate at any office or agency of the
Trustee maintained for such purpose pursuant to Section 8.11, the Trustee shall
execute, authenticate and deliver, in the name of the designated Transferee or
Transferees, one or more new Certificates of the same Class of a like aggregate
Percentage Interest.

                  (f) At the option of the Holder thereof, any Certificate may
be exchanged for other Certificates of the same Class with authorized
denominations and a like aggregate Percentage Interest, upon surrender of such
Certificate to be exchanged at any office or agency of the Trustee maintained
for such purpose pursuant to Section 8.11. Whenever any Certificates are so
surrendered for exchange, the Trustee shall execute, authenticate and deliver,
the Certificates which the Certificateholder making the exchange is entitled to
receive. Every Certificate presented or surrendered for transfer or exchange
shall (if so required by the Trustee) be duly endorsed by, or be accompanied by
a written instrument of transfer in the form satisfactory to the Trustee duly
executed by, the Holder thereof or his attorney duly authorized in writing.

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

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

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

         If (i) any mutilated Certificate is surrendered to the Trustee, or the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Certificate and of the ownership thereof, and (ii) there is delivered to
Trustee such security or indemnity as may be required by it to save it harmless,
then, in the absence of actual knowledge by the Trustee that such Certificate
has been acquired by a bona fide purchaser, the Trustee, shall execute,
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of the same Class and
of like denomination and Percentage Interest. Upon the issuance of any new
Certificate

                                      -105-

<PAGE>

under this Section, the Trustee may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Trustee)
connected therewith. Any replacement Certificate issued pursuant to this Section
shall constitute complete and indefeasible evidence of ownership in the
applicable REMIC created hereunder, as if originally issued, whether or not the
lost, stolen or destroyed Certificate shall be found at any time.

         SECTION 5.04. Persons Deemed Owners.

         The Depositor, the Master Servicer, the Securities Administrator, the
Trustee and any agent of any of them may treat the Person in whose name any
Certificate is registered as the owner of such Certificate for the purpose of
receiving distributions pursuant to Section 4.01 and for all other purposes
whatsoever, and none of the Depositor, the Master Servicer, the Securities
Administrator, the Trustee or any agent of any of them shall be affected by
notice to the contrary.

         SECTION 5.05. Certain Available Information.

         On or prior to the date of the first sale of any Class CE Certificate,
Class P Certificate or Residual Certificate to an Independent third party, the
Depositor shall provide to the Securities Administrator ten copies of any
private placement memorandum or other disclosure document used by the Depositor
in connection with the offer and sale of such Certificate. In addition, if any
such private placement memorandum or disclosure document is revised, amended or
supplemented at any time following the delivery thereof to the Securities
Administrator, the Depositor promptly shall inform the Securities Administrator
of such event and shall deliver to the Securities Administrator ten copies of
the private placement memorandum or disclosure document, as revised, amended or
supplemented. The Securities Administrator shall maintain at its office as set
forth in Section 11.05 hereof and shall make available free of charge during
normal business hours for review by any Holder of a Certificate or any Person
identified to the Securities Administrator as a prospective transferee of a
Certificate, originals or copies of the following items: (i) in the case of a
Holder or prospective transferee of a Class CE Certificate, Class P Certificate
or Residual Certificate, the related private placement memorandum or other
disclosure document relating to such Class of Certificates, in the form most
recently provided to the Securities Administrator; and (ii) in all cases, (A)
this Agreement and any amendments hereof entered into pursuant to Section 11.01,
(B) all monthly statements required to be delivered to Certificateholders of the
relevant Class pursuant to Section 4.02 since the Closing Date, and all other
notices, reports, statements and written communications delivered to the
Certificateholders of the relevant Class pursuant to this Agreement since the
Closing Date and (C) any copies of all officers' certificates delivered to the
Securities Administrator by the Trustee prepared by the Master Servicer or any
Servicer since the Closing Date to evidence such Person's determination that any
P&I Advance or Servicing Advance was, or if made, would be a Nonrecoverable P&I
Advance or Nonrecoverable Servicing Advance. Copies and mailing of any and all
of the foregoing items will be available from the Securities Administrator or
the Trustee upon request at the expense of the Person requesting the same.

                                      -106-

<PAGE>

                                   ARTICLE VI

                      THE DEPOSITOR AND THE MASTER SERVICER

         SECTION 6.01. Liability of the Depositor and the Master Servicer.

         The Depositor and the Master Servicer each shall be liable in
accordance herewith only to the extent of the obligations specifically imposed
by this Agreement upon them in their respective capacities as Depositor and
Master Servicer and undertaken hereunder by the Depositor and the Master
Servicer herein.

         SECTION 6.02. Merger or Consolidation of the Depositor or the Master
Servicer.

         Subject to the following paragraph, the Depositor will keep in full
effect its existence, rights and franchises as a corporation under the laws of
the jurisdiction of its incorporation. Subject to the following paragraph, the
Master Servicer will keep in full effect its existence, rights and franchises as
a corporation under the laws of the jurisdiction of its formation. The Depositor
and the Master Servicer each will obtain and preserve its qualification to do
business as a foreign corporation in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, the Certificates or any of the Mortgage Loans
and to perform its respective duties under this Agreement.

         The Depositor or the Master Servicer may be merged or consolidated with
or into any Person, or transfer all or substantially all of its assets to any
Person, in which case any Person resulting from any merger or consolidation to
which the Depositor or the Master Servicer shall be a party, or any Person
succeeding to the business of the Depositor or the Master Servicer, shall be the
successor of the Depositor or the Master Servicer, as the case may be,
hereunder, without the execution or filing of any paper or any further act on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding; provided, however, the Rating Agencies' ratings of the Class A
Certificates, the Class A-IO Certificates and the Mezzanine Certificates in
effect immediately prior to such merger or consolidation will not be qualified,
reduced or withdrawn as a result thereof (as evidenced by a letter to such
effect from the Rating Agencies).

         SECTION 6.03. Limitation on Liability of the Depositor, the Master
Servicer, the Servicers, the Securities Administrator and Others.

         None of the Depositor, the Master Servicer, the Securities
Administrator, the Servicers or any of the directors, officers, employees or
agents of the Depositor, the Master Servicer, the Securities Administrator or
the Servicers shall be under any liability to the Trust Fund or the
Certificateholders for any action taken or for refraining from the taking of any
action in good faith pursuant to this Agreement or the Servicing Agreements, or
for errors in judgment; provided, however, that this provision shall not protect
the Depositor, the Master Servicer, the Securities Administrator or any such
person against any breach of warranties, representations or covenants made
herein or in the Servicing Agreements, or against any specific liability imposed
on the Master Servicer, the Securities Administrator or the Servicers pursuant
hereto or pursuant to the Servicing Agreements, or against any liability which
would otherwise be imposed by reason of willful misfeasance, bad faith or gross

                                      -107-

<PAGE>

negligence in the performance of duties or by reason of reckless disregard of
obligations and duties hereunder or under the Servicing Agreements. The
Depositor, the Master Servicer, the Securities Administrator, the Servicers and
any director, officer, employee or agent of the Depositor, the Master Servicer,
the Securities Administrator or the Servicers may rely in good faith on any
document of any kind which, PRIMA FACIE, is properly executed and submitted by
any Person respecting any matters arising hereunder or under the Servicing
Agreements. The Depositor, the Master Servicer, the Servicers, the Securities
Administrator and any director, officer, employee or agent of the Depositor, the
Master Servicer, the Servicers or the Securities Administrator shall be
indemnified and held harmless by the Trust Fund against any loss, liability or
expense incurred in connection with any legal action relating to this Agreement,
the Certificates or any Servicing Agreement, or any loss, liability or expense
incurred other than by reason of willful misfeasance, bad faith or gross
negligence in the performance of duties hereunder or by reason of reckless
disregard of obligations and duties hereunder. None of the Depositor, the Master
Servicer, the Securities Administrator or any Servicer shall be under any
obligation to appear in, prosecute or defend any legal action unless such action
is related to its respective duties under this Agreement or the applicable
Servicing Agreement and, in its opinion, does not involve it in any expense or
liability; provided, however, that each of the Depositor, the Master Servicer
and the Securities Administrator may in its discretion undertake any such action
which it may deem necessary or desirable with respect to this Agreement and the
rights and duties of the parties hereto and the interests of the
Certificateholders hereunder. In such event, the legal expenses and costs of
such action and any liability resulting therefrom (except any loss, liability or
expense incurred by reason of willful misfeasance, bad faith or gross negligence
in the performance of duties hereunder or by reason of reckless disregard of
obligations and duties hereunder) shall be expenses, costs and liabilities of
the Trust Fund, and the Depositor, the Master Servicer and the Securities
Administrator shall be entitled to be reimbursed therefor from the Master
Servicer Collection Account as and to the extent provided in Article III, any
such right of reimbursement being prior to the rights of the Certificateholders
to receive any amount in the Master Servicer Collection Account.

         SECTION 6.04 Limitation on Resignation of the Master Servicer.

         The Master Servicer shall not resign from the obligations and duties
hereby imposed on it except upon determination that its duties hereunder are no
longer permissible under applicable law. Any such determination pursuant to the
preceding sentence permitting the resignation of the Master Servicer shall be
evidenced by an Opinion of Counsel to such effect obtained at the expense of the
Master Servicer and delivered to the Trustee and the Rating Agencies. No
resignation of the Master Servicer shall become effective until the Trustee or a
successor Master Servicer shall have assumed the Master Servicer's
responsibilities, duties, liabilities (other than those liabilities arising
prior to the appointment of such successor) and obligations under this
Agreement.

         SECTION 6.05 Assignment of Master Servicing.

         The Master Servicer may sell and assign its rights and delegate its
duties and obligations in its entirety as Master Servicer under this Agreement;
provided, however, that: (i) the purchaser or transferee accepting such
assignment and delegation (a) shall be a Person which shall be qualified to
service mortgage loans for Fannie Mae or Freddie Mac; (b) shall have a net worth
of not less than $15,000,000 (unless otherwise approved by each Rating Agency
pursuant to clause (ii) below); (c)

                                      -108-

<PAGE>

shall be reasonably satisfactory to the Trustee (as evidenced in a writing
signed by the Trustee); and (d) shall execute and deliver to the Trustee an
agreement, in form and substance reasonably satisfactory to the Trustee, which
contains an assumption by such Person of the due and punctual performance and
observance of each covenant and condition to be performed or observed by it as
master servicer under this Agreement, any custodial agreement from and after the
effective date of such agreement; (ii) each Rating Agency shall be given prior
written notice of the identity of the proposed successor to the Master Servicer
and each Rating Agency's rating of the Certificates in effect immediately prior
to such assignment, sale and delegation will not be downgraded, qualified or
withdrawn as a result of such assignment, sale and delegation, as evidenced by a
letter to such effect delivered to the Master Servicer and the Trustee; and
(iii) the Master Servicer assigning and selling the master servicing shall
deliver to the Trustee an officer's certificate and an Opinion of Independent
counsel, each stating that all conditions precedent to such action under this
Agreement have been completed and such action is permitted by and complies with
the terms of this Agreement. No such assignment or delegation shall affect any
liability of the Master Servicer arising prior to the effective date thereof.

         SECTION 6.06 Rights of the Depositor in Respect of the Master Servicer.

         The Master Servicer shall afford the Depositor and the Trustee, upon
reasonable notice, during normal business hours, access to all records
maintained by the Master Servicer in respect of the Master Servicer's rights and
obligations hereunder and access to officers of the Master Servicer responsible
for such obligations. Upon request, the Master Servicer shall furnish to the
Depositor and the Trustee the most recent financial statements of its parent and
such other information relating to the Master Servicer's capacity to perform its
obligations under this Agreement as it possesses. To the extent such information
is not otherwise available to the public, the Depositor and the Trustee shall
not disseminate any information obtained pursuant to the preceding two sentences
without the Master Servicer's written consent, except as required pursuant to
this Agreement or to the extent that it is appropriate to do so (i) in working
with legal counsel, auditors, taxing authorities or other governmental agencies
or (ii) pursuant to any law, rule, regulation, order, judgment, writ, injunction
or decree of any court or governmental authority having jurisdiction over the
Depositor, the Trustee or the Trust, and in any case, the Depositor or the
Trustee, as the case may be, shall use its best efforts to assure the
confidentiality of any such disseminated non-public information. The Depositor
may, but is not obligated to, enforce the obligations of the Master Servicer
under this Agreement and may, but is not obligated to, perform, or cause a
designee to perform, any defaulted obligation of the Master Servicer under this
Agreement or exercise the rights of the Master Servicer under this Agreement;
provided that the Master Servicer shall not be relieved of any of its
obligations under this Agreement by virtue of such performance by the Depositor
or its designee. The Depositor shall not have any responsibility or liability
for any action or failure to act by the Master Servicer and is not obligated to
supervise the performance of the Master Servicer under this Agreement or
otherwise.

                                      -109-

<PAGE>

                                   ARTICLE VII

                                     DEFAULT

         SECTION 7.01. Master Servicer Events of Default.

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

                           (i) any failure by the Master Servicer to remit to
         the Trustee for distribution to the Certificateholders any payment
         (other than a P&I Advance required to be made from its own funds on any
         Distribution Account Deposit Date pursuant to Section 4.03) required to
         be made under the terms of the Certificates and this Agreement which
         continues unremedied for a period of one Business Day after the date
         upon which written notice of such failure, requiring the same to be
         remedied, shall have been given to the Master Servicer by the Depositor
         or the Trustee (in which case notice shall be provided by telecopy), or
         to the Master Servicer, the Depositor, the Trustee and by the Holders
         of Certificates entitled to at least 25% of the Voting Rights; or

                           (ii) any failure on the part of the Master Servicer
         duly to observe or perform in any material respect any other of the
         covenants or agreements on the part of the Master Servicer contained in
         this Agreement, or the breach by the Master Servicer of any
         representation and warranty contained in Section 2.05, which continues
         unremedied for a period of 30 days after the date on which written
         notice of such failure, requiring the same to be remedied, shall have
         been given to the Master Servicer by the Depositor or the Trustee or to
         the Master Servicer, the Depositor and the Trustee by the Holders of
         Certificates entitled to at least 25% of the Voting Rights; or

                           (iii) a decree or order of a court or agency or
         supervisory authority having jurisdiction in the premises in an
         involuntary case under any present or future federal or state
         bankruptcy, insolvency or similar law or the appointment of a
         conservator or receiver or liquidator in any insolvency, readjustment
         of debt, marshalling of assets and liabilities or similar proceeding,
         or for the winding-up or liquidation of its affairs, shall have been
         entered against the Master Servicer and such decree or order shall have
         remained in force undischarged or unstayed for a period of 90 days; or

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

                           (v) the Master Servicer shall admit in writing its
         inability to pay its debts generally as they become due, file a
         petition to take advantage of any applicable insolvency or
         reorganization statute, make an assignment for the benefit of its
         creditors, or voluntarily suspend payment of its obligations; or

                                      -110-

<PAGE>

                           (vi) any failure of the Master Servicer to make any
         P&I Advance on any Distribution Account Deposit Date required to be
         made from its own funds pursuant to Section 4.03 which continues
         unremedied until 3:00 p.m. New York time on the Business Day
         immediately following the Distribution Account Deposit Date.

If a Master Servicer Event of Default described in clauses (i) through (vi) of
this Section shall occur, then, and in each and every such case, so long as such
Master Servicer Event of Default shall not have been remedied, the Depositor or
the Trustee may, and at the written direction of the Holders of Certificates
entitled to at least 51% of Voting Rights, the Trustee shall, by notice in
writing to the Master Servicer (and to the Depositor if given by the Trustee or
to the Trustee if given by the Depositor) with a copy to each Rating Agency,
terminate all of the rights and obligations of the Master Servicer in its
capacity as Master Servicer under this Agreement, to the extent permitted by
law, and in and to the Mortgage Loans and the proceeds thereof. If a Master
Servicer Event of Default described in clause (vi) hereof shall occur, the
Trustee shall, by notice in writing to the Master Servicer and the Depositor,
terminate all of the rights and obligations of the Master Servicer in its
capacity as Master Servicer under this Agreement and in and to the Mortgage
Loans and the proceeds thereof. On or after the receipt by the Master Servicer
of such written notice, all authority and power of the Master Servicer under
this Agreement, whether with respect to the Certificates (other than as a Holder
of any Certificate) or the Mortgage Loans or otherwise, shall pass to and be
vested in the Trustee pursuant to and under this Section, and, without
limitation, the Trustee is hereby authorized and empowered, as attorney-in-fact
or otherwise, to execute and deliver, on behalf of and at the expense of the
Master Servicer, any and all documents and other instruments and to do or
accomplish all other acts or things necessary or appropriate to effect the
purposes of such notice of termination, whether to complete the transfer and
endorsement or assignment of the Mortgage Loans and related documents, or
otherwise. The Master Servicer agrees promptly (and in any event no later than
ten Business Days subsequent to such notice) to provide the Trustee with all
documents and records requested by it to enable it to assume the Master
Servicer's functions under this Agreement, and to cooperate with the Trustee in
effecting the termination of the Master Servicer's responsibilities and rights
under this Agreement, including, without limitation, the transfer within one
Business Day to the Trustee for administration by it of all cash amounts which
at the time shall be or should have been credited by the Master Servicer to the
Master Servicer Collection Account held by or on behalf of the Master Servicer
or thereafter be received with respect to the Mortgage Loans or any REO Property
(provided, however, that the Master Servicer shall continue to be entitled to
receive all amounts accrued or owing to it under this Agreement on or prior to
the date of such termination, whether in respect of P&I Advances or otherwise,
and shall continue to be entitled to the benefits of Section 6.03,
notwithstanding any such termination, with respect to events occurring prior to
such termination). For purposes of this Section 7.01, the Trustee shall not be
deemed to have knowledge of a Master Servicer Event of Default unless a
Responsible Officer of the Trustee assigned to and working in the Trustee's
Corporate Trust Office has actual knowledge thereof or unless written notice of
any event which is in fact such a Master Servicer Event of Default is received
by the Trustee and such notice references the Certificates, the Trust or this
Agreement. The Trustee shall promptly notify the Rating Agencies of the
occurrence of a Master Servicer Event of Default of which it has knowledge as
provided above.

                                      -111-

<PAGE>

         SECTION 7.02. Trustee to Act; Appointment of Successor.

                  On and after the time the Master Servicer receives a notice of
termination, the Trustee shall be the successor in all respects to the Master
Servicer in its capacity as Master Servicer under this Agreement and the
transactions set forth or provided for herein, and all the responsibilities,
duties and liabilities relating thereto and arising thereafter shall be assumed
by the Trustee (except for any representations or warranties of the Master
Servicer under this Agreement, the responsibilities, duties and liabilities
contained in Section 2.03 and the obligation to deposit amounts in respect of
losses pursuant to Section 3.23(c)) by the terms and provisions hereof
including, without limitation, the Master Servicer's obligations to make P&I
Advances pursuant to Section 4.03; provided, however, that if the Trustee is
prohibited by law or regulation from obligating itself to make advances
regarding delinquent mortgage loans, then the Trustee shall not be obligated to
make P&I Advances pursuant to Section 4.03; and provided further, that any
failure to perform such duties or responsibilities caused by the Master
Servicer's failure to provide information required by Section 7.01 shall not be
considered a default by the Trustee as successor to the Master Servicer
hereunder. As compensation therefor, the Trustee shall be entitled to the Master
Servicing Fee and all funds relating to the Mortgage Loans to which the Master
Servicer would have been entitled if it had continued to act hereunder.
Notwithstanding the above and subject to the immediately following paragraph,
the Trustee may, if it shall be unwilling to so act, or shall, if it is unable
to so act or if it is prohibited by law from making advances regarding
delinquent mortgage loans or if the Holders of Certificates entitled to at least
51% of the Voting Rights so request in writing promptly appoint or petition a
court of competent jurisdiction to appoint, an established mortgage loan
servicing institution acceptable to each Rating Agency and having a net worth of
not less than $15,000,000, as the successor to the Master Servicer under this
Agreement in the assumption of all or any part of the responsibilities, duties
or liabilities of the Master Servicer under this Agreement.

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

         SECTION 7.03. Notification to Certificateholders.

                  (a) Upon any termination of the Master Servicer pursuant to
Section 7.01 above or any appointment of a successor to the Master Servicer
pursuant to Section 7.02 above, the Trustee shall give prompt written notice
thereof to the Certificateholders at their respective addresses appearing in the
Certificate Register.

                                      -112-

<PAGE>

                  (b) Not later than the later of 60 days after the occurrence
of any event, which constitutes or which, with notice or lapse of time or both,
would constitute a Master Servicer Event of Default or five days after a
Responsible Officer of the Trustee becomes aware of the occurrence of such an
event, the Trustee shall transmit by mail to all Holders of Certificates notice
of each such occurrence, unless such default or Master Servicer Event of Default
shall have been cured or waived.

         SECTION 7.04. Waiver of Master Servicer Events of Default.

         The Holders representing at least 66% of the Voting Rights evidenced by
all Classes of Certificates affected by any default or Master Servicer Event of
Default hereunder may waive such default or Master Servicer Event of Default;
PROVIDED, HOWEVER, that a default or Master Servicer Event of Default under
clause (i) or (vii) of Section 7.01 may be waived only by all of the Holders of
the Regular Certificates. Upon any such waiver of a default or Master Servicer
Event of Default, such default or Master Servicer Event of Default shall cease
to exist and shall be deemed to have been remedied for every purpose hereunder.
No such waiver shall extend to any subsequent or other default or Master
Servicer Event of Default or impair any right consequent thereon except to the
extent expressly so waived.

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<PAGE>

                                  ARTICLE VIII

             CONCERNING THE TRUSTEE AND THE SECURITIES ADMINISTRATOR

         SECTION 8.01. Duties of Trustee and Securities Administrator.

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

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

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

                           (i) Prior to the occurrence of a Master Servicer
                  Event of Default, and after the curing or waiver of all such
                  Master Servicer Events of Default which may have occurred with
                  respect to the Trustee and at all times with respect to the
                  Securities Administrator, the duties and obligations of the
                  Trustee shall be determined solely by the express provisions
                  of this Agreement, neither the Trustee nor the Securities
                  Administrator shall be liable except for the performance of
                  such duties and obligations as are specifically set forth in
                  this Agreement, no implied covenants or obligations shall be
                  read into this Agreement against the Trustee or the Securities
                  Administrator and, in the absence of bad faith on the part of
                  the Trustee or the Securities Administrator, respectively, the
                  Trustee or the Securities Administrator, respectively, may
                  conclusively rely, as to the truth of the statements and the
                  correctness of the opinions expressed therein, upon any
                  certificates or opinions furnished to the Trustee or the
                  Securities Administrator, respectively, that conform to the
                  requirements of this Agreement;

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<PAGE>

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

                           (iii) Neither the Trustee nor the Securities
                  Administrator shall be personally liable with respect to any
                  action taken, suffered or omitted to be taken by it in good
                  faith in accordance with the direction of the Holders of
                  Certificates entitled to at least 25% of the Voting Rights
                  relating to the time, method and place of conducting any
                  proceeding for any remedy available to the Trustee or the
                  Securities Administrator or exercising any trust or power
                  conferred upon the Trustee or the Securities Administrator
                  under this Agreement.

         SECTION 8.02. Certain Matters Affecting Trustee and Securities
Administrator.

                  (a) Except as otherwise provided in Section 8.01:

                           (i) The Trustee and the Securities Administrator may
                  request and rely upon and shall be protected in acting or
                  refraining from acting upon any resolution, Officers'
                  Certificate, certificate of auditors or any other certificate,
                  statement, instrument, opinion, report, notice, request,
                  consent, order, appraisal, bond or other paper or document
                  reasonably believed by it to be genuine and to have been
                  signed or presented by the proper party or parties;

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

                           (iii) Neither the Trustee nor the Securities
                  Administrator shall be under any obligation to exercise any of
                  the trusts or powers vested in it by this Agreement or to
                  institute, conduct or defend any litigation hereunder or in
                  relation hereto at the request, order or direction of any of
                  the Certificateholders, pursuant to the provisions of this
                  Agreement, unless such Certificateholders shall have offered
                  to the Trustee or the Securities Administrator, as the case
                  may be, reasonable security or indemnity satisfactory to it
                  against the costs, expenses and liabilities which may be
                  incurred therein or thereby; nothing contained herein shall,
                  however, relieve the Trustee of the obligation, upon the
                  occurrence of a Master Servicer Event of Default (which has
                  not been cured or waived), to exercise such of the rights and
                  powers vested in it by this Agreement, and to use the same
                  degree of care and skill in their exercise as a prudent person
                  would exercise or use under the circumstances in the conduct
                  of such person's own affairs;

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<PAGE>

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

                           (v) Prior to the occurrence of a Master Servicer
                  Event of Default hereunder and after the curing or waiver of
                  all Master Servicer Events of Default which may have occurred
                  with respect to the Trustee and at all times with respect to
                  the Securities Administrator, neither the Trustee nor the
                  Securities Administrator shall be bound to make any
                  investigation into the facts or matters stated in any
                  resolution, certificate, statement, instrument, opinion,
                  report, notice, request, consent, order, approval, bond or
                  other paper or document, unless requested in writing to do so
                  by the Holders of Certificates entitled to at least 25% of the
                  Voting Rights; PROVIDED, HOWEVER, that if the payment within a
                  reasonable time to the Trustee or the Securities Administrator
                  of the costs, expenses or liabilities likely to be incurred by
                  it in the making of such investigation is, in the opinion of
                  the Trustee or the Securities Administrator, as applicable,
                  not reasonably assured to the Trustee or the Securities
                  Administrator by such Certificateholders, the Trustee or the
                  Securities Administrator, as applicable, may require
                  reasonable indemnity satisfactory to it against such expense,
                  or liability from such Certificateholders as a condition to
                  taking any such action;

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

                           (vii) The Trustee shall not be personally liable for
                  any loss resulting from the investment of funds held in the
                  Master Servicer Collection Account at the direction of the
                  Master Servicer pursuant to Section 3.23(c), for any loss
                  resulting from the investment of funds held in the Reserve
                  Fund at the direction of the Holder of the Class CE
                  Certificate or for any loss resulting from the redemption or
                  sale of any such investment as therein authorized;

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

                           (ix) the Trustee shall not be deemed to have notice
                  of any default or Master Servicer Event of Default unless a
                  Responsible Officer of the Trustee has knowledge thereof or
                  unless written notice of any event which is in fact such a
                  default is received by the Trustee at the Corporate Trust
                  Office of the Trustee, and such notice references the
                  Certificates and this Agreement; and

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<PAGE>

                           (x) the rights, privileges, protections, immunities
                  and benefits given to the Trustee, including, without
                  limitation, its right to be indemnified, are extended to, and
                  shall be enforceable by, each agent, custodian and other
                  Person employed to act hereunder.

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

                  (c) The Trustee is hereby directed by the Depositor to execute
and deliver the Cap Contract on behalf of the Trust Fund in the form presented
to it by the Depositor.

         SECTION 8.03. Trustee and Securities Administrator not Liable for
Certificates or Mortgage Loans.

         The recitals contained herein and in the Certificates (other than the
signature of the Trustee, the authentication of the Trustee on the Certificates,
the acknowledgments of the Trustee contained in Article II and the
representations and warranties of the Trustee in Section 8.12) shall be taken as
the statements of the Depositor and neither the Trustee nor the Securities
Administrator assumes any responsibility for their correctness. Neither the
Trustee nor the Securities Administrator makes any representations or warranties
as to the validity or sufficiency of this Agreement (other than as specifically
set forth in Section 8.12) or of the Certificates (other than the signature of
the Trustee and authentication of the Trustee on the Certificates) or of any
Mortgage Loan or related document. The Trustee shall not be accountable for the
use or application by the Depositor of any of the Certificates or of the
proceeds of such Certificates, or for the use or application of any funds paid
to the Depositor or the Master Servicer in respect of the Mortgage Loans or
deposited in or withdrawn from the Master Servicer Collection Account by the
Master Servicer, other than any funds held by or on behalf of the Trustee in
accordance with Section 3.23 and 3.24.

         SECTION 8.04. Trustee and Securities Administrator May Own
Certificates.

         Each of the Trustee and the Securities Administrator in its individual
capacity or any other capacity may become the owner or pledgee of Certificates
and may transact business with other interested parties and their Affiliates
with the same rights it would have if it were not Trustee or the Securities
Administrator.

         SECTION 8.05. Fees and Expenses of Trustee and Securities
Administrator.

         The fees of the Trustee and the Securities Administrator hereunder and
of Wells Fargo under the Custodial Agreement shall be paid in accordance with a
side letter agreement with the Master Servicer and at the sole expense of the
Master Servicer. In addition, the Trustee, the Securities Administrator, the
Custodian and any director, officer, employee or agent of the Trustee, the
Securities Administrator and the Custodian shall be indemnified by the Trust and
held harmless against any loss, liability or expense (including reasonable
attorney's fees and expenses) incurred

                                      -117-

<PAGE>

by the Trustee or the Securities Administrator in connection with any claim or
legal action or any pending or threatened claim or legal action arising out of
or in connection with the acceptance or administration of its respective
obligations and duties under this Agreement, including other agreements related
hereto, other than any loss, liability or expense (i) for which the Trustee is
indemnified by the Master Servicer, (ii) that constitutes a specific liability
of the Trustee or the Securities Administrator pursuant to Section 10.01(g) or
(iii) any loss, liability or expense incurred by reason of willful misfeasance,
bad faith or negligence in the performance of duties hereunder by reason of
reckless disregard of obligations and duties hereunder. The Master Servicer
agrees to indemnify the Trustee, from, and hold the Trustee harmless against,
any loss, liability or expense (including reasonable attorney's fees and
expenses) incurred by the Trustee by reason of the Master Servicer's willful
misfeasance, bad faith or gross negligence in the performance of its duties
under this Agreement or by reason of the Master Servicer's reckless disregard of
its obligations and duties under this Agreement. Such indemnity shall survive
the termination or discharge of this Agreement and the resignation or removal of
the Trustee. Any payment hereunder made by the Master Servicer to the Trustee
shall be from the Master Servicer's own funds, without reimbursement from REMIC
I therefor.

         SECTION 8.06. Eligibility Requirements for Trustee and Securities
Administrator.

         The Trustee and the Securities Administrator shall at all times be a
corporation or an association (other than the Depositor, the Seller, the Master
Servicer or any Affiliate of the foregoing) organized and doing business under
the laws of any state or the United States of America, authorized under such
laws to exercise corporate trust powers, having a combined capital and surplus
of at least $50,000,000 (or a member of a bank holding company whose capital and
surplus is at least $50,000,000) and subject to supervision or examination by
federal or state authority. If such corporation or association publishes reports
of conditions at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purposes of this
Section the combined capital and surplus of such corporation or association
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of conditions so published. In case at any time the Trustee or the
Securities Administrator, as applicable, shall cease to be eligible in
accordance with the provisions of this Section, the Trustee or the Securities
Administrator, as applicable, shall resign immediately in the manner and with
the effect specified in Section 8.07.

         SECTION 8.07. Resignation and Removal of Trustee and Securities
Administrator.

         The Trustee and the Securities Administrator may at any time resign and
be discharged from the trust hereby created by giving written notice thereof to
the Depositor, to the Master Servicer, to the Securities Administrator (or the
Trustee, if the Securities Administrator resigns) and to the Certificateholders.
Upon receiving such notice of resignation, the Depositor shall promptly appoint
a successor trustee or successor securities administrator by written instrument,
in duplicate, which instrument shall be delivered to the resigning Trustee or
Securities Administrator, as applicable, and to the successor trustee or
successor securities administrator, as applicable. A copy of such instrument
shall be delivered to the Certificateholders, the Trustee, the Securities
Administrator and the Master Servicer by the Depositor. If no successor trustee
or successor securities administrator shall have been so appointed and have
accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Trustee or Securities Administrator, as the case may
be, may, at

                                      -118-

<PAGE>

the expense of the Trust Fund, petition any court of competent jurisdiction for
the appointment of a successor trustee, successor securities administrator,
Trustee or Securities Administrator, as applicable.

         If at any time the Trustee or the Securities Administrator shall cease
to be eligible in accordance with the provisions of Section 8.06 and shall fail
to resign after written request therefor by the Depositor, or if at any time the
Trustee or the Securities Administrator shall become incapable of acting, or
shall be adjudged bankrupt or insolvent, or a receiver of the Trustee or the
Securities Administrator or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or the Securities
Administrator or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then the Depositor may remove the Trustee or the
Securities Administrator, as applicable and appoint a successor trustee or
successor securities administrator, as applicable, by written instrument, in
duplicate, which instrument shall be delivered to the Trustee or the Securities
Administrator so removed and to the successor trustee or successor securities
administrator. A copy of such instrument shall be delivered to the
Certificateholders, the Trustee, the Securities Administrator and the Master
Servicer by the Depositor.

         The Holders of Certificates entitled to at least 51% of the Voting
Rights may at any time remove the Trustee or the Securities Administrator and
appoint a successor trustee or successor securities administrator by written
instrument or instruments, in triplicate, signed by such Holders or their
attorneys-in-fact duly authorized, one complete set of which instruments shall
be delivered to the Depositor, one complete set to the Trustee or the Securities
Administrator so removed and one complete set to the successor so appointed. A
copy of such instrument shall be delivered to the Certificateholders, the
Trustee (in the case of the removal of the Securities Administrator), the
Securities Administrator (in the case of the removal of the Trustee) and the
Master Servicer by the Depositor.

         Any resignation or removal of the Trustee or the Securities
Administrator and appointment of a successor trustee or successor securities
administrator pursuant to any of the provisions of this Section shall not become
effective until acceptance of appointment by the successor trustee or successor
securities administrator, as applicable, as provided in Section 8.08.

         Notwithstanding anything to the contrary contained herein, the Master
Servicer and the Securities Administrator shall at all times be the same Person.

         SECTION 8.08. Successor Trustee or Securities Administrator.

         Any successor trustee or successor securities administrator appointed
as provided in Section 8.07 shall execute, acknowledge and deliver to the
Depositor and its predecessor trustee or predecessor securities administrator an
instrument accepting such appointment hereunder, and thereupon the resignation
or removal of the predecessor trustee or predecessor securities administrator
shall become effective and such successor trustee or successor securities
administrator without any further act, deed or conveyance, shall become fully
vested with all the rights, powers, duties and obligations of its predecessor
hereunder, with the like effect as if originally named as trustee or securities
administrator herein. The predecessor trustee or predecessor securities
administrator shall deliver to the successor trustee or successor securities
administrator all Mortgage

                                      -119-

<PAGE>

Loan Documents and related documents and statements to the extent held by it
hereunder, as well as all moneys, held by it hereunder, and the Depositor and
the predecessor trustee or predecessor securities administrator shall execute
and deliver such instruments and do such other things as may reasonably be
required for more fully and certainly vesting and confirming in the successor
trustee or successor securities administrator all such rights, powers, duties
and obligations.

         No successor trustee or successor securities administrator shall accept
appointment as provided in this Section unless at the time of such acceptance
such successor trustee or successor securities administrator shall be eligible
under the provisions of Section 8.06 and the appointment of such successor
trustee or successor securities administrator shall not result in a downgrading
of any Class of Certificates by any Rating Agency, as evidenced by a letter from
each Rating Agency.

         Upon acceptance of appointment by a successor trustee or successor
securities administrator as provided in this Section, the Depositor shall mail
notice of the succession of such trustee hereunder to all Holders of
Certificates at their addresses as shown in the Certificate Register. If the
Depositor fails to mail such notice within 10 days after acceptance of
appointment by the successor trustee or successor securities administrator, the
successor trustee or successor securities administrator shall cause such notice
to be mailed at the expense of the Depositor.

         SECTION 8.09. Merger or Consolidation of Trustee or Securities
Administrator.

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

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

         Notwithstanding any other provisions hereof, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the REMIC I or property securing the same may at the time be located, the
Trustee shall have the power and shall execute and deliver all instruments to
appoint one or more Persons approved by the Trustee to act as co-trustee or
co-trustees, jointly with the Trustee, or separate trustee or separate trustees,
of all or any part of REMIC I, and to vest in such Person or Persons, in such
capacity, and for the benefit of the Holders of the Certificates, such title to
REMIC I, or any part thereof, and, subject to the other provisions of this
Section 8.10, such powers, duties, obligations, rights and trusts as the Trustee
may consider necessary or desirable. No co-trustee or separate trustee hereunder
shall be required to meet the terms of eligibility as a successor trustee under
Section 8.06 hereunder and no notice to Holders of Certificates of the
appointment of co-trustee(s) or separate trustee(s) shall be required under
Section 8.08 hereof.

                                      -120-

<PAGE>

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

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

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

         SECTION 8.11. Appointment of Office or Agency.

         The Trustee will appoint an office or agency in the City of New York
located at 55 Water Street, First Floor, New York, New York 10041, where the
Certificates may be surrendered for registration of transfer or exchange, and
presented for final distribution and where notices and demands to or upon the
Trustee in respect of the Certificates and this Agreement may be served.

         SECTION 8.12. Representations and Warranties.

         The Trustee hereby represents and warrants to the Master Servicer, the
Securities Administrator and the Depositor as applicable, as of the Closing
Date, that:

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

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

                                      -121-

<PAGE>

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

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

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

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

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

                                      -122-

<PAGE>

                                   ARTICLE IX

                                   TERMINATION

         SECTION 9.01. Termination Upon Repurchase or Liquidation of All
Mortgage Loans.

                  (a) Subject to Section 9.02, the respective obligations and
responsibilities under this Agreement of the Depositor, the Master Servicer and
the Trustee (other than the obligations of the Master Servicer to the Trustee
pursuant to Section 8.05 and of the Master Servicer to make remittances to the
Trustee and the Trustee to make payments in respect of the REMIC I Regular
Interests, REMIC II Regular Interests or the Classes of Certificates as
hereinafter set forth) shall terminate upon payment to the Certificateholders
and the deposit of all amounts held by or on behalf of the Trustee and required
hereunder to be so paid or deposited on the Distribution Date coinciding with or
following the earlier to occur of (i) the purchase by the Terminator (as defined
below) of all Mortgage Loans and each REO Property remaining in REMIC I and (ii)
the final payment or other liquidation (or any advance with respect thereto) of
the last Mortgage Loan or REO Property remaining in REMIC I; PROVIDED, HOWEVER,
that in no event shall the trust created hereby continue beyond the expiration
of 21 years from the death of the last survivor of the descendants of Joseph P.
Kennedy, the late ambassador of the United States to the Court of St. James,
living on the date hereof. The purchase by the Terminator of all Mortgage Loans
and each REO Property remaining in REMIC I shall be at a price (the "Termination
Price") equal to the sum of (i) the greater of (A) the aggregate Purchase Price
of all the Mortgage Loans included in REMIC I, plus the appraised value of each
REO Property, if any, included in REMIC I, such appraisal to be conducted by an
appraiser mutually agreed upon by the Terminator and the Trustee in their
reasonable discretion and (B) the aggregate fair market value of all of the
assets of REMIC I (as determined by the Terminator and the Trustee, as of the
close of business on the third Business Day next preceding the date upon which
notice of any such termination is furnished to Certificateholders pursuant to
the third paragraph of this Section 9.01) plus (ii) any amounts due the
Servicers and the Master Servicer in respect of unpaid Servicing Fees, Master
Servicing Fees and outstanding P&I Advances and Servicing Advances.

                  (b) The Class CE Certificateholder (so long as it is not an
Affiliate of the Seller) shall have the right (the party exercising such right,
the "Terminator"), to purchase all of the Mortgage Loans and each REO Property
remaining in REMIC I pursuant to clause (i) of the preceding paragraph no later
than the Determination Date in the month immediately preceding the Distribution
Date on which the Certificates will be retired; PROVIDED, HOWEVER, that the
Terminator may elect to purchase all of the Mortgage Loans and each REO Property
remaining in REMIC I pursuant to clause (i) above only if the aggregate Stated
Principal Balance of the Mortgage Loans and each REO Property remaining in the
Trust Fund at the time of such election is reduced to less than 10% of the
aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date.
By acceptance of the Residual Certificates, the Holder of the Residual
Certificates agrees, in connection with any termination hereunder, to assign and
transfer any amounts in excess of par, and to the extent received in respect of
such termination, to pay any such amounts to the Holders of the Class CE
Certificates and Class P Certificates.

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<PAGE>

                  (c) Notice of the liquidation of the Certificates shall be
given promptly by the Trustee by letter to the Certificateholders mailed (a) in
the event such notice is given in connection with the purchase of the Mortgage
Loans and each REO Property by the Terminator, not earlier than the 15th day and
not later than the 25th day of the month next preceding the month of the final
distribution on the Certificates or (b) otherwise during the month of such final
distribution on or before the Determination Date in such month, in each case
specifying (i) the Distribution Date upon which the Trust Fund will terminate
and the final payment in respect of the REMIC I Regular Interests, REMIC II
Regular Interests or the Certificates will be made upon presentation and
surrender of the related Certificates at the office of the Trustee therein
designated, (ii) the amount of any such final payment, (iii) that no interest
shall accrue in respect of the REMIC I Regular Interests, REMIC II Regular
Interests or Certificates from and after the Interest Accrual Period relating to
the final Distribution Date therefor and (iv) that the Record Date otherwise
applicable to such Distribution Date is not applicable, payments being made only
upon presentation and surrender of the Certificates at the office of the
Trustee. In the event such notice is given in connection with the purchase of
all of the Mortgage Loans and each REO Property remaining in REMIC I by the
Terminator, the Terminator shall deliver to the Trustee for deposit in the
Distribution Account not later than the last Business Day of the month next
preceding the month of the final distribution on the Certificates an amount in
immediately available funds equal to the above-described Termination Price. The
Trustee shall remit (a) to the Master Servicer from such funds deposited in the
Distribution Account (i) any amounts which the Master Servicer would be
permitted to withdraw and retain from the Master Servicer Collection Account
pursuant to Sections 3.24 and 3.26 and (ii) any other amounts otherwise payable
by the Trustee to the Master Servicer from amounts on deposit in the
Distribution Account pursuant to the terms of this Agreement and (b) to the
Servicers, any amounts reimbursable to the Servicers pursuant to the Servicing
Agreements, in each case prior to making any final distributions pursuant to
Section 10.01(d) below. Upon certification to the Trustee by a Servicing Officer
of the making of such final deposit, the Trustee shall promptly release to the
Terminator the Mortgage Files for the remaining Mortgage Loans, and Trustee
shall execute all assignments, endorsements and other instruments necessary to
effectuate such transfer.

                  (d) Upon presentation of the Certificates by the
Certificateholders on the final Distribution Date, the Trustee shall distribute
to each Certificateholder so presenting and surrendering its Certificates the
amount otherwise distributable on such Distribution Date in accordance with
Section 4.01 in respect of the Certificates so presented and surrendered. Any
funds not distributed to any Holder or Holders of Certificates being retired on
such Distribution Date because of the failure of such Holder or Holders to
tender their Certificates shall, on such date, be set aside and held in trust
and credited to the account of the appropriate non-tendering Holder or Holders.
If any Certificates as to which notice has been given pursuant to this Section
9.01 shall not have been surrendered for cancellation within six months after
the time specified in such notice, the Trustee shall mail a second notice to the
remaining non-tendering Certificateholders to surrender their Certificates for
cancellation in order to receive the final distribution with respect thereto. If
within one year after the second notice all such Certificates shall not have
been surrendered for cancellation, the Trustee shall, directly or through an
agent, mail a final notice to the remaining non-tendering Certificateholders
concerning surrender of their Certificates. The costs and expenses of
maintaining the funds in trust and of contacting such Certificateholders shall
be paid out of the assets remaining in the trust funds. If within one year after
the final notice any such Certificates shall not have been surrendered for
cancellation, the Trustee shall pay to the Depositor all such amounts,

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and all rights of non-tendering Certificateholders in or to such amounts shall
thereupon cease. No interest shall accrue or be payable to any Certificateholder
on any amount held in trust by the Trustee as a result of such
Certificateholder's failure to surrender its Certificate(s) for final payment
thereof in accordance with this Section 9.01. Any such amounts held in trust by
the Trustee shall be held in an Eligible Account and the Trustee may direct any
depository institution maintaining such account to invest the funds in one or
more Permitted Investments. All income and gain realized from the investment of
funds deposited in such accounts held in trust by the Trustee shall be for the
benefit of the Trustee; PROVIDED, HOWEVER, that the Trustee shall deposit in
such account the amount of any loss of principal incurred in respect of any such
Permitted Investment made with funds in such accounts immediately upon the
realization of such loss.

                  Immediately following the deposit of funds in trust hereunder
in respect of the Certificates, the Trust Fund shall terminate.

         SECTION 9.02. Additional Termination Requirements.

                  (a) In the event that the Terminator purchases all the
Mortgage Loans and each REO Property or the final payment on or other
liquidation of the last Mortgage Loan or REO Property remaining in REMIC I
pursuant to Section 9.01, the Trust Fund shall be terminated in accordance with
the following additional requirements:

                           (i) The Trustee shall specify the first day in the
         90-day liquidation period in a statement attached to each Trust REMIC's
         final Tax Return pursuant to Treasury regulation Section 1.860F-1 and
         shall satisfy all requirements of a qualified liquidation under Section
         860F of the Code and any regulations thereunder, as evidenced by an
         Opinion of Counsel obtained by and at the expense of the Terminator;

                           (ii) During such 90-day liquidation period and, at or
         prior to the time of making of the final payment on the Certificates,
         the Trustee shall sell all of the assets of REMIC I to the Terminator
         for cash; and

                           (iii) At the time of the making of the final payment
         on the Certificates, the Trustee shall distribute or credit, or cause
         to be distributed or credited, to the Holders of the Residual
         Certificates all cash on hand in the Trust Fund (other than cash
         retained to meet claims), and the Trust Fund shall terminate at that
         time.

                  (b) At the expense of the requesting Terminator (or, if the
Trust Fund is being terminated as a result of the occurrence of the event
described in clause (ii) of the first paragraph of Section 9.01, at the expense
of the Trust Fund), the Terminator shall prepare or cause to be prepared the
documentation required in connection with the adoption of a plan of liquidation
of each Trust REMIC pursuant to this Section 9.02.

                  (c) By their acceptance of Certificates, the Holders thereof
hereby agree to authorize the Trustee to specify the 90-day liquidation period
for each Trust REMIC, which authorization shall be binding upon all successor
Certificateholders.

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<PAGE>

                                    ARTICLE X

                                REMIC PROVISIONS

         SECTION 10.01. REMIC Administration.

                  (a) The Trustee shall elect to treat each Trust REMIC under
the Code and, if necessary, under applicable state law and as instructed by the
Securities Administrator. Each such election will be made by the Securities
Administrator on Form 1066 or other appropriate federal tax or information
return or any appropriate state return for the taxable year ending on the last
day of the calendar year in which the Certificates are issued. For the purposes
of the REMIC election in respect of REMIC I, the REMIC I Regular Interests shall
be designated as the Regular Interests in REMIC I and the Class R-I Interest
shall be designated as the Residual Interests in REMIC I. The REMIC II Regular
Interests shall be designated as Regular Interests in REMIC II and the Class
R-II Interest shall be designated as the Residual Interests in REMIC II. The
Class A Certificates, the Class A-IO Certificates, the Mezzanine Certificates,
the Class P Certificates and the Class CE Certificates shall be designated as
the Regular Interests in REMIC III and the Class R-III Interest shall be
designated as the Residual Interests in REMIC III. The Trustee shall not permit
the creation of any "interests" in each Trust REMIC (within the meaning of
Section 860G of the Code) other than the REMIC I Regular Interests, the REMIC II
Regular Interests and the interests represented by the Certificates.

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

                  (c) The Securities Administrator shall be reimbursed for any
and all expenses relating to any tax audit of the Trust Fund (including, but not
limited to, any professional fees or any administrative or judicial proceedings
with respect to each Trust REMIC that involve the Internal Revenue Service or
state tax authorities), including the expense of obtaining any tax related
Opinion of Counsel except as specified herein. The Securities Administrator, as
agent for each Trust REMIC's tax matters person shall (i) act on behalf of the
Trust Fund in relation to any tax matter or controversy involving any Trust
REMIC and (ii) represent the Trust Fund in any administrative or judicial
proceeding relating to an examination or audit by any governmental taxing
authority with respect thereto. The holder of the largest Percentage Interest of
each class of Residual Certificates shall be designated, in the manner provided
under Treasury regulations section 1.860F-4(d) and Treasury regulations section
301.6231(a)(7)-1, as the tax matters person of the related REMIC created
hereunder. By their acceptance thereof, the holder of the largest Percentage
Interest of the Residual Certificates hereby agrees to irrevocably appoint the
Securities Administrator or an Affiliate as its agent to perform all of the
duties of the tax matters person for the Trust Fund.

                  (d) The Securities Administrator shall prepare and file and
the Trustee shall sign all of the Tax Returns in respect of each REMIC created
hereunder. The expenses of preparing and filing such returns shall be borne by
the Securities Administrator without any right of reimbursement therefor.

                  (e) The Securities Administrator shall perform on behalf of
each Trust REMIC all reporting and other tax compliance duties that are the
responsibility of such REMIC under the

                                      -126-

<PAGE>

Code, the REMIC Provisions or other compliance guidance issued by the Internal
Revenue Service or any state or local taxing authority. Among its other duties,
as required by the Code, the REMIC Provisions or other such compliance guidance,
the Securities Administrator shall provide (i) to any Transferor of a Residual
Certificate such information as is necessary for the application of any tax
relating to the transfer of a Residual Certificate to any Person who is not a
Permitted Transferee upon receipt of additional reasonable compensation, (ii) to
the Certificateholders such information or reports as are required by the Code
or the REMIC Provisions including reports relating to interest, original issue
discount and market discount or premium (using the Prepayment Assumption as
required) and (iii) to the Internal Revenue Service the name, title, address and
telephone number of the person who will serve as the representative of each
Trust REMIC. The Depositor shall provide or cause to be provided to the
Securities Administrator, within ten (10) days after the Closing Date, all
information or data that the Securities Administrator reasonably determines to
be relevant for tax purposes as to the valuations and issue prices of the
Certificates, including, without limitation, the price, yield, prepayment
assumption and projected cash flow of the Certificates.

                  (f) To the extent in the control of the Trustee or the
Securities Administrator, each such Person (i) shall take such action and shall
cause each REMIC created hereunder to take such action as shall be necessary to
create or maintain the status thereof as a REMIC under the REMIC Provisions,
(ii) shall not take any action, cause the Trust Fund to take any action or fail
to take (or fail to cause to be taken) any action that, under the REMIC
Provisions, if taken or not taken, as the case may be, could (A) endanger the
status of each Trust REMIC as a REMIC or (B) result in the imposition of a tax
upon the Trust Fund (including but not limited to the tax on prohibited
transactions as defined in Section 860F(a)(2) of the Code and the tax on
contributions to a REMIC set forth in Section 860G(d) of the Code) (either such
event, an "Adverse REMIC Event") unless such action or inaction is permitted
under this Agreement or the Trustee and the Securities Administrator have
received an Opinion of Counsel, addressed to the them (at the expense of the
party seeking to take such action but in no event at the expense of the Trustee
or the Securities Administrator) to the effect that the contemplated action will
not, with respect to any Trust REMIC, endanger such status or result in the
imposition of such a tax, nor (iii) shall the Securities Administrator take or
fail to take any action (whether or not authorized hereunder) as to which the
Trustee has advised it in writing that it has received an Opinion of Counsel to
the effect that an Adverse REMIC Event could occur with respect to such action;
provided that the Securities Administrator may conclusively rely on such Opinion
of Counsel and shall incur no liability for its action or failure to act in
accordance with such Opinion of Counsel. In addition, prior to taking any action
with respect to any Trust REMIC or the respective assets of each, or causing any
Trust REMIC to take any action, which is not contemplated under the terms of
this Agreement, the Securities Administrator will consult with the Trustee or
its designee, in writing, with respect to whether such action could cause an
Adverse REMIC Event to occur with respect to any Trust REMIC, and the Securities
Administrator shall not take any such action or cause any Trust REMIC to take
any such action as to which the Trustee has advised it in writing that an
Adverse REMIC Event could occur. The Trustee may consult with counsel to make
such written advice, and the cost of same shall be home by the party seeking to
take the action not permitted by this Agreement, but in no event shall such cost
be an expense of the Trustee.

                  (g) In the event that any tax is imposed on "prohibited
transactions" of any REMIC created hereunder as defined in Section 860F(a)(2) of
the Code, on the "net income from

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<PAGE>

foreclosure property" of such REMIC as defined in Section 860G(c) of the Code,
on any contributions to any such REMIC after the Startup Day therefor pursuant
to Section 860G(d) of the Code, or any other tax is imposed by the Code or any
applicable provisions of state or local tax laws, such tax shall be charged (i)
to the Trustee pursuant to Section 10.03 hereof, if such tax arises out of or
results from a breach by the Trustee of any of its obligations under this
Article X, (ii) to the Securities Administrator pursuant to Section 10.03
hereof, if such tax arises out of or results from a breach by the Securities
Administrator of any of its obligations under this Article X, (iii) to the
Master Servicer pursuant to Section 10.03 hereof, if such tax arises out of or
results from a breach by the Master Servicer of any of its obligations under
Article III or under this Article X, or (iv) against amounts on deposit in the
Distribution Account and shall be paid by withdrawal therefrom.

                  (h) The Trustee and the Securities Administrator shall, for
federal income tax purposes, maintain books and records with respect to each
Trust REMIC on a calendar year and on an accrual basis.

                  (i) Following the Startup Day, the Trustee shall not accept
any contributions of assets to any Trust REMIC other than in connection with any
Qualified Substitute Mortgage Loan delivered in accordance with Section 2.03
unless it shall have received an Opinion of Counsel to the effect that the
inclusion of such assets in the Trust Fund will not cause the related REMIC to
fail to qualify as a REMIC at any time that any Certificates are outstanding or
subject such REMIC to any tax under the REMIC Provisions or other applicable
provisions of federal, state and local law or ordinances.

                  (j) Neither the Trustee nor the Securities Administrator shall
knowingly enter into any arrangement by which any Trust REMIC will receive a fee
or other compensation for services nor permit either REMIC to receive any income
from assets other than "qualified mortgages" as defined in Section 860G(a)(3) of
the Code or "permitted investments" as defined in Section 860G(a)(5) of the
Code.

                  (k) The Securities Administrator shall apply for an employer
identification number with the Internal Revenue Service via a Form SS-4 or other
comparable method for each REMIC. In connection with the foregoing, the
Securities Administrator shall provide the name and address of the person who
can be contacted to obtain information required to be reported to the holders of
Regular Interests in each REMIC as required by IRS Form 8811.

         SECTION 10.02. Prohibited Transactions and Activities.

         None of the Depositor, the Securities Administrator, the Master
Servicer or the Trustee shall sell, dispose of or substitute for any of the
Mortgage Loans (except in connection with (i) the foreclosure of a Mortgage
Loan, including but not limited to, the acquisition or sale of a Mortgaged
Property acquired by deed in lieu of foreclosure, (ii) the bankruptcy of REMIC
I, (iii) the termination of REMIC I pursuant to Article IX of this Agreement,
(iv) a substitution pursuant to Article II of this Agreement or (v) a purchase
of Mortgage Loans pursuant to Article II of this Agreement), nor acquire any
assets for any Trust REMIC (other than REO Property acquired in respect of a
defaulted Mortgage Loan), nor sell or dispose of any investments in the Master
Servicer Collection Account or the Distribution Account for gain, nor accept any
contributions to any Trust REMIC after the

                                      -128-

<PAGE>

Closing Date (other than a Qualified Substitute Mortgage Loan delivered in
accordance with Section 2.03), unless it has received an Opinion of Counsel,
addressed to the Trustee and the Trustee (at the expense of the party seeking to
cause such sale, disposition, substitution, acquisition or contribution but in
no event at the expense of the Trustee) that such sale, disposition,
substitution, acquisition or contribution will not (a) affect adversely the
status of any Trust REMIC as a REMIC or (b) cause any Trust REMIC to be subject
to a tax on "prohibited transactions" or "contributions" pursuant to the REMIC
Provisions.

         SECTION 10.03. Indemnification.

                  (a) The Trustee agrees to be liable for any taxes and costs
incurred by the Trust Fund, the Depositor, the Securities Administrator or the
Master Servicer including, without limitation, any reasonable attorneys fees
imposed on or incurred by the Trust Fund, the Depositor, the Securities
Administrator or the Master Servicer as a result of the Trustee's failure to
perform its covenants set forth in this Article X in accordance with the
standard of care of the Trustee set forth in this Agreement.

                  (b) The Master Servicer agrees to indemnify the Trust Fund,
the Depositor and the Trustee for any taxes and costs including, without
limitation, any reasonable attorneys' fees imposed on or incurred by the Trust
Fund, the Depositor or the Trustee, as a result of the Master Servicer's failure
to perform its covenants set forth in Article III in accordance with the
standard of care of the Master Servicer set forth in this Agreement.

                  (c) The Securities Administrator agrees to be liable for any
taxes and costs incurred by the Trust Fund, the Depositor or the Trustee
including, without limitation, any reasonable attorneys fees imposed on or
incurred by the Trust Fund, the Depositor or the Trustee as a result of the
Securities Administrator's failure to perform its covenants set forth in this
Article X in accordance with the standard of care of the Securities
Administrator set forth in this Agreement.

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<PAGE>

                                   ARTICLE XI

                            MISCELLANEOUS PROVISIONS

         SECTION 11.01. Amendment.

         This Agreement may be amended from time to time by the Depositor, the
Securities Administrator, the Master Servicer and the Trustee, but without the
consent of any of the Certificateholders, (i) to cure any ambiguity or defect,
(ii) to correct, modify or supplement any provisions herein (including to give
effect to the expectations of Certificateholders), or (iii) to make any other
provisions with respect to matters or questions arising under this Agreement
which shall not be inconsistent with the provisions of this Agreement, provided
that such action shall not, as evidenced by an Opinion of Counsel delivered to
the Trustee, adversely affect in any material respect the interests of any
Certificateholder. No amendment shall be deemed to adversely affect in any
material respect the interests of any Certificateholder who shall have consented
thereto, and no Opinion of Counsel shall be required to address the effect of
any such amendment on any such consenting Certificateholder.

         This Agreement may also be amended from time to time by the Depositor,
the Securities Administrator, the Master Servicer and the Trustee with the
consent of the Holders of Certificates entitled to at least 66% of the Voting
Rights for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement or of modifying in any
manner the rights of the Holders of Certificates; PROVIDED, HOWEVER, that no
such amendment shall (i) reduce in any manner the amount of, or delay the timing
of, payments received on Mortgage Loans which are required to be distributed on
any Certificate without the consent of the Holder of such Certificate, (ii)
adversely affect in any material respect the interests of the Holders of any
Class of Certificates in a manner, other than as described in (i), without the
consent of the Holders of Certificates of such Class evidencing at least 66% of
the Voting Rights allocated to such Class, or (iii) modify the consents required
by the immediately preceding clauses (i) and (ii) without the consent of the
Holders of all Certificates then outstanding. Notwithstanding any other
provision of this Agreement, for purposes of the giving or withholding of
consents pursuant to this Section 11.01, Certificates registered in the name of
the Depositor or the Master Servicer or any Affiliate thereof shall be entitled
to Voting Rights with respect to matters affecting such Certificates. Without
limiting the generality of the foregoing, any amendment to this Agreement
required in connection with the compliance with or the clarification of any
reporting obligations described in Section 3.18 hereof shall not require the
consent of any Certificateholder and without the need for any Opinion of Counsel
or Rating Agency confirmation.

         Notwithstanding any contrary provision of this Agreement, the Trustee
shall not consent to any amendment to this Agreement unless it shall have first
received an Opinion of Counsel to the effect that such amendment will not result
in the imposition of any tax on any Trust REMIC pursuant to the REMIC Provisions
or cause any Trust REMIC to fail to qualify as a REMIC at any time that any
Certificates are outstanding and that such amendment is authorized or permitted
by this Agreement.

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<PAGE>

         Promptly after the execution of any such amendment the Trustee shall
furnish a copy of such amendment to each Certificateholder.

         It shall not be necessary for the consent of Certificateholders under
this Section 11.01 to approve the particular form of any proposed amendment, but
it shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Certificateholders shall be subject to such reasonable
regulations as the Trustee may prescribe.

         The cost of any Opinion of Counsel to be delivered pursuant to this
Section 11.01 shall be borne by the Person seeking the related amendment, but in
no event shall such Opinion of Counsel be an expense of the Trustee .

         The Trustee may, but shall not be obligated to enter into any amendment
pursuant to this Section that affects its rights, duties and immunities under
this Agreement or otherwise.

         SECTION 11.02. Recordation of Agreement; Counterparts.

         To the extent permitted by applicable law, this Agreement is subject to
recordation in all appropriate public offices for real property records in all
the counties or other comparable jurisdictions in which any or all of the
properties subject to the Mortgages are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Depositor at the expense of the Certificateholders, but only upon direction of
the Trustee accompanied by an Opinion of Counsel to the effect that such
recordation materially and beneficially affects the interests of the
Certificateholders.

         For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one and
the same instrument.

         SECTION 11.03. Limitation on Rights of Certificateholders.

         The death or incapacity of any Certificateholder shall not operate to
terminate this Agreement or the Trust Fund, nor entitle such Certificateholder's
legal representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of the Trust Fund, nor
otherwise affect the rights, obligations and liabilities of the parties hereto
or any of them.

         No Certificateholder shall have any right to vote (except as expressly
provided for herein) or in any manner otherwise control the operation and
management of the Trust Fund, or the obligations of the parties hereto, nor
shall anything herein set forth, or contained in the terms of any of the
Certificates, be construed so as to constitute the Certificateholders from time
to time as partners or members of an association; nor shall any
Certificateholder be under any liability to any third person by reason of any
action taken by the parties to this Agreement pursuant to any provision hereof.

                                      -131-

<PAGE>

         No Certificateholder shall have any right by virtue of any provision of
this Agreement to institute any suit, action or proceeding in equity or at law
upon or under or with respect to this Agreement, unless such Holder previously
shall have given to the Trustee a written notice of default and of the
continuance thereof, as hereinbefore provided, and unless also the Holders of
Certificates entitled to at least 25% of the Voting Rights shall have made
written request upon the Trustee to institute such action, suit or proceeding in
its own name as Trustee hereunder and shall have offered to the Trustee such
reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby, and the Trustee, for 15 days
after its receipt of such notice, request and offer of indemnity, shall have
neglected or refused to institute any such action, suit or proceeding. It is
understood and intended, and expressly covenanted by each Certificateholder with
every other Certificateholder. and the Trustee, that no one or more Holders of
Certificates shall have any right in any manner whatsoever by virtue of any
provision of this Agreement to affect, disturb or prejudice the rights of the
Holders of any other of such Certificates, or to obtain or seek to obtain
priority over or preference to any other such Holder, or to enforce any right
under this Agreement, except in the manner herein provided and for the equal,
ratable and common benefit of all Certificateholders. For the protection and
enforcement of the provisions of this Section, each and every Certificateholder
and the Trustee shall be entitled to such relief as can be given either at law
or in equity.

         SECTION 11.04. Governing Law.

         This Agreement shall be construed in accordance with the laws of the
State of New York and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws.

         SECTION 11.05. Notices.

         All directions, demands and notices hereunder shall be in writing and
shall be deemed to have been duly given when received if sent by facsimile,
receipt confirmed, if personally delivered at or mailed by first class mail,
postage prepaid, or by express delivery service or delivered in any other manner
specified herein, to (a) in the case of the Depositor, ACE Securities Corp.,
AMACAR GROUP, 6525 Morrison Boulevard, Suite 318, Charlotte, North Carolina
2821, Attention: Juliana Johnson (telecopy number:(704) 365-1362), or such other
address or telecopy number as may hereafter be furnished to the Master Servicer
and the Trustee in writing by the Depositor, (b) in the case of the Master
Servicer and the Securities Administrator, P.O. Box 98, Columbia, Maryland 21046
and for overnight delivery to 9062 Old Annapolis Road, Columbia, Maryland 21045,
Attention: Ace Securities Corp., 2002-HE3 (telecopy number: (410) 715-2380), or
such other address or telecopy number as may hereafter be furnished to the
Trustee and the Depositor in writing by the Master Servicer or the Securities
Administrator, and (c) in the case of the Trustee, at each Corporate Trust
Office or such other address or telecopy number as the Trustee may hereafter be
furnish to the Master Servicer and the Depositor in writing by the Trustee. Any
notice required or permitted to be given to a Certificateholder shall be given
by first class mail, postage prepaid, at the address of such Holder as shown in
the Certificate Register. Any notice so mailed within the time prescribed in
this Agreement shall be conclusively presumed to have been duly given when
mailed, whether or not the Certificateholder receives such notice. A copy of any
notice required to be telecopied hereunder also shall be mailed to the
appropriate party in the manner set forth above.

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<PAGE>

         SECTION 11.06. Severability of Provisions.

         If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement or of the Certificates or the rights of the Holders thereof.

         SECTION 11.07. Notice to Rating Agencies.

         The Trustee shall use its best efforts promptly to provide notice to
the Rating Agencies with respect to each of the following of which it has actual
knowledge:

                  1.       Any material change or amendment to this Agreement;

                  2.       The occurrence of any Master Servicer Event of
                           Default that has not been cured or waived;

                  3.       The resignation or termination of the Master
                           Servicer, the Trustee;

                  4.       The repurchase or substitution of Mortgage Loans
                           pursuant to or as contemplated by Section 2.03;

                  5.       The final payment to the Holders of any Class of
                           Certificates;

                  6.       Any change in the location of the Master Servicer
                           Collection Account or the Distribution Account; and

                  7.       Any event that would result in the inability of the
                           Trustee to make advances regarding delinquent
                           Mortgage Loans.

                  In addition, the Trustee shall promptly furnish to each Rating
Agency copies of each report to Certificateholders described in Section 4.02.

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<PAGE>

                  The Master Servicer shall make available to each Rating Agency
copies of the following:

                  1.       Each annual statement as to compliance described in
                           Section 3.16; and

                  2.       Each annual independent public accountants' servicing
                           report described in Section 3.17.

                  Any such notice pursuant to this Section 11.07 shall be in
writing and shall be deemed to have been duly given if personally delivered at
or mailed by first class mail, postage prepaid, or by express delivery service
to Standard & Poor's, a division of the McGraw-Hill Companies, Inc., 55 Water
Street, New York, New York 10041, to Moody's Investors Service, Inc., 99 Church
Street, New York, New York 10007 and to Fitch Ratings, 1 State Street Plaza, New
York, New York 10004 or such other addresses as the Rating Agencies may
designate in writing to the parties hereto.

         SECTION 11.08. Article and Section References.

         All article and section references used in this Agreement, unless
otherwise provided, are to articles and sections in this Agreement.

         SECTION 11.09. Grant of Security Interest.

         It is the express intent of the parties hereto that the conveyance of
the Mortgage Loans by the Depositor to the Trustee, on behalf of the Trust and
for the benefit of the Certificateholders, be, and be construed as, a sale of
the Mortgage Loans by the Depositor and not a pledge of the Mortgage Loans to
secure a debt or other obligation of the Depositor. However, in the event that,
notwithstanding the aforementioned intent of the parties, the Mortgage Loans are
held to be property of the Depositor, then, (a) it is the express intent of the
parties that such conveyance be deemed a pledge of the Mortgage Loans by the
Depositor to the Trustee, on behalf of the Trust and for the benefit of the
Certificateholders, to secure a debt or other obligation of the Depositor and
(b)(1) this Agreement shall also be deemed to be a security agreement within the
meaning of Articles 8 and 9 of the Uniform Commercial Code as in effect from
time to time in the State of New York; (2) the conveyance provided for in
Section 2.01 hereof shall be deemed to be a grant by the Depositor to the
Trustee, on behalf of the Trust and for the benefit of the Certificateholders,
of a security interest in all of the Depositor's right, title and interest in
and to the Mortgage Loans and all amounts payable to the holders of the Mortgage
Loans in accordance with the terms thereof and all proceeds of the conversion,
voluntary or involuntary, of the foregoing into cash, instruments, securities or
other property, including without limitation all amounts, other than investment
earnings, from time to time held or invested in the Master Servicer Collection
Account and the Distribution Account, whether in the form of cash, instruments,
securities or other property; (3) the obligations secured by such security
agreement shall be deemed to be all of the Depositor's obligations under this
Agreement, including the obligation to provide to the Certificateholders the
benefits of this Agreement relating to the Mortgage Loans and the Trust Fund;
and (4) notifications to persons holding such property, and acknowledgments,
receipts or confirmations from persons holding such property, shall be

                                      -134-

<PAGE>

deemed notifications to, or acknowledgments, receipts or confirmations from,
financial intermediaries, bailees or agents (as applicable) of the Trustee for
the purpose of perfecting such security interest under applicable law.
Accordingly, the Depositor hereby grants to the Trustee, on behalf of the Trust
and for the benefit of the Certificateholders, a security interest in the
Mortgage Loans and all other property described in clause (2) of the preceding
sentence, for the purpose of securing to the Trustee the performance by the
Depositor of the obligations described in clause (3) of the preceding sentence.
Notwithstanding the foregoing, the parties hereto intend the conveyance pursuant
to Section 2.01 to be a true, absolute and unconditional sale of the Mortgage
Loans and assets constituting the Trust Fund by the Depositor to the Trustee, on
behalf of the Trust and for the benefit of the Certificateholders.

         SECTION 11.10. Third Party Beneficiaries.

         For purposes of Sections 2.05, 3.01, 3.05, 3.07, 3.15(c), 3.18, 3.22,
3.26, 3.32 and 6.03, the Servicers shall be third party beneficiaries of this
Agreement and each Servicer shall have the right to enforce such provisions.
Further, it is understood and agreed that the obligations of the Servicers are
set forth in their entirety in the related Servicing Agreement and the Servicers
are not bound by the terms hereof.

                                      -135-

<PAGE>

                  IN WITNESS WHEREOF, the Depositor, the Master Servicer, the
Securities Administrator and the Trustee have caused their names to be signed
hereto by their respective officers thereunto duly authorized, in each case as
of the day and year first above written.

                                        ACE SECURITIES CORP.,
                                        as Depositor

                                        By:_____________________________________
                                        Name:
                                        Title:

                                        By:_____________________________________
                                        Name:
                                        Title:

                                        WELLS FARGO BANK MINNESOTA, NATIONAL
                                        ASSOCIATION,
                                        as Master Servicer and Securities
                                        Administrator

                                        By:_____________________________________
                                        Name:
                                        Title:

                                        BANK ONE, NATIONAL ASSOCIATION,
                                        not in its individual capacity but
                                        solely as Trustee

                                        By:_____________________________________
                                        Name:
                                        Title:

<PAGE>

STATE OF        )
                ) ss.:
COUNTY OF       )

                  On the ___ day of December 2002, before me, a notary public in
and for said State, personally appeared _____________________ known to me to be
a _____________________ of ACE Securities Corp., one of the corporations that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.

                  IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.

                                                ________________________________
                                                          Notary Public

[Notarial Seal]                                 My commission expires

<PAGE>

STATE OF                )
                        ) ss.:
COUNTY OF               )

                  On the __ day of December 2002, before me, a notary public in
and for said State, personally appeared ___________________________ known to me
to be a ____________________ of ACE Securities Corp., one of the corporations
that executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.

                  IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.

                                                ________________________________
                                                          Notary Public

[Notarial Seal]                                 My commission expires

<PAGE>

STATE OF                )
                        ) ss.:
COUNTY OF               )

                  On the ___ day of December, 2002, before me, a notary public
in and for said State, personally appeared _______________ known to me to be a
_______________ of ________________, Wells Fargo Bank Minnesota, National
Association, one of the corporations that executed the within instrument, and
also known to me to be the person who executed it on behalf of said corporation,
and acknowledged to me that such corporation executed the within instrument.

                  IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.

                                                ________________________________
                                                          Notary Public

[Notarial Seal]                                 My commission expires

<PAGE>

STATE OF                )
                        ) ss.:
COUNTY OF               )

                  On the ___ day of December, 2002, before me, a notary public
in and for said State, personally appeared ____________________, known to me to
be a __________________ of Bank One, National Association, one of the
corporations that executed the within instrument, and also known to me to be the
person who executed it on behalf of said corporation, and acknowledged to me
that such corporation executed the within instrument.

                  IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.

                                                ________________________________
                                                          Notary Public

[Notarial Seal]                                 My commission expires

<PAGE>

                                   EXHIBIT A-1
                                   -----------

                   FORM OF CLASS A-[1][2A][2B][2C] CERTIFICATE

SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986 (THE "CODE").

<TABLE>
<CAPTION>
<S>                                                       <C>
Series 2002-HE3, Class A-[1][2A][2B][2C]                  Aggregate Certificate Principal Balance of the
                                                          Class A-[1][2A][2B][2C] Certificates as of the
Pass-Through Rate: Variable                               Issue Date:
                                                          $
Date of Pooling and Servicing Agreement and               Denomination: $
Cut-off Date: December 1, 2002
                                                          Master Servicer: Wells Fargo Bank Minnesota,
                                                          National Association
First Distribution Date:
_________________, 2003                                   Trustee: Bank One National Association

No.__                                                     Issue Date: December 10, 2002

                                                          CUSIP:________________
</TABLE>

DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE LESS THAN
THE AMOUNT SHOWN ABOVE AS THE DENOMINATION OF THIS CERTIFICATE.

                                      A-1-1

<PAGE>

          ACE SECURITIES CORP. HOME EQUITY LOAN TRUST, SERIES 2002-HE3
                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family, fixed and
adjustable-rate first lien mortgage loans (the "Mortgage Loans") formed and sold
by

                              ACE SECURITIES CORP.

THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN ACE
SECURITIES CORP., THE MASTER SERVICER, THE SECURITIES ADMINISTRATOR, THE TRUSTEE
OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE
UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE
UNITED STATES.

                  This certifies that________________ is the registered owner of
a Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class A-[1][2A][2B][2C]
Certificates as of the Issue Date) in that certain beneficial ownership interest
evidenced by all the Class A-[1][2A][2B][2C] Certificates in REMIC III created
pursuant to a Pooling and Servicing Agreement, dated as specified above (the
"Agreement"), among ACE Securities Corp., as depositor (hereinafter called the
"Depositor," which term includes any successor entity under the Agreement),
Wells Fargo Bank Minnesota, National Association, as master servicer (the
"Master Servicer") and securities administrator (the "Securities Administrator")
and Bank One National Association, as trustee (the "Trustee"), a summary of
certain of the pertinent provisions of which is set forth hereafter. To the
extent not defined herein, the capitalized terms used herein have the meanings
assigned in the Agreement. This Certificate is issued under and is subject to
the terms, provisions and conditions of the Agreement, to which Agreement the
Holder of this Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.

                  Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class A-[1][2A][2B][2C] Certificates on such
Distribution Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date and is
the registered owner of Class A-[1][2A][2B][2C] Certificates the aggregate
initial Certificate Principal Balance of which is in excess of the lesser of (i)
$5,000,000 or (ii) two-thirds of the aggregate initial Certificate Principal
Balance of the Class A-[1][2A][2B][2C] Certificates, or otherwise by check
mailed by first class mail to the address of the Person entitled thereto, as
such name and address shall

                                      A-1-2

<PAGE>

appear on the Certificate Register. Notwithstanding the above, the final
distribution on this Certificate will be made after due notice by the Trustee of
the pendency of such distribution and only upon presentation and surrender of
this Certificate at the office or agency appointed by the Trustee for that
purpose as provided in the Agreement.

                  The Pass-Through Rate applicable to the calculation of
interest payable with respect to this Certificate on any Distribution Date shall
equal a rate per annum equal to the lesser of (i) One-Month LIBOR plus ____%, in
the case of each Distribution Date through and including the Distribution Date
on which the aggregate principal balance of the Mortgage Loans (and properties
acquired in respect thereof) remaining in the Trust Fund is reduced to less than
10% of the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date, or One-Month LIBOR plus ____% per annum, in the case of any Distribution
Date thereafter and (ii) the applicable Net WAC Pass-Through Rate for such
Distribution Date.

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer, the Trustee, the Securities
Administrator and the rights of the Certificateholders under the Agreement at
any time by the Depositor, the Master Servicer, the Trustee and the Securities
Administrator with the consent of the Holders of Certificates entitled to at
least 66% of the Voting Rights. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or such Holders attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

                                      A-1-3

<PAGE>

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.

                  No service charge will be made for any such registration of
transfer or exchange of Certificates, but the Trustee may require payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any transfer or exchange of Certificates.

                  The Depositor, the Master Servicer, the Trustee, the
Securities Administrator and any agent of the Depositor, the Master Servicer,
the Trustee or the Securities Administrator may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and none of
the Depositor, the Master Servicer, the Trustee, the Securities Administrator
nor any such agent shall be affected by notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC I and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC I of all the Mortgage
Loans and all property acquired in respect of such Mortgage Loans. The Agreement
permits, but does not require, the party designated in the Agreement to purchase
from REMIC I all the Mortgage Loans and all property acquired in respect of any
Mortgage Loan at a price determined as provided in the Agreement. The exercise
of such right will effect early retirement of the Certificates; however, such
right to purchase is subject to the aggregate Stated Principal Balance of the
Mortgage Loans at the time of purchase being less than 10% of the aggregate
principal balance of the Mortgage Loans as of the Cut-off Date.

                  The recitals contained herein shall be taken as statements of
the Depositor and the Trustee does not assume responsibility for their
correctness.

                  Unless the certificate of authentication hereon has been
executed by the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                      A-1-4

<PAGE>

                  IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.

Dated: December 10, 2002

                                        BANK ONE NATIONAL ASSOCIATION
                                        as Trustee

                                        By:_____________________________________
                                                    Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

                  This is one of the Class A-[1][2A][2B][2C] Certificates
referred to in the within-mentioned Agreement.

                                        BANK ONE NATIONAL ASSOCIATION
                                        as Trustee

                                        By:_____________________________________
                                                  Authorized Signatory

<PAGE>

                                  ABBREVIATIONS
                                  -------------

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

<TABLE>
<CAPTION>
<S>                                        <C>
TEN COM  -  as tenants in common           UNIF GIFT MIN ACT -       Custodian
                                                                     ---------
TEN ENT  -  as tenants by the entireties                          (Cust) (Minor)
                                                              under Uniform Gifts to
JT TEN   -  as joint tenants with right                              Minors Act
            if survivorship and not as
            tenants in common                        __________________
                                                     (State)
</TABLE>

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

                                   ASSIGNMENT
                                   ----------

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto __________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)

a Percentage Interest equal to ____% evidenced by the within Asset Backed
Pass-Through Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.

                  I (we) further direct the Trustee or the Trustee to issue a
new Certificate of a like Percentage Interest and Class to the above named
assignee and deliver such Certificate to the following address:________________
______________________________________________________________________________.

Dated:

                                ______________________________________
                                Signature by or on behalf of assignor

                                ______________________________________
                                Signature Guaranteed

<PAGE>

                            DISTRIBUTION INSTRUCTIONS

                  The assignee should include the following for purposes of
distribution:

                  Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________________
________________________________________________________________________________
for the account of _____________________________, account number ______________,
or, if mailed by check, to _____________________________________________________
_______________________________________________________________________________.
Applicable statements should be mailed to_______________________________________
_______________________________________________________________________________.
This information is provided by _______________________________________________,
the assignee named above, or __________________________, as its agent.

<PAGE>

                                   EXHIBIT A-2
                                   -----------

                             CLASS A-IO CERTIFICATE

         SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
         "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS
         THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE
         INTERNAL REVENUE CODE OF 1986 (THE "CODE").

<TABLE>
<CAPTION>
<S>                                                        <C>
Series 2002-HE3                                            Aggregate Notional Amount of the
                                                           Class A- IO Certificates as of
                                                           the Issue Date:
Pass-Through Rate: Variable                                $____________

Cut-off Date and date of Pooling and                       Denomination: $________________
Servicing Agreement: December 1, 2002
                                                           Master Servicer: Wells Fargo Bank
First Distribution Date:__________, 2002                   Minnesota, National Association

No. __                                                     Trustee: Bank One National Association

                                                           Issue Date: December 10, 2002

                                                           CUSIP:_________________
</TABLE>

<PAGE>

                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family, fixed and
adjustable-rate and fixed-rate, first lien mortgage loans (the "Mortgage Loans")
formed and sold by

                              ACE SECURITIES CORP.

         THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN ACE
         SECURITIES CORP., THE MASTER SERVICER, THE SECURITIES ADMINISTRATOR,
         THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS
         CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY
         AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.

                  This certifies that __________________ is the registered owner
of a Percentage Interest (obtained by dividing the denomination of this
Certificate by the aggregate Notional Amount of the Class A-IO Certificates as
of the Issue Date) in that certain beneficial ownership interest evidenced by
all the Class A-IO Certificates in REMIC III created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among ACE
Securities Corp., as depositor (hereinafter called the "Depositor," which term
includes any successor entity under the Agreement), Wells Fargo Bank Minnesota,
National Association, as master servicer (the "Master Servicer") and securities
administrator (the "Securities Administrator") and Bank One National
Association, as trustee (the "Trustee"), a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.

                  Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class A-IO Certificates on such Distribution
Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date and is
the registered owner of Class A-IO Certificates the aggregate initial Notional
Amount of which is in excess of the lesser of (i) $5,000,000 or (ii) two-thirds
of the aggregate initial Notional Amount of the Class A-IO Certificates, or
otherwise by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by

                                      A-2-2

<PAGE>

the Trustee of the pendency of such distribution and only upon presentation and
surrender of this Certificate at the office or agency appointed by the Trustee
for that purpose as provided in the Agreement.

                  The Pass-Through Rate on the Class A-IO-1 Component of the
Class A-IO Certificates is equal to the lesser of (a) the weighted average of
the Expense Adjusted Mortgage Rate of the Group I Mortgage Loans and (b) (i)
____% per annum from the first Distribution Date to and including the tenth
Distribution Date, (ii) ____% per annum from the eleventh Distribution Date to
and including the twentieth Distribution Date, (iii) ____% per annum from the
twenty-first Distribution Date to and including the thirtieth Distribution Date
and (iv) 0.00% per annum thereafter.

                  The Pass-Through Rate on the Class A-IO-2 Component of the
Class A-IO Certificates is equal to the lesser of (a) the weighted average of
the Expense Adjusted Mortgage Rate of the Group II Mortgage Loans and (b) (i)
____% per annum from the first Distribution Date to and including the tenth
Distribution Date, (ii) ____% per annum from the eleventh Distribution Date to
and including the twentieth Distribution Date, (iii) ____% per annum from the
twenty-first Distribution Date to and including the thirtieth Distribution Date
and (iv) 0.00% per annum thereafter.

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Notional Amount of the Class of Certificates specified on the face hereof.

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer, the Trustee, the Securities
Administrator and the rights of the Certificateholders under the Agreement at
any time by the Depositor, the Master Servicer, the Trustee and the Securities
Administrator with the consent of the Holders of Certificates entitled to at
least 66% of the Voting Rights. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate

                                      A-2-3

<PAGE>

for registration of transfer at the offices or agencies appointed by the Trustee
as provided in the Agreement, duly endorsed by, or accompanied by an assignment
in the form below or other written instrument of transfer in form satisfactory
to the Trustee duly executed by, the Holder hereof or such Holder's attorney
duly authorized in writing, and thereupon one or more new Certificates of the
same Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange
of Certificates, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any transfer or exchange of Certificates.

                  The Depositor, the Master Servicer, the Trustee, the
Securities Administrator and any agent of the Depositor, the Master Servicer,
the Trustee or the Securities Administrator may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and none of
the Depositor, the Master Servicer, the Trustee, the Securities Administrator
nor any such agent shall be affected by notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC I and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC I of all the Mortgage
Loans and all property acquired in respect of such Mortgage Loans. The Agreement
permits, but does not require, the party designated in the Agreement to purchase
from REMIC I all the Mortgage Loans and all property acquired in respect of any
Mortgage Loan at a price determined as provided in the Agreement. The exercise
of such right will effect early retirement of the Certificates; however, such
right to purchase is subject to the aggregate Stated Principal Balance of the
Mortgage Loans at the time of purchase being less than 10% of the aggregate
principal balance of the Mortgage Loans as of the Cut-off Date.

                  The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.

                  Unless the certificate of authentication hereon has been
executed by the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                      A-2-4

<PAGE>

                  IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.

Dated: December 10, 2002

                                        BANK ONE NATIONAL ASSOCIATION
                                        as Trustee

                                        By:_____________________________________
                                                    Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

                  This is one of the Class A-IO Certificates referred to in the
within-mentioned Agreement.

                                        BANK ONE NATIONAL ASSOCIATION
                                        as Trustee

                                        By:_____________________________________
                                                  Authorized Signatory

<PAGE>

                                  ABBREVIATIONS
                                  -------------

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

<TABLE>
<CAPTION>
<S>                                        <C>
TEN COM  -  as tenants in common           UNIF GIFT MIN ACT -       Custodian
                                                                     ---------
TEN ENT  -  as tenants by the entireties                          (Cust) (Minor)
                                                              under Uniform Gifts to
JT TEN   -  as joint tenants with right                              Minors Act
            if survivorship and not as
            tenants in common                        __________________
                                                     (State)
</TABLE>

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

                                   ASSIGNMENT
                                   ----------

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto __________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)

a Percentage Interest equal to ____% evidenced by the within Asset Backed
Pass-Through Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.

                  I (we) further direct the Trustee or the Trustee to issue a
new Certificate of a like Percentage Interest and Class to the above named
assignee and deliver such Certificate to the following address:________________
______________________________________________________________________________.

Dated:

                                ______________________________________
                                Signature by or on behalf of assignor

                                ______________________________________
                                Signature Guaranteed

<PAGE>

                            DISTRIBUTION INSTRUCTIONS

                  The assignee should include the following for purposes of
distribution:

                  Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________________
________________________________________________________________________________
for the account of _____________________________, account number ______________,
or, if mailed by check, to _____________________________________________________
_______________________________________________________________________________.
Applicable statements should be mailed to_______________________________________
_______________________________________________________________________________.
This information is provided by _______________________________________________,
the assignee named above, or __________________________, as its agent.

<PAGE>

                                   EXHIBIT A-3
                                   -----------

                    FORM OF CLASS [M-1][M-2][M-3] CERTIFICATE

             SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
             "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT,"
             AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D
             OF THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").

             [[FOR M-1] THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A AND THE
             CLASS A-IO CERTIFICATES TO THE EXTENT DESCRIBED IN THE POOLING AND
             SERVICING AGREEMENT REFERRED TO HEREIN.]

             [[FOR M-2] THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A
             CERTIFICATES, THE CLASS A-IO CERTIFICATES AND THE CLASS M-1
             CERTIFICATES TO THE EXTENT DESCRIBED IN THE POOLING AND SERVICING
             AGREEMENT REFERRED TO HEREIN.]

             [[FOR M-3] THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A
             CERTIFICATES, THE CLASS A-IO CERTIFICATES, THE CLASS M-1
             CERTIFICATES AND THE CLASS M-2 CERTIFICATES TO THE EXTENT DESCRIBED
             IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.]

<TABLE>
<CAPTION>
<S>                                                       <C>
Series 2002-HE3, Class [M-1][M-2][M-3]                    Aggregate Certificate Principal Balance of the
                                                          Class [M-1][M-2][M-3] Certificates as of the
Pass-Through Rate: Variable                               Issue Date: $______________

Date of Pooling and Servicing Agreement and               Denomination: $______________
Cut-off Date: December 1, 2002
                                                          Master Servicer: Wells Fargo Bank Minnesota,
                                                          National Association
First Distribution Date:
_________________, 2002                                   Trustee: Bank One National Association

No.___                                                    Issue Date: December 10, 2002

                                                          CUSIP:_________________
</TABLE>

             DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE
             PRINCIPAL BALANCE OF THIS CERTIFICATE MAY BE MADE
             MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE

<PAGE>

             OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE
             LESS THAN THE AMOUNT SHOWN ABOVE AS THE DENOMINATION OF THIS
             CERTIFICATE.

                                      A-3-2

<PAGE>

          ACE SECURITIES CORP. HOME EQUITY LOAN TRUST, SERIES 2002-HE3
                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family, fixed and
adjustable-rate first lien mortgage loans (the "Mortgage Loans") formed and sold
by

                              ACE SECURITIES CORP.

             THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
             ACE SECURITIES CORP., THE MASTER SERVICER, THE SECURITIES
             ADMINISTRATOR, THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES.
             NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
             GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.

                  This certifies that _____________________ is the registered
owner of a Percentage Interest (obtained by dividing the denomination of this
Certificate by the aggregate Certificate Principal Balance of the Class
[M-1][M-2][M-3] Certificates as of the Issue Date) in that certain beneficial
ownership interest evidenced by all the Class [M-1][M-2][M-3] Certificates in
REMIC III created pursuant to a Pooling and Servicing Agreement, dated as
specified above (the "Agreement"), among ACE Securities Corp., as depositor
(hereinafter called the "Depositor," which term includes any successor entity
under the Agreement), Wells Fargo Bank Minnesota, National Association, as
master servicer (the "Master Servicer") and securities administrator (the
"Securities Administrator") and Bank One National Association, as trustee (the
"Trustee"), a summary of certain of the pertinent provisions of which is set
forth hereafter. To the extent not defined herein, the capitalized terms used
herein have the meanings assigned in the Agreement. This Certificate is issued
under and is subject to the terms, provisions and conditions of the Agreement,
to which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.

                  Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class [M-1][M-2][M-3] Certificates on such
Distribution Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date and is
the registered owner of Class [M-1][M-2][M-3] Certificates the aggregate initial
Certificate Principal Balance of which is in excess of the lesser of (i)
$5,000,000 or (ii) two-thirds of the aggregate initial

                                      A-3-3

<PAGE>

Certificate Principal Balance of the Class [M-1][M-2][M-3] Certificates, or
otherwise by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose as provided in the
Agreement.

                  The Pass-Through Rate applicable to the calculation of
interest payable with respect to this Certificate on any Distribution Date shall
equal a rate per annum equal to the lesser of (i) One-Month LIBOR plus ____%, in
the case of each Distribution Date through and including the Distribution Date
on which the aggregate principal balance of the Mortgage Loans (and properties
acquired in respect thereof) remaining in the Trust Fund is reduced to less than
10% of the aggregate principal balance of the Mortgage Loans as of the Cut-off
Date, or One-Month LIBOR plus ____ % per annum, in the case of any Distribution
Date thereafter and (ii) the applicable Net WAC Pass-Through Rate for such
Distribution Date.

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer, the Trustee, the Securities
Administrator and the rights of the Certificateholders under the Agreement at
any time by the Depositor, the Master Servicer, the Trustee and the Securities
Administrator with the consent of the Holders of Certificates entitled to at
least 66% of the Voting Rights. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same

                                      A-3-4

<PAGE>

Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.

                  Any holder of this Certificate will be deemed to have amde the
representations set forth in Section 5.02(c) of the Agreement.

                  No service charge will be made for any such registration of
transfer or exchange of Certificates, but the Trustee may require payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any transfer or exchange of Certificates.

                  The Depositor, the Master Servicer, the Trustee, the
Securities Administrator and any agent of the Depositor, the Master Servicer,
the Trustee or the Securities Administrator may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and none of
the Depositor, the Master Servicer, the Trustee, the Securities Administrator
nor any such agent shall be affected by notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC I and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC I of all the Mortgage
Loans and all property acquired in respect of such Mortgage Loans. The Agreement
permits, but does not require, the party designated in the Agreement to purchase
from REMIC I all the Mortgage Loans and all property acquired in respect of any
Mortgage Loan at a price determined as provided in the Agreement. The exercise
of such right will effect early retirement of the Certificates; however, such
right to purchase is subject to the aggregate Stated Principal Balance of the
Mortgage Loans at the time of purchase being less than 10% of the aggregate
principal balance of the Mortgage Loans as of the Cut-off Date.

                  The recitals contained herein shall be taken as statements of
the Depositor and the Trustee does no assume responsibility for their
correctness.

                  Unless the certificate of authentication hereon has been
executed by the Trustee by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                      A-3-5

<PAGE>

                  IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.

Dated: December 10, 2002

                                        BANK ONE NATIONAL ASSOCIATION
                                        as Trustee

                                        By:_____________________________________
                                                    Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

                  This is one of the Class [M-1][M-2][M-3] Certificates referred
to in the within-mentioned Agreement.

                                        BANK ONE NATIONAL ASSOCIATION
                                        as Trustee

                                        By:_____________________________________
                                                  Authorized Signatory

<PAGE>

                                  ABBREVIATIONS
                                  -------------

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

<TABLE>
<CAPTION>
<S>                                        <C>
TEN COM  -  as tenants in common           UNIF GIFT MIN ACT -       Custodian
                                                                     ---------
TEN ENT  -  as tenants by the entireties                          (Cust) (Minor)
                                                              under Uniform Gifts to
JT TEN   -  as joint tenants with right                              Minors Act
            if survivorship and not as
            tenants in common                        __________________
                                                     (State)
</TABLE>

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

                                   ASSIGNMENT
                                   ----------

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto __________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)

a Percentage Interest equal to ____% evidenced by the within Asset Backed
Pass-Through Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.

                  I (we) further direct the Trustee or the Trustee to issue a
new Certificate of a like Percentage Interest and Class to the above named
assignee and deliver such Certificate to the following address:________________
______________________________________________________________________________.

Dated:

                                ______________________________________
                                Signature by or on behalf of assignor

                                ______________________________________
                                Signature Guaranteed

<PAGE>

                            DISTRIBUTION INSTRUCTIONS

                  The assignee should include the following for purposes of
distribution:

                  Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________________
________________________________________________________________________________
for the account of _____________________________, account number ______________,
or, if mailed by check, to _____________________________________________________
_______________________________________________________________________________.
Applicable statements should be mailed to_______________________________________
_______________________________________________________________________________.
This information is provided by _______________________________________________,
the assignee named above, or __________________________, as its agent.

<PAGE>

                                   EXHIBIT A-4
                                   -----------

                          FORM OF CLASS CE CERTIFICATE

             SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
             "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT,"
             AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D
             OF THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").

             THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES, THE
             CLASS A-IO CERTIFICATES, THE CLASS M-1 CERTIFICATES, THE CLASS M-2
             CERTIFICATES AND THE CLASS M-3 CERTIFICATES TO THE EXTENT DESCRIBED
             IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.

             THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
             SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
             STATE AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED
             PURSUANT TO SUCH ACT AND LAWS OR IS SOLD OR TRANSFERRED IN
             TRANSACTIONS THAT ARE EXEMPT FROM REGISTRATION UNDER SUCH ACT AND
             UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN ACCORDANCE WITH
             THE PROVISIONS OF SECTION 5.02 OF THE AGREEMENT.

             NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR
             OTHER RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT
             INCOME SECURITY ACT OF 1974, AS AMENDED, OR THE CODE WILL BE
             REGISTERED EXCEPT IN COMPLIANCE WITH THE PROCEDURES DESCRIBED
             HEREIN.

<PAGE>

<TABLE>
<CAPTION>
<S>                                                        <C>
Series 2002-HE3                                            Aggregate Certificate Principal Balance of the
                                                           Class CE Certificates as of the Issue Date:
Pass-Through Rate: Variable                                $_____________

Cut-off Date and date of Pooling and                       Denomination: $_________________
Servicing Agreement: December 1, 2002
                                                           Master Servicer: Wells Fargo Bank
First Distribution Date: __________, 2002                  Minnesota, National Association

No. __                                                     Trustee: Bank One National Association

Aggregate Notional Amount of the Class                     Issue Date: December 10, 2002
CE Certificates as of the Issue Date:
$_____________

Notional Amount: $_______________
</TABLE>

             DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF
             THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
             ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF
             AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS THE
             DENOMINATION OF THIS CERTIFICATE.

                                      A-4-2

<PAGE>

                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family, fixed and
adjustable-rate and fixed-rate, first lien mortgage loans (the "Mortgage Loans")
formed and sold by

                              ACE SECURITIES CORP.

             THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
             ACE SECURITIES CORP., THE MASTER SERVICER, THE SECURITIES
             ADMINISTRATOR, THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES.
             NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
             GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.

                  This certifies that ________________ is the registered owner
of a Percentage Interest (obtained by dividing the denomination of this
Certificate by the aggregate Certificate Principal Balance of the Class CE
Certificates as of the Issue Date) in that certain beneficial ownership interest
evidenced by all the Class CE Certificates in REMIC III created pursuant to a
Pooling and Servicing Agreement, dated as specified above (the "Agreement"),
among ACE Securities Corp., as depositor (hereinafter called the "Depositor,"
which term includes any successor entity under the Agreement), Wells Fargo Bank
Minnesota, National Association, as master servicer (the "Master Servicer") and
securities administrator (the "Securities Administrator") and Bank One National
Association, as trustee (the "Trustee"), a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.

                  Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class CE Certificates on such Distribution
Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date and is
the registered owner of Class CE Certificates the aggregate initial Certificate
Principal Balance of which is in excess of the lesser of (i) $5,000,000 or (ii)
two-thirds of the aggregate initial Certificate Principal Balance of the Class
CE Certificates, or otherwise by check mailed by first class mail to the address
of the Person entitled thereto, as such name and address shall appear on the
Certificate Register. Notwithstanding the above, the final distribution on this
Certificate will be made after due

                                      A-4-3

<PAGE>

notice by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Trustee for that purpose as provided in the Agreement.

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer, the Trustee, the Securities
Administrator and the rights of the Certificateholders under the Agreement at
any time by the Depositor, the Master Servicer, the Trustee and the Securities
Administrator with the consent of the Holders of Certificates entitled to at
least 66% of the Voting Rights. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

                  No transfer of this Certificate shall be made unless the
transfer is made pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "1933 Act"), and an effective
registration or qualification under applicable state securities laws, or is made
in a transaction that does not require such registration or qualification. In
the event that such a transfer of this Certificate is to be made without
registration or qualification, the Trustee shall require receipt of (i) if such
transfer is purportedly being made in reliance upon Rule 144A under the 1933
Act, written certifications from the Holder of the Certificate desiring to
effect the transfer, and from such Holder's prospective transferee,
substantially in the forms attached to the Agreement as Exhibit B-1, and (ii) in
all other cases, an Opinion of Counsel satisfactory to it that such transfer may
be made

                                      A-4-4

<PAGE>

without such registration or qualification (which Opinion of Counsel shall not
be an expense of the Trust Fund or of the Depositor, the Trustee, the Master
Servicer or the Securities Administrator in their respective capacities as
such), together with copies of the written certification(s) of the Holder of the
Certificate desiring to effect the transfer and/or such Holder's prospective
transferee upon which such Opinion of Counsel is based. Neither the Depositor
nor the Trustee is obligated to register or qualify the Class of Certificates
specified on the face hereof under the 1933 Act or any other securities law or
to take any action not otherwise required under the Agreement to permit the
transfer of such Certificates without registration or qualification. Any Holder
desiring to effect a transfer of this Certificate shall be required to indemnify
the Trustee, the Depositor, the Master Servicer and the Securities Administrator
against any liability that may result if the transfer is not so exempt or is not
made in accordance with such federal and state laws.

                  No transfer of this Certificate to a Plan subject to ERISA or
Section 4975 of the Code, any Person acting, directly or indirectly, on behalf
of any such Plan or any Person using "Plan Assets" to acquire this Certificate
shall be made except in accordance with Section 5.02(c) of the Agreement.

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange
of Certificates, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any transfer or exchange of Certificates.

                  The Depositor, the Master Servicer, the Trustee, the
Securities Administrator and any agent of the Depositor, the Master Servicer,
the Trustee or the Securities Administrator may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and none of
the Depositor, the Master Servicer, the Trustee, the Securities Administrator
nor any such agent shall be affected by notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC I and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC I of all the Mortgage
Loans and all property acquired in respect of such Mortgage Loans. The Agreement
permits, but does not require, the party designated in the Agreement to purchase
from REMIC I all the Mortgage Loans and all property acquired in respect of any
Mortgage Loan at a price determined as provided in the Agreement. The exercise
of such right will effect early retirement of the Certificates; however, such
right to purchase is subject to the aggregate Stated Principal Balance of the
Mortgage Loans at the time of purchase being less than 10% of the aggregate
principal balance of the Mortgage Loans as of the Cut-off Date.

                                      A-4-5

<PAGE>

                  The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.

                  Unless the certificate of authentication hereon has been
executed by the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                      A-4-6

<PAGE>

                  IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.

Dated: December 10, 2002

                                        BANK ONE NATIONAL ASSOCIATION
                                        as Trustee

                                        By:_____________________________________
                                                    Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

                  This is one of the Class CE Certificates referred to in the
within-mentioned Agreement.

                                        BANK ONE NATIONAL ASSOCIATION
                                        as Trustee

                                        By:_____________________________________
                                                  Authorized Signatory

<PAGE>

                                  ABBREVIATIONS
                                  -------------

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

<TABLE>
<CAPTION>
<S>                                        <C>
TEN COM  -  as tenants in common           UNIF GIFT MIN ACT -       Custodian
                                                                     ---------
TEN ENT  -  as tenants by the entireties                          (Cust) (Minor)
                                                              under Uniform Gifts to
JT TEN   -  as joint tenants with right                              Minors Act
            if survivorship and not as
            tenants in common                        __________________
                                                     (State)
</TABLE>

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

                                   ASSIGNMENT
                                   ----------

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto __________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)

a Percentage Interest equal to ____% evidenced by the within Asset Backed
Pass-Through Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.

                  I (we) further direct the Trustee or the Trustee to issue a
new Certificate of a like Percentage Interest and Class to the above named
assignee and deliver such Certificate to the following address:________________
______________________________________________________________________________.

Dated:

                                ______________________________________
                                Signature by or on behalf of assignor

                                ______________________________________
                                Signature Guaranteed

<PAGE>

                            DISTRIBUTION INSTRUCTIONS

                  The assignee should include the following for purposes of
distribution:

                  Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________________
________________________________________________________________________________
for the account of _____________________________, account number ______________,
or, if mailed by check, to _____________________________________________________
_______________________________________________________________________________.
Applicable statements should be mailed to_______________________________________
_______________________________________________________________________________.
This information is provided by _______________________________________________,
the assignee named above, or __________________________, as its agent.

<PAGE>

                                   EXHIBIT A-5
                                   -----------

                               CLASS P CERTIFICATE

             SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
             "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT,"
             AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D
             OF THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").

             THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
             SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
             STATE AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED
             PURSUANT TO SUCH ACT AND LAWS OR IS SOLD OR TRANSFERRED IN
             TRANSACTIONS THAT ARE EXEMPT FROM REGISTRATION UNDER SUCH ACT AND
             UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN ACCORDANCE WITH
             THE PROVISIONS OF SECTION 5.02 OF THE AGREEMENT.

             NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR
             OTHER RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT
             INCOME SECURITY ACT OF 1974, AS AMENDED, OR THE CODE WILL BE
             REGISTERED EXCEPT IN COMPLIANCE WITH THE PROCEDURES DESCRIBED
             HEREIN.

<TABLE>
<CAPTION>
<S>                                                        <C>
Series 2002-HE3                                            Aggregate Certificate Principal Balance of the
                                                           Class P Certificates as of the Issue Date:
Pass-Through Rate: Variable                                $_________

Cut-off Date and date of Pooling and                       Denomination: $_________
Servicing Agreement: December 1, 2002
                                                           Master Servicer: Wells Fargo Bank
First Distribution Date: __________, 2002                  Minnesota, National Association

No. __                                                     Trustee: Bank One National Association

                                                           Issue Date: December 10, 2002
</TABLE>

<PAGE>

             DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF
             THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN.
             ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF
             AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS THE
             DENOMINATION OF THIS CERTIFICATE.

                                      A-5-2

<PAGE>

                      ASSET BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family, fixed and
adjustable-rate and fixed-rate, first lien mortgage loans (the "Mortgage Loans")
formed and sold by

                              ACE SECURITIES CORP.

             THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
             ACE SECURITIES CORP., THE MASTER SERVICER, THE SECURITIES
             ADMINISTRATOR, THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES.
             NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
             GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.

                  This certifies that____________________ is the registered
owner of a Percentage Interest (obtained by dividing the denomination of this
Certificate by the aggregate Certificate Principal Balance of the Class P
Certificates as of the Issue Date) in that certain beneficial ownership interest
evidenced by all the Class P Certificates in REMIC III created pursuant to a
Pooling and Servicing Agreement, dated as specified above (the "Agreement"),
among ACE Securities Corp., as depositor (hereinafter called the "Depositor,"
which term includes any successor entity under the Agreement), Wells Fargo Bank
Minnesota, National Association, as master servicer (the "Master Servicer") and
securities administrator (the "Securities Administrator") and Bank One National
Association, as trustee (the "Trustee"), a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.

                  Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class P Certificates on such Distribution
Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date and is
the registered owner of Class P Certificates the aggregate initial Certificate
Principal Balance of which is in excess of the lesser of (i) $5,000,000 or (ii)
two-thirds of the aggregate initial Certificate Principal Balance of the Class P
Certificates, or otherwise by check mailed by first class mail to the address of
the Person entitled thereto, as such name and address shall appear on the
Certificate Register. Notwithstanding the above, the final distribution on this
Certificate will be made after due

                                      A-5-3

<PAGE>

notice by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency appointed
by the Trustee for that purpose as provided in the Agreement.

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer, the Trustee, the Securities
Administrator and the rights of the Certificateholders under the Agreement at
any time by the Depositor, the Master Servicer, the Trustee and the Securities
Administrator with the consent of the Holders of Certificates entitled to at
least 66% of the Voting Rights. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

                  No transfer of this Certificate shall be made unless the
transfer is made pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "1933 Act"), and an effective
registration or qualification under applicable state securities laws, or is made
in a transaction that does not require such registration or qualification. In
the event that such a transfer of this Certificate is to be made without
registration or qualification, the Trustee shall require receipt of (i) if such
transfer is purportedly being made in reliance upon Rule 144A under the 1933
Act, written certifications from the Holder of the Certificate desiring to
effect the transfer, and from such Holder's prospective transferee,
substantially in the forms attached to the Agreement as Exhibit B-1, and (ii) in
all other cases, an Opinion of Counsel satisfactory to it that such transfer may
be made

                                      A-5-4

<PAGE>

without such registration or qualification (which Opinion of Counsel shall not
be an expense of the Trust Fund or of the Depositor, the Trustee, the Master
Servicer or the Securities Administrator in their respective capacities as
such), together with copies of the written certification(s) of the Holder of the
Certificate desiring to effect the transfer and/or such Holder's prospective
transferee upon which such Opinion of Counsel is based. Neither the Depositor
nor the Trustee is obligated to register or qualify the Class of Certificates
specified on the face hereof under the 1933 Act or any other securities law or
to take any action not otherwise required under the Agreement to permit the
transfer of such Certificates without registration or qualification. Any Holder
desiring to effect a transfer of this Certificate shall be required to indemnify
the Trustee, the Depositor, the Master Servicer and the Securities Administrator
against any liability that may result if the transfer is not so exempt or is not
made in accordance with such federal and state laws.

                  No transfer of this Certificate to a Plan subject to ERISA or
Section 4975 of the Code, any Person acting, directly or indirectly, on behalf
of any such Plan or any Person using "Plan Assets" to acquire this Certificate
shall be made except in accordance with Section 5.02(c) of the Agreement.

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or exchange
of Certificates, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any transfer or exchange of Certificates.

                  The Depositor, the Master Servicer, the Trustee, the
Securities Administrator and any agent of the Depositor, the Master Servicer,
the Trustee or the Securities Administrator may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and none of
the Depositor, the Master Servicer, the Trustee, the Securities Administrator
nor any such agent shall be affected by notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC I and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC I of all the Mortgage
Loans and all property acquired in respect of such Mortgage Loans. The Agreement
permits, but does not require, the party designated in the Agreement to purchase
from REMIC I all the Mortgage Loans and all property acquired in respect of any
Mortgage Loan at a price determined as provided in the Agreement. The exercise
of such right will effect early retirement of the Certificates; however, such
right to purchase is subject to the aggregate Stated Principal Balance of the
Mortgage Loans at the time of purchase being less than 10% of the aggregate
principal balance of the Mortgage Loans as of the Cut-off Date.

                                      A-5-5

<PAGE>

                  The recitals contained herein shall be taken as statements of
the Depositor and the Trustee assumes no responsibility for their correctness.

                  Unless the certificate of authentication hereon has been
executed by the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                      A-5-6

<PAGE>

                  IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.

Dated: December 10, 2002

                                        BANK ONE NATIONAL ASSOCIATION
                                        as Trustee

                                        By:_____________________________________
                                                    Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

                  This is one of the Class P Certificates referred to in the
within-mentioned Agreement.

                                        BANK ONE NATIONAL ASSOCIATION
                                        as Trustee

                                        By:_____________________________________
                                                  Authorized Signatory

<PAGE>

                                  ABBREVIATIONS
                                  -------------

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

<TABLE>
<CAPTION>
<S>                                        <C>
TEN COM  -  as tenants in common           UNIF GIFT MIN ACT -       Custodian
                                                                     ---------
TEN ENT  -  as tenants by the entireties                          (Cust) (Minor)
                                                              under Uniform Gifts to
JT TEN   -  as joint tenants with right                              Minors Act
            if survivorship and not as
            tenants in common                        __________________
                                                     (State)
</TABLE>

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

                                   ASSIGNMENT
                                   ----------

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto __________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)

a Percentage Interest equal to ____% evidenced by the within Asset Backed
Pass-Through Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.

                  I (we) further direct the Trustee or the Trustee to issue a
new Certificate of a like Percentage Interest and Class to the above named
assignee and deliver such Certificate to the following address:________________
______________________________________________________________________________.

Dated:

                                ______________________________________
                                Signature by or on behalf of assignor

                                ______________________________________
                                Signature Guaranteed

<PAGE>

                            DISTRIBUTION INSTRUCTIONS

                  The assignee should include the following for purposes of
distribution:

                  Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________________
________________________________________________________________________________
for the account of _____________________________, account number ______________,
or, if mailed by check, to _____________________________________________________
_______________________________________________________________________________.
Applicable statements should be mailed to_______________________________________
_______________________________________________________________________________.
This information is provided by _______________________________________________,
the assignee named above, or __________________________, as its agent.

<PAGE>

                                   EXHIBIT A-6
                                   -----------

                           FORM OF CLASS R CERTIFICATE

             THIS CERTIFICATE MAY NOT BE TRANSFERRED TO A NON- UNITED STATES
             PERSON.

             SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
             REPRESENTS THE SOLE "RESIDUAL INTEREST" IN EACH OF THREE "REAL
             ESTATE MORTGAGE INVESTMENT CONDUITS" ("REMIC"), AS THOSE TERMS ARE
             DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
             REVENUE CODE OF 1986 (THE "CODE").

             ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY
             BE MADE ONLY IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF
             THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.

             THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
             SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
             STATE AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED
             PURSUANT TO SUCH ACT AND LAWS OR IS SOLD OR TRANSFERRED IN
             TRANSACTIONS THAT ARE EXEMPT FROM REGISTRATION UNDER SUCH ACT AND
             UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN ACCORDANCE WITH
             THE PROVISIONS OF SECTION 5.02 OF THE AGREEMENT.

             NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR
             OTHER RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT
             INCOME SECURITY ACT OF 1974, AS AMENDED, OR THE CODE WILL BE
             REGISTERED EXCEPT IN COMPLIANCE WITH THE PROCEDURES DESCRIBED
             HEREIN.

             ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY
             BE MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES (I) AN AFFIDAVIT
             TO THE TRUSTEE THAT (A) SUCH TRANSFEREE IS NOT (1) THE UNITED
             STATES OR ANY POSSESSION THEREOF, ANY STATE OR POLITICAL
             SUBDIVISION THEREOF, ANY FOREIGN GOVERNMENT, ANY INTERNATIONAL
             ORGANIZATION, OR ANY AGENCY OR INSTRUMENTALITY OF ANY OF THE
             FOREGOING, (2) ANY ORGANIZATION (OTHER THAN A COOPERATIVE DESCRIBED

<PAGE>

             IN SECTION 521 OF THE CODE) THAT IS EXEMPT FROM THE TAX IMPOSED BY
             CHAPTER 1 OF THE CODE UNLESS SUCH ORGANIZATION IS SUBJECT TO THE
             TAX IMPOSED BY SECTION 511 OF THE CODE, (3) ANY ORGANIZATION
             DESCRIBED IN SECTION 1381(A)(2)(C) OF THE CODE (ANY SUCH PERSON
             DESCRIBED IN THE FOREGOING CLAUSES (1), (2) OR (3) SHALL
             HEREINAFTER BE REFERRED TO AS A "DISQUALIFIED ORGANIZATION") OR (4)
             AN AGENT OF A DISQUALIFIED ORGANIZATION AND (B) NO PURPOSE OF SUCH
             TRANSFER IS TO IMPEDE THE ASSESSMENT OR COLLECTION OF TAX, AND (II)
             SUCH TRANSFEREE SATISFIES CERTAIN ADDITIONAL CONDITIONS RELATING TO
             THE FINANCIAL CONDITION OF THE PROPOSED TRANSFEREE. NOTWITHSTANDING
             THE REGISTRATION IN THE CERTIFICATE REGISTER OF ANY TRANSFER, SALE
             OR OTHER DISPOSITION OF THIS CERTIFICATE TO A DISQUALIFIED
             ORGANIZATION OR AN AGENT OF A DISQUALIFIED ORGANIZATION, SUCH
             REGISTRATION SHALL BE DEEMED TO BE OF NO LEGAL FORCE OR EFFECT
             WHATSOEVER AND SUCH PERSON SHALL NOT BE DEEMED TO BE A
             CERTIFICATEHOLDER FOR ANY PURPOSE HEREUNDER, INCLUDING, BUT NOT
             LIMITED TO, THE RECEIPT OF DISTRIBUTIONS ON THIS CERTIFICATE. EACH
             HOLDER OF THIS CERTIFICATE BY ACCEPTANCE HEREOF SHALL BE DEEMED TO
             HAVE CONSENTED TO THE PROVISIONS OF THIS PARAGRAPH AND THE
             PROVISIONS OF SECTION 5.02(D) OF THE POOLING AND SERVICING
             AGREEMENT REFERRED TO HEREIN. ANY PERSON THAT IS A DISQUALIFIED
             ORGANIZATION IS PROHIBITED FROM ACQUIRING BENEFICIAL OWNERSHIP OF
             THIS CERTIFICATE.

<TABLE>
<CAPTION>
<S>                                                    <C>
Series 2002-HE3, Class R                               Aggregate Percentage Interest of the Class R
                                                       Certificates as of the Issue Date: 100.00%
Date of Pooling and Servicing Agreement
 and Cut-off Date: December 1, 2002                    Master Servicer: Wells Fargo Bank Minnesota,
                                                       National Association

First Distribution Date:                               Trustee: Bank One National Association
_______________, 2002
No __                                                  Issue Date: December 10, 2002
</TABLE>

                                      A-6-2

<PAGE>

       ACE SECURITIES CORP. HOME EQUITY LOAN TRUST, SERIES 2002-HE3 ASSET
                         BACKED PASS-THROUGH CERTIFICATE

evidencing a beneficial ownership interest in a Trust Fund (the "Trust Fund")
consisting primarily of a pool of conventional one- to four-family, fixed and
adjustable-rate first lien mortgage loans (the "Mortgage Loans") formed and sold
by

                              ACE SECURITIES CORP.

             THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN
             ACE SECURITIES CORP., THE MASTER SERVICER, THE SECURITIES
             ADMINISTRATOR, THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES.
             NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
             GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.

                  This certifies that _______________ is the registered owner of
a Percentage Interest (obtained by dividing the denomination of this Certificate
by the aggregate Certificate Principal Balance of the Class R Certificates as of
the Issue Date) in that certain beneficial ownership interest evidenced by all
the Class R Certificates in REMIC III created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among ACE
Securities Corp., as depositor (hereinafter called the "Depositor," which term
includes any successor entity under the Agreement), Wells Fargo Bank Minnesota,
National Association, as master servicer (the "Master Servicer") and securities
administrator (the "Securities Administrator") and Bank One National
Association, as trustee (the "Trustee"), a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.

                  Pursuant to the terms of the Agreement, distributions will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (a "Distribution Date"), commencing on
the First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the Record Date, in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class R Certificates on such Distribution
Date pursuant to the Agreement.

                  All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by the Trustee by wire transfer in
immediately available funds to the account of the Person entitled thereto if
such Person shall have so notified the Trustee in writing at least five Business
Days prior to the Record Date immediately prior to such Distribution Date and is
the registered owner of Class R Certificates the aggregate initial Certificate
Principal Balance of which is in excess of the lesser of (i) $5,000,000 or (ii)
two-thirds of the aggregate initial Certificate Principal Balance of the Class R
Certificates, or otherwise by check mailed by first class mail to the

                                      A-6-3

<PAGE>

address of the Person entitled thereto, as such name and address shall appear on
the Certificate Register. Notwithstanding the above, the final distribution on
this Certificate will be made after due notice by the Trustee of the pendency of
such distribution and only upon presentation and surrender of this Certificate
at the office or agency appointed by the Trustee for that purpose as provided in
the Agreement.

                  This Certificate is one of a duly authorized issue of
Certificates designated as Asset Backed Pass-Through Certificates of the Series
specified on the face hereof (herein called the "Certificates") and representing
a Percentage Interest in the Class of Certificates specified on the face hereof
equal to the denomination specified on the face hereof divided by the aggregate
Certificate Principal Balance of the Class of Certificates specified on the face
hereof.

                  The Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.

                  The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer, the Trustee, the Securities
Administrator and the rights of the Certificateholders under the Agreement at
any time by the Depositor, the Master Servicer, the Trustee and the Securities
Administrator with the consent of the Holders of Certificates entitled to at
least 66% of the Voting Rights. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.

                  As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies appointed by the Trustee as provided in
the Agreement, duly endorsed by, or accompanied by an assignment in the form
below or other written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or such Holders attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.

                  The Certificates are issuable in fully registered form only
without coupons in Classes and denominations representing Percentage Interests
specified in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.

                                      A-6-4

<PAGE>

                  No transfer of this Certificate shall be made unless the
transfer is made pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "1933 Act"), and an effective
registration or qualification under applicable state securities laws, or is made
in a transaction that does not require such registration or qualification. In
the event that such a transfer of this Certificate is to be made without
registration or qualification, the Trustee shall require receipt of (i) if such
transfer is purportedly being made in reliance upon Rule 144A under the 1933
Act, written certifications from the Holder of the Certificate desiring to
effect the transfer, and from such Holder's prospective transferee,
substantially in the forms attached to the Agreement as Exhibit B-1, (ii) if
such transfer is purportedly being made in reliance upon Rule 501(a) under the
1933 Act, written certifications from the Certificateholder desiring to effect
the transfer and from such Certificateholder's prospective transferee,
substantially in the form attached hereto as Exhibit B-2, and (iii) in all other
cases, an Opinion of Counsel satisfactory to it that such transfer may be made
without such registration or qualification (which Opinion of Counsel shall not
be an expense of the Trust Fund or of the Depositor, the Trustee, the Master
Servicer or the Securities Administrator in their respective capacities as
such), together with copies of the written certification(s) of the Holder of the
Certificate desiring to effect the transfer and/or such Holders prospective
transferee upon which such Opinion of Counsel is based. Neither the Depositor
nor the Trustee is obligated to register or qualify the Class of Certificates
specified on the face hereof under the 1933 Act or any other securities law or
to take any action not otherwise required under the Agreement to permit the
transfer of such Certificates without registration or qualification. Any Holder
desiring to effect a transfer of this Certificate shall be required to indemnify
the Trustee, the Depositor, the Master Servicer and the Securities Administrator
against any liability that may result if the transfer is not so exempt or is not
made in accordance with such federal and state laws.

                  No transfer of this Certificate to a Plan subject to ERISA or
Section 4975 of the Code, any Person acting, directly or indirectly, on behalf
of any such Plan or any Person using "Plan Assets" to acquire this Certificate
shall be made except in accordance with Section 5.02(c) of the Agreement.

                  Prior to registration of any transfer, sale or other
disposition of this Certificate, the proposed transferee shall provide to the
Trustee (i) an affidavit to the effect that such transferee is any Person other
than a Disqualified Organization or the agent (including a broker, nominee or
middleman) of a Disqualified Organization, and (ii) a certificate that
acknowledges that (A) the Class R Certificates have been designated as
representing the beneficial ownership of the residual interests in each of REMIC
I, REMIC II and REMIC III, (B) it will include in its income a PRO RATA share of
the net income of the Trust Fund and that such income may be an "excess
inclusion," as defined in the Code, that, with certain exceptions, cannot be
offset by other losses or benefits from any tax exemption, and (C) it expects to
have the financial means to satisfy all of its tax obligations including those
relating to holding the Class R Certificates. Notwithstanding the registration
in the Certificate Register of any transfer, sale or other disposition of this
Certificate to a Disqualified Organization or an agent (including a broker,
nominee or middleman) of a Disqualified Organization, such registration shall be
deemed to be of no legal force or effect whatsoever and such Person shall not be
deemed to be a Certificateholder for any purpose, including, but not limited to,
the receipt of distributions in respect of this Certificate.

                                      A-6-5

<PAGE>

                  The Holder of this Certificate, by its acceptance hereof,
shall be deemed to have consented to the provisions of Section 5.02 of the
Agreement and to any amendment of the Agreement deemed necessary by counsel of
the Depositor to ensure that the transfer of this Certificate to any Person
other than a Permitted Transferee or any other Person will not cause any portion
of the Trust Fund to cease to qualify as a REMIC or cause the imposition of a
tax upon any REMIC.

                  No service charge will be made for any such registration of
transfer or exchange of Certificates, but the Trustee may require payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any transfer or exchange of Certificates.

                  The Depositor, the Master Servicer, the Trustee and the
Securities Administrator and any agent of the Depositor, the Master Servicer,
the Trustee or the Securities Administrator may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and none of
the Depositor, the Master Servicer, the Trustee, the Securities Administrator
nor any such agent shall be affected by notice to the contrary.

                  The obligations created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders of all
amounts held by the Trustee and required to be paid to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in
REMIC I and (ii) the purchase by the party designated in the Agreement at a
price determined as provided in the Agreement from REMIC I of all the Mortgage
Loans and all property acquired in respect of such Mortgage Loans. The Agreement
permits, but does not require, the party designated in the Agreement to purchase
from REMIC I all the Mortgage Loans and all property acquired in respect of any
Mortgage Loan at a price determined as provided in the Agreement. The exercise
of such right will effect early retirement of the Certificates; however, such
right to purchase is subject to the aggregate Stated Principal Balance of the
Mortgage Loans at the time of purchase being less than 10% of the aggregate
principal balance of the Mortgage Loans as of the Cut-off Date.

                  The recitals contained herein shall be taken as statements of
the Depositor and the Trustee does not assume responsibility for their
correctness.

                  Unless the certificate of authentication hereon has been
executed by the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.

                                      A-6-6

<PAGE>

                  IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.

Dated: December 10, 2002

                                        BANK ONE NATIONAL ASSOCIATION
                                        as Trustee

                                        By:_____________________________________
                                                    Authorized Officer

                          CERTIFICATE OF AUTHENTICATION
                          -----------------------------

                  This is one of the Class R Certificates referred to in the
within-mentioned Agreement.

                                        BANK ONE NATIONAL ASSOCIATION
                                        as Trustee

                                        By:_____________________________________
                                                  Authorized Signatory

<PAGE>

                                  ABBREVIATIONS
                                  -------------

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

<TABLE>
<CAPTION>
<S>                                        <C>
TEN COM  -  as tenants in common           UNIF GIFT MIN ACT -       Custodian
                                                                     ---------
TEN ENT  -  as tenants by the entireties                          (Cust) (Minor)
                                                              under Uniform Gifts to
JT TEN   -  as joint tenants with right                              Minors Act
            if survivorship and not as
            tenants in common                        __________________
                                                     (State)
</TABLE>

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

                                   ASSIGNMENT
                                   ----------

                  FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto __________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)

a Percentage Interest equal to ____% evidenced by the within Asset Backed
Pass-Through Certificate and hereby authorize(s) the registration of transfer of
such interest to assignee on the Certificate Register of the Trust Fund.

                  I (we) further direct the Trustee or the Trustee to issue a
new Certificate of a like Percentage Interest and Class to the above named
assignee and deliver such Certificate to the following address:________________
______________________________________________________________________________.

Dated:

                                ______________________________________
                                Signature by or on behalf of assignor

                                ______________________________________
                                Signature Guaranteed

<PAGE>

                            DISTRIBUTION INSTRUCTIONS

                  The assignee should include the following for purposes of
distribution:

                  Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________________________
________________________________________________________________________________
for the account of _____________________________, account number ______________,
or, if mailed by check, to _____________________________________________________
_______________________________________________________________________________.
Applicable statements should be mailed to_______________________________________
_______________________________________________________________________________.
This information is provided by _______________________________________________,
the assignee named above, or __________________________, as its agent.

<PAGE>

                                   EXHIBIT B-1
                                   -----------

                    FORM OF TRANSFEROR REPRESENTATION LETTER

                                     [Date]

Bank One National Association
1 Bank One Plaza
Mail Suite IL1-0126
Chicago, Illinois 60670

                  Re:  ACE Securities Corp. Home Equity Loan Trust,
                       Series 2002-HE3 Asset Backed Pass-Through Certificates,
                       Class CE, Class P and Class R Certificates
                       -------------------------------------------------------

Ladies and Gentlemen:

                  In connection with the transfer by ______________________ (the
"Transferor") to ___________________ (the "Transferee") of the captioned
mortgage pass-through certificates (the "Certificates"), the Transferor hereby
certifies as follows:

                  Neither the Transferor nor anyone acting on its behalf has (a)
offered, pledged, sold, disposed of or otherwise transferred any Certificate,
any interest in any Certificate or any other similar security to any person in
any manner, (b) has solicited any offer to buy or to accept a pledge,
disposition or other transfer of any Certificate, any interest in any
Certificate or any other similar security from any person in any manner, (c) has
otherwise approached or negotiated with respect to any Certificate, any interest
in any Certificate or any other similar security with any person in any manner,
(d) has made any general solicitation by means of general advertising or in any
other manner, (e) has taken any other action, that (in the case of each of
subclauses (a) through (e) above) would constitute a distribution of the
Certificates under the Securities Act of 1933, as amended (the "1933 Act"), or
would render the disposition of any Certificate a violation of Section 5 of the
1933 Act or any state securities law or would require registration or
qualification pursuant thereto. The Transferor will not act, nor has it
authorized or will it authorize any person to act, in any manner set forth in
the foregoing sentence with respect to any Certificate. The Transferor will not
sell or otherwise transfer any of the Certificates, except in compliance with
the provisions of that certain Pooling and Servicing Agreement, dated as of
December 1, 2002, among ACE Securities Corp. as Depositor, Wells Fargo Bank
Minnesota, N.A. as Master Servicer and Securities Administrator and Bank One
National Association as Trustee (the "Pooling and Servicing Agreement"),
pursuant to which Pooling and Servicing Agreement the Certificates were issued.

<PAGE>

                  Capitalized terms used but not defined herein shall have the
meanings assigned thereto in the Pooling and Servicing Agreement.

                                        Very truly yours,

                                        [Transferor]

                                        By:______________________________
                                        Name:
                                        Title:

                                      B-1-2

<PAGE>

                    FORM OF TRANSFEREE REPRESENTATION LETTER

                                                     [Date]

Bank One National Association
1 Bank One Plaza
Mail Suite IL1-0126
Chicago, Illinois 60670

                  Re:  ACE Securities Corp. Home Equity Loan Trust,
                       Series 2002-HE3 Asset Backed Pass-Through Certificates,
                       Class CE, Class P and Class R Certificates
                       -------------------------------------------------------

Ladies and Gentlemen:

                  In connection with the purchase from
______________________________ (the "Transferor") on the date hereof of the
captioned trust certificates (the "Certificates"), (the "Transferee") hereby
certifies as follows:

                  1. The Transferee is a "qualified institutional buyer" as that
             term is defined in Rule 144A ("Rule 144A") under the Securities Act
             of 1933 (the "1933 Act") and has completed either of the forms of
             certification to that effect attached hereto as Annex 1 or Annex 2.
             The Transferee is aware that the sale to it is being made in
             reliance on Rule 144A. The Transferee is acquiring the Certificates
             for its own account or for the account of a qualified institutional
             buyer, and understands that such Certificate may be resold, pledged
             or transferred only (i) to a person reasonably believed to be a
             qualified institutional buyer that purchases for its own account or
             for the account of a qualified institutional buyer to whom notice
             is given that the resale, pledge or transfer is being made in
             reliance on Rule 144A, or (ii) pursuant to another exemption from
             registration under the 1933 Act.

                  2. The Transferee has been furnished with all information
             regarding (a) the Certificates and distributions thereon, (b) the
             nature, performance and servicing of the Mortgage Loans, (c) the
             Pooling and Servicing Agreement referred to below, and (d) any
             credit enhancement mechanism associated with the Certificates, that
             it has requested.

                  3. The Transferee: (a) is not an employee benefit or other
             plan subject to the prohibited transaction provisions of the
             Employee Retirement Income Security Act of 1974, as amended
             ("ERISA), or Section 4975 of the Internal Revenue Code of 1986, as
             amended ("Plan"), or any other person (including an investment
             manager, a named fiduciary or a trustee of any Plan) acting,
             directly or indirectly, on behalf of or purchasing any Certificate
             with "plan assets" of any Plan within the meaning of the Department
             of Labor ("DOL") regulation at 29 C.F.R.ss.2510.3-101 or (b) has
             provided the Trustee, the

                                      B-1-3

<PAGE>

             Depositor, the Master Servicer and the Securities Administrator
             with an opinion of counsel acceptable to and in form and substance
             satisfactory to such parties to the effect that the purchase of
             Certificates is permissible under applicable law, will not
             constitute or result in any non-exempt prohibited transaction under
             ERISA or Section 4975 of the Code and will not subject the Trustee,
             the Depositor, the Master Servicer or the Securities Administrator
             to any obligation or liability (including obligations or
             liabilities under ERISA or Section 4975 of the Code) in addition to
             those undertaken in the Pooling and Servicing Agreement.

             In addition, the Transferee hereby certifies, represents and
warrants to, and covenants with, the Depositor, the Trustee, the Master Servicer
and the Securities Administrator that the Transferee will not transfer such
Certificates to any Plan or person unless such Plan or person meets the
requirements set forth in either 3(a) or (b) above.

             All capitalized terms used but not otherwise defined herein have
the respective meanings assigned thereto in the Pooling and Servicing Agreement,
dated as of December 1, 2002, among ACE Securities Corp. as Depositor, Wells
Fargo Bank Minnesota, N.A. as Master Servicer and Securities Administrator and
Bank One National Association as Trustee, pursuant to which the Certificates
were issued.

                                        [TRANSFEREE]

                                        By:____________________________
                                        Name:
                                        Title:

                                      B-1-4

<PAGE>

                                                          ANNEX 1 TO EXHIBIT B-1
                                                          ----------------------

            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A

                  [For Transferees Other Than Registered Investment Companies]

                  The undersigned hereby certifies as follows to [name of
Transferor] (the "Transferor") and Bank One National Association, as Trustee,
with respect to the asset backed pass-through certificates (the "Certificates")
described in the Transferee Certificate to which this certification relates and
to which this certification is an Annex:

                  1. As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
entity purchasing the Certificates (the "Transferee").

                  2. In connection with purchases by the Transferee, the
Transferee is a "qualified institutional buyer" as that term is defined in Rule
144A under the Securities Act of 1933 ("Rule 144A") because (i) the Transferee
owned and/or invested on a discretionary basis $________________1 in securities
(except for the excluded securities referred to below) as of the end of the
Transferee's most recent fiscal year (such amount being calculated in accordance
with Rule 144A) and (ii) the Transferee satisfies the criteria in the category
marked below.

             ___  Corporation, etc. The Transferee is a corporation (other than
                  a bank, savings and loan association or similar institution),
                  Massachusetts or similar business trust, partnership, or any
                  organization described in Section 501(c)(3) of the Internal
                  Revenue Code of 1986.

             ___  Bank. The Transferee (a) is a national bank or banking
                  institution organized under the laws of any State, territory
                  or the District of Columbia, the business of which is
                  substantially confined to banking and is supervised by the
                  State or territorial banking commission or similar official or
                  is a foreign bank or equivalent institution, and (b) has an
                  audited net worth of at least $25,000,000 as demonstrated in
                  its latest annual financial statements, a copy of which is
                  attached hereto.

             ___  Savings and Loan. The Transferee (a) is a savings and loan
                  association, building and loan association, cooperative bank,
                  homestead association or similar institution, which is
                  supervised and examined by a State or Federal authority having
                  supervision over any such institutions or is a foreign savings
                  and loan association or equivalent institution and (b) has an
                  audited net worth of at least $25,000,000 as demonstrated in
                  its latest annual financial statements, a copy of which is
                  attached hereto.

--------

1            Transferee must own and/or invest on a discretionary basis at least
             $100,000,000 in securities unless Transferee is a dealer, and, in
             that case, Transferee must own and/or invest on a discretionary
             basis at least $10,000,000 in securities.

                                      B-1-5

<PAGE>

             ___  Broker-dealer. The Transferee is a dealer registered pursuant
                  to Section 15 of the Securities Exchange Act of 1934.

             ___  Insurance Company. The Transferee is an insurance company
                  whose primary and predominant business activity is the writing
                  of insurance or the reinsuring of risks underwritten by
                  insurance companies and which is subject to supervision by the
                  insurance commissioner or a similar official or agency of a
                  State, territory or the District of Columbia.

             ___  State or Local Plan. The Transferee is a plan established and
                  maintained by a State, its political subdivisions, or any
                  agency or instrumentality of the State or its political
                  subdivisions, for the benefit of its employees.

             ___  ERISA Plan. The Transferee is an employee benefit plan within
                  the meaning of Title I of the Employee Retirement Income
                  Security Act of 1974.

             ___  Investment Advisor The Transferee is an investment advisor
                  registered under the Investment Advisers Act of 1940.

                  3. The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Transferee, (ii) securities
that are part of an unsold allotment to or subscription by the Transferee, if
the Transferee is a dealer, (iii) securities issued or guaranteed by the U.S. or
any instrumentality thereof, (iv) bank deposit notes and certificates of
deposit, (v) loan participations, (vi) repurchase agreements, (vii) securities
owned but subject to a repurchase agreement and (viii) currency, interest rate
and commodity swaps.

                  4. For purposes of determining the aggregate amount of
securities owned and/or invested on a discretionary basis by the Transferee, the
Transferee used the cost of such securities to the Transferee and did not
include any of the securities referred to in the preceding paragraph. Further,
in determining such aggregate amount, the Transferee may have included
securities owned by subsidiaries of the Transferee, but only if such
subsidiaries are consolidated with the Transferee in its financial statements
prepared in accordance with generally accepted accounting principles and if the
investments of such subsidiaries are managed under the Transferee's direction.
However, such securities were not included if the Transferee is a
majority-owned, consolidated subsidiary of another enterprise and the Transferee
is not itself a reporting company under the Securities Exchange Act of 1934.

                  5. The Transferee acknowledges that it is familiar with Rule
144A and understands that the Transferor and other parties related to the
Certificates are relying and will continue to rely on the statements made herein
because one or more sales to the Transferee may be in reliance on Rule 144A.

             ___  ___               Will the Transferee be purchasing the
             Yes  No                Certificates only for the Transferee's own
                                    account?

                                      B-1-6

<PAGE>

                  6. If the answer to the foregoing question is "no", the
Transferee agrees that, in connection with any purchase of securities sold to
the Transferee for the account of a third party (including any separate account)
in reliance on Rule 144A, the Transferee will only purchase for the account of a
third party that at the time is a "qualified institutional buyer" within the
meaning of Rule 144A. In addition, the Transferee agrees that the Transferee
will not purchase securities for a third party unless the Transferee has
obtained a current representation letter from such third party or taken other
appropriate steps contemplated by Rule 144A to conclude that such third party
independently meets the definition of "qualified institutional buyer" set forth
in Rule 144A.

                  7. The Transferee will notify each of the parties to which
this certification is made of any changes in the information and conclusions
herein. Until such notice is given, the Transferee's purchase of the
Certificates will constitute a reaffirmation of this certification as of the
date of such purchase. In addition, if the Transferee is a bank or savings and
loan as provided above, the Transferee agrees that it will furnish to such
parties updated annual financial statements promptly after they become
available.

Dated:

                                        ___________________________________
                                        Print Name of Transferee

                                        By:________________________________
                                        Name:
                                        Title:

                                      B-1-7

<PAGE>

                                                          ANNEX 2 TO EXHIBIT B-1
                                                          ----------------------

            QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
            --------------------------------------------------------

           [For Transferees That Are Registered Investment Companies]

                  The undersigned hereby certifies as follows to [name of
Transferor] (the "Transferor") and Bank One National Association, as Trustee,
with respect to the asset backed pass-through certificates (the "Certificates")
described in the Transferee Certificate to which this certification relates and
to which this certification is an Annex:

                  1. As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the entity purchasing the
Certificates (the "Transferee") or, if the Transferee is a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act of 1933 ("Rule 144A") because the Transferee is part of a Family of
Investment Companies (as defined below), is such an officer of the investment
adviser (the "Adviser").

                  2. In connection with purchases by the Transferee, the
Transferee is a "qualified institutional buyer" as defined in Rule 144A because
(i) the Transferee is an investment company registered under the Investment
Company Act of 1940, and (ii) as marked below, the Transferee alone, or the
Transferee's Family of Investment Companies, owned at least $100,000,000 in
securities (other than the excluded securities referred to below) as of the end
of the Transferee's most recent fiscal year. For purposes of determining the
amount of securities owned by the Transferee or the Transferee's Family of
Investment Companies, the cost of such securities was used.

             ___  The Transferee owned $________________________ in securities
                  (other than the excluded securities referred to below) as of
                  the end of the Transferee's most recent fiscal year (such
                  amount being calculated in accordance with Rule 144A).

             ___  The Transferee is part of a Family of Investment Companies
                  which owned in the aggregate $_______________ in securities
                  (other than the excluded securities referred to below) as of
                  the end of the Transferee's most recent fiscal year (such
                  amount being calculated in accordance with Rule 144A).

                  3. The term "Family of Investment Companies" as used herein
means two or more registered investment companies (or series thereof) that have
the same investment adviser or investment advisers that are affiliated (by
virtue of being majority owned subsidiaries of the same parent or because one
investment adviser is a majority owned subsidiary of the other).

                  4. The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Transferee or are part of the
Transferee's Family of Investment Companies, (ii) securities issued or
guaranteed by the U.S. or any instrumentality thereof, (iii) bank deposit notes
and certificates of deposit, (iv) loan participations, (v) repurchase
agreements, (vi) securities owned but subject to a repurchase agreement and
(vii) currency, interest rate and commodity swaps.

                                      B-1-8

<PAGE>

                  5. The Transferee is familiar with Rule 144A and understands
that the parties to which this certification is being made are relying and will
continue to rely on the statements made herein because one or more sales to the
Transferee will be in reliance on Rule 144A. In addition, the Transferee will
only purchase for the Transferee's own account.

                  6. The undersigned will notify the parties to which this
certification is made of any changes in the information and conclusions herein.
Until such notice, the Transferee's purchase of the Certificates will constitute
a reaffirmation of this certification by the undersigned as of the date of such
purchase.

Dated:

                                        ________________________________________
                                        Print Name of Transferee or Advisor

                                        By:_____________________________________
                                        Name:
                                        Title:

                                        IF AN ADVISER:

                                        ________________________________________
                                        Print Name of Transferee

                                      B-1-9

<PAGE>

                    FORM OF TRANSFEREE REPRESENTATION LETTER

                  The undersigned hereby certifies on behalf of the purchaser
named below (the "Purchaser") as follows:

                       1. I am an executive officer of the Purchaser.

                       2. The Purchaser is a "qualified institutional buyer", as
             defined in Rule 144A, ("Rule 144A") under the Securities Act of
             1933, as amended.

                       3. As of the date specified below (which is not earlier
             than the last day of the Purchaser's most recent fiscal year), the
             amount of "securities", computed for purposes of Rule 144A, owned
             and invested on a discretionary basis by the Purchaser was in
             excess of $100,000,000.

Name of Purchaser_______________________________________________________________

By: (Signature)_________________________________________________________________

Name of Signatory_______________________________________________________________

Title___________________________________________________________________________

Date of this certificate________________________________________________________

Date of information provided in paragraph 3_____________________________________

                                     B-1-10

<PAGE>

                                   EXHIBIT B-2
                                   -----------

                    FORM OF TRANSFEROR REPRESENTATION LETTER

                                                 ____________, 20__

Bank One National Association
1 Bank One Plaza
Mail Suite IL1-0126
Chicago, Illinois 60670

                  Re:  ACE Securities Corp. Home Equity Loan Trust,
                       Series 2002-HE3 Asset Backed Pass-Through Certificates,
                       Class CE, Class P and Class R Certificates
                       -------------------------------------------------------

Ladies and Gentlemen:

                  In connection with the transfer by ________________ (the
"Transferor") to __________________________ (the "Transferee") of the captioned
mortgage pass-through certificates (the "Certificates"), the Transferor hereby
certifies as follows:

                  Neither the Seller nor anyone acting on its behalf has (a)
offered, pledged, sold, disposed of or otherwise transferred any Certificate,
any interest in any Certificate or any other similar security to any person in
any manner, (b) has solicited any offer to buy or to accept a pledge,
disposition or other transfer of any Certificate, any interest in any
Certificate or any other similar security from any person in any manner, (c) has
otherwise approached or negotiated with respect to any Certificate, any interest
in any Certificate or any other similar security with any person in any manner,
(d) has made any general solicitation by means of general advertising or in any
other manner, or (e) has taken any other action, that (as to any of (a) through
(e) above) would constitute a distribution of the Certificates under the
Securities Act of 1933 (the "Act'), that would render the disposition of any
Certificate a violation of Section 5 of the Act or any state securities law, or
that would require registration or qualification pursuant thereto. The Seller
will not act, in any manner set forth in the foregoing sentence with respect to
any Certificate. The Seller has not and will not sell or otherwise transfer any
of the Certificates, except in compliance with the provisions of the Pooling and
Servicing Agreement.

                                                Very truly yours,

                                                ________________________________
                                                (Transferor)

                                                By:_____________________________
                                                Name:
                                                Title:

                                      B-2-1

<PAGE>

                            FORM OF TRANSFEREE LETTER

                                            _______________, 20__

Bank One National Association
1 Bank One Plaza
Mail Suite IL1-0126
Chicago, Illinois 60670

                  Re:  ACE Securities Corp. Home Equity Loan Trust,
                       Series 2002-HE3 Asset Backed Pass-Through Certificates,
                       Class CE, Class P and Class R Certificates
                       -------------------------------------------------------

Ladies and Gentlemen:

                  In connection with the transfer by ______________________ (the
"Transferor") to __________________________ (the "Transferee") of the captioned
mortgage pass-through certificates (the "Certificates"), the Transferee hereby
certifies as follows:

                  1. The Transferee understands that (a) the Certificates have
             not been and will not be registered or qualified under the
             Securities Act of 1933, as amended (the "Act") or any state
             securities law, (b) the Depositor is not required to so register or
             qualify the Certificates, (c) the Certificates may be resold only
             if registered and qualified pursuant to the provisions of the Act
             or any state securities law, or if an exemption from such
             registration and qualification is available, (d) the Pooling and
             Servicing Agreement contains restrictions regarding the transfer of
             the Certificates and (e) the Certificates will bear a legend to the
             foregoing effect.

                  2. The Transferee is acquiring the Certificates for its own
             account for investment only and not with a view to or for sale in
             connection with any distribution thereof in any manner that would
             violate the Act or any applicable state securities laws.

                  3. The Transferee is (a) a substantial, sophisticated
             institutional investor having such knowledge and experience in
             financial and business matters, and, in particular, in such matters
             related to securities similar to the Certificates, such that it is
             capable of evaluating the merits and risks of investment in the
             Certificates, (b) able to bear the economic risks of such an
             investment and (c) an "accredited investor" within the meaning of
             Rule 501(a) promulgated pursuant to the Act.

                  4. The Transferee has been furnished with, and has had an
             opportunity to review (a) a copy of the Pooling and Servicing
             Agreement and (b) such other information concerning the
             Certificates, the Mortgage Loans and the Depositor as has been
             requested by the Transferee from the Depositor or the Transferor
             and is relevant to the Transferee's

                                      B-2-2

<PAGE>

             decision to purchase the Certificates. The Transferee has had any
             questions arising from such review answered by the Depositor or the
             Transferor to the satisfaction of the Transferee.

                  5. The Transferee has not and will not nor has it authorized
             or will it authorize any person to (a) offer, pledge, sell, dispose
             of or otherwise transfer any Certificate, any interest in any
             Certificate or any other similar security to any person in any
             manner, (b) solicit any offer to buy or to accept a pledge,
             disposition of other transfer of any Certificate, any interest in
             any Certificate or any other similar security from any person in
             any manner, (c) otherwise approach or negotiate with respect to any
             Certificate, any interest in any Certificate or any other similar
             security with any person in any manner, (d) make any general
             solicitation by means of general advertising or in any other manner
             or (e) take any other action, that (as to any of (a) through (e)
             above) would constitute a distribution of any Certificate under the
             Act, that would render the disposition of any Certificate a
             violation of Section 5 of the 1933 Act or any state securities law,
             or that would require registration or qualification pursuant
             thereto. The Transferee will not sell or otherwise transfer any of
             the Certificates, except in compliance with the provisions of the
             Pooling and Servicing Agreement.

                  6. The Transferee: (a) is not an employee benefit or other
             plan subject to the prohibited transaction provisions of the
             Employee Retirement Income Security Act of 1974, as amended
             ("ERISA"), or Section 4975 of the Internal Revenue Code of 1986, as
             amended ("Plan"), or any other person (including an investment
             manager, a named fiduciary or a trustee of any Plan) acting,
             directly or indirectly, on behalf of or purchasing any Certificate
             with "plan assets" of any Plan within the meaning of the Department
             of Labor ("DOL") regulation at 29 C.F.R. ss.2510.3-101 or (b) has
             provided the Trustee, the Depositor, the Master Servicer and the
             Securities Administrator with an opinion of counsel acceptable to
             and in form and substance satisfactory to such parties to the
             effect that the purchase of Certificates is permissible under
             applicable law, will not constitute or result in any non-exempt
             prohibited transaction under ERISA or Section 4975 of the Code and
             will not subject the Trustee, the Depositor, the Master Servicer or
             the Securities Administrator to any obligation or liability
             (including obligations or liabilities under ERISA or Section 4975
             of the Code) in addition to those undertaken in the Pooling and
             Servicing Agreement.

             In addition, the Transferee hereby certifies, represents and
warrants to, and covenants with, the Depositor, the Trustee, the Master Servicer
and the Securities Administrator that the Transferee will not transfer such
Certificates to any Plan or person unless such Plan or person meets the
requirements set forth in either 6(a) or (b) above.

                                                Very truly yours,

                                                By:_____________________________
                                                Name:
                                                Title:

                                      B-2-3

<PAGE>

                                   EXHIBIT B-3
                                   -----------

                        TRANSFER AFFIDAVIT AND AGREEMENT

STATE OF NEW YORK       )
                        ss.:
COUNTY OF NEW YORK      )

             ___________________________ being duly sworn, deposes, represents
and warrants as follows:

             1.   I am a _____________________ of
                  _______________________________ (the "Owner") a corporation
                  duly organized and existing under the laws of
                  _________________________, the record owner of ACE Securities
                  Corp. Home Equity Loan Trust, Series 2002-HE3, Asset Backed
                  Pass-Through Certificates, Series 2002-HE3, Class R
                  Certificates (the "Class R Certificates"), on behalf of whom I
                  make this affidavit and agreement. Capitalized terms used but
                  not defined herein have the respective meanings assigned
                  thereto in the Pooling and Servicing Agreement pursuant to
                  which the Class R Certificates were issued.

             2.   The Owner (i) is and will be a "Permitted Transferee" as of
                  ____________________. ____ and (ii) is acquiring the Class R
                  Certificates for its own account or for the account of another
                  Owner from which it has received an affidavit in substantially
                  the same form as this affidavit. A "Permitted Transferee" is
                  any person other than a "disqualified organization" or a
                  possession of the United States. For this purpose, a
                  "disqualified organization" means the United States, any state
                  or political subdivision thereof, any agency or
                  instrumentality of any of the foregoing (other than an
                  instrumentality all of the activities of which are subject to
                  tax and, except for the Federal Home Loan Mortgage
                  Corporation, a majority of whose board of directors is not
                  selected by any such governmental entity) or any foreign
                  government, international organization or any agency or
                  instrumentality of such foreign government or organization,
                  any real electric or telephone cooperative, or any
                  organization (other than certain farmers' cooperatives) that
                  is generally exempt from federal income tax unless such
                  organization is subject to the tax on unrelated business
                  taxable income.

             3.   The Owner is aware (i) of the tax that would be imposed on
                  transfers of the Class R Certificates to disqualified
                  organizations under the Internal Revenue Code of 1986 that
                  applies to all transfers of the Class R Certificates after
                  March 31, 1988; (ii) that such tax would be on the transferor
                  or, if such transfer is through an agent (which person
                  includes a broker, nominee or middleman) for a non-Permitted
                  Transferee, on the agent; (iii) that the person otherwise
                  liable for the tax shall be relieved of liability

                                      B-3-1

<PAGE>

                  for the tax if the transferee furnishes to such person an
                  affidavit that the transferee is a Permitted Transferee and,
                  at the time of transfer, such person does not have actual
                  knowledge that the affidavit is false; and (iv) that each of
                  the Class R Certificates may be a "noneconomic residual
                  interest" within the meaning of proposed Treasury regulations
                  promulgated under the Code and that the transferor of a
                  "noneconomic residual interest" will remain liable for any
                  taxes due with respect to the income on such residual
                  interest, unless no significant purpose of the transfer is to
                  impede the assessment or collection of tax.

             4.   The Owner is aware of the tax imposed on a "pass-through
                  entity" holding the Class R Certificates if, at any time
                  during the taxable year of the pass-through entity, a
                  non-Permitted Transferee is the record holder of an interest
                  in such entity. (For this purpose, a "pass-through entity"
                  includes a regulated investment company, a real estate
                  investment trust or common trust fund, a partnership, trust or
                  estate, and certain cooperatives.)

             5.   The Owner is aware that the Trustee will not register the
                  transfer of any Class R Certificate unless the transferee, or
                  the transferee's agent, delivers to the Trustee, among other
                  things, an affidavit in substantially the same form as this
                  affidavit. The Owner expressly agrees that it will not
                  consummate any such transfer if it knows or believes that any
                  of the representations contained in such affidavit and
                  agreement are false.

             6.   The Owner consents to any additional restrictions or
                  arrangements that shall be deemed necessary upon advice of
                  counsel to constitute a reasonable arrangement to ensure that
                  the Class R Certificates will only be owned, directly or
                  indirectly, by an Owner that is a Permitted Transferee.

             7.   The Owner's taxpayer identification number is
                  ________________.

             8.   The Owner has reviewed the restrictions set forth on the face
                  of the Class R Certificates and the provisions of Section
                  5.02(d) of the Pooling and Servicing Agreement under which the
                  Class R Certificates were issued (in particular, clauses
                  (iii)(A) and (iii)(B) of Section 5.02(d) which authorize the
                  Trustee to deliver payments to a person other than the Owner
                  and negotiate a mandatory sale by the Trustee in the event
                  that the Owner holds such Certificate in violation of Section
                  5.02(d)); and that the Owner expressly agrees to be bound by
                  and to comply with such restrictions and provisions.

             9.   The Owner is not acquiring and will not transfer the Class R
                  Certificates in order to impede the assessment or collection
                  of any tax.

             10.  The Owner anticipates that it will, so long as it holds the
                  Class R Certificates, have sufficient assets to pay any taxes
                  owed by the holder of such Class R Certificates, and hereby
                  represents to and for the benefit of the person from whom it
                  acquired the Class R Certificates that the Owner intends to
                  pay taxes associated with holding such

                                      B-3-2

<PAGE>

                  Class R Certificates as they become due, fully understanding
                  that it may incur tax liabilities in excess of any cash flows
                  generated by the Class R Certificates.

             11.  The Owner has no present knowledge that it may become
                  insolvent or subject to a bankruptcy proceeding for so long as
                  it holds the Class R Certificates.

             12.  The Owner has no present knowledge or expectation that it will
                  be unable to pay any United States taxes owed by it so long as
                  any of the Certificates remain outstanding.

             13.  The Owner is not acquiring the Class R Certificates with the
                  intent to transfer the Class R Certificates to any person or
                  entity that will not have sufficient assets to pay any taxes
                  owed by the holder of such Class R Certificates, or that may
                  become insolvent or subject to a bankruptcy proceeding, for so
                  long as the Class R Certificates remain outstanding.

             14.  The Owner will, in connection with any transfer that it makes
                  of the Class R Certificates, obtain from its transferee the
                  representations required by Section 5.02(d) of the Pooling and
                  Servicing Agreement under which the Class R Certificate were
                  issued and will not consummate any such transfer if it knows,
                  or knows facts that should lead it to believe, that any such
                  representations are false.

             15.  The Owner will, in connection with any transfer that it makes
                  of the Class R Certificates, deliver to the Trustee an
                  affidavit, which represents and warrants that it is not
                  transferring the Class R Certificates to impede the assessment
                  or collection of any tax and that it has no actual knowledge
                  that the proposed transferee: (i) has insufficient assets to
                  pay any taxes owed by such transferee as holder of the Class R
                  Certificates; (ii) may become insolvent or subject to a
                  bankruptcy proceeding for so long as the Class R Certificates
                  remains outstanding; and (iii) is not a "Permitted
                  Transferee".

             16.  The Owner is a citizen or resident of the United States, a
                  corporation, partnership or other entity created or organized
                  in, or under the laws of, the United States or any political
                  subdivision thereof, or an estate or trust whose income from
                  sources without the United States may be included in gross
                  income for United States federal income tax purposes
                  regardless of its connection with the conduct of a trade or
                  business within the United States.

             17.  The Owner of the Class R Certificate, hereby agrees that in
                  the event that the Trust Fund created by the Pooling and
                  Servicing Agreement is terminated pursuant to Section 9.01
                  thereof, the undersigned shall assign and transfer to the
                  Holders of the Class CE and the Class P Certificates any
                  amounts in excess of par received in connection with such
                  termination. Accordingly, in the event of such termination,
                  the Trustee is hereby authorized to withhold any such amounts
                  in excess of par and to pay such amounts directly to the
                  Holders of the Class CE and the Class P Certificates. This
                  agreement shall bind and be enforceable against any successor,
                  transferee or assigned of the undersigned in the Class R
                  Certificate. In connection

                                      B-3-3

<PAGE>

                  with any transfer of the Class R Certificate, the Owner shall
                  obtain an agreement substantially similar to this clause from
                  any subsequent owner.

                                      B-3-4

<PAGE>

                  IN WITNESS WHEREOF, the Owner has caused this instrument to be
executed on its behalf, pursuant to the authority of its Board of Directors, by
its [Vice] President, attested by its [Assistant] Secretary, this ____ day of
_________________, ____.

                                                [OWNER]

                                                By:_____________________________
                                                Name:
                                                Title:    [Vice] President

ATTEST:

By:_________________________________
Name:
Title:    [Assistant] Secretary

                  Personally appeared before me the above-named
__________________, known or proved to me to be the same person who executed the
foregoing instrument and to be a [Vice] President of the Owner, and acknowledged
to me that [he/she] executed the same as [his/her] free act and deed and the
free act and deed of the Owner.

                  Subscribed and sworn before me this ______________ day of
__________, ____.

                                                ________________________________
                                                          Notary Public

                                                County of ______________________
                                                State of _______________________

                                                My Commission expires:

                                      B-3-5

<PAGE>

                          FORM OF TRANSFEROR AFFIDAVIT

STATE OF NEW YORK       )
                        : ss.:
COUNTY OF NEW YORK      )

                  _________________________, being duly sworn, deposes,
represents and warrants as follows:

                  1. I am a ____________________ of _________________________
(the "Owner"), a corporation duly organized and existing under the laws of
_____________, on behalf of whole I make this affidavit.

                  2. The Owner is not transferring the Class R Certificates (the
"Residual Certificates") to impede the assessment or collection of any tax.

                  3. The Owner has no actual knowledge that the Person that is
the proposed transferee (the "Purchaser") of the Residual Certificates: (i) has
insufficient assets to pay any taxes owed by such proposed transferee as holder
of the Residual Certificates; (ii) may become insolvent or subject to a
bankruptcy proceeding for so long as the Residual Certificates remain
outstanding and (iii) is not a Permitted Transferee.

                  4. The Owner understands that the Purchaser has delivered to
the Trustee or a transfer affidavit and agreement in the form attached to the
Pooling and Servicing Agreement as Exhibit B-2. The Owner does not know or
believe that any representation contained therein is false.

                  5. At the time of transfer, the Owner has conducted a
reasonable investigation of the financial condition of the Purchaser as
contemplated by Treasury Regulations Section 1.860E-1(c)(4)(i) and, as a result
of that investigation, the Owner has determined that the Purchaser has
historically paid its debts as they became due and has found no significant
evidence to indicate that the Purchaser will not continue to pay its debts as
they become due in the future. The Owner understands that the transfer of a
Residual Certificate may not be respected for United States income tax purposes
(and the Owner may continue to be liable for United States income taxes
associated therewith) unless the Owner has conducted such an investigation.

                  6. Capitalized terms not otherwise defined herein shall have
the meanings ascribed to them in the Pooling and Servicing Agreement.

                                      B-3-6

<PAGE>

                  IN WITNESS WHEREOF, the Owner has caused this instrument to be
executed on its behalf, pursuant to the authority of its Board of Directors, by
its [Vice] President, attested by its [Assistant] Secretary, this ____ day of
________________, ____.

                                                [OWNER]

                                                By:_____________________________
                                                Name:
                                                Title:    [Vice] President

ATTEST:

By:_________________________________
Name:
Title:    [Assistant] Secretary

                  Personally appeared before me the above-named
__________________, known or proved to me to be the same person who executed the
foregoing instrument and to be a [Vice] President of the Owner, and acknowledged
to me that [he/she] executed the same as [his/her] free act and deed and the
free act and deed of the Owner.

                  Subscribed and sworn before me this ______________ day of
__________, ____.

                                                ________________________________
                                                          Notary Public

                                                County of ______________________
                                                State of _______________________

                                                My Commission expires:

<PAGE>

                                    EXHIBIT C

                      FORM OF MASTER SERVICER CERTIFICATION

             Re:  ACE Securities Corp. Home Equity Loan Trust, Series 2002-HE2
                  (the "Trust")

I, [identify the certifying individual], a [title] of Wells Fargo Bank
Minnesota, National Association, as Master Servicer of the Trust, certify to ACE
Securities Corp. (the "Depositor"), that:

1. I have reviewed the annual report on Form 10-K for the fiscal year [___], and
all reports on Form 8-K containing distribution date reports filed in respect of
periods included in the year covered by that annual report, of the Depositor
relating to the above-referenced trust;

2. Based on my knowledge, the information in these reports, taken as a whole,
does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading as of the
last day of the period covered by that annual report;

3. Based on my knowledge, the distribution information required to be provided
to the trustee by the master servicer under the pooling and servicing agreement
is included in these reports;

4. I am responsible for reviewing the activities performed by the master
servicer under the pooling and servicing agreement and based upon the review
required under the pooling and servicing agreement, and except as disclosed in
the report, the master servicer has fulfilled its obligations under the pooling
and servicing agreement; and

5. I have disclosed to the Depositor's certified public accountants all
significant deficiencies relating to the master servicer's compliance with the
minimum master servicing standards in accordance with a review conducted in
compliance with the Uniform Single Attestation Program for Mortgage Bankers or
similar standard as set forth in the pooling and servicing agreement.

                                        Date:

                                        Wells Fargo Bank Minnesota, National
                                        Association,
                                        as Master Servicer

                                        By: _______________________________

                                        [Signature]
                                        [Title]

                                       C-1

<PAGE>

                                   Schedule 1
                                   ----------

                             MORTGAGE LOAN SCHEDULE

                             AVAILABLE UPON REQUEST

<PAGE>

                                   Schedule 2
                                   ----------

                         SCHEDULE OF PREPAYMENT CHARGES

                             AVAILABLE UPON REQUEST

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