Superior Bank FSB – ‘424B5’ on 9/28/99 re: Superior Bank FSB Afc Mortgage LN Asset BK Notes Ser 1999-3

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Prospectus   —   Rule 424(b)(5)
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Document/Exhibit                   Description                      Pages   Size 

 1: 424B5       Prospectus Supplement                                283   1.15M 

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 Prospectus Supplement, dated September 20, 1999
(To Prospectus dated August 9, 1999)

$515,000,000 (Approximate)
 AFC MORTGAGE LOAN ASSET BACKED NOTES, SERIES 1999-3

 SUPERIOR BANK FSB
 SELLER AND SERVICER

 AFC TRUST SERIES 1999-3
ISSUER

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

YOU SHOULD CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE S-11 IN THIS   
PROSPECTUS SUPPLEMENT AND PAGE 4 IN THE PROSPECTUS.                             

The notes will represent interests only in a trust consisting primarily of      
mortgage loans and will not represent ownership interests in or obligations of  
the servicer, the seller, the trustee of the trust or any of their affiliates.  

This prospectus supplement may be used to offer and sell the offered notes only 
if accompanied by the prospectus.                                               

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

THE TRUST WILL ISSUE THE FOLLOWING NOTES WHICH ARE OFFERED HEREBY:              

                   INITIAL NOTE                  NOTE INTEREST
CLASS               PRINCIPAL BALANCE                  RATE     
-----               -----------------             ------------- 
1A  . . . . . . . . . . . .   $315,000,000                  Variable(1)         
2A  . . . . . . . . . . . .   $200,000,000                  Variable(1)         

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

(1)  Calculated as described herein. The note interest rate is generally        
based on the lesser of (i) one- month LIBOR plus an applicable spread 
  rate and (ii) the applicable cap rate, subject to an available funds cap
rate.                                                                 

THE ASSETS OF THE TRUST WILL INCLUDE:                                           

o   a pool of fixed-rate mortgage loans;                                        
o   a pool of adjustable-rate mortgage loans;                                   
o   cash accounts for the purpose of purchasing additional                      
mortgage loans; and                                                     
o   credit enhancement in the form of a note insurance policy.                  

 [FGIC LOGO]

OFFERING INFORMATION:                                                           

           Price to         Underwriting         Proceeds to
         Public            Discount             Seller
          ---------------  -------------------  ------------------
Class 1A           100%               0.25%              99.75%         
Class 2A           100%               0.25%              99.75%         
          ----               -----              ------
Total          $515,000,000        $1,287,500         $513,712,500      

The underwriters listed below will offer the notes described above subject to   
certain conditions, which are discussed in the "Method of Distribution" section 
of this prospectus supplement. Delivery of the offered notes is expected to be  
on or about September 28, 1999. The proceeds to the seller from the sale of such
notes has been determined prior to deducting expenses of approximately $550,000.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES         
COMMISSION HAS APPROVED OR DISAPPROVED OF THE OFFERED NOTES OR DETERMINED THAT  
THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY       
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE ATTORNEY GENERAL OF   
THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED THE MERITS OF THIS OFFERING.
ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.                                 

MERRILL LYNCH & CO.                                            J.P. MORGAN & CO.

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IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS PROSPECTUS SUPPLEMENT AND  
THE ACCOMPANYING PROSPECTUS.                                                    

We provide information to you about the offered notes in two separate documents 
that progressively provide more detail:                                         

    o    the accompanying prospectus, which provides general information, some
of which may not apply to the offered notes; and            

    o    this prospectus supplement, which describes the specific terms of the
offered notes.                                              

If information varies between this prospectus supplement and the accompanying   
prospectus, you should rely on the information in this prospectus supplement.   

We include cross-references in this prospectus supplement and the accompanying  
prospectus to captions in these materials where you can find further related    
discussions. The following table of contents included in the accompanying       
prospectus provides the pages on which these captions are located.              

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                                           TABLE OF CONTENTS                                           

                                                                                                   PAGE
                                         PROSPECTUS SUPPLEMENT                                     ----
                                                                                                       
SUMMARY INFORMATION.................................................................................S-5
RISK FACTORS.......................................................................................S-11
THE MORTGAGE POOL..................................................................................S-19
    General Description of the Mortgage Pool.......................................................S-19
    Group 1........................................................................................S-19
    Group 2........................................................................................S-32
YIELD AND PREPAYMENT CONSIDERATIONS................................................................S-46
    Delay in Distributions.........................................................................S-46
    Prepayment Considerations and Risks............................................................S-46
    Optional Purchase of Defaulted Mortgage Loans..................................................S-48
    Effect of Prepayments and Mortgage Loan Yield on Class 1A Note Interest Rate...................S-48
    Prepayment Model for Class 1A Notes............................................................S-48
    Effect of Prepayments and Mortgage Loan Yield on Class 2A Note Interest Rate...................S-54
    Prepayment Model for Class 2A Notes............................................................S-55
    Limitation on Adjustments......................................................................S-60
THE SELLER.........................................................................................S-60
    Loan Origination History.......................................................................S-60
    Underwriting Criteria..........................................................................S-60
THE ISSUER AND THE INDENTURE.......................................................................S-71
    The Owner Trustee..............................................................................S-71
    The Indenture Trustee..........................................................................S-72
DESCRIPTION OF THE NOTES...........................................................................S-73
    Final Scheduled Payment Date...................................................................S-74
    Registration of Notes..........................................................................S-74
    Glossary of Terms..............................................................................S-78
    The Principal and Interest Accounts............................................................S-84
    The Note Distribution Accounts.................................................................S-85
    Calculation of One-Month LIBOR.................................................................S-85
    Allocation of Amount Available ................................................................S-86
    Interest Coverage Account and Reserve Account..................................................S-92
    Advances.......................................................................................S-93
    Excess Spread, Overcollateralization and Cross-Collateralization Provisions....................S-94
SALE AND SERVICING AGREEMENT.......................................................................S-95
    General........................................................................................S-95
    The Servicer...................................................................................S-96
    Termination; Purchase of Mortgage Loans........................................................S-98
    Removal and Resignation of Servicer............................................................S-99
    Sale and Assignment of the Mortgage Loans; Recordation of Assignments of Mortgages............S-100
    Amendment.....................................................................................S-101
THE NOTE INSURER AND THE NOTE INSURANCE POLICY ...................................................S-101
    Capitalization................................................................................S-102
    Note Insurance Policy.........................................................................S-103
FEDERAL INCOME TAX CONSEQUENCES...................................................................S-105
ERISA CONSIDERATIONS..............................................................................S-106
LEGAL INVESTMENT..................................................................................S-106
METHOD OF DISTRIBUTION............................................................................S-107

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EXPERTS...........................................................................................S-108
RATINGS...........................................................................................S-108
LEGAL MATTERS.....................................................................................S-109
ANNEX I.............................................................................................I-1

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 SUMMARY INFORMATION

        THE FOLLOWING SUMMARY IS A VERY BROAD OVERVIEW OF THE NOTES AND DOES NOT
CONTAIN ALL OF THE INFORMATION THAT YOU SHOULD CONSIDER IN MAKING YOUR          
INVESTMENT DECISION. TO UNDERSTAND ALL OF THE TERMS OF THE NOTES OFFERED HEREBY,
READ CAREFULLY THIS ENTIRE PROSPECTUS SUPPLEMENT AND THE ENTIRE ACCOMPANYING    
PROSPECTUS.                                                                     

Title of Series.....................AFC Mortgage Loan Asset Backed Notes,       
      Series 1999-3.

Cut-off Date........................September 1, 1999.                          

Closing Date........................On or about September 28, 1999.             

Seller and Servicer.................Superior Bank FSB, a federally chartered    
                               stock savings bank. Superior Bank FSB's
                            principal offices are located at One
                         Lincoln Centre, Oakbrook Terrace,
                              Illinois 60181 and its phone number is
        (630) 916- 4000.

Indenture Trustee...................LaSalle Bank National Association.          

Owner Trustee.......................Wilmington Trust Company.                   

Note Insurer........................Financial Guaranty Insurance Company, a     
                             New York stock insurance corporation.

THE ISSUER                                                                      

The notes will be issued by AFC Trust Series 1999-3, the issuer, a Delaware     
business trust established under an owner trust agreement between the seller and
the owner trustee. On the closing date, the trust will acquire two separate     
pools of mortgage loans from the seller. The first pool is "GROUP 1" and        
consists of fixed-rate mortgage loans. The second pool is "GROUP 2" and consists
of adjustable-rate mortgage loans.                                              

The issuer will issue two classes of notes, Class 1A and Class 2A, representing 
non-recourse obligations of the issuer secured by the trust estate.             

EQUITY CERTIFICATES                                                             

AFC Trust Certificates, Series 1999-3, will be issued under the owner trust     
agreement and will represent the beneficial ownership interest in the issuer.   
The equity certificates are not offered by this prospectus supplement.          

THE NOTES                                                                       

The Class 1A and Class 2A notes are offered hereby. The notes will have the     
characteristics shown in the first table on the cover of this prospectus        
supplement.                                                                     

The notes will initially be represented by one or more book-entry notes         
registered in the name of CEDE & Co., as nominee of the Depository Trust        
Company, in minimum denominations of $100,000 and integral multiples of $1,000  
in excess thereof.                                                              

See "Description of the Notes--Registration of the Notes" in this prospectus    
supplement and "Description of the Securities" in the prospectus.               

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DISTRIBUTIONS ON THE NOTES                                                      

The indenture trustee will make payments of interest and principal on the 25th  
of each month beginning in October 1999. However, if the 25th is not a business 
day, distributions will be made on the next business day after the 25th of the  
month. The first payment date will be October 25, 1999.                         

As described in greater detail in this prospectus supplement, distributions on  
the Class 1A notes will generally be paid from collections on the group 1       
mortgage loans and distributions on the Class 2A notes will generally be paid   
from collections on the group 2 mortgage loans.                                 

INTEREST PAYMENTS                                                               

Interest will accrue on each of the notes at the related note interest rate. The
note interest rates are adjustable and will be calculated for each payment date 
based on the lesser of (1) one-month LIBOR plus an applicable spread rate, and  
(2) a cap rate of 9.75% per annum for the Class 1A notes and a cap rate of      
15.50% per annum for the Class 2A notes, subject to an available funds cap rate.
The spread rate is 0.58% per annum for the Class 1A notes and 0.39% per annum   
for the Class 2A notes.                                                         

If on any payment date the interest paid on the notes is based on the available 
funds cap rate, the resulting shortfall, together with interest on that amount, 
will be carried forward and paid as an additional interest payment on future    
payment dates from funds available to that group after all other distributions, 
other than distributions on the equity certificates, have been made.            

See "Description of the Notes--Calculation of One-Month LIBOR"; "--Allocation of
Amount Available"; and "--Glossary of Terms" in this prospectus supplement.     

PRINCIPAL PAYMENTS                                                              

Generally, the required amount of principal distributable on each class of notes
on each payment date will be the lesser of:                                     

(1) principal actually received on the mortgage loans in the related group plus 
any excess of the note principal balance of that class over the mortgage loan   
balance of that group due to losses on those mortgage loans; and                

(2) the amount, if any, needed to pay down the note principal balance of such   
class so that the outstanding balance of the related group exceeds such note    
principal balance by the amount required by the note insurer for the related    
group. Such excess is referred to as the "REQUIRED OVERCOLLATERALIZATION        
AMOUNT."                                                                        

However, the amount of principal distributable on a note will never be greater  
than the outstanding principal balance of that note.                            

Under certain circumstances, the amount of required principal distributable to  
you may be zero. This can occur on any payment date on which the required       
overcollateralization amount for the group related to your note has been reached
or maintained.                                                                  

See "Description of the Notes-Allocation of Amount Available"; and "--Glossary  
of Terms" in this prospectus supplement.                                        

CREDIT ENHANCEMENT                                                              

Credit enhancement refers to features of the notes that are intended to reduce  
the effect on holders of the notes of losses on the mortgage loans. The credit  
enhancement consists of excess spread, cross-collateralization,                 
overcollateralization and the note insurance policy, each as described below.   

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EXCESS SPREAD                                                                   

On each payment date, the amount of interest due on the mortgage loans of each  
group will generally be greater than the amount needed to make monthly interest 
payments on the related notes and to pay certain fees for that month. The excess
interest that is collected and, with respect to group 1 only, amounts collected 
on the permanent buydown companion loans in group 1 are referred to as "EXCESS  
SPREAD". As described in greater detail in this prospectus supplement, excess   
spread from a group of mortgage loans will be used first to cover any shortfalls
in the required payments of principal on the notes related to such group, and   
then for cross-collateralization and/or overcollateralization as described      
below.                                                                          

On the closing date, the note insurer will establish for each group of mortgage 
loans a maximum dollar amount of excess spread that may be used to cover        
realized losses in principal for that group. On the date on which the aggregate 
amount of excess spread applied to cover those losses is equal to that dollar   
amount, excess spread will no longer be available to cover shortfalls in        
required principal payments, or to create overcollateralization on that group.  
That date is referred to as the "CROSS-OVER DATE" for a group.                  

See "Description of the Notes--Excess Spread, Overcollateralization and         
Cross-Collateralization Provisions"; and "-Glossary of Terms" in this prospectus
supplement.                                                                     

CROSS-COLLATERALIZATION                                                         

Cross-collateralization generally refers to the use of amounts received on one  
group of mortgage loans, after payment of required interest and principal on the
related notes, to pay shortfalls of required interest and principal on the notes
related to the other group as a result of realized losses on the mortgage loans 
related to that other group.                                                    

The excess funds for a group are from two sources: (1) excess spread that is not
needed to pay shortfalls in principal for that group and (2) excess principal   
that is not needed because principal received for that group exceeds the amount 
necessary to reach or maintain the required overcollateralization amount.       

See "Description of the Notes--Excess Spread, Overcollateralization and         
Cross-Collateralization Provisions"; and "-Glossary of Terms" in this prospectus
supplement.                                                                     

OVERCOLLATERALIZATION                                                           

Overcollateralization refers to the actual amount by which the aggregate        
principal balance due on the mortgage loans in a group exceeds the aggregate    
principal balance due on the related notes. That excess is intended to protect  
noteholders against shortfalls in required payments on the related notes.       

An initial amount of overcollateralization will be required for each group. The 
following chart indicates the amount of initial overcollateralization as of the 
closing date:                                                                   

-----------------------------------------------------------                     
Cut-off Date                               Over-                            
Mortgage Loan        Closing Date     collateralization                       
Balance and Pre-     Note Principal    (expressed as a % of                     
Funding Amount         Balance         group balance)                         
----------------     --------------    --------------------                     
Group 1:             Class 1A:                                                  
$327,272,727.27      $315,000,000            3.75%                              
----------------     --------------    --------------------                     
Group 2:             Class 2A:                                                  
$206,504,904.49      $200,000,000            3.15%                              
-----------------------------------------------------------                     

On the closing date, the note insurer will also specify the required            
overcollateralization amount for each group (which will vary throughout the life
of the notes). The required overcollateralization amount for a group is intended
to be reached by an additional payment of principal from amounts that are       
available for such group after payments of required principal and interest      

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payments on all notes and certain fees and expenses. That amount, if any, will  
be used to pay principal on the related notes on an accelerated basis in        
relation to the related mortgage loans, thereby increasing the amount of        
overcollateralization for the related group.                                    

See "Description of the Notes--Excess Spread, Overcollateralization and         
Cross-Collateralization Provisions"; and "-Glossary of Terms" in this prospectus
supplement.                                                                     

NOTE INSURANCE POLICY                                                           

Financial Guaranty Insurance Company will issue a note insurance policy. Subject
to certain limitations described in this prospectus supplement, the policy will 
irrevocably and unconditionally guarantee payment to the holders of the notes of
the required monthly payment of interest due to each noteholder (which does not 
include the payment of interest carried forward and payable to the noteholders) 
and the ultimate receipt of the note principal balance of each such note.       

If the note insurer fails to make a payment due under the note insurance policy,
you will directly bear the risk of loss.                                        

See "The Note Insurer and the Note Insurance Policy" in this prospectus         
supplement.                                                                     

PRIORITY OF PAYMENTS                                                            

In general, the indenture trustee will distribute funds available for a group   
(after payment of certain fees and expenses) on each payment date in the        
following order of priority:                                                    

first, to make the required payments of interest on the notes related to that   
group;                                                                          

second, to make the required payments of principal on the notes related to that 
group;                                                                          

third, to pay any accrued and unpaid trustee's fees related to that group;      

fourth, to make the required payments of interest and principal on the notes    
related to the other group, if funds available for that other group are         
insufficient as a result of realized losses on the mortgage loans related to    
that group;                                                                     

fifth, if the payment date is prior to the cross-over date for that group, to   
make an additional payment of principal on the notes related to that group, if  
necessary, in order to reach the required overcollateralization amount for that 
group;                                                                          

sixth, to reimburse the servicer and/or seller for certain unreimbursed expenses
or advances related to that group;                                              

seventh, to deposit into the reserve account the excess overcollateralization   
amount for that group, if any;                                                  

eighth, to make an additional payment of interest on the notes related to that  
group equal to any additional interest amount carried forward; and              

ninth, to pay the balance of any funds available to the equity                  
certificateholders.                                                             

See "Description of the Notes--Allocation of Amount Available" in this          
prospectus supplement.                                                          

THE MORTGAGE LOANS                                                              

The trust estate will consist of two groups of mortgage loans. The group 1      
mortgage loans are fixed-rate mortgage loans secured by first or second liens on
residential, multifamily, commercial or mixed-use residential and commercial    
real properties. The group 1 mortgage loans have an aggregate principal balance 
of approximately $202,789,370.29 as of September 1, 1999.                       

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For additional information regarding the fixed-rate mortgage loans, see "The    
Mortgage Pool-Group 1" in this prospectus supplement.                           

The group 2 mortgage loans are adjustable-rate mortgage loans secured by first  
liens on residential real properties. The adjustable-rate mortgage loans have an
aggregate principal balance of approximately $128,473,131.74 as of September 1, 
1999.                                                                           

For additional information regarding the adjustable-rate mortgage loans, see    
"The Mortgage Pool-Group 2" in this prospectus supplement.                      

COLLECTIONS ON THE MORTGAGE LOANS AND                                           
ADVANCES BY THE SERVICER                                                        

The servicer will collect monthly payments of principal and interest on the     
mortgage loans. Each month, the servicer will retain its servicing fee and      
amounts payable or reimbursable to it or the seller and forward the remainder of
the collections, including unscheduled payments, to the indenture trustee. For  
any month, if the servicer receives an interest payment on a mortgage loan that 
is less than the full interest payment due (or if no interest payment is        
received at all), the servicer will advance to the indenture trustee its own    
funds to cover that shortfall in interest.                                      

See "Description of the Notes--The Principal and Interest Accounts"; and        
"Advances" in this prospectus supplement and "Description of the Securities-    
Monthly Advances by Servicer in Respect of Delinquencies on the Mortgage Assets"
and "-Compensating Interest" in the prospectus.                                 

PRE-FUNDING ACCOUNTS AND SUBSEQUENT                                             
MORTGAGE LOANS                                                                  

On the closing date, the seller will pay to the issuer approximately            
$202,515,129.73 which will be held by the indenture trustee in two separate     
pre-funding accounts as follows:                                                

Group 1 Pre-Funding Account          $124,483,356.98                  

Group 2 Pre-Funding Account          $78,031,772.75                   

For a period of not more than 90 days after the closing date, the seller will be
obligated to sell and the issuer will be obligated to purchase with the funds in
each pre-funding account additional mortgage loans to be included in the related
group. Each mortgage loan purchased by the issuer during this period must meet  
the criteria set forth in the sale and servicing agreement, which are described 
in this prospectus supplement. Any amounts remaining in the pre-funding accounts
at the end of the 90-day period following the closing date will be distributed  
on the next payment date to the holders of the related notes as a payment of    
principal.                                                                      

See "The Mortgage Pool-Group 1-Conveyance of Group 1 Subsequent Mortgage Loans  
and the Group 1 Pre-Funding Account" and -- "Group 2-Conveyance of Group 2      
Subsequent Mortgage Loans and the Group 2 Pre-Funding Account" in this          
prospectus supplement.                                                          

OPTIONAL TERMINATION                                                            

When the aggregate principal balance of the mortgage loans (and properties      
acquired in respect thereof) remaining in the trust has been reduced to less    
than 5% of the sum of (1) the aggregate principal balance of the mortgage loans 
as of September 1, 1999, and (2) the aggregate amounts on deposit in the        
pre-funding accounts on the closing date, the servicer, at its option, may      
purchase all the remaining mortgage loans and properties from the trust, and    
thereby cause an early retirement of the notes.                                 

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See "The Sale and Servicing Agreement--Termination; Purchase of Mortgage Loans" 
in this prospectus supplement.                                                  

FEDERAL INCOME TAX CONSEQUENCES                                                 

Upon the issuance of the notes, counsel to the seller will deliver its opinion  
to the effect that the notes will be characterized as indebtedness and the      
issuer will not be classified as a taxable mortgage pool, an association taxable
as a corporation or a publicly traded partnership.                              

For further information regarding the federal income tax consequences of        
investing in the notes, see "Federal Income Tax Consequences" in this prospectus
supplement and "Federal Income Tax                                              
Consequences" in the prospectus.                                                

RATINGS                                                                         

When issued, the notes will receive the following ratings from Moody's Investors
Service, Inc. and Standard & Poor's Ratings Services, a Division of             
the McGraw-Hill Companies:                                                      

NOTES           MOODY'S            S&P                                
---------------  ---------------   --------------                               
Class 1A           Aaa              AAA                                 
Class 2A           Aaa              AAA                                 

The security ratings address the likelihood that you will receive all           
distributions on the underlying mortgage loans to which you are entitled. A     
security rating is not a recommendation to buy, sell or hold a security and is  
subject to change or withdrawal at any time by the assigning rating agency. The 
ratings do not address the frequency of prepayments on the mortgage loans or the
corresponding effect on yield to investors. In addition, the ratings do not     
address the likelihood of payment of any interest carried forward and payable to
the noteholders on future payment dates.                                        

See "Ratings" in this prospectus supplement.                                    

LEGAL INVESTMENT                                                                

The Class 1A notes will not constitute "mortgage related securities" for        
purposes of the Secondary Mortgage Market Enhancement Act of 1984. When issued, 
the Class 2A notes will not constitute "mortgage related securities" for        
purposes of SMMEA. However, when the group 2 pre-funding account has been       
reduced to zero, the Class 2A notes will constitute "mortgage related           
securities" for purposes of SMMEA for so long as they are rated not lower than  
the second highest rating category by one or more nationally recognized         
statistical rating organizations and, as such, will be legal investments for    
certain entities to the extent provided in SMMEA and applicable state laws. You 
should consult your legal advisors in determining whether and to what extent the
offered notes constitute legal investments for you.                             

See "Legal Investment" in this prospectus supplement and in the prospectus.     

ERISA CONSIDERATIONS                                                            

The notes may be eligible for purchase by a pension or other employee benefit   
plan subject to the Employee Retirement Income Security Act of 1974, as amended,
or Section 4975 of the Internal Revenue Code of 1986, as amended. A fiduciary of
an employee benefit plan must determine that the purchase of a note is          
consistent with its fiduciary duties under applicable law and does not result in
a nonexempt prohibited transaction under applicable law.                        

See "ERISA Considerations" in this prospectus supplement and in the prospectus. 

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RISK FACTORS

 You should consider, among other things, the following factors in
connection with the purchase of the notes.                                      

THE YIELD TO MATURITY ON YOUR NOTES WILL DEPEND ON A VARIETY OF FACTORS         
INCLUDING PREPAYMENTS                                                           

        The yield to maturity on each class of notes will depend on a variety of
factors, including:                                                             

       o       the rate and timing of principal payments on the mortgage loans
related to that class;                          

   o       the rate and timing of payments of excess spread and excess
            principal to accelerate payments of principal on such class;

o       the note interest rate for that class; and              

o       the purchase price of that class.                       

Since a majority of the mortgagors are permitted to prepay their
mortgage loans at any time, without penalty, the rate and timing of principal   
distributions on the notes are highly uncertain. Generally, when market interest
rates increase, borrowers are less likely to prepay their mortgage loans.       
Conversely, when market interest rates decrease, borrowers are more likely to   
prepay their mortgage loans. General economic conditions and homeowner mobility 
will also influence such decisions.                                             

     Refinancing programs, which may involve soliciting all or some of the
mortgagors to refinance their mortgage loans, may increase the rate of          
prepayments on the mortgage loans.                                              

Prepayments of principal may also be caused by the following:   
liquidations of defaulted mortgage loans; insurance payments on the mortgage    
loans; repurchases due to breaches of representations and warranties or         
defective documentation; optional purchase by the servicer of defaulted mortgage
loans and the optional purchase by the servicer of all the mortgage loans in    
connection with the termination of the trust.                                   

   A prepayment of a mortgage loan in a group will usually result in a
prepayment of principal on the related notes which would otherwise be           
distributed over the term of the related mortgage loan. Increased prepayments   
could result in a faster return of principal to you at a time when you may not  
be able to reinvest those funds at an interest rate as high as the note interest
rate on your class of notes. Conversely, reduced prepayments could result in a  
slower return of principal to you at a time when you may be able to reinvest    
those funds at a higher rate of interest than the note interest rate on your    
class of notes. In particular, a reduction in the rate of principal payments    
will occur when interest only vouchers are used to defer principal payments and 
interest only payments are made under the seller's periodic payment loan program
described in this prospectus supplement.                                        

       In general, if you purchase a class of notes at a price higher than its
outstanding principal balance and principal distributions on such class occur   
faster than you anticipate at the time of purchase, the yield will be lower than
you anticipate. Conversely, if you purchase a class of notes at a price lower   
than its outstanding principal balance and principal distributions on that class
occur more slowly than you anticipate at the time of purchase, the yield will be
lower than you anticipate.                                                      

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       See "Yield and Prepayment Considerations" in this prospectus supplement
and "Yield Considerations" in the prospectus.                                   

ACCELERATED PAYMENTS OF PRINCIPAL ON THE NOTES WILL AFFECT THE YIELD TO MATURITY
ON YOUR NOTES                                                                   

       Your yield to maturity will also depend on whether, and to what extent,
excess spread and excess principal are used to make additional principal        
payments to you in order to reach the required overcollateralization amount for 
your group. If the required overcollateralization amount with respect to the    
group related to your note has not been reached, excess spread and excess       
principal may be used to accelerate the return of principal to you on each      
payment date prior to the cross-over date for your group. However, excess spread
and excess principal will first be used to cover any shortfalls in the required 
payments of interest and principal on your notes and the notes related to the   
other group. By applying these amounts first to shortfalls, the amounts         
available to accelerate payment of principal in satisfaction of the required    
overcollateralization amount is reduced and the rate at which payments of       
principal would otherwise be accelerated is less than it would have been if     
excess spread and excess principal were first applied to reach the required     
overcollateralization amount. On and after the cross-over date for a group, this
acceleration of principal feature will no longer apply to the notes related to  
that group.                                                                     

       In general, if you purchase a class of notes at a price higher than its
outstanding principal balance and principal distributions on that class occur   
faster than you anticipate at the time of purchase, the yield will be lower than
you anticipate. Conversely, if you purchase a class of notes at a price lower   
than its outstanding principal balance and principal distributions on that class
occur more slowly than you anticipate at the time of purchase, the yield will be
lower than you anticipate.                                                      

       See "Yield and Prepayment Considerations" in this prospectus supplement
and "Yield Considerations" in the prospectus.                                   

THE VARIABLE NOTE INTEREST RATE ON THE NOTES MAY AFFECT YOUR YIELD TO MATURITY  

        The note interest rate applicable to your note on each payment date will
affect your yield to maturity. The note interest rates on the notes are based on
one-month LIBOR plus an applicable fixed spread rate (subject to certain caps). 
The mortgage rates on the group 1 mortgage loans are fixed. The mortgage rates  
on the group 2 mortgage loans adjust annually or semi-annually based upon       
six-month LIBOR. One-month LIBOR will fluctuate in response to economic and     
market conditions, whereas the fixed mortgage rates will remain fixed. Six-month
LIBOR will also fluctuate but may respond differently to the same economic and  
market conditions than one-month LIBOR, and there is not necessarily any        
correlation between them. One-month LIBOR may increase to a level such that the 
amount of interest collected on the mortgage loans is insufficient to pay       
interest on some or all of the offered notes at one-month LIBOR plus the        
applicable spread rate. If that occurs, the rate payable on the affected notes  
will be capped at the rate based on the amount of interest collected or advanced
on the mortgage loans for the related group less certain fees. The notes do     
contain a "carry forward" or "catch-up" feature and the amount of the shortfall 
resulting from paying interest based on the available funds cap rate will be    
paid on future payment dates, but only on a subordinated basis from any amounts 
that would otherwise be distributable on the equity certificates.               

       See "Yield and Prepayment Considerations" in this prospectus supplement
and "Yield Considerations" in the prospectus.                                   

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PRINCIPAL DISTRIBUTIONS ARE UNPREDICTABLE AND, THEREFORE, MAY BE AN             
INAPPROPRIATE INVESTMENT FOR YOU                                                

        If you require a particular amount of principal on a specific date or an
otherwise predictable stream of principal distributions, an investment in any   
class of notes may be an inappropriate investment for you. As described in      
greater detail in this prospectus supplement, the amount and rate at which      
principal distributions will be made on the notes is unpredictable. The amount  
of principal distributable to each class on a payment date may be any one of the
following: the amount of principal received on the mortgage loans from the      
related group, a lesser or greater amount based on the required                 
overcollateralization amount for such group, or zero if such required           
overcollateralization amount has been reached on such payment date. The seller  
cannot assure you as to the amount of or the rate at which principal            
distributions will be made to you.                                              

THE PAYMENT PERFORMANCE OF THE NOTES WILL BE RELATED TO THE PAYMENT PERFORMANCE 
OF THE MORTGAGE LOANS IN THE TRUST; SOME TYPES OF MORTGAGE LOANS MAY BE PRONE TO
DEFAULTS AND MAY EXPOSE YOUR NOTES TO GREATER LOSSES                            

     The excess spread, cross-collateralization, overcollateralization and
note insurance features described in this prospectus supplement are intended to 
enhance the likelihood that you will receive regular payments of interest and   
principal. However, higher than anticipated rates of delinquencies or defaults  
on the mortgage loans may result in delays in the receipt of principal by you,  
thereby affecting the yield to maturity on your notes. In the event that the    
mortgaged properties fail to provide adequate security for the mortgage loans,  
any resulting losses will be covered by funds available through the excess      
spread, cross-collateralization and overcollateralization features described    
above and by amounts paid under the note insurance policy. Any such payments    
would result in prepayments of principal that would otherwise be distributed    
over the remaining terms of the mortgage loans and thus will affect the yield to
maturity of your note as described above. The risk of delinquency, defaults or  
losses may be higher for certain mortgage loans. You should consider the        
following:                                                                      

    MULTIFAMILY, COMMERCIAL, MIXED-USE LOANS. Approximately 1.31% of the
group 1 mortgage loans (by original group 1 principal balance) are secured by   
multifamily properties. Approximately 0.68% of the group 1 mortgage loans (by   
original group 1 principal balance) are secured by commercial properties.       
Approximately 0.76% of the group 1 mortgage loans (by original group 1 principal
balance) are secured by mixed-use properties (residential and commercial).      
Multifamily loans, commercial loans and loans secured by mixed-use properties   
(residential and commercial) are generally viewed by lenders as exposing the    
lender to a greater risk of loss than mortgage loans secured by one- to         
four-family residential properties, units in planned unit developments,         
individual condominium units or manufactured homes. That is because multifamily 
lending, commercial lending and mixed-use lending typically involves larger     
loans that may result in larger losses than those on residential properties. In 
addition, repayment of multifamily, commercial and mixed-used loans is typically
dependent upon the successful operation of the related mortgaged property.      
Income from and the market value of the mortgaged property would be adversely   
affected if space in the mortgaged property could not be leased, if tenants were
unable to meet their obligations or if for any other reason rental payments     
could not be collected. Successful operation of an income-producing mortgaged   
property is dependent upon, among other factors, economic conditions generally  
and in the geographic area, operating costs and the performance of the          
management agent, if any. In some cases, that operation may be subject to       
circumstances outside the control of the borrower or lender, including the      
quality or stability of surrounding neighborhoods, the development of competing 
properties or businesses, maintenance expenses (including energy costs), rent   
control or stabilization laws and changes in the tax laws. If the cash flow from
a particular mortgaged property is reduced (for example, if leases are not      
renewed, if tenants default or if                                               

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rental rates decline), the borrower's ability to repay the loan may be impaired 
and the resale value of the particular property may decline. No assurance can be
given to you that the values of the mortgaged properties securing the           
multifamily loans, commercial loans and mixed-use loans have remained or will   
remain at the levels in effect on the dates of origination of the related loans.
For further information regarding the primary risk to holders of mortgage loans 
secured by multifamily properties, commercial properties and mixed-use          
properties, see "Legal Aspects of Mortgage Assets" in the prospectus.           

    SECOND LIENS. Approximately 15.87% of the group 1 mortgage loans (by
original group 1 principal balance) are secured by second liens on the related  
underlying mortgaged property. The primary risk to holders of mortgage loans    
secured by second liens is the possibility that funds received in connection    
with a foreclosure of the related first lien will be inadequate to satisfy fully
both the first lien and the second lien. In the event that a holder of the first
lien forecloses on a mortgaged property, the proceeds of the foreclosure or     
similar sale will be applied first to the payment of court costs and fees in    
connection with the foreclosure, second to real estate taxes, third in          
satisfaction of all principal, interest, prepayment or acceleration penalties,  
if any, and any other sums due and owing to the holder of the first lien. The   
claims of the holder of the first lien will be satisfied in full out of proceeds
of the liquidation of the mortgage loan, if such proceeds are sufficient, before
the trust as holder of the second lien receives any payments in respect of the  
mortgage loan. Consequently, the trust as holder of the second lien may receive 
substantially less than it is owed on such loan, or nothing. Even assuming that 
the mortgaged properties provide adequate security for the mortgage loans,      
substantial delays could be encountered in connection with the liquidation of   
defaulted mortgage loans and corresponding delays in the receipt of related     
proceeds by noteholders could occur. For further information regarding the      
primary risk to holders of mortgage loans secured by second liens see "Legal    
Aspects of Mortgage Assets" in the prospectus.                                  

      MANUFACTURED HOMES. Approximately 11.23% of the group 1 mortgage loans
(by original group 1 principal balance) and approximately 13.34% of the group 2 
mortgage loans (by original group 2 principal balance) are secured by a lien on 
real estate to which a manufactured home (as defined in the prospectus) has been
permanently attached. Under the laws of most states, a manufactured home that   
has been permanently attached to its site becomes subject to real estate title  
and recording laws. The seller has recorded or caused to be recorded a real     
estate mortgage or deed of trust where the related manufactured home is located 
in order to perfect a security interest in each manufactured home securing the  
manufactured home loans to be conveyed to the trust. The seller also obtains a  
manufactured housing unit (ALTA 7 or state equivalent) endorsement from each    
title insurer of a manufactured home loan stating that the insurer agrees that  
the related manufactured housing unit is included within the term "land" when   
used in the title policy. If however, the manufactured home is deemed not       
permanently attached to the real estate, under the laws of most states, it will 
be considered personal property and perfection of a security interest in such   
manufactured home is effected, depending on applicable state law, either by     
noting the security interest on the certificate of title for the manufactured   
home or by filing a financing statement under the Uniform Commercial Code with  
the office of the Secretary of State and, in some states, the office of the     
county clerk of the state where the home is located. Consequently, if a         
determination is made that the manufactured home is considered personal         
property, other parties could obtain an interest in the manufactured home which 
is prior to the security interest retained by the trust. For further information
regarding the primary risk to holders of mortgage loans secured by manufactured 
homes, see "Legal Aspects of Mortgage Assets - Manufactured Home Loans" in the  
prospectus.                                                                     

    BALLOON PAYMENTS. Because borrowers of balloon loans are required to
make a relatively large single payment upon maturity, it is possible that the   
default risk associated with balloon loans is greater than that associated with 
fully-amortizing mortgage loans. Approximately 25.26% of the group 1 mortgage   
loans (by original group 1 principal balance) are balloon loans which provide   
for equal monthly payments of principal                                         

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and interest based on a 30-year amortization schedule, and a single payment of  
the remaining principal balance of the balloon loan at the end of the 15th year 
following origination.                                                          

   In addition, approximately 22.58% of the group 1 mortgage loans (by
original group 1 principal balance) provide that the mortgagors have the option,
at any time during the term of the related mortgage loan, to use a limited      
number of payment vouchers provided to them at origination in order to defer    
payment of the principal portion of the corresponding payment. If such a voucher
is used, the mortgagor is only required to pay the interest portion due on a    
payment date. Any principal so deferred will increase the principal balance that
would otherwise be due at the maturity of such loan, creating a final payment   
that may be substantially greater than any other previous payment depending on  
how many interest only vouchers are used by the mortgagor.                      

THE YIELD TO MATURITY ON YOUR NOTES MAY BE AFFECTED BY THE GEOGRAPHIC           
CONCENTRATION OF THE MORTGAGE LOANS IN THE TRUST                                

     The yield to maturity on your notes may be affected by the geographic
concentration of the mortgaged properties securing the mortgage loans. If the   
regional economy or housing market of any region having a significant           
concentration of properties underlying the mortgage loans becomes weak, the     
mortgage loans related to properties in that region may experience high rates of
loss and delinquency, or the value of properties located in such regions may    
decline resulting in an increase in the loan-to-value ratios. Approximately     
13.17%, 12.44%, 6.45%, 6.23% and 6.20% of the group 1 mortgage loans (by        
original group 1 principal balance) are located in New York, Florida, Michigan, 
Pennsylvania and Ohio. Approximately 12.43%, 8.73%, 8.00%, 7.60%, 6.98%, 6.89%  
and 6.66% of the group 2 mortgage loans (by original group 2 principal balance) 
are located in New York, Ohio, Michigan, New Jersey, North Carolina,            
Pennsylvania and Indiana. Any deterioration of economic conditions in such      
states which adversely affects the ability of borrowers to make payments on the 
mortgage loans may increase the likelihood of losses on the mortgage loans. Such
losses, if they occur, will be covered through the credit enhancement features  
described above but may result in unanticipated rates and timing of prepayments 
that have an adverse affect on the yield to maturity of your notes. Very        
recently several regions along the eastern seaboard suffered damages due to     
hurricane Floyd. The seller has not yet determined if any of the mortgage loans 
were secured by properties in these areas or the likelihood of losses on such   
mortgage loans as a result.                                                     

THE SUBSEQUENT MORTGAGE LOANS TO BE INCLUDED IN THE TRUST ESTATE MAY DIFFER FROM
THE INITIAL MORTGAGE LOANS                                                      

      The mortgage loans transferred to the trust after the closing date may
have characteristics different from those of the mortgage loans expected to be  
in the trust on the closing date. However, each mortgage loan subsequently      
transferred to the issuer must satisfy the eligibility criteria referred to     
herein, as applicable, under "The Mortgage Pool--Group 1--Conveyance of Group 1 
Subsequent Mortgage Loans and the Group 1 Pre-Funding Account" and "--Group     
2--Conveyance of Group 2 Subsequent Mortgage Loans and the Group 2 Pre-Funding  
Account" at the time of its conveyance to the trust and be underwritten in      
accordance with the criteria set forth herein, as applicable, under "The        
Seller--Underwriting Criteria--Group 1" and "--Group 2".                        

YOU WILL RECEIVE A MANDATORY PREPAYMENT OF PRINCIPAL WHICH MAY AFFECT THE YIELD 
TO MATURITY ON YOUR NOTES                                                       

        To the extent that amounts on deposit in the related pre-funding account
have not been fully applied to the purchase of subsequent mortgage loans by the 
trust, the holders of the related notes will receive, pro                       

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rata, a prepayment of principal in an amount equal to the related pre-funded    
amount remaining in the related account. This prepayment, in general, will have 
the same effect on noteholders as prepayments on the mortgage loans. Although no
assurance can be given to you, it is anticipated by the seller that the         
principal amount of subsequent mortgage loans sold to the trust after the       
closing date will require the application of substantially all of the amounts on
deposit in the pre-funding accounts on the closing date so that there should be 
no material amount of principal prepaid to you from such pre-funding accounts.  
However, it is unlikely that the seller will be able to deliver subsequent      
mortgage loans with an aggregate principal balance identical to the original    
amounts on deposit in each pre-funding account, with the result being that some 
prepayment to you will occur on the December 27, 1999 payment date. See "Yield  
and Prepayment Considerations" in this prospectus supplement and "Yield         
Considerations" in the prospectus.                                              

POTENTIAL DELAYS IN RECEIPT OF DISTRIBUTIONS                                    

You may experience some delay in the receipt of distributions of
interest and principal on your notes since such distributions will be forwarded 
by the trustee to DTC and DTC will credit such distributions to the accounts of 
its participants which will thereafter credit them to the accounts of           
noteholders either directly or indirectly through indirect participants. See    
"Description of the Notes-Registration of Notes" in this prospectus supplement. 

LACK OF HISTORICAL DATA FOR MULTIFAMILY LOANS, COMMERCIAL LOANS, MIXED-USE LOANS
AND MANUFACTURED HOME LOANS ORIGINATED BY THE SELLER                            

    The seller's mortgage loan programs pertaining to multifamily loans,
mixed-use loans, commercial loans and manufactured home loans described in "The 
Seller-Underwriting Criteria" in this prospectus supplement have produced a     
relatively low total volume of mortgage loans. As a result, the seller does not 
have significant historical delinquency, foreclosure or loss experience with    
respect to its multifamily loan, mixed-use loan, commercial loan or manufactured
home loan programs that may provide a basis to you for purposes of estimating   
the future delinquency, foreclosure or loss experience on mortgage loans similar
to the multifamily loans, mixed-use loans, commercial loans and manufactured    
home loans included in the trust.                                               
See "The Seller-Underwriting Criteria" in this prospectus supplement.           

YOUR NOTES MAY BE EXPOSED TO GREATER LOSSES BECAUSE THE UNDERWRITING STANDARDS  
FOR A MAJORITY OF THE MORTGAGE LOANS ARE LESS STRINGENT THAN FANNIE MAE OR      
FREDDIE MAC UNDERWRITING STANDARDS                                              

   A majority of the mortgage loans have been originated using program
criteria and underwriting standards that are less stringent than the program    
criteria and underwriting standards applied by other first mortgage loan        
purchase programs such as those run by Fannie Mae or Freddie Mac. Accordingly,  
these mortgage loans may experience rates of delinquency, foreclosure and loss  
that are higher than mortgage loans originated in accordance with Fannie Mae or 
Freddie Mac guidelines. In the event that the mortgaged properties fail to      
provide adequate security for the loans, any resulting losses will be covered   
through the credit enhancement features described above, but may result in      
unanticipated rates and timing of prepayments that have an adverse affect on the
yield to maturity on your notes. In particular, because in the absence of       
shortfalls excess spread and excess principal will, prior to the cross-over date
for a group, be used to accelerate payments of principal on the related notes   
application of excess spread to cover shortfalls will reduce accelerated        
payments of principal to you. See "The Seller-Underwriting Criteria".           

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THE FAILURE OF THE CREDIT ENHANCEMENT TO COVER LOSSES ON THE TRUST ESTATE WILL  
RESULT IN LOSSES ALLOCATED TO THE NOTES                                         

    The excess spread, cross-collateralization and overcollateralization
features described above are intended to protect you against shortfalls in      
required payments of interest and principal to you. If excess spread and excess 
principal on the mortgage loans are insufficient to protect against shortfalls, 
the note insurer, subject to certain limitations described in this prospectus   
supplement, will be required to make a payment to you. If the note insurer is   
unable to meet its obligations under the note insurance policy, you could       
experience a loss on your investment. For financial and other information       
concerning the note insurer, see "The Note Insurer and The Note Insurance       
Policy" and Appendix A and Appendix B in this prospectus supplement.            

THE RATINGS ON YOUR NOTES WILL DEPEND PRIMARILY ON THE CREDITWORTHINESS OF THE  
NOTE INSURER                                                                    

      It is a condition to the issuance of the offered notes that each class
of offered notes be rated "AAA" by Standard & Poor's and Aaa by Moody's. A      
security rating is not a recommendation to buy, sell or hold securities and is  
subject to revision or withdrawal at any time. There can be no assurance to you 
that the rating assigned to any class of the notes will not be lowered or       
withdrawn by a rating agency at any time after the initial issuance. If any     
rating is revised or withdrawn, the liquidity of your notes may be adversely    
affected. In addition, the rating of the notes will depend primarily on the     
creditworthiness of the note insurer. Any reduction in the rating assigned to   
the claims-paying ability of the note insurer below the rating initially given  
to the notes would likely result in a reduction in the rating of the notes. See 
"Ratings" in this prospectus supplement and "Risk Factors" in the prospectus.   

YEAR 2000 SYSTEMS RISK COULD AFFECT THE ABILITY OF THE SERVICER TO PERFORM ITS  
DUTIES                                                                          

       As is the case with most companies using computers in their operations,
the servicer is faced with the task of completing its compliance goals in       
connection with the year 2000 issue. The year 2000 issue is the result of prior 
computer programs being written using two digits, rather than four digits, to   
define the applicable year. Any of the servicer's computer programs that have   
time-sensitive software may recognize a date using "00" as the year 1900 rather 
than the year 2000. Any such occurrence could result in major computer system   
failure or miscalculations. The servicer has completed its renovation, testing  
and implementation efforts to make its applicable servicing systems and software
year 2000 compliant. However, in the event that any of the servicer's suppliers,
customers, brokers or agents do not successfully and timely achieve year 2000   
compliance, the performance of obligations of the servicer under the sale and   
servicing agreement could be adversely affected. See "Sale and Servicing        
Agreement-The Servicer-Year 2000 Compliance" in this prospectus supplement.     

VIOLATIONS OF FEDERAL AND STATE LAWS MAY RESULT IN LOSSES ON THE MORTGAGE LOANS 

      Federal and state laws, public policy and general principles of equity
relating to the protection of consumers, unfair and deceptive practices and debt
collection practices:                                                           

    o       regulate interest rates and other charges on mortgage loans;

o       require certain disclosures to borrowers;               

o       require licensing of originators; and                   

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    o       regulate generally the origination, servicing and collection
process for the mortgage loans.                 

      Depending on the specific facts and circumstances involved, violations
may limit the ability of a trust to collect all or a part of the principal of or
interest on the mortgage loans, may entitle the borrower to a refund of amounts 
previously paid and could result in liability for damages and administrative    
enforcement against the originator or an assignee of the originator, such as the
issuer, or the initial servicer or a subsequent servicer, as the case may be. In
particular, it is possible that some mortgage loans included in a trust fund    
will be subject to the Home Ownership and Equity Protection Act of 1994. The    
Homeownership Act adds some additional provisions to Regulation Z, the          
implementing regulation of the Federal Truth-In-Lending Act. These provisions   
impose additional disclosure and other requirements on creditors with respect to
non-purchase money mortgage loans with high interest rates or high up-front fees
and charges. In general, mortgage loans within the purview of the Homeownership 
Act have annual percentage rates over 10 percentage points greater than the     
yield on Treasury securities of comparable maturity and/or fees and points which
exceed the greater of 8% of the total loan amount or $441. The $441 amount is   
adjusted annually based on changes in the Consumer Price Index for the prior    
year. The provisions of the Homeownership Act apply on a mandatory basis to all 
of these types of mortgage loans originated on or after October 1, 1995. These  
provisions can impose specific statutory liabilities upon creditors who fail to 
comply with their provisions and may affect the enforceability of the related   
loans. In addition, any assignee of the creditor, such as the issuer, would     
generally be subject to all claims and defenses that the consumer could assert  
against the creditor, including the right to rescind the mortgage loan.         
Recently, class action lawsuits under the Homeownership Act have been brought   
naming as a defendant securitization trusts such as the issuer with respect to  
the mortgage loans.                                                             

In addition, amendments to the federal bankruptcy laws have been
proposed that could result in (1) the treatment of a claim secured by a junior  
lien in a borrower's principal residence as protected only to the extent that   
the claim was secured when the security interest was made and (2) the           
disallowance of claims based on secured debt if the creditor failed to comply   
with specific provisions of the Truth in Lending Act (15 U.S.C. ss.1639). Such  
amendments could apply retroactively to secured debt incurred by the debtor     
prior to the date of effectiveness of the amendments.                           

    The seller will represent that all applicable federal and state laws
were complied with in connection with the origination of the mortgage loans. If 
there is a material and adverse breach of a representation, the seller will be  
obligated to repurchase any affected mortgage loan or to substitute a new       
mortgage loan into the related trust fund. If the seller fails to repurchase or 
substitute, the trust estate could experience losses which, to the extent not   
covered by credit support, could adversely affect the yield to maturity on the  
related notes.                                                                  
See "Legal Aspects of Mortgage Assets" in the prospectus.                       

       Some capitalized terms used in this prospectus supplement will have the
meaning assigned to them under "Description of the Notes-Glossary of Terms" or  
in the prospectus under "Glossary".                                             

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 THE MORTGAGE POOL

GENERAL DESCRIPTION OF THE MORTGAGE POOL                                        

       The notes will represent non-recourse obligations of the issuer secured
by the trust estate. The trust estate will consist of, among other things, two  
pools of mortgage loans evidenced by promissory notes secured by mortgages,     
deeds of trust or other similar security instruments creating a first or second 
lien on one- to four-family properties, units in planned unit developments,     
individual condominium units, manufactured homes, multifamily properties,       
commercial properties and mixed-use residential and commercial structures and   
all proceeds thereof due after the cut-off date, with respect to the initial    
mortgage loans, or the subsequent cut-off date with respect to the subsequent   
mortgage loans other than the Depositor's Yield as described in the prospectus. 
The two pools are referred to herein as "group 1" and "group 2", each, a "group"
and collectively, the mortgage pool. On the closing date the issuer will acquire
from the seller, pursuant to a sale and servicing agreement dated as of         
September 1, 1999 among the seller, the servicer, the issuer and the indenture  
trustee, the initial mortgage pool consisting of mortgage loans with an         
aggregate principal balance as of the cut-off date equal to approximately       
$331,262,502.03.                                                                

The issuer will pledge the initial mortgage loans and subsequent
mortgage loans to the indenture trustee, pursuant to an indenture, dated as of  
September 1, 1999, between the issuer and the indenture trustee, as collateral  
to secure payments on the notes.                                                

    Additional mortgage loans are intended to be purchased by the issuer
from the seller from time to time on or before December 23, 1999, from funds on 
deposit in the related pre-funding account. The initial mortgage loans and the  
subsequent mortgage loans, if available, will be originated or purchased by the 
seller, and sold by the seller to the issuer. The sale and servicing agreement  
will provide that the mortgage loans in the related groups, following the       
conveyance of the related subsequent mortgage loans, must conform to certain    
specified characteristics described below under "--Group 1--Conveyance of Group 
1 Subsequent Mortgage Loans and the Group 1 Pre-Funding Account" and "--Group   
2--Conveyance of Group 2 Subsequent Mortgage Loans and the Group 2 Pre-Funding  
Account". Funds on deposit in the group 1 pre-funding account will only be used 
to purchase group 1 subsequent mortgage loans and funds on deposit in the group 
2 pre-funding account will only be used to purchase group 2 subsequent mortgage 
loans. In the sole discretion of the note insurer, subsequent mortgage loans    
with characteristics varying from those described herein may be purchased by the
issuer; provided, however, that the addition of such mortgage loans will not    
materially affect the aggregate characteristics of the entire mortgage pool.    

      Prior to the issuance of the notes, mortgage loans may be removed from
the mortgage pool as a result of incomplete documentation or otherwise, if the  
seller deems such removal necessary or appropriate, and may be prepaid at any   
time. A limited number of other mortgage loans may be included in the mortgage  
pool prior to the issuance of the notes unless including such mortgage loans    
would materially alter the characteristics of the mortgage pool as described    
herein. The seller believes that the information set forth herein will be       
representative of the characteristics of the mortgage pool as it exists at the  
time the notes are issued, although the range of interest rates borne by the    
related mortgage notes and maturities and certain other characteristics of the  
mortgage loans in the mortgage pool may vary as described herein.               

GROUP 1                                                                         

The initial group 1 consists of mortgage loans with an aggregate
principal balance outstanding as of the cut-off date, after deducting all       
payments of principal received or deferred on or before such date, of           
$202,789,370.29. The group 1 initial mortgage loans consist of conventional,    
fixed-rate mortgage loans                                                       

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secured by first or second liens on one- to four-family residential properties, 
units in planned unit developments, individual condominium units, manufactured  
homes, multifamily properties, commercial properties and mixed-use residential  
and commercial structures, with original terms to maturity of up to 360 months. 
Approximately 81.17% of the group 1 initial mortgage loans, by original group 1 
principal balance, were originated and underwritten by the seller and the       
remainder of the group 1 initial mortgage loans were purchased and              
re-underwritten by the seller. In each case the underwriting was performed in   
accordance with the criteria set forth under "The Seller--Underwriting          
Criteria--Group 1" herein. The predecessor of the seller began originating and  
purchasing mortgage loans pursuant to its Fixed Rate Mortgage Program in 1985.  
The seller began originating and purchasing mortgage loans pursuant to its Fixed
Rate Mortgage Program-Multifamily and Mixed Use Properties in September 1994,   
pursuant to its Manufactured Home Loan Program in March 1997 and pursuant to its
Commercial Property Program in August 1997. See "The Seller--Loan Origination   
History" in this prospectus supplement.                                         

PAYMENTS ON THE GROUP 1 MORTGAGE LOANS                          

  Simple Interest Loans. Approximately 74.61% of the group 1 initial
mortgage loans, by original group 1 principal balance, provide for substantially
equal monthly payments (except, in the case of a balloon loan, for the final    
monthly payment) that are allocated to principal and interest according to the  
daily simple interest method. Each monthly payment with respect to substantially
all of the simple interest loans consists of an installment of interest which is
calculated according to the simple interest method on the basis of the          
outstanding principal balance of the simple interest loan multiplied by the     
stated note rate and further multiplied by a fraction, the numerator of which is
the number of days in the period elapsed since the last day interest was        
satisfied and the denominator of which is 365 days, as opposed to the customary 
method, on which 30 days of interest is owed each month irrespective of the day 
on which the payment is received. As payments are received, the amount received 
is applied first to interest accrued to the date of payment and the balance is  
applied to reduce the unpaid principal balance. Accordingly, if a mortgagor pays
a fixed monthly installment before its scheduled due date, the portion of the   
payment allocable to interest for the period since the preceding payment was    
made will be less than it would have been had the payment been made as          
scheduled, and the portion of the payment applied to reduce the unpaid principal
balance will be correspondingly greater. However, if the next succeeding payment
is made on the due date, a greater amount will be allocated to interest than    
would be the case if the previous payment had also been on the due date.        

     Conversely, if a mortgagor pays a fixed monthly installment after its
scheduled due date, the portion of the payment allocable to interest for the    
period since the preceding payment was made will be greater than it would have  
been had the payment been made as scheduled, and the remaining portion, if any, 
of the payment applied to reduce the unpaid principal balance will be           
correspondingly less. If each scheduled payment is made on or prior to its      
scheduled due date, the principal balance of the simple interest loan will      
amortize in the manner described in the preceding paragraph. However, if the    
mortgagor consistently makes scheduled payments after the scheduled due date the
simple interest loan will amortize more slowly than scheduled. Any remaining    
unpaid principal is payable on the final maturity date of the simple interest   
loan.                                                                           

       With respect to the simple interest loans, the mortgagor is required to
pay interest only to the date of prepayment in the case of principal prepayments
and curtailments.                                                               

   Periodic Payment Loans. Approximately 21.05% of the group 1 initial
mortgage loans, by original group 1 principal balance, provide for substantially
equal payments to be made every 28 day period. Each periodic payment consists of
an installment of interest which is calculated according to the customary       
method, applied on a 28/364 day basis, so that each payment is applied first to 
accrued and unpaid interest as if the payment were made on its due date,        
regardless of when the payment is actually received, and the                    

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remainder to the unpaid principal balance. Although partial prepayments of      
principal on periodic payment loans are applied on scheduled periodic payment   
dates, with no resulting reduction in interest payable for the period in which  
the partial prepayment is made, the related mortgagors are required to pay      
interest only to the date of prepayment if accompanied by a prepayment of       
principal in full.                                                              

        Loans with Payment Vouchers. Approximately 22.58% of the group 1 initial
mortgage loans, by original group 1 principal balance, are mortgage loans the   
mortgage notes of which provide that the mortgagors have the option at any time 
during the term of the related mortgage loan, to use up to 65 payment vouchers, 
in the aggregate, provided to them at origination in order to defer payment of  
the principal portion of the corresponding payment and pay only the interest    
portion due on such payment date. Any principal deferred in such a manner will  
be due in full on the maturity date of the related mortgage loan.               

   Deferred Payment Loans. Approximately 15.90% of the group 1 initial
mortgage loans, by original group 1 principal balance, are mortgage loans for   
which the mortgagor has elected, pursuant to the terms of the related mortgage  
note, to defer the first two payments due on the related payment dates          
thereunder and the principal balance conveyed to the trust fund has been reduced
by the principal amount so deferred. If the mortgagor has not prepaid the loan  
before a certain date and the maturity date is not otherwise accelerated by the 
servicer, these deferred payments will be forgiven. On the closing date and, if 
necessary, on any subsequent transfer date, the seller will deposit into the    
group 1 interest coverage account an amount to be applied by the indenture      
trustee to cover the interest that will accrue during the period of deferment on
the principal balance of a deferred payment loan as transferred to the trust    
fund. To the extent the deferred payments are not forgiven, the servicer will   
retain deferred payments collected for payment to the seller as part of the     
Depositor's Yield.                                                              

   Temporary Buydown Loans. Approximately 0.19% of the group 1 initial
mortgage loans, by original group 1 principal balance, provide that the mortgage
rate stated in the related mortgage note will be reduced by 2% during the first 
twelve month period of the loan, and reduced by 1% during the second twelve     
month period of the loan, after which such stated mortgage rate will apply.     

Permanent Buydown Loans and Permanent Buydown Companion Loans.  
Approximately 18.52% of the group 1 initial mortgage loans, by original group 1 
principal balance, are permanent buydown loans made by the seller to a borrower 
together with a companion loan for the purpose of financing a buydown of the    
interest rate on the permanent buydown loan. The permanent buydown loan and the 
permanent buydown companion loan are evidenced by separate notes. However, the  
servicer will treat both loans as a single obligation. The permanent buydown    
loan and the permanent buydown companion loan are given a single loan number and
are billed on a single statement. Both notes are secured by either a first or   
second lien on the same mortgaged property, and a default under one note will   
trigger a default under the other. For each permanent buydown loan conveyed to  
the issuer the corresponding permanent buydown companion loan will also be      
conveyed to the issuer. However, the group 1 principal balance as of the cut-off
date does not, and as of any date will not, include the outstanding balance of  
the permanent buydown companion loans included in group 1 and the               
overcollateralization amount will not take into account the permanent buydown   
companion loans. All payments received on the permanent buydown companion loans 
will be included in the excess spread for group 1 and, as credit enhancement, be
used to cover realized losses on the group 1 mortgage loans, to cover realized  
losses on the group 2 mortgage loans or, prior to the cross-over date for group 
1, to reach the required overcollateralization amount for group 1. Each         
permanent buydown companion loan provides for equal monthly payments for a term 
not to exceed 5 years.                                                          

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CHARACTERISTICS OF THE GROUP 1 MORTGAGE LOANS                   

    Each group 1 initial mortgage loan was originated on or after May 4,
1998. As of the cut-off date, none of the group 1 initial mortgage loans were   
contractually delinquent for two or more payments. Since the origination of the 
group 1 mortgage loans, two of the group 1 initial mortgage loans have been     
contractually delinquent for two consecutive payments on any occasion prior to  
the cut-off date.                                                               

       In addition, the group 1 initial mortgage loans will have the following
characteristics as of the cut-off date (expressed, where applicable, as a       
percentage of the original group 1 principal balance):                          

              None of the group 1 initial mortgage loans will have had a first
   payment date prior to June 8, 1998, and none of the group 1 initial
  mortgage loans will have a remaining term to maturity of less than
        approximately 33.98 months. The latest maturity date of any of the group
1 initial mortgage loans will be September 1, 2029.             

             Approximately 20.65% of the group 1 initial mortgage loans will
be mortgage loans the proceeds of which were used to purchase a 
      mortgaged property. The proceeds of not more than approximately 10.98%
  of the group 1 initial mortgage loans will be used to refinance an
    existing mortgage loan and not more than approximately 68.37% of the
group 1 initial mortgage loans will be cash-out loans.          

              No more than approximately 0.56% of the group 1 initial mortgage
    loans will be secured by mortgaged properties located in any one zip
code area.                                                      

            Approximately 25.26% of the group 1 initial mortgage loans are
balloon loans.                                                  

             None of the group 1 initial mortgage loans provide for negative
amortization.                                                   

               None of the group 1 initial mortgage loans will be insured by any
primary mortgage insurance policy.                              

            Approximately 15.87% of the group 1 initial mortgage loans, by
        group 1 principal balance, are secured by second liens with a first lien
        on the related underlying mortgaged property. Approximately 0.02% of the
     group 1 initial mortgage loans are second liens that have the related
     first liens included in group 1. With respect to the remainder of the
  group 1 initial mortgage loans there exists no other mortgage lien
senior to that of such group 1 initial mortgage loans.          

             Approximately 73.37% of the group 1 initial mortgage loans will
be secured by attached or detached one-family dwelling units.   
 Approximately 1.60% of the group 1 initial mortgage loans will be
     secured by units in condominiums. Approximately 11.23% of the group 1
initial mortgage loans will be secured by manufactured homes.   
 Approximately 1.40% of the group 1 initial mortgage loans will be
     secured by units in planned unit developments. Approximately 9.65% of
the group 1 initial mortgage loans will be secured by units in  
properties consisting of two- to four-family dwelling units.    
 Approximately 1.31% of the group 1 initial mortgage loans will be
     secured by multifamily properties. Approximately 0.68% of the group 1
      initial mortgage loans will be secured by commercial properties and no
        more than approximately 0.76% of the group 1 initial mortgage loans will
be secured by mixed use properties.                             

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      Based on representations of mortgagors at origination,
  approximately 16.09% of the group 1 initial mortgage loans will be
      secured by investor properties and approximately 92.64% of the group 1
        initial mortgage loans will be secured by owner-occupied properties. The
  apparent discrepancy in these percentages results from there being
  approximately 8.73% of the group 1 initial mortgage loans that are
    secured by (a) units in properties consisting of two- to four-family
   dwelling units, (b) multifamily properties and mixed use properties
        partially occupied by the mortgagor as the mortgagor's primary residence
 and partially rented out as investor property, and (c) commercial
 properties partially operated by the mortgagor as the mortgagor's
primary place of business.                                      

  Permanent Buydown Loans and Permanent Buydown Companion Loans. The
permanent buydown loans, all of which will be included in the initial group 1,  
will have an aggregate principal balance as of the cut-off date, after deducting
all payments received on or before such date, of $37,564,707.20. The aggregate  
principal balance of the corresponding permanent buydown companion loans as of  
the cut-off date, after deducting all payments received on or before such date, 
will be $3,642,480.56. At origination, no combined loan-to-value ratio of any   
permanent buydown loan and permanent buydown companion loan exceeded 102.28%.   

      As of the cut-off date, the average principal balance of the permanent
buydown loans is $82,019.01. The lowest and highest principal balances of the   
permanent buydown loans, as of the cut-off date are $11,055.83 and $498,100.00, 
respectively.                                                                   

      As of the cut-off date, the average principal balance of the permanent
buydown companion loans is $7,953.01. The lowest and highest principal balances 
of the permanent buydown companion loans, as of the cut-off date, are $451.10   
and $59,000.24, respectively.                                                   

       As of the cut-off date, the weighted average remaining term to maturity
of the permanent buydown loans will be approximately 267.48 months. As of the   
cut-off date, the weighted average remaining term to maturity of the permanent  
buydown companion loans will be approximately 58.92 months. All of the permanent
buydown companion loans had an original term to maturity of 60 months.          

TABLES                                                          

THE FOLLOWING INFORMATION SETS FORTH IN TABULAR FORMAT CERTAIN  
ADDITIONAL CHARACTERISTICS OF THE GROUP 1 INITIAL MORTGAGE LOANS, OTHER THAN THE
PERMANENT BUYDOWN COMPANION LOANS, AS OF THE CUT-OFF DATE. THE PRINCIPAL        
BALANCES OF THE GROUP 1 MORTGAGE LOANS AS SET FORTH IN THE FOLLOWING TABLES ARE 
AS REDUCED BY THE PRINCIPAL PORTION OF ANY DEFERRED PAYMENTS.                   

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     The following table sets forth the range of principal balances of the
group 1 initial mortgage loans as of the cut-off date:                          

 GROUP 1

                            Percent by
Range of Principal Balances       Principal       Principal       Number of     
as of the Cut-off Date ($)         Balance         Balance      Mortgage Loans  
---------------------------     -------------     ----------    --------------  
0.01  -   10,000.00     $    278,820.09        0.14%             30 
10,000.01  -   20,000.00        4,279,703.47        2.11             273      
20,000.01  -   30,000.00       11,047,897.90        5.45             428      
30,000.01  -   40,000.00       15,849,386.97        7.82             450      
40,000.01  -   50,000.00       19,548,153.25        9.64             431      
50,000.01  -   60,000.00       22,445,875.34       11.07             405      
60,000.01  -   70,000.00       19,136,941.25        9.44             294      
70,000.01  -   80,000.00       15,007,963.59        7.40             200      
80,000.01  -   90,000.00       11,598,563.25        5.72             136      
90,000.01  -  100,000.00       10,333,656.13        5.10             108      
100,000.01  -  110,000.00        9,108,153.28        4.49              87       
110,000.01  -  120,000.00        8,936,111.26        4.41              78       
120,000.01  -  130,000.00        5,749,561.01        2.84              46       
130,000.01  -  140,000.00        5,971,876.69        2.94              44       
140,000.01  -  150,000.00        4,950,070.21        2.44              34       
150,000.01  -  160,000.00        5,401,503.17        2.66              35       
160,000.01  -  170,000.00        4,097,325.51        2.02              25       
170,000.01  -  180,000.00        4,033,494.63        1.99              23       
180,000.01  -  190,000.00        1,110,232.90        0.55               6       
190,000.01  -  200,000.00        1,764,715.99        0.87               9       
200,000.01  -  250,000.00        9,434,976.47        4.65              42       
250,000.01  -  300,000.00        6,297,439.48        3.11              23       
300,000.01  -  350,000.00        2,984,199.00        1.47               9       
350,000.01  -  400,000.00        1,497,937.51        0.74               4       
400,000.01  -  450,000.00          434,200.00        0.21               1       
450,000.01  -  500,000.00          966,100.00        0.48               2       
500,000.01  -  550,000.00          524,511.94        0.26               1       
                       ---------------      ------           -----
Totals                        $202,789,370.29      100.00%          3,224       
                       ===============      ======           =====

       As of the cut-off date, the average principal balance is $62,899.93 for
the group 1 initial mortgage loans. The lowest and highest principal balances of
the group 1 initial mortgage loans, as of the cut-off date, are $6,000.00 and   
$524,511.94, respectively.                                                      

      The average principal balance of the group 1 initial mortgage loans at
origination was approximately $62,987.77. No group 1 initial mortgage loans had 
a principal balance at origination of less than $6,000.00 or greater than       
$525,000.00.                                                                    

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       The following table sets forth the geographic distribution of the group
1 initial mortgage loans as of the cut-off date:                                

 GROUP 1

                    Percent by
Geographic            Principal          Principal       Number of    
Distribution            Balance            Balance      Mortgage Loans  
--------------------     -------------       -----------    --------------      
Alabama                $  2,164,513.68          1.07%            44             
Arizona                   1,064,546.16          0.52             26             
Arkansas                  2,256,995.92          1.11             44             
California                4,698,301.25          2.32             76             
Colorado                  5,592,643.08          2.76            102             
Connecticut               4,197,666.57          2.07             56             
Delaware                    701,705.20          0.35             12             
District Of Columbia        512,850.00          0.25              6             
Florida                  25,236,327.57         12.44            512             
Georgia                   3,001,211.70          1.48             58             
Idaho                       289,211.72          0.14              7             
Illinois                  7,958,896.90          3.92            109             
Indiana                   8,068,278.50          3.98            156             
Iowa                        152,682.46          0.08              4             
Kansas                       56,542.83          0.03              1             
Kentucky                  1,268,955.10          0.63             21             
Louisiana                   752,265.24          0.37             11             
Maine                     1,100,950.47          0.54             12             
Maryland                  6,760,636.18          3.33             89             
Massachusetts             6,530,759.49          3.22             68             
Michigan                 13,080,132.77          6.45            221             
Minnesota                 1,116,425.68          0.55             18             
Mississippi               1,410,913.85          0.70             25             
Missouri                  2,168,359.41          1.07             51             
Montana                     431,727.33          0.21              7             
Nebraska                    577,073.34          0.28             11             
Nevada                      295,995.07          0.15              5             
New Hampshire               487,378.29          0.24              8             
New Jersey                7,790,419.16          3.84             92             
New Mexico                  830,991.72          0.41             13             
New York                 26,710,007.90         13.17            282             
North Carolina            7,418,758.37          3.66            122             
North Dakota                312,093.15          0.15              6             
Ohio                     12,576,318.58          6.20            208             
Oklahoma                  1,394,952.96          0.69             23             
Oregon                    2,586,962.89          1.28             32             
Pennsylvania             12,624,559.18          6.23            208             
Rhode Island              1,575,683.29          0.78             17             
South Carolina            7,612,638.04          3.75            145             
South Dakota                151,059.96          0.07              3             
Tennessee                 2,724,637.17          1.34             40             
Texas                     2,527,570.20          1.25             51             
Utah                      1,585,388.14          0.78             40             
Vermont                     111,521.31          0.05              2             
Virginia                  4,933,163.10          2.43             72             
Washington                4,209,818.67          2.08             64             
West Virginia             1,659,705.48          0.82             22             
Wisconsin                 1,432,048.63          0.71             21             
Wyoming                      87,126.63          0.04              1             
          ---------------        ------          -----
Totals                 $202,789,370.29        100.00%         3,224             
          ===============        ======          =====

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  The following table sets forth the original combined loan-to-value
ratios (CLTV) of the group 1 initial mortgage loans as of the cut-off date:     

 GROUP 1

                                                       Percent by    Number of
Original Combined                    Principal           Principal     Mortgage 
Loan-to-Value                       Balance             Balance        Loans
-----------------                 --------------        ----------     ---------

10.01%    -  15.00%             $     69,141.39             0.03%           2   
15.01%    -  20.00%                  323,037.84             0.16           10   
20.01%    -  25.00%                  215,776.49             0.11            8   
25.01%    -  30.00%                  347,766.11             0.17           11   
30.01%    -  35.00%                  488,587.42             0.24           14   
35.01%    -  40.00%                1,142,732.32             0.56           24   
40.01%    -  45.00%                1,016,554.24             0.50           27   
45.01%    -  50.00%                2,052,907.28             1.01           46   
50.01%    -  55.00%                3,175,505.48             1.57           56   
55.01%    -  60.00%                4,867,457.71             2.40           90   
60.01%    -  65.00%               11,269,891.89             5.56          185   
65.01%    -  70.00%               15,086,409.64             7.44          229   
70.01%    -  75.00%               22,479,533.50            11.09          351   
75.01%    -  80.00%               48,499,196.88            23.92          770   
80.01%    -  85.00%               47,888,846.74            23.61          735   
85.01%    -  90.00%               42,611,791.69            21.01          651   
90.01%    -  91.50%               1,254,233.67              0.62           15   
                             ---------------           ------        -----
Totals                          $202,789,370.29           100.00%       3,224   
                             ===============           ======        =====

At origination, no group 1 initial mortgage loans had a combined
loan-to-value ratio exceeding 91.50%. The weighted average CLTV of the group 1  
initial mortgage loans, as of the cut-off date and without considering the      
permanent buydown companion loans, was approximately 78.07%. Taking into        
consideration the permanent buydown companion loans, no group 1 initial mortgage
loans had a combined loan-to-value ratio exceeding 102.28%, at origination, and 
the weighted average combined loan-to-value ratio of the group 1 initial        
mortgage loans was approximately 79.43% as of the cut-off date.                 

       The original CLTVs shown on the table above are equal to (i) the sum of
(a) the original principal balance of the mortgage loan at the date of          
origination plus (b) the then outstanding principal balance of any related first
lien, divided by (ii) the collateral value of the related mortgaged property.   
The "collateral value" of a mortgaged property is the lesser of (x) the         
appraised value based on an appraisal made for the originator of the initial    
mortgage loans by an independent fee appraiser (or, in certain instances, by a  
licensed in-house appraiser of the seller) at the time of the origination of the
initial mortgage loan and (y) the sales price of the mortgaged property at the  
time of origination. With respect to an initial mortgage loan for which the     
proceeds were used to refinance an existing mortgage loan, the collateral value 
is the appraised value of the related mortgaged property based upon the         
appraisal obtained at the time of refinancing.                                  

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       The following table sets forth the mortgage rates borne by the mortgage
notes relating to the group 1 initial mortgage loans as of the cut-off date:    

 GROUP 1

                                            Percent by         Number of
Mortgage Rates (%)    Principal Balance     Principal Balance   Mortgage Loans  
------------------    -----------------     -----------------   --------------  
7.000  -   7.249     $    451,000.00              0.22%               4       
7.250  -   7.499       16,859,781.54              8.31              200       
7.500  -   7.749        3,711,775.33              1.83               39       
7.750  -   7.999        6,579,395.82              3.24               73       
8.000  -   8.249        2,555,657.66              1.26               32       
8.250  -   8.499        5,690,013.45              2.81               71       
8.500  -   8.749        5,210,605.64              2.57               69       
8.750  -   8.999        7,541,226.95              3.72               97       
9.000  -   9.249        5,032,869.93              2.48               76       
9.250  -   9.499        8,206,826.37              4.05              111       
9.500  -   9.749        9,053,097.29              4.46              118       
9.750  -   9.999       10,822,029.07              5.34              160       
10.000  -  10.249        7,359,890.72              3.63              134        
10.250  -  10.499        7,650,987.62              3.77              141        
10.500  -  10.749        9,281,353.17              4.58              164        
10.750  -  10.999       13,618,647.88              6.72              209        
11.000  -  11.249       10,796,805.32              5.32              184        
11.250  -  11.499        8,077,291.60              3.98              159        
11.500  -  11.749        9,153,789.05              4.51              174        
11.750  -  11.999       11,785,030.38              5.81              204        
12.000  -  12.249        7,736,893.10              3.82              146        
12.250  -  12.499        6,946,527.19              3.43              127        
12.500  -  12.749        8,936,198.19              4.41              148        
12.750  -  12.999        7,542,905.47              3.72              142        
13.000  -  13.249        2,812,931.43              1.39               48        
13.250  -  13.499        2,930,483.40              1.45               59        
13.500  -  13.749        3,287,907.28              1.62               57        
13.750  -  13.999        1,459,097.35              0.72               34        
14.000  -  14.249        1,015,283.87              0.50               25        
14.250  -  14.499          415,553.50              0.20                9        
14.500  -  14.749          111,973.79              0.06                4        
14.750  -  14.999           72,475.40              0.04                2        
15.000  -  15.249           13,997.88              0.01                1        
15.250  -  15.499           19,600.00              0.01                1        
15.750  -  15.999           29,934.03              0.01                1        
16.000  -  16.249           19,533.62              0.01                1        
              ---------------            ------            -----
Totals                $202,789,370.29            100.00%           3,224        
              ===============            =======           =====

       As of the cut-off date, the weighted average mortgage rate of the group
1 initial mortgage loans was approximately 10.408% per annum and ranged from    
7.110% to 16.150%.                                                              

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The following table sets forth the number of remaining months to
maturity of the group 1 initial mortgage loans as of the cut-off date:          

 GROUP 1

Remaining                                         Percent by         Number of  
Months to Maturity       Principal Balance    Principal Balance   Mortgage Loans
------------------       -----------------    -----------------   --------------
24.01  -   36.00       $    17,762.91              0.01%               1    
48.01  -   60.00           249,440.27              0.12                9    
60.01  -   72.00           203,928.39              0.10                4    
72.01  -   84.00           149,005.73              0.07                5    
84.01  -   96.00           233,564.12              0.12                6    
96.01  -  108.00            76,200.00              0.04                2    
108.01  -  120.00         5,782,836.95              2.85              191     
120.01  -  132.00           576,163.42              0.28               12     
132.01  -  144.00           337,836.39              0.17                8     
144.01  -  156.00           484,943.56              0.24                8     
156.01  -  168.00         1,173,307.73              0.58               17     
168.01  -  180.00        76,398,820.35             37.67            1,295     
180.01  -  192.00         1,594,835.97              0.79               21     
192.01  -  204.00           588,203.81              0.29                9     
204.01  -  216.00           603,687.18              0.30                7     
216.01  -  228.00           287,909.45              0.14                3     
228.01  -  240.00        24,929,999.02             12.29              435     
240.01  -  252.00         1,484,313.24              0.73               19     
252.01  -  264.00           102,164.33              0.05                3     
264.01  -  276.00           428,599.93              0.21                4     
276.01  -  288.00           622,198.41              0.31                5     
288.01  -  300.00        10,058,967.08              4.96              169     
300.01  -  312.00           952,533.38              0.47               13     
312.01  -  324.00           375,712.43              0.19                4     
324.01  -  336.00           638,884.26              0.32                5     
336.01  -  348.00         1,158,756.35              0.57               12     
348.01  -  360.00        71,050,988.58             35.04              937     
360.01  -  361.00         2,227,807.05              1.10               20     
                  ---------------            ------            -----
Totals                 $202,789,370.29            100.00%           3,224     
                  ================           ======            =====

       As of the cut-off date, the weighted average remaining term to maturity
of the group 1 initial mortgage loans will be approximately 258.27 months.      

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      The following table sets forth the distribution of the group 1 initial
mortgage loans by the seller's underwriting class as of the cut-off date:       

 GROUP 1

                                       Percent by        Number of
                                        Principal         Mortgage
Underwriting Class     Principal Balance        Balance           Loans         
------------------     -----------------      ----------       ----------       
AAA                    $  5,133,486.15           2.53%            68          
AA                       35,784,458.06          17.65            500          
ANIV                     23,166,742.05          11.42            308          
I                        56,648,838.39          27.93            870          
II                       23,539,377.61          11.61            414          
III                       7,283,612.29           3.59            107          
IIISE                     5,133,422.50           2.53             69          
IIB                      18,495,756.11           9.12            360          
IV                       21,613,730.39          10.66            403          
IVPI                      3,090,704.96           1.52             64          
V                         2,899,241.78           1.43             61          
             ---------------         ------          -----
Totals                 $202,789,370.29         100.00%         3,224          
             ===============         =======         =====

        The following table sets forth the property types of the group 1 initial
mortgage loans:                                                                 

 GROUP 1

                                Percent by
                                 Principal      Principal      Number of
Property Types                        Balance        Balance     Mortgage Loans 
--------------------             ---------------   ----------    -------------- 
One Family (attached/detached)   $148,790,705.44     73.37%          2,410      
Condominium                         3,242,244.57      1.60              69      
Two-to-Four Family                 19,563,395.71      9.65             212      
Planned Unit Development            2,847,658.50      1.40              47      
Manufactured Homes                 22,776,856.88     11.23             456      
Multifamily                         2,654,645.52      1.31              16      
Mixed Use                           1,536,570.21      0.76               9      
Commercial Properties               1,377,293.46      0.68               5      
                            --------------    ------           -----
Totals.......................    $202,789,370.29    100.00%          3,224      
                           ===============    ======           =====

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CONVEYANCE OF GROUP 1 SUBSEQUENT MORTGAGE LOANS AND THE GROUP 1 
PRE-FUNDING ACCOUNT                                             

      Under the sale and servicing agreement, following the initial issuance
of the notes, the seller has committed to sell, and the issuer will be obligated
to purchase from the seller, on or before December 23, 1999, subject to the     
availability thereof, additional conventional, fixed-rate residential mortgage  
loans secured by first or second liens on Single Family Properties, multifamily 
properties, commercial properties and mixed use properties which will be        
originated and underwritten or purchased and re-underwritten by the seller. In  
each case the underwriting will be performed in accordance with the criteria set
forth herein under "The Seller--Underwriting Criteria--Group 1". Group 1        
subsequent mortgage loans will be transferred to the issuer and pledged to the  
indenture trustee pursuant to subsequent transfer instruments among the seller, 
the issuer and the indenture trustee. In connection with the purchase of group 1
subsequent mortgage loans on the dates of transfer, the issuer will be required 
to pay to the seller, from amounts on deposit in the group 1 pre-funding        
account, a cash purchase price for each group 1 subsequent mortgage loan, other 
than a permanent buydown companion loan, which will be a percentage of the      
principal balance thereof (as already reduced by the principal portion of any   
deferred payments) as determined by the note insurer immediately prior to each  
subsequent transfer in accordance with the terms of the insurance agreement. The
seller will designate the close of business on the day prior to the related     
group 1 subsequent transfer date as the cut-off date with respect to the related
subsequent mortgage loans purchased on that date and, as a result, the issuer   
will not be required to pay accrued interest with respect thereto. Therefore,   
the aggregate principal balance of the related group after the closing date will
increase by an amount equal to the aggregate principal balance of the related   
group 1 subsequent mortgage loans so purchased and the amount in the related    
pre-funding account will decrease accordingly.                                  

With respect to group 1, the indenture trustee will establish a 
pre-funding account into which it will deposit upon receipt from the seller     
$124,483,356.98, to be used to purchase the group 1 subsequent mortgage loans.  
The original group 1 pre-funded amount will be reduced during the funding period
by the amount thereof used to purchase group 1 subsequent mortgage loans in     
accordance with the sale and servicing agreement. During the period from the    
closing date until the earlier of (a) the date on which the amount on deposit in
the group 1 pre-funding account is zero or (b) December 27, 1999, the group 1   
pre-funded amount will be maintained in the group 1 pre-funding account.        

Any conveyance of group 1 subsequent mortgage loans on a group 1
subsequent transfer date is subject to certain conditions including, but not    
limited to, the following:                                                      

o       each group 1 subsequent mortgage loans must satisfy the 
       representations and warranties specified in the group 1
         subsequent transfer instrument and the sale and servicing
agreement;                                      

      o       the seller will not select such subsequent mortgage loans in a
          manner that it believes is adverse to the interests of the
noteholders;                                    

       o       the seller will deliver opinions of counsel with respect to the
             validity of the conveyance of such subsequent mortgage loans;

       o       each group 1 subsequent mortgage loans may not be contractually
         delinquent for two or more consecutive payments as of the
related group 1 subsequent cut-off date;        

o       the original term to maturity of each group 1 subsequent
          mortgage loan will not be less than 60 months and will not
exceed 360 months;                              

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 o       each group 1 subsequent mortgage loan may not provide for
negative amortization;                          

       o       each group 1 subsequent mortgage loan (other than any permanent
               buydown companion loan) will have a mortgage rate not less than
6%;                                             

     o       each group 1 subsequent mortgage loan will be underwritten in
 accordance with the criteria set forth under "The
          Seller--Underwriting Criteria--Group 1" in this prospectus
supplement;                                     

        o       each group 1 subsequent mortgage loan will have been serviced by
         the servicer since origination or purchase by the seller;

  o       each group 1 subsequent mortgage loan will not have a CLTV
             (excluding any permanent buydown companion loan) greater than
92%; and                                        

       o       each group 1 subsequent mortgage loan will have a first payment
date not later than February 1, 2000.           

      In addition, following the purchase of all group 1 subsequent mortgage
loans by the issuer, the group 1 mortgage loans (including the group 1          
subsequent mortgage loans but excluding any permanent buydown companion loans)  
as of the end of the group 1 funding period will:                               

  o       have a weighted average mortgage rate of at least 10.310%;

        o       have a weighted average remaining term to stated maturity of not
  more than 290 months and not less than 195 months;

o       have a weighted average CLTV of not more than 82%;      

   o       have not in excess of 35% by aggregate principal balance of
group 1 mortgage loans that are balloon loans;  

        o       have no group 1 mortgage loan with a principal balance in excess
of $995,000;                                    

   o       not have in excess of 15% by aggregate principal balance of
              group 1 mortgage loans secured by non-owner occupied mortgaged
properties;                                     

        o       not have a concentration of mortgaged properties in a single zip
              code in excess of 2% by aggregate principal balance of group 1
mortgage loans;                                 

        o       not have in excess of 3% by aggregate principal balance of group
         1 mortgage loans secured by mortgaged properties that are
condominiums;                                   

   o       have at least 70% by aggregate principal balance of group 1
             mortgage loans secured by fee simple interests in attached or
detached Single Family Properties;              

        o       not have in excess of 5% by aggregate principal balance of group
                1 mortgage loans secured by multifamily properties and mixed use
properties;                                     

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   o       not have in excess of 13% by aggregate principal balance of
     group 1 mortgage loans secured by manufactured homes;

        o       not have in excess of 2% by aggregate principal balance of group
  1 mortgage loans secured by commercial properties;

     o       have a weighted average number of months since origination of
not over 4 months; and                          

        o       have at least 80% of such subsequent mortgage loans by aggregate
          principal balance with a first payment date on or prior to
January 1, 2000.                                

       In the sole discretion of the note insurer, group 1 subsequent mortgage
loans with characteristics varying from those set forth in this paragraph may be
purchased by the trust; provided, however, that the addition of these mortgage  
loans will not materially affect the aggregate characteristics of group 1.      

GROUP 2                                                                         

       The initial group 2 consists of the group 2 initial mortgage loans with
an aggregate principal balance outstanding as of the cut-off date, after        
deducting all payments of principal received or deferred on or before such date,
of $128,473,131.74. The group 2 initial mortgage loans consist of conventional, 
adjustable-rate mortgage loans secured by first liens on Single Family          
Properties with original terms to maturity of up to 360 months. Approximately   
58.72% of the group 2 initial mortgage loans, by original group 2 principal     
balance, were originated and underwritten by the seller, and the remainder of   
the group 2 initial mortgage loans were purchased and re-underwritten by the    
seller. In each case the underwriting was performed in accordance with the      
criteria set forth herein under "The Seller--Underwriting Criteria--Group 2".   
The seller began originating and purchasing mortgage loans pursuant to its      
Adjustable Rate First Mortgage Program in the fourth calendar quarter of 1992.  

PAYMENTS ON THE GROUP 2 MORTGAGE LOANS                          

   The group 2 initial mortgage loans have mortgage rates subject to a
semiannual adjustment after an initial six month, twenty-four month or          
thirty-six month period on the day of the month specified in the related        
mortgage note to equal the sum, rounded to the nearest 0.125%, of (1) a per     
annum rate equal to the average of interbank offered rates for six-month U.S.   
dollar-denominated deposits in the London market based on quotations of major   
banks as published in The Wall Street Journal and as most recently available as 
of the date specified in the related mortgage note, and (2) a fixed percentage  
amount specified in the related mortgage note; provided, however, that the      
mortgage rate will not increase or decrease on any adjustment date by more than 
1%, or, with respect to the initial adjustment date, not increase by more than  
3% with respect to approximately 80.33% of the group 2 initial mortgage loans   
that are subject to an adjustment after an initial twenty-four or thirty-six    
month period. All of the group 2 initial mortgage loans provide that over the   
life of the mortgage loan the mortgage rate will in no event be more than the   
fixed percentage set forth in the mortgage note. Approximately 99.14% of the    
group 2 initial mortgage loans provide that the mortgage rate may be 1% lower   
than the initial mortgage rate. Effective with the first payment due on a group 
2 initial mortgage loan after each related adjustment date, the monthly payment 
will be adjusted to an amount which will fully amortize the outstanding         
principal balance of the group 2 initial mortgage loan over its remaining term, 
and pay interest at the mortgage rate as so adjusted. 99.96% of the group 2     
initial mortgage loans were originated with a mortgage rate less than the sum of
(1) the six-month LIBOR index at the time the initial mortgage rate was         
established and (2) the gross margin, such sum rounded as described above.      

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   If the six-month LIBOR index ceases to be published or is otherwise
unavailable, the servicer will select an alternative index for mortgage loans on
comparable properties, based upon comparable information, over which it has no  
control and which is readily verifiable by mortgagors.                          

  Deferred Payment Loans. Approximately 7.05% of the group 2 initial
mortgage loans, by original group 2 principal balance, are mortgage loans for   
which the mortgagor has elected, pursuant to the terms of the related mortgage  
note, to defer the first two payments due on the related payment dates          
thereunder and the principal balance conveyed to the trust has been reduced by  
the principal amount so deferred. If the mortgagor has not prepaid the loan     
before a certain date and the maturity date is not otherwise accelerated by the 
servicer, these deferred payments will be forgiven. On the closing date and, if 
necessary, on any subsequent transfer date, the seller will deposit into the    
group 2 interest coverage account an amount to be applied by the indenture      
trustee to cover the interest that will accrue during the period of deferment on
the principal balance of the deferred payment loan as transferred to the trust  
fund. To the extent the deferred payments are not forgiven, the servicer will   
retain deferred payments collected for payment to the seller as part of the     
Depositor's Yield.                                                              

   Temporary Buydown Loans. Approximately 1.06% of the group 2 initial
mortgage loans, by original group 2 principal balance, provide that the mortgage
rate stated in the related mortgage note will be reduced by 2% during the first 
twelve month period of the loan, and reduced by 1% during the second twelve     
month period of the loan, after which the stated mortgage rate, as subject to   
adjustment, will apply.                                                         

CHARACTERISTICS OF THE MORTGAGE LOANS                           

       As of the cut-off date, none of the group 2 initial mortgage loans were
contractually delinquent for two or more consecutive payments. Since the        
origination of the group 2 initial mortgage loans, two of the group 2 initial   
mortgage loans have been contractually delinquent for two consecutive payments  
on any occasion prior to the cut-off date.                                      

      Each group 2 initial mortgage loan was originated on or after July 17,
1998, and has an initial or next adjustment date on or before September 1, 2002.

       In addition, the group 2 initial mortgage loans will have the following
characteristics as of the cut-off date (expressed, where applicable, as a       
percentage of the original group 2 principal balance):                          

              None of the group 2 initial mortgage loans will have had a first
        payment date prior to September 1, 1998, and none of the group 2 initial
  mortgage loans will have a remaining term to maturity of less than
   approximately 238.00 months. The latest maturity date of any of the
group 2 initial mortgage loans will be September 1, 2029.       

             Approximately 50.84% of the group 2 initial mortgage loans will
be mortgage loans the proceeds of which were used to purchase a 
      mortgaged property. The proceeds of approximately 8.75% of the group 2
     initial mortgage loans will be used to refinance an existing mortgage
    loan and the proceeds of approximately 40.40% of the group 2 initial
mortgage loans will be cash-out mortgage loans.                 

              No more than approximately 0.66% of the group 2 initial mortgage
    loans will be secured by mortgaged properties located in any one zip
code area.                                                      

             None of the group 2 initial mortgage loans provide for negative
amortization.                                                   

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               None of the group 2 initial mortgage loans will be insured by any
primary mortgage insurance policy.                              

             Approximately 73.79% of the group 2 initial mortgage loans will
 be secured by attached or detached one-family dwelling units (not
 including manufactured homes). Approximately 1.92% of the group 2
initial mortgage loans will be secured by units in condominiums.
 Approximately 1.05% of the group 2 initial mortgage loans will be
      secured by units in planned unit developments. Approximately 13.34% of
  the group 2 initial mortgage loans will be secured by manufactured
        homes. Approximately 9.90% of the group 2 initial mortgage loans will be
secured by units in properties consisting of two- to four-family
  dwelling units. None of the group 2 initial mortgage loans will be
     secured by multifamily properties, commercial properties or mixed use
properties.                                                     

    Based on representations of mortgagors at origination,
  approximately 12.66% of the group 2 initial mortgage loans will be
      secured by investor properties and approximately 95.26% of the group 2
        initial mortgage loans will be secured by owner-occupied properties. The
  apparent discrepancy in these percentages results from there being
  approximately 7.92% of the group 2 initial mortgage loans that are
secured by units in properties consisting of two- to four-family
     dwelling units partially occupied by the mortgagor as the mortgagor's
primary residence and partially rented out as investor property.

      TABLES. THE FOLLOWING INFORMATION SETS FORTH IN TABULAR FORMAT CERTAIN
ADDITIONAL CHARACTERISTICS OF THE GROUP 2 INITIAL MORTGAGE LOANS AS OF THE      
CUT-OFF DATE. THE PRINCIPAL BALANCES OF THE GROUP 2 MORTGAGE LOANS AS SET FORTH 
IN THE FOLLOWING TABLES ARE AS REDUCED BY THE PRINCIPAL PORTION OF ANY DEFERRED 
PAYMENTS.                                                                       

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     The following table sets forth the range of principal balances of the
group 2 initial mortgage loans as of the cut-off date:                          

 GROUP 2

                                                 Percent by        Number of
Range of Principal Balance  Principal Balance  Principal Balance  Mortgage Loans
--------------------------  -----------------  -----------------  --------------

$ 10,000.01  - $ 20,000.00  $    224,644.05           0.17%             13      
$ 20,000.01  - $ 30,000.00     1,246,479.60           0.97              48      
$ 30,000.01  - $ 40,000.00     3,933,381.10           3.06             109      
$ 40,000.01  - $ 50,000.00     6,173,298.93           4.81             137      
$ 50,000.01  - $ 60,000.00     9,032,857.21           7.03             163      
$ 60,000.01  - $ 70,000.00    11,195,776.41           8.71             171      
$ 70,000.01  - $ 80,000.00    12,859,041.89          10.01             171      
$ 80,000.01  - $ 90,000.00    10,385,003.68           8.08             122      
$ 90,000.01  - $100,000.00     7,223,367.15           5.62              76      
$100,000.01  - $110,000.00     5,895,445.93           4.59              56      
$110,000.01  - $120,000.00     7,728,409.16           6.02              67      
$120,000.01  - $130,000.00     5,013,969.46           3.90              40      
$130,000.01  - $140,000.00     6,337,796.39           4.93              47      
$140,000.01  - $150,000.00     3,760,406.80           2.93              26      
$150,000.01  - $160,000.00     3,251,047.02           2.53              21      
$160,000.01  - $170,000.00     2,476,192.23           1.93              15      
$170,000.01  - $180,000.00     2,994,123.38           2.33              17      
$180,000.01  - $190,000.00     2,051,360.99           1.60              11      
$190,000.01  - $200,000.00     1,752,040.49           1.36               9      
$200,000.01  - $250,000.00     6,777,794.13           5.28              31      
$250,000.01  - $300,000.00     6,936,022.55           5.40              25      
$300,000.01  - $350,000.00     3,829,194.46           2.98              12      
$350,000.01  - $400,000.00       731,768.18           0.57               2      
$400,000.01  - $450,000.00     2,186,000.00           1.70               5      
$450,000.01  - $500,000.00     2,912,184.28           2.27               6      
$700,000.01  - $750,000.00       720,526.27           0.56               1      
$800,000.01  - $850,000.00       845,000.00           0.66               1      
                      ---------------         ------           -----
Totals                      $128,473,131.74         100.00%          1,402      
                      ===============         ======           =====

       As of the cut-off date, the average principal balance is $91,635.61 for
the group 2 initial mortgage loans. As of the cut-off date, the lowest and      
highest principal balances of the group 2 initial mortgage loans are $12,000.00 
and $845,000.00, respectively.                                                  

      The average principal balance of the group 2 initial mortgage loans at
origination was approximately $91,704.95. No group 2 initial mortgage loan had a
principal balance at origination of less than $12,000.00 or greater than        
$845,000.00.                                                                    

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       The following table sets forth the geographic distribution of the group
2 initial mortgage loans as of the cut-off date:                                

 GROUP 2

                                                                     Number of
                                                 Percent by         Mortgage
Geographic Distribution    Principal Balance    Principal Balance       Loans   
-----------------------    -----------------    -----------------     --------- 

Alabama                    $    319,083.85            0.25%               4     
Arizona                       1,232,139.24            0.96                7     
California                    1,175,536.20            0.92                9     
Colorado                      5,797,735.65            4.51               52     
Connecticut                   5,167,950.17            4.02               37     
Delaware                        163,951.76            0.13                1     
Florida                       5,759,446.21            4.48               68     
Georgia                       1,828,183.04            1.42               25     
Idaho                           513,174.65            0.40                5     
Illinois                      5,468,331.17            4.26               58     
Indiana                       8,554,626.64            6.66              124     
Iowa                            285,045.72            0.22                6     
Kansas                           95,975.00            0.07                1     
Kentucky                        220,844.27            0.17                4     
Louisiana                       181,578.19            0.14                3     
Maine                         1,103,308.04            0.86               13     
Maryland                      3,160,483.62            2.46               29     
Massachusetts                 2,056,228.13            1.60               21     
Michigan                     10,277,227.07            8.00              123     
Minnesota                       575,090.99            0.45                8     
Mississippi                      52,000.00            0.04                1     
Missouri                      1,877,309.07            1.46               30     
Nebraska                         67,484.90            0.05                2     
New Hampshire                   327,724.86            0.26                3     
New Jersey                    9,759,181.36            7.60               77     
New Mexico                      492,980.92            0.38                7     
New York                     15,969,653.59           12.43              101     
North Carolina                8,964,939.37            6.98              121     
Ohio                         11,212,102.14            8.73              159     
Oklahoma                         39,226.44            0.03                2     
Oregon                          433,900.00            0.34                4     
Pennsylvania                  8,845,108.67            6.88              128     
Rhode Island                    758,362.31            0.59                6     
South Carolina                4,501,179.00            3.50               63     
Tennessee                       571,333.76            0.44                7     
Texas                         3,208,346.86            2.50               37     
Utah                          2,406,886.29            1.87               15     
Vermont                         100,000.00            0.08                1     
Virginia                      1,516,900.83            1.18               18     
Washington                    3,010,341.66            2.34               16     
West Virginia                   137,580.10            0.11                2     
Wisconsin                       209,900.00            0.16                3     
Wyoming                          74,750.00            0.06                1     
                       --------------          ------            -----
Totals                      $128,473,131.74         100.00%           1,402     
                       ===============         =======           =====

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      The following table sets forth the original loan-to-value (LTV) ratios
of the group 2 initial mortgage loans as of the cut-off date:                   

 GROUP 2

                                                                     Number of
       Original                                     Percent by        Mortgage
Loan-to-Value Ratio(%)     Principal Balance   Principal Balance      Loans 
-------------------------    -----------------   -----------------    --------- 

10.01  -  15.00             $     19,992.05             0.02%             1     
15.01  -  20.00                   29,989.30             0.02              1     
20.01  -  25.00                   62,000.00             0.05              2     
30.01  -  35.00                   97,000.00             0.08              2     
35.01  -  40.00                  430,332.14             0.33              7     
40.01  -  45.00                  323,236.72             0.25              6     
45.01  -  50.00                  965,788.44             0.75             14     
50.01  -  55.00                  980,796.41             0.76             16     
55.01  -  60.00                1,482,772.96             1.15             20     
60.01  -  65.00                6,085,708.01             4.74             71     
65.01  -  70.00                6,047,650.51             4.71             62     
70.01  -  75.00               11,130,317.38             8.66            135     
75.01  -  80.00               39,293,461.82            30.58            441     
80.01  -  85.00               38,300,038.64            29.81            392     
85.01  -  90.00               23,224,047.36            18.08            232     
                       ---------------           ------          -----
Totals                      $128,473,131.74           100.00%         1,402     
                       ===============           =======         =====

        The original loan-to-value ratios shown on the previous table are equal,
with respect to each group 2 initial mortgage loan, to (1) the principal balance
of such group 2 initial mortgage loan at the date of origination, divided by (2)
the collateral value of the related mortgaged property.                         

     At origination, no group 2 initial mortgage loan had an LTV exceeding
90.00%. As of the cut-off date, the weighted average LTV of the group 2 initial 
mortgage loans (weighted based upon the original group 2 principal balance) was 
approximately 80.11%.                                                           

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       The following table sets forth the mortgage rates borne by the mortgage
notes relating to the group 2 initial mortgage loans as of the cut-off date:    

 GROUP 2

                                            Percent by         Number of
Mortgage Rates        Principal Balance     Principal Balance   Mortgage Loans  
---------------       -----------------     -----------------   --------------  

6.750 -  6.999%      $   131,750.00               0.10%              1        
7.250 -  7.499%          176,865.32               0.14               1        
7.500 -  7.749%          509,336.07               0.40               5        
7.750 -  7.999%          836,900.00               0.65               4        
8.000 -  8.249%          690,655.30               0.54               8        
8.250 -  8.499%        2,244,041.41               1.75              16        
8.500 -  8.749%        1,840,780.10               1.43              20        
8.750 -  8.999%        4,241,847.33               3.30              42        
9.000 -  9.249%        2,191,447.08               1.71              25        
9.250 -  9.499%        6,029,595.41               4.69              47        
9.500 -  9.749%        6,343,331.02               4.94              79        
9.750 -  9.999%        6,367,941.19               4.96              65        
10.000 - 10.249%        9,548,849.20               7.43             103         
10.250 - 10.499%        7,461,648.36               5.81              82         
10.500 - 10.749%        8,926,205.92               6.95              89         
10.750 - 10.999%       14,491,998.36              11.28             172         
11.000 - 11.249%        7,836,473.26               6.10              80         
11.250 - 11.499%        7,999,964.27               6.23              89         
11.500 - 11.749%        8,228,764.84               6.41             104         
11.750 - 11.999%       12,260,964.14               9.54             147         
12.000 - 12.249%        3,511,695.39               2.73              38         
12.250 - 12.499%        4,084,384.55               3.18              49         
12.500 - 12.749%        4,590,685.91               3.57              46         
12.750 - 12.999%        4,969,741.45               3.87              55         
13.000 - 13.249%        1,017,298.71               0.79              14         
13.250 - 13.499%          821,024.86               0.64               9         
13.500 - 13.749%          220,856.93               0.17               3         
13.750 - 13.999%          482,102.54               0.38               5         
14.000 - 14.249%          353,037.32               0.27               2         
14.250 - 14.499%           62,945.50               0.05               2         
            ---------------             ------           -----
Totals               $128,473,131.74             100.00%          1,402         
            ===============             =======          =====

       As of the cut-off date, the weighted average mortgage rate of the group
2 initial mortgage loans was approximately 10.786% per annum and ranged from    
6.750% to 14.375%.                                                              

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The following table sets forth the number of remaining months to
maturity of the group 2 initial mortgage loans as of the cut-off date:          

 GROUP 2

                              Percent by
                               Principal        Principal        Number of
Remaining Months to Maturity       Balance          Balance      Mortgage Loans 
----------------------------   --------------     -----------    -------------- 

229   - 240.99               $    364,899.90          0.28%              8      
289   - 300.99                  1,005,103.17          0.78              25      
337   - 348.99                    255,448.94          0.20               4      
349   - 357.99                  6,958,456.63          5.42              76      
358   - 358.99                 18,978,796.46         14.77             186      
359   - 359.99                 60,516,960.23         47.10             651      
360                            40,393,466.41         31.44             452      
                       ---------------        ------           -----
Totals                       $128,473,131.74        100.00%          1,402      
                       ===============        =======          =====

       As of the cut-off date, the weighted average remaining term to maturity
of the group 2 initial mortgage loans will be approximately 358.15 months.      

      The following table sets forth the distribution of the group 2 initial
mortgage loans by month of next rate adjustment as of the cut-off date:         

 GROUP 2

                            Percent by
                              Principal       Principal        Number of
Month of Next Rate Adjustment      Balance         Balance       Mortgage Loans 
-----------------------------  ---------------   -----------     -------------- 

November           1999        $   64,530.27         0.05%               1      
December           1999           248,408.48         0.19                2      
January            2000           471,138.92         0.37                2      
February           2000           245,144.23         0.19                2      
March              2000            74,634.93         0.06                1      
August             2000           111,285.27         0.09                2      
September          2000            69,528.74         0.05                1      
October            2000           111,220.20         0.09                1      
December           2000           133,605.29         0.10                1      
January            2001           399,492.03         0.31                3      
February           2001           641,576.90         0.50                6      
March              2001           242,772.74         0.19                3      
April              2001           940,977.02         0.73               12      
May                2001         1,312,663.90         1.02               15      
June               2001         2,980,824.46         2.32               34      
July               2001        18,223,557.95        14.18              184      
August             2001        58,370,009.13        45.43              627      
September          2001        38,003,065.07        29.58              439      
July               2002           425,969.03         0.33                4      
August             2002         2,302,325.84         1.79               32      
September          2002         3,100,401.34         2.41               30      
                         -------------       ------            -----
Totals                         $128,473,131.74     100.00%           1,402      
                         ===============     =======           =====

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        The following table sets forth the distribution of the gross margins set
forth in the mortgage notes relating to the group 2 initial mortgage loans as of
the cut-off date:                                                               

 GROUP 2

                        Principal          Percent by            Number of
Gross Margin                Balance        Principal Balance     Mortgage Loans 
------------------      ---------------    -----------------     -------------- 

3.750  -   3.999%     $    73,950.00            0.06%                  1      
4.000  -   4.249%         291,302.80            0.23                   3      
4.250  -   4.499%       1,303,170.51            1.01                  13      
4.500  -   4.749%       1,613,966.97            1.26                  13      
4.750  -   4.999%       1,033,898.15            0.80                  11      
5.000  -   5.249%       5,680,762.18            4.42                  53      
5.250  -   5.499%       2,974,798.99            2.32                  39      
5.500  -   5.749%       7,169,875.94            5.58                  71      
5.750  -   5.999%       8,876,594.28            6.91                  88      
6.000  -   6.249%       7,127,541.25            5.55                  77      
6.250  -   6.499%      16,658,451.90           12.97                 177      
6.500  -   6.749%       6,962,859.87            5.42                  74      
6.750  -   6.999%      14,575,832.07           11.35                 163      
7.000  -   7.249%      12,227,166.81            9.52                 132      
7.250  -   7.499%       6,202,792.40            4.83                  77      
7.500  -   7.749%       7,291,797.30            5.68                  79      
7.750  -   7.999%       6,356,243.20            4.95                  62      
8.000  -   8.249%       9,650,469.06            7.51                 127      
8.250  -   8.499%       2,447,557.33            1.91                  32      
8.500  -   8.749%       3,344,258.66            2.60                  37      
8.750  -   8.999%       2,933,836.53            2.28                  32      
9.000  -   9.249%       1,259,759.70            0.98                  13      
9.250  -   9.499%       1,367,040.13            1.06                  20      
9.500  -   9.749%         456,704.06            0.36                   4      
9.750  -   9.999%         283,851.26            0.22                   2      
10.000  -  10.249%         271,900.39            0.21                   1       
10.500  -  10.749%          36,750.00            0.03                   1       
               ---------------          ------               -----
Totals                $128,473,131.74          100.00%              1,402       
               ===============          ======               =====

        As of the cut-off date the weighted average gross margins on the group 2
initial mortgage loans was approximately 6.768% per annum and ranged from 3.750%
to 10.500% per annum.                                                           

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       The following table sets forth the distribution of the maximum mortgage
rates set forth in the mortgage notes relating to the group 2 initial mortgage  
loans as of the cut-off date:                                                   

 GROUP 2

                            Principal          Percent by          Number of
Maximum Mortgage Rates         Balance        Principal Balance   Mortgage Loans
----------------------     ---------------    -----------------   --------------

13.500   - 13.749%         $   328,567.00           0.26%               3       
13.750   - 13.999%             836,900.00           0.65                4       
14.000   - 14.249%             331,155.30           0.26                5       
14.250   - 14.499%           2,164,791.41           1.69               15       
14.500   - 14.749%           1,840,780.10           1.43               20       
14.750   - 14.999%           4,135,682.43           3.22               41       
15.000   - 15.249%           2,191,447.08           1.71               25       
15.250   - 15.499%           6,206,460.73           4.83               48       
15.500   - 15.749%           6,524,100.09           5.08               81       
15.750   - 15.999%           6,289,541.19           4.90               64       
16.000   - 16.249%           9,908,349.20           7.71              106       
16.250   - 16.499%           7,420,898.36           5.78               82       
16.500   - 16.749%           8,926,205.92           6.95               89       
16.750   - 16.999%          14,729,913.26          11.47              174       
17.000   - 17.249%           7,836,473.26           6.10               80       
17.250   - 17.499%           7,999,964.27           6.23               89       
17.500   - 17.749%           8,228,764.84           6.41              104       
17.750   - 17.999%          12,339,364.14           9.60              148       
18.000   - 18.249%           3,511,695.39           2.73               38       
18.250   - 18.499%           4,204,384.55           3.27               50       
18.500   - 18.749%           4,590,685.91           3.57               46       
18.750   - 18.999%           5,044,376.38           3.93               56       
19.000   - 19.249%           1,017,298.71           0.79               14       
19.250   - 19.499%             821,024.86           0.64                9       
19.500   - 19.749%             220,856.93           0.17                3       
19.750   - 19.999%             407,467.61           0.32                4       
20.000   - 20.249%             353,037.32           0.27                2       
20.250   - 20.499%              62,945.50           0.05                2       
                   ---------------         ------            -----
Total                     $128,473,131.74         100.00%           1,402       
                   ===============         ======            =====

        As of the cut-off date the weighted average maximum mortgage rate on the
group 2 initial mortgage loans was approximately 16.806% per annum and ranged   
from 13.625% to 20.375% per annum.                                              

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   The following table sets forth the distribution of minimum mortgage
rates set forth in the mortgage notes relating to the group 2 initial mortgage  
loans as of the cut-off date:                                                   

 GROUP 2

                            Principal         Percent by           Number of
Minimum Mortgage Rates         Balance       Principal Balance    Mortgage Loans
----------------------     ---------------   -----------------    --------------

6.500  -  6.749%          $   328,567.00          0.26%                3      
6.750  -  6.999%              836,900.00          0.65                 4      
7.000  -  7.249%              331,155.30          0.26                 5      
7.250  -  7.499%            2,164,791.41          1.69                15      
7.500  -  7.749%            1,840,780.10          1.43                20      
7.750  -  7.999%            4,135,682.43          3.22                41      
8.000  -  8.249%            2,191,447.08          1.71                25      
8.250  -  8.499%            6,206,460.73          4.83                48      
8.500  -  8.749%            6,524,100.09          5.08                81      
8.750  -  8.999%            6,289,541.19          4.90                64      
9.000  -  9.249%            9,908,349.20          7.71               106      
9.250  -  9.499%            7,420,898.36          5.78                82      
9.500  -  9.749%            8,926,205.92          6.95                89      
9.750  -  9.999%           14,729,913.26         11.47               174      
10.000  - 10.249%            7,836,473.26          6.10                80       
10.250  - 10.499%            7,999,964.27          6.23                89       
10.500  - 10.749%            8,228,764.84          6.41               104       
10.750  - 10.999%           12,339,364.14          9.60               148       
11.000  - 11.249%            3,511,695.39          2.73                38       
11.250  - 11.499%            4,204,384.55          3.27                50       
11.500  - 11.749%            4,590,685.91          3.57                46       
11.750  - 11.999%            5,044,376.38          3.93                56       
12.000  - 12.249%            1,017,298.71          0.79                14       
12.250  - 12.499%              821,024.86          0.64                 9       
12.500  - 12.749%              220,856.93          0.17                 3       
12.750  - 12.999%              407,467.61          0.32                 4       
13.000  - 13.249%              353,037.32          0.27                 2       
13.250  - 13.499%               62,945.50          0.05                 2       
                   ---------------        ------             -----
Totals                    $128,473,131.74        100.00%            1,402       
                   ===============        =======            =====

        As of the cut-off date the weighted average minimum mortgage rate on the
group 2 initial mortgage loans was approximately 9.806% per annum and ranged    
from 6.625% to 13.375% per annum.                                               

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      The following table sets forth the distribution of the group 2 initial
mortgage loans by the seller's underwriting class as of the cut-off date:       

 GROUP 2

                          Principal         Percent by           Number of
Underwriting Class            Balance       Principal Balance    Mortgage Loans 
------------------        ---------------   -----------------    -------------- 

AA                       $  7,548,866.65           5.88%                74      
ANIV                       16,928,726.70          13.18                101      
I                          29,100,150.72          22.65                297      
II                         17,669,813.47          13.75                230      
III                         5,894,430.95           4.59                 56      
III-SE                      2,977,011.52           2.32                 30      
IIB                        20,221,516.08          15.74                252      
IV                         19,107,665.94          14.87                260      
IVPI                        3,608,374.80           2.81                 35      
V                           5,416,574.91           4.22                 67      
                    --------------         ------              -----
Totals                   $128,473,131.74         100.00%             1,402      
                   ===============         =======             =====

        The following table sets forth the number of months since origination of
the group 2 initial mortgage loans:                                             

 GROUP 2

                              Percent by
                               Principal       Principal       Number of
MONTHS SINCE ORIGINATION           Balance         Balance      Mortgage Loans
--------------------------      ---------------   -----------    -------------- 
           0             $ 41,103,466.41      31.99%           469
   0.01 -  1               60,917,479.20      47.42            661
   1.01 -  2               19,190,644.14      14.94            191
   2.01 - 12                7,150,256.72       5.56             79
  12.01 - 24                  111,285.27       0.09              2
                         ---------------     ------          -----
Totals                     $128,473,131.74     100.00%         1,402  
                         ===============     ======          =====

        The following table sets forth the property types of the group 2 initial
mortgage loans:                                                                 

 GROUP 2

                              Percent by
                                Principal       Principal        Number of
Property Type                       Balance         Balance       Mortgage Loans
---------------------           ---------------   -----------     --------------
One Family (attached/detached)  $ 94,806,353.23      73.79%           992       
Condominium                        2,469,720.84       1.92             33       
Two-to-Four Family                12,713,245.91       9.90            118       
Planned Unit Development           1,351,295.47       1.05             10       
Manufactured Homes                17,132,516.29      13.34            249       
                         ---------------     ------          -----
Totals                          $128,473,131.74     100.00%         1,402       
                         ===============     ======          =====

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CONVEYANCE OF GROUP 2 SUBSEQUENT MORTGAGE LOANS AND THE GROUP 2 PRE-FUNDING     
ACCOUNT                                                                         

      Under the sale and servicing agreement, following the initial issuance
of the notes, the seller has committed to sell, and the issuer will be obligated
to purchase from the seller, on or before December 23, 1999, subject to the     
availability thereof, additional conventional, adjustable-rate residential      
mortgage loans secured by first liens on Single Family Properties which will be 
originated and underwritten or purchased and re-underwritten by the seller. In  
each case the underwriting will be performed in accordance with the criteria set
forth herein under "The Seller--Underwriting Criteria--Group 2". Group 2        
subsequent mortgage loans will be transferred to the issuer and pledged to the  
indenture trustee pursuant to subsequent transfer instruments among the seller, 
the issuer and the indenture trustee. In connection with the purchase of group 2
subsequent mortgage loans on the dates of transfer, the issuer will be required 
to pay to the seller from amounts on deposit in the group 2 pre-funding account 
a cash purchase price equal to a percentage of the principal balance thereof (as
already reduced by the principal portion of any deferred payments) as determined
by the note insurer immediately prior to each subsequent transfer date in       
accordance with the terms of the insurance agreement. The seller will designate 
the close of business on the day prior to the group 2 subsequent transfer date  
as the cut-off date with respect to the related group 2 subsequent mortgage     
loans purchased on such date and, as a result, the issuer will not be required  
to pay accrued interest with respect thereto. Therefore, the aggregate principal
balance of group 2 after the closing date will increase by an amount equal to   
the aggregate principal balance of the group 2 subsequent mortgage loans so     
purchased and the amount in the group 2 pre-funding account will decrease       
accordingly.                                                                    

With respect to group 2, the indenture trustee will establish a 
pre-funding account into which it will deposit upon receipt from the seller,    
$78,031,772.75 to be used to purchase group 2 subsequent mortgage loans. The    
original group 2 pre-funded amount will be reduced during the funding period by 
the amount thereof used to purchase group 2 subsequent mortgage loans in        
accordance with the sale and servicing agreement. During the period from the    
closing date until the earlier of (a) the date on which the amount on deposit in
the group 2 pre-funding account is zero and (b) December 27, 1999, the group 2  
pre-funded amount will be maintained in the group 2 pre-funding account.        

Any conveyance of group 2 subsequent mortgage loans on a group 2
subsequent transfer date is subject to certain conditions including, but not    
limited to, the following:                                                      

      o       each subsequent mortgage loan must satisfy the representations
           and warranties specified in the group 2 subsequent transfer
instrument and the sale and servicing agreement;

      o       the seller will not select such subsequent mortgage loans in a
          manner that it believes is adverse to the interests of the
noteholders;                                    

       o       the seller will deliver opinions of counsel with respect to the
             validity of the conveyance of such subsequent mortgage loans;

        o       each group 2 subsequent mortgage loan may not be 30 or more days
             contractually delinquent as of the related group 2 subsequent
cut-off date;                                   

o       the original term to maturity of such group 2 subsequent
           mortgage loan will not be less than 120 months and will not
exceed 360 months;                              

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 o       each group 2 subsequent mortgage loan may not provide for
negative amortization;                          

      o       each group 2 subsequent mortgage loan will have a gross margin
not less than 3%;                               

     o       each group 2 subsequent mortgage loan will be underwritten in
 accordance with the criteria set forth under "The
Seller--Underwriting Criteria--Group 2" herein; 

        o       each group 2 subsequent mortgage loan will have been serviced by
         the servicer since origination or purchase by the seller;

  o       each group 2 subsequent mortgage loan will not have an LTV
greater than 90%;                               

 o       each group 2 subsequent mortgage loan will have a maximum
mortgage rate not less than 11.00%; and         

       o       each group 2 subsequent mortgage loan will have a first payment
date not later than February 1, 2000.           

      In addition, following the purchase of all group 2 subsequent mortgage
loans by the issuer, the group 2 mortgage loans (including the group 2          
subsequent mortgage loans) as of the end of the group 2 funding period will:    

     o       have a weighted average gross margin of at least 5.000% and a
weighted average coupon of at least 9.000%;     

        o       have a weighted average remaining term to stated maturity of not
  more than 360 months and not less than 300 months;

o       have a weighted average LTV of not more than 83%;       

        o       have no group 2 mortgage loan with a principal balance in excess
of $995,000;                                    

        o       not have in excess of 8% by aggregate principal balance of group
        2 mortgage loans secured by non-owner occupied mortgaged
properties;                                     

        o       not have a concentration of mortgaged properties in a single zip
              code in excess of 2% by aggregate principal balance of group 2
mortgage loans;                                 

        o       not have in excess of 4% by aggregate principal balance of group
         2 mortgage loans secured by mortgaged properties that are
condominiums;                                   

   o       have at least 68% by aggregate principal balance of group 2
             mortgage loans secured by fee simple interests in attached or
detached Single Family Properties;              

o       not be secured by multifamily properties;               

o       not be secured by mixed use properties;                 

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o       not be secured by commercial properties;                

       o       not have in excess of 14% by aggregate principal balance of the
     group 2 mortgage loans secured by manufactured homes;

    o       be secured by a first priority lien on the related mortgaged
property;                                       

     o       have a weighted average number of months since origination of
not over 4 months; and                          

        o       have at least 80% of such subsequent mortgage loans by aggregate
          principal balance with a first payment date on or prior to
January 1, 2000.                                

       In the sole discretion of the note insurer, group 2 subsequent mortgage
loans with characteristics varying from those set forth in this paragraph may be
purchased by the trust; provided, however, that the addition of these group 2   
mortgage loans will not materially affect the aggregate characteristics of group
2.                                                                              

 YIELD AND PREPAYMENT CONSIDERATIONS

DELAY IN DISTRIBUTIONS                                                          

      The effective yield to the noteholders will be slightly lower than the
yield otherwise produced by the related note interest rate because the          
distribution of such interest will not be made until the 25th day (or, if such  
day is not a business day, on the first business day thereafter) of the month   
following the month in which interest accrues on the mortgage loans (without any
additional distribution of interest or earnings thereon in respect of such      
delay). A "business day" is any day other than Saturday or Sunday, or a day on  
which banking institutions in the States of New York, Delaware or Illinois are  
authorized or obligated by law or executive order to be closed. See "Description
of the Notes" in this prospectus supplement.                                    

PREPAYMENT CONSIDERATIONS AND RISKS                                             

        A majority of the mortgage loans may be prepaid by the mortgagors at any
time without a prepayment penalty. Upon prepayment of a deferred payment loan,  
the deferred payments may be due and payable. Any prepayment charges and        
deferred payments collected shall be retained by the servicer and paid to the   
seller.                                                                         

      Interest shortfalls on the mortgage loans due to principal prepayments
in full and curtailments will be covered to the extent described in this        
prospectus supplement and in the prospectus by payments of compensating interest
by the servicer and any shortfalls not covered by such payments that would      
otherwise be borne by the notes will be covered by distributions of Excess      
Spread from the related group, Net Excess Spread and Excess Principal from the  
other group (prior to the related cross-over date), amounts on deposit in the   
reserve account, if any (prior to the related cross-over date), and payments    
pursuant to the note insurance policy, subject to the limitations described     
herein. Because in the absence of such shortfalls the Excess Spread will, prior 
to the related cross-over date, be used to accelerate payments of principal on  
the related notes, application of Excess Spread to cover any interest shortfalls
will reduce accelerated payments of principal to the notes.                     

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   To the extent that the original pre-funded amount with respect to a
group has not been fully applied to the purchase of related subsequent mortgage 
loans by the trust by the end of the related funding period, the holders of the 
related notes will receive, pro rata, a prepayment of principal in an amount    
equal to the lesser of (a) the pre-funded amount remaining in the related       
pre-funding account on the first payment date following the termination of the  
funding period and (b) the related outstanding note principal balance. Although 
no assurance can be given, it is anticipated by the seller that the principal   
amount of subsequent mortgage loans sold to the trust will require the          
application of substantially all of the original pre-funded amounts and that    
there should be no material amount of principal prepaid to the related          
noteholders from the related pre-funding account. However, it is unlikely that  
the seller will be able to deliver subsequent mortgage loans with an aggregate  
principal balance identical to the related original pre-funded amounts, with the
result that some prepayment of the related notes will occur on the December 27, 
1999 payment date.                                                              

       In addition, the yield to maturity of the notes will depend on whether,
to what extent, and the timing with respect to which, Remaining Net Excess      
Spread and Net Excess Principal is used to accelerate payments of principal on  
such notes. With respect to each group, on any payment date on which the        
Overcollateralization Amount equals the Required Overcollateralization Amount,  
Remaining Net Excess Spread and Net Excess Principal will not be applied to     
accelerate payments of principal on such notes. In addition, on any such date,  
distributions in respect of principal to the related notes may only equal that  
amount necessary to maintain the Required Overcollateralization Amount with     
respect to a group, which amount may be zero, therefore reducing the rate of    
principal payments allocated to the related notes.                              

   Greater than anticipated prepayments of principal will increase the
yield on notes purchased at a price less than par. Greater than anticipated     
prepayments of principal will decrease the yield on notes purchased at a price  
greater than par. The effect on an investor's yield due to principal prepayments
on the mortgage loans occurring at a rate that is faster (or slower) than the   
rate anticipated by the investor in the period immediately following the        
issuance of the notes will not be entirely offset by a subsequent like reduction
(or increase) in the rate of principal payments. The weighted average life of   
the notes will also be affected by the amount and timing of delinquencies and   
defaults on the mortgage loans and the recoveries, if any, on defaulted mortgage
loans and foreclosed properties.                                                

    The rate of principal payments on each class of notes, the aggregate
amount of distributions on each class of notes and the yield to maturity of each
class of notes is directly related to the rate of payments of principal on the  
mortgage loans in the related group, which may be in the form of scheduled and  
unscheduled payments. In particular, a reduction in the rate of principal       
payments will occur when interest only vouchers are used to defer principal     
payments and interest only payments are made under the periodic payment loans.  
In general, when the level of prevailing interest rates for similar loans       
significantly declines, the rate of prepayment is likely to increase, although  
the prepayment rate is influenced by a number of other factors, including       
general economic conditions and homeowner mobility. The rate of principal       
payments will in turn be affected by the amortization schedules (which will     
change periodically to accommodate adjustments to the mortgage rates on group 2 
mortgage loans) and by the rate of principal prepayments and curtailments on the
related mortgage loans (including, for this purpose, prepayments resulting from 
(a) refinancings, (b) liquidations due to defaults, casualties and condemnations
and (c) repurchases by the seller or the servicer). The rate of default on      
second mortgage loans may be greater than that of mortgage loans secured by     
first liens on comparable properties. Prepayments, liquidations and purchases of
the mortgage loans will result in distributions to related noteholders of       
amounts of principal which would otherwise be distributed over the remaining    
terms of the related mortgage loans. A majority of the mortgage loans may be    
prepaid by the                                                                  

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mortgagors at any time without a prepayment penalty and the mortgagor is        
required to pay interest only to the date of prepayment.                        

OPTIONAL PURCHASE OF DEFAULTED MORTGAGE LOANS                                   

  Although the servicer has no obligation to do so, the servicer may
purchase from the issuer a mortgage loan which is delinquent in payment 90 days 
or more. The purchase price for such mortgage loan will be equal to 100% of the 
principal balance thereof plus accrued and unpaid interest thereon.             

        In addition, the servicer may, at its option, with written notice to the
noteholders and the indenture trustee, purchase from the trust all of the       
outstanding mortgage loans and REO Properties, and thus effect the early        
retirement of the related notes, on any payment date on which the outstanding   
aggregate principal balance of the mortgage loans is less than or equal to 5% of
the sum of the original pool principal balance and the original pre-funded      
amounts. See "Sale and Servicing Agreement--Termination; Purchase of Mortgage   
Loans" in this prospectus supplement and "Description of the                    
Securities--Termination of the Trust Fund and Disposition of Trust Fund Assets" 
in the prospectus.                                                              

EFFECT OF PREPAYMENTS AND MORTGAGE LOAN YIELD ON CLASS 1A NOTE INTEREST RATE    

     Disproportionate principal payments (whether resulting from principal
prepayments or curtailments) on group 1 mortgage loans having mortgage rates    
higher or lower than the then current Class 1A note interest rate may also      
affect the yield on the Class 1A notes. The yield to maturity of the Class 1A   
notes may be lower than that otherwise produced if disproportionate principal   
payments (including principal prepayments) are made on group 1 mortgage loans   
having mortgage rates that exceed the Class 1A note interest rate.              

     The Class 1A note interest rate is based upon, among other factors as
described above, the value of an index, one-month LIBOR which is different from 
the fixed rates applicable to the group 1 mortgage loans, as described under    
"The Mortgage Pool-Group 1" herein. See "Description of the Notes- Calculation  
of One-Month LIBOR" herein. Each group 1 mortgage loan bears a fixed rate       
whereas the Class 1A note interest rate adjusts monthly and may be based upon   
one-month LIBOR. Because the mortgage rates on the group 1 mortgage loans are   
fixed, such rates will not change in response to changes in market interest     
rates. Accordingly, if mortgage market interest rates or market yields for      
securities similar to the Class 1A notes were to rise, the market value of the  
Class 1A notes may decline in cases where the Class 1A note interest rate did   
not increase accordingly. One-month LIBOR may respond to economic and market    
factors, while the mortgage rates on the group 1 mortgage loans will be fixed.  
One-month LIBOR may increase to a level at which the amount of interest         
collected on all of the group 1 mortgage loans during the related accrual period
may be insufficient to pay interest on the Class 1A notes at the Class 1A note  
interest rate calculated using either one-month LIBOR plus 0.58% per annum or   
9.75% per annum. In such an event, the rate payable on the Class 1A notes will  
be the available funds cap rate. The resulting interest differential amount will
be paid to the Class 1A noteholders on future payment dates, but on a           
subordinated basis.                                                             

PREPAYMENT MODEL FOR CLASS 1A NOTES                                             

 Prepayments on mortgage loans are commonly measured relative to a
prepayment standard or model. The model used in this prospectus supplement with 
respect to group 1 is based on a constant annual rate of prepayment relative to 
the then outstanding principal balance of the related mortgage loans applied    
monthly during the period indicated of the life of the group 1 mortgage loan.   
The prepayment model does not purport                                           

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to be either a historical description of the prepayment experience of any pool  
of mortgage loans or a prediction of the anticipated rate of prepayment of any  
pool of mortgage loans, including the group 1 mortgage loans. The seller does   
not make any representation about the appropriateness of any prepayment model.  

       The percentages and weighted average lives in the following tables were
determined assuming that                                                        

    o       scheduled interest and principal payments (including balloon
                payments) on the group 1 mortgage loans are received in a timely
            manner and prepayments of group 1 mortgage loans in full are
             made at the indicated scenario level set forth in the tables;

o       the servicer exercises its right of optional termination
 described above on the earliest permissible date;

     o       distributions are made on the 25th day of each calendar month
                regardless of the day on which the payment date actually occurs,
commencing in October 1999;                     

o       the group 1 mortgage loans have been aggregated into 9  
                hypothetical initial mortgage loans, one of which is a permanent
             buydown companion loan and two of which are temporary buydown
               loans, and sixteen hypothetical subsequent mortgage loans, four
              of which are temporary buydown loans, with the characteristics
       set forth in the first following table; and the group 1
            subsequent mortgage loans are purchased by December 23, 1999
             resulting in no mandatory prepayment of the Class 1A notes on
December 27, 1999;                              

o       no losses on the group 1 mortgage loans have occurred;  

      o       the sum of the servicing fee and fees payable out of the trust
        to the indenture trustee, the owner trustee and the note
              insurer, respectively, equals approximately 0.86% per annum of
             the scheduled principal balance of the group 1 mortgage loans
for each payment date;                          

       o       no interest shortfalls will arise in connection with prepayment
in full of the group 1 mortgage loans;          

     o       the initial Class 1A note interest rate is equal to 5.77% per
              annum and the initial Class 1A note principal balance is equal
to $315,000,000,                                

   o       the Class A Principal Remittance Amount with respect to the
          Class 1A notes on each payment date occurring prior to the
               step-down date is equal to principal received from group 1 plus
             the related Unrecovered Class A Portion for such payment date
            and on each payment date occurring on or after the step-down
              date is equal to that amount required to reach or maintain the
Required Overcollateralization Amount;          

     o       on each payment date prior to the cross-over date, the Excess
               Spread for group 1 is applied in an amount required to reach or
              maintain the Required Overcollateralization Amount for group 1
                and to reduce the principal balance of the Class 1A notes to the
            extent that the amount of such current application plus such
          amounts applied on all prior payment dates does not exceed
               $40,909,090.91 for group 1 (not including the permanent buydown
companion loans);                               

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        o       each payment date is deemed to occur before the cross-over date;

o       the Class 1A notes are purchased on September 28, 1999; 

       o       no available funds shortfall with respect to group 1 exists and
               Remaining Net Excess Spread and Net Excess Principal is applied
              to reach or maintain the Required Overcollateralization Amount
                as described herein and in the sale and servicing agreement; and

    o       the Required Overcollateralization Amount for group 1 is the
                Overcollateralization Amount required by the note insurer at any
            time as set forth in the insurance agreement with respect to
             group 1 among the seller, the servicer, the note insurer, the
issuer and the indenture trustee.               

The first and second following tables assume that there are no  
delinquencies on the group 1 mortgage loans and that the related interest       
coverage account has sufficient funds on deposit to cover shortfalls in interest
of the Class 1A notes during the funding period attributable to the pre-funding 
feature. The "stepdown date" will be the payment date following the later to    
occur of (1) the thirtieth payment date and (2) the date on which the then      
outstanding group 1 principal balance is equal to 50% of the sum of the original
group 1 pre-funded amount and the original group 1 principal balance.           

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                                                        [Enlarge/Download Table]

                                               GROUP 1                                                
                                 HYPOTHETICAL GROUP 1 MORTGAGE LOANS                                  


                                                             ORIGINAL     REMAINING       REMAINING   
                                                           AMORTIZATION  AMORTIZATION     MONTHS TO   
                                              MORTGAGE         TERM          TERM      BALLOON-PAYMENT
          PRINCIPAL BALANCE                INTEREST-RATE   (IN MONTHS)   (IN MONTHS)     (IN MONTHS)  
---------------------------------------    -------------   -----------   -----------     -----------  
                                                                                                      
Initial mortgage loans:                                                                               
  $   6,938,431.91                             9.799%           114           113             N/A     
  $  28,553,666.20                            10.094%           178           177             N/A     
  $  28,224,920.95                             9.933%           238           237             N/A     
  $  12,053,096.85                            10.054%           297           296             N/A     
  $     321,330.00                             9.287%(1)        338           338             N/A     
  $  75,467,722.43                            10.369%           359           358             N/A     
  $  51,167,201.95                            11.078%           360           359             179     
  $      63,000.00                             7.150%(1)        360           360             180     
  $   3,642,480.56                             0.000%(2)         60            59             N/A     

Subsequent group 1 mortgage loans (first                                                              
subsequent transfer balance as of                                                                     
October 31, 1999):                                                                                    
  $   2,129,597.07                             9.799%           114           114             N/A     
  $   8,763,911.58                            10.094%           178           178             N/A     
  $   8,663,010.55                             9.933%           238           238             N/A     
  $   3,699,429.50                            10.054%           297           297             N/A     
  $      98,625.08                             9.287%(1)        338           338             N/A     
  $  23,163,135.77                            10.369%           359           359             N/A     
  $  15,704,632.49                            11.078%           360           360             180     
  $      19,336.45                             7.150%(1)        360           360             180     

Subsequent group 1 mortgage loans                                                                     
(second subsequent transfer balance as                                                                
of November 30, 1999):                                                                                
  $   2,129,597.07                             9.799%           114           114             N/A     
  $   8,763,911.58                            10.094%           178           178             N/A     
  $   8,663,010.55                             9.933%           238           238             N/A     
  $   3,699,429.50                            10.054%           297           297             N/A     
  $      98,625.08                             9.287%(1)        338           338             N/A     
  $  23,163,135.77                            10.369%           359           359             N/A     
  $  15,704,632.49                            11.078%           360           360             180     
  $      19,336.45                             7.150%(1)        360           360             180     

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

(1) Tempory buydown loan which assumes the mortgage rate increases 1% in month  
twelve and an additional 1% in month twenty-four.                               

(2) Permanent buydown companion loan which provides for equal monthly payments  
of principal only for 60 months.                                                

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        Since the following tables were prepared on the basis of the assumptions
in the preceding paragraph, there are discrepancies between the characteristics 
of the actual group 1 mortgage loans and the characteristics of the mortgage    
loans assumed in preparing such tables. Any such discrepancy may have an effect 
upon the percentages of the note principal balance outstanding of the Class 1A  
notes and the weighted average life of the Class 1A notes set forth in the      
tables. In addition, since the actual group 1 mortgage loans and the trust have 
characteristics which differ from those assumed in preparing the tables set     
forth below, the distributions of principal on the Class 1A notes may be made   
earlier or later than as indicated in the tables.                               

        It is not likely that the group 1 mortgage loans will prepay to maturity
at any of the prepayment models specified in the tables below or that all group 
1 mortgage loans will prepay at the same rate. In addition, the diverse         
remaining terms to maturity of the group 1 mortgage loans (which include        
recently originated group 1 mortgage loans) could produce slower or faster      
distributions of principal than are indicated in the following tables at the    
prepayment model specified even if the weighted average of the remaining terms  
to maturity of the group 1 mortgage loans equals those assumed.                 

      Investors are urged to make their investment decisions on a basis that
includes their determination as to anticipated prepayment rates under a variety 
of the assumptions discussed herein.                                            

      The model used in this prospectus supplement with respect to the Class
1A notes is the prepayment assumption which represents the assumed rate of      
prepayment each month relative to the then outstanding principal balance of a   
pool of mortgage loans for the life of such mortgage loans. With respect to the 
Class 1A notes, a 100% prepayment assumption assumes a constant prepayment rate 
of 2% per annum of the then outstanding principal balance of such mortgage loans
in the first month of the life of the mortgage loans and an additional 1.2% per 
annum in each month thereafter until the twenty-first month. Beginning in the   
twenty-first month and in each month thereafter during the life of the mortgage 
loans, a 100% prepayment assumption assumes a constant prepayment rate of 26%   
per annum. As used in the table entitled "Prepayment Scenarios", 0% prepayment  
assumption assumes prepayment rates equal to 0% of the prepayment assumption    
i.e., no prepayments. Correspondingly, 100% prepayment assumption assumes       
prepayment rates equal to 100% of the prepayment assumption and so forth. In    
comparison, the model used in this prospectus supplement with respect to group 2
is based on a Constant Prepayment Rate more fully defined herein under the      
caption "Certain Yield and Prepayment Considerations--prepayment model for Class
2A notes". A "Constant Prepayment Rate" or "CPR" represents a constant annual   
rate of payment relative to the then outstanding principal balance of the       
related mortgage loans applied monthly during the indicated portion of the life 
of the group 2 mortgage loan.                                                   

                                                                [Download Table]

                        PREPAYMENT SCENARIOS                                 


            Scenario 1    Scenario 2       Scenario 3  Scenario 4  Scenario 5
            ----------    ----------       ----------  ----------  ----------
                                                                             
Group 1(1)      0%            50%             100%        150%        200%   
Group 2(2)      10%           20%              28%        35%         45%    

----------                                                                      
(1) As a percentage of the prepayment assumption.                               
(2) As a constant prepayment rate (CPR).                                        

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     Based on the foregoing assumptions, the following tables indicate the
projected weighted average life of the Class 1A notes.                          

                                                        [Enlarge/Download Table]

                       PERCENTAGE OF THE ORIGINAL PRINCIPAL BALANCE OF THE CLASS 1A                       
                                    NOTES OUTSTANDING AT THE RESPECTIVE                                   
                                     PREPAYMENT MODELS SET FORTH BELOW                                    



            Payment Date                Scenario 1    Scenario 2      Scenario 3    Scenario 4  Scenario 5
            ------------                ----------    ----------      ----------    ----------  ----------

                                                                                                          
Initial Percentage...................       100%          100%            100%         100%        100%   
September 25, 2000...................        95            90              86           81          77    
September 25, 2001...................        93            78              63           50          37    
September 25, 2002...................        91            65              44           29          18    
September 25, 2003...................        89            55              32           18           9    
September 25, 2004...................        88            45              23           11           0    
September 25, 2005...................        85            38              17            6           0    
September 25, 2006...................        83            32              12            0           0    
September 25, 2007...................        80            27               9            0           0    
September 25, 2008...................        77            23               6            0           0    
September 25, 2009...................        74            19               0            0           0    
September 25, 2010...................        71            16               0            0           0    
September 25, 2011...................        68            14               0            0           0    
September 25, 2012...................        64            11               0            0           0    
September 25, 2013...................        60             9               0            0           0    
September 25, 2014...................        43             6               0            0           0    
September 25, 2015...................        34             0               0            0           0    
September 25, 2016...................        32             0               0            0           0    
September 25, 2017...................        29             0               0            0           0    
September 25, 2018...................        27             0               0            0           0    
September 25, 2019...................        24             0               0            0           0    
September 25, 2020...................        22             0               0            0           0    
September 25, 2021...................        20             0               0            0           0    
September 25, 2022...................        18             0               0            0           0    
September 25, 2023...................        16             0               0            0           0    
September 25, 2024...................        14             0               0            0           0    
September 25, 2025...................        11             0               0            0           0    
September 25, 2026...................         9             0               0            0           0    
September 25, 2027...................         0             0               0            0           0    
September 25, 2028...................         0             0               0            0           0    
September 25, 2029...................         0             0               0            0           0    
Weighted Average Life (1)(2) years...     14.78          5.81            3.45         2.49        1.96    
Weighted Average Life (1)(3) years...     14.84          6.00            3.57         2.56        2.00    
--------------------------                                                                                

(1) The weighted average life of a Class 1A note is determined by (1)           
  multiplying the amount of cash distributions in reduction of the principal
balance of such note by the number of years from the date of issuance of
  such Class 1A note to the stated payment date, (2) adding the results, and
    (3) dividing the sum by the initial principal balance of such Class 1A note.

(2) Assumes servicer exercises its right of optional termination at the earliest
permissible date.                                                       

(3) Assumes that the Class 1A notes remain outstanding to their maturity date.  

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     As with fixed-rate obligations generally, the rate of prepayment on a
pool of mortgage loans is affected by prevailing market rates for mortgage loans
of a comparable term and risk level. When the market interest rate is below the 
mortgage coupon, mortgagors may have an increased incentive to refinance their  
mortgage loans. Depending on prevailing market rates, the future outlook for    
market rates and economic conditions generally, some mortgagors may sell or     
refinance mortgaged properties in order to realize their equity in the mortgaged
properties, to meet cash flow needs or to make other investments. The seller    
makes no representation as to the particular factors that will affect the       
prepayment of the group 1 mortgage loans, as to the relative importance of such 
factors, as to the percentage of the principal balance of the group 1 mortgage  
loans that will be paid as of any date or as to the overall rate of prepayment  
on the group 1 mortgage loans.                                                  

EFFECT OF PREPAYMENTS AND MORTGAGE LOAN YIELD ON CLASS 2A NOTE INTEREST RATE    

     Disproportionate principal payments (whether resulting from principal
prepayments or curtailments) on group 2 mortgage loans having mortgage rates    
higher or lower than the then current Class 2A note interest rate may also      
affect the yield on the Class 2A notes. The yield to maturity of the Class 2A   
notes will be lower than that otherwise produced if disproportionate principal  
payments (including principal prepayments) are made on group 2 mortgage loans   
having mortgage rates that exceed the Class 2A note interest rate.              

     The Class 2A note interest rate is based upon, among other factors as
described above, the value of an index, one-month LIBOR, which is different from
the value of the six-month LIBOR index applicable to the group 2 mortgage loans,
as described under "The Mortgage Pool-Group 2" herein. See "Description of the  
Notes-Calculation of One-Month LIBOR" herein. Each group 2 mortgage loan, after 
the initial adjustment, adjusts annually or semiannually based upon the         
six-month LIBOR index whereas the Class 2A note interest rate adjusts monthly   
and may be based upon one-month LIBOR. One-month LIBOR and the six-month LIBOR  
index applicable to the mortgage loans may respond differently to economic and  
market factors, and there is not necessarily any correlation between them. In   
addition, the mortgage loans are subject to periodic rate caps, maximum mortgage
rates and minimum mortgage rates. Thus, it is possible, for example, that       
one-month LIBOR may rise during periods in which the six-month LIBOR index on   
the mortgage loans is stable or are falling or that, even if both one-month     
LIBOR and the six-month LIBOR index rise during the same period, one-month LIBOR
may increase to a level at which the amount of interest collected on all group 2
mortgage loans during the related accrual period may be insufficient to pay     
interest on the Class 2A notes at the Class 2A note interest rate calculated    
using either one-month LIBOR plus 0.39% per annum or 15.50% per annum. In such  
an event, the rate payable on the Class 2A notes will be the available funds cap
rate. The resulting interest differential amount will be paid to the Class 2A   
noteholders on future distribution dates, but on a subordinated basis.          

    In addition, a number of factors affect the performance of one-month
LIBOR and may cause one-month LIBOR to move in a different manner from other    
indices. To the extent that one-month LIBOR may reflect changes in the general  
level of interest rates less quickly than other indices, in a period of rising  
interest rates, increases in the yield to Class 2A noteholders due to such      
rising interest rates may occur later than that which would be produced by other
indices, and in a period of declining rates, one-month LIBOR may remain higher  
than other market interest rates.                                               

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        All of the group 2 mortgage loans are adjustable-rate mortgage loans. As
is the case with conventional fixed-rate mortgage loans, ARM Loans may be       
subject to a greater rate of principal prepayments in a declining interest rate 
environment. For example, if prevailing interest rates were to fall             
significantly, ARM Loans could be subject to higher prepayment rates than if    
prevailing interest rates were to remain constant because the availability of   
fixed-rate mortgage loans at competitive interest rates may encourage mortgagors
to refinance their ARM Loans to "lock in" lower fixed interest rates. The rate  
of payments (including prepayments) on pools of mortgage loans is influenced by 
a variety of economic, geographic, social and other factors, including changes  
in mortgagors' housing needs, job transfers, unemployment, mortgagors' net      
equity in the mortgaged properties and servicing decisions. No assurances can be
given as to the rate of prepayments on the group 2 mortgage loans in stable or  
changing interest rate environments and the seller makes no representations as  
to the particular factors that will affect the prepayment of the group 2        
mortgage loans.                                                                 

PREPAYMENT MODEL FOR CLASS 2A NOTES                                             

 Prepayments on mortgage loans are commonly measured relative to a
prepayment standard or model. As described above, the prepayment model with     
respect to group 2 is based on a CPR. The prepayment model does not purport to  
be either a historical description of the prepayment experience of any pool of  
mortgage loans or a prediction of the anticipated rate of prepayment of any pool
of mortgage loans, including the group 2 mortgage loans. The seller does not    
make any representation about the appropriateness of any prepayment model.      

       The percentages and weighted average lives in the following tables were
determined assuming that:                                                       

o       scheduled interest and principal payments on the group 2
              mortgage loans are received in a timely manner and prepayments
               of group 2 mortgage loans in full are made at the indicated CPR
       set forth in the table entitled "Prepayment Scenarios";

       o       the servicer exercises its right of optional termination on the
earliest permissible date as described above;   

     o       distributions are made on the 25th day of each calendar month
                regardless of the day on which the payment date actually occurs,
commencing in October, 1999;                    

  o       the group 2 mortgage loans have been aggregated into eight
              hypothetical group 2 initial mortgage loans, one of which is a
        temporary buydown loan, and sixteen hypothetical group 2
             subsequent mortgage loans, two of which are temporary buydown
          loans, with the characteristics set forth in the first and
           second following table; and the group 2 subsequent mortgage
        loans are purchased by December 23, 1999 resulting in no
                mandatory prepayment of the Class 2A notes on December 27, 1999;

o       no losses on the group 2 mortgage loans have occurred;  

    o       the sum of the servicing fee and the fees payable out of the
              trust to the indenture trustee, the owner trustee and the note
     insurer, respectively, equals approximately 0.86% per

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                annum of the scheduled principal balance of the group 2 mortgage
loans for each payment date;                    

       o       no interest shortfalls will arise in connection with prepayment
in full of the group 2 mortgage loans;          

     o       the initial Class 2A note interest rate is equal to 5.77% per
              annum and the initial Class 2A note principal balance is equal
to $200,000,000;                                

   o       the Class A Principal Remittance Amount with respect to the
          Class 2A notes on each payment date occurring prior to the
               step-down date is equal to principal received from group 2 plus
             the related Unrecovered Class A Portion for such payment date
            and on each payment date occurring on or after the step-down
              date is equal to that amount required to reach or maintain the
Required Overcollateralization Amount;          

     o       on each payment date prior to the cross-over date, the Excess
               Spread for group 2 is applied in an amount required to reach or
                maintain the Required Overcollateralization Amount and to reduce
          the principal balance of the related Class 2A notes to the
            extent that the amount of such current application plus such
          amounts applied on all prior payment dates does not exceed
$26,845,637.58 for group 2,                     

        o       each payment date is deemed to occur before the cross-over date;

o       the Class 2A notes are purchased on September 28, 1999; 

     o       the six-month LIBOR index remains at a constant rate equal to
 5.9425%, with respect to any adjustment date; and

       o       no available funds shortfall with respect to group 2 exists and
               Remaining Net Excess Spread and Net Excess Principal is applied
              to reach or maintain the Required Overcollateralization Amount
 as described in the sale and servicing agreement.

        The first through fourth following tables also assume that (1) there are
no delinquencies on the group 2 mortgage loans; (2) the group 2 interest        
coverage account has sufficient funds on deposit to cover shortfalls in interest
on the Class 2A notes during the funding period attributable to the pre-funding 
feature; and (3) the Required Overcollateralization Amount for group 2 is the   
Overcollateralization Amount required by the note insurer at any time as set    
forth in the insurance agreement with respect to group 2 among the seller, the  
servicer, the note insurer, the issuer and the indenture trustee. The "step-down
date" will be the payment date following the later to occur of (1) the thirtieth
payment date and (2) the date on which the then outstanding group 2 principal   
balance is equal to 50% of the sum of the original group 2 pre-funded amount and
the original group 2 principal balance.                                         

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                               HYPOTHETICAL GROUP 2 MORTGAGE LOANS                                 


                  MONTHS                                                     ORIGINAL    REMAINING 
                    TO        MORTGAGE                MAXIMUM     MINIMUM    TERM TO      TERM TO  
    PRINCIPAL      RATE       INTEREST      GROSS     INTEREST   INTEREST    MATURITY    MATURITY  
     BALANCE      CHANGE        RATE        MARGIN      RATE       RATE    (IN-MONTHS)  (IN-MONTHS)
     -------      ------        ----        ------      ----       ----    -----------  -----------

Initial group 2 mortgage loans:                                                                    

                                                                                                   
 $ 6,943,946.55     19        11.424%       7.314%     17.424%    10.424%       360         355    
 $18,223,557.95     22        11.008%       6.935%     17.008%    10.008%       359         357    
 $ 1,103,856.83      4        11.348%       7.650%     17.289%    10.289%       360         357    
 $ 2,728,294.87     35        10.957%       7.036%     17.087%    10.087%       359         358    
 $ 3,100,401.34     36        11.234%       7.220%     17.372%    10.372%       359         359    
 $38,003,065.07     24        10.714%       6.659%     16.714%     9.714%       359         359    
 $57,396,675.16     23        10.683%       6.673%     16.683%     9.683%       360         359    
 $   973,333.97     24         8.330%(1)    6.397%     16.330%     9.330%       360         359    

Subsequent group 2 mortgage loans (first                                                           
subsequent transfer balance as of October 31,                                                      
1999):                                                                                             

 $   828,553.34     36       10.957%       7.036%     17.087%    10.087%       359         359     
 $   941,558.01     36       11.234%       7.220%     17.372%    10.372%       359         359     
 $ 5,534,295.43     24       11.008%       6.935%     17.008%    10.008%       359         359     
 $11,541,115.63     24       10.714%       6.659%     16.714%     9.714%       359         359     
 $ 2,108,800.70     24       11.424%       7.314%     17.424%    10.424%       360         360     
 $17,430,743.11     24       10.683%       6.673%     16.683%     9.683%       360         360     
 $   335,229.26      6       11.348%       7.650%     17.289%    10.289%       360         360     
 $   295,590.89     24        8.330%(1)    6.397%     16.330%     9.330%       360         360     

Subsequent group 2 mortgage loans (second                                                          
subsequent transfer balance as of November 30,                                                     
1999):                                                                                             

 $   828,553.34     36       10.957%       7.036%     17.087%    10.087%       359         359     
 $   941,558.01     36       11.234%       7.220%     17.372%    10.372%       359         359     
 $ 5,534,295.43     24       11.008%       6.935%     17.008%    10.008%       359         359     
 $11,541,115.63     24       10.714%       6.659%     16.714%     9.714%       359         359     
 $ 2,108,800.70     24       11.424%       7.314%     17.424%    10.424%       360         360     
 $17,430,743.11     24       10.683%       6.673%     16.683%     9.683%       360         360     
 $   335,229.26      6       11.348%       7.650%     17.289%    10.289%       360         360     
 $   295,590.89     24        8.330%(1)    6.397%     16.330%     9.330%       360         360     

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

(1) Temporary buydown loan which assumes the mortgage rate increases 1% in month
twelve. Beginning in month twenty-four the mortgage rate adjusts every six      
months based on the six month LIBOR index.                                      

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        Since the following tables were prepared on the basis of the assumptions
in the preceding paragraph, there are discrepancies between the characteristics 
of the actual group 2 mortgage loans and the characteristics of the mortgage    
loans assumed in preparing such table. Any such discrepancy may have an effect  
upon the percentages of the Class 2A note principal balance outstanding and the 
weighted average life of the Class 2A notes set forth in the tables. In         
addition, since the actual group 2 mortgage loans and the trust have            
characteristics which differ from those assumed in preparing the table set forth
below, the distributions of principal on the Class 2A notes may be made earlier 
or later than as indicated in the table.                                        

        It is not likely that the group 2 mortgage loans will prepay to maturity
at the prepayment model specified in the tables below or that all group 2       
mortgage loans will prepay at the same rate. In addition, the diverse remaining 
terms to maturity of the group 2 mortgage loans (which include recently         
originated group 2 mortgage loans) could produce slower or faster distributions 
of principal than are indicated in the table at the various percentages of the  
prepayment model specified even if the weighted average of the remaining terms  
to maturity of the group 2 mortgage loans equals those assumed.                 

      Investors are urged to make their investment decisions on a basis that
includes their determination as to anticipated prepayment rates under a variety 
of the assumptions discussed herein.                                            

      The model used in this prospectus supplement with respect to the Class
2A notes is based on a percentage of CPR as shown in the table entitled         
"Prepayment Scenarios". See "Certain Yield and Prepayment                       
Considerations--Prepayment Model for Class 1A Notes" above.                     

     Based on the foregoing assumptions, the following table indicates the
projected weighted average life of the Class 2A notes.                          

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                       PERCENTAGE OF THE ORIGINAL PRINCIPAL BALANCE OF THE CLASS 2A                        
                                    NOTES OUTSTANDING AT THE RESPECTIVE                                    
                                     PREPAYMENT MODELS SET FORTH BELOW                                     


            Payment Date                Scenario 1    Scenario 2      Scenario 3     Scenario 4  Scenario 5
            ------------                ----------    ----------      ----------     ----------  ----------
                                                                                                           
Initial Percentage...................       100%          100%            100%          100%         100%  
September 25, 2000...................        86            76              68            61           52   
September 25, 2001...................        76            59              47            37           25   
September 25, 2002...................        68            46              34            25           15   
September 25, 2003...................        60            36              24            16            8   
September 25, 2004...................        53            29              17            10            0   
September 25, 2005...................        47            23              12             7            0   
September 25, 2006...................        42            18               9             0            0   
September 25, 2007...................        37            15               6             0            0   
September 25, 2008...................        33            12               4             0            0   
September 25, 2009...................        29             9               0             0            0   
September 25, 2010...................        26             7               0             0            0   
September 25, 2011...................        23             6               0             0            0   
September 25, 2012...................        21             4               0             0            0   
September 25, 2013...................        18             4               0             0            0   
September 25, 2014...................        16             3               0             0            0   
September 25, 2015...................        14             0               0             0            0   
September 25, 2016...................        12             0               0             0            0   
September 25, 2017...................        11             0               0             0            0   
September 25, 2018...................         9             0               0             0            0   
September 25, 2019...................         8             0               0             0            0   
September 25, 2020...................         7             0               0             0            0   
September 25, 2021...................         6             0               0             0            0   
September 25, 2022...................         5             0               0             0            0   
September 25, 2023...................         4             0               0             0            0   
September 25, 2024...................         3             0               0             0            0   
September 25, 2025...................         2             0               0             0            0   
September 25, 2026...................         2             0               0             0            0   
September 25, 2027...................         0             0               0             0            0   
September 25, 2028...................         0             0               0             0            0   
September 25, 2029...................         0             0               0             0            0   
Weighted Average Life (1)(2) years...      7.71          3.98            2.74          2.08         1.51   
Weighted Average Life (1)(3) years...      7.72          4.05            2.82          2.17         1.58   
--------------------------                                                                                 

(1) The weighted average life of a Class 2A note is determined by (1)           
  multiplying the amount of cash distributions in reduction of the principal
balance of such note by the number of years from the date of issuance of
  such Class 2A note to the stated payment date, (2) adding the results, and
    (3) dividing the sum by the initial principal balance of such Class 2A note.

(2) Assumes servicer exercises its right of optional termination at the earliest
permissible date.                                                       

(3) Assumes that the Class 2A notes remain outstanding to their maturity.       

 The rate of prepayment on a pool of mortgage loans is affected by
prevailing market rates for mortgage loans of a comparable term and risk level. 
When the market interest rate is below the mortgage coupon, mortgagors may have 
an increased incentive to refinance their mortgage loans. Depending on          
prevailing market rates, the future outlook for market rates and economic       
conditions generally, some mortgagors may sell or refinance mortgaged properties
in order to realize their equity in the mortgaged properties, to meet cash flow 
needs or to make other investments. The seller makes no representation as to the
particular factors that will affect the prepayment of the group 2 mortgage      
loans, as to the relative                                                       

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importance of such factors, as to the percentage of the principal balance of the
group 2 mortgage loans that will be paid as of any date or as to the overall    
rate of prepayment on the group 2 mortgage loans.                               

LIMITATION ON ADJUSTMENTS                                       

Although each of the group 2 mortgage loans bears interest at an
adjustable mortgage rate, the adjustments of the mortgage rate for any group 2  
mortgage loan will not exceed the periodic rate cap and the mortgage rate will  
in no event exceed the maximum mortgage rate or be less than the minimum        
mortgage rate for such group 2 mortgage loan, regardless of the level of        
interest rates generally or the rate otherwise produced by adding the six-month 
LIBOR index and the gross margin. In addition, such adjustments will be subject 
to rounding to the nearest 0.125%.                                              

THE SELLER

        For further information regarding the seller, see "The Depositor" in the
prospectus.                                                                     

LOAN ORIGINATION HISTORY                                                        

 The seller originates mortgage loans on single family properties,
multifamily properties, commercial properties, mixed-use and manufactured home  
properties nationwide and purchases mortgage loans from lenders, mortgage       
bankers, and brokers on a wholesale basis. The seller conducts loan origination 
and/or wholesale operations in all states in the United States except Alaska and
Hawaii. The dollar amounts of first and second mortgage loans originated and    
purchased by the seller, collectively, during the twelve month periods ended    
June 30, 1999, 1998, 1997 and 1996 were approximately $2,059,988,000,           
$1,568,485,000, $998,988,000 and $727,327,000, respectively.                    

UNDERWRITING CRITERIA                                                           

        All of the mortgage loans were or will be originated or purchased by the
seller and are or will be serviced by the servicer. All mortgage loan           
applications are underwritten, and properties appraised, prior to origination   
and/or purchase by the seller. All loans are reviewed and approved by a loan    
officer of the seller, each of whom has specific credit limits based on         
experience and seniority. However, only twenty-five senior loan officers can    
approve loan applications from $150,001-$250,000, only thirteen executive       
officers of the seller can approve loan applications from $250,001-$400,000 and 
only three senior executive officers of the seller can approve loan applications
from $400,001-$500,000. All loan applications over $500,000 require the approval
of two specific senior executive officers of the seller and ratification by the 
board of directors of the seller.                                               

        Borrower loan applications are reviewed through a combination of reviews
of credit bureau reports and/or individual certifications. Income is determined 
through various means, including applicant interviews, written verifications    
with employers and review of pay stubs and tax returns, and a determination is  
made that the borrower has a sufficient level of disposable income to satisfy   
debt repayment requirements.                                                    

       Substantially all properties of the seller are appraised by independent
fee appraisers approved by the seller in advance of funding, although in rare   
instances the appraisal may be performed by a licensed                          

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in-house appraiser of the seller. In addition, as part of the seller's quality  
control audit procedures, approximately one of every ten properties with respect
to a loan originated or purchased by the seller is then reappraised by a        
different appraiser and approximately 10% of all loans originated or purchased  
are reunderwritten. With respect to manufactured homes, standard Fannie Mae     
manufactured housing appraisal guidelines are used by both staff and independent
fee appraisers. Loans are closed through approved attorneys, title insurers or  
agents of title insurers and escrow companies, and the lien position is insured 
by major title companies. The seller makes loans primarily on suburban and urban
single family homes in major metropolitan areas. In addition, the seller makes  
loans secured by owner-occupied and investor properties which include a         
commercial unit. Loans secured by multifamily properties and mixed residential  
and commercial structures are also made where the loan proceeds may be used by  
the borrower for business purposes.                                             

     The maximum permitted combined loan-to-value ratio and debt-to-income
ratio guidelines for each underwriting program and class are set forth herein   
under "The Seller-Underwriting Criteria-Group 1" and "The Seller-Underwriting   
Criteria-Group 2". Approximately 28.86% of the group 1 initial mortgage loans   
(by original group 1 principal balance) were underwritten to Classes IIB, III,  
III-SE, IV, IV-PI and V.                                                        

       Approximately 44.54% of the group 2 initial mortgage loans, by original
group 2 principal balance, were underwritten to Classes IIB, III, III-SE, IV,   
IV-PI and V.                                                                    

GROUP 1                                                         

Single Family Loans. Approximately 86.02% of the group 1 initial
mortgage loans, by original group 1 principal balance, were originated or       
purchased by the seller pursuant to its Fixed-Rate Mortgage Program underwriting
guidelines. The Fixed-Rate Mortgage Program Underwriting Guidelines are         
primarily intended to evaluate a borrower's credit standing and ability to repay
a mortgage loan and to assess the value of the related mortgaged property as    
collateral for such mortgage loan.                                              

     The group 1 mortgage loans are originated primarily for borrowers who
are refinancing existing debt, which may include mortgage loans. Therefore, the 
related mortgage may be either a senior or junior lien. In general, the         
borrowers, in connection with certain lower numbered and earlier alphabetically 
designated underwriting classes, have a history of paying consumer and prior    
mortgage debt predominantly in a timely manner or, instead, in connection with  
certain higher numbered and later alphabetically designated underwriting        
classes, may have payment histories that include up to three payments missed on 
a prior mortgage obligation and/or, in some cases, major derogatory credit items
such as outstanding judgments or prior bankruptcies.                            

     The Fixed-Rate Mortgage Program allows originations of mortgage loans
secured by primary residences or investment properties.                         

        Several different underwriting classes are used to categorize borrowers'
creditworthiness. In addition to general Fixed-Rate Mortgage Program            
underwriting guidelines, each class has guidelines relating to maximum permitted
combined loan-to-value ratio, maximum permitted debt-to-income ratio and        
acceptable consumer credit and mortgage credit delinquencies and defaults.      
Generally, higher numbered and later alphabetically designated underwriting     
classes (as set forth in the table below) permit                                

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a greater number of derogatory credit items than the lower numbered and earlier 
alphabetically designated underwriting classes.                                 

    Each underwriting class has guidelines and standards for the type of
income, employment and asset verification performed prior to closing the loan.  
In general, the Fixed-Rate Mortgage Program does not require verification of the
source of the borrower's assets to close the loan because this is not deemed to 
be a critical credit factor in the case of a refinanced mortgage loan. The      
Fixed-Rate Mortgage Program Class AAA, Class AA, Class I, Class II and Class IIB
generally require the verification of employment and income that is stated on   
the borrower's application. The Class ANIV, Class III and Class III-SE program  
guidelines generally require verification of employment without verification of 
income that must be stated on the application. The Class IV program generally   
requires the verification of income that is stated on the application. The Class
IV-PI program generally requires the verification of fifty percent of income    
that is stated on the application. The Class V program generally requires the   
verification of all income that can be verified by independent means. Generally,
the maximum permitted combined loan-to-value ratio and debt-to-income ratio     
guidelines for each Fixed-Rate Mortgage Program underwriting class are as       
follows:                                                                        

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                             FIXED-RATE MORTGAGE PROGRAM                                 
                                 SINGLE FAMILY LOANS                                     


                                                               MAXIMUM                   
                                                              PERMITTED        MAXIMUM   
                                                               COMBINED       PERMITTED  
UNDERWRITING                                                LOAN-TO-VALUE  DEBT-TO-INCOME
   CLASS                      PROPERTY TYPE                     RATIO           RATIO    
   -----                      -------------                     -----           -----    
                                                                                         
    AAA       Owner Occupied One- to Four-Family                 80%             45%     
              Owner Occupied Condominium/Townhouse/PUD           80%             45%     
              Non-Owner Occupied One- to Four-Family             N/A             N/A     
              Non-Owner Occupied Condominium/Townhouse/PUD       N/A             N/A     

     AA       Owner Occupied One- to Four-Family                 80%             45%     
              Owner Occupied Condominium/Townhouse/PUD           85%             45%     
              Non-Owner Occupied One- to Four-Family             80%             45%     
              Non-Owner Occupied Condominium/Townhouse/PUD       75%             45%     

    ANIV      Owner Occupied One- to Four-Family                 75%             40%     
              Owner-Occupied Condominium/Townhouse/PUD           80%             40%     
              Non-Owner Occupied One- to Four-Family             75%             40%     
              Non-Owner Occupied Condominium/Townhouse/PUD       70%             40%     

     I        Owner Occupied One- to Four-Family                 80%             50%     
              Owner Occupied Condominium/Townhouse/PUD           85%             50%     
              Non-Owner Occupied One- to Four-Family             80%             50%     
              Non-Owner Occupied Condominium/Townhouse/PUD       70%             50%     

     II       Owner Occupied One- to Four-Family                 75%             50%     
              Owner Occupied Condominium/Townhouse/PUD           80%             50%     
              Non-Owner Occupied One- to Four-Family             75%             50%     
              Non-Owner Occupied Condominium/Townhouse/PUD       70%             50%     

    IIB       Owner Occupied One- to Four-Family                 75%             50%     
              Owner Occupied Condominium/Townhouse/PUD           75%             50%     
              Non-Owner Occupied One- to Four-Family             75%             50%     
              Non-Owner Occupied Condominium/Townhouse/PUD       70%             50%     

    III       Owner Occupied One- to Four-Family                 70%             45%     
              Owner Occupied Condominium/Townhouse/PUD           75%             45%     
              Non-Owner Occupied One- to Four-Family             70%             45%     
              Non-Owner Occupied Condominium/Townhouse/PUD       60%             45%     

   III-SE     Owner Occupied One- to Four-Family                 70%             45%     
              Owner Occupied Condominium/Townhouse/PUD           75%             45%     
              Non-Owner Occupied One- to Four-Family             70%             45%     
              Non-Owner Occupied Condominium/Townhouse/PUD       60%             45%     

     IV       Owner Occupied One- to Four-Family                 70%             45%     
              Owner Occupied Condominium/Townhouse/PUD           70%             45%     
              Non-Owner Occupied One- to Four-Family             65%             45%     
              Non-Owner Occupied Condominium/Townhouse/PUD       55%             45%     

   IV-PI      Owner Occupied One- to Four-Family                 70%             45%     
              Owner Occupied Condominium/Townhouse/PUD           70%             45%     
              Non-Owner Occupied One- to Four-Family             65%             45%     
              Non-Owner Occupied Condominium/Townhouse/PUD       55%             45%     

     V        Owner Occupied One- to Four-Family                 65%             45%     
              Owner Occupied Condominium/Townhouse/PUD           55%             45%     
              Non-Owner Occupied One- to Four-Family             55%             45%     

      The maximum permitted combined loan-to-value ratio may be increased by
5% for Classes AAA, AA, ANIV, I, II, IIB, III, III-SE, IV and IV-PI on only     
owner occupied one- to four-family dwellings and units in planned unit          
developments, if the borrowers have exhibited an excellent mortgage payment     
history, verified for the most recent twelve month period.                      

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        Further adjustments to both the maximum permitted combined loan-to-value
ratio and the maximum permitted debt-to-income ratio are available only on owner
occupied one- to four-family dwellings and units in planned unit developments,  
through utilization of the "rate add-on feature". This feature, offered on all  
loan classes with the exception of Class V, typically allows the loan-to-value  
ratio to be increased a maximum of 10%. The rate add-on feature is no longer    
available on any other property type but, rather, has been incorporated into the
maximum permitted combined loan-to-value ratio and the maximum permitted        
debt-to-income ratio at origination.                                            

        Down payment requirements for purchase money transactions are verifiable
liquid assets of the borrower. In addition, the minimum cash down payment       
required to be provided by the borrower, which may include any gift received by 
the borrower, is 10% of the sale price, except with respect to Class AAA, Class 
AA and Class I which is 5% of the sale price. For all classes with the exception
of V, if the property is an owner-occupied one- to four-family residence, a     
seller financed subordinate mortgage loan is allowed. In some cases a seller    
financed subordinate loan may exceed 20% of the purchase price.                 

  On a case-by-case basis, the seller may determine that, based upon
compensating factors, a prospective borrower not strictly qualifying under the  
class guidelines warrants an underwriting exception. Compensating factors may   
include, but are not limited to, low combined loan-to-value ratio, low          
debt-to-income ratio, good credit history, stable employment and duration of    
residence at the applicant's current address.                                   

    Manufactured Home Loans. The manufactured home loans included in the
initial group 1 (approximately 11.23% of the group 1 initial mortgage loans, by 
original group 1 principal balance) were originated or purchased by the seller  
pursuant to its Manufactured Home Loan Program. The Manufactured Home Loan      
Program allows origination of fixed-rate and adjustable-rate first lien mortgage
loans on manufactured homes that have been permanently affixed to a permanent   
foundation and to the real property. In addition, the Manufactured Home Loan    
Program allows origination of fully amortizing loans only, with standard        
amortization terms up to thirty (30) years based on the loan amount. Generally, 
for loans of $50,000 and above the maximum term available is 30 years including 
balloon loans which provide for equal monthly payments of principal and interest
based on a thirty year amortization schedule, and a single payment of the       
remaining principal balance of the balloon loan at the end of the 15th year     
following origination; for loans from $25,000 to $49,999 the maximum term is 25 
years; and for loans of less than $25,000 the maximum term is 10 years. Subject 
to certain limitations, the manufactured home, may be either a second home or a 
vacation home.                                                                  

    The seller's underwriting standards under the Manufactured Home Loan
Program are primarily intended to evaluate a borrower's credit standing and     
ability to repay a mortgage loan and to assess the value of the manufactured    
home and underlying real estate as collateral for such mortgage loan. In        
general, the seller's underwriting guidelines with respect to eligible borrowers
under the Manufactured Home Loan Program are the same as those under the        
seller's Fixed-Rate Mortgage Program or Adjustable-Rate Mortgage Program, as the
case may be.                                                                    

       The Manufactured Home Loan Program underwriting guidelines with respect
to eligible properties are, in general, the same as those for the Fixed-Rate    
Mortgage Program or Adjustable-Rate Mortgage Program, as the case may be, with  
necessary modifications due to the nature of the product. The Manufactured Home 
must be constructed pursuant to Federal Manufactured Home Construction and      
Safety Standards and the property must be zoned 1-4 family residential. The     
wheels, axles and trailer                                                       

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hitch must have been removed and the home must be permanently affixed to a      
permanent foundation on the real estate. The seller requires a manufactured     
housing unit (ALTA 7 or state equivalent) endorsement from each title insurer of
a Manufactured Home Loan stating that the insurer agrees that the related       
manufactured housing unit is included within the term "land" when used in the   
title policy. Each underwriting class, in addition to standard Fixed-Rate       
Mortgage Program guidelines or Adjustable-Rate Mortgage Program guidelines, as  
the case may be, has guidelines as to the maximum permitted loan-to-value ratio 
based on the size of the manufactured home (single-wide or multi-wide).         
Generally, higher numbered and later alphabetically designated underwriting     
classes (as set forth in the table below) permit a greater number of derogatory 
credit items than the lower numbered and earlier alphabetically designated      
underwriting classes.                                                           

MANUFACTURED HOME LOAN PROGRAM

                                                MAXIMUM          MAXIMUM
                                                PERMITTED        PERMITTED
   UNDERWRITING                                 LOAN-TO-VALUE   DEBT-TO-INCOME
   CLASS           PROPERTY TYPE                RATIO            RATIO
   -----           -------------                -----            -----

    AA         Owner Occupied Single-wide        85%               45%
               Owner Occupied Multi-wide         90%               45%

    ANIV       Owner Occupied Single-wide        75%               45%
               Owner Occupied Multi-wide         85%               45%

    I          Owner Occupied Single-wide        85%               50%
               Owner Occupied Multi-wide         90%               50%

    II         Owner Occupied Single-wide        80%               50%
               Owner Occupied Multi-wide         85%               50%

    IIB        Owner Occupied Single-wide        75%               45%
               Owner Occupied Multi-wide         80%               45%

    III        Owner Occupied Single-wide        70%               45%
               Owner Occupied Multi-wide         80%               45%

    III-SE     Owner Occupied Single-wide        70%               45%
               Owner Occupied Multi-wide         80%               45%

    IV         Owner Occupied Single-wide        70%               45%
               Owner Occupied Multi-wide         75%               45%

    Multifamily Loans and Mixed-Use Loans. The multifamily and mixed-use
loans included in the initial group 1 (approximately 2.07% of the group 1       
initial mortgage loans, by original group 1 principal balance) were originated  
or purchased by the seller pursuant to its Fixed Rate Mortgage                  
Program--Multifamily and Mixed-Use. The seller primarily underwrites loans for 5
or more unit apartment buildings for multifamily loan transactions and the      
seller primarily underwrites mixed-use property loans for 3 or more unit        
buildings with a minimum 40% residential component in Arkansas, Arizona,        
California, Colorado, Connecticut, Delaware, Florida, Georgia, Idaho, Illinois, 
Indiana, Louisiana, Maine, Massachusetts, Maryland, Michigan, Minnesota,        
Missouri, New Hampshire, New Jersey, New York, North Carolina, Ohio, Oregon,    
Pennsylvania, Rhode Island, South Carolina,                                     

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Tennessee, Texas, Utah, Virginia, Washington, Wisconsin and the District of     
Columbia under the Fixed-Rate Mortgage Program--Multifamily and Mixed-Use.      

 The seller's underwriting standards under the Fixed Rate Mortgage
Program--Multifamily and Mixed Use are primarily intended to assess the ability 
of the mortgaged property to generate adequate cash flow to support the mortgage
and to a lesser extent, the financial capabilities and managerial ability of the
mortgagor. In determining whether a loan should be granted, the seller considers
the reliability of the income stream from the property, the debt service        
coverage ratios and the adequacy of such property as collateral for the mortgage
loan, the creditworthiness of the mortgagor and the mortgagor's management      
experience. The "debt service coverage ratio" or "DSCR" with respect to a       
mortgaged property means (a) the annual net operating income for the related    
mortgaged property used in underwriting the related mortgage loan divided by (b)
the annual debt service (principal and interest) for such mortgage loan. While  
their primary consideration in underwriting a mortgage loan is the mortgaged    
property, sufficient documentation on the mortgagor is required to establish the
financial strength and ability of the borrower to successfully operate the      
mortgaged property and meet the obligations of the note and the mortgage.       

     Under the Fixed Rate Mortgage Program--Multifamily and Mixed-Use, the
amount of the mortgage loan is not more than 75% of the appraised value. The    
debt service coverage ratio ("DSCR") is not less than 1.20.                     

       The Fixed Rate Mortgage Program--Multifamily and Mixed-Use requires the
inspection of the property and records regarding the property are inspected to  
determine that the property is in compliance with current zoning requirements,  
the number of buildings on the property, the proximity of the property to       
natural hazards and flood zones and whether there are any negative environmental
factors. The property must front on publicly dedicated and maintained streets   
with provisions for adequate and safe ingress and egress. Also, the title is    
reviewed to determine if there are any covenants, conditions and restrictions or
easements on the property. The properties are appraised by licensed and insured 
independent appraisers approved by the seller and reviewed either by the        
seller's property evaluation department and/or an outside consultant.           

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 Generally, the maximum permitted combined loan-to-value ratio and
minimum permitted debt service coverage ratio guidelines for each underwriting  
class are as follows:                                                           

 FIXED-RATE MORTGAGE PROGRAM
 MULTIFAMILY AND MIXED-USE

                                   MAXIMUM
                                                   PERMITTED         MINIMUM
                                                    COMBINED         PERMITTED
    UNDERWRITING                                   LOAN-TO-VALUE    DEBT SERVICE
      CLASS                PROPERTY TYPE             RATIO          COVERAGE
      -----                -------------             -----          --------

      AA       Owner Occupied.................       75%             1.20%
               Non-Owner Occupied.............       70%             1.20%

      I        Owner Occupied.................       75%             1.20%
               Non-Owner Occupied.............       70%             1.20%

      II       Owner Occupied.................       65%             1.20%
               Non-Owner Occupied.............       60%             1.20%

      IV       Owner Occupied.................       55%             1.35%
               Non-Owner Occupied.............       50%             1.35%

      V        Owner Occupied.................       55%             1.35%
               Non-Owner Occupied.............       50%             1.35%

      Commercial Loans. The commercial loans included in the initial group 1
(approximately 0.68% of the group 1 initial mortgage loans, by original group 1 
principal balance) were originated or purchased by the seller pursuant to its   
Commercial Property Program. The properties primarily consist of commercial     
and/or office space with a minimum of three tenants.                            

 The seller's underwriting standards under the Commercial Property
Program are primarily intended to assess the ability of the mortgaged property  
to generate adequate cash flow to support the mortgage and to a lesser extent,  
the financial capabilities and managerial ability of the mortgagor. In          
determining whether a loan should be granted, the seller considers the          
reliability of the income stream from the property, the DSCRs and the adequacy  
of such property as collateral for the mortgage loan, the creditworthiness of   
the mortgagor and the mortgagor's management experience. While the primary      
consideration in underwriting a mortgage loan under this program is the         
mortgaged property, sufficient documentation on the mortgagor is required to    
establish the financial strength and ability of the borrower to successfully    
operate the mortgaged property and meet the obligations of the note and the     
mortgage.                                                                       

      Under the Commercial Property Program, the amount of the mortgage loan
is not more than 70% of the appraised value. The DSCR is not less than 1.25.    

       The Commercial Property Program requires the inspection of the property
and records regarding the property to determine that the property is in         
compliance with current zoning requirements, the number of buildings on the     
property, the proximity of the property to natural hazards and flood zones and  
whether there are any negative environmental factors. The property must front on
publicly dedicated and maintained streets with provisions for adequate and safe 
ingress and egress. Also, the title is reviewed to                              

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determine if there are any covenants, conditions and restrictions or easements  
on the property. The properties are appraised by licensed and insured           
independent appraisers approved by the seller and reviewed either by the        
seller's property evaluation department and/or an outside consultant.           

 Generally, the maximum permitted combined loan-to-value ratio and
minimum permitted DSCR guidelines for each underwriting class are as follows:   

 COMMERCIAL PROPERTY PROGRAM

                                 MAXIMUM
                                                 PERMITTED         MINIMUM
                                                  COMBINED         PERMITTED
   UNDERWRITING                                  LOAN-TO-VALUE    DEBT SERVICE
        CLASS                PROPERTY TYPE            RATIO       COVERAGE RATIO
        -----                -------------            -----       --------------

     A        Owner Occupied................       70%             1.25%
              Non-Owner Occupied............       65%             1.25%

     I        Owner Occupied................       70%             1.25%
              Non-Owner Occupied............       65%             1.25%

     II       Owner Occupied................       65%             1.35%
              Non-Owner Occupied............       60%             1.35%

     IV       Owner Occupied................       55%             1.45%
              Non-Owner Occupied............       50%             1.45%

     V        Owner Occupied................       55%             1.45%
              Non-Owner Occupied............       50%             1.45%

GROUP 2                                                         

Single Family Loans. Approximately 86.66% of the group 2 initial
mortgage loans, by original group 2 principal balance, were originated or       
purchased by the seller pursuant to its Adjustable-Rate First Mortgage Program  
underwriting guidelines. The Adjustable-Rate First Mortgage Program guidelines  
are primarily intended to evaluate a borrower's credit standing and ability to  
repay a mortgage loan and to assess the value of the related mortgaged property 
as collateral for such mortgage loan.                                           

     The group 2 mortgage loans are originated primarily for borrowers who
are refinancing existing debt. In general, the borrowers, in connection with    
certain lower numbered and earlier alphabetically designated underwriting       
classes, have a history of paying consumer and prior mortgage debt predominantly
in a timely manner or, instead, in connection with certain higher numbered and  
later alphabetically designated underwriting classes, may have payment histories
that include up to three payments missed on a prior mortgage obligation and/or, 
in some cases, major derogatory credit items such as outstanding judgments or   
prior bankruptcies.                                                             

 Several different underwriting classes are used to categorize the
creditworthiness of borrowers. In addition to general Adjustable-Rate First     
Mortgage Program guidelines, each class has guidelines relating to maximum      
permitted loan-to-value ratio, maximum permitted debt-to-income ratio and       
acceptable consumer credit and mortgage credit delinquencies and defaults.      
Generally, higher numbered and later                                            

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alphabetically designated underwriting classes (as set forth in the table below)
permit a greater number of derogatory credit items than the lower numbered and  
earlier alphabetically designated underwriting classes.                         

    Each underwriting class has guidelines and standards for the type of
income, employment and asset verification performed prior to closing the loan.  
In general, the Adjustable-Rate First Mortgage Program does not require         
verification of the source of the borrower's assets to close the loan because   
this is not deemed to be a critical credit factor in the case of a refinanced   
mortgage loan. The Adjustable-Rate First Mortgage Program Class AA, Class I,    
Class II and Class IIB generally require the verification of employment and     
income that is stated on the borrower's application. The Class ANIV, Class III  
and Class III-SE program guidelines generally require verification of employment
without verification of income that must be stated on the application. The Class
III-SE program, although originally intended for self-employed borrowers only,  
is now used as a credit class for all borrowers. The Class IV program generally 
requires the verification of income that is stated on the application. The Class
IV-PI program generally requires the verification of fifty percent of income    
that is stated on the application. The Class V program generally requires the   
verification of all income that can be verified by independent means.           

Generally, the maximum permitted loan-to-value ratio and maximum
permitted debt-to-income ratio guidelines for each underwriting class are as    
follows:                                                                        

ADJUSTABLE-RATE FIRST MORTGAGE PROGRAM

                                                        [Enlarge/Download Table]


                                                              MAXIMUM         MAXIMUM   
                                                             PERMITTED       PERMITTED  
UNDERWRITING                                               LOAN-TO-VALUE  DEBT-TO-INCOME
   CLASS                     PROPERTY TYPE                     RATIO           RATIO    
   -----                     -------------                     -----           -----    

                                                                                        
     AA      Owner Occupied One- to Four-Family                 80%             45%     
             Owner Occupied Condominium/Townhouse/PUD           85%             45%     
             Non-Owner Occupied One- to Four-Family             80%             45%     
             Non-Owner Occupied Condominium/Townhouse/PUD       75%             45%     

    ANIV     Owner Occupied One- to Four-Family                 75%             40%     
             Owner Occupied Condominium/Townhouse/PUD           80%             40%     
             Non-Owner Occupied One- to Four-Family             75%             40%     
             Non-Owner Occupied Condominium/Townhouse/PUD       70%             40%     

     I       Owner Occupied One- to Four-Family                 80%             50%     
             Owner Occupied Condominium/Townhouse/PUD           85%             50%     
             Non-Owner Occupied One- to Four-Family             80%             50%     
             Non-Owner Occupied Condominium/Townhouse/PUD       70%             50%     

     II      Owner Occupied One- to Four-Family                 75%             50%     
             Owner Occupied Condominium/Townhouse/PUD           80%             50%     
             Non-Owner Occupied One- to Four-Family             75%             50%     
             Non-Owner Occupied Condominium/Townhouse/PUD       70%             50%     

    IIB      Owner Occupied One- to Four-Family                 75%             50%     
             Owner Occupied Condominium/Townhouse/PUD           75%             50%     
             Non-Owner Occupied One- to Four-Family             75%             50%     
             Non-Owner Occupied Condominium/Townhouse/PUD       70%             50%     

   III-SE    Owner Occupied One- to Four-Family                 70%             45%     
             Owner Occupied Condominium/Townhouse/PUD           75%             45%     

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                                                                [Download Table]
                                                             
       Non-Owner Occupied One- to Four-Family        70%  45%
       Non-Owner Occupied Condominium/Townhouse/PUD  60%  45%

 III   Owner Occupied One- to Four-Family            70%  45%
       Owner Occupied Condominium/Townhouse/PUD      75%  45%
       Non-Owner Occupied One- to Four-Family        70%  45%
       Non-Owner Occupied Condominium/Townhouse/PUD  60%  45%

  IV   Owner Occupied One- to Four-Family            70%  45%
       Owner Occupied Condominium/Townhouse/PUD      70%  45%
       Non-Owner Occupied One- to Four-Family        65%  45%
       Non-Owner Occupied Condominium/Townhouse/PUD  55%  45%

IV-PI  Owner Occupied One- to Four-Family            70%  45%
       Owner Occupied Condominium/Townhouse/PUD      70%  45%
       Non-Owner Occupied One- to Four-Family        65%  45%
       Non-Owner Occupied Condominium/Townhouse/PUD  55%  45%

  V    Owner Occupied One- to Four-Family            65%  45%
       Owner Occupied Condominium/Townhouse/PUD      55%  45%
       Non-Owner Occupied One- to Four-Family        55%  45%

       The maximum permitted loan-to-value ratio may be increased 5% for Class
AA, ANIV, I, II, IIB, III-SE, III, IV and IV-PI on owner-occupied one- to       
four-family dwellings only, if the borrowers have exhibited an excellent        
mortgage payment history, verified for the most recent twelve month period.     

     Further adjustments to both maximum permitted loan-to-value ratio and
maximum permitted debt-to-income ratio are available only on owner-occupied one-
to four-family dwellings, through utilization of the rate add-on feature. This  
feature, offered on all loan classes with the exception of Class V, typically   
allows the loan-to-value ratio to be increased a maximum of 10%. The rate add-on
feature is no longer available on any other property type but, rather, has been 
incorporated into the maximum permitted combined loan-to-value ratio and the    
maximum permitted debt-to-income ratio at origination.                          

        Down payment requirements for purchase money transactions are verifiable
liquid assets of the borrower. In addition, the minimum cash down payment       
required to be provided by the borrower, which may include any gift received by 
the borrower, is 10% of the sale price, except with respect to Class AA and     
Class I which is 5% of the sale price. For all classes with the exception of V, 
if the property is an owner-occupied one- to four-family residence, a seller    
financed subordinate mortgage loan is allowed. In some cases a seller financed  
subordinate loan may exceed 20% of the purchase price.                          

  On a case-by-case basis, the seller may determine that, based upon
compensating factors, a prospective borrower not strictly qualifying under the  
guidelines of a particular class warrants an underwriting exception.            
Compensating factors may include, but are not limited to, low loan-to-value     
ratio, low debt-to-income ratio, good credit history, stable employment and time
in residence at the applicant's current address.                                

       Manufactured Home Loans. All of the manufactured home loans included in
the initial group 2 (approximately 13.34% of the group 2 initial mortgage loans,
by original group 2 principal balance) were originated or purchased by the      
seller pursuant to its Manufactured Home Loan Program as described above under  
the caption "The Seller-Underwriting Criteria-Group 1".                         

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THE ISSUER AND THE INDENTURE

     AFC Trust Series 1999-3, the issuer, is a business trust to be formed
under the laws of the State of Delaware under an owner trust agreement, dated as
of September 1, 1999, between the seller and the owner trustee for the          
transactions described in this prospectus supplement. The owner trust agreement 
constitutes the "governing instrument" under the laws of the State of Delaware  
relating to business trusts. AFC Trust Certificates, Series 1999-3, referred to 
in this prospectus supplement as the "equity certificates", will be issued      
pursuant to the owner trust agreement and will represent the beneficial         
ownership interest in the issuer. The equity certificates will be transferred by
the issuer to the seller as partial consideration for the mortgage loans to be  
sold by the seller on the closing date to the issuer pursuant to a sale and     
servicing agreement. The equity certificates are not being offered by this      
prospectus supplement or the accompanying prospectus. After its formation, the  
issuer will not engage in any activity other than:                              

        o       acquiring and holding the mortgage loans and the
 proceeds from the mortgage loans,

      o       issuing the notes and the equity certificates,

                o       making payments on the notes and the equity certificates
and                             

        o       engaging in other activities that are necessary,
                     suitable or convenient to accomplish the foregoing or
              are incidental thereto or connected therewith.

        The issuer is not expected to have any significant assets other than the
trust estate pledged as collateral to secure the notes. The trust estate will   
consist primarily of the mortgage loans and all amounts distributable thereon.  
The issuer's principal offices are located in Wilmington, Delaware, in care of  
Wilmington Trust Company, as owner trustee.                                     

THE OWNER TRUSTEE                                                               

      Wilmington Trust Company will act as the owner trustee under the owner
trust agreement. The owner trustee is a Delaware banking corporation and its    
principal offices are located in Rodney Square North, 1100 North Market Street, 
Wilmington, Delaware 19890.                                                     

      Neither the owner trustee nor any director, officer or employee of the
owner trustee will be under any liability to the issuer or the noteholders under
the owner trust agreement under any circumstances, except for the owner         
trustee's own misconduct, gross negligence, bad faith or grossly negligent      
failure to act or for the inaccuracy of the representations made by the owner   
trustee in the owner trust agreement. All persons into which the owner trustee  
may be merged or with which it may be consolidated or any person resulting from 
a merger or consolidation shall be the successor of the owner trustee under the 
owner trust agreement.                                                          

      Certain functions of the owner trustee under the owner trust agreement
and the sale and servicing agreement will be performed by the indenture trustee,
including maintaining the certificate distribution account and making           
distributions to holders of equity certificates.                                

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        The principal compensation to be paid to the owner trustee in respect of
its obligations under the owner trust agreement will be paid by the seller      
pursuant to a separate fee agreement.                                           

THE INDENTURE TRUSTEE                                                           

      On the closing date, the issuer will pledge the mortgage loans and its
other assets to the indenture trustee under an indenture between the issuer and 
LaSalle Bank National Association, a nationally chartered commercial bank, as   
indenture trustee. The indenture trustee's offices for notices under the        
indenture are located at 135 LaSalle Street, Suite 200, Chicago, Illinois 60603.
The indenture trustee will be appointed note registrar and paying agent pursuant
to the indenture.                                                               

   In order to provide for the payment of the fees and expenses of the
indenture trustee, the indenture trustee will establish and maintain a trust    
expense account for each group into which the indenture trustee will deposit on 
each payment date, one-twelfth of the annual trustee expense amount. The annual 
trustee expense amount with respect to each mortgage loan is equal to 0.01% per 
annum times the related principal balance. Amounts on deposit in the related    
trustee expense account will be withdrawn pursuant to the terms of the indenture
to pay the fees and expenses of the indenture trustee with respect to the       
related group. On each payment date, the indenture trustee will pay from amounts
on deposit in the related note distribution account, prior to making any        
required distributions to the noteholders, an amount that is sufficient to pay  
the monthly premium due the note insurer.                                       

       The indenture trustee may resign at any time in the manner set forth in
the indenture, in which event the servicer will be obligated to appoint a       
successor indenture trustee. The indenture trustee may be removed if it ceases  
to be eligible to continue as such under the indenture, if it becomes insolvent 
or if it fails to perform in accordance with the indenture. The indenture       
trustee may also be removed by the seller without cause, as long as the note    
insurer consents to such removal. Any resignation or removal of the indenture   
trustee and appointment of a successor indenture trustee will not become        
effective until the acceptance of appointment by a successor indenture trustee. 
The indenture trustee may appoint a custodian to hold the mortgage loans and has
initially appointed itself to act in such capacity. The seller may maintain     
other banking relationships in the ordinary course of business with the         
indenture trustee and any custodian.                                            

YEAR 2000 COMPLIANCE                                            

      The indenture trustee will represent in the indenture that it has used
reasonable commercial efforts to cure any deficiencies with regard to the       
manipulation or calculation of dates beyond December 31, 1999 in the internally 
maintained computer software systems used by the indenture trustee in the       
conduct of its trust business which would materially and adversely affect its   
ability to perform its obligations under the indenture and the sale and         
servicing agreement. The indenture trustee will further represent in the        
indenture that it will use reasonable commercial best efforts to obtain         
reasonable assurances from each third party vendor of licensed computer software
systems used by the indenture trustee in the conduct of its trust business that 
such vendors shall use reasonable commercial efforts to cure any deficiencies   
with regards to the manipulation or calculation of dates beyond December 31,    
1999 in such systems which would materially and adversely affect the ability of 
the indenture trustee to perform its obligations under the indenture and the    
sale and servicing agreement.                                                   

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DESCRIPTION OF THE NOTES

  The issuer will issue two classes of notes, Class 1A and Class 2A,
pursuant to the indenture. The Class 1A notes will have an initial Class 1A note
principal balance of $315,000,000 and the Class 2A notes will have an initial   
Class 2A note principal balance of $200,000,000.                                

       On each payment date, interest will be paid on the notes at the related
note interest rate in an amount equal to interest accrued during the related    
accrual period on the related note principal balance prior to giving effect to  
principal distributions to be made on that date.                                

    Interest payable with respect to each payment date on the notes will
accrue during the period commencing on the payment date of the immediately      
preceding month and ending on the day immediately preceding the related payment 
date, except that with respect to the first payment date interest payable on the
notes will accrue during the period commencing on the closing date and ending on
the day immediately preceding the first payment date. All calculations of       
interest on the notes will be computed on the basis of the actual number of days
elapsed in the accrual period and a 360-day year.                               

      For purposes of making payments on the notes, the assets of the issuer
will be divided into two groups, group 1 and group 2. Payments on the Class 1A  
notes will be made primarily from payments on the group 1 assets and payments on
the Class 2A notes will be made primarily from payments on the group 2 assets.  
Each group includes:                                                            

o      the related mortgage loans (including the related initial
               mortgage loans and any related subsequent mortgage loans) and all
             proceeds thereof due after the cut-off date with respect to the
             initial mortgage loans and after the related subsequent cut-off
 date with respect to the subsequent mortgage loans,

       o      the related note distribution account, the related principal and
        interest account, the related trustee expense account, the
             related pre-funding account and subject to certain limitations,
            the related interest coverage account and the reserve account,
          and those assets as from time to time are deposited in these
            accounts, including amounts on deposit therein and invested in
permitted instruments,                            

o      any related REO Property,                                

       o      the indenture trustee's rights under all insurance policies with
             respect to the related mortgage loans required to be maintained
            pursuant to the sale and servicing agreement and any insurance
proceeds and                                      

      o      the indenture trustee's rights under the note insurance policy.

       Distributions on the notes will be made by the indenture trustee on the
25th day of each month, or if that day is not a business day, on the first      
business day thereafter commencing on October 25, 1999, to the persons in whose 
names such notes are registered (which, initially, will be CEDE & Co., the      
nominee of DTC) as of the Record Date which will be the business day immediately
preceding each                                                                  

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payment date except that the final distribution on the notes will be made only  
upon presentment and surrender of the notes at the office or agency of the      
indenture trustee in Chicago, Illinois.                                         

      Distributions on each payment date will be made by check mailed to the
address of the person entitled thereto as it appears on the certificate register
or, if the holder of record owns notes with an initial note principal balance in
excess of $5,000,000, and who has so notified the indenture trustee in writing  
in accordance with the indenture, by wire transfer in immediately available     
funds to the account of that noteholder at a bank or other seller institution   
having appropriate wire transfer facilities; provided, however, the final       
distribution in retirement of the notes will be made only upon presentment and  
surrender of the certificate at the corporate trust office of the indenture     
trustee. On each payment date, a holder of a note will receive such holder's    
percentage interest of the amounts required to be distributed with respect to   
such notes. The "percentage interest" evidenced by a note will equal the        
percentage derived by dividing the denomination of the note by the aggregate    
denominations of all notes of the same class.                                   

FINAL SCHEDULED PAYMENT DATE                                                    

  To the extent not paid in full prior to that date, the outstanding
principal amount of each class of notes will be payable on September 28, 2029,  
the final scheduled payment date for each class.                                

REGISTRATION OF NOTES                                                           

        The notes will be issued in book-entry form. The notes will be issued in
minimum dollar denominations of $100,000 and integral multiples of $1,000 in    
excess thereof (except that a single note of each of the Class 1A and Class 2A  
notes may be issued in a different amount which is less than the related minimum
dollar denomination).                                                           

        Holders of notes may hold their notes through DTC (in the United States)
or Cedelbank or Euroclear (in Europe) if they are participants of such systems, 
or indirectly through organizations which are participants in such systems.     

     The notes will initially be registered in the name of CEDE & Co., the
nominee of DTC. Cedelbank and Euroclear will hold omnibus positions on behalf of
their participants through customers' securities accounts in Cedelbank's and    
Euroclear's names on the books of their respective depositaries which in turn   
will hold such positions in customers' securities accounts in the depositaries' 
names on the books of DTC. Citibank, N.A. will act as depositary for Cedelbank  
and The Chase Manhattan Bank will act as depositary for Euroclear.              

  Noteholders that are not participants or indirect participants but
desire to purchase, sell or otherwise transfer ownership of, or other interests 
in, the book-entry notes may do so only through participants and indirect       
participants. In addition, noteholders will receive all distributions of        
principal of and interest on the book-entry notes from the indenture trustee    
through DTC and DTC participants. The indenture trustee will forward payments to
DTC in same day funds and DTC will forward these payments to participants in    
next day funds settled through the New York Clearing House. Each participant    
will be responsible for disbursing these payments to indirect participants or to
noteholders. Unless and until definitive notes are issued, it is anticipated    
that the only noteholders                                                       

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of the book-entry notes will be CEDE & Co., as nominee of DTC. Noteholders will 
not be recognized by the indenture trustee as noteholders, as the term is used  
in the indenture and noteholders will be permitted to exercise the rights of    
noteholders only indirectly through DTC and its participants.                   

      Under the rules, regulations and procedures creating and affecting DTC
and its operations, DTC is required to make book-entry transfers of the         
book-entry notes among participants and to receive and transmit distributions of
principal of, and interest on, the book-entry notes. Participants and indirect  
participants with which noteholders have accounts with respect to the book-entry
notes similarly are required to make book-entry transfers and receive and       
transmit payments on behalf of their respective noteholders. Accordingly,       
although noteholders will not possess definitive notes, the rules, regulations  
and procedures creating and affecting DTC and its operations provide a mechanism
by which noteholders through their participants and indirect participants will  
receive payments and will be able to transfer their interest.                   

      Because DTC can only act on behalf of participants, who in turn act on
behalf of indirect participants and on behalf of banks, the ability of a note   
owner to pledge book-entry notes to persons or entities that do not participate 
in the DTC system, or to otherwise act with respect to these notes, may be      
limited due to the absence of physical notes for the book-entry notes. In       
addition, under a book-entry format, noteholders may experience delays in their 
receipt of payments since distributions will be made by the trustee to CEDE &   
Co., as nominee for DTC.                                                        

      Under the rules, regulations and procedures creating and affecting DTC
and its operations , DTC will take action permitted to be taken by a noteholder 
under the indenture only at the direction of one or more participants to whose  
DTC account the book-entry notes are credited. Additionally, under the rules,   
regulations and procedures creating and affecting DTC and its operations, DTC   
will take actions with respect to specified voting rights only at the direction 
of and on behalf of participants whose holdings of book-entry notes evidence    
these specified voting rights. DTC may take conflicting actions with respect to 
voting rights, to the extent that participants whose holdings of book-entry     
notes evidencing these voting rights, authorize divergent action.               

       Transfers between participants will occur in accordance with DTC rules.
Transfers between Cedelbank participants and Euroclear participants will occur  
in accordance with their respective rules and operating procedures.             

     Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through Cedelbank      
participants or Euroclear participants, on the other, will be effected in DTC in
accordance with DTC rules on behalf of the relevant European international      
clearing system by its depositary; however, such cross-market transactions will 
require delivery of instructions to the relevant European international clearing
system by the counterparty in such system in accordance with its rules and      
procedures and within its established deadlines (European time). The relevant   
European international clearing system will, if the transaction meets its       
settlement requirements, deliver instructions to its depositary to take action  
to effect final settlement on its behalf by delivering or receiving securities  
in DTC, and making or receiving payment in accordance with normal procedures for
same-day funds settlement applicable to DTC. Cedelbank participants and         
Euroclear participants may not deliver instructions directly to the             
depositaries.                                                                   

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   Because of time-zone differences, credits of securities received in
Cedelbank or Euroclear as a result of a transaction with a participant will be  
made during subsequent securities settlement processing and dated the business  
day following the DTC settlement date. Such credits or any transactions in such 
securities settled during such processing will be reported to the relevant      
Euroclear or Cedelbank participants on such business day. Cash received in      
Cedelbank or Euroclear as a result of sales of securities by or through a       
Cedelbank participant or Euroclear participant to a participant will be received
with value on the DTC settlement date but will be available in the relevant     
Cedelbank or Euroclear cash account only as of the business day following       
settlement in DTC. For information with respect to tax documentation procedures 
relating to the notes, see "Certain U.S. Federal Income Tax Documentation       
Requirements" and "Global Clearance, Settlement and Tax Documentation           
Procedures" in Annex I hereto.                                                  

      DTC is a limited-purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing          
corporation" within the meaning of the New York Uniform Commercial Code, and a  
"clearing agency" registered pursuant to the provisions of Section 17A of the   
1934 Act. DTC accepts securities for deposit from its participating             
organizations and facilitates the clearance and settlement of securities        
transactions between participants in such securities through electronic         
book-entry changes in accounts of participants, thereby eliminating the need for
physical movement of notes. Participants include securities brokers and dealers,
banks and trust companies and clearing corporations and may include certain     
other organizations. Indirect access to the DTC system is also available to     
others such as banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a participant, either directly or        
indirectly.                                                                     

        Cedelbank is incorporated under the laws of Luxembourg as a professional
depository. Cedelbank holds securities for its participating organizations and  
facilitates the clearance and settlement of securities transactions between     
Cedelbank participants through electronic book-entry changes in accounts of     
Cedelbank participants, thereby eliminating the need for physical movement of   
notes. Transactions may be settled in Cedelbank in any of 28 currencies,        
including United States dollars. Cedelbank provides to its Cedelbank            
participants, among other things, services for safekeeping, administration,     
clearance and settlement of internationally traded securities and securities    
lending and borrowing. Cedelbank interfaces with domestic markets in several    
countries. As a professional depository, Cedelbank is subject to regulation by  
the Luxembourg Monetary Institute. Cedelbank participants are recognized        
financial institutions around the world, including underwriters, securities     
brokers and dealers, banks, trust companies, clearing corporations and certain  
other organizations. Indirect access to Cedelbank is also available to others,  
such as banks, brokers, dealers and trust companies that clear through or       
maintain a custodial relationship with a Cedelbank participant, either directly 
or indirectly.                                                                  

    Euroclear was created in 1968 to hold securities for participants of
Euroclear and to clear and settle transactions between Euroclear participants   
through simultaneous electronic book-entry delivery against payment, thereby    
eliminating the need for physical movement of notes and any risk from lack of   
simultaneous transfers of securities and cash. Transactions may now be settled  
in any of 32 currencies, including United States dollars. Euroclear includes    
various other services, including securities lending and borrowing and          
interfaces with domestic markets in several countries generally similar to the  
arrangements for cross-market transfers with DTC described above. Euroclear is  
operated by the Brussels, Belgium office of Morgan Guaranty Trust Company of New
York, under contract with Euroclear Clearance Systems S.C., a Belgian           
cooperative corporation. All operations are conducted by                        

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the Euroclear operator, and all Euroclear securities clearance accounts and     
Euroclear cash accounts are accounts with the Euroclear operator, not the       
cooperative. The cooperative established policy for Euroclear on behalf of      
Euroclear participants. Euroclear participants include banks (including central 
banks), securities brokers and dealers and other professional financial         
intermediaries. Indirect access to Euroclear is also available to other firms   
that clear through or maintain a custodial relationship with a Euroclear        
participant, either directly or indirectly.                                     

  The Euroclear operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Board of Governors of the Federal Reserve System  
and the New York State Banking Department, as well as the Belgian Banking       
Commission.                                                                     

  Securities clearance accounts and cash accounts with the Euroclear
operator are governed by the Terms and Conditions Governing Use of Euroclear and
the related Operating Procedures of the Euroclear System and applicable Belgian 
law. These terms and conditions govern transfers of securities and cash with    
Euroclear, withdrawals of securities and cash from Euroclear, and receipts of   
payments with respect to securities in Euroclear. All securities in Euroclear   
are held on a fungible basis without attribution of specific notes to specific  
clearance accounts. The Euroclear operator acts under the terms and conditions  
only on behalf of Euroclear participants, and has no record of or relationship  
with persons holding through Euroclear participants.                            

       Distributions with respect to notes held through Cedelbank or Euroclear
will be credited to the cash accounts of Cedelbank participants or Euroclear    
participants in accordance with the relevant system's rules and procedures, to  
the extent received by its depositary. Such distributions will be subject to tax
reporting in accordance with relevant United States tax laws and regulations.   
See "Federal Income Tax Consequences" in the prospectus. Cedelbank or the       
Euroclear operator, as the case may be, will take any other action permitted to 
be taken by a noteholder under the sale and servicing agreement on behalf of a  
Cedelbank participant or Euroclear participant only in accordance with its      
relevant rules and procedures and subject to its depositary's ability to effect 
such actions on its behalf through DTC.                                         

  Although DTC, Cedelbank and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of notes among participants of DTC, 
Cedelbank and Euroclear, they are under no obligation to perform or continue to 
perform such procedures and such procedures may be discontinued at any time.    

     DTC management is aware that some computer applications, systems, and
the like for processing data that are dependent upon calendar dates, including  
dates before, on, and after January 1, 2000, may encounter "Year 2000 problems."
DTC has informed its participants and other members of the financial community  
that it has developed and is implementing a program so that its Systems, as the 
same relate to the timely payment of distributions (including principal and     
income payments) to securityholders, book-entry deliveries, and settlement of   
trades within DTC, continue to function appropriately. This program includes a  
technical assessment and a remediation plan, each of which is complete.         
Additionally, DTC's plan includes a testing phase, which is expected to be      
completed within appropriate time frames.                                       

However, DTC's ability to perform properly its services is also 
dependent upon other parties, including but not limited to issuers and their    
agents, as well as third party vendors from whom DTC licenses software and      
hardware, and third party vendors on whom DTC relies for information or the     

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provision of services, including telecommunication and electrical utility       
service providers, among others. DTC has informed the financial community that  
it is contacting (and will continue to contact) third party vendors from whom   
DTC acquires services to: (i) impress upon them the importance of such services 
being Year 2000 compliant; and (ii) determine the extent of their efforts for   
Year 2000 remediation (and, as appropriate, testing) of their services. In      
addition, DTC is in the process of developing such contingency plans as it deems
appropriate.                                                                    

        According to DTC, the foregoing information with respect to DTC has been
provided to the Industry for informational purposes only and is not intended to 
serve as a representation, warranty, or contract modification of any kind.      

      The seller, the servicer, the indenture trustee, the owner trustee and
their respective affiliates will have no liability for any actions taken by DTC 
or its nominee or Cedel or Euroclear, including, without limitation, actions for
any aspect of the records relating to or payments made on account of beneficial 
ownership interests in the notes held by CEDE & Co., as nominee for DTC, or for 
maintaining, supervising or reviewing any records relating to such beneficial   
ownership interests.                                                            

GLOSSARY OF TERMS                                                               

      The following terms are given the meaning shown below to help describe
the cash flows on the notes:                                                    

    The "ADDITIONAL PRINCIPAL" for any Class 1A or Class 2A note and any
payment date will equal the amount necessary to reduce the related note         
principal balance so that the Overcollateralization Amount for the related group
equals the related Required Overcollateralization Amount for that group.        

       The "AMOUNT AVAILABLE" for a group on a payment date will equal the sum
of:                                                                             

              (1) the Available Remittance Amount for that group (reduced by
 any monthly premium payable to the note insurer);

         (2) the Excess Spread for that group with respect to such
payment date;                                   

         (3) if an available funds shortfall exists in that group,

                      (a) first, the Net Excess Spread from the other group,
   to the extent of the available funds shortfall; and

                      (b) second, the Excess Principal from the other group,
         to the extent of any remaining available funds shortfall;

    (4) any amounts required to be deposited in the note
             distribution account for that group from the reserve account;
and                                             

             (5) any payments made by the note insurer with respect to the
related class of notes.                         

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  The "AVAILABLE FUNDS CAP CARRY FORWARD AMOUNT" with respect to any
payment date and a class of notes up to and including (but not after) the       
payment date on which the related note principal balance is reduced to zero,    
will be an amount equal to the sum of (1) the excess, if any, of (x) the Class A
Interest Remittance Amount with respect to such class of notes for the          
immediately preceding payment date calculated pursuant to clause (1) of the     
related definition of note interest rate, over (y) the Class A Interest         
Remittance Amount with respect to such class of notes for the immediately       
preceding payment date calculated pursuant to clause (2) of the related         
definition of note interest rate, (2) the amount of any Available Funds Cap     
Carry Forward Amount for the preceding payment date to the extent not           
distributed to the related noteholders on such preceding payment date and (3)   
interest accrued on the amounts described in clauses (1) and (2) of this        
definition during the accrual period for the current payment date at the related
note interest rate for that payment date.                                       

       The "AVAILABLE FUNDS CAP RATE" with respect to a class of notes and any
payment date, will be the annualized percentage derived from the fraction (which
shall not be greater than 1) the numerator of which is the positive difference  
between (1) the sum of (a) all interest collected and advanced on the mortgage  
loans in the related group during the related due period, (b) amounts withdrawn 
from the related interest coverage account for that payment date and (c) with   
respect to the Class 1A notes only, amounts collected on the permanent buydown  
companion loans for that payment date, and (2) the sum of (a) the aggregate     
servicing fee with respect to the related group for such payment date, (b) the  
monthly premium payable to the note insurer with respect to the related group   
and (c) one-twelfth of the annual trustee expense amount with respect to the    
related group, and the denominator of which is the aggregate note principal     
balance of such class immediately prior to such payment date.                   

    An "AVAILABLE FUNDS SHORTFALL" with respect to any group and payment
date means the amount by which the Available Remittance Amount plus Excess      
Spread for that group is less than the Required Payments (other than in respect 
of the Class A Principal Remittance Amount after the related cross-over date)   
for that group.                                                                 

    The "AVAILABLE PRINCIPAL AMOUNT" for any group and payment date will
equal the excess, if any, of the amount described in the related definition of  
"Class A Principal Remittance Amount" without giving effect to clauses (a) and  
(b) thereof over the amount described in the related definition of "Class A     
Principal Remittance Amount" after giving effect to clause (a) and (b) thereof. 

       The "AVAILABLE REMITTANCE AMOUNT" with respect to any group and payment
date will be the sum of the following:                                          

               (1) the sum of all amounts received or required to be paid by the
  servicer, the seller or any sub-servicer in respect of the related
      mortgage loans (exclusive of (a) the Depositor's Yield, (b) the Excess
        Spread, (c) amounts withdrawn by the servicer from the related principal
        and interest accounts as set forth in clauses (2), (3), (4), (5) and (6)
       below under the caption "--The Principal and Interest Accounts" and any
       amounts not required to be deposited therein and (d) scheduled payments
      received in advance of their due date for application on such due date
      at the request of the related mortgagor) during the related Due Period
     (or, in the case of amounts paid by the seller in connection with the
purchase or substitution of a mortgage loan as to which there is
       defective loan documentation or a breach of representation or warranty,
    as of the related determination date) and deposited into the related
     principal and interest accounts as of the related determination date;

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               (2) the amount of any advances and compensating interest payments
   with respect to the related group remitted by the servicer for such
payment date;                                                   

           (3) any amount applied by the indenture trustee from funds on
       deposit in the related interest coverage account to cover shortfalls in
      interest on the related class of notes attributable to the pre-funding
   feature and to cover the interest portion of deferred payments; and

               (4) with respect to the final payment date in connection with the
      purchase of all the mortgage loans and REO Properties, the termination
price remitted by the servicer.                                 

      The "CLASS A CARRY-FORWARD AMOUNT" with respect to each class of notes
and for any payment date, is the sum of (1) the amount, if any, by which (A) the
related Class A Remittance Amount with respect to each such class of notes as of
the immediately preceding payment date exceeded (B) the amount of the actual    
distribution, exclusive of any related insured payment, to the related class of 
noteholders made on such immediately preceding payment date and (2) interest on 
the amount, if any, described in clause (1) above (to the extent that the amount
in clause (1) above represents insured payments), at the Class 1A note interest 
rate with respect to group 1 and the Class 2A note interest rate with respect to
group 2, from such immediately preceding payment date.                          

      The "CLASS A INTEREST REMITTANCE AMOUNT" with respect to each class of
notes for any payment date will be the interest accrued at the related note     
interest rate for the related accrual period on the related note principal      
balance immediately prior to such payment date. All calculations of interest on 
the notes will be computed on the basis of the actual number of days elapsed in 
the related accrual period and in a year of 360 days.                           

      The "CLASS A PRINCIPAL REMITTANCE AMOUNT" with respect to any class of
notes and the related group and payment date will be equal to the least of (a)  
if such payment date is prior to the cross-over date, that amount required to   
reach the Required Overcollateralization Amount with respect to that group or   
thereafter, to maintain that Required Overcollateralization Amount on the       
payment date, (b) the sum of the related note principal balance with respect to 
the related class of notes and the amounts described in clauses (3) (to the     
extent the amount in clause (3) represents prior insured payments with respect  
to the related group or interest thereon) and (5) below and (c) the sum of the  
following amounts relating to that group:                                       

        (1) the principal portion of all scheduled and unscheduled
      payments received on the related mortgage loans during the related Due
      Period including all principal prepayments, curtailments, other excess
payments of principal in respect of the related mortgage loans, 
Insurance Proceeds, Released Mortgaged Property Proceeds and net
        liquidation proceeds, but exclusive of (i) the principal portions of any
     deferred payments subsequently paid by the related mortgagor and (ii)
        payments received during the related Due Period on the permanent buydown
companion loans, if any, in that group;                         

         (2) an amount equal to the Unrecovered Class A Portion with
respect to the related class of notes;                          

              (3) the Class A Carry-Forward Amount with respect to the related
class of notes;                                                 

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        (4) the principal portion of all proceeds deposited in the
      principal and interest account with respect to the related group as of
 the related determination date in connection with the purchase or
   substitution of a mortgage loan as to which there is defective loan
documentation or a breach of a representation or warranty; and  

             (5) any amounts recovered from the related class of noteholders
       during the related Due Period that constituted a mortgagor payment on a
     related mortgage loan or an advance with respect to the related group
      that was recovered as a voidable preference by a trustee in bankruptcy
  pursuant to the United States Bankruptcy Code in accordance with a
    final, nonappealable order of a court having competent jurisdiction.

   As to the final payment date in connection with the purchase by the
servicer of all the related mortgage loans and REO Properties pursuant to the   
sale and servicing agreement, the related Class A Principal Remittance Amount   
shall be that amount described in clause (b) of the definition of Class A       
Principal Remittance Amount above with respect to the related group and that    
payment date.                                                                   

      The "CLASS A REMITTANCE AMOUNT" for any class of notes and any payment
date is equal to the sum of the related Class A Interest Remittance Amount and  
the related Class A Principal Remittance Amount for that payment date.          

      The "CROSS-OVER DATE" with respect to a group is the date on and after
which the sum of (i) the aggregate amount of Excess Spread for that group and   
(ii) the aggregate amount withdrawn from the reserve account, and distributed to
the related class of noteholders since the closing date on account of Realized  
Losses for such group equals the subordinated amount specified by the note      
insurer for that group and set forth in the insurance agreement, among the      
seller, the servicer, the note insurer and the indenture trustee.               

    The "EXCESS PRINCIPAL" for any group and payment date will equal the
Available Principal Amount remaining after the application of the related       
Available Remittance Amount to cover the Required Payments for that group.      

       The "EXCESS SPREAD" with respect to a group for any payment date, is an
amount equal to the excess of (a) the sum of (1) all payments received or       
advanced on account of interest on the mortgage loans related to that group     
during the related Due Period, (2) an amount with respect to that group         
withdrawn by the indenture trustee from the related interest coverage account   
and deposited into the related note distribution account for that payment date, 
and (3) with respect to group 1, all payments received during the related Due   
Period with respect to the permanent buydown companion loans in group 1, over   
(b) the sum of (1) the Class A Interest Remittance Amount for the related notes 
for that payment date, (2) one-twelfth of the annual trustee expense amount with
respect to that group, (3) the monthly premium payable to the note insurer with 
respect to that group, and (4) the servicing fee with respect to that group for 
that payment date.                                                              

        The "NET EXCESS AMOUNT AVAILABLE" is the sum of the amounts described in
clauses (1) and (5) of the definition of Amount Available.                      

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        The "NET EXCESS PRINCIPAL" for any group and payment date will equal the
Excess Principal for that group remaining after the application thereof to cover
an available funds shortfall with respect to the other group.                   

     The "NET EXCESS SPREAD" for any group and payment date will equal the
Excess Spread for that group remaining after the application thereof to cover   
Required Payments with respect to that group (other than in respect of the      
related Class A Principal Remittance Amount after the related cross-over date). 

    The "NOTE INTEREST RATE" FOR THE CLASS 1A NOTES and any payment date
will be a rate equal to the lesser of (1) the lesser of (a) one-month LIBOR plus
0.58% per annum, and (b) 9.75% per annum and (2) the Available Funds Cap Rate   
for the Class 1A notes. However, on any payment date on which the servicer does 
not exercise its option to purchase the mortgage loans and REO Properties as    
described under "Sale and Servicing Agreement--Termination; Purchase of the     
Mortgage Loans" herein, the rate provided in clause (1)(a) will be one-month    
LIBOR plus 0.98% per annum. One-month LIBOR will be determined on the second    
business day preceding the beginning of each accrual period with respect to the 
Class 1A notes.                                                                 

  The "NOTE INTEREST RATE" FOR THE CLASS 2A NOTES and any particular
payment date will be equal to the lesser of (1) the lesser of (a) one-month     
LIBOR plus 0.39% per annum and (b) 15.50% per annum and (2) the Available Funds 
Cap Rate for the Class 2A notes. However, on any payment date on which the      
servicer does not exercise its option to purchase the mortgage loans and REO    
Properties as described under "Sale and Servicing Agreement-Termination;        
Purchase of the Mortgage Loans" herein, the rate described in clause (1)(a) will
be one-month LIBOR plus 0.79% per annum. One-month LIBOR will be determined on  
the second business day preceding the beginning of each accrual period with     
respect to the Class 2A notes.                                                  

     The "NOTE PRINCIPAL BALANCE" for any class of notes as of any date of
determination is equal to the related initial note principal balance reduced by 
the sum of (A) all amounts (including that portion of insured payments, if any, 
made in respect of principal) distributed to that class of noteholders in       
respect of principal on all previous payment dates on account of amounts        
described in clauses (1), (2), (3) (to the extent the amount in clause (3)      
represents a right to receive principal not previously covered by insured       
payments), and (4) of the definition of Class A Principal Remittance Amount, (B)
all other amounts previously distributed to the related noteholders constituting
Additional Principal in reduction of the related note principal balance and (C) 
all amounts previously distributed to the related noteholders as a mandatory    
prepayment only on the payment date occurring on December 27, 1999.             

      The "OVERCOLLATERALIZATION AMOUNT" for any group and payment date will
equal the excess, if any, of (1) the sum of (a) the aggregate principal balances
of the mortgage loans related to that group and (b) the related pre-funded      
amount and (c) the amount, if any, on deposit in the reserve account over (2)   
the related note principal balance after giving effect to the distributions of  
the related Class A Principal Remittance Amount on that payment date.           

       A "REALIZED LOSS" with respect to any payment date is for each mortgage
loan which was liquidated during the related Due Period, an amount (not less    
than zero or greater than the related principal balance) equal to the excess of 
(1) the principal balance of the liquidated mortgage loans (other than the      
outstanding balance of the permanent buydown companion loans) over (2) the      
principal portion                                                               

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of the Liquidation Proceeds to be distributed to the related noteholders on that
payment date net of amounts reimbursable to the servicer and indenture trustee. 

     The "REMAINING NET EXCESS SPREAD" for any group and payment date will
equal the Net Excess Spread for such group remaining after the application      
thereof to cover an Available Funds Shortfall with respect to the other group.  

The "REQUIRED OVERCOLLATERALIZATION AMOUNT" for any group is the
overcollateralization amount required by the note insurer at any time and set   
forth in the insurance agreement. The Required Overcollateralization Amount for 
each group will be subject to certain stepups and stepdowns based on (1) certain
delinquency and loss tests with respect to the mortgage loans in the related    
group and (2) the targeted overcollateralization amount of the note insurer for 
the groups in the aggregate.                                                    

     The "REQUIRED PAYMENTS" for any group and payment date will equal the
amount required to pay the Class A Interest Remittance Amount with respect to   
the related class of notes, the Class A Principal Remittance Amount with respect
to the related class of notes, one-twelfth of the annual trustee expense amount 
and the monthly premium payable to the note insurer in respect of that group.   

       The "UNDERCOLLATERALIZATION AMOUNT" with respect to any payment date is
the excess, if any, of:                                                         

 (1) the aggregate note principal balance of the notes immediately
preceding that payment date minus (x) all amounts (excluding that portion of    
insured payments, if any, to be made in respect of principal) to be distributed 
to the noteholders in respect of principal on that payment date on account of   
amounts described in clauses (1), (3) (to the extent the amount in clause (3)   
represents a right to receive principal not previously covered by an insured    
payment) and (4) of the definition of Class A Principal Remittance Amount, and  
(y) all amounts distributed to the noteholders as a mandatory prepayment on the 
payment date occurring on December 27, 1999, over                               

        (2) the sum of (x) the aggregate principal balance of the mortgage loans
at the beginning of the related Due Period plus (y) the sum of the pre-funded   
amount, minus the sum of (x) the principal portion of the monthly payments      
received during the related Due Period and deposited in the principal and       
interest accounts and all principal prepayments, curtailments, other excess     
payments of principal, Insurance Proceeds, Net Liquidation Proceeds, Released   
Mortgaged Property Proceeds and net income from any REO Property with respect to
the mortgage loans to the extent applied by the servicer as recoveries of       
principal in respect of the mortgage loans, which will be distributed as        
payments of principal to the related noteholders on that payment date and (y)   
the aggregate Realized Losses for that payment date.                            

     The "UNRECOVERED CLASS A PORTION" with respect to each class of notes
and any payment date is an amount equal to the lesser of (1) the                
Undercollateralization Amount and (2) an amount equal to the excess, if any, of 

 (A) the related note principal balance immediately preceding that
payment date minus the sum of (x) all amounts (excluding that portion of insured
payments with respect to the related group, if any, to be made in respect of    
principal) to be distributed to the related noteholders in respect of principal 
on that payment date on account of amounts described in clauses (1), (3) (to the
extent the amount in clause (3) represents a right to receive principal not     
previously covered by an insured payment) and (4)                               

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the definition of Class A Principal Remittance Amount, and (y) all amounts      
distributed to the related noteholders as a mandatory prepayment on the payment 
date occurring on December 27, 1999, over                                       

    (B) the sum of (x) the principal balance of the related group at the
beginning of the related Due Period plus (y) the related pre-funded amount,     
minus the sum of (x) the principal portion of the monthly payments received     
during the related Due Period and deposited in the related principal and        
interest account and all principal prepayments, curtailments, other excess      
payments of principal, Insurance Proceeds, Net Liquidation Proceeds, Released   
Mortgaged Property Proceeds and net income from any REO Property with respect to
the related group to the extent applied by the servicer as recoveries of        
principal in respect of the related mortgage loans, which will be distributed as
payments of principal to the related noteholders on that payment date and (y)   
the aggregate Realized Losses for that payment date.                            

THE PRINCIPAL AND INTEREST ACCOUNTS                                             

    The servicer shall establish and maintain an account for each group,
which shall be an eligible account, on behalf of the noteholders. The servicer  
shall deposit therein payments and collections received or made by it in        
connection with the related mortgage loans, net of the servicing fee, subsequent
to the cut-off date or related subsequent cut-off date, as the case may be, to  
the extent not applied in computing the aggregate principal balance of the      
related mortgage loans as of such date. The servicer may withdraw funds from a  
principal and interest account only for the purposes set forth in the sale and  
servicing agreement, including but not limited to the following:                

          (1) to effect the remittance to the indenture trustee on the
      twenty-second day of each month, or if such day is not a business day,
       on the immediately following business day, of the Excess Spread and the
  amounts set forth in clause (1) of the definition of the Available
Remittance Amount;                                              

      (2) subject to the limitations set forth in the sale and
   servicing agreement, to pay the servicer for any accrued and unpaid
      servicing fees with respect to related mortgage loans and to reimburse
       itself for related unreimbursed advances and servicing advances and any
        amount used to cover shortfalls in interest on newly originated mortgage
        loans as described below under "--Advances." The servicer's right to pay
      itself unpaid servicing fees, and to reimburse itself for unreimbursed
servicing advances and amounts used to cover any such interest  
        shortfalls, is limited to late collections on the related mortgage loan,
   and such other amounts as may be collected by the servicer from the
        related mortgagor or otherwise with respect to the related mortgage loan
      in respect of which such unreimbursed amounts are owed. The servicer's
   right to reimbursement for unreimbursed advances is limited to late
        collections of interest on any mortgage loan; provided that the servicer
    shall not be entitled to reimbursement from Liquidation Proceeds for
       advances made as described in subsection (3) of the paragraph under the
      caption "Advances" in this prospectus supplement. The servicer's right
   to such reimbursements is senior to the rights of holders of notes;

               (3) to withdraw any amount received from a mortgagor on a related
 mortgage loan that is recoverable and sought to be recovered as a
preference amount;                                              

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         (4) to make investments in permitted instruments and to pay
      itself interest earned in respect of permitted instruments or on funds
deposited in the related principal and interest account;        

         (5) to pay itself the servicing fee and any other permitted
     servicing compensation to the extent not previously retained or paid;
and                                                             

      (6) to withdraw funds necessary for the conservation and
disposition of any REO Property.                                

THE NOTE DISTRIBUTION ACCOUNTS                                                  

      The indenture trustee shall establish and maintain a note distribution
account for each group, which shall be an eligible account, on behalf of the    
noteholders. The indenture trustee shall, promptly upon receipt, deposit in the 
related note distribution account and retain therein the following:             

             (1)     the related Available Remittance Amount for a payment
date;                           

     (2)     the related Excess Spread for a payment date;

        (3)     any amounts required to be deposited in the note
                    distribution account for that group from the reserve
account; and                    

              (4)     any amount required to be deposited by the servicer in
                    connection with any losses on permitted instruments.

     The indenture trustee shall withdraw funds from the note distribution
account for distribution to noteholders as described below under "--Allocation  
of Amount Available" and as otherwise provided in the sale and servicing        
agreement.                                                                      

CALCULATION OF ONE-MONTH LIBOR                                                  

  On the second business day preceding the beginning of each accrual
period, the trustee will determine one-month LIBOR for such accrual period with 
respect to the notes. One-month LIBOR will be the rate for deposits in United   
States dollars for a term equal to the relevant accrual period which appears in 
the Telerate Page 3750 as of 11:00 a.m., London time, on such date. The first   
accrual period shall begin on the closing date. If such rate does not appear on 
Telerate Page 3750, the rate for that day will be determined on the basis of the
rates at which deposits in United States dollars are offered by the Reference   
Banks at approximately 11:00 a.m., London time, on that day to banks in the     
London interbank market for a term equal to the relevant accrual period. The    
indenture trustee will request the principal London office of each of the       
Reference Banks to provide a quotation of its rate. If at least two such        
quotations are provided, the rate for that day will be the arithmetic mean of   
the quotations. If fewer than two quotations are provided as requested, the rate
for that day will be the arithmetic mean of the rates quoted by major banks in  
New York City, selected by the servicer, at approximately 11:00 a.m., New York  
City time, on that day for loans in United States dollars to leading European   
banks for a term equal to the relevant accrual period. If on any interest       
determination date, the indenture trustee is unable to determine one-month LIBOR
for an accrual period, one-month LIBOR for such accrual period shall be         

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one-month LIBOR as determined on the previous interest determination date;      
provided, however, that one-month LIBOR for an accrual period shall not be based
on one-month LIBOR for the previous accrual period for three consecutive accrual
periods. If one-month LIBOR for an accrual period would be based on one-month   
LIBOR for the previous accrual period for the second consecutive accrual period,
the indenture trustee will select a comparable alternative index (over which the
indenture trustee has no control) used for determining one-month Eurodollar     
lending rates that is calculated and published (or otherwise made available) by 
an independent third party.                                                     

        Telerate Page 3750 means the display page currently so designated on the
Dow Jones Telerate Service (or such other page as may replace the page on that  
service for the purpose of displaying comparable rates or prices) and Reference 
Banks means leading banks selected by the trustee and engaged in transactions in
Eurodollar deposits in the international Eurocurrency market.                   

        The establishment of one-month LIBOR on each interest determination date
by the indenture trustee and the indenture trustee's calculation of the rate of 
interest applicable to the Class 1A and Class 2A notes for the related accrual  
period shall (in the absence of manifest error) be final and binding.           

ALLOCATION OF AMOUNT AVAILABLE                                                  

On or before each payment date, the servicer will determine the 
Overcollateralization Amount for each group after giving effect to the          
distribution of the related Class A Principal Remittance Amount to the related  
notes on that payment date and the amount of the related Net Excess Spread.     

        On each payment date, the indenture trustee will withdraw from each note
distribution account the related Amount Available, and make distributions       
thereof in the following order of priority and to the extent of available funds.
Notwithstanding the foregoing, on any payment date, in the event that the Amount
Available with respect to a particular group is insufficient to distribute the  
entire amount of the related Class A Interest Remittance Amount, such Amount    
Available shall be distributed by the indenture trustee among the related class 
of noteholders in proportion to the total respective distributions of such      
amounts on each such class of notes that would otherwise be payable on such     
payment date.                                                                   

GROUP 1                                                         

With respect to the Class 1A notes and group 1:                 

  If the payment date is prior to the cross-over date, the indenture
trustee shall distribute the indicated amounts in the following order of        
priority:                                                                       

           (X)(1) to the Class 1A noteholders (subject to the second and
    last paragraphs under "--Allocation of Amount Available"), an amount
equal to the lesser of:                                         

                    (A)    the Amount Available with respect to group 1; and

                      (B) the Class A Interest Remittance Amount with respect to
the Class 1A notes;                 

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            (2) to the Class 1A noteholders (subject to the last paragraph
      under "--Allocation of Amount Available"), to be applied to reduce the
 Class 1A note principal balance until the Class 1A note principal
       balance has been reduced to zero and to make payments in respect of the
        amounts described in clauses (c) (3) (to the extent the amount in clause
      (c) (3) represents prior insured payments or interest thereon) and (c)
       (5) of the definition of Class A Principal Remittance Amount above, the
lesser of:                                                      

                   (A) the balance of the Amount Available with respect to
          group 1 after payments described in clause (X)(1) above; and

                    (B) the Class A Principal Remittance Amount with respect
to the Class 1A notes;                            

            (3) to the group 1 trustee expense account, an amount equal to
     the lesser of (A) the balance of the Amount Available with respect to
        group 1 after payments described in clauses (X)(1) and (2) above and (B)
    any accrued and unpaid annual trustee expense amount with respect to
group 1;                                                        

               (4) to the Class 1A noteholders to be applied to reduce the Class
       1A note principal balance until the Class 1A note principal balance has
been reduced to zero, an amount equal to the lesser of:         

                   (A) the balance of the Amount Available with respect to
            group 1 after payments described in clauses (X)(1) through (3)
              above and, to the extent applicable, after payments to the Class
2A noteholders as described under "Excess Spread, 
           Overcollateralization and Cross-Collateralization Provisions"
below; and                                        

                      (B) the Additional Principal with respect to the Class
1A notes;                                       

           (5) to the servicer and/or the seller, an amount equal to the
       lesser of (A) the balance of the Amount Available with respect to group
      1 after payments described in clauses (X)(1) through (4) above and, to
    the extent applicable, after payments to the Class 2A noteholders as
described under "Excess Spread, Overcollateralization and       
      Cross-Collateralization Provisions" below and (B) any expenses paid by
    the servicer and/or seller that were incurred in connection with any
third party claims that remain unreimbursed;                    

           (6) to the servicer, an amount equal to the lesser of (A) the
      balance of the Amount Available with respect to group 1 after payments
described in clauses (X)(1) through (5) above and, to the extent
   applicable, after payments to the Class 2A noteholders as described
       under "Excess Spread, Overcollateralization and Cross-Collateralization
       Provisions" below and (B) the aggregate of any nonrecoverable servicing
    advances and nonrecoverable monthly advances with respect to group 1
previously made by the servicer and not previously reimbursed;  

          (7) to the reserve account, the excess overcollateralization
       amount for group 1, if any, as defined under "Interest Coverage Account
and Reserve Account" below;                                     

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               (8) to the Class 1A noteholders until the Class 1A note principal
   balance has been reduced to zero, an amount equal to the lesser of:

                      (A)    the balance of the Remaining Net Excess Spread with
                    respect to group 1, if any, after payments
                            described in clauses (x)(1) through (7) above; and

                    (B)    the Available Funds Cap Carry Forward Amount with
                    respect to the Class 1A notes, if any; and

             (9) to the equity certificateholders, the balance of the Amount
      Available with respect to group 1, if any, after payments described in
     clauses (X)(1) through (8) above and, to the extent applicable, after
       payments to the Class 2A noteholders as described under "Excess Spread,
    Overcollateralization and Cross-Collateralization Provisions" below.

     If the payment date is on or after the cross-over date, the indenture
trustee shall distribute the indicated amounts in the following order of        
priority:                                                                       

           (Y)(1) to the Class 1A noteholders (subject to the second and
    last paragraphs under "--Allocation of Amount Available"), an amount
equal to the lesser of:                                         

                    (A)    the Amount Available with respect to group 1; and

                      (B) the Class A Interest Remittance Amount with respect to
the Class 1A notes;                               

            (2) to the Class 1A noteholders (subject to the last paragraph
      under "--Allocation of Amount Available"), to be applied to reduce the
 Class 1A note principal balance until the Class 1A note principal
       balance has been reduced to zero and to make payments in respect of the
amounts described in clauses (c) (3) (to the extent the amounts 
        described in clause (c) (3) represent prior Insured Payments or interest
      thereon) and (c) (5) of the definition of Class A Principal Remittance
Amount with respect to the Class 1A notes above, the lesser of: 

                   (A) the balance of the Net Excess Amount Available with
          respect to group 1 after payments described in clause (Y)(1)
above; and                                        

                    (B) the Class A Principal Remittance Amount with respect
to the Class 1A notes;                            

            (3) to the group 1 trustee expense account, an amount equal to
       the lesser of the balance of the Amount Available with respect to group
  1 after payments described in clauses (Y)(1) and (2) above and any
      accrued and unpaid annual trustee expense amount with respect to group
1;                                                              

           (4) to the servicer and/or the seller, an amount equal to the
       lesser of (A) the balance of the Amount Available with respect to group
      1 after payments described in clauses (Y)(1) through (3) above and, to
    the extent applicable, after payments to the Class 2A noteholders as
described under "Excess Spread, Overcollateralization and       
Cross-Collateralization Provisions"                             

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       below and (B) any expenses paid by the servicer and/or seller that were
incurred in connection with any third party claims that remain  
unreimbursed;                                                   

           (5) to the servicer, an amount equal to the lesser of (A) the
      balance of the Amount Available with respect to group 1 after payments
 described in clauses (Y)(i) through (iv) above and, to the extent
   applicable, after payments to the Class 2A noteholders as described
       under "Excess Spread, Overcollateralization and Cross-Collateralization
       Provisions" below and (B) the aggregate of any nonrecoverable servicing
    advances and nonrecoverable monthly advances with respect to group 1
previously made by the servicer and not previously reimbursed;  

          (6) to the reserve account, the excess overcollateralization
       amount for group 1, if any, as defined under "Interest Coverage Account
and Reserve Account" below;                                     

               (7) to the Class 1A noteholders until the Class 1A note principal
balance has been reduced to zero, the lesser of:                

                      (A)    the balance of the Remaining Net Excess Spread with
                        respect to group 1 after payments described in
               clauses (Y)(1) through (6) above; and

                    (B)    the Available Funds Cap Carry Forward Amount with
                    respect to the Class 1A notes, if any; and

             (8) to the equity certificateholders, the balance of the Amount
     Available with respect to group 1 after payments described in clauses
      (Y)(1) through (7) above and, to the extent applicable, after payments
to the Class 2A noteholders as described under "Excess Spread,  
       Overcollateralization and Cross-Collateralization Provisions" below, if
any.                                                            

GROUP 2                                                         

With respect to the Class 2A notes and group 2:   

      If the payment date is prior to the cross-over date, the
indenture trustee shall distribute the indicated amounts in the following order 
of priority:                                                                    

           (X)(1) to the Class 2A noteholders (subject to the second and
    last paragraphs under "--Allocation of Amount Available"), an amount
equal to the lesser of:                                         

                    (A)    the Amount Available with respect to group 2; and

                   (B) the related Class A Interest Remittance Amount with
respect to the Class 2A notes;                                  

            (2) to the Class 2A noteholders (subject to the last paragraph
      under "--Allocation of Amount Available"), to be applied to reduce the
 Class 2A note principal balance until the Class 2A note principal
       balance has been reduced to zero and to make payments in respect of the
        amounts described in clauses (c) (3) (to the extent the amount in clause
(c) (3) represents prior                                        

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      Insured Payments or interest thereon) and (c) (5) of the definition of
      Class A Principal Remittance Amount with respect to the Class 2A notes
above, the lesser of:                                           

                   (A) the balance of the Amount Available with respect to
          group 2 after payments described in clause (X)(1) above; and

                    (B) the Class A Principal Remittance Amount with respect
to the Class 2A notes;                            

            (3) to the group 2 trustee expense account, an amount equal to
       the lesser of the balance of the Amount Available with respect to group
  2 after payments described in clauses (X)(1) and (2) above and any
      accrued and unpaid annual trustee expense amount with respect to group
2;                                                              

               (4) to the Class 2A noteholders to be applied to reduce the Class
       2A note principal balance until the Class 2A note principal balance has
been reduced to zero, an amount equal to the lesser of:         

                   (A) the balance of the Amount Available with respect to
            group 2 after payments described in clauses (X)(1) through (3)
              above and, to the extent applicable, after payments to the Class
1A noteholders as described under "Excess Spread, 
           Overcollateralization and Cross-Collateralization Provisions"
below; and                                        

                      (B) the Additional Principal with respect to the Class
2A notes;                                       

           (5) to the servicer and/or the seller, an amount equal to the
       lesser of (A) the balance of the Amount Available with respect to group
      2 after payments described in clauses (X)(1) through (4) above and, to
    the extent applicable, after payments to the Class 1A noteholders as
described under "Excess Spread, Overcollateralization and       
      Cross-Collateralization Provisions" below and (B) any expenses paid by
    the servicer and/or seller that were incurred in connection with any
third party claims that remain unreimbursed;                    

           (6) to the servicer, an amount equal to the lesser of (A) the
      balance of the Amount Available with respect to group 2 after payments
described in clauses (X)(1) through (5) above and, to the extent
   applicable, after payments to the Class 1A Noteholders as described
       under "Excess Spread, Overcollateralization and Cross-Collateralization
       Provisions" below and (B) the aggregate of any nonrecoverable servicing
    advances and nonrecoverable monthly advances with respect to group 2
previously made by the servicer and not previously reimbursed;  

          (7) to the reserve account, the excess overcollateralization
       amount for group 2, if any, as defined under "Interest Coverage Account
and Reserve Account" below;                                     

               (8) to the Class 2A noteholders until the Class 2A note principal
   balance has been reduced to zero, an amount equal to the lesser of:

                   (A) the balance of the Remaining Net Excess Spread with
             respect to group 2, if any, after payments described in clauses
(X)(1) through (7) above; and                     

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                 (B) the Available Funds Cap Carry Forward Amount with
respect to the Class 2A notes, if any; and        

             (8) to the equity certificateholders, the balance of the Amount
      Available with respect to group 2, if any, after payments described in
     clauses (X)(1) through (8) above and, to the extent applicable, after
       payments to the Class 1A noteholders as described under "Excess Spread,
    Overcollateralization and Cross-Collateralization Provisions" below.

     If the payment date is on or after the cross-over date, the indenture
trustee shall distribute the indicated amounts in the following order of        
priority:                                                                       

           (Y)(1) to the Class 2A noteholders (subject to the second and
    last paragraphs under "--Allocation of Amount Available"), an amount
equal to the lesser of:                                         

                    (A)    the Amount Available with respect to group 2; and

                      (B) the Class A Interest Remittance Amount with respect to
the Class 2A notes;                               

            (2) to the Class 2A noteholders (subject to the last paragraph
      under "--Allocation of Amount Available"), to be applied to reduce the
 Class 2A note principal balance until the Class 2A note principal
       balance has been reduced to zero and to make payments in respect of the
amounts described in clauses (c) (3) (to the extent the amounts 
        described in clause (c) (3) represent prior insured payments or interest
      thereon) and (c) (5) of the definition of Class A Principal Remittance
Amount with respect to the Class 2A notes above, the lesser of: 

                   (A) the balance of the Net Excess Amount Available with
          respect to group 2 after payments described in clause (Y)(1)
above; and                                        

                    (B) the related Class A Principal Remittance Amount with
respect to the Class 2A notes;                    

            (3) to the group 2 trustee expense account, an amount equal to
       the lesser of the balance of the Amount Available with respect to group
  2 after payments described in clauses (Y)(1) and (2) above and any
      accrued and unpaid annual trustee expense amount with respect to group
2;                                                              

           (4) to the servicer and/or the seller, an amount equal to the
       lesser of (A) the balance of the Amount Available with respect to group
      2 after payments described in clauses (Y)(1) through (3) above and, to
    the extent applicable, after payments to the Class 1A noteholders as
described under "Excess Spread, Overcollateralization and       
      Cross-Collateralization Provisions" below and (B) any expenses paid by
    the servicer and/or seller that were incurred in connection with any
third party claims that remain unreimbursed;                    

           (5) to the servicer, an amount equal to the lesser of (A) the
      balance of the Amount Available with respect to group 2 after payments
described in clauses (Y)(1) through (4) above and, to the extent
   applicable, after payments to the Class 1A noteholders as described
under                                                           

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 "Excess Spread, Overcollateralization and Cross-Collateralization
       Provisions" below and (B) the aggregate of any nonrecoverable servicing
    advances and nonrecoverable monthly advances with respect to group 2
previously made by the servicer and not previously reimbursed;  

          (6) to the reserve account, the excess overcollateralization
       amount for group 2, if any, as defined under "Interest Coverage Account
and Reserve Account" below;                                     

               (7) to the Class 2A noteholders until the Class 2A note principal
balance has been reduced to zero, the lesser of:                

                       (A) the balance of the Remaining Net Excess Spread with
             respect to group 2 after payments described in clauses (Y)(1)
through (6) above; and                          

                     (B) the Available Funds Cap Carry Forward Amount with
respect to the Class 2A notes, if any; and      

             (8) to the equity certificateholders, the balance of the Amount
     Available with respect to group 2 after payments described in clauses
      (Y)(1) through (7) above and, to the extent applicable, after payments
to the Class 1A noteholders as described under "Excess Spread,  
       Overcollateralization and Cross-Collateralization Provisions" below, if
any.                                                            

     The sale and servicing agreement provides that to the extent the note
insurer makes insured payments with respect to a class of notes, the note       
insurer (a) will be subrogated to the rights of the holders of the notes with   
respect to those insured payments, (b) shall be deemed, to the extent of the    
payments so made, to be a registered holder of that class of notes and (c) shall
be entitled to reimbursement for those insured payments, with interest accrued  
thereon at the weighted average of the related note interest rates, on each     
payment date after the related noteholders have received the related Class A    
Remittance Amount (exclusive of any related Class A Carry-Forward Amount        
representing amounts previously paid to noteholders as insured payments or      
interest accrued in respect of those insured payments) for that payment date.   

INTEREST COVERAGE ACCOUNT AND RESERVE ACCOUNT                                   

The seller will establish for the benefit of each class of the  
noteholders an interest coverage trust account for each group. On the closing   
date and, if necessary, on each subsequent transfer date, the seller will       
deposit in each interest coverage account a cash amount as required by the note 
insurer and specified in the sale and servicing agreement. Funds on deposit in  
the related interest coverage account will be applied by the indenture trustee  
to cover shortfalls in the related Class A Interest Remittance Amount           
attributable to (1) the pre-funding feature during the funding period and (2)   
the deferment of interest feature with respect to certain of the mortgage loans.
During the funding period, an interest shortfall initially will exist because   
while the related noteholders are entitled to receive interest accruing on the  
related note principal balance, the related note principal balance during the   
funding period will be greater than the aggregate principal balance of the      
initial mortgage loans with respect to each group on the closing date. Upon     
conveyance of related subsequent mortgage loans to the issuer, funds on deposit 
in the related interest coverage account related to the pre-funding feature will
be released by the indenture trustee to the seller to the extent not necessary  
to cover these interest shortfalls.                                             

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Approximately 12.47% of the initial mortgage loans, by original 
principal balance (which excludes the permanent buydown companion loans), are   
deferred payment loans and the principal balance conveyed to the trust has been 
reduced by the principal amount so deferred. If the mortgagor has not prepaid   
the loan before a certain date and the maturity date is not otherwise           
accelerated by the servicer, these deferred payments will be forgiven. During   
the funding period, funds on deposit in the related interest coverage account   
will be available to cover the interest portion of deferred payments. In        
addition, it is possible that some of the subsequent mortgage loans transferred 
to the trust will contain this deferment of payments feature. With respect to   
any subsequent mortgage loan that is a deferred payment loan, that amount       
necessary to cover the interest that will accrue during the period of deferment 
on the principal balance of the deferred payment loan as transferred to the     
trust will be deposited by the seller into the related interest coverage account
and will be applied by the indenture trustee to cover shortfalls in the related 
Class A Interest Remittance Amount attributable to this interest feature. Upon  
termination of the funding period, any other amounts remaining in the interest  
coverage accounts will be released by the indenture trustee to the seller. To   
the extent deferred payments are not forgiven, the servicer will retain deferred
payments collected for payment to the seller as part of the Depositor's Yield.  

      If on any payment date the Required Overcollateralization Amount for a
group has been reached and all of the mortgage loans in such group have been    
paid in full or liquidated during the related Due Period, the amount, if any, by
which the Overcollateralization Amount for that group immediately preceding such
Due Period exceeded the Required Overcollateralization Amount for that group,   
determined without taking into account the overcollateralization amount required
by the note insurer for the groups in the aggregate, will be deposited by the   
indenture trustee into a reserve account, to the extent of available funds after
payments having a higher priority as set forth above under "--Allocation of     
Amount Available" are made. This amount deposited is referred to in this        
prospectus supplement as the "excess overcollateralization amount". On each     
payment date, funds on deposit in the reserve account will be available to cover
any available funds shortfall with respect to the class of notes outstanding    
until the related group reaches its Required Overcollateralization Amount, also 
determined without taking into account the overcollateralization amount required
by the note insurer for the groups in the aggregate. On the payment date that   
such Required Overcollateralization Amount is reached, amounts on deposit in the
reserve account will be released to the equity certificateholders.              

ADVANCES                                                                        

     Not later than the close of business on the twenty-second day of each
month (or if such day is not a business day, on the following business day), the
servicer shall remit to the indenture trustee for deposit in the note           
distribution account with respect to the related group an amount, to be         
distributed on the related payment date, equal to the sum of (1) the interest   
portions of the aggregate amount of monthly payments on the mortgage loans with 
respect to the related group (net of the servicing fee, the annual trustee      
expense amount and, after the cross-over date, the Excess Spread) due during the
related Due Period, but delinquent as of the close of business on the first day 
of the month in which such payment date occurs, (2) with respect to each REO    
Property that was acquired during or prior to the related Due Period and which  
was not disposed of during such Due Period, an amount equal to the excess, if   
any, of interest on the principal balance deemed to apply to such REO Property  
for the most recently ended calendar month at the related mortgage rate, net of 
the servicing fee, the annual trustee expense amount and, after the cross-over  
date, the Excess Spread, over the net income from such property for such Due    
Period, (3) with respect to each payment date, the amount necessary on the      
first, second, third, fourth and fifth payment dates to pay 30 days' interest   
with respect to each non-delinquent newly originated                            

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mortgage loan in the related group that has not had a first payment date as of  
the closing date, net of the servicing fee and the annual trustee expense       
amount, and (4) with respect to each payment date, if pursuant to the sale and  
servicing agreement the servicer has previously reimbursed itself for an advance
described in clause (3) above, then an amount equal to such amount previously   
reimbursed.                                                                     

       The servicer is required to make an advance out of its own funds or out
of funds in the principal and interest account with respect to the related group
that do not constitute the related Amount Available with respect to the related 
group for such payment date.                                                    

EXCESS SPREAD, OVERCOLLATERALIZATION AND CROSS-COLLATERALIZATION PROVISIONS     

      On any payment date prior to the cross-over date, holders of the Class
1A and Class 2A notes will have a first priority right to 100% of the related   
Excess Spread to fund the amount by which the related Class A Remittance Amount 
with respect to the related class of notes, exceeds the related Available       
Remittance Amount for such payment date. To the extent available, the Net Excess
Spread and Excess Principal with respect to a group will then be applied to     
cover any available funds shortfall with respect to the other group.            

      In addition, on any payment date prior to the cross-over date on which
the Overcollateralization Amount for a group is less than the Required          
Overcollateralization Amount for that group, the Remaining Net Excess Spread and
the Net Excess Principal, if any, will be used to make additional distributions 
of principal on the related class of notes until the Overcollateralization      
Amount equals the related Required Overcollateralization Amount for that group. 
Net Excess Spread and Net Excess Principal from one group will not be used to   
make payments of Additional Principal on the notes related to the other group.  

        Credit enhancement with respect to the notes will be provided in part by
the initial Overcollateralization Amount for the related group resulting from   
the sum of the original principal balance of the related group and the original 
group 1 pre-funded amount or the original group 2 pre-funded amount, as         
applicable, exceeding the related initial note principal balance as of the      
closing date. On the closing date, the initial Overcollateralization Amount with
respect to group 1 is expected to be $12,272,727.27, equal to 3.75% of the sum  
of the original group 1 principal balance and the original group 1 pre-funded   
amount; the initial Overcollateralization Amount with respect to group 2 is     
expected to be $6,504,904.49 equal to 3.15% of the sum of the original group 2  
principal balance and the original group 2 pre-funded amount.                   

     Prior to the related cross-over date, Excess Spread with respect to a
group will be applied first, to cover any available funds shortfall with respect
to that group, second, to cover any available funds shortfall with respect to   
the other group, third, to pay the amount of any related accrued and unpaid     
annual trustee expense amount, fourth, to reach and maintain the Required       
Overcollateralization Amount for that group, if necessary, fifth, with respect  
to the related group, to reimburse the servicer for amounts to which it is      
entitled, sixth, if necessary, to deposit the excess overcollateralization      
amount in the reserve account and seventh, to pay the related Available Funds   
Cap Carry Forward Amount, if any, to the holders of related notes on a pro rata 
basis among such noteholders, and to distribute any remaining amounts to the    
equity certificateholders. After the cross-over date, Excess Spread with respect
to a group, will be applied, first, to cover any available funds shortfall with 
respect to that group, second, to cover any available funds shortfall with      
respect to the other group, third, to pay the amount of any related accrued and 
unpaid annual trustee expense amount, fourth, with respect to the related group,
to reimburse                                                                    

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the servicer for amounts to which it is entitled, fifth, if necessary, to       
deposit the excess overcollateralization amount in the reserve account and      
sixth, to pay the Available Funds Cap Carry Forward Amount, if any, to the      
holders of related notes on a pro rata basis among such noteholders and to      
distribute any remaining amounts to the equity certificateholders.              

Application of the Additional Principal will have the effect of 
accelerating the rate of payment of principal of the notes until the cross-over 
date. Application of funds in accordance with the foregoing is intended to      
create and maintain a positive Overcollateralization Amount for each group equal
to the Required Overcollateralization Amount for that group and thereby provide 
a cushion against ultimate losses rather than to maintain a regular cash flow to
holders of notes or to guarantee against current losses. There can be no        
assurance that the Required Overcollateralization Amount will be attained or    
maintained. The Required Overcollateralization Amount for each group will be    
based on the targeted overcollateralization amount required by the note insurer 
for that group and for the groups in the aggregate and will be subject to       
certain stepups and stepdowns based on certain delinquency and loss tests with  
respect to the mortgage loans in the related group and the overcollateralization
amount attained with respect to the other group. In addition, the Required      
Overcollateralization Amount may be reduced at any time at the discretion of the
note insurer.                                                                   

If Realized Losses on the mortgage loans result in an           
Undercollateralization Amount, an insured payment with respect to that amount   
will be made by the note insurer to be allocated to each class of notes based on
its respective Unrecovered Class A Portion. Because the Undercollateralization  
Amount is based on the notes in the aggregate and on the principal balance of   
the mortgage loans of the groups in the aggregate, even if the note principal   
balance of a class of notes exceeds the aggregate principal balance of the      
mortgage loans in the related group, an insured payment will not be made unless 
the note principal balance of the notes in the aggregate exceed the principal   
balance of the mortgage loans in the aggregate.                                 

SALE AND SERVICING AGREEMENT

GENERAL                                                                         

 The issuer will acquire the mortgage loans pursuant to a sale and
servicing agreement dated as of September 1, 1999, among the seller, the        
servicer, the issuer and the indenture trustee, a form of which agreement is    
filed as an exhibit to the registration statement of which this prospectus      
supplement is a part. Copies of the sale and servicing agreement and indenture  
as executed will be included in the Current Report on Form 8-K relating to the  
notes, which will be filed by the seller with the Securities and Exchange       
Commission within fifteen days after the initial issuance of the notes.         
Reference is made to the prospectus for important information in addition to    
that set forth herein regarding the trust, the terms and conditions of the sale 
and servicing agreement, the indenture and the notes. The seller will provide to
a prospective or actual noteholder without charge, on written request, a copy   
(without exhibits) of the sale and servicing agreement and/or the indenture.    
Requests should be addressed to Superior Bank FSB, 1 Ramland Road, Orangeburg,  
New York 10962, Attention: President.                                           

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THE SERVICER                                                                    

      Superior Bank FSB, the servicer, will be responsible for the servicing
of the mortgage loans and will be entitled to a fee equal to 0.65% per annum of 
the principal balance of each mortgage loan, calculated and payable monthly from
interest actually received by the servicer on the mortgage loans, as described  
herein.                                                                         

        The servicer, as of June 30, 1999, serviced approximately $3,973,941,000
of mortgage loans (including the mortgage loans and mortgage loans not          
originated or purchased by the seller).                                         

       Statements are provided for all mortgage loans serviced. Mortgagors are
instructed to forward all payments, along with a coupon detachable from the     
statement, to a lockbox account. Available funds are then transferred from the  
lockbox account to the related principal and interest account. Telephone calls  
on first payment defaults are made at five (5) days past due utilizing the      
predictive dialer and a customized campaign. Phone calls may be made as early as
one day past due on newly originated loans depending upon loan (credit) class,  
and unpaid principal balance. Sixteen days after a missed payment a system      
generated late notice is sent. Loans are cycled through the dialer at a minimum 
of every three days until contact is made or promise for payment is established.
Collection attempts increase to daily frequency as the month progresses. At the 
second missed payment, generally, an on-site interview is scheduled with the    
borrower and the mortgaged property is inspected. If foreclosure is necessary,  
the servicer's litigation department supervises and monitors all litigation     
procedures (including bankruptcy proceedings) conducted by the foreclosing      
attorneys. If title passes to the mortgagee, the servicer's real estate division
will immediately insure that the mortgaged property is preserved and protected. 
Upon extensive review and analysis, a disposition strategy is developed and the 
property is aggressively marketed.                                              

The following table and discussion set forth certain information
concerning the delinquency and loss experience on mortgage loans secured by     
single family properties, multifamily properties, commercial properties and     
mixed use properties (including the mortgage loans originated or purchased by   
the seller and serviced by the servicer).                                       

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                  DELINQUENCY AND LOSS EXPERIENCE(1)
                  ($ IN THOUSANDS)

                                                        [Enlarge/Download Table]


                                                               FISCAL YEAR ENDING JUNE 30,                      
                                             -----------------------------------------------------------------  
                                                1996               1997              1998             1999      
                                             -----------       -----------       -----------       -----------  
                                                                                                                
Total Outstanding Principal Balance .......  $ 1,332,113       $ 1,904,232       $ 2,719,429       $ 3,756,735  
Number of Loans ...........................       18,420            26,119            36,898            51,638  

Period of Delinquency(2):                                                                                       
  30-59 Days(3)                                                                                                 
           Principal Balance ..............  $    14,299       $    39,594       $    45,046       $    86,934  
           Number of Loans ................          210               526               576             1,256  
           Percent of Delinquency by Dollar         1.07%             2.08%             1.66%             2.31% 
  60-89 Days                                                                                                    
           Principal Balance ..............  $     6,419       $    15,252       $    27,062       $    40,370  
           Number of Loans ................           82               186               291               539  
           Percent of Delinquency by Dollar         0.48%             0.80%             1.00%             1.07% 
  90 Days or More                                                                                               
           Principal Balance ..............  $    39,110       $    77,465       $   140,902       $   220,110  
           Number of Loans ................          431               813             1,435             2,262  
           Percent of Delinquency by Dollar         2.94%             4.07%             5.18%             5.86% 
  Total Delinquency                                                                                             
           Principal Balance ..............  $    59,828       $   132,311       $   213,010       $   347,414  
           Number of Loans ................          723             1,525             2,302             4,057  
           Percent by Delinquency by Dollar         4.49%             6.95%             7.83%             9.25% 

Average Outstanding Principal Balance .....  $ 1,104,163       $ 1,624,031       $ 2,294,635       $ 3,212,097  
Net Gains/(Losses) on Liquidated Loans ....  $    (1,684)      $    (8,092)      $   (15,758)      $   (34,997) 
Net Gains/(Losses) as a Percent of Average                                                                      
  Outstanding Principal Balance ...........        (0.15)%           (0.50)%           (0.69)%           (1.09)%
Net Gains/(Losses) on Liquidated Loans                                                                          
  including advances(4) ...................  $    (1,703)      $    (8,161)      $   (15,886)      $   (35,764) 
Net Gains/(Losses) as a Percent of Average                                                                      
  Outstanding Principal Balance(4) ........        (0.15)%           (0.50)%           (0.69)%           (1.11)%

-----------                                                                     

(1)     This table includes fixed-rate and adjustable-rate mortgage loans.      

(2)     Includes mortgage loans in the process of foreclosure and mortgaged     
       properties acquired through foreclosure or deed in lieu of foreclosure.

(3)     Represents two payments missed.                                         

(4)     Includes all net recorded servicer advances through date of liquidation 
less recoveries of such advances.                               

   The number of outstanding mortgage loans originated pursuant to the
Adjustable-Rate First Mortgage Program in the servicer's loan portfolio, and the
total principal balance of such loans, as of June 30, 1999 were approximately   
15,906 and $1,637,617,000 , respectively, as of June 30, 1998 were approximately
10,454 and $1,169,017,000, respectively, as of June 30, 1997 were approximately 
6,906 and $793,336,000, respectively, and as of June 30, 1996 were approximately
4,179 and $472,639,000, respectively. As of June 30, 1999, only 1,506 of such   
adjustable-rate mortgage loans were delinquent.                                 

    At June 30, 1999 with respect to the mortgage loans set forth in the
preceding table, 361 properties (representing $37,048,479 in principal balance  
of such loans) were acquired through foreclosure of the related mortgage loans  
or through deed in lieu of foreclosure and were not                             

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liquidated. The average length of ownership of foreclosed properties has        
historically been 5.64 months with an average loss (including accrued and unpaid
interest) per property of $47,305.                                              

      The delinquency and loss experience percentages in the preceding table
are calculated on the basis of all conventional mortgage loans serviced for the 
seller as of the end of the periods indicated. However, because the total amount
of loans serviced by the servicer has rapidly increased over these periods as a 
result of new originations, the total amount of loans serviced as of the end of 
any indicated period will include many loans that will not have been outstanding
long enough to give rise to some or all of the indicated periods of delinquency.
In the absence of such substantial continuous additions of newly originated     
loans to the total amount of loans serviced, the delinquency percentages        
indicated in the preceding table would be higher and could be substantially     
higher.                                                                         

YEAR 2000 COMPLIANCE                                            

Superior Bank FSB is a federally chartered and insured savings  
association, regulated by the Office of Thrift Supervision. Pursuant to OTS and 
Federal Financial Institutions Examination Counsel guidelines, Superior         
initiated a comprehensive program to study the impact on its computer systems in
order to be year 2000 compliant. This study involved identifying affected       
systems and/or applications and implementing appropriate modifications or       
replacements of hardware and software maintained by Superior. The study also    
involved receiving assurance that similar actions have or are being taken by    
third party service providers that are relied upon by Superior. In addition,    
Superior took necessary steps to receive assurance that its borrowers on income 
producing properties are taking necessary steps to address their year 2000      
issues so that income to cover debt service will not be interrupted.            

  Under this program, Superior identified computer systems that will
require either modification, upgrade or replacement. Superior utilized primarily
in-house personnel to perform these tasks, and also contracted with outside     
consultants, to a lesser degree, for some specific programming functions. As    
such, Superior's planned modifications, upgrades and replacement of existing    
systems, along with third party confirmations, have been completed and          
Superior's computer systems and software are year 2000 compliant, and any       
related costs did not have a material adverse impact on the results of          
operations, cash flows or financial condition of Superior.                      

TERMINATION; PURCHASE OF MORTGAGE LOANS                                         

        On any payment date on which the aggregate outstanding principal balance
of the mortgage loans in the trust is less than or equal to 5% of the sum of the
original pool principal balance and the original pre-funded amount, the servicer
may determine to purchase and may purchase from the trust all of the mortgage   
loans and all REO Property at a termination price equal to the sum of (1) 100%  
of the principal balance of each mortgage loan remaining plus one month's       
accrued interest thereon at the related mortgage rate net of the rate at which  
the servicer's fee is calculated and (2) the appraised value of any such REO    
Property remaining determined in accordance with the terms of the sale and      
servicing agreement. See "Description of the Securities--Termination of the     
Trust Fund and Disposition of Trust Fund Assets" in the prospectus.             

        In connection with any such purchase by the servicer, the servicer shall
remit to the indenture trustee for remittance to the related noteholders and    
equity certificateholders on the final payment                                  

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date with respect to such terminated group all other amounts then on deposit in 
the related principal and interest account that would have constituted part of  
the related Available Remittance Amount for subsequent payment dates absent such
purchase.                                                                       

REMOVAL AND RESIGNATION OF SERVICER                                             

   The note insurer may, pursuant to the sale and servicing agreement,
remove the servicer as servicer with respect to the mortgage loans of a group   
upon the occurrence and continuation beyond the applicable cure period of any of
the following events, other than the event described in clause (1)(C) below, and
the holders of the majority Class 1A or the Class 2A notes evidencing in excess 
of 51% of the related note principal balance, with the consent of the note      
insurer, which consent may not be unreasonably withheld, may remove the servicer
as servicer of the mortgage loans of the related group upon the occurrence and  
continuation beyond the applicable cure period of (a) an event described in     
clause (2) below or (b) upon the failure of the note insurer to exercise its    
rights to remove the servicer upon the occurrence of any event described in     
clauses (1)(A), (1)(B), (1)(D), (3), (4) or (5) below:                          

               (1)(A) an event of nonpayment, unless in the case of an event
        of nonpayment described in clauses (1) or (2) of the definition thereof,
     the insufficiency described in such clauses (1) or (2) results from a
  failure of the note insurer or the indenture trustee to perform in
      accordance with its respective obligations with respect to such group;
      (B) the failure by the servicer to make any required servicing advance
     with respect to such group, to the extent such failure materially and
  adversely affects the interests of the note insurer or the related
 noteholders; (C) the failure by the servicer to make any required
       monthly advance with respect to such group; or (D) any other failure by
 the servicer to remit to related noteholders, or to the indenture
        trustee for the benefit of the related noteholders, any payment required
   to be made under the terms of the sale and servicing agreement with
       respect to the related notes, to the extent such failure materially and
  adversely affects the interests of the note insurer or the related
    noteholders and which continues unremedied after the date upon which
        written notice of such failure, requiring the same to be remedied, shall
    have been given to the servicer by the note insurer or the indenture
        trustee or to the servicer and the indenture trustee with the consent of
the note insurer; or                                            

                  (2) failure by the servicer duly to observe or perform, in
       any material respect, any other covenants, obligations or agreements of
 the servicer with respect to a group as set forth in the sale and
    servicing agreement with respect to the related notes, which failure
    continues unremedied for a period of 60 days after the date on which
        written notice of that failure, requiring the same to be remedied, shall
  have been given to the servicer by the indenture trustee or to the
     servicer and the indenture trustee by the note insurer or any related
noteholder with the consent of the note insurer; or             

                 (3) a decree or order of a court or agency or supervisory
     authority having jurisdiction for the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt, 
        marshalling of assets and liabilities or similar proceedings, or for the
 winding-up or liquidation of its affairs, shall have been entered
    against the servicer and such decree or order shall have remained in
force, undischarged or unstayed for a period of 60 days; or     

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              (4) the servicer shall consent to the appointment of a
        conservator or receiver or liquidator in any insolvency, readjustment of
        debt, marshalling of assets and liabilities or similar proceedings of or
      relating to the servicer or of or relating to all or substantially all
of the servicer's property and such appointment shall continue  
  unremedied for a period of 30 days after the servicer has received
notice of such default; or                                      

                    (5) the servicer shall admit in writing its inability to pay
      its debts 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, any of which shall continue unremedied for a period of 30
days after the servicer has received notice of such default; or 

                   (6) certain other events if required by the note insurer in
the sale and servicing agreement.                               

    Upon the occurrence of the event described in clause (1)(C), and the
servicer's failure to remedy such by twelve o'clock noon, New York City time, on
the next succeeding business day, the indenture trustee or a successor servicer 
will immediately assume the duties of the servicer with respect to the related  
group.                                                                          

        An event of nonpayment is defined in the sale and servicing agreement as
(1) with respect to any payment date, the insufficiency of amounts remitted to  
the indenture trustee by the servicer and available to the indenture trustee to 
pay the full amount of the related Class A Remittance Amounts for a group,      
exclusive of the related Class A Carry-Forward Amounts that represent insured   
payments or interest accrued in respect of insured payments, and the monthly    
premium payable to the note insurer and (2) the sum of all Realized Losses with 
respect to such group exceeds an amount specified in the sale and servicing     
agreement. In certain instances of the occurrence of an event of nonpayment the 
indenture trustee and the note insurer may prohibit the termination of the      
servicer with respect to a group if such event of nonpayment does not result    
from the action or omission of the servicer.                                    

Under the sale and servicing agreement, if Realized Losses and  
delinquencies with respect to a group reach certain specified levels, the note  
insurer has the option to direct the indenture trustee to remove the servicer   
with respect to that group.                                                     

       Upon removal or resignation of the servicer as servicer of the mortgage
loans, the indenture trustee will be the successor servicer of the mortgage     
loans of the related group. The indenture trustee and any other successor       
servicer in such capacity is entitled to the same reimbursement for advances and
servicing compensation with respect to the mortgage loans of the related group  
as the servicer. See "Description of the Securities--Servicing and Other        
Compensation and Payment of Expenses" and "--Events of Default under the        
Governing Agreements and Rights Upon Event of Default" in the prospectus.       

SALE AND ASSIGNMENT OF THE MORTGAGE LOANS;                                      
RECORDATION OF ASSIGNMENTS OF MORTGAGES                                     

     On the closing date, all of the seller's right, title and interest in
and to the mortgage loans will be sold, conveyed, transferred and assigned from 
the seller to the issuer. The issuer will pledge                                

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and assign the mortgage loans to the indenture trustee in exchange for the      
notes. Assignments of the mortgage loans in favor of the indenture trustee (or  
its nominee) will be recorded in the appropriate public office for real property
records, except in states such as New York where, in the opinion of counsel,    
such recording is not required to protect the indenture trustee's interest in   
the mortgage loan against the claim of any subsequent transferee or creditor of 
the seller.                                                                     

AMENDMENT                                                                       

     In addition to the provisions for amendment of the sale and servicing
agreement described in the prospectus, with respect to the notes, the Required  
Overcollateralization Amounts and the subordinated amounts may be reduced at the
discretion of the note insurer and, consequently, without the consent of, or    
notice to, the holders of notes.                                                

THE NOTE INSURER AND THE NOTE INSURANCE POLICY

The information set forth in this section and in the financial  
statements of Financial Guaranty Insurance Company, the note insurer, set forth 
in Appendix A and Appendix B hereto, has been provided by the note insurer. No  
representation is made by the seller or any of its affiliates as to the accuracy
or completeness of any such information.                                        

        Financial Guaranty Insurance Company, the note insurer, a New York stock
insurance corporation, is a monoline financial guaranty insurance company which,
since January 1984, has been a leading insurer of bonds issued by municipal     
governmental subdivisions and agencies thereof. The note insurer also insures a 
variety of non-municipal structured debt obligations and pass-through           
securities. The note insurer is authorized to write insurance in all 50 states  
and the District of Columbia and is also authorized to carry on general         
insurance business in the United Kingdom and to write credit and guaranty       
insurance in France.                                                            

    The note insurer is a wholly-owned subsidiary of FGIC Corporation, a
Delaware holding company. FGIC Corporation is a subsidiary of General Electric  
Capital Corporation ("GE Capital"). Neither FGIC Corporation nor GE Capital is  
obligated to pay the debts of or the claims of the note insurer.                

       The note insurer and its holding company, FGIC Corporation, are subject
to regulation by the State of New York Insurance Department and by each other   
jurisdiction in which the note insurer is licensed to write insurance. These    
regulations vary from jurisdiction to jurisdiction, but generally require       
insurance holding companies and their insurance subsidiaries to register and    
file certain reports, including information concerning their capital structure, 
ownership and financial condition and require prior approval by the insurance   
department of their state of domicile of changes in control, of dividends and of
other intercorporate transfer of assets and of transactions between insurance   
companies, their parents and affiliates. The note insurer is required to file   
quarterly and annual statutory financial statements and is subject to statutory 
restrictions concerning the types and quality of investments, the use of policy 
forms, premium rates and the size of risk that it may insure, subject to        
reinsurance. Additionally, the note insurer is subject to triennial audits by   
the State of New York Insurance Department.                                     

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       The note insurer considers its role in providing insurance to be credit
enhancement rather than credit substitution. The note insurer only insures      
securities that it considers to be of investment grade quality. With respect to 
each category of obligations considered for insurance, the note insurer has     
established and maintains its own underwriting standards that are based on those
aspects of credit quality that the note insurer deems important for the category
and that take into account criteria established for the category typically used 
by rating agencies. Credit criteria for evaluating securities include economic  
and social trends, debt management, financial management and legal and          
administrative factors, the adequacy of anticipated cash flow, including the    
historical and expected performance of assets pledged for payment of securities 
under varying economic scenarios, underlying levels of protection such as       
insurance or overcollateralization, and, particularly in the case of long-term  
municipal securities, the importance of the project being financed.             

        The note insurer also reviews the security features and reserves created
by the financing documentation, as well as the financial and other covenants    
imposed upon the credit backing the issue. In connection with underwriting new  
issues, the note insurer sometimes requires, as a condition to insuring an      
issue, that collateral be pledged or, in some instances, that a third-party     
guarantee be provided for a term of the insured obligation by a party of        
acceptable credit quality obligated to make payment prior to any payment by the 
note insurer.                                                                   

 Insurance written by the note insurer insures the full and timely
payment of interest and principal when due on insured debt securities and timely
interest and ultimate principal payments due in respect of pass-through         
securities such as the notes. If the issuer of a security insured by the note   
insurer defaults on its obligations to pay such debt service, or, in the case of
a pass-through security, available funds are insufficient to pay the insured    
amounts, the note insurer will make the scheduled insured payments, without     
regard to any acceleration of the securities which may have occurred, and will  
be subrogated to the rights of security holders to the extent of its payments.  
The claims paying ability of the note insurer is rated Aaa, AAA and AAA by      
Moody's, Standard & Poor's and Fitch Investors Service, Inc., respectively.     

       In consideration for issuing its insurance, the note insurer receives a
premium which is generally paid in full upon issuance of the policy or on an    
annual, semiannual or monthly basis. The premium rates charged depend           
principally on the credit strength of the securities as judged by the note      
insurer according to its internal credit rating system and the type of issue.   

    As of June 30, 1999, December 31, 1998 and 1997 the note insurer had
written directly or assumed through reinsurance, guaranties of approximately    
$285.8 billion, $268.1 billion and $230.2 billion par value of securities,      
respectively (of which approximately 86 percent, 86 percent and 86 percent,     
respectively, constituted guaranties of municipal bonds), for which it had      
collected gross premiums of approximately $2.31 billion, $2.25 billion and $2.14
billion, respectively. As of June, 30, 1999, the note insurer had reinsured     
approximately 22 percent of the risks it had written, 30 percent through quota  
share reinsurance, 19 percent through excess of loss reinsurance and 51 percent 
through facultative arrangements.                                               

CAPITALIZATION                                                                  

        The following table sets forth the capitalization of the note insurer as
of December 31, 1997, December 31, 1998 and June 30, 1999, respectively, on the 
basis of generally accepted accounting                                          

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principles (subject to year end adjustments with respect to the June 30, 1999   
information). No material adverse change in the capitalization of the note      
insurer has occurred since June 30, 1999.                                       

                                                        [Enlarge/Download Table]


                                                                                  (UNAUDITED)  
                                                      DECEMBER 31,   DECEMBER 31,   JUNE 30,   
                                                          1997         1998           1999     
                                                     (IN MILLIONS) (IN MILLIONS)  (IN MILLIONS)
                                                     ------------- -------------  -------------
                                                                                               
Unearned Premiums ..................................     $  629       $  610        $   605    
Other Liabilities ..................................        250          302            243    
    Stockholder's Equity(1)                                                                    
    Common Stock ...................................         15           15             15    
    Additional Paid-in Capital .....................        384          384            384    
    Accumulated Other Comprehensive Income .........         84           92             (1)   
    Retained Earnings ..............................      1,470        1,581          1,630    
                                                         ------       ------        -------    
Total Stockholder's Equity .........................      1,953        2,072          2,028    
                                                         ------       ------        -------    
Total Liabilities and Stockholder's Equity .........     $2,832       $2,984        $ 2,876    
                                                         ======       ======        =======    

(1) Components of Stockholder's Equity have been restated for all periods       
   presented to reflect "Accumulated Other Comprehensive Income" in accordance
with the Statement of Financial Accounting Standards No. 130 "Reporting 
    Comprehensive Income" adopted by the note insurer effective January 1, 1998.
  As this new standard only requires additional information in the financial
statements, it does not affect the note insurer's financial position or 
results of operations.                                                  

      For further financial information concerning the note insurer, see the
audited financial statements of the note insurer included as Appendix A and the 
unaudited interim financial statements of the note insurer included as Appendix 
B.                                                                              

      Copies of the note insurer's quarterly and annual statutory statements
filed by the note insurer with the State of New York Insurance Department are   
available upon request to Financial Guaranty Insurance Company, 115 Broadway,   
New York, New York 10006, Attention: Corporate Communications Department. The   
note insurer's telephone number is (212) 312-3000.                              

       The note insurer does not accept any responsibility for the accuracy or
completeness of this prospectus supplement or the prospectus or any information 
or disclosure contained herein, or omitted herefrom, other than with respect to 
the accuracy of information in this prospectus supplement regarding the note    
insurer and the note insurance policy set forth under the heading "The Note     
Insurer and the Note Insurance Policy" herein and in Appendix A and Appendix B. 

NOTE INSURANCE POLICY                                                           

      The note insurer will issue a note insurance policy for the notes. The
note insurance policy unconditionally guarantees the payment of insured payments
on the notes. "Insured payments" as to any payment date means (1) the amount, if
any, by which (X) the related Class A Remittance Amount with respect to the     
related class of the notes (excepting amounts payable in connection with the    
repurchase or substitution of defective mortgage loans if such amounts are due  
but not paid by the seller) exceeds (Y) the sum of (a) the related Available    
Remittance Amount (minus the monthly premium payable to the note insurer), (b)  
(I) if such payment date is prior to the cross-over date, the                   

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lesser of (1) the sum of (i) the Excess Spread deposited into the related note  
distribution account as of such payment date, (ii) to the extent of an available
funds shortfall, the Net Excess Spread from the other group, if any, and (iii)  
to the extent of an available funds shortfall, the Excess Principal from the    
other group, if any, and (2) the related subordinated amount, or (II) if such   
payment date is on or after the cross-over date, that portion of the Amount     
Available constituting Excess Spread with respect to the related group available
to pay the related Class A Interest Remittance Amount, (c) any amount           
transferred from the reserve account to the related note distribution account,  
and (d) the aggregate amount of any previous related insured payments for which 
the note insurer has not been reimbursed by the indenture trustee pursuant to   
the sale and servicing agreement, together with that portion of the amounts     
described in the immediately preceding clause (X) of the definition of insured  
payment that represents interest accrued in respect of prior insured payments   
and (2) the outstanding note principal balance on the notes to the extent unpaid
on the final scheduled payment date. The note insurer will make each such       
insured payment (other than that portion of an insured payment constituting a   
preference amount (defined below)) to the indenture trustee as paying agent on  
the later of (a) the payment date on which such insured payment is distributable
to the related noteholders pursuant to the sale and servicing agreement and (b) 
the business day next following the day on which the note insurer shall have    
received telephonic or telegraphic notice, subsequently confirmed in writing, or
written notice by registered or certified mail, from the indenture trustee as   
paying agent specifying that an insured payment is due. The note insurance      
policy will provide for payment of the amount, a "preference amount", of any    
distributions in respect of principal or interest previously paid to a          
noteholder that are subsequently recovered from such noteholder prior to the    
expiration date of the note insurance policy, pursuant to a final, nonappealable
order of a court of competent jurisdiction under the United States Bankruptcy   
Code. Any such payments would be made under the note insurance policy on the    
second business day following receipt by the note insurer of notice as described
above, a certified copy of such final order, assignment to the note insurer of  
such noteholder's rights and claims with respect to such preference amount and  
appointment of the note insurer as such noteholder's agent in respect of the    
preference amount. No holder of a note shall be entitled to reimbursement for   
any payment voided as a preference as to which the note insurer previously has  
made a payment under the note insurance policy, nor is the note insurer         
obligated to make any payment in respect of any preference amount which         
represent a payment of the principal amount of the notes prior to the time the  
note insurer otherwise would have been required to make a payment in respect of 
such principal.                                                                 

     The note insurer's obligation under the note insurance policy will be
discharged to the extent that funds are received by the indenture trustee for   
distribution to the noteholders, whether or not such funds are properly         
distributed by the indenture trustee.                                           

       For purposes of the note insurance policy, "noteholder" as to any class
of note, does not include the trust, the servicer, any sub-servicer or the      
seller.                                                                         

   The note insurer only insures the timely receipt of interest on the
notes and the ultimate receipt of principal on the notes. The note insurer does 
not guarantee (i) any rate of principal payments on the notes, (ii) recovery of 
payments deemed voidable preferences under state law, (iii) the payment of the  
purchase price by the seller in connection with the purchase of mortgage loans  
due to defective documentation or a breach of representation or warranty, or    
(iv) the payment of any Available Funds Cap Carry Forward Amount for any payment
date. The note insurance policy is non-cancelable. The note insurance policy    
expires and terminates without any action on the part of                        

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the note insurer or any other person on the date that is one year and one day   
following the date on which the notes have been paid in full.                   

THE NOTE INSURANCE POLICY IS NOT COVERED BY THE PROPERTY/       
CASUALTY INSURANCE SECURITY FUND SPECIFIED IN ARTICLE 76 OF THE NEW             
YORK INSURANCE LAW.                                                             

       In the absence of payments under the note insurance policy, noteholders
will directly bear the credit and other risks associated with their undivided   
interest in the trust.                                                          

 FEDERAL INCOME TAX CONSEQUENCES

       Upon the issuance of the notes, Thacher Proffitt & Wood, counsel to the
seller, will deliver its opinion to the effect that based on the application of 
existing law and assuming compliance with the owner trust agreement and         
indenture, for federal income tax purposes:                                     

  o       the notes will be characterized as indebtedness and not as
            representing an ownership interest in the trust estate or an
equity interest in the issuer or the seller and 

        o       the issuer will not be classified as an association taxable as a
        corporation for federal income tax purposes (including a
               "publicly traded partnership" as defined in Treasury Regulation
                Section 1.7704) or a taxable mortgage pool as defined in Section
7701(i) of the Code.                            

      Each noteholder, by the acceptance of a note, will agree to treat such
notes as indebtedness for federal income tax purposes. See "Federal Income Tax  
Consequences" in the prospectus for additional information concerning the       
application of federal income tax laws to the trust and the notes.              

        The notes will not be treated as having been issued with "original issue
discount," as defined in the prospectus. The prepayment assumption that will be 
used in determining the rate of amortization of market discount and premium, if 
any, for federal income tax purposes will be based on the assumption that the   
mortgage loans will prepay at a rate equal to 28% CPR. No representation is made
that the mortgage loans will prepay at that rate or at any other rate. See      
"Federal Income Tax Consequences" in the prospectus.                            

The notes will not be treated as assets described in Section    
7701(a)(19)(C) of the Code or "real estate assets" under Section 856(c)(4)(A) of
the Code. In addition, interest on the notes will not be treated as "interest on
obligations secured by mortgages on real property" under Section 856(c)(3)(B) of
the Code. The notes will also not be treated as "qualified mortgages" under     
Section 860G(a)(3)(C) of the Code.                                              

 Prospective investors in the notes should see "Federal Income Tax
Consequences" and "State and Other Tax Consequences" in the prospectus for a    
discussion of the application of federal income and state and local tax laws to 
the issuer and purchasers of the notes.                                         

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ERISA CONSIDERATIONS

   Transactions involving the trust fund might be deemed to constitute
prohibited transactions under ERISA and the Code with respect to a Plan that    
purchases the notes if the assets included in the trust fund are deemed to be   
assets of the Plan. For this purpose, the notes will be treated as debt under   
the Regulations if they are treated as indebtedness under applicable local law  
and do not have any substantial equity features. Under the regulations of the   
U.S. Department of Labor ("Regulations") defining the term "plan assets", when a
plan acquires an "equity interest" in another entity, the underlying assets of  
that entity may be considered to be Plan assets unless certain exceptions apply.
See "ERISA CONSIDERATIONS" in the prospectus. The Regulations provide that the  
term "equity interest" means any interest in an entity other than an instrument 
which is treated as indebtedness under applicable local law and which has       
not"substantial equity features." The term "substantial equity features" has no 
definition under the Regulations.                                               

   Although there is no authority directly on point, it is anticipated
that, as of the date of this prospectus supplement, the notes should be treated 
as indebtedness without substantial equity features for purposes of the         
Regulations. However, even if the notes are treated as indebtedness for such    
purposes, the acquisition or holding of notes by or on behalf of a Plan or      
related investment vehicle could be considered to give rise to a prohibited     
transaction if the servicer, the indenture trustee, any successor servicer or   
any of their respective affiliates is or becomes a party in interest or         
disqualified person with respect to a Plan or related investment vehicle, unless
certain exemptions from the prohibited transaction rules were applicable        
depending on the type and circumstances of the plan fiduciary making the        
decision to acquire a note. In addition, if the notes were treated as an equity 
interest in the future, the assets of the issuer could be treated as plan assets
of a plan for the purposes of ERISA and the Code. In view of the                
investor-specific nature of the conditions on the exemptive relief available    
under ERISA and the Code, each investor should determine whether it is investing
plan assets in the notes and, if it is, should determine that appropriate       
exemptive relief from ERISA's prohibited transaction provisions is available. By
acquiring a note, each purchaser will be deemed to represent that either (1) it 
is not acquiring the note with the assets of a Plan; or (2) the acquisition and 
holding of the note will not give rise to a nonexempt prohibited transaction    
under Section 406 of ERISA or Section 4975 of the Code.                         

        Any Plan fiduciary considering whether to purchase a note on behalf of a
Plan should consult with its counsel regarding the applicability of the         
fiduciary responsibility and prohibited transaction provisions of ERISA and the 
Code to such investment. See "ERISA Considerations" in the prospectus.          

LEGAL INVESTMENT

       Although at their initial issuance the Class 1A notes will be rated Aaa
by Moody's and "AAA" by Standard & Poor's, the Class 1A notes will not          
constitute "mortgage related securities" for purposes of the Secondary Mortgage 
Market Enhancement Act of 1984 because group 1 includes mortgage loans which are
secured by second liens.                                                        

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        The Class 2A notes will not constitute "mortgage related securities" for
purposes of SMMEA until such time as the balance of the group 2 pre-funding     
account is reduced to zero. At such time the Class 2A notes will constitute     
"mortgage related securities" for purposes of SMMEA so long as they are rated in
one of the two highest rating categories by at least one nationally recognized  
statistical rating organization, and, as such, they will constitute legal       
investments for certain entities to the extent provided for in SMMEA.           

        The seller makes no representations as to the proper characterization of
any class of notes for legal investment or other purposes, or as to the ability 
of particular investors to purchase any class of notes under applicable legal   
investment restrictions. These uncertainties may adversely affect the liquidity 
of any class of notes. Accordingly, all institutions whose investment activities
are subject to legal investment laws and regulations, regulatory capital        
requirements or review by regulatory authorities should consult with their legal
advisors in determining whether and to what extent any class of notes           
constitutes a legal investment or is subject to investment, capital or other    
restrictions. See "Legal Investment" in the prospectus.                         

METHOD OF DISTRIBUTION

Subject to the terms and conditions set forth in an underwriting
agreement, the seller has agreed to sell to Merrill Lynch, Pierce, Fenner &     
Smith Incorporated and J.P. Morgan Securities, Inc., and each of the            
underwriters has agreed to purchase from the seller, the principal amount of the
notes set forth opposite its name below:                                        

                                       Principal         Principal
                                       Amount of         Amount of
                Underwriters            Class 1A Notes    Class 2A Notes
                ------------            --------------    --------------
Merrill Lynch, Pierce Fenner & Smith                                            
Incorporated                              $157,500,000      $100,000,000    
J.P. Morgan Securities, Inc.                $157,500,000      $100,000,000      
                                       -----------      ------------
 Total..............................  $315,000,000      $200,000,000

   In the underwriting agreement, each of the underwriters has agreed,
subject to the terms and conditions set forth therein, to purchase all of its   
respective allocation of the notes if any of the notes are purchased.           

       The underwriters have advised the seller that they propose initially to
offer the notes to the public at the price set forth on the cover page hereof,  
and to certain dealers at such price less a concession not in excess of 0.15% of
the note denominations for the Class 1A notes and not in excess of 0.15% of the 
note denominations for the Class 2A notes. The underwriters may allow and such  
dealers may reallow a concession not in excess of 0.125% of the note            
denominations to certain other dealers. After the initial public offering, the  
public offering price and such concessions may be changed.                      

Until the distribution of the notes is completed, rules of the  
Securities and Exchange Commission may limit the ability of the underwriters and
certain selling group members to bid for and purchase the notes. As an exception
to these rules, the underwriters are permitted to engage in                     

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certain transactions that stabilize the price of the notes. Such transactions   
consist of bids or purchases for the purpose of pegging, fixing or maintaining  
the price of the notes.                                                         

    In general, purchases of a security for the purpose of stabilization
could cause the price of the security to be higher than it might be in the      
absence of such purchases.                                                      

       Neither the seller or any of its affiliates nor any of the underwriters
makes any representation or prediction as to the direction or magnitude of any  
effect that the transactions described above may have on the price of the notes.
In addition, neither the seller or any of its affiliates nor any of the         
underwriters makes any representation that the underwriters will engage in such 
transactions or that such transactions, once commenced, will not be discontinued
without notice.                                                                 

      The underwriting agreement provides that the seller will indemnify the
underwriters against certain liabilities, including liabilities under the       
Securities Act of 1933, as amended.                                             

    There can be no assurance that a secondary market for the notes will
develop or, if it does develop, that it will continue. The primary source of    
information available to investors concerning the notes will be the monthly     
statements discussed in the prospectus under "Description of the Notes--Reports 
to Noteholders", which will include information as to the outstanding principal 
balance of the notes and the status of any existing credit enhancement. There   
can be no assurance that any additional information regarding the notes will be 
available through any other source. In addition, the seller is not aware of any 
source through which price information about the notes will be generally        
available on an ongoing basis. The limited nature of such information regarding 
the notes may adversely affect the liquidity of the notes, even if a secondary  
market for the notes becomes available.                                         

 EXPERTS

       The financial statements of Financial Guaranty Insurance Company, as of
December 31, 1998 and 1997 and for each of the years in the three-year period   
ended December 31, 1998, have been included in this prospectus supplement in    
Appendix A in reliance upon the report of KPMG LLP, independent certified public
accountants, appearing in Appendix A, upon the authority of said firm as experts
in accounting and auditing.                                                     

 RATINGS

   As a condition of issuance, the Class 1A and Class 2A notes will be
rated Aaa by Moody's Investors Service, Inc. and "AAA" by Standard & Poor's     
Ratings Services, A Division of the McGraw-Hill Companies, Inc. The security    
ratings of the notes should be evaluated independently from similar ratings on  
other types of securities. A security rating is not a recommendation to buy,    
sell or hold securities and may be subject to revision or withdrawal at any time
by the rating agencies. In general, ratings address credit risk and do not      
address the likelihood or rate of prepayment. See "Rating" and "Risk            
Factors--Limited Nature of Ratings" in the prospectus.                          

      The ratings of Moody's on mortgage-backed notes address the likelihood
of the receipt by the holders thereof of all distributions on the underlying    
mortgage loans to which they are entitled.                                      

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Moody's ratings on the notes do not represent any assessment of the likelihood  
that principal prepayments will be made by mortgagors or the degree to which    
such prepayments might differ from that originally anticipated. The rating      
assigned by Moody's to the notes does not address the possibility that the      
noteholders might suffer a lower than anticipated yield, nor does it address the
likelihood that the Available Funds Cap Carry Forward Amount will be paid to the
noteholders.                                                                    

Standard & Poor's ratings on mortgage-backed notes address the  
likelihood of the receipt by noteholders of payments required thereon. Standard 
& Poor's ratings take into consideration the credit quality of the mortgage     
pool, structural and legal aspects associated with the notes, and the extent to 
which the payment stream on the mortgage pool is adequate to make payments      
required under the notes. Standard & Poor's rating on the notes does not,       
however, constitute a statement regarding frequency of prepayments on the       
mortgage loans nor the likelihood that the Available Funds Cap Carry Forward    
Amount will be paid to the noteholders.                                         

The ratings assigned to the notes will depend primarily on the  
creditworthiness of the note insurer. Any reduction in a rating assigned to the 
claims-paying ability of the note insurer below the ratings initially assigned  
to the notes may result in a reduction of the ratings assigned to the notes.    

     The seller does not expect a rating on the notes by any rating agency
other than as set forth above. However, there can be no assurance as to whether 
any other rating agency will rate the notes, or, if it does, what rating would  
be assigned by such other rating agency. A rating on the notes by another rating
agency, if assigned at all, may be lower than the ratings assigned to the notes 
as set forth above.                                                             

 LEGAL MATTERS

       Certain legal matters relating to the notes will be passed upon for the
seller by Thacher Proffitt & Wood and Lawrence S. Rigie, Esq. and for the       
underwriters by Brown & Wood LLP.                                               

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 ANNEX I

 GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES

 Except in certain limited circumstances, the globally offered AFC
Mortgage Loan Asset Backed Notes, Series 1999-3 (the "Global Securities") will  
be available only in book-entry form. Investors in the Global Securities may    
hold such Global Securities through any of The Depository Trust Company ("DTC"),
Cedelbank ("Cedelbank"), or the Euroclear System ("Euroclear"). The Global      
Securities will be tradeable as home market instruments in both the European and
U.S. domestic markets. initial settlement and all secondary trades will settle  
in same-day funds.                                                              

    Secondary market trading between investors holding Global Securities
through Cedelbank and Euroclear will be conducted in the ordinary way in        
accordance with their normal rules and operating procedures and in accordance   
with conventional eurobond practice (i.e., seven calendar day settlement).      

    Secondary market trading between investors holding Global Securities
through DTC will be conducted according to the rules and procedures applicable  
to U.S. corporate debt obligations and prior Home Equity Loan Asset Backed Notes
issues.                                                                         

     Secondary cross-market trading between Cedelbank or Euroclear and DTC
Participants holding notes will be effected on a delivery-against-payment basis 
through the respective Depositaries of Cedelbank and Euroclear (in such         
capacity) and as DTC Participants.                                              

  Non-U.S. holders (as described below) of Global Securities will be
subject to U.S. withholding taxes unless such holders meet certain requirements 
and deliver appropriate U.S. tax documents to the securities clearing           
organizations or their participants.                                            

INITIAL SETTLEMENT                                                              

        All Global Securities will be held in book-entry form by DTC in the name
of CEDE & Co. as nominee of DTC. Investors' interests in the Global Securities  
will be represented through financial institutions acting on their behalf as    
Direct and Indirect Participants in DTC. As a result, Cedelbank and Euroclear   
will hold positions on behalf of their participants through their respective    
Depositaries, which in turn will hold such positions in accounts as DTC         
Participants.                                                                   

   Investors electing to hold their Global Securities through DTC will
follow the settlement practices applicable to prior Home Equity Loan Asset      
Backed Notes issues. Investor securities custody accounts will be credited with 
their holdings against payment in same-day funds on the settlement date.        

       Investors electing to hold their Global Securities through Cedelbank or
Euroclear accounts will follow the settlement procedures applicable to          
conventional eurobonds, except that there will be no temporary global security  
and no "lock-up" or restricted period. Global Securities will be credited to the
securities custody accounts on the settlement date against payment in same-day  
funds.                                                                          

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SECONDARY MARKET TRADING                                                        

        Since the purchaser determines the place of delivery, it is important to
establish at the time of the trade where both the purchaser's and seller's      
accounts are located to ensure that the settlement can be made on the desired   
value date.                                                                     

      Trading between DTC Participants. Secondary market trading between DTC
Participants will be settled using the procedures applicable to prior Home      
Equity Loan Asset Backed Notes issues in same-day funds.                        

  Trading between Cedelbank and/or Euroclear Participants. Secondary
market trading between Cedelbank participants or Euroclear participants will be 
settled using the procedures applicable to conventional eurobonds in same-day   
funds.                                                                          

     Trading between DTC seller and Cedelbank or Euroclear purchaser. When
Global Securities are to be transferred from the account of a DTC Participant to
the account of a Cedelbank Participant or a Euroclear Participant, the purchaser
will send instructions to Cedelbank or Euroclear through a Cedelbank Participant
or Euroclear Participant at least one business day prior to settlement.         
Cedelbank or Euroclear will instruct the respective Depositary, as the case may 
be, to receive the Global Securities against payment. Payment will include      
interest accrued on the Global Securities from and including the last coupon    
payment date to and excluding the settlement date, on the basis of the actual   
number of days in such accrual period and a year assumed to consist of 360 days.
For transactions settling on the 31st of the month, payment will include        
interest accrued to and excluding the first day of the following month. Payment 
will then be made by the respective Depositary of the DTC Participant's account 
against delivery of the Global Securities. After settlement has been completed, 
the Global Securities will be credited to the respective clearing system and by 
the clearing system, in accordance with its usual procedures, to the Cedelbank  
Participant's or Euroclear Participant's account. The securities credit will    
appear the next day (European time) and the cash debt will be back-valued to,   
and the interest on the Global Securities will accrue from the value date (which
would be the preceding day when settlement occurred in New York). If settlement 
is not completed on the intended value date (i.e., the trade fails), the        
Cedelbank or Euroclear cash debt will be valued instead as of the actual        
settlement date.                                                                

   Cedelbank participants and Euroclear participants will need to make
available to the respective clearing systems the funds necessary to process     
same-day funds settlement. The most direct means of doing so is to preposition  
funds for settlement, either from cash on hand or existing lines of credit, as  
they would for any settlement occurring within Cedelbank or Euroclear. Under    
this approach, they may take on credit exposure to Cedelbank or Euroclear until 
the Global Securities are credited to their accounts one day later.             

   As an alternative, if Cedelbank or Euroclear has extended a line of
credit to them, Cedelbank participants or Euroclear participants can elect not  
to proposition funds and allow that credit line to be drawn upon the finance    
settlement. Under this procedure, Cedelbank participants or Euroclear           
participants purchasing Global Securities would incur overdraft charges for one 
day, assuming they cleared the overdraft when the Global Securities were        
credited to their accounts. However, interest on the Global Securities would    
accrue from the value date. Therefore, in many cases the investment income on   
the Global Securities earned during that one-day period may substantially reduce
or offset                                                                       

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the amount of such overdraft charges, although this result will depend on each  
Cedelbank Participant's or Euroclear Participant's particular cost of funds.    

        Since the settlement is taking place during New York business hours, DTC
Participants can employ their usual procedures for sending Global Securities to 
the respective Depositary for the benefit of Cedelbank participants or Euroclear
participants. The sale proceeds will be available to the DTC seller on the      
settlement date. Thus, to the DTC Participant a cross-market transaction will   
settle no differently than a trade between two DTC Participants.                

       Trading between Cedelbank or Euroclear seller and DTC purchaser. Due to
time zone differences in their favor, Cedelbank participants and Euroclear      
participants may employ their customary procedures for transactions in which    
Global Securities are to be transferred by the respective clearing system,      
through the respective Depositary, to a DTC Participant. The seller will send   
instructions to Cedelbank or Euroclear through a Cedelbank Participant or       
Euroclear Participant at least one business day prior to the settlement. In     
these cases, Cedelbank or Euroclear will instruct the respective Depositary, as 
appropriate, to deliver the Global Securities to the DTC Participant's account  
against payment. Payment will include interest accrued on the Global Securities 
from and including the last coupon payment to and excluding the settlement date 
on the basis of the actual number of days in such accrual period and a year     
assumed to consist of 360 days. For transactions settling on the 31st of the    
month, payment will include interest accrued to and excluding the first day of  
the following month. The payment will then be reflected in the account of the   
Cedelbank Participant or Euroclear Participant the following day, and receipt of
the cash proceeds in the Cedelbank Participant's or Euroclear Participant's     
account would be backed-value to the value date (which would be the preceding   
day, when settlement occurred in New York). Should the Cedelbank Participant or 
Euroclear Participant have a line of credit with its respective clearing system 
and elect to be in debt in anticipation of receipt of the sale proceeds in its  
account, the back-valuation will extinguish any overdraft incurred over that    
one-day period. If settlement is not completed on the intended value date (i.e.,
the trade fails), receipt of the cash proceeds in the Cedelbank Participant's or
Euroclear Participant's account would instead be valued as of the actual        
settlement date.                                                                

      Finally, day traders that use Cedelbank or Euroclear and that purchase
Global Securities from DTC Participants for delivery to Cedelbank participants  
or Euroclear participants should note that these trades would automatically fail
on the sale side unless affirmative action were taken. At least three techniques
should be readily available to eliminate this potential problem:                

   (a) borrowing through Cedelbank or Euroclear for one day (until the
purchase side of the day trade is reflected in their Cedelbank or Euroclear     
accounts) in accordance with the clearing system's customary procedures;        

      (b) borrowing the Global Securities in the U.S. from a DTC Participant
no later than one day prior to settlement, which would give the Global          
Securities sufficient time to be reflected in their Cedelbank or Euroclear      
account in order to settle the sale side of the trade; or                       

      (c) staggering the value dates for the buy and sell sides of the trade
so that the value date for the purchase from the DTC Participant is at least one
day prior to the value date for the sale to the Cedelbank participants or       
Euroclear participants.                                                         

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CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS                      

  A beneficial owner of Global Securities holding securities through
Cedelbank or Euroclear (or through DTC if the holder has an address outside of  
the U.S.) will be subject to the 30% U.S. withholding tax that generally applies
to payments of interest (including original issue discount) on registered debt  
issued by U.S. Persons, unless (i) each clearing system, bank or other financial
institution that holds customers' securities in the ordinary course of its trade
or business in the chain of intermediaries between such beneficial owner and the
U.S. entity required to withhold tax complies with applicable certification     
requirements and (ii) such beneficial owner takes one of the following steps to 
obtain an exemption or reduced tax rate:                                        

      Exemption for non-U.S. Persons (Form W-8). Beneficial owners of Global
Securities that are non-U.S. Persons can obtain a complete exemption from the   
withholding tax by filing a signed Form W-8 (Certificate of Foreign Status). If 
the information shown on Form W-8 changes, a new Form W- 8 must be filed within 
30 days of such change.                                                         

      Exemption for non-U.S. Persons with effectively connected income (Form
4224). A non-U.S. Person, including a non-U.S. corporation or bank with a U.S.  
branch, for which the interest income is effectively connected with its conduct 
of trade or business in the United States, can obtain an exemption from the     
withholding tax by filing Form 4224 (Exemption from Withholding of Tax on Income
Effectively Connected with the Conduct of a Trade or Business in the United     
States).                                                                        

 Exemption or reduced rate for non-U.S. Persons resident in treaty
countries (Form 1001). Non-U.S. Persons that are Certificate Owners residing in 
a country that has a tax treaty with the United States can obtain an exemption  
or reduced tax rate (depending on the treaty terms) by filing Form 1001         
(Ownership, Exemption or Reduced Rate Certificate). If the treaty provides only 
for a reduced rate, withholding tax will be imposed at that rate unless the     
filer alternatively files Form W- 8. Form 1001 may be filed by the Certificate  
Owners or their agents.                                                         

Exemption for U.S. Persons (Form W-9). U.S. Persons can obtain a
complete exemption from the withholding tax by filing Form W-9 (Payer's Request 
for Taxpayer Identification Number and Certification).                          

        U.S. Federal Income Tax Reporting Procedure. The Certificate Owners of a
Global Security or, in the case of a Form 1001 or a Form 4224 filer, his agent, 
files by submitting the appropriate form to the person through whom it holds    
(the clearing agency, in the case of persons holding directly on the books of   
the clearing agency). Form W-8 and Form 1001 are currently effective for three  
calendar years and Form 4224 is currently effective for one calendar year. See  
"Certain Federal Income Tax Consequences--REMIC's-- Backup Withholding With     
Respect to REMIC Notes" in the Prospectus.                                      

        The term "U.S. Person" means 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 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  
supervision over the administration of the trust and one or more United States  
fiduciaries have authority to control all substantial decisions of the trust.   
This summary does not deal with all aspects                                     

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of U.S. Federal income tax withholding that may be relevant to foreign holders  
of the Global Securities. Investors are advised to consult their own tax        
advisors for specific tax advice concerning their holding and disposing of the  
Global Securities.                                                              

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                                                                      APPENDIX A

FINANCIAL GUARANTY INSURANCE
COMPANY 

Financial Statements

December 31, 1998 and 1997

(With Independent Auditors' Report Thereon) 

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FINANCIAL GUARANTY INSURANCE COMPANY                                            
================================================================================

AUDITED FINANCIAL STATEMENTS                                                    

DECEMBER 31, 1998                                                               

     Report of Independent Auditors .......................................... 1
     Balance Sheets .......................................................... 2
     Statements of Income .................................................... 3
     Statements of Stockholder's Equity ...................................... 4
     Statements of Cash Flows ................................................ 5
     Notes to Financial Statements ........................................... 6

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[LETTERHEAD OF KPMG LLP]
 345 Park Avenue
New York, New York 10154

INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholder                                          
Financial Guaranty Insurance Company                                            

We have audited the accompanying balance sheets of Financial Guaranty Insurance 
Company as of December 31, 1998 and 1997, and the related statements of income, 
stockholder's equity, and cash flows for each of the years in the three year    
period ended December 31, 1998. These financial statements are the              
responsibility of the Company's management. Our responsibility is to express an 
opinion on these financial statements based on our audits.                      

We conducted our audits in accordance with generally accepted auditing          
standards. Those standards require that we plan and perform the audit to obtain 
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting 
the amounts and disclosures in the financial statements. An audit also includes 
assessing the accounting principles used and significant estimates made by      
management, as well as evaluating the overall financial statement presentation. 
We believe that our audits provide a reasonable basis for our opinion.          

In our opinion, the financial statements referred to above present fairly, in   
all material respects, the financial position of Financial Guaranty Insurance   
Company as of December 31, 1998 and 1997 and the results of its operations and  
its cash flows for each of the years in the three year period then ended in     
conformity with generally accepted accounting principles.                       

                                      /s/ KPMG LLP

January 22, 1999                                                                

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FINANCIAL GUARANTY INSURANCE                                                    
COMPANY                                                           BALANCE SHEETS

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

($ in Thousands, except per share amounts)                                      

                                                        [Enlarge/Download Table]

                                                                DECEMBER 31,  DECEMBER 31,
ASSETS                                                             1998         1997      
                                                                ----------    ----------  
                                                                                          
Fixed maturity securities available-for-sale                                              
 (amortized cost of $2,519,490 in 1998 and $2,313,458 in 1997)  $2,663,024    $2,443,746  
Short-term investments, at cost, which approximates market          30,395        76,039  
Cash                                                                   318           802  
Accrued investment income                                           40,038        38,927  
Reinsurance recoverable                                              8,115         8,220  
Prepaid reinsurance premiums                                       148,366       154,208  
Deferred policy acquisition costs                                   80,924        86,286  
Property and equipment, net of accumulated depreciation                                   
  ($6,981 in 1998 and $17,346 in 1997)                               1,802         3,142  
Prepaid expenses and other assets                                  $11,047        21,002  
                                                                ----------    ----------  
      Total assets                                              $2,984,029    $2,832,372  
                                                                ==========    ==========  

LIABILITIES AND STOCKHOLDER'S EQUITY                                                      

Liabilities:                                                                              

Unearned premiums                                               $  610,182    $  628,553  
Loss and loss adjustment expenses                                   59,849        76,926  
Ceded reinsurance balances payable                                   3,129         3,932  
Accounts payable and accrued expenses                               46,764        26,352  
Current federal income taxes payable                                69,542        19,335  
Deferred federal income taxes                                      122,839       118,522  
Payable for securities purchased                                         6         5,811  
                                                                ----------    ----------  

      Total liabilities                                            912,311       879,431  
                                                                ----------    ----------  

Stockholder's Equity:                                                                     

Common stock, par value $1,500 per share;                                                 
10,000 shares authorized, issued and outstanding                    15,000        15,000  
Additional paid-in capital                                         383,511       383,511  
Accumulated other comprehensive income                              91,922        83,935  
Retained earnings                                                1,581,285     1,470,495  
                                                                ----------    ----------  

      Total stockholder's equity                                 2,071,718     1,952,941  
                                                                ----------    ----------  

      Total liabilities and stockholder's equity                $2,984,029    $2,832,372  
                                                                ==========    ==========  

 See accompanying notes to financial statements.

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FINANCIAL GUARANTY INSURANCE                                                    
COMPANY                                                     STATEMENTS OF INCOME

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

                                                        [Enlarge/Download Table]


($ in Thousands)                                                                          

                                                       FOR THE YEAR ENDED DECEMBER 31,    
                                                  --------------------------------------- 
                                                     1998           1997          1996    
                                                  ---------      ---------      --------- 
                                                                                          
REVENUES:                                                                                 

Gross premiums written                            $ 112,425      $  95,995      $  97,027 
Ceded premiums                                      (19,444)       (19,780)       (29,376)
                                                  ---------      ---------      --------- 

 Net premiums written                                92,981         76,215         67,651 
Decrease in net unearned premiums                    12,529         39,788         51,314 
                                                  ---------      ---------      --------- 

 Net premiums earned                                105,510        116,003        118,965 
Net investment income                               133,353        127,773        124,635 
Net realized gains                                   29,360         16,700         15,022 
                                                  ---------      ---------      --------- 

 Total revenues                                     268,223        260,476        258,622 
                                                  ---------      ---------      --------- 

EXPENSES:                                                                                 

Loss and loss adjustment expenses                     3,178         12,539          2,389 
Policy acquisition costs                             13,870         12,936         16,327 
Decrease (Increase) in deferred                                                           
  policy acquisition costs                            5,362          5,659          2,923 
Other underwriting expenses                          18,539         14,691         12,508 
                                                  ---------      ---------      --------- 

 Total expenses                                      40,949         45,825         34,147 
                                                  ---------      ---------      --------- 

Income before provision for Federal income taxes    227,274        214,651        224,475 
                                                  ---------      ---------      --------- 

Federal income tax expense:                                                               
 Current                                             41,467         39,133         41,548 
 Deferred                                                17          1,715          5,318 
                                                  ---------      ---------      --------- 

 Total Federal income tax expense                    41,484         40,848         46,866 
                                                  ---------      ---------      --------- 

 Net income                                       $ 185,790      $ 173,803      $ 177,609 
                                                  =========      =========      ========= 

 See accompanying notes to financial statements.

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                                                        [Enlarge/Download Table]


FINANCIAL GUARANTY INSURANCE                                                                                                 
COMPANY                                                                                                                      
                                                                                           STATEMENTS OF STOCKHOLDER'S EQUITY
=============================================================================================================================

                                                                                   ACCUMULATED                               
                                                                     ADDITIONAL      OTHER                                   
                                                          COMMON      PAID-IN     COMPREHENSIVE    RETAINED                  
                                                          STOCK       CAPITAL        INCOME         EARNINGS         TOTAL   
                                                         -------     ----------   -------------   -----------     -----------

                                                                                                                             
Balance, January 1, 1996                                 $15,000     $334,011       $ 62,286      $1,136,584      $1,547,881 
Net income                                                  --           --             --           177,609         177,609 
Other comprehensive income:                                                                                                  
   Change in fixed maturity securities                                                                                       
   available for sale, net of tax of ($13,260)              --           --          (24,625)           --           (24,625)
   Change in foreign currency translation adjustment        --           --            1,070            --             1,070 
                                                                                                                  ---------- 
Total comprehensive income                                  --           --             --              --           154,054 
                                                                                                                  ---------- 
Dividend paid                                               --           --             --           (17,500)        (17,500)
                                                         -------     --------       --------      ----------      ---------- 
Balance, December 31, 1996                                15,000      334,011         38,731       1,296,692       1,684,435 
                                                         -------     --------       --------      ----------      ---------- 

Net Income                                                  --           --             --           173,803         173,803 
Other comprehensive income:                                                                                                  
   Change in fixed maturity securities                                                                                       
   available for sale, net of tax of ($24,516)              --           --           45,527            --            45,527 
   Change in foreign currency translation                                                                                    
     adjustment                                             --           --             (323)           --              (323)
                                                                                                                  ---------- 
Total comprehensive income                                  --           --             --              --           219,007 
                                                                                                                  ---------- 
Capital contribution                                        --         49,500           --              --            49,500 
                                                         -------     --------       --------      ----------      ---------- 
Balance at December 31, 1997                              15,000      383,511         83,935       1,470,495       1,952,942 
                                                         -------     --------       --------      ----------      ---------- 

Net Income                                                  --           --             --           185,790         185,790 
Other comprehensive income:                                                                                                  
   Change in fixed maturity securities                                                                                       
   available for sale, net of tax of $4,636                 --           --            8,610            --             8,610 
   Change in foreign currency translation                                                                                    
     adjustment                                             --           --             (623)           --              (623)
                                                                                                                  ---------- 
Total comprehensive income                                  --           --             --              --           193,777 
                                                                                                                  ---------- 
Dividend declared                                           --           --             --           (75,000)        (75,000)
                                                         -------     --------       --------      ----------      ---------- 
Balance at December 31, 1998                             $15,000     $383,511       $ 91,922      $1,581,285      $2,071,719 
                                                         =======     ========       ========      ==========      ========== 

                                        See accompanying notes to financial statements.                                      

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FINANCIAL GUARANTY INSURANCE                                                    
COMPANY                                                 STATEMENTS OF CASH FLOWS
================================================================================

($ in Thousands)                                                                

                                                        [Enlarge/Download Table]

                                                              FOR THE YEAR ENDED DECEMBER 31,       
                                                      --------------------------------------------- 
                                                         1998           1997                 1996   
                                                      ---------      ---------            --------- 
                                                                                                    
OPERATING ACTIVITIES:                                                                               

Net income                                            $ 185,790      $ 173,803            $ 177,609 
 Adjustments to reconcile net income                                                                
   to net cash provided by operating activities:                                                    
 Change in unearned premiums                            (18,371)       (53,263)             (45,719)
 Change in loss and loss adjustment expense reserves    (17,077)         4,310               (5,192)
 Depreciation of property and equipment                   1,399          2,013                2,472 
 Change in reinsurance recoverable                          105         (1,205)                 657 
 Change in prepaid reinsurance premiums                   5,842         13,475               (5,596)
 Change in foreign currency translation adjustment         (958)          (497)               1,646 
 Policy acquisition costs deferred                      (13,870)       (12,936)             (16,327)
 Amortization of deferred policy acquisition costs       19,232         18,595               19,250 
 Change in accrued investment income, and prepaid                                                   
   expenses and other assets                             12,847         (2,754)              (7,201)
 Change in other liabilities                             15,606        (36,233)              30,117 
 Change in deferred income taxes                             17          1,715                5,318 
 Amortization of fixed maturity securities                4,149          2,698                  792 
 Change in current income taxes payable                  50,207        (32,681)                 720 
 Net realized gains on investments                      (29,360)       (16,700)             (15,022)
                                                      ---------      ---------            --------- 

Net cash provided by operating activities               215,558         60,340              143,524 
                                                      ---------      ---------            --------- 

Investing Activities:                                                                               

Sales and maturities of fixed maturity securities       607,372        741,604              891,643 
Purchases of fixed maturity securities                 (818,999)      (848,843)                     
Purchases, sales and maturities of short-term                                                       
  investments, net                                       45,644         (2,200)              17,193 
Purchases of property and equipment, net                    (59)          (459)                (854)
                                                      ---------      ---------            --------- 

Net cash used in investing activities                  (166,042)      (109,898)            (125,363)
                                                      ---------      ---------            --------- 

Financing Activities:                                                                               

Capital Contributions                                      --           49,500                 --   
Dividends paid                                          (50,000)          --                (17,500)
                                                      ---------      ---------            --------- 
Net cash provided by financing activities               (50,000)        49,500              (17,500)
                                                      ---------      ---------            --------- 

(Decrease) Increase in cash                                (484)           (58)                 661 
Cash at beginning of year                                   802            860                  199 
                                                      ---------      ---------            --------- 

Cash at end of year                                   $     318      $     802            $     860 
                                                      =========      =========            ========= 

 See accompanying notes to financial statements.

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FINANCIAL GUARANTY INSURANCE                                                    
COMPANY                                            NOTES TO FINANCIAL STATEMENTS
================================================================================

(1)  BUSINESS                                                                   

Financial Guaranty Insurance Company (the "Company") is a wholly-owned
insurance subsidiary of FGIC Corporation (the "Parent"). The Parent is
owned approximately ninety-nine percent by General Electric Capital   
     Corporation ("GE Capital") and approximately one percent by Sumitomo Marine
  and Fire Insurance Company, Ltd. The Company provides financial guaranty
  insurance on newly issued municipal bonds and municipal bonds trading in
  the secondary market, the latter including bonds held by unit investment
  trusts and mutual funds. The Company also insures structured debt issues
 outside the municipal market. Approximately 86% of the business written
since inception by the Company has been municipal bond insurance.     

 The Company insures only those securities that, in its judgment, are of
   investment grade quality. Municipal bond insurance written by the Company
   insures the full and timely payment of principal and interest when due on
     scheduled maturity, sinking fund or other mandatory redemption and interest
payment dates to the holders of municipal securities. The Company's   
    insurance policies do not provide for accelerated payment of the principal
   of, or interest on, the bond insured in the case of a payment default. If
     the issuer of a Company-insured bond defaults on its obligation to pay debt
     service, the Company will make scheduled interest and principal payments as
due and is subrogated to the rights of bondholders to the extent of   
payments made by it.                                                  

The preparation of financial statements in conformity with generally  
  accepted accounting principles requires management to make estimates and
    assumptions that effect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the    
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those   
estimates.                                                            

(2)  SIGNIFICANT ACCOUNTING POLICIES                                            

  The accompanying financial statements have been prepared on the basis of
   generally accepted accounting principles ("GAAP") which differ in certain
respects from the accounting practices prescribed or permitted by     
   regulatory authorities (see Note 3). The prior years financial statements
 have been reclassified to conform to the 1998 presentation. Significant
accounting policies are as follows:                                   

INVESTMENTS                                                           

  The Company accounts for its investments in accordance with Statement of
Financial Accounting Standards No. 115 ("SFAS 115"), "Accounting for  
   Certain Investments in Debt and Equity Securities." The Statement defines
three categories for classification of debt securities and the related
accounting treatment for each respective category. The Company has    
determined that its fixed maturity securities portfolio should be     
classified as available-for-sale. Under SFAS 115, securities held as  
available-for-sale are recorded at fair value and unrealized holding  
    gains/losses are recorded as a separate component of stockholder's equity,
net of applicable income taxes.                                       

    Short-term investments are carried at cost, which approximates fair value.
   Bond discounts and premiums are amortized over the remaining terms of the
securities. Realized gains or losses on the sale of investments are   
determined on the basis of specific identification.                   

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FINANCIAL GUARANTY INSURANCE                                                    
COMPANY                                NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================

PREMIUM REVENUE RECOGNITION                                           

   Premiums for policies where premiums are collected in a single payment at
 policy inception are earned over the period at risk, based on the total
 exposure outstanding at any point in time. Financial guaranty insurance
    policies exposure generally declines according to predetermined schedules.
  For policies with premiums that are collected periodically, premiums are
reflected in income pro rata over the period covered by the premium   
payment.                                                              

POLICY ACQUISITION COSTS                                              

   Policy acquisition costs include only those expenses that relate directly
to premium production. Such costs include compensation of employees   
   involved in underwriting, marketing and policy issuance functions, rating
   agency fees, state premium taxes and certain other underwriting expenses,
 offset by ceding commission income on premiums ceded to reinsurers (see
   Note 6). Net acquisition costs are deferred and amortized over the period
in which the related premiums are earned. Anticipated loss and loss   
 adjustment expenses are considered in determining the recoverability of
acquisition costs.                                                    

LOSS AND LOSS ADJUSTMENT EXPENSES                                     

   Provision for loss and loss adjustment expenses includes amounts equal to
   the present value of unpaid principal and interest and other payments due
  under insured risks at the balance sheet date for which, in management's
    judgment, the likelihood of default is probable. Such reserves amounted to
$59.8 million and $76.9 million at December 31, 1998 and 1997,        
respectively. As of December 31, 1998 and 1997, such reserves included
$39.6 million and $35.1 million, respectively, established based on an
     evaluation of the insured portfolio in light of current economic conditions
  and other relevant factors. As of December 31, 1998 and 1997, case-basis
loss and loss adjustment expense reserves were $20.2 million and $41.8
  million, respectively. Loss and loss adjustment expenses include amounts
  discounted at an interest rate between 5.0% and 5.1% in 1998 and between
   5.9% and 6.0% in 1997. The discount rate used is based upon the risk free
  rate for the average maturity of the applicable bond sector. The reserve
    for loss and loss adjustment expenses is necessarily based upon estimates,
    however, in management's opinion the reserves for loss and loss adjustment
     expenses is adequate. However, actual results will likely differ from those
estimates.                                                            

INCOME TAXES                                                          

Deferred tax assets and liabilities are recognized for the future tax 
  consequences attributable to differences between the financial statement
  carrying amounts of existing assets and liabilities and their respective
 tax bases. These temporary differences relate principally to unrealized
 gains (losses) on fixed maturity securities available-for-sale, premium
    revenue recognition, deferred acquisition costs and deferred compensation.
  Deferred tax assets and liabilities are measured using enacted tax rates
   expected to apply to taxable income in the years in which those temporary
     differences are expected to be recovered or settled. The effect on deferred
     tax assets and liabilities of a change in tax rates is recognized in income
in the period that includes the enactment date.                       

     Financial guaranty insurance companies are permitted to deduct from taxable
income, subject to certain limitations, amounts added to statutory    
     contingency reserves (see Note 3). The amounts deducted must be included in
     taxable income upon their release from the reserves or upon earlier release
   of such amounts from such reserves to cover excess losses as permitted by
   insurance regulators. The amounts deducted are allowed as deductions from
     taxable income only to the extent that U.S. government non-interest bearing
 tax and loss bonds are purchased and held in an amount equal to the tax
benefit attributable to such deductions.                              

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FINANCIAL GUARANTY INSURANCE                                                    
COMPANY                                NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================

PROPERTY AND EQUIPMENT                                                

Property and equipment consists of furniture, fixtures, equipment and 
     leasehold improvements which are recorded at cost and are charged to income
over their estimated service lives. Office furniture and equipment are
depreciated straight-line over five years. Leasehold improvements are 
    amortized over their estimated service life or over the life of the lease,
    whichever is shorter. Computer equipment and software are depreciated over
  three years. Maintenance and repairs are charged to expense as incurred.

FOREIGN CURRENCY TRANSLATION                                          

The Company has established foreign branches in France and the United 
     Kingdom and determined that the functional currencies of these branches are
    local currencies. Accordingly, the assets and liabilities of these foreign
     branches are translated into U.S. dollars at the rates of exchange existing
   at December 31, 1998 and 1997 and revenues and expenses are translated at
     average monthly exchange rates. The cumulative translation loss at December
   31, 1998 and 1997 was $1.4 million and $0.7 million, respectively, net of
tax, and is reported as a separate component of stockholder's equity. 

NEW ACCOUNTING PRONOUNCEMENTS                                         

 In June 1997, FASB Statement 130, "Reporting Comprehensive Income", was
  issued to establish standards for reporting and display of comprehensive
    income and its components (revenues, expenses, gains and losses) in a full
   set of general-purpose financial statements. This Statement requires that
    all items that are required to be recognized under accounting standards as
 components of comprehensive income be reported in a financial statement
   that is displayed with the same prominence as other financial statements.
This Statement does not require a specific format for that financial  
  statement but requires that an enterprise display an amount representing
    total comprehensive income for the period in that financial statement. The
Company implemented this Statement in 1998.                           

In June 1998, FASB Statement No. 133, "Accounting for Derivative      
    Instruments and Hedging Activities", was issued to establish comprehensive
 accounting and reporting standards effective as of the beginning of the
  first quarter of the fiscal year beginning after June 15, 1999 (thus for
  calendar year-end entities, this Standard is effective January 1, 2000).
This Standard not only defines derivative instruments and hedging     
 activities, but also requires that they be recorded on the statement of
     financial position at fair value, and depending upon if the instrument is a
    derivative or qualifies as a specific type of hedge, changes in fair value
    may be recorded either in the statement of earnings or other comprehensive
    income. Management is assessing the impact of this Standard on the Company
and does not anticipate the impact to be significant.                 

(3)  STATUTORY ACCOUNTING PRACTICES                                             

   The financial statements are prepared on the basis of GAAP, which differs
  in certain respects from accounting practices prescribed or permitted by
   state insurance regulatory authorities. The following are the significant
ways in which statutory-basis accounting practices differ from GAAP:  

    (a)  premiums are earned directly in proportion to the scheduled
              principal and interest payments rather than in proportion to the
total exposure outstanding at any point in time.  

      (b)  policy acquisition costs are charged to current operations as
  incurred rather than as related premiums are earned;

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FINANCIAL GUARANTY INSURANCE                                                    
COMPANY                                NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================

    (c)  a contingency reserve is computed on the basis of statutory
               requirements for the security of all policyholders, regardless of
              whether loss contingencies actually exist, whereas under GAAP, a
               reserve is established based on an ultimate estimate of exposure;

     (d)  certain assets designated as non-admitted assets are charged
              directly against surplus but are reflected as assets under GAAP,
if recoverable;                                   

       (e)  federal income taxes are only provided with respect to taxable
              income for which income taxes are currently payable, while under
      GAAP taxes are also provided for differences between the
              financial reporting and the tax bases of assets and liabilities;

          (f)  purchases of tax and loss bonds are reflected as admitted assets,
      while under GAAP they are recorded as federal income tax
payments; and                                     

          (g)  all fixed income investments are carried at amortized cost rather
than at fair value for securities classified as   
available-for-sale under GAAP.                    

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FINANCIAL GUARANTY INSURANCE                                                    
COMPANY                                NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
The following is a reconciliation of net income and stockholder's equity        
presented on a GAAP basis to the corresponding amounts reported on a            
statutory-basis for the periods indicated below (in thousands):                 

                                                        [Enlarge/Download Table]

                                                                           YEARS ENDED DECEMBER 31,                              
                                                ---------------------------------------------------------------------------------
                                                        1998                         1997                     1996               
                                                ------------------------    ------------------------    -------------------------
                                                  NET      STOCKHOLDER'S      NET      STOCKHOLDER'S      NET      STOCKHOLDER'S 
                                                 INCOME       EQUITY         INCOME       EQUITY         INCOME        EQUITY    
                                                --------   -------------    --------   -------------    --------   --------------
                                                                                                                                 
GAAP basis amount                               $185,790    $2,071,718      $173,803    $1,952,941      $177,609    $ 1,684,434  

Premium revenue recognition                      (13,946)     (195,155)       (4,924)     (181,209)       (9,358)      (176,285) 

Deferral of acquisition costs                      5,362       (80,924)        5,659       (86,286)        2,923        (91,945) 

Contingency reserve                                 --        (627,257)         --        (540,677)         --         (460,973) 

Contingency reserve tax deduction (see Note 2)      --          74,059          --          95,185          --           85,176  

Non-admitted assets                                 --          (1,502)         --          (2,593)         --           (3,879) 

Case basis loss reserves                           1,945            73         1,377        (1,872)       (3,197)        (3,249) 

Portfolio loss reserves                            3,900        32,900         5,000        29,000          --           24,000  

Deferral of income taxes                              17        72,521         1,715        72,260         5,317         70,719  

Unrealized (gains) on fixed maturity                                                                                             
securities held at fair value, net of tax           --         (93,297)         --         (84,687)         --          (39,160) 

Recognition of profit commission                   1,338        (6,050)       (1,203)       (7,388)         (441)        (6,185) 

Unauthorized reinsurance                            --             (39)         --            --            --             --    

Allocation of tax benefits due to                                                                                                
Parent's net operating loss to the                                                                                               
Company (see Note 5)                                 253        11,169           313        10,916           313         10,603  
                                                --------    ----------      --------    ----------      --------    -----------  

Statutory-basis amount                          $184,659    $1,258,215      $181,740    $1,255,590      $173,166    $ 1,093,256  
                                                ========    ==========      ========    ==========      ========    ===========  

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FINANCIAL GUARANTY INSURANCE                                                    
COMPANY                                NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------

4)   INVESTMENTS                                                                

Investments in fixed maturity securities carried at fair value of $3.2
  million and $3.1 million as of December 31, 1998 and 1997, respectively,
 were on deposit with various regulatory authorities as required by law.

The amortized cost and fair values of short-term investments and of   
   investments in fixed maturity securities classified as available-for-sale
are as follows (in thousands):                                        

                                                                [Download Table]

                                              GROSS       GROSS               
                                            UNREALIZED  UNREALIZED            
                                AMORTIZED    HOLDING     HOLDING       FAIR   
1998                               COST       GAINS      LOSSES        VALUE  
----                            ----------  ---------   ----------  ----------
                                                                              
U.S. Treasury securities and                                                  
  obligations of U.S.                                                         
  government corporations and                                                 
  agencies                      $   75,595  $  1,294     $    2     $   76,887
Obligations of states and                                                     
  political subdivisions         2,367,682   142,777      4,112      2,506,347
Debt securities issued by                                                     
  foreign governments               38,520     3,182       --           41,702
Other                               37,693       416         21         38,088
                                ----------  --------     ------     ----------
Investments available-for-sale   2,519,490   147,669      4,135      2,663,024
Short-term investments              30,395      --         --           30,395
                                ----------  --------     ------     ----------
Total                           $2,549,885  $147,669     $4,135     $2,693,419
                                ==========  ========     ======     ==========

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FINANCIAL GUARANTY INSURANCE                                                    
COMPANY                                NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================

The amortized cost and fair values of short-term investments and of   
     investments in fixed maturity securities available-for-sale at December 31,
  1998, by contractual maturity date, are shown below. Expected maturities
     may differ from contractual maturities because borrowers may have the right
     to call or prepay obligations with or without call or prepayment penalties.

                                             AMORTIZED          FAIR
1998                                            COST             VALUE
  ----                                         ----------       ----------
  Due in one year or less                      $   32,677       $   32,693
  Due after one year through five years           110,268          113,985
  Due after five years through ten years          711,111          752,903
  Due after ten years through twenty years      1,537,253        1,635,363
  Due after twenty years                          158,576          158,475
                                               ----------       ----------

  Total                                        $2,549,885       $2,693,419
                                               ==========       ==========

                                                                [Download Table]

                                               GROSS      GROSS               
                                             UNREALIZED  UNREALIZED           
                                  AMORTIZED   HOLDING     HOLDING      FAIR   
1997                               COST        GAINS      LOSSES       VALUE  
----                             ----------  ----------  ---------- ----------
                                                                              
U.S. Treasury securities and                                                  
 obligations of U.S. government                                               
 corporations and agencies       $   11,539   $    185     $--      $   11,724

Obligations of states and                                                     
 political subdivisions           2,272,225    130,183      655      2,401,753

Debt securities issued by                                                     
 foreign governments                 29,694        603       28         30,269
                                 ----------   --------     ----     ----------
Investments available-for-sale    2,313,458    130,971      683      2,443,746

Short-term investments               76,039       --        --          76,039
                                 ----------   --------     ----     ----------

Total                            $2,389,497   $130,971     $683     $2,519,785
                                 ==========   ========     ====     ==========

   In 1998, 1997 and 1996, proceeds from sales and maturities of investments
    in fixed maturity securities available-for-sale carried at fair value were
     $607.3 million, $741.6 million, and $891.6 million, respectively. For 1998,
     1997 and 1996 gross gains of $29.6 million, $19.1 million and $19.8 million
respectively, and gross losses of $0.2 million, $2.4 million and $4.8 
million respectively, were realized on such sales.                    

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FINANCIAL GUARANTY INSURANCE                                                    
COMPANY                                NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================

    Net investment income of the Company is derived from the following sources
(in thousands):                                                       

                                                 YEAR ENDED DECEMBER 31,
                                               ---------------------------------
                                               1998         1997        1996
                                               --------     --------    --------

     Income from fixed maturity securities     $129,942     $122,372    $119,290
     Income from short-term investments           4,421        6,366       6,423
                                               --------     --------    --------

     Total investment income                    134,363      128,738     125,713
     Investment expenses                          1,010          965       1,078
                                               --------     --------    --------

     Net investment income                     $133,353     $127,773    $124,635
                                               ========     ========    ========

As of December 31, 1998, the Company did not have more than 3% of its 
investment portfolio concentrated in a single issuer or industry.     

(5)  INCOME TAXES                                                               

   The Company files a federal tax return as part of the consolidated return
     of General Electric Capital Corporation ("GE Capital"). Under a tax sharing
agreement with GE Capital, taxes are allocated to the Company and the 
Parent based upon their respective contributions to consolidated net  
income. The Company also has a separate tax sharing agreement with its
Parent. Under this agreement the Company can utilize its Parent's net 
operating loss to offset taxable income on a stand-alone basis. The   
    Company's effective federal corporate tax rate (18.3 percent in 1998, 19.0
  percent in 1997 and 20.8 percent in 1996) is less than the corporate tax
     rate on ordinary income of 35 percent in 1998, 1997 and 1996, primarily due
to tax exempt interest on municipal investments.                      

    Federal income tax expense relating to operations of the Company for 1998,
1997 and 1996 is comprised of the following (in thousands):           

                       YEAR ENDED DECEMBER 31,
                       -------------------------------
                       1998         1997        1996
                       -------     -------     -------
Current tax expense            $41,467     $39,133     $41,548        
Deferred tax expense                17       1,715       5,318        
                       -------     -------     -------
Federal income tax expense     $41,484     $40,848     $46,866        
                       =======     =======     =======

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FINANCIAL GUARANTY INSURANCE                                                    
COMPANY                                NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================

   The following is a reconciliation of federal income taxes computed at the
   statutory rate and the provision for federal income taxes (in thousands):

                                           YEAR ENDED DECEMBER 31,
                                            ----------------------------------
                                            1998          1997        1996
                                            --------     --------     --------
Income taxes computed on income                                       
before provision for federal                                      
      income taxes, at the statutory rate   $ 79,546     $ 75,128     $ 78,566

Tax effect of:                                                        
       Tax-exempt interest                    (35,660)     (34,508)     (32,609)
    Original issue discount                 (2,511)        --           --
      Other, net                                (109)         228          909
                                            --------     --------     --------

    Provision for income taxes              $ 41,484     $ 40,848     $ 46,866
                                            ========     ========     ========

The tax effects of temporary differences that give rise to significant
  portions of the net deferred tax liability or asset at December 31, 1998
and 1997 are presented below (in thousands):                          

                                               1998         1997
                                               --------     --------
Deferred tax assets:                                                  
   Loss reserves                               $ 12,364     $ 10,999
   Deferred compensation                          2,230        2,242
   Tax over book capital gains                    3,464        2,996
   Other                                          3,579        2,260
                                               --------     --------

Total gross deferred tax assets                   21,637       18,497 
                                               --------     --------

Deferred tax liabilities:                                             
Unrealized gains on fixed maturity                            
   securities, available-for-sale                50,237       45,601
   Deferred acquisition costs                    28,323       30,200
   Premium revenue recognition                   44,935       40,103
   Rate differential on tax and loss bonds        9,454        9,454
   Other                                         11,527       11,661
                                               --------     --------

Total gross deferred tax liabilities             144,476      137,019 
                                               --------     --------

Net deferred tax liability                      $122,839     $118,522 
                                               ========     ========

  Based upon the level of historical taxable income, projections of future
taxable income over the periods in which the deferred tax assets are  
deductible and the estimated reversal of future taxable temporary     
   differences, the Company believes it is more likely than not that it will
realize the benefits of these deductible differences and has not      
established a valuation allowance at December 31, 1998 and 1997. The  
  Company anticipates that the related deferred tax asset will be realized
based on future profitable business.                                  

  Total federal income tax payments during 1998, 1997 and 1996 were $(8.7)
million, $71.8 million, and $33.9 million, respectively.              

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FINANCIAL GUARANTY INSURANCE                                                    
COMPANY                                NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================

(6)  REINSURANCE                                                                

   The Company reinsures portions of its risk with other insurance companies
through quota share reinsurance treaties and, where warranted, on a   
   facultative basis. This process serves to limit the Company's exposure on
risks underwritten. In the event that any or all of the reinsuring    
companies were unable to meet their obligations, the Company would be 
liable for such defaulted amounts. The Company evaluates the financial
condition of its reinsurers and monitors concentrations of credit risk
  arising from activities or economic characteristics of the reinsurers to
  minimize its exposure to significant losses from reinsurer insolvencies.
  The Company holds collateral under reinsurance agreements in the form of
letters of credit and trust agreements in various amounts with various
reinsurers totaling $37.0 million that can be drawn on in the event of
default.                                                              

 Net premiums earned are presented net of ceded earned premiums of $25.3
   million, $33.3 million and $23.7 million for the years ended December 31,
1998, 1997 and 1996, respectively. Loss and loss adjustment expenses  
  incurred are presented net of ceded losses of $0.9 million, $0.2 million
  and $(0.8) million for the years ended December 31, 1998, 1997 and 1996,
respectively.                                                         

(7)  LOSS AND LOSS ADJUSTMENT EXPENSES                                          

     Activity in the reserve for loss and loss adjustment expenses is summarized
as follows (in thousands):                                            

                                   YEAR ENDED DECEMBER 31,
                                  ------------------------------------
                                  1998          1997          1996
                                  --------      --------      --------

Balance at January 1,             $ 76,926      $ 72,616      $ 77,808
  Less reinsurance recoverable       (8,220)       (7,015)       (7,672)
                                  --------      --------      --------
Net balance at January 1,           68,706        65,601        70,136

Incurred related to:                                                  
Current year                           568         1,047          --  
Prior years                         (1,290)        6,492         2,389
Portfolio reserves                   3,900         5,000          --  
                                  --------      --------      --------

Total Incurred                       3,178        12,539         2,389
                                  --------      --------      --------

Paid related to:                                                      
Current year                          --          (1,047)         --  
 Prior years                        (20,150)       (8,387)       (6,924)
                                  --------      --------      --------

 Total Paid                         (20,150)       (9,434)       (6,924)
                                  --------      --------      --------

Net balance at December 31,         51,734        68,706        65,601
 Plus reinsurance recoverable        8,115         8,220         7,015
                                  --------      --------      --------
Balance at December 31,           $ 59,849      $ 76,926      $ 72,616
                                  ========      ========      ========

    The changes in incurred portfolio and case reserves principally relates to
   business written in prior years. The changes are based upon an evaluation
    of the insured portfolio in light of current economic conditions and other
relevant factors.                                                     

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FINANCIAL GUARANTY INSURANCE                                                    
COMPANY                                NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================

(8)  RELATED PARTY TRANSACTIONS                                                 

  The Company has various agreements with subsidiaries of General Electric
Company ("GE") and GE Capital. These business transactions include    
appraisal fees and due diligence costs associated with underwriting   
  structured finance mortgage-backed security business; payroll and office
expenses incurred by the Company's international branch offices but   
    processed by a GE subsidiary; investment fees pertaining to the management
of the Company's investment portfolio; and telecommunication service  
charges. Approximately $3.2 million, $4.9 million and $8.1 million in 
 expenses were incurred in 1998, 1997 and 1996, respectively, related to
such transactions.                                                    

The Company also insured certain non-municipal issues with GE Capital 
     involvement as sponsor of the insured securitization and/or servicer of the
     underlying assets. For some of these issues, GE Capital also provides first
  loss protection in the event of default. Gross premiums written on these
 issues amounted to $0.5 million in 1998, $0.5 million in 1997, and $0.6
  million in 1996. As of December 31, 1998, par outstanding on these deals
before reinsurance was $109.4 million.                                

The Company insures bond issues and securities in trusts that were    
  sponsored by affiliates of GE (approximately 1 percent of gross premiums
written) in 1998, 1997 and 1996.                                      

(9)  COMPENSATION PLANS                                                         

     Officers and other key employees of the Company participate in the Parent's
 incentive compensation, deferred compensation and profit sharing plans.
Expenses incurred by the Company under compensation plans and bonuses 
   amounted to $2.2 million, $5.0 million and $4.5 million in 1998, 1997 and
1996, respectively, before deduction for related tax benefits.        

(10) DIVIDENDS                                                                  

Under New York insurance law, the Company may pay a dividend only from
    earned surplus subject to the following limitations: (a) statutory surplus
after such dividend may not be less than the minimum required paid-in 
  capital, which was $66.4 million in 1998 and 1997, and (b) dividends may
not exceed the lesser of 10 percent of its surplus or 100 percent of  
   adjusted net investment income, as defined by New York insurance law, for
    the 12 month period ending on the preceding December 31, without the prior
    approval of the Superintendent of the New York State Insurance Department.
At December 31, 1998 and 1997, the amount of the Company's surplus    
     available for dividends was approximately $50.8 million and $124.6 million,
respectively.                                                         

During 1998, 1997 and 1996, the Company paid dividends of $75.0, $0.0 
million and $17.5 million, respectively.                              

(11) CAPITAL CONTRIBUTION                                                       

     During 1997, the Parent made a capital contribution of $49.5 million to the
Company.                                                              

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FINANCIAL GUARANTY INSURANCE                                                    
COMPANY                                NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================

(12) FINANCIAL INSTRUMENTS                                                      

FAIR VALUE OF FINANCIAL INSTRUMENTS                                   

The following methods and assumptions were used by the Company in     
estimating fair values of financial instruments:                      

  Fixed Maturity Securities: Fair values for fixed maturity securities are
  based on quoted market prices, if available. If a quoted market price is
not available, fair values is estimated using quoted market prices for
    similar securities. Fair value disclosure for fixed maturity securities is
included in the balance sheets and in Note 4.                         

   Short-Term Investments: Short-term investments are carried at cost, which
approximates fair value.                                              

     Cash, Receivable for Securities Sold, and Payable for Securities Purchased:
The carrying amounts of these items approximate their fair values.    

The estimated fair values of the Company's financial instruments at   
December 31, 1998 and 1997 are as follows (in thousands):             

                                                        [Enlarge/Download Table]

                                               1998                      1997           
                                    -------------------------  -------------------------
                                     CARRYING        FAIR       CARRYING        FAIR    
                                      AMOUNT         VALUE       AMOUNT         VALUE   
                                    ----------     ----------  ----------     ----------
                                                                                        
Financial Assets                                                                        

  Cash                                                                                  
    On hand and in demand accounts  $      318     $      318  $      802     $      802
  Short-term investments                30,395         30,395  $   76,039     $   76,039
  Fixed maturity securities         $2,663,024     $2,663,024  $2,443,746     $2,443,746

Financial Guaranties: The carrying value of the Company's financial   
    guaranties is represented by the unearned premium reserve, net of deferred
     acquisition costs, and loss and loss adjustment expense reserves. Estimated
   fair values of these guaranties are based on amounts currently charged to
enter into similar agreements (net of applicable ceding commissions), 
discounted cash flows considering contractual revenues to be received 
    adjusted for expected prepayments, the present value of future obligations
     and estimated losses, and current interest rates. The estimated fair values
of such financial guaranties range between $379.1 million and $419.0  
   million compared to a carrying value of $432.6 million as of December 31,
   1998 and between $355.7 million and $382.6 million compared to a carrying
value of $456.8 million as of December 31, 1997.                      

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FINANCIAL GUARANTY INSURANCE                                                    
COMPANY                                NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================

CONCENTRATIONS OF CREDIT RISK                                         

The Company considers its role in providing insurance to be credit    
     enhancement rather than credit substitution. The Company insures only those
securities that, in its judgment, are of investment grade quality. The
   Company has established and maintains its own underwriting standards that
   are based on those aspects of credit that the Company deems important for
 the particular category of obligations considered for insurance. Credit
 criteria include economic and social trends, debt management, financial
management and legal and administrative factors, the adequacy of      
   anticipated cash flows, including the historical and expected performance
of assets pledged for payment of securities under varying economic    
scenarios and underlying levels of protection such as insurance or    
overcollateralization.                                                

     In connection with underwriting new issues, the Company sometimes requires,
     as a condition to insuring an issue, that collateral be pledged or, in some
instances, that a third-party guarantee be provided for a term of the 
 obligation insured by a party of acceptable credit quality obligated to
   make payment prior to any payment by the Company. The types and extent of
collateral pledged varies, but may include residential and commercial 
mortgages, corporate debt, government debt and consumer receivables.  

    As of December 31, 1998, the Company's total insured principal exposure to
     credit loss in the event of default by bond issuers was $131.2 billion, net
of reinsurance of $35.4 billion. The Company's insured portfolio as of
December 31, 1998 was broadly diversified by geography and bond market
sector with no single debt issuer representing more than 1% of the    
Company's principal exposure outstanding, net of reinsurance.         

   As of December 31, 1998, the composition of principal exposure by type of
issue, net of reinsurance, was as follows (in millions):              

                             NET
                               PRINCIPAL
                               OUTSTANDING
                               -----------
Municipal:                                                            
General obligation                          $ 69,684.2            
Special revenue                               42,453.6            
Industrial revenue                               465.3            
Non-municipal                                 18,598.5            
                                ----------
Total                                      $131,201.6           
                                ==========

     The Company's gross and net exposure outstanding was $295,860.8 million and
$229,750.6 million, respectively, as of December 31, 1998.            

 As of December 31, 1998, the composition of principal exposure ceded to
reinsurers was as follows (in millions):                              

                                 CEDED
                                 PRINCIPAL
                                 OUTSTANDING
                                 -----------
Reinsurer:                                                            
Capital Re                                   $14,615.1            
Enhance Re                                     9,539.1            
Other                                         11,220.1            
                                 ---------
Total                                       $35,374.3           
                                 =========

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FINANCIAL GUARANTY INSURANCE                                                    
COMPANY                                NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================

The Company is authorized to do business in 50 states, the District of
Columbia, and in the United Kingdom and France. Principal exposure    
outstanding at December 31, 1998 by state, net of reinsurance, was as 
follows (in millions):                                                

                                         NET
                                         PRINCIPAL
                                         OUTSTANDING
                                         -----------
California                                        $ 14,945.0          
Pennsylvania                                        12,140.1          
Florida                                             11,577.8          
New York                                            11,397.1          
Illinois                                             8,189.6          
Texas                                                6,689.5          
Michigan                                             5,406.8          
New Jersey                                           4,773.0          
Arizona                                              3,678.7          
Ohio                                                 3,470.2          
                                        ----------

Sub-total                                           82,267.8          
Other states                                        48,662.4          
International                                          271.4          
                                        ----------

Total                                             $131,201.6          
                                        ==========

(13) COMMITMENTS                                                                

     Total rent expense was $2.6 million, $2.4 million and $2.8 million in 1998,
 1997 and 1996, respectively. For each of the next five years and in the
     aggregate as of December 31, 1998, the minimum future rental payments under
 noncancellable operating leases having remaining terms in excess of one
year approximate (in thousands):                                      

YEAR                                                     AMOUNT       
----                                                     ------       
1999                                                     $2,909       
2000                                                      2,909       
2001                                                      2,911       
2002                                                                  
2003                                                       --         
                                                  ------
Total minimum future rental payments                     $8,729       
                                                  ======

(14) YEAR 2000 READINESS DISCLOSURE (UNAUDITED)                                 

     The inability of business processes to continue to function correctly after
the beginning of the Year 2000 could have serious adverse effects on  
companies and entities throughout the world. FGIC recognizes the      
seriousness of the Year 2000 issue and has developed an action plan to
mitigate Year 2000 issues in their information systems, products,     
facilities and suppliers. The action plan has been reviewed by senior 
     management at the Company and GE Capital Services internal audit staff. Our
    progress is closely monitored by GE Capital's Year 2000 Program Management
Office.                                                               

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FINANCIAL GUARANTY INSURANCE                                                    
COMPANY                                NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================

    The action plan is divided into four phases: (1) define/measure - identify
     and inventory possible sources of Year 2000 issues; (2) analyze - determine
the nature and extent of Year 2000 issues and develop project plans to
 address those issues; (3) improve - execute project plans and perform a
majority of the testing; and (4) control - complete testing, continue 
monitoring readiness and complete necessary contingency plans.        

  The action plan includes solutions which are appropriate to the specific
situations. Some systems have been upgraded to new systems (or to new 
 releases of existing systems) which are Year 2000 ready. Remediation of
   FGIC's applications is complete. Year 2000 system testing is currently in
   progress; we expect to be completed mid-1999. The cost of addressing such
 matters will not have a material impact on the business, operations, or
financial condition of the Company.                                   

Business operations are also dependent on the Year 2000 readiness of  
infrastructure suppliers in areas such as utilities, communications,  
   transportation and other services. The likelihood and effects of failures
in infrastructure systems and in the supply chain cannot be estimated.
  However, with respect to operations under its direct control, management
    does not expect, in view of its Year 2000 action plan, that occurrences of
 Year 2000 failures will have a material adverse effect on the financial
position, results of operations or liquidity.                         

 We are in the process of updating our Business Contingency and Disaster
   Recovery Plans, as appropriate. We expect these plans to be completed and
tested by mid-1999.                                                   

(15) COMPREHENSIVE INCOME                                                       

In 1997, the Financial Accounting Standards Board issued SFAS No. 130,
     "Comprehensive Income". This statement was implemented retroactively by the
 Company in 1998. the statement requires that an enterprise (a) classify
items of other comprehensive income by their nature in a financial    
  statement and (b) display the accumulated balance of other comprehensive
    income separately from retained earnings and additional paid-in capital in
    the equity section of a statement of financial position. Accumulated other
 comprehensive income of the Company consists of net unrealized gains on
investment securities and foreign currency translation adjustments.   

   The following are components of other comprehensive income (in thousands)
for the years ended December 31, 1998, 1997 and 1996:                 

                                                                [Download Table]

                                                           1998                 
                                         ---------------------------------------
                                         Before Tax        Tax        Net of Tax
                                           Amount        Expense       Amount   
                                         ----------     ---------     ----------
                                                                                
Unrealized gains on investments:                                                
  Unrealized holding losses arising                                             
     during the period                    $ 42,606      $(14,912)     $ 27,694  
  Less: reclassification adjustment for                                         
     gains realized in net income          (29,360)       10,276       (19,084) 
                                          --------      --------      --------  
Other comprehensive income                $ 13,246      $ (4,636)     $  8,610  
                                          ========      ========      ========  

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FINANCIAL GUARANTY INSURANCE                                                    
COMPANY                                NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================

                                                                [Download Table]

                                                         1997                    
                                          ---------------------------------------
                                          Before Tax      Tax          Net of Tax
                                            Amount       Expense        Amount   
                                          ----------    --------      -----------
                                                                                 
Unrealized gains on investments:                                                 
   Unrealized holding losses arising                                             
      during the period                   $ 86,742      $(30,360)     $ 56,382   
   Less: reclassification adjustment for                                         
      gains realized in net income         (16,700)        5,845       (10,855)  
                                          --------      --------      --------   
Other comprehensive income                $ 70,042      $(24,515)     $ 45,527   
                                          ========      ========      ========   

                                                                [Download Table]


                                                         1996                 
                                          ------------------------------------
                                          Before Tax      Tax       Net of Tax
                                            Amount      Expense       Amount  
                                          ----------    -------     ----------
                                                                              
Unrealized gains on investments:                                              
   Unrealized holding losses arising                                          
      during the period                   $(22,863)     $ 8,002     $(14,861) 
   Less: reclassification adjustment for                                      
      gains realized in net income         (15,022)       5,258       (9,764) 
                                          --------      -------     --------  
Other comprehensive income                $(37,885)     $13,260     $(24,625) 
                                          ========      =======     ========  

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                                                                      APPENDIX B

FINANCIAL GUARANTY INSURANCE COMPANY                                            
================================================================================

UNAUDITED INTERIM FINANCIAL STATEMENTS                                          

JUNE 30, 1999                                                                   

Balance Sheets.....................................................  1          
Statements of Income...............................................  2          
Statements of Cash Flows...........................................  3          
Notes to Unaudited Interim Financial Statements....................  4          

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                                                        [Enlarge/Download Table]

FINANCIAL GUARANTY INSURANCE                                                                  
COMPANY                                                                        BALANCE SHEETS 
==============================================================================================
($ in Thousands)                                                                              
                                                                    JUNE 30,     DECEMBER 31, 
                                                                      1999          1998      
                                                                   -----------    ----------  
ASSETS                                                             (UNAUDITED)                
                                                                                              
Fixed maturity securities, available for sale,                                                
   at fair value (amortized cost of                                                           
   $2,431,049 in 1999 and $2,519,490 in 1998)                      $ 2,429,203    $2,663,024  
Short-term investments, at cost, which approximates fair value         165,841        30,395  
Cash                                                                       682           318  
Accrued investment income                                               38,726        40,038  
Reinsurance receivable                                                   8,159         8,115  
Deferred policy acquisition costs                                       78,242        80,924  
Property, plant and equipment net of                                                          
   accumulated depreciation of $7,303 in 1999 and $6,981 in 1998         1,157         1,802  
Prepaid reinsurance premiums                                           146,734       148,366  
Prepaid expenses and other assets                                        9,586        11,047  
                                                                   -----------    ----------  
            Total assets                                           $ 2,878,330    $2,984,029  
                                                                   ===========    ==========  

LIABILITIES AND STOCKHOLDER'S EQUITY                                                          

Liabilities:                                                                                  

Unearned premiums                                                  $   605,147    $  610,182  
Losses and loss adjustment expenses                                     54,989        59,849  
Ceded reinsurance payable                                                1,980         3,129  
Accounts payable and accrued expenses                                   45,311        46,764  
Current federal income taxes payable                                    68,610        69,542  
Deferred federal income taxes payable                                   73,935       122,839  
Payable for securities purchased                                          --               6  
                                                                   -----------    ----------  

            Total liabilities                                          849,972       912,311  
                                                                   -----------    ----------  

Stockholder's Equity:                                                                         

Common stock, par value $1,500 per share at June 30,                                          
  1999 and at December 31, 1998: 10,000 shares authorized,                                    
  issued and outstanding                                                15,000        15,000  
Additional paid-in capital                                             383,511       383,511  
Accumulated other comprehensive income, net of tax                      (1,380)       91,922  
Retained earnings                                                    1,631,227     1,581,285  
                                                                   -----------    ----------  

            Total stockholder's equity                               2,028,358     2,071,718  
                                                                   -----------    ----------  

            Total liabilities and stockholder's equity             $ 2,878,330    $2,984,029  
                                                                   ===========    ==========  

See accompanying notes to unaudited interim financial statements

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FINANCIAL GUARANTY INSURANCE                                                    
COMPANY                                                     STATEMENTS OF INCOME
================================================================================
($ in Thousands)                                                                

                                               SIX MONTHS ENDED JUNE 30,
                                              1999          1998
                                              ---------    ---------
                                             (UNAUDITED)

REVENUES:                                                                       

Gross premiums written                          $  56,974    $  46,221  
Ceded premiums                                    (11,151)      (4,818) 
                                              ---------    ---------

Net premiums written                               45,823       41,403  
Decrease in net unearned premiums                   3,402       16,654  
                                              ---------    ---------

Net premiums earned                                49,225       58,057  
Net investment income                              67,416       66,023  
Net realized gains                                 25,019       25,773  
                                              ---------    ---------

  Total revenues                                141,660      149,853
                                              ---------    ---------

EXPENSES:                                                                       

Losses and loss adjustment expenses                (2,683)       3,381  
Policy acquisition costs                            8,996       10,576  
Other underwriting expenses                         9,640        9,426  
                                              ---------    ---------

  Total expenses                                 15,953       23,383
                                              ---------    ---------

Income before provision for                                     
    federal income taxes                        125,707      126,470

Provision for federal income taxes                 25,765       28,589  
                                              ---------    ---------

   Net income                                 $  99,942    $  97,881
                                              =========    =========

See accompanying notes to unaudited interim financial statements

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FINANCIAL GUARANTY INSURANCE                                                    
COMPANY                                                 STATEMENTS OF CASH FLOWS
================================================================================
($ in Thousands)                                                                
                                                       SIX MONTHS ENDED JUNE 30,
                                                     1999         1998
                                                      ---------    ---------
                                                     (UNAUDITED)

OPERATING ACTIVITIES:                                                           

Net income                                              $  99,942    $  97,881  
Adjustments to reconcile net income to net                              
cash provided by operating activities:                              
  Provision for deferred income taxes                     1,308          663
  Amortization of fixed maturity securities               1,830        1,886
   Policy acquisition costs deferred                      (6,314)      (8,515)
  Amortization of deferred policy acquisition costs       8,996       10,576
  Depreciation of fixed assets                              645          732
  Change in reinsurance receivable                          (44)         639
  Change in prepaid reinsurance premiums                  1,632        7,630
  Foreign currency translation adjustment                 1,838          382
Change in accrued investment income, prepaid                            
     expenses and other assets                            2,773       13,719
   Change in unearned premiums                            (5,035)     (24,228)
Change in losses and loss adjustment                                    
     expense reserves                                     (4,860)     (15,756)
  Change in other liabilities                            (2,602)      13,289
  Change in current income taxes payable                   (932)      29,779
   Net realized gains on investments                     (25,019)     (25,773)
                                                      ---------    ---------

Net cash provided by operating activities                  74,158      102,904  
                                                      ---------    ---------

INVESTING ACTIVITIES:                                                           

Sales or maturities of fixed maturity securities          581,563      431,647  
Purchases of fixed maturity securities                   (469,911)    (535,726) 
Sales or maturities (purchases) of short-term                                   
investments, net                                       (135,446)       1,441
                                                      ---------    ---------

Net cash used for investing activities                    (23,794)    (102,638) 
                                                      ---------    ---------

FINANCING ACTIVITIES:                                                           

Dividends paid                                            (50,000)        --    
                                                      ---------    ---------
Net cash provided by financing activities                 (50,000)        --    
                                                      ---------    ---------

Increase in cash                                              364          266  
Cash at beginning of period                                   318          802  
                                                      ---------    ---------

Cash at end of period                                   $     682    $   1,068  
                                                      =========    =========

See accompanying notes to unaudited interim financial statements

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FINANCIAL GUARANTY INSURANCE                                                    
COMPANY                                            NOTES TO FINANCIAL STATEMENTS
================================================================================
June 30, 1999 and 1998                                                          
(Unaudited)                                                                     

(1)  BASIS OF PRESENTATION                                            

    The interim financial statements of Financial Guaranty Insurance
Company (the Company) in this report reflect all adjustments
        necessary, in the opinion of management, for a fair statement of (a)
          results of operations for the six months ended June 30, 1999 and 1998,
          (b) the financial position at June 30, 1999 and December 31, 1998, and
   (c) cash flows for the six months ended June 30, 1999 and 1998.

         These interim financial statements should be read in conjunction with
   the financial statements and related notes included in the 1998
audited financial statements.                               

        The preparation of financial statements in conformity with generally
        accepted accounting principles requires management to make estimates
  and assumptions that effect the reported amounts of assets and
          liabilities and disclosure of contingent assets and liabilities at the
         date of the financial statements and the reported amounts of revenues
         and expenses during the reporting period. Actual results could differ
from those estimates.                                       

(2)  STATUTORY ACCOUNTING PRACTICES                                   

     The financial statements are prepared on the basis of GAAP, which
       differs in certain respects from accounting practices prescribed or
          permitted by state insurance regulatory authorities. The following are
      the significant ways in which statutory basis accounting practices
differ from GAAP:                                           

    (a)  premiums are earned directly in proportion to the scheduled
              principal and interest payments rather than in proportion to the
total exposure outstanding at any point in time;  

      (b)  policy acquisition costs are charged to current operations as
  incurred rather than as related premiums are earned;

    (c)  a contingency reserve is computed on the basis of statutory
               requirements for the security of all policyholders, regardless of
              whether loss contingencies actually exist, whereas under GAAP, a
               reserve is established based on an ultimate estimate of exposure;

       (d)  certain assets designated as "non-admitted assets" are charged
              directly against surplus but are reflected as assets under GAAP,
if recoverable;                                   

       (e)  federal income taxes are only provided with respect to taxable
              income for which income taxes are currently payable, while under
      GAAP taxes are also provided for differences between the
          financial reporting and tax bases of assets and liabilities;

          (f)  purchases of tax and loss bonds are reflected as admitted assets,
      while under GAAP they are recorded as federal income tax
payments; and                                     

    (g)  all fixed income investments are carried at amortized cost,
               rather than at fair value for securities classified as "Available
for Sale" under GAAP.                             

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FINANCIAL GUARANTY INSURANCE                                                    
COMPANY                                            NOTES TO FINANCIAL STATEMENTS
================================================================================
The following is a reconciliation of the net income and stockholder's equity of 
Financial Guaranty prepared on a GAAP basis to the corresponding amounts        
reported on a statutory basis for the periods indicated below:                  

                                                        [Enlarge/Download Table]


                                                     SIX MONTHS ENDED JUNE 30,               
                                        ---------------------------------------------------- 
                                                  1999                         1998          
                                        -------------------------   ------------------------ 
                                           NET       STOCKHOLDER'S     NET      STOCKHOLDER'S
                                          INCOME        EQUITY       INCOME        EQUITY    
                                         --------    -----------    --------    -----------  
                                                                                             
GAAP basis amount                        $ 99,942    $ 2,028,358    $ 97,881    $ 2,005,404  

Premium revenue recognition                (8,326)      (203,481)     (6,709)      (187,918) 

Deferral of acquisition costs               2,682        (78,242)      2,061        (84,225) 

Contingency reserve                          --         (648,106)       --         (567,350) 

Non-admitted assets                          --             (933)       --           (2,090) 

Case-basis losses incurred                   (989)          (916)      1,286           (586) 

Portfolio loss reserves                     1,000         33,900       1,400         30,400  

Deferral of income tax                      1,308         74,509         663         73,633  

Unrealized gains on fixed maturity                                                           
  securities held at fair value, net         --            1,200        --          (64,021) 
  of taxes                                                                                   

Profit commission                              13         (6,038)      1,754         (5,635) 

Provision for unauthorized reinsurance       --              (38)       --             --    

Contingency reserve tax deduction            --           74,059        --           74,059  

Allocation of tax benefits due to                                                            
  Parent's net operating loss to the          156         11,325         106         11,022  
                                         --------    -----------    --------    -----------  
  Company                                                                                    

Statutory basis amount                   $ 95,786    $ 1,285,597    $ 98,442    $ 1,282,693  
                                         ========    ===========    ========    ===========  

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FINANCIAL GUARANTY INSURANCE                                                    
COMPANY                                            NOTES TO FINANCIAL STATEMENTS
================================================================================

(3)  DIVIDENDS                                                        

          Under New York Insurance Law, the Company may pay a dividend only from
earned surplus subject to the following limitations:        

   o    Statutory surplus after dividends may not be less than the
          minimum required paid-in capital, which was $66.4 million in
1999.                                             

         o    Dividends may not exceed the lesser of 10 percent of its surplus
          or 100 percent of adjusted net investment income, as defined
          therein, for the twelve month period ending on the preceding
              December 31, without the prior approval of the Superintendent of
the New York State Insurance Department.          

      The amount of the Company's surplus available for dividends during
   1999 is approximately $128.6 million before dividends declared.

         The Company declared $50.0 million in dividends during the first half
of 1999.                                                    

(4)  INCOME TAXES                                                     

        The Company's effective Federal corporate tax rate (20.5 percent and
 22.6 percent for the six months ended June 30, 1999 and 1998,
   respectively) is less than the statutory corporate tax rate (35
 percent in 1999 and 1998) on ordinary income due to permanent
 differences between financial and taxable income, principally
tax-exempt interest.                                        

(5)  REINSURANCE                                                      

          In accordance with Statement of Financial Accounting Standards No. 113
("SFAS 113"), "Accounting and Reporting for Reinsurance of  
    Short-Duration and Long-Duration Contracts", the Company reports
       assets and liabilities relating to reinsured contracts gross of the
         effects of reinsurance. Net premiums earned are shown net of premiums
       ceded of $12.8 million and $12.4 million, respectively, for the six
months ended June 30, 1999 and 1998.                        

(6)  COMPREHENSIVE INCOME                                             

 In June 1997, the Financial Accounting Standards Board issued
       statement No. 130, "Reporting Comprehensive Income", which requires
    enterprises to disclose comprehensive income and its components.
        Comprehensive income encompasses all changes in shareholders' equity
  (except those arising from transactions with shareholders) and
  includes net income, net unrealized capital gains or losses on
  available-for-sale securities and foreign currency translation
 adjustments, net of taxes. This new standard only changes the
       presentation of certain information in the financial statements and
  does not affect the Company's financial position or results of
          operations. The following is a reconciliation of comprehensive income:

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FINANCIAL GUARANTY INSURANCE                                                    
COMPANY                                            NOTES TO FINANCIAL STATEMENTS
================================================================================
June 30, 1999 and 1998                                                          
(Unaudited)                                                                     

                                                FOR THE SIX MONTHS
                                                ENDED JUNE 30,
                                                1999        1998
                                                --------    --------
    Net income                                  $ 99,942    $ 97,881
Other comprehensive income:                                 
Change in unrealized investment gains,                
           net of taxes                           (94,497)    (20,666)
Change in foreign exchange gains,                     
          net of taxes                             1,195         248
                                                --------    --------
    Comprehensive income                        $  6,640    $ 77,463
                                                ========    ========

(7)  YEAR 2000 READINESS DISCLOSURE                                   

         The inability of business processes to continue to function correctly
   after the beginning of the Year 2000 could have serious adverse
effects on companies and entities throughout the world. FGIC
          recognizes the seriousness of the Year 2000 issue and has developed an
          action plan to mitigate Year 2000 issues in their information systems,
         products, facilities and suppliers. The action plan has been reviewed
       by senior management at FGIC and GE Capital Services internal audit
      staff. Our progress is closely monitored by GE Capital's Year 2000
Program Management Office.                                  

     The action plan is divided into four phases: (1) define/measure -
    identify and inventory possible sources of Year 2000 issues; (2)
     analyze - determine the nature and extent of Year 2000 issues and
        develop project plans to address those issues; (3) improve - execute
          project plans and perform a majority of the testing; and (4) control -
          complete testing, continue monitoring readiness and complete necessary
contingency plans.                                          

   The action plan includes solutions which are appropriate to the
    specific situations. Currently, Year 2000 system remediation and
     testing is complete for all of FGIC's internal systems. We do not
        expect the cost of addressing such matters to have a material impact
       on the business, operations, or financial condition of the Company.

        Business operations are also dependent on the Year 2000 readiness of
        infrastructure suppliers in areas such as utilities, communications,
    transportation and other services. The likelihood and effects of
        failures in infrastructure systems and in the supply chain cannot be
   estimated. However, with respect to operations under its direct
        control, management does not expect, in view of its Year 2000 action
     plan, that occurrences of Year 2000 failures will have a material
      adverse effect on the financial position, results of operations or
liquidity.                                                  

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 AFC MORTGAGE LOAN ASSET BACKED SECURITIES
(ISSUABLE IN SERIES)

 SUPERIOR BANK FSB
 Depositor

YOU SHOULD CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 4 OF THIS      
PROSPECTUS AND IN THE PROSPECTUS SUPPLEMENT.                                    

THE PROSPECTUS TOGETHER WITH THE ACCOMPANYING PROSPECTUS SUPPLEMENT WILL        
CONSTITUTE THE FULL PROSPECTUS.                                                 

THE SECURITIES:                                                                 

Superior Bank FSB, as depositor, will sell the securities, which may be in the  
form of mortgage pass-through certificates or mortgage-backed notes. Each issue 
of securities will have its own series designation and will evidence either:    

o   the ownership of  trust fund assets, or                     

o   debt obligations secured by trust fund assets.              

THE TRUST FUND AND ITS ASSETS                                                   

The assets of a trust fund will primarily include any combination of various    
types of one- to four-family residential first and junior lien mortgage loans,  
multifamily first and second mortgage loans, commercial first and second        
mortgage loans, mixed use residential and commercial first and second mortgage  
loans, manufactured housing conditional sales contracts and installment loan    
agreements or home improvement installments sales contracts and installment loan
agreements.                                                                     

CREDIT ENHANCEMENT                                                              

The assets of the trust fund for a series of securities may also include letters
of credit, insurance policies, guarantees, reserve funds or currency or interest
rate exchange agreements or any combination of credit support. Credit           
enhancement may also be provided by means of subordination of one or more       
classes of securities, cross support or by overcollateralization.               

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES         
COMMISSION HAS APPROVED THESE SECURITIES OR DETERMINED THAT THIS PROSPECTUS IS  
ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. 

Offers of the securities may be made through one or more different methods,     
including through underwriters as described in "Methods of Distribution" in this
prospectus and in the related prospectus supplement.                            

The date of this Prospectus is August 9, 1999.                                  

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 TABLE OF CONTENTS

Important Notice about Information in this Prospectus                           
and Each Accompanying Prospectus Supplement............................3
Risk Factors...............................................................4    
Introduction; Glossary....................................................11    
Description of the Trust Funds............................................11    
Principal and Interest Account........................................15
Certificate Account...................................................16
Pre-Funding Account...................................................16
Credit Support........................................................16
Use of Proceeds...........................................................16    
Yield Considerations......................................................16    
Maturity and Weighted Average Life....................................19
Foreclosures and Payment Plans........................................21
Description of The Securities.............................................22    
Distributions on the Securities.......................................24
Example of Distributions..............................................26
Monthly Advances by Servicer in Respect of                              
    Delinquencies on the Mortgage Assets..............................27
Compensating Interest.................................................27
Form of Reports to Securityholders....................................28
Termination of the Trust Fund and Disposition of                        
    Trust Fund Assets.................................................29
Assignment of Mortgage Assets; Repurchases............................31
Representations and Warranties; Repurchases...........................33
Payments on Mortgage Assets; Deposits to                                
    Principal and Interest Account....................................34
Deposits to Certificate Account.......................................36
Pre-Funding Account...................................................37
Collection and Other Servicing Procedures.............................37
Servicing Advances....................................................39
Sub-Servicers.........................................................39
Realization Upon Defaulted Mortgage Loans and                           
    Contracts.........................................................40
Hazard Insurance Policies.............................................41
Due-on-Sale Provisions................................................42
Servicing and Other Compensation and Payment                            
    of Expenses.......................................................42
Annual Evidence as to the Compliance of the                             
    Master Servicer...................................................43
Matters Regarding the Servicer and the Depositor                        
     .................................................................43
Events of Default under the Governing                                   
Agreement and Rights Upon Events of                             
    Default...........................................................44
Amendment of the Governing Agreements.................................48
Optional Purchase by the Servicer of Defaulted                          
    Mortgage Loans....................................................49
Duties of the Trustee.................................................49
Description of the Trustee............................................50
Description of Credit Support.............................................50    
Subordinate Certificates..............................................51
Cross-Support Provisions..............................................51
Insurance or Guarantees With Respect to the                             
    Mortgage Assets...................................................51
Letter of Credit......................................................52
Insurance Policies and Surety Bonds with respect                        
    to the Securities.................................................52
Reserve Funds or Spread Account.......................................52
Overcollateralization.................................................53
Description of Primary Insurance Policies.................................53    
Primary Mortgage Insurance Policies...................................54
Primary Hazard Insurance Policies.....................................54
FHA Insurance.........................................................56
VA Guarantees.........................................................59
Legal Aspects of Mortgage Assets..........................................60    
Mortgage Loans........................................................60
Manufactured Home Contracts...........................................61
Foreclosure on Mortgages..............................................64
Foreclosure on Mortgaged Properties Located in                          
    the Commonwealth of Puerto Rico...................................67
Repossession with respect to Manufactured                               
    Home Contracts....................................................67
Junior Mortgages......................................................68
Rights of Redemption..................................................69
Anti-Deficiency Legislation and Other                                   
    Limitations on Lenders............................................69
Consumer Protection Laws with respect to                                
Manufactured Housing Contracts and Home                         
    Improvement Contracts.............................................72
Other Limitations.....................................................73
Enforceability of Provisions..........................................73
Leases and Rents......................................................74
Subordinate Financing.................................................75
Applicability of Usury Laws...........................................75
Alternative Mortgage Instruments......................................76
Formaldehyde Litigation with respect to                                 
    Manufactured Homes................................................77
Soldiers' and Sailors' Civil Relief Act of 1940.......................77
Environmental Legislation.............................................78
Forfeitures in Drug and RICO Proceedings..............................79
Negative Amortization Loans...........................................79
Installment Contracts.................................................79
Federal Income Tax Consequences...........................................80    
General...............................................................80
REMICs................................................................81
Notes................................................................101
Grantor Trust Funds..................................................102
Partnership Trust Funds..............................................113
State And Other Tax Consequences.........................................120    
ERISA Considerations.....................................................120    
Representation from Plans Investing in Notes                            
with "Substantial Equity Features" or                           
    Certain Securities...............................................126
Tax Exempt Investors.................................................127
Consultation with Counsel............................................127
Legal Investment.........................................................128    
Methods of Distribution..................................................129    
Legal Matters............................................................131    
Financial Information....................................................131    
Rating...................................................................131    
Available Information....................................................131    
Incorporation of Certain Information by Reference........................132    

 2

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               IMPORTANT NOTICE ABOUT INFORMATION IN THIS PROSPECTUS
               AND EACH ACCOMPANYING PROSPECTUS SUPPLEMENT

Information about each series of securities is contained in two separate        
documents:                                                                      

      o   this prospectus, which provides general information, some of which
may not apply to a particular series; and               

   o   the accompanying prospectus supplement for a particular series,
            which describes the specific terms of the securities of that series.
            If the prospectus supplement contains information about a particular
  series that differs from the information contained in this
        prospectus, you should rely on the information in the prospectus
supplement.                                             

You should rely only on the information contained in this prospectus and the    
accompanying prospectus supplement. We have not authorized anyone to provide you
with information that is different from that contained in this prospectus and   
the accompanying prospectus supplement. The information in this prospectus is   
accurate only as of the date of this prospectus.                                

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RISK FACTORS

      The offered securities are not suitable investments for all investors.
In particular, you should not purchase the offered securities unless you        
understand and are able to bear the prepayment, credit, liquidity and market    
risks associated with the securities.                                           

      You should carefully consider the following factors in connection with
the purchase of the securities offered hereby as well as any additional risk    
factors that are set forth in the prospectus supplement related to your         
security:                                                                       

THE SECURITIES WILL HAVE LIMITED LIQUIDITY SO INVESTORS MAY BE UNABLE TO SELL   
THEIR SECURITIES OR MAY BE FORCED TO SELL THEM AT A DISCOUNT FROM THEIR INITIAL 
OFFERING PRICE                                                                  

        There can be no assurance that a resale market for the securities of any
series will develop following the issuance and sale of any series of securities.
Even if a resale market does develop, it may not provide securityholders with   
liquidity of investment or continue for the life of the securities of any       
series. The prospectus supplement for any series of securities may indicate that
an underwriter specified in the prospectus supplement intends to establish a    
secondary market in the securities, however no underwriter will be obligated to 
do so. As a result, any resale prices that may be available for any offered     
security in any market that may develop may be at a discount from the initial   
offering price. The securities offered hereby will not be listed on any         
securities exchange.                                                            

THE YIELD TO MATURITY ON YOUR SECURITIES WILL DEPEND ON A VARIETY OF FACTORS    
INCLUDING PREPAYMENTS                                                           

      The timing of principal payments on the securities of a series will be
affected by a number of factors, including the following:                       

        o   the extent of prepayments on the underlying assets in the trust fund
or;                                                     

o   how payments of principal are allocated among the classes of
        securities of that series as specified in the related prospectus
supplement;                                             

  o   if any party has an option to terminate the related trust fund
early, the effect of the exercise of the option;        

   o   the rate and timing of defaults and losses on the assets in the
related trust fund; and                                 

  o   repurchases of assets in the related trust fund as a result of
       material breaches of representations and warranties made by the
depositor, servicer or mortgage loan seller.            

    Prepayments on mortgage loans are influenced by a number of factors,
including prevailing mortgage market interest rates, local and regional economic
conditions and homeowner mobility.                                              

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The rate of prepayment of the mortgage loans included in or underlying the      
assets in each trust fund may affect the yield to maturity of the securities. In
general, if you purchase a class of offered securities at a price higher than   
its outstanding principal balance and principal distributions on your class     
occur faster than you anticipate at the time of purchase, the yield will be     
lower than you anticipate. Conversely, if you purchase a class of offered       
securities at a price lower than its outstanding principal balance and principal
distributions on that class occur more slowly than you anticipate at the time of
purchase, the yield will be lower than you anticipate.                          

      To the extent amounts in any pre-funding account have not been used to
purchase additional mortgage loans, holders of the related securities may       
receive an additional prepayment.                                               

       The yield to maturity on some types of classes of securities, including
securities that are entitled to principal distributions only or interest        
distributions only, securities as to which accrued interest or a portion thereof
will not be distributed but rather added to the principal balance of the        
security, and securities with an interest rate which fluctuates inversely with  
an index, may be relatively more sensitive to the rate of prepayment on the     
related mortgage loans than other classes of securities and, if applicable, to  
the occurrence of an early retirement of the securities. The prospectus         
supplement for a series will set forth the related classes of securities that   
may be more sensitive to prepayment rates.                                      

       See "Yield Considerations" and "Maturity and Prepayment Considerations"
in this prospectus.                                                             

THE RATINGS OF YOUR SECURITIES MAY BE LOWERED OR WITHDRAWN WHICH MAY ADVERSELY  
AFFECT THE LIQUIDITY OR MARKET VALUE OF YOUR SECURITY                           

       It is a condition to the issuance of the securities that each series of
securities be rated in one of the four highest rating categories by a nationally
recognized statistical rating agency. A security rating is not a recommendation 
to buy, sell or hold securities and may be subject to revision or withdrawal at 
any time. No person is obligated to maintain the rating on any security, and    
accordingly, there can be no assurance to you that the ratings assigned to any  
security on the date on which the security is originally issued will not be     
lowered or withdrawn by a rating agency at any time thereafter. The rating(s) of
any series of securities by any applicable rating agency may be lowered         
following the initial issuance of the securities as a result of the downgrading 
of the obligations of any applicable credit support provider, or as a result of 
losses on the related mortgage loans in excess of the levels contemplated by the
rating agency at the time of its initial rating analysis. Neither the depositor,
the servicer nor any of their respective affiliates will have any obligation to 
replace or supplement any credit support, or to take any other action to        
maintain any rating(s) of any series of securities. If any rating is revised or 
withdrawn, the liquidity or the market value of your security may be adversely  
affected.                                                                       

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THE PAYMENT PERFORMANCE OF THE SECURITIES WILL BE RELATED TO THE PAYMENT        
PERFORMANCE OF THE MORTGAGE ASSETS IN THE RELATED TRUST FUNDS; SOME TYPES OF    
MORTGAGE LOANS MAY BE ESPECIALLY PRONE TO DEFAULTS AND MAY EXPOSE THE RELATED   
CERTIFICATES TO GREATER LOSSES                                                  

       The securities will be directly or indirectly backed by mortgage loans,
manufactured housing, conditional sales contracts and installment loan          
agreements or home improvement installment sales contracts and installment loan 
agreements. Some types of mortgage loans and contracts may have a greater       
likelihood of delinquency and foreclosure, and a greater likelihood of loss in  
the event of delinquency and foreclosure. You should be aware that if the       
mortgaged properties fail to provide adequate security for the mortgage loans or
contracts included in a trust fund, any resulting losses, to the extent not     
covered by credit support, will be allocated to the related securities in the   
manner described in the related prospectus supplement and consequently would    
adversely affect the yield to maturity on those securities. The depositor cannot
assure you that the values of the mortgaged properties have remained or will    
remain at the appraised values on the dates of origination of the related       
mortgage loans. The prospectus supplement for each series of securities will    
describe the mortgage loans and contracts which are to be included in the trust 
fund related to your security and risks associated with those mortgage loans and
contracts which you should carefully consider in connection with the purchase of
your security.                                                                  

NONPERFECTION OF SECURITY INTERESTS IN MANUFACTURED HOMES MAY RESULT IN LOSSES  
ON THE RELATED MANUFACTURED HOUSING CONTRACTS AND THE SECURITIES BACKED BY THE  
MANUFACTURED HOUSING CONTRACTS                                                  

    Any conditional sales contracts and installment loan agreements with
respect to manufactured homes included in a trust fund will be secured by a     
security interest in a manufactured home. Perfection of security interests in   
manufactured homes and enforcement of rights to realize upon the value of the   
manufactured homes as collateral for the manufactured housing contracts are     
subject to a number of federal and state laws, including the Uniform Commercial 
Code as adopted in each state and each state's certificate of title statutes.   
The steps necessary to perfect the security interest in a manufactured home will
vary from state to state. If the depositor fails, due to clerical errors or     
otherwise, to take the appropriate steps to perfect the security interest, the  
trustee may not have a first priority security interest in the manufactured home
securing a manufactured housing contract. Additionally, courts in many states   
have held that manufactured homes may, under certain circumstances, become      
subject to real estate title and recording laws. As a result, a security        
interest in a manufactured home could be rendered subordinate to the interests  
of other parties claiming an interest in the home under applicable state real   
estate law. The failure to properly perfect a valid, first priority security    
interest in a manufactured home securing a manufactured housing contract could  
lead to losses that, to the extent not covered by credit support, may adversely 
affect the yield to maturity of the related securities.                         

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CREDIT SUPPORT MAY BE LIMITED; THE FAILURE OF CREDIT SUPPORT TO COVER LOSSES ON 
THE TRUST FUND ASSETS WILL RESULT IN LOSSES ALLOCATED TO THE RELATED SECURITIES 

      Credit support is intended to reduce the effect of delinquent payments
or losses on the underlying trust fund assets on those classes of securities    
that have the benefit of the credit support. With respect to each series of     
securities, credit support will be provided in one or more of the forms referred
to in this prospectus and the related prospectus supplement. Regardless of the  
form of credit support provided, the amount of coverage will usually be limited 
in amount and may be subject to periodic reduction in accordance with a schedule
or formula. Furthermore, credit support may provide only very limited coverage  
as to certain types of losses or risks, and may provide no coverage as to       
certain other types of losses or risks. If losses on the trust fund assets      
exceed the amount of coverage provided by any credit support or the losses are  
of a type not covered by any credit support, these losses will be borne by the  
holders of the related securities or specific classes of the related securities.
See "Description of Credit Support".                                            

FORECLOSURE OF MORTGAGE LOANS MAY RESULT IN LIMITATIONS OR DELAYS IN RECOVERY   
AND LOSSES ALLOCATED TO THE RELATED SECURITIES                                  

     Even assuming that the mortgaged properties provide adequate security
for the mortgage loans, substantial delays can be encountered in connection with
the liquidation of defaulted mortgage loans and corresponding delays in the     
receipt of related proceeds by the securityholders could occur. An action to    
foreclose on a mortgaged property securing a mortgage loan is regulated by state
statutes, rules and judicial decisions and is subject to many of the delays and 
expenses of other lawsuits if defenses or counterclaims are interposed,         
sometimes requiring several years to complete. In some states an action to      
obtain a deficiency judgment is not permitted following a nonjudicial sale of a 
mortgaged property. In the event of a default by a mortgagor, these restrictions
may impede the ability of the servicer to foreclose on or sell the mortgaged    
property or to obtain liquidation proceeds sufficient to repay all amounts due  
on the related mortgage loan. The servicer will be entitled to deduct from      
liquidation proceeds all expenses reasonably incurred in attempting to recover  
amounts due on the related liquidated mortgage loan and not yet repaid,         
including payments to prior lienholders, accrued servicing fees, legal fees and 
costs of legal action, real estate taxes, and maintenance and preservation      
expenses, monthly advances and servicing advances. If the mortgaged properties  
fail to provide adequate security for the mortgage loans in the trust fund      
related to your security and insufficient funds are available from any          
applicable credit support, you could experience a loss on your investment.      

    Liquidation expenses with respect to defaulted mortgage loans do not
vary directly with the outstanding principal balance of the loan at the time of 
default. Therefore, assuming that a servicer takes the same steps in realizing  
upon a defaulted mortgage loan having a small remaining principal balance as it 
would in the case of a defaulted mortgage loan having a larger principal        
balance, the amount realized after expenses of liquidation would be less as a   
percentage of the outstanding principal balance of the smaller principal balance
mortgage loan than would be the case with a larger principal balance loan.      

See "Legal Aspects of Mortgage Assets" in this prospectus.      

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MORTGAGED PROPERTIES ARE SUBJECT TO ENVIRONMENTAL RISKS AND THE COST OF         
ENVIRONMENTAL CLEAN-UP MAY INCREASE LOSSES ON THE RELATED MORTGAGE LOANS        

     Under various federal, state and local environmental laws, ordinances
and regulations, a current or previous owner of real property may be liable for 
the costs of removal or remediation of hazardous or toxic substances on, under  
or in the property. Such laws often impose liability whether or not the owner or
operator knew of, or was responsible for, the presence of the hazardous or toxic
substances. A lender also risks liability on foreclosure of the mortgage on the 
property. In addition, the presence of hazardous or toxic substances, or the    
failure to properly remediate the property, may adversely affect the owner's or 
operator's ability to sell such property. Although the incidence of             
environmental contamination of residential properties is less common than that  
for commercial properties, mortgage loans contained in a trust fund may be      
secured by mortgaged properties in violation of environmental laws, ordinances  
or regulations. The servicer is generally prohibited from foreclosing on a      
mortgaged property unless it has taken adequate steps to ensure environmental   
compliance with respect to the mortgaged property. However, to the extent the   
servicer errs and forecloses on mortgaged property that is subject to           
environmental law violations, and to the extent a mortgage loan seller does not 
provide adequate representations and warranties against environmental law       
violations, or is unable to honor its obligations, including the obligation to  
repurchase a mortgage loan upon the breach of a representation or warranty, a   
trust fund could experience losses which, to the extent not covered by credit   
support, could adversely affect the yield to maturity on the related securities.

THE EXERCISE OF AN OPTIONAL TERMINATION RIGHT WILL AFFECT THE YIELD TO MATURITY 
ON THE RELATED SECURITIES                                                       

      The prospectus supplement for each series of securities will set forth
the party that may, at its option, purchase the assets of the related trust fund
if the aggregate principal balance of the mortgage loans and other trust fund   
assets in the trust fund for that series is less than the percentage specified  
in the related prospectus supplement of the aggregate principal balance of the  
outstanding mortgage loans and other trust fund assets at the cut-off date for  
that series. The percentage will be between 25% and 0%. The exercise of the     
termination right will effect the early retirement of the securities of that    
series. The prospectus supplement for each series of securities will set forth  
the price to be paid by the terminating party and the amounts that the holders  
of the securities will be entitled to receive upon early retirement.            

     A trust fund may also be terminated and the certificates retired upon
the servicer's determination, if applicable and based upon an opinion of        
counsel, that the REMIC status of the trust fund has been lost or that a        
substantial risk exists that the REMIC status will be lost for the then current 
taxable year.                                                                   

      The termination of a trust fund and the early retirement of securities
by any party would decrease the average life of the securities and may adversely
affect the yield to holders of some classes of related securities.              

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VIOLATIONS OF FEDERAL AND STATE LAWS MAY RESULT IN LOSSES ON THE MORTGAGE LOANS 

      Federal and state laws, public policy and general principles of equity
relating to the protection of consumers, unfair and deceptive practices and debt
collection practices:                                                           

o   regulate interest rates and other charges on mortgage loans;

o   require certain disclosures to borrowers;                   

o   require licensing of originators; and                       

        o   regulate generally the origination, servicing and collection process
for the mortgage loans.                                 

      Depending on the specific facts and circumstances involved, violations
may limit the ability of a trust fund to collect all or a part of the principal 
of or interest on the mortgage loans, may entitle the borrower to a refund of   
amounts previously paid and could result in liability for damages and           
administrative enforcement against the originator or an assignee of the         
originator, such as the trust, or the initial servicer or a subsequent servicer,
as the case may be. In particular, it is possible that some mortgage loans      
included in a trust fund will be subject to the Home Ownership and Equity       
Protection Act of 1994. The Homeownership Act adds some additional provisions to
Regulation Z, the implementing regulation of the Federal Truth-In-Lending Act.  
These provisions impose additional disclosure and other requirements on         
creditors with respect to non-purchase money mortgage loans with high interest  
rates or high up-front fees and charges. In general, mortgage loans within the  
purview of the Homeownership Act have annual percentage rates over 10 percentage
points greater than the yield on Treasury securities of comparable maturity     
and/or fees and points which exceed the greater of 8% of the total loan amount  
or $441. The $441 amount is adjusted annually based on changes in the Consumer  
Price Index for the prior year. The provisions of the Homeownership Act apply on
a mandatory basis to all mortgage loans originated on or after October 1, 1995. 
These provisions can impose specific statutory liabilities upon creditors who   
fail to comply with their provisions and may affect the enforceability of the   
related loans. In addition, any assignee of the creditor, such as a trust fund, 
would generally be subject to all claims and defenses that the consumer could   
assert against the creditor, including the right to rescind the mortgage loan.  
Recently, class action lawsuits under the Homeownership Act have been brought   
naming as a defendant securitization trusts such as the trust funds with respect
to the mortgage loans.                                                          

In addition, amendments to the federal bankruptcy laws have been
proposed that could result in (1) the treatment of a claim secured by a junior  
lien in a borrower's principal residence as protected only to the extent that   
the claim was secured when the security interest was made and (2) the           
disallowance of claims based on secured debt if the creditor failed to comply   
with specific provisions of the Truth in Lending Act (15 U.S.C. ss.1639). Such  
amendments could apply retroactively to secured debt incurred by the debtor     
prior to the date of effectiveness of the amendments.                           

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       The depositor will represent that all applicable federal and state laws
were complied with in connection with the origination of the mortgage loans. If 
there is a material and adverse breach of a representation, the depositor will  
be obligated to repurchase any affected mortgage loan or to substitute a new    
mortgage loan into the related trust fund. If the depositor fails to repurchase 
or substitute, a trust fund could experience losses which, to the extent not    
covered by credit support, could adversely affect the yield to maturity on the  
related securities. See "Legal Aspects of Mortgage Loans".                      

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INTRODUCTION; GLOSSARY

       The mortgage pass-through certificates or mortgage-backed notes offered
by this prospectus and the prospectus supplement will be offered from time to   
time in series.                                                                 

       Each series of mortgage pass-through certificates will represent in the
aggregate the entire beneficial ownership interest in the assets deposited into 
a particular trust fund. Each series of mortgage-backed notes will represent    
indebtedness secured by the assets deposited into a particular trust fund. The  
certificates and notes of any series are collectively referred to in this       
prospectus as the "securities".                                                 

       The securities of each series will be payable solely from the assets of
the related trust fund, including any applicable credit support, and will not   
have any claims against the assets of any other trust fund or recourse to any   
other party. The securities will not represent an interest in or obligation of  
the depositor, the servicer, the trustee or any of their respective affiliates. 

   Some capitalized terms are used in this prospectus to assist you in
understanding the terms of the securities. The capitalized terms used in this   
prospectus are defined in the glossary beginning on page __ in this prospectus. 

DESCRIPTION OF THE TRUST FUNDS

  The trust fund for each series will be held by the trustee for the
benefit of the related securityholders. Each trust fund will consist of:        

        o   a segregated pool of various types of first and junior lien mortgage
   loans, manufactured housing conditional sales contracts and
         installment loan agreements or home improvement installment sales
       contracts and installment loan agreements as are subject to the
related agreement governing the trust fund;             

o   amounts on deposit in the principal and interest account,   
     certificate account, pre-funding account or any other account
maintained for the benefit of the securityholders;      

       o   property acquired on behalf of securityholders by foreclosure, deed
           in lieu of foreclosure or repossession and any revenues received on
the property;                                           

        o   the rights of the depositor under any hazard insurance policies, FHA
        insurance policies, VA guarantees and primary mortgage insurance
          policies to be included in the trust fund, each as described under
"Description of Primary Insurance Policies";            

 o   the rights of the depositor under the agreement or agreements
          pursuant to which it acquired the mortgage loans to be included in
the trust fund;                                         

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        o   the rights of the trustee in any cash advance reserve fund or surety
      bond to be included in the trust fund, each as described under
        "Monthly Advances by Servicer in Respect of Delinquencies on the
Trust Fund Assets"; and                                 

        o   any letter of credit, mortgage pool insurance policy, special hazard
        insurance policy, bankruptcy bond, financial guarantee insurance
           policy, reserve fund, currency or interest rate exchange agreement,
            guarantee or guaranteed investment contract, each as described under
"Description of Credit Support".                        

       Each Mortgage Asset will be evidenced by a promissory note or contract,
referred to in this prospectus as a "mortgage note", secured by a first or      
junior mortgage, deed of trust or similar instrument creating a lien on any of  
the following mortgaged properties:                                             

    o  one- to four-family residential properties including detached and
       attached dwellings, townhouses, rowhouses, individual condominium
         units, individual units in planned-unit developments and individual
          units in de minimis planned-unit developments. Loans secured by this
      type of property may be conventional loans, FHA-insured loans or
VA-guaranteed loans as specified in the related prospectus
supplement;                                               

      o  residential properties consisting of five or more dwelling units in
multi-story structures;                                   

     o  commercial properties including office buildings, retail buildings
         and a variety of other commercial properties as may be described in
the related prospectus supplement;                        

        o  properties consisting of mixed residential and commercial structures;

       o  leasehold interests in residential properties, the title of which is
held by third party lessors;                              

o  manufactured homes that, in the case of mortgage loans, are  
       permanently affixed to their site or, in the case of manufactured
home contracts, may be relocated, or                      

      o  real property acquired upon foreclosure or comparable conversion of
the mortgage loans included in a trust fund.              

No more than 10% of the Mortgage Assets in any mortgage pool (by
original principal balance of the mortgage pool) will be secured by commercial  
properties. The term of any leasehold will exceed the term of the mortgage note 
by at least five years.                                                         

  The manufactured homes securing the mortgage loans or manufactured
housing contracts will consist of manufactured homes within the meaning of 42   
United States Code, Section 5402(6), which defines a "manufactured home" as "a  
structure, transportable in one or more sections, which in the traveling mode,  
is eight body feet or more in width or forty body feet or more in length, or,   
when erected on site, is three hundred twenty or more square feet, and which is 
built on a permanent chassis and designed to be used as a dwelling with or      
without a permanent foundation when                                             

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connected to the required utilities, and includes the plumbing, heating, air    
conditioning, and electrical systems contained therein; except that such term   
shall include any structure which meets all the requirements of this paragraph  
except the size requirements and with respect to which the manufacturer         
voluntarily files a certification required by the Secretary of Housing and Urban
Development and complies with the standards established under this chapter.     

        The home improvement contracts will be secured primarily by mortgages on
Single Family Properties that are generally subordinate to other mortgages on   
the same mortgaged property or by purchase money security interests in the home 
improvements financed thereby.                                                  

       The mortgaged properties may be located in any one of the fifty states,
the District of Columbia, Guam, Puerto Rico or any other territory of the United
States. The mortgaged properties may include vacation, second and non-owner     
occupied homes.                                                                 

        Each Mortgage Asset will be selected by the depositor for inclusion in a
trust fund from among those originated by or purchased by the depositor, either 
directly or through its affiliates or from banks, savings and loan associations,
mortgage bankers, mortgage brokers, investment banking firms, the Federal       
Deposit Insurance Corporation and other mortgage loan originators or sellers not
affiliated with the depositor or from its affiliates. Each seller of mortgage   
loans will be referred to in this prospectus and the related prospectus         
supplement as a "mortgage loan seller". Each prospectus supplement will contain 
information, as of the date of the prospectus supplement, with respect to the   
underwriting standards and criteria applied by the depositor in originating or  
purchasing the mortgage loans to be included in a trust fund.                   

     The Mortgage Assets to be included in a trust fund will have original
terms to maturity of not more than 30 years and will be any one of the          
following:                                                                      

      o   Fully amortizing Mortgage Assets with a fixed rate of interest and
level monthly payments to maturity;                     

       o   Fully amortizing Mortgage Assets with an interest rate that adjusts
     periodically, with corresponding adjustments in the amount of
            monthly payments, to equal the sum, which may be rounded, of a fixed
percentage amount and an index;                         

        o   ARM Loans that provide for an election, at the borrower's option, to
            convert the adjustable interest rate to a fixed interest rate, which
will be described in the related prospectus supplement; 

   o   ARM Loans that provide for negative amortization or accelerated
           amortization resulting from delays in or limitations on the payment
         adjustments necessary to amortize fully the outstanding principal
         balance of the loan at its then applicable interest rate over its
remaining term;                                         

   o   Fully amortizing Mortgage Assets with a fixed interest rate and
        level monthly payments, or payments of interest only, during the
            early years of the term, followed by periodically increasing monthly
payments of principal and interest for the duration of  

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            the term or for a specified number of years, which will be described
in the related prospectus supplement;                   

      o   Fixed interest rate Mortgage Assets providing for level payment of
      principal and interest on the basis of an assumed amortization
          schedule or payments of interest only and a balloon payment at the
end of a specified term; and                            

       o   Mortgage Assets that provide for a line of credit pursuant to which
      amounts may be advanced to the borrower from time to time; and

      o   Another type of Mortgage Asset described in the related prospectus
supplement.                                             

       The trust fund may include mortgage loans that are delinquent as of the
date the related series of securities is issued. In that case, the related      
prospectus supplement will set forth, as to each mortgage loan, available       
information as to the period of delinquency and any other information relevant  
for a prospective purchaser to make an investment decision. No mortgage loan in 
a trust fund will be 90 or more days delinquent and no trust fund will include a
concentration greater than 20% of mortgage loans which are more than 30 and less
than 90 days delinquent.                                                        

   MORTGAGE LOAN INFORMATION IN PROSPECTUS SUPPLEMENT. Each prospectus
supplement will contain specific information with respect to the Mortgage Assets
contained in the related trust fund. That information will be as of the cut-off 
date specified in the prospectus supplement, which will usually be the close of 
business on the first day of the month of formation of the related trust fund,  
including the following:                                                        

      o   the aggregate outstanding principal balance, the largest, smallest
         and average outstanding principal balance of the Mortgage Assets,

        o   the type of property securing the Mortgage Assets and the percentage
            of Mortgage Assets in the related mortgage pool which are secured by
that type of property,                                  

      o   the remaining terms to maturity and the weighted average remaining
term to maturity of the Mortgage Assets,                

o   the earliest origination date and latest origination date,  

       o   the interest rates or range of interest rates borne by the Mortgage
           Assets and the weighted average interest rate borne by the Mortgage
Assets,                                                 

  o   the geographical distribution of the mortgaged properties on a
state-by-state basis,                                   

     o   information with respect to the prepayment provisions, if any, of
the Mortgage Assets,                                    

   o   with respect to ARM Loans, the index, the adjustment dates, the
    highest, lowest and weighted average margin, and the maximum
          interest rate variation at the time of any adjustment and over the
life of the ARM Loan,                                   

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        o   the range of debt service coverage ratios for mortgage loans secured
by multifamily properties or commercial properties,     

o   the specific type of property securing commercial loans, and

     o   information regarding the payment characteristics of the Mortgage
           Assets, for example whether the mortgage loans provide for payments
       of interest only for any period and the frequency and amount by
          which, and the term during which, monthly payments adjust or other
amortization provisions.                                

        If specific information respecting the trust fund assets is not known to
the depositor at the time securities are initially offered, more general        
information of the nature described above will be provided in the prospectus    
supplement, and specific information as to the trust fund assets to be included 
in the trust fund on the date of issuance of the securities will be set forth in
a report which will be available to purchasers of the related securities at or  
before the initial issuance of the securities and will be filed, together with  
the related pooling and servicing agreement, with respect to each series of     
certificates, or the related servicing agreement, trust agreement and indenture,
with respect to each series of notes, as part of a report on Form 8-K with the  
Securities and Exchange Commission within fifteen days after the initial        
issuance. If Mortgage Assets are added to or deleted from the trust fund after  
the date of the related prospectus supplement, the addition or deletion will be 
noted on the report on Form 8-K. In no event, however, will more than 5% (by    
principal balance at the cut-off date) of the mortgage loans deviate from the   
characteristics of the mortgage loans set forth in the related prospectus       
supplement. In addition, a report on Form 8-K will be filed within 15 days after
the end of any pre-funding period containing information respecting the trust   
fund assets transferred to a trust fund after the date of issuance of the       
related securities as described in the third following paragraph.               

PRINCIPAL AND INTEREST ACCOUNT                                                  

        Each trust fund will include one or more principal and interest accounts
established and maintained on behalf of the securityholders into which the      
servicer will deposit payments received after the cut-off date with respect to  
the Mortgage Assets as described under "Payments on Mortgage Assets; Deposits to
Principal and Interest Account" in this prospectus and in the related prospectus
supplement. Any amounts received after the cut-off date in respect of interest  
accrued on the Mortgage Assets prior to the cut-off date will not be a part of  
any trust fund and will not be deposited in the principal and interest account. 
Also, unless the prospectus supplement for a series of securities states        
otherwise, the Depositor's Yield, which represents the right to receive all     
prepayment penalties and premiums collected on the Mortgage Assets and other    
amounts if specified in the related prospectus supplement, will be retained by  
the Depositor and will not be a part of any trust fund. A principal and interest
account may be maintained as an interest bearing or non-interest bearing account
and funds held therein may be invested in certain short-term, high quality      
investments. See "Description of the Agreements-- Payments on the Mortgage      
Loans; Deposits to Principal and Interest Account".                             

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CERTIFICATE ACCOUNT                                                             

Each trust fund will include one or more certificate accounts   
established and maintained on behalf of the securityholders into which the      
trustee will, to the extent described in this prospectus and in the prospectus  
supplement, deposit all amounts remitted by the servicer from the principal and 
interest account and payments received or advanced with respect to the other    
assets in the trust fund. A certificate account will be maintained as a         
non-interest bearing account and funds held therein may be invested in certain  
short-term, high quality investments. See "Description of the Pooling and       
Servicing Agreements--Deposits to Certificate Account".                         

PRE-FUNDING ACCOUNT                                                             

   The related trust fund may include one or more pre-funding accounts
established and maintained on behalf of the securityholders into which the      
trustee will deposit amounts received from the depositor to be applied to       
acquire additional Mortgage Assets subject to the conditions specified in the   
related prospectus supplement. See "Description of Pooling and Servicing        
Agreements--Subsequent Mortgage Loans".                                         

CREDIT SUPPORT                                                                  

      Partial or full protection against defaults and losses on the Mortgage
Assets in the related trust fund may be provided to one or more classes of      
securities in the related series by credit support. Credit support may be in the
form of subordination of one or more classes of securities in a series, letter  
of credit, insurance policy, guarantee, reserve fund, cross-collateralization,  
overcollateralization or another type of credit support, or a combination       
thereof. The amount and types of coverage, the identification of the entity     
providing the coverage, if applicable, and related information with respect to  
each type of credit support, if any, will be described in the prospectus        
supplement for a series of securities. See "Description of Credit Support".     

 USE OF PROCEEDS

       The net proceeds to be received from the sale of the securities will be
applied by the depositor to finance the purchase of, or to repay short-term     
loans incurred to originate or finance the purchase of, the Mortgage Assets or  
will be used by the depositor for general corporate purposes. The depositor     
expects that it will make additional sales of securities similar to the         
securities from time to time, but the timing and amount of offerings of         
securities will depend on a number of factors, including the volume of Mortgage 
Assets acquired by the depositor, prevailing interest rates, availability of    
funds and general market conditions.                                            

YIELD CONSIDERATIONS

The yield on any offered security will depend on the following: 

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o   the price paid by the securityholder,                       

o   the rate at which interest accrued on the security,         

       o   the receipt and timing of receipt of distributions on the security,

   o   the weighted average life of the Mortgage Assets in the related
trust fund,                                             

 o   liquidations of Mortgage Assets following mortgagor defaults,

        o   purchases of Mortgage Assets in the event of optional termination of
        the trust fund or breaches of representations made in respect of
           such Mortgage Assets by the depositor, the servicer and others, and

   o   in the case of securities evidencing interests in ARM Loans, by
          changes in the interest rates or the conversions of ARM Loans to a
fixed interest rate.                                    

        SECURITY INTEREST RATE. Securities of any class within a series may have
fixed, variable or adjustable security interest rates, which may or may not be  
based upon the interest rates borne by the Mortgage Assets in the related trust 
fund. The prospectus supplement with respect to any series of securities will   
specify the security interest rate for each class of securities or, in the case 
of a variable or adjustable security interest rate, the method of determining   
the security interest rate. Holders of Stripped Interest Securities or a class  
of securities having a security interest rate that varies based on the weighted 
average interest rate of the underlying Mortgage Assets will be affected by     
disproportionate prepayments and repurchases of Mortgage Assets having higher   
interest rates than the average interest rate.                                  

   TIMING OF PAYMENT OF INTEREST AND PRINCIPAL. The effective yield to
securityholders entitled to payments of interest will be slightly lower than the
yield otherwise produced by the applicable security interest rate because, while
interest on the Mortgage Assets may accrue from the first day of each month, the
distributions of such interest will not be made until the remittance date which 
may be as late as the 25th day of the month following the month in which        
interest accrues on the Mortgage Assets. On each remittance date, a payment of  
interest on the securities, or addition to the principal balance of a class of  
Accrual Securities, will include interest accrued during the interest accrual   
period described in the related prospectus supplement for that remittance date. 
If the interest accrual period ends on a date other than a remittance date for  
the related series, the yield realized by the holders of the securities may be  
lower than the yield that would result if the interest accrual period ended on  
the remittance date. In addition, if so specified in the related prospectus     
supplement, interest accrued for an interest accrual period for one or more     
classes of securities may be calculated on the assumption that distributions of 
principal, and additions to the principal balance of Accrual Securities, and    
allocations of losses on the Mortgage Assets may be made on the first day of the
interest accrual period for a remittance date and not on the remittance date.   
This method would produce a lower effective yield than if interest were         
calculated on the basis of the actual principal amount outstanding during an    
interest accrual period.                                                        

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      PRINCIPAL PREPAYMENTS. The yield to maturity on the securities will be
affected by the rate of principal payments on the Mortgage Assets, including    
principal prepayments, curtailments, defaults and liquidations. The rate at     
which principal prepayments occur on the Mortgage Assets will be affected by a  
variety of factors, including, without limitation, the following:               

o   the terms of the Mortgage Assets,                           

o   the level of prevailing interest rates,                     

o   the availability of mortgage credit,                        

      o   in the case of multifamily loans and commercial loans, the quality
of management of the mortgaged properties, and          

    o   economic, demographic, geographic, tax, legal and other factors.

    In general, however, if prevailing interest rates fall significantly
below the interest rates on the Mortgage Assets included in a particular trust  
fund, those Mortgage Assets are likely to be the subject of higher principal    
prepayments than if prevailing rates remain at the rates borne by those Mortgage
Assets. Conversely, if prevailing interest rates rise significantly above the   
interest rates on the Mortgage Assets included in a particular trust fund, those
Mortgage Assets are likely to be the subject of lower principal prepayments than
if prevailing rates remain at the rates borne by those Mortgage Assets. The rate
of principal payments on some or all of the classes of securities of a series   
will correspond to the rate of principal payments on the Mortgage Assets        
included in the related trust fund and is likely to be affected by the existence
of prepayment premium provisions of the Mortgage Assets in a mortgage pool, and 
by the extent to which the servicer of any such Mortgage Asset is able to       
enforce such provisions. Mortgage Assets with a prepayment premium provision, to
the extent enforceable, generally would be expected to experience a lower rate  
of principal prepayments than otherwise identical Mortgage Assets without such  
provisions, or with lower prepayment premiums.                                  

   If the purchaser of a security offered at a discount calculates its
anticipated yield to maturity based on an assumed rate of distributions of      
principal that is faster than that actually experienced on the Mortgage Assets, 
the actual yield to maturity will be lower than that so calculated. Conversely, 
if the purchaser of a security offered at a premium calculates its anticipated  
yield to maturity based on an assumed rate of distributions of principal that is
slower than that actually experienced on the Mortgage Assets, the actual yield  
to maturity will be lower than that so calculated. In either case, the effect on
yield of prepayments on one or more classes of securities of a series may be    
mitigated or exacerbated by the priority of distributions of principal to those 
classes as provided in the related prospectus supplement.                       

       The timing of changes in the rate of principal payments on the Mortgage
Assets may significantly affect an investor's actual yield to maturity, even if 
the average rate of distributions of principal is consistent with an investor's 
expectation. In general, the earlier a principal payment is received on the     
Mortgage Assets and distributed in respect of a security, the greater the effect
on such investor's yield to maturity. The effect on an investor's yield of      
principal payments occurring at                                                 

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a rate higher or lower than the rate anticipated by the investor during a given 
period may not be offset by a subsequent like decrease or increase in the rate  
of principal payments.                                                          

      DEFAULTS. The rate of defaults on the Mortgage Assets will also affect
the rate and timing of principal payments on the Mortgage Assets and thus the   
yield on the securities. In general, defaults on Single Family Loans are        
expected to occur with greater frequency in their early years. However, Mortgage
Assets that require balloon payments, including multifamily loans, risk default 
at maturity, or that the maturity of the balloon loan may be extended in        
connection with a workout. The rate of default on mortgage loans which are      
refinance or limited documentation mortgage loans, Mortgage Assets with high    
loan-to-value ratios, and ARM Loans may be higher than for other types of       
Mortgage Assets. Furthermore, the rate and timing of defaults and liquidations  
on the Mortgage Assets will be affected by the general economic condition of the
region of the country in which the related mortgaged properties are located. The
risk of delinquencies and loss is greater and prepayments are less likely in    
regions where a weak or deteriorating economy exists, as may be evidenced by,   
among other factors, increasing unemployment or falling property values.        

MATURITY AND WEIGHTED AVERAGE LIFE                                              

      PREPAYMENTS. The rates at which principal payments are received on the
Mortgage Assets included in a trust fund and the rate at which payments are made
from any credit support for the related series of securities may affect the     
ultimate maturity and the weighted average life of each class of the series.    
Prepayments on the Mortgage Assets in a trust fund will generally accelerate the
rate at which principal is paid on some or all of the classes of the securities 
of the related series.                                                          

       If so provided in the prospectus supplement for a series of securities,
one or more classes of securities may have a final scheduled remittance date,   
which is the date on or prior to which the principal balance thereof is         
scheduled to be reduced to zero, calculated on the basis of the assumptions     
applicable to such series set forth therein.                                    

    Weighted average life refers to the average amount of time that will
elapse from the date of issue of a security until each dollar of principal of   
that security will be repaid to the investor. The weighted average life of a    
class of securities of a series will be influenced by, among other factors, the 
rate at which principal on the related Mortgage Assets is paid to that class,   
which may be in the form of scheduled amortization or prepayments. For this     
purpose, the term "prepayment" includes prepayments, in whole or in part, and   
liquidations due to default.                                                    

        In addition, the weighted average life of the securities may be affected
by the varying maturities of the related Mortgage Assets. If any Mortgage Assets
in a trust fund have actual terms to maturity of less than those assumed in     
calculating the final scheduled remittance dates for the classes of securities  
of the related series, one or more classes of the securities may be fully paid  
prior to their respective final scheduled remittance dates, even in the absence 
of prepayments. Accordingly, the prepayment experience of the mortgage pool     
will, to some extent, be a function of the mix of interest rates and maturities 
of the Mortgage Assets in that mortgage pool. See "Description of the Trust     
Funds".                                                                         

        Prepayments on loans are also commonly measured relative to a prepayment
standard or model, such as the Constant Prepayment Rate prepayment model or the 
Standard Prepayment                                                             

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Assumption prepayment model, each as described below. CPR represents a constant 
assumed rate of prepayment each month relative to the then outstanding principal
balance of a pool of loans for the life of those loans. SPA represents an       
assumed rate of prepayment each month relative to the then outstanding principal
balance of a pool of loans. A prepayment assumption of 100% of SPA assumes      
prepayment rates of 0.2% per annum of the then outstanding principal balance of 
the loans in the first month of the life of the loans and an additional 0.2% per
annum in each month thereafter until the thirtieth month. Beginning in the      
thirtieth month and in each month thereafter during the life of the loans, 100% 
of SPA assumes a constant prepayment rate of 6% per annum each month.           

Neither CPR nor SPA nor any other prepayment model or assumption
purports to be an historical description of prepayment experience or a          
prediction of the anticipated rate of prepayment of any pool of loans. Moreover,
CPR and SPA were developed based upon historical prepayment experience for      
Single Family Loans. Thus, it is likely that prepayment of any Mortgage Assets  
will not conform to any particular level of CPR or SPA.                         

       The prospectus supplement with respect to each series of securities may
contain tables, if applicable, setting forth the projected weighted average life
of one or more classes of offered securities of the series and the percentage of
the initial principal balance of each class that would be outstanding on        
specified remittance dates based on the assumptions stated in that prospectus   
supplement, including assumptions that prepayments on the related Mortgage      
Assets are made at rates corresponding to various percentages of CPR, SPA or at 
other rates specified in the prospectus supplement. Tables and assumptions are  
intended to illustrate the sensitivity of the weighted average life of the      
securities to various prepayment rates and are not intended to predict or to    
provide information that will enable investors to predict the actual weighted   
average life of the securities. It is unlikely that prepayment of any Mortgage  
Assets for any series will conform to any particular level of CPR, SPA or any   
other rate specified in the related prospectus supplement.                      

       TYPE OF MORTGAGE ASSET. The type of Mortgage Assets included in a trust
fund may affect the weighted average life of the related securities. A number of
Mortgage Assets may have balloon payments due at maturity, and because the      
ability of a mortgagor to make a balloon payment typically will depend upon its 
ability either to refinance the loan or to sell the related mortgaged property, 
there is a risk that Mortgage Assets having balloon payments may default at     
maturity, or that the servicer may extend the maturity of the Mortgage Asset in 
connection with a workout. In addition, a number of Mortgage Assets may be      
junior mortgage loans. The rate of default on junior mortgage loans may be      
greater than that of mortgage loans secured by first liens on comparable        
properties. In the case of defaults, recovery of proceeds may be delayed by,    
among other things, bankruptcy of the mortgagor or adverse conditions in the    
market where the property is located. In order to minimize losses on defaulted  
Mortgage Assets, the servicer may, to the extent and under the circumstances set
forth in this prospectus and in the related servicing agreement, be permitted to
modify Mortgage Assets that are in default or as to which a payment default is  
imminent. Any defaulted balloon payment or modification that extends the        
maturity of a Mortgage Asset will tend to extend the weighted average life of   
the securities, thereby lengthening the period of time elapsed from the date of 
issuance of a security until it is retired.                                     

    Although the interest rates on ARM Loans will be subject to periodic
adjustments, adjustments generally will, unless otherwise specified in the      
related prospectus supplement, (1) not increase or decrease the interest rate by
more than a fixed percentage amount on each adjustment                          

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date, (2) not increase the interest rate over a fixed percentage amount during  
the life of any ARM Loan and (3) be based on an index, which may not rise and   
fall consistently with the mortgage interest rate, plus the related fixed       
percentage set forth in the related mortgage note, which may be different from  
margins being used at the time for newly originated adjustable rate mortgage    
loans. As a result, the interest rates on the ARM Loans in a mortgage pool at   
any time may not equal the prevailing rates for similar, newly originated       
adjustable rate mortgage loans. In certain rate environments, the prevailing    
rates on fixed rate mortgage loans may be sufficiently low in relation to the   
then-current mortgage rates on ARM Loans with the result that the rate of       
prepayments may increase as a result of refinancings. There can be no certainty 
as to the rate of prepayments on the Mortgage Assets during any period or over  
the life of any series of securities.                                           

The interest rates on ARM Loans subject to negative amortization
generally adjust monthly and their amortization schedules adjust less           
frequently. During a period of rising interest rates, as well as immediately    
after origination when initial interest rates are generally lower than the sum  
of the indices applicable at origination and the related margins, the amount of 
interest accruing on the principal balance of these types of Mortgage Assets may
exceed the amount of the minimum scheduled monthly payment thereon. As a result,
a portion of the accrued interest on negatively amortizing Mortgage Assets may  
become deferred interest which will be added to the principal balance thereof   
and will bear interest at the applicable interest rate. The addition of any     
deferred interest to the principal balance of any related class or classes of   
securities of a series will lengthen the weighted average life thereof and may  
adversely affect yield to holders thereof, depending upon the price at which the
securities were purchased. In addition, with respect to certain ARM Loans       
subject to negative amortization, during a period of declining interest rates,  
it might be expected that each minimum scheduled monthly payment on the ARM Loan
would exceed the amount of scheduled principal and accrued interest on the      
principal balance thereof, and since such excess will be applied to reduce the  
principal balance of the related class or classes of securities, the weighted   
average life of the securities will be reduced which may adversely affect yield 
to holders thereof, depending upon the price at which such securities were      
purchased.                                                                      

  FORECLOSURES AND PAYMENT PLANS. The number of foreclosures and the
principal amount of the Mortgage Assets that are foreclosed in relation to the  
number of Mortgage Assets that are repaid in accordance with their terms will   
affect the weighted average life of those Mortgage Assets and that of the       
related series of securities. Servicing decisions made with respect to the      
Mortgage Assets, including the use of payment plans prior to a demand for       
acceleration and the restructuring of Mortgage Assets in bankruptcy proceedings,
may also have an effect upon the payment patterns of particular Mortgage Assets 
and thus the weighted average life of the securities.                           

     DUE-ON-SALE CLAUSES. Acceleration of mortgage payments as a result of
certain transfers of or the creation of encumbrances upon underlying mortgaged  
property is another factor affecting prepayment rates that may not be reflected 
in the prepayment standards or models used in the relevant prospectus           
supplement. In most cases the Mortgage Assets will include "due-on-sale" clauses
that permit the lender to accelerate the maturity of the loan if the borrower   
sells, transfers or conveys the property. The servicer, on behalf of the trust  
fund, will employ its usual practices in determining whether to exercise any    
right that the trustee may have as mortgagee to accelerate payment of the       
Mortgage Asset. An ARM Loan may be assumable under some conditions if the       
proposed transferee of the related mortgaged property establishes its ability to
repay the Mortgage Asset and, in the reasonable judgment of the servicer or the 
related sub-servicer, the security for the                                      

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ARM Loan would not be impaired by the assumption. The extent to which ARM Loans 
are assumed by purchasers of the mortgaged properties rather than prepaid by the
related mortgagors in connection with the sales of the mortgaged properties will
affect the weighted average life of the related series of securities. See "Legal
Aspects of Mortgage Assets--Enforceability of Certain Provisions" and           
"Description of the Pooling and Servicing Agreements--Due-on-Sale Provisions".  

 THE DEPOSITOR

        Superior Bank FSB, the depositor, is a federally chartered stock savings
bank acquired by Coast to Coast Financial Corporation, a Nevada corporation, on 
December 30, 1988. The deposits of the depositor are insured by the Savings     
Association Insurance Fund of the FDIC. The depositor is a member of the Federal
Home Loan Bank of Chicago and is subject to regulation, examination and         
supervision by the Office of Thrift Supervision and the FDIC. The depositor     
maintains its principal office at One Lincoln Centre, Oakbrook Terrace, Illinois
60181 and administrative offices for the consumer finance operations of the     
depositor at 135 Chestnut Ridge Road, Montvale, New Jersey 07645. In the near   
future, most likely within six months of the date of this prospectus, the       
depositor's consumer finance operations will be relocated to 1 Ramland Road,    
Orangeburg, New York. The telephone number of the principal office of the       
Depositor is (708) 916-4000 and the telephone number of its administrative      
offices is currently (201) 930-1500.                                            

   On November 30, 1992, the depositor acquired by merger the mortgage
origination and servicing operating assets utilized by Alliance Funding Company,
Inc., a Delaware corporation, and its subsidiaries in mortgage origination and  
servicing activities. Effective December 1, 1992 mortgage origination and       
servicing activities historically conducted by Alliance Funding Company, Inc.   
and its mortgage banking and servicing subsidiaries began to be conducted by two
new divisions of the depositor. These new divisions are the Alliance Funding    
Division, primarily engaged in mortgage origination, and the Servicing Division,
primarily engaged in mortgage servicing. As of the effective date, the senior   
officers of Alliance Funding Company, Inc. became senior officers of the        
Alliance Funding Division with direct responsibility for the operations of the  
new Alliance Funding Division and the Servicing Division.                       

       The depositor originates mortgage loans (including the Mortgage Assets)
on residential and multifamily dwellings nationwide; purchases mortgage loans   
from lenders, mortgage bankers, and brokers on a wholesale basis; assembles and 
sells pools of mortgages to commercial banks and other financial institutions;  
and services the mortgage portfolios it has placed with investors. Each         
prospectus supplement will contain information, as of the date of such          
prospectus supplement, with respect to the underwriting criteria of the         
depositor.                                                                      

 DESCRIPTION OF THE SECURITIES

       The securities will be issued in series. As used herein with respect to
any series, the term "certificate" or the term "note" refers to all of the      
certificates or notes of that series, whether or not offered hereby and by the  
related prospectus supplement, unless the context otherwise requires.           

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        The certificates of each series, including any class of certificates not
offered hereby, will be issued in fully registered form only and will represent 
the entire beneficial ownership interest in the trust fund created pursuant to  
the related pooling and servicing agreement. The notes of each series, including
any class of notes not offered hereby, will be issued in fully registered form  
only and will represent indebtedness of the trust fund created pursuant to the  
related indenture.                                                              

       If so provided in the prospectus supplement, any class of securities of
any series may be represented by a certificate or note registered in the name of
a nominee of The Depository Trust Company. The interests of beneficial owners of
securities registered in the name of DTC will be represented by entries on the  
records of participating members of DTC. Definitive certificates or notes will  
be available for securities registered in the name of DTC only under the limited
circumstances provided in the related prospectus supplement. The securities will
be transferable and exchangeable for like securities of the same class and      
series in authorized denominations at the corporate trust office of the trustee 
as specified in the related prospectus supplement. The prospectus supplement for
each series of securities will describe any limitations on transferability. No  
service charge will be made for any registration of exchange or transfer of     
securities, but the depositor or the trustee or any agent of the trustee may    
require payment of a sum sufficient to cover any tax or other governmental      
charge.                                                                         

Each series of securities may consist of either:                

 o   a single class of securities evidencing the entire beneficial
ownership of or indebtedness of the related trust fund; 

      o   two or more classes of securities evidencing the entire beneficial
           ownership of or indebtedness of the related trust fund, one or more
          classes of which will be senior in right of payment to one or more
   of the other classes to the extent described in the related
prospectus supplement;                                  

       o   two or more classes of securities, one or more classes of which are
       entitled to (a) principal distributions, with disproportionate,
           nominal or no interest distributions or (b) interest distributions,
     with disproportionate, nominal or no principal distributions;

o   two or more classes of securities which differ as to timing,
        sequential order, priority of payment, security interest rate or
          amount of distributions of principal or interest or both, or as to
         which distributions of principal or interest or both on any class
          may be made upon the occurrence of specified events, in accordance
       with a schedule or formula, or on the basis of collections from
          designated portions of the mortgage pool, which series may include
            one or more classes of securities, as to which accrued interest or a
           portion thereof will not be distributed but rather will be added to
          the principal balance of the security on each distribution date in
      the manner described in the related prospectus supplement; and

     o   other types of classes of securities, as described in the related
prospectus supplement.                                  

        With respect to any series of notes, the equity certificates, insofar as
they represent the beneficial ownership interest in the issuer, will be         
subordinate to the related notes.                                               

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       Each class of securities, other than some Strip Securities, will have a
stated principal amount and, unless otherwise provided in the related prospectus
supplement, will be entitled to payments of interest on the stated principal    
amount based on a fixed, variable or adjustable security interest rate. See     
"-Distribution of Interest on the Securities" and "-Distribution of Principal of
the Securities" below.                                                          

      The specific percentage ownership interest of each class of securities
and the minimum denomination for each security will be set forth in the related 
prospectus supplement.                                                          

DISTRIBUTIONS ON THE SECURITIES                                                 

      Distributions allocable to principal and interest on the securities of
each series will be made by or on behalf of the trustee each month on each date 
as specified in the related prospectus supplement and referred to as a          
"remittance date", commencing with the month following the month in which the   
applicable cut-off date occurs. Distributions will be made to the persons in    
whose names the securities are registered at the close of business on the Record
Date. The amount of each distribution will be determined as of the close of     
business on the date specified in the related prospectus supplement and referred
to as the "determination date". All distributions with respect to each class of 
securities on each remittance date will be allocated pro rata among the         
outstanding securities in that class. Payments will be made either by wire      
transfer in immediately available funds to the account of a securityholder at a 
bank or other entity having appropriate facilities therefor, if the             
securityholder has so notified the depositor or its designee no later than the  
date specified in the related prospectus supplement and, if so provided in the  
related prospectus supplement, holds securities in the requisite amount         
specified therein, or by check mailed to the address of the person entitled     
thereto as it appears on the security register maintained by the trustee or its 
agent; provided, however, that the final distribution in retirement of the      
securities will be made only upon presentation and surrender of the securities  
at the office or agency of the trustee or its agent specified in the notice to  
securityholders of the final distribution. With respect to each series of       
certificates or notes, the security register will be referred to as the         
"certificate register" or "note register", respectively.                        

     DISTRIBUTIONS OF INTEREST ON THE SECURITIES. Each class of securities
may earn interest at a different rate, which may be a fixed, variable or        
adjustable security interest rate. The related prospectus supplement will       
specify the security interest rate for each class, or, in the case of a variable
or adjustable security interest rate, the method for determining the security   
interest rate. The security interest rate of each security offered hereby will  
be stated in the related prospectus supplement as the "pass-through rate" with  
respect to a certificate and the "note interest rate" with respect to a note.   
Unless otherwise specified in the related prospectus supplement, interest on the
securities will be calculated on the basis of a 360-day year consisting of      
twelve 30-day months.                                                           

       With respect to each series of securities and each remittance date, the
distribution in respect of interest on each security, other than some classes of
Accrual Securities and Strip Securities, will be equal to the interest accrued  
during the related interest accrual period on the outstanding principal balance 
of the security immediately prior to the remittance date, at the applicable     
security interest rate. As to each Strip Security with no or, in some cases, a  
nominal principal balance, the distributions in respect of interest on any      
distribution date will be on the basis of a notional amount and equal one       
month's Stripped Interest. The method of determining the notional amount for a  
class                                                                           

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of Strip Securities will be described in the related prospectus supplement.     
Reference to notional amount is solely for convenience in certain calculations  
and does not represent the right to receive any distribution of principal. Prior
to the time interest is distributable on any class of Accrual Securities,       
interest accrued on that class will be added to the principal balance thereof on
each remittance date. Interest distributions on a series of securities will be  
reduced in the event of shortfalls in collections of interest resulting from    
prepayments on mortgage loans unless the servicer is obligated to cover the     
shortfalls from its own funds up to its servicing fee for the related due       
period. The particular manner in which interest shortfalls are to be allocated  
among some or all of the classes of securities of a series will be specified in 
the related prospectus supplement. The related prospectus supplement will also  
describe the extent to which the amount of accrued interest that is otherwise   
distributable on, or in the case of Accrual Securities added to the principal   
balance of, a class of offered securities may be reduced as a result of other   
contingencies, such as applicable law, delinquencies, losses and deferred       
interest on or in respect of the Mortgage Assets in the related trust fund. With
respect to each series of certificates or notes, the interest distributions     
payable will be referred to in the applicable prospectus supplement as the      
"accrued certificate interest" or "accrued note interest", respectively. See    
"Yield Considerations".                                                         

        DISTRIBUTIONS OF PRINCIPAL OF THE SECURITIES. The principal balance of a
security, at any time, will equal the maximum amount that the holder will be    
entitled to receive in respect of principal out of the future cash flow on the  
Mortgage Assets and other assets included in the related trust fund. The        
principal balance of each security offered hereby will be stated in the related 
prospectus supplement as the "certificate principal balance" with respect to a  
certificate and the "note balance" with respect to a note. With respect to each 
security, distributions generally will be applied to undistributed accrued      
interest thereon, and thereafter to principal. The outstanding principal balance
of a security will be reduced to the extent of distributions of principal       
thereon, and if and to the extent so provided in the related prospectus         
supplement, by the amount of any realized losses, allocated thereto. The        
outstanding principal balance of a security may be increased by any deferred    
interest if so specified in the related prospectus supplement. The initial      
aggregate principal balance of a series and each class of securities related to 
a series will be specified in the related prospectus supplement. Distributions  
of principal will be made on each remittance date to the class or classes of    
securities entitled thereto until the principal balance of that class has been  
reduced to zero. With respect to a Senior/Subordinate Series, distributions     
allocable to principal of a class of securities will be based on the percentage 
interest in the related trust fund evidenced by the class, which in turn will be
based on the principal balance of that class as compared to the principal       
balance of all classes of securities of the series. Distributions of principal  
of any class of securities will be made on a pro rata basis among all of the    
securities of that class. Strip Securities with no principal balance will not   
receive distributions of principal.                                             

       ALLOCATION TO SECURITYHOLDERS OF LOSSES AND SHORTFALLS. With respect to
any defaulted mortgage loan that is finally liquidated, through foreclosure sale
or otherwise, the amount of the realized loss incurred in connection with       
liquidation will equal the excess, if any, of the unpaid principal balance of   
the liquidated loan immediately prior to liquidation, over the aggregate amount 
of Liquidation Proceeds derived from liquidation remaining after application of 
the proceeds to unpaid accrued interest on the liquidated loan and to reimburse 
the servicer or any sub-servicer for related unreimbursed servicing expenses.   
With respect to mortgage loans the principal balances of which have been reduced
in connection with bankruptcy proceedings, the amount of that reduction also    
will be treated as a realized loss. As to any series of securities, other than a
Senior/Subordinate                                                              

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Series, any realized loss not covered as described under "Description of Credit 
Support" will be allocated among the securities in the manner specified in the  
related prospectus supplement. As to any Senior/Subordinate Series, realizes    
losses will be allocated first to the most subordinate class of securities as   
described below under "Description of Credit Support--Subordination."           

EXAMPLE OF DISTRIBUTIONS                                                        

      The following chart sets forth an example of distributions on a series
of securities, based upon the assumption that such securities will be issued in 
June 199_ and that the remittance date is the twenty-fifth day of each month:   

                                                        [Enlarge/Download Table]
                                                                                                  
June 1, 199_.................................. Cut-off date. The original pool principal balance  
                                                 will be the aggregate principal balances of the  
                                                 Mortgage Assets as of the cut-off date after     
                                                 application of all payments due and collected    
                                                 on such date.                                    

June 2-July 1, 199_........................... Collection period. The servicer or the             
                                                 sub-servicers remit for deposit in the principal 
                                                 and interest account all amounts received on     
                                                 account of the Mortgage Assets.                  

June 30, 199_................................. Record date (the last day of the month             
                                                 immediately preceding the month of the           
                                                 related remittance date). Distributions on July  
                                                 25, 199_ will be made to securityholders of      
                                                 record at the close of business on June 30,      
                                                 199_.                                            

July 22, 199_................................. Determination date (e.g., the day of the month     
                                                 which is at least two business days prior to the 
                                                 remittance date). The servicer determines the    
                                                 amount of principal and interest that will be    
                                                 distributed to the securityholders on July 25,   
                                                 199_, and transfers funds in the principal and   
                                                 interest account to the certificate account      
                                                 together with any monthly advances and           
                                                 compensating interest.                           

Not later than 10:00 a.m., New York                                                               
  time, on July 24, 199_...................... If applicable, notice in the event that an event of
                                                 default has occurred with respect to such        
                                                 remittance date is given by the trustee. The     
                                                 trustee will notify the servicer and the         
                                                 provider of the credit support of the amount of  
                                                 credit support, if any, required to be           

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                                                        [Enlarge/Download Table]
                                                                                                
                                                 distributed to the securityholders on July 25, 
                                                 199_.                                          

July 25, 199_................................. Remittance date (e.g., the 25th day of the month 
                                                 or if such 25th day is not a business day, the 
                                                 first business day immediately following).     
                                                 The trustee or its designee will distribute to 
                                                 securityholders the amounts required to be     
                                                 distributed pursuant to the related pooling and
                                                 servicing agreement or indenture.              

MONTHLY ADVANCES BY SERVICER IN RESPECT OF DELINQUENCIES ON THE MORTGAGE ASSETS 

       With respect to any series of securities, the servicer will be required
as part of its servicing responsibilities to advance on or before each          
remittance date its own funds or funds held in the principal and interest       
account that are not included in the amount available for that remittance date, 
an amount equal to the aggregate of payments of interest, net of related        
servicing fees that were due during the related Due Period and were delinquent  
on the related determination date, and, with respect to each REO Property which 
was acquired during or prior to the related Due Period and which was not        
disposed of during such Due Period, an amount equal to the excess, if any, of   
interest on the principal balance deemed to apply to such REO Property for the  
most recently ended calendar month at the related interest rate, net of the     
related servicing fees, over the net income from such property for such month,  
subject to the servicer's good faith determination that any monthly advances    
made will be reimbursable from proceeds subsequently recovered on the Mortgage  
Asset related to the advance.                                                   

     Monthly advances are intended to maintain a regular flow of scheduled
interest to holders of the class or classes of securities entitled thereto,     
rather than to guarantee or insure against losses. Monthly advances of the      
servicer's funds will be reimbursable only out of late collections of interest  
on the Mortgage Assets respecting which advances were made, including amounts   
received under any form of credit support; provided, however, that any monthly  
advance will be reimbursable from any amounts in the certificate account, after 
distributions to securityholders, to the extent that the servicer shall         
determine that the monthly advance is not ultimately recoverable from late      
collections of interest. If monthly advances have been made by the servicer from
excess funds in the principal and interest account, the servicer will replace   
such funds in the principal and interest account on any future distribution date
to the extent that funds in the certificate account on that remittance date are 
less than payments required to be made to securityholders on that date. If so   
specified in the related prospectus supplement, the obligations of the servicer 
to make monthly advances may be secured by a cash advance reserve fund or a     
surety bond. If applicable, information regarding the characteristics of, and   
the identity of any obligor on, any such surety bond, will be set forth in the  
related prospectus supplement.                                                  

COMPENSATING INTEREST                                                           

       With respect to each Mortgage Asset in the related trust fund for which
a principal prepayment in full or in part was received during a Due Period, the 
servicer will be required, if so specified in the related prospectus supplement,
to remit to the trustee for deposit in the certificate                          

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account, from and to the extent of amounts otherwise payable to it as servicing 
compensation, an amount equal to the difference between (a) 30 days' interest on
the principal balance of that Mortgage Asset as of the beginning of the related 
Due Period at the rate at which interest accrues on that Mortgage Asset, net of 
the per annum rate at which the servicer's servicing fee accrues, and (b) the   
amount of interest actually received on that Mortgage Asset for the Due Period, 
net of the servicer's servicing fees. This difference is referred to in this    
prospectus as "compensating interest".                                          

FORM OF REPORTS TO SECURITYHOLDERS                                              

 With each distribution to holders of any class of securities of a
series, the servicer or the trustee, will forward or cause to be forwarded to   
each securityholder, to the depositor and to any other parties as may be        
specified in the related servicing agreement, a statement setting forth the     
following as of the remittance date:                                            

           (1) the amount of the distribution to holders of securities of that
class applied to reduce the principal balance of the securities;

             (2) the amount of the distribution to holders of securities of that
class allocable to interest;                                    

            (3) the amount of related administration or servicing compensation
    received by the trustee or the servicer and any sub-servicer and any
other customary information as the servicer deems necessary or  
  desirable, or that a securityholder reasonably requests, to enable
securityholders to prepare their tax returns;                   

        (4) the amount available for distribution to securityholders for
that remittance date;                                           

 (5) if applicable, the aggregate amount of advances and
compensating interest included in the distribution;             

           (6) the aggregate principal balance of the Mortgage Assets at the
close of business on that remittance date;                      

            (7) the aggregate amount of principal and interest received on the
Mortgage Assets during the related Due Period;                  

           (8) the number and aggregate principal balance of Mortgage Assets
       (a) delinquent one month, (b) delinquent two or more months, and (c) as
to which foreclosure proceedings have been commenced;           

          (9) with respect to any mortgaged property acquired on behalf of
  securityholders through foreclosure or deed in lieu of foreclosure
 during the preceding calendar month, the principal balance of the
    related Mortgage Asset as of the close of business on the remittance
date in such month;                                             

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        (10) the aggregate principal balance of each class of securities
      (including any class of securities not offered hereby) at the close of
      business on that remittance date, separately identifying any reduction
       in the principal balance due to the allocation of any realized loss and
      any increase in the principal balance of a class of Accrual Securities
in the event accrued interest has been added to that balance;   

          (11) the amount of any special hazard realized losses allocated to
    the subordinate securities, if any, at the close of business on that
remittance date;                                                

      (12) the amount deposited in the reserve fund, if any, on that
remittance date;                                                

        (13) the amount remaining in the reserve fund, if any, as of the
close of business on that remittance date;                      

            (14) the aggregate unpaid accrued interest, if any, on each class of
securities at the close of business on that remittance date;    

           (15) in the case of securities that accrue interest at the variable
       rate, the security interest rate applicable to that remittance date, as
 calculated in accordance with the method specified in the related
prospectus supplement; and                                      

          (16) as to any series which includes credit support, the amount of
        coverage of each instrument of credit support included in the trust fund
as of the close of business on that distribution date.          

   In the case of information furnished pursuant to subclauses (1)-(3)
above, the amounts shall be expressed as a dollar amount per minimum            
denomination of securities or for such other specified portion thereof. With    
respect to each series of certificates or notes, securityholders will be        
referred to as the "certificateholders" or the "noteholders", respectively.     

       Within a reasonable period of time after the end of each calendar year,
the servicer or the trustee, as provided in the related prospectus supplement,  
shall furnish to each person who at any time during the calendar year was a     
holder of a security a statement containing the information set forth in        
subclauses (1)-(4) above, aggregated for such calendar year or the applicable   
portion thereof during which that person was a securityholder. This obligation  
of the servicer or the trustee shall be deemed to have been satisfied to the    
extent that substantially comparable information shall be provided by the       
servicer or the trustee pursuant to any requirements of the Code as are from    
time to time in force.                                                          

TERMINATION OF THE TRUST FUND AND DISPOSITION OF TRUST FUND ASSETS              

      The obligations created by the governing agreements for each series of
securities will terminate upon the earlier to occur of the following:           

o   the final payment or other liquidation of the last trust fund asset subject 
 thereto or the disposition of all underlying property subject to the last
trust fund asset acquired upon foreclosure of that trust fund asset,    

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o   the mutual consent of the servicer, the provider of credit support, if any, 
and all securityholders in writing, and                                 

o   the purchase of all of the assets of the trust fund by the party entitled to
   effect the termination, under the circumstances and in the manner set forth
in the related prospectus supplement.                                   

      In no event, however, will the trust created by the related agreements
continue beyond twenty-one years after the death of the last surviving lineal   
descendant of the person named in the related agreement, alive as of the cut-off
date. Written notice of termination of the related agreements will be given to  
each securityholder, and the final distribution will be made only upon surrender
and cancellation of the securities at an office or agency appointed by the      
trustee which will be specified in the notice of termination.                   

      Any purchase of all of the assets of the trust fund as described above
shall be made at the price set forth in the related prospectus supplement which 
will generally be equal to sum of (a) 100% of the principal balance of each     
Mortgage Asset as of the day of the purchase plus accrued interest thereon at   
the applicable interest rate, net of the rate at which the servicing fee is     
calculated if the servicer is the purchasing party, to the first day of the     
month following the purchase plus (b) the appraised value of any underlying     
property subject to the Mortgage Assets acquired for the benefit of             
securityholders.                                                                

       In connection with any purchase of all of the assets of the trust fund,
the purchasing party will also pay the outstanding fees and expenses of the     
trustee and the provider of credit support. The purchase price for termination  
in this manner will be reduced by amounts on deposit in the principal and       
interest account and certificate account that would have constituted part of the
amount available for distribution to holders of the securities for subsequent   
remittance dates absent such purchase. The exercise of an optional termination  
right will effect early retirement of the securities of that series, but the    
right of the person entitled to effect the termination is subject to the        
aggregate principal balance of the outstanding Mortgage Assets for the series at
the time of purchase being less than the percentage specified in the related    
prospectus supplement of the aggregate principal balance of the Mortgage Assets 
at the cut-off date for that series, which percentage will be between 25% and   
0%.                                                                             

 DESCRIPTION OF THE AGREEMENTS

        Each series of certificates evidencing interests in a trust fund will be
issued in accordance with a pooling and servicing agreement among the depositor,
the servicer and the trustee named in the prospectus supplement. Each series of 
notes evidencing indebtedness of a trust fund will be issued in accordance with 
an indenture between the related issuer and the trustee named in the prospectus 
supplement. The issuer of notes will be the depositor or an owner trust         
established under an owner trust agreement between the depositor and the owner  
trustee for the purpose of issuing a series of notes. Where the issuer is an    
owner trust, the ownership of the trust fund will be evidenced by equity        
certificates issued under the owner trust agreement. The provisions of each     
agreement will vary depending upon the nature of the securities to be issued    
thereunder and the nature of the                                                

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related trust fund. Various forms of pooling and servicing agreement, servicing 
agreement, owner trust agreement, trust agreement and indenture have been filed 
as exhibits to the registration statement of which this prospectus is a part.   
The following summaries describe specific provisions which may appear in each   
agreement. The prospectus supplement for a series of securities will describe   
any provision of the agreement relating to a series that materially differs from
the description of the agreement contained in this prospectus. The summaries do 
not purport to be complete and are subject to, and are qualified in their       
entirety by reference to, all of the provisions of the related agreements for   
each trust fund and the related prospectus supplement.                          

ASSIGNMENT OF MORTGAGE ASSETS; REPURCHASES                                      

       At the time of issuance of any series of securities, the depositor will
cause the Mortgage Assets included in the related trust fund to be assigned to  
the trustee, together with all principal and interest received by or on behalf  
of the depositor on or with respect to the Mortgage Assets after the cut-off    
date, other than the Depositor's Yield and amounts received after the cut-off   
date in respect of interest accrued on or prior to the cut-off date. The trustee
will, concurrently with this assignment, deliver the securities to the depositor
in exchange for the Mortgage Assets and the other assets constituting the trust 
fund for the series. Each Mortgage Asset will be identified in a schedule       
appearing as an exhibit to the related agreement. The Mortgage Asset schedule   
will include detailed information in respect of each Mortgage Asset included in 
the related trust fund, including without limitation, the address of the related
mortgaged property, the interest rate and, if applicable, the index, margin,    
adjustment date and any rate cap information, the original and remaining term to
maturity, the original and outstanding principal balance and balloon payment, if
any, the appraised value, the loan-to-value ratio as of the date indicated and  
the scheduled payment of principal and interest.                                

        With respect to each mortgage loan, the depositor will, unless otherwise
provided in the related prospectus supplement, deliver or cause to be delivered 
to the trustee, or to the custodian acting on behalf of the trustee, certain    
loan documents, including the following:                                        

    o   the mortgage note endorsed, without recourse, in blank or to the
order of the trustee,                                   

o   the Mortgage with evidence of recording indicated thereon,  

 o   an assignment of the Mortgage to the trustee with evidence of
          recording thereon (except as otherwise set forth in the prospectus
     supplement and except for any such assignment of Mortgage not
         returned from the public recording office, or one or more blanket
            certificates attaching copies of one or more assignments of mortgage
   relating thereto where the original assignment is not being
           delivered to the trustee) or an assignment of the Mortgage from the
last assignee of the Mortgage in blank,                 

o   evidence of title insurance,                                

       o   intervening assignments of Mortgage, except for any such assignment
            of the Mortgage that has been lost or has not been returned from the
public recording office, and                            

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o   any assumption and modification agreements.                 

   In the event that, with respect to any mortgage loan, the depositor
cannot deliver the Mortgage or any assignment with evidence of recording thereon
concurrently with the execution and delivery of the agreement for any series    
because they have been lost or have not yet been returned by the public         
recording office, the depositor will deliver or cause to be delivered to the    
trustee a certified true photocopy of the Mortgage or assignment. The depositor 
will deliver or cause to be delivered to the trustee any such Mortgage or       
assignment with evidence of recording indicated thereon upon receipt thereof    
from the public recording office. Except as otherwise set forth in the          
prospectus supplement, assignments of the Mortgage Assets to the trustee will be
recorded in the appropriate public office for real property records.            

       As to each manufactured home contract or home improvement contract, the
depositor will, unless otherwise provided in the related prospectus supplement, 
deliver or cause to be delivered to the trustee, or to the custodian acting on  
behalf of the trustee, certain documents including the following:               

     o   the original contract endorsed, without recourse, to the order of
the trustee,                                            

        o   instruments related to the contract and the security interest in the
property securing the contract, and                     

       o   a blanket assignment to the trustee of all contracts, documents and
         instruments in the related trust fund. In order to give notice of
   the right, title and interest of the securityholders to the
           contracts, the depositor will cause to be executed and delivered to
          the trustee a UCC-1 financing statement identifying the trustee as
      the secured party and identifying all contracts as collateral.

The trustee will review (or cause to be reviewed) the documents 
delivered to it within 45 days after the initial issuance of the securities of  
each series, unless otherwise provided in the related prospectus supplement, to 
ascertain that all required documents have been executed and received. If the   
trustee or the provider of credit support, if applicable under the related      
agreement, during the process of reviewing the documents delivered to it finds  
any document constituting a part of a trustee's file to be missing or defective 
in any material respect, the trustee or the provider of credit support, as      
applicable, shall promptly so notify the depositor. If within 60 days, or such  
other date set forth in the prospectus supplement, after the trustee's notice to
it respecting such defect the depositor has not remedied the defect and the     
defect materially and adversely affects the interest of the holders of          
securities in the related Mortgage Asset or the interests of the provider of    
credit support if applicable, the depositor will, on the next succeeding        
determination date, either (1) substitute in lieu of such Mortgage Asset a      
mortgage loan, or loans, or contract or contracts, which meet certain criteria  
set forth in the related agreement or (2) purchase the Mortgage Asset at a price
equal to the principal balance of the Mortgage Asset as of the date of purchase,
plus all accrued and unpaid interest thereon through the due date for such      
Mortgage Asset in the Due Period most recently ended prior to the determination 
date computed at the interest rate plus the amount of any unreimbursed servicing
advances made by the Servicer. The purchase price shall be deposited in the     
principal and interest account. In addition, if the then aggregate outstanding  
principal balance of a substitute Mortgage Assets is less than the principal    
balance of the Mortgage Asset to be replaced as of the                          

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date of substitution plus accrued and unpaid interest thereon, deliver to the   
trustee the amount of the shortfall.                                            

     Unless otherwise specified in the related prospectus supplement, this
repurchase or substitution obligation constitutes the sole remedy available to  
holders of securities or the trustee for omission of, or a material defect in, a
constituent document.                                                           

REPRESENTATIONS AND WARRANTIES; REPURCHASES                                     

       With respect to each Mortgage Asset included in the related trust fund,
the depositor will make or assign certain representations and warranties, as of 
a specified date covering, by way of example, the following types of matters:   

        o   the accuracy of the information set forth for such Mortgage Asset on
the Mortgage Asset schedule;                            

      o   the existence of title insurance insuring the lien priority of the
Mortgage Asset;                                         

o   the authority of the depositor to sell the Mortgage Asset;  

       o   the payment status of the Mortgage Asset and the status of payments
     of taxes, assessments and other charges affecting the related
mortgaged property;                                     

      o   the existence of customary provisions in the related mortgage note
            and Mortgage to permit realization against the mortgaged property of
the benefit of the security of the Mortgage; and        

o   the existence of hazard insurance coverage on the mortgaged 
property.                                               

      Unless otherwise provided in the related prospectus supplement, in the
event of a breach of any such representation or warranty, the warranting party  
will be obligated to cure the breach or repurchase or replace the affected      
Mortgage Asset as described below. Since the representations and warranties may 
not address events that may occur following the date as of which they were made,
the warranting party will have a cure, repurchase or substitution obligation in 
connection with a breach of such a representation and warranty only if the      
relevant event that causes the breach occurs prior to that date. Such party will
have no repurchase obligations if the relevant event that causes the breach     
occurs after the date. However, the depositor will not include any Mortgage     
Asset in the trust fund for any series of securities if it knows that a         
representation and warranty regarding that Mortgage Asset is not accurate and   
complete in all material respects as of the date of initial issuance of the     
related series of securities.                                                   

        The related agreement will provide that the servicer and/or trustee will
be required to notify promptly the relevant warranting party of any breach of   
any representation or warranty made by or on behalf of it in respect of a       
Mortgage Asset that materially and adversely affects the value of the Mortgage  
Asset or the interests therein of the securityholders. If the warranting party  
cannot cure the breach within 60 days following the date on which the warranting
party discovered the breach or was notified of the breach, then the warranting  
party will be obligated to, on the determination date next                      

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succeeding the end of the 60 day period, either (i) repurchase the Mortgage     
Asset from the trustee at the Purchase Price therefor or (ii) replace such      
Mortgage Asset with one or more qualified substitute Mortgage Assets, provided  
that, if a REMIC election has been made with respect to the trust fund, such    
substitution must be made within two years of the date of initial issuance of   
the securities, plus permissible extensions. If the aggregate outstanding       
balance of a qualified substitute Mortgage Asset is less than the outstanding   
principal balance of the defective Mortgage Asset plus accrued and unpaid       
interest thereon, the warranting party will also remit for distribution to the  
holders of securities an amount equal to the shortfall. This repurchase or      
substitution obligation will constitute the sole remedy available to holders of 
securities or the trustee for a breach of representation by a warranting party. 

       Neither the depositor nor the servicer (except to the extent that it is
the warranting party) will be obligated to purchase or substitute for a Mortgage
Asset if a warranting party defaults on its obligation to do so, and no         
assurance can be given that warranting parties will carry out such obligations  
with respect to a Mortgage Asset.                                               

     A servicer will make certain representations and warranties regarding
its authority to enter into, and its ability to perform its obligations under,  
the related agreement. Upon a breach of any representation of the servicer which
materially and adversely affects the interests of the securityholders, the      
servicer will be obligated to cure the breach in all material respects.         

PAYMENTS ON MORTGAGE ASSETS; DEPOSITS TO PRINCIPAL AND INTEREST ACCOUNT         

   The servicer will, as to each trust fund, establish and maintain or
cause to be established and maintained a principal and interest account for the 
collection of payments on the related Mortgage Assets. Each principal and       
interest account must be an eligible account which means it must be either (1)  
an account or accounts maintained with an institution whose deposits are insured
by the FDIC, the unsecured and uncollateralized debt obligations of which shall 
be rated "A" or better by Standard and Poor's, a Division of the McGraw-Hill    
Companies, Inc., and A2 or better by Moody's Investors Service, Inc. and in one 
of the two highest short-term rating categories by S&P and in the highest       
short-term rating category by Moody's and which is either:                      

  o   a federal savings and loan association duly organized, validly
     existing and in good standing under the federal banking laws,

        o   an institution duly organized, validly existing and in good standing
under the applicable banking laws of any state,         

       o   a national banking association duly organized, validly existing and
in good standing under the federal banking laws,        

o   a principal subsidiary of a bank holding company, or        

    o   if required by the related agreement, approved in writing by the
provider of credit support                              

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       or (2) a trust account or accounts maintained with the trust department
of a federal or state chartered depository institution or trust company, having 
capital and surplus of not less than $50,000,000, acting in its fiduciary       
capacity. Amounts on deposit in the principal and interest account may be       
invested in certain high quality permitted instruments. Unless otherwise        
provided in the related prospectus supplement, any interest or other income     
earned on funds in the principal and interest account will be paid to the       
servicer or its designee as additional servicing compensation and the servicer  
shall be responsible for any net losses thereon. The principal and interest     
account may be maintained with an institution that is an affiliate of the       
servicer, provided that such institution meets the standards set forth above. If
permitted by each rating agency and so specified in the related prospectus      
supplement, a principal and interest account may contain funds relating to more 
than one series of securities and may contain other funds respecting payments on
mortgage loans belonging to the servicer or serviced or master serviced by it on
behalf of others.                                                               

       The servicer will deposit or cause to be deposited in the principal and
interest account for each trust fund within one business day of receipt of good 
funds, unless otherwise provided in the agreement and described in the related  
prospectus supplement, the following payments and collections received by the   
servicer or on its behalf subsequent to the cut-off date:                       

           (1) all payments on account of principal, including
    principal prepayments and other excess payments of principal, on the
Mortgage Assets, net of the Depositor's Yield, if any;          

               (2) all payments on account of interest on the Mortgage
    Assets, net of amounts received after the cut-off date in respect of
        interest accrued on the Mortgage Assets on or prior to the cut-off date;

                (3) all proceeds of the hazard insurance policies, other
       than amounts to be applied to the restoration or repair of the property
    or released to the mortgagor in accordance with the normal servicing
      procedures of the servicer or the related sub-servicer, subject to the
terms and conditions of the related Mortgage and mortgage note, 

(4) all proceeds from any FHA insurance,

                  (5) any proceeds received in connection with the taking of
       an entire mortgaged property by exercise of the power of eminent domain
       or condemnation or any release of a part of the mortgaged property from
       the lien of the related Mortgage, whether by partial condemnation, sale
or otherwise, and                                               

                    (6) all amounts received and retained in connection with the
     liquidation of defaulted Mortgage Assets, by foreclosure or otherwise
        net of fees and advances reimbursable therefrom plus the net proceeds on
     a monthly basis with respect to any mortgaged properties acquired for
   the benefit of securityholders by foreclosure or by deed-in-lieu of
foreclosure or otherwise;                                       

             (7) all proceeds of any Mortgage Asset or property in
    respect thereof purchased by the warranting party as described under
"Description of the Pooling and                                 

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     Servicing Agreements-- Assignment of Mortgage Loans; Repurchases" and
  "--Representations and Warranties; Repurchases" in respect of that
Mortgage Asset;                                                 

                  (8) all payments required to be deposited in the principal
 and interest account with respect to any deductible clause in any
       blanket insurance policy described under "--Hazard Insurance Policies";
and                                                             

                  (9) any amount required to be deposited by the servicer in
       connection with net losses realized on investments of funds held in the
principal and interest account in permitted instruments.        

    Unless otherwise specified in the related prospectus supplement, the
foregoing requirements for deposit in the principal and interest account may be 
net of any portion thereof retained by the servicer as its servicing            
compensation which need not, to the extent permitted by the related servicing   
agreement, be deposited in the principal and interest account. See "Description 
of the Pooling and Servicing Agreements--Servicing and Other Compensation and   
Payment of Expenses".                                                           

DEPOSITS TO CERTIFICATE ACCOUNT                                                 

        The trustee will, as to each trust fund, establish and maintain or cause
to be established and maintained a certificate account which must be an eligible
account.                                                                        

    The trustee will deposit or cause to be deposited in the certificate
account for each trust fund, unless otherwise provided in the servicing         
agreement and described in the related prospectus supplement, the following     
amounts received subsequent to the cut-off date:                                

                  (1) all amounts transferred to the trustee by the servicer
from the principal and interest account;                        

                   (2) any monthly advances and compensating interest remitted
     to the trustee by the servicer as described under "Description of the
        Certificates--Monthly Advances in respect of Delinquencies--Compensating
Interest";                                                      

                   (3) any amounts paid under any instrument or drawn from any
fund that constitutes credit support for the related series of  
securities as described under "Description of Credit Support";  

                   (4) all income or gain from investments of funds on deposit
     in the certificate account and any amount required to be deposited by
     the servicer in connection with net losses realized on investments of
funds in the certificate account; and                           

                    (5) the purchase price received for the Mortgage Assets upon
termination of the trust fund.                                  

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PRE-FUNDING ACCOUNT                                                             

 If so provided in the related prospectus supplement, the original
principal amount of a series of securities may exceed the principal balance of  
the Mortgage Assets initially being delivered to the trustee. Cash in an amount 
equal to such difference will be deposited into a separate trust account        
maintained with the trustee. During the period set forth in the related         
prospectus supplement, amounts on deposit in the pre-funding account may be used
to purchase additional Mortgage Assets for the related trust fund. Such         
additional Mortgage Assets will be required to conform to the requirements set  
forth in the related prospectus supplement and pooling and servicing agreement  
or indenture. Any amounts remaining in the pre-funding account at the end of    
such period will be distributed as a principal prepayment to the holders of the 
related series of securities at the time and in the manner set forth in the     
related prospectus supplement.                                                  

COLLECTION AND OTHER SERVICING PROCEDURES                                       

     The servicer, directly or through sub-servicers, will make reasonable
efforts to collect all scheduled payments under the Mortgage Assets and will    
follow or cause to be followed the collection procedures as it would follow with
respect to Mortgage Assets that are comparable to the Mortgage Assets and held  
for its own account, provided these procedures are consistent with the related  
servicing agreement and any related insurance policy, bankruptcy bond, letter of
credit or other insurance instrument described under "Description of Primary    
Insurance Policies" or "Description of Credit Support".                         

     The servicer will be required to perform the customary functions of a
servicer of comparable loans, including the following:                          

o   collecting payments from mortgagors,                        

        o   maintaining hazard insurance policies as described herein and in any
    related prospectus supplement and filing and settling claims
thereunder,                                             

        o   maintaining escrow or impoundment accounts of mortgagors for payment
      of taxes, insurance and other items required to be paid by any
mortgagor pursuant to the terms of the Mortgage Asset,  

       o   processing assumptions or substitutions, although, unless otherwise
       specified in the related prospectus supplement, the servicer is
        generally required to exercise due-on-sale clauses to the extent
        such exercise is permitted by law and would not adversely affect
insurance coverage,                                     

o   attempting to cure delinquencies,                           

o   supervising foreclosures, and                               

   o   maintaining accounting records relating to the Mortgage Assets.

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       The servicer will be required to make reasonable efforts to collect all
payments called for under the terms and provisions of the Mortgage Assets.      
Consistent with the foregoing, the servicer may at its own discretion waive any 
late payment charge, prepayment charge, assumption fee or any penalty interest  
in connection with the prepayment of a Mortgage Asset or any other fee or charge
which the servicer would be entitled to retain as servicing compensation and may
waive, vary or modify any term of any Mortgage Asset or consent to the          
postponement of strict compliance with any such term or in any manner grant     
indulgence to any mortgagor, subject to the limitations set forth in the related
servicing agreement. In the event the servicer consents to the deferment of the 
due dates for payments due on a mortgage note, the servicer will nonetheless    
make payment of any required monthly advances with respect to the payments so   
extended to the same extent as if such installment were due, owing and          
delinquent and had not been deferred.                                           

       Under a servicing agreement, a servicer will be granted some discretion
to extend relief to mortgagors whose payments become delinquent. A servicer may,
among other things, grant a period of temporary indulgence (generally up to four
months) to a mortgagor or may enter into a plan providing for repayment by such 
mortgagor of delinquent amounts within a specified period (generally up to one  
year) from the date of execution of the plan. However, unless otherwise         
specified in the related prospectus supplement, the servicer must first         
determine that any waiver or extension will not impair the coverage of any      
related insurance policy or materially adversely affect the security for the    
mortgage loan or contract. In addition, unless otherwise specified in the       
related prospectus supplement, if a material default occurs or a payment default
is reasonably foreseeable, the servicer will be permitted, subject to any       
specific limitations set forth in the related servicing agreement and described 
in the related prospectus supplement, to modify, waive or amend any term of the 
mortgage loan, including deferring payments, extending the stated maturity date 
or otherwise adjusting the payment schedule, provided that such modification,   
waiver or amendment (1) is reasonably likely to produce a greater recovery with 
respect to such Mortgage Asset on a present value basis than would liquidation  
and (2) will not adversely affect the coverage under any applicable credit      
enhancement.                                                                    

   In the case of multifamily loans or commercial loans, a mortgagor's
failure to make scheduled payments may mean that operating income is            
insufficient to service the mortgage debt, or may reflect the diversion of that 
income from the servicing of the mortgage debt. In addition, a mortgagor under a
multifamily loan or a commercial loan that is unable to make scheduled payments 
may also be unable to make timely payment of all required taxes and otherwise to
maintain and insure the related mortgaged property. In general, the servicer    
will be required to monitor any multifamily loan or commercial loan that is in  
default, evaluate whether the causes of the default can be corrected over a     
reasonable period without significant impairment of the value of the related    
mortgaged property, initiate corrective action in cooperation with the mortgagor
if cure is likely, inspect the related mortgaged property and take such other   
actions as are consistent with the related servicing agreement. A significant   
period of time may elapse before the servicer is able to assess the success of  
any such corrective action or the need for additional initiatives. The time     
within which the servicer can make the initial determination of appropriate     
action, evaluate the success of corrective action, develop additional           
initiatives, institute foreclosure proceedings and actually foreclose (or accept
a deed to a mortgaged property in lieu of foreclosure) on behalf of the         
securityholders of the related series may vary considerably depending on the    
particular multifamily loan or commercial loan, the mortgaged property, the     
mortgagor, the presence of an acceptable party                                  

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to assume the multifamily loan or commercial loan and the laws of the           
jurisdiction in which the mortgaged property is located.                        

   If a mortgagor files a bankruptcy petition, the servicer may not be
permitted to accelerate the maturity of the related Mortgage Asset or to        
foreclose on the mortgaged property for a considerable period of time. See      
"Legal Aspects of Mortgage Assets."                                             

SERVICING ADVANCES                                                              

   In the course of performing its servicing obligations, the servicer
will, unless otherwise specified in the related prospectus supplement, pay all  
reasonable and customary "out of pocket" costs and expenses incurred in the     
performance of its servicing obligations in accordance with the general         
servicing standards described above, which costs and expenses may include the   
cost of the following:                                                          

o   the preservation, restoration and protection of mortgaged   
          properties, including advances in respect of real estate taxes and
         assessments and insurance premiums on fire, hazard, flood and FHA
insurance policies,                                     

    o   any enforcement or judicial proceedings, including foreclosures,

    o   the management and liquidation of mortgaged property acquired in
satisfaction of the related Mortgage Asset and          

        o   in connection with the liquidation of a Mortgage Asset, expenditures
  relating to the purchase or maintenance of the first lien.

Each of these types of expenditures will constitute a "servicing
advance".                                                                       

    Unless otherwise specified in the related prospectus supplement, the
servicer may recover servicing advances, if not theretofore recovered from the  
mortgagor on whose behalf the servicing advance was made, from late collections 
on the related Mortgage Asset, including Liquidation Proceeds, Released         
Mortgaged Property Proceeds, Insurance Proceeds and such other amounts as may be
collected by the servicer from the mortgagor or otherwise relating to the       
Mortgage Asset. To the extent the servicer, in its good faith business judgment,
determines that such servicing advances will not be ultimately recoverable from 
late collections, Insurance Proceeds, Released Mortgaged Property Proceeds or   
Liquidation Proceeds on the related Mortgage Assets, unless otherwise provided  
in the related prospectus supplement, the servicer may be reimbursed from       
distributions of the amount available after distributions to the                
securityholders. The servicer is not required to make any servicing advance     
which it determines would be a nonrecoverable servicing advance.                

SUB-SERVICERS                                                                   

   A servicer may delegate its servicing obligations in respect of the
Mortgage Assets to third-party servicers, but the servicer will remain obligated
under the related servicing agreement. The sub-servicing agreement between a    
servicer and a sub-servicer will be consistent with the terms of the related    
servicing agreement and will not result in a withdrawal or downgrading of the   
rating of                                                                       

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any class of securities issued pursuant to the servicing agreement or indenture.
Although each sub-servicing agreement will be a contract solely between the     
servicer and the sub-servicer, the servicing agreement will provide that, if for
any reason the servicer for such series of securities is no longer acting in    
such capacity, the trustee or any successor servicer must recognize the         
sub-servicer's rights and obligations under the sub-servicing agreement.        

 The servicer will be solely liable for all fees owed by it to any
sub-servicer, whether or not the servicer's compensation pursuant to the related
servicing agreement is sufficient to pay such fees. Each sub-servicer will be   
reimbursed by the servicer for certain expenditures which it makes, generally to
the same extent the servicer would be reimbursed under a servicing agreement.   
See "--Servicing and Other Compensation and Payment of Expenses".               

REALIZATION UPON DEFAULTED MORTGAGE LOANS AND CONTRACTS                         

       The servicer will be required to foreclose upon or otherwise take title
in the name of the trustee on behalf of the securityholders of mortgaged        
properties relating to defaulted Mortgage Assets as to which no satisfactory    
arrangements can be made for collection of delinquent payments, but the servicer
will not be required to foreclose if it determines that foreclosure would not be
in the best interests of the securityholders or the provider of credit support, 
if any.                                                                         

        In connection with a foreclosure or other conversion, the servicer shall
perform collection and foreclosure procedures with the same degree of care and  
skill as it would use under the circumstances in the conduct of its own affairs.

Realization on defaulted contracts may be accomplished through  
repossession and subsequent resale of the underlying manufactured home or home  
improvement. With respect to a defaulted home improvement contract, the servicer
will decide whether to foreclose upon the mortgaged property or write off the   
principal balance of such home improvement contract as a bad debt or take an    
unsecured note. In doing so, the servicer will estimate the expected proceeds   
and expenses to determine whether a foreclosure proceeding or a repossession and
resale is appropriate. If a home improvement contract secured by a lien on a    
mortgaged property is junior to another lien on the related mortgaged property, 
following any default thereon, unless foreclosure proceeds for such home        
improvement contract are expected to at least satisfy the related senior        
mortgage loan in full and to pay foreclosure costs, it is likely that such home 
improvement contract will be written off as bad debt with no foreclosure        
proceeding.                                                                     

    The limitations imposed by the pooling and servicing agreement for a
series of certificates and the REMIC provisions of the Code (if a REMIC election
has been made with respect to the related trust fund) on the operations and     
ownership of any mortgaged property acquired on behalf of the trust fund may    
result in the recovery of an amount less than the amount that would otherwise be
recovered. See "Legal Aspects of Mortgage Assets--Foreclosure".                 

The servicer will be entitled to withdraw from the principal and
interest account out of the Liquidation Proceeds recovered on any defaulted     
Mortgage Asset, prior to the distribution of such Liquidation Proceeds to       
securityholders, amounts representing its normal servicing compensation on the  
Mortgage Asset and unreimbursed servicing advances incurred with respect to the 
Mortgage Asset. If the proceeds of any liquidation of the property securing the 
defaulted Mortgage Loan are                                                     

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less than the outstanding principal balance of the defaulted Mortgage Asset plus
interest accrued thereon at the interest rate plus the aggregate amount of those
amounts reimbursable to the servicer, the trust fund will realize a loss in the 
amount of such difference.                                                      

HAZARD INSURANCE POLICIES                                                       

  Unless otherwise stated in the related prospectus supplement, each
servicing agreement will require the servicer to maintain or cause to be        
maintained fire and hazard insurance with extended coverage customary in the    
area where the mortgaged property is located in an amount which is at least     
equal to the least of (1) the outstanding principal balance owing on the related
Mortgage Asset and any first lien, (2) the full insurable value of the premises 
securing the Mortgage Asset and (3) the minimum amount required to compensate   
for damage or loss on a replacement cost basis. Generally, if at the origination
of the Mortgage Asset or at any time during the term of the Mortgage Asset, the 
servicer determines that the mortgaged property is in an area identified in the 
Federal Register by the Federal Emergency Management Agency as having special   
flood hazards (and such flood insurance has been made available) and the        
servicer determines that such insurance is necessary in accordance with accepted
mortgage servicing practices of prudent lending institutions, the servicer will 
cause to be purchased a flood insurance policy meeting the requirements of the  
current guidelines of the Federal Insurance Administration with a generally     
acceptable insurance carrier, in an amount representing coverage not less than  
the lesser of (1) the outstanding principal balance of the Mortgage Asset and   
any first lien and (2) the maximum amount of insurance available under the      
National Flood Insurance Act of 1968, the Flood Disaster Protection Act of 1973 
or the National Flood Insurance Act of 1994, as amended. The servicer will also 
be required to maintain on REO Property, to the extent such insurance is        
available, fire and hazard insurance in the applicable amounts described above, 
liability insurance and, to the extent required and available under the National
Flood Insurance Act of 1994, as amended, and the servicer determines that such  
insurance is necessary in accordance with accepted mortgage servicing practices 
of prudent lending institutions, flood insurance in an amount equal to that     
required above. Any amounts collected by the servicer under any such policies   
(other than amounts to be applied to the restoration or repair of the mortgaged 
property, or to be released to the mortgagor in accordance with customary       
mortgage servicing procedures) will be deposited in the principal and interest  
account.                                                                        

       If the servicer obtains and maintains a blanket policy insuring against
fire and hazards of extended coverage on all of the Mortgage Assets that names  
the servicer as loss payee and provides coverage in an amount equal to the      
aggregate unpaid principal balance on the Mortgage Assets without co-insurance, 
and otherwise complies with the preceding paragraph, the servicer will be deemed
to have satisfied its obligations with respect to fire and hazard insurance     
coverage.                                                                       

    Since the amount of hazard insurance that mortgagors are required to
maintain on the improvements securing the home improvement contracts may decline
as the principal balances owing thereon decrease, and since residential         
properties have historically appreciated in value over time, hazard insurance   
proceeds could be insufficient to restore fully the damaged property in the     
event of a partial loss.                                                        

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DUE-ON-SALE PROVISIONS                                                          

    When a mortgaged property has been or is about to be conveyed by the
mortgagor, the servicer, on behalf of the trustee, will be required under the   
related servicing agreement, to the extent it has knowledge of such conveyance  
or prospective conveyance, to enforce the rights of the trustee as the mortgagee
of record to accelerate the maturity of the related Mortgage Asset under any    
"due-on-sale" clause contained in the related Mortgage or mortgage note, unless 
the servicer reasonably believes that the "due-on-sale" clause is not           
enforceable under applicable law or if the mortgage loan is an ARM Loan that by 
its terms is assumable. In this event, the servicer will be required to enter   
into an assumption and modification agreement with the person to whom such      
property has been or is about to be conveyed, pursuant to which such person     
becomes liable under the mortgage note and, unless prohibited by applicable law 
or the mortgage documents, the mortgagor remains liable thereon. The proposed   
transferee of the related mortgaged property must establish to the servicer its 
ability to repay the loan and that the security for the loan would not be       
impaired by the assumption. If a mortgagor transfers the mortgaged property     
subject to an ARM Loan without consent, that ARM Loan may be declared due and   
payable. Any fee collected by or on behalf of the servicer for entering into an 
assumption agreement will be retained by or on behalf of the servicer as        
additional servicing compensation. In connection with any assumption, the terms 
of the related mortgage loan may not be changed. The servicer may also be       
authorized under the related servicing agreement, subject to certain approvals, 
to enter into a substitution of liability agreement with such person, pursuant  
to which the original mortgagor is released from liability and such person is   
substituted as mortgagor and becomes liable under the mortgage note.            

SERVICING AND OTHER COMPENSATION AND PAYMENT OF EXPENSES                        

      The servicer's primary servicing compensation with respect to a series
of securities will come from the periodic payment to it of a portion of the     
interest payment on each Mortgage Asset which amount will be set forth in the   
prospectus supplement with respect to a series of securities. Since the         
servicer's primary compensation is a percentage of the principal balance of each
Mortgage Asset, such amounts will decrease in accordance with the amortization  
schedule of each Mortgage Loan. Unless otherwise provided in the related        
prospectus supplement, the servicer may retain, as additional servicing         
compensation, all assumption fees, modification fees and other administrative   
fees, late payment charges, release fees, bad check charges, any other          
servicing-related fees (other than the Depositor's Yield), net Liquidation      
Proceeds not otherwise required to be deposited into the principal and interest 
account pursuant to the related servicing agreement, interest or other income   
which may be earned on funds held in the principal and interest account,        
certificate account and any other account created under the related servicing   
agreement. The servicing agreement and prospectus supplement with respect to a  
series of securities will set forth any other amounts payable to the servicer.  
Any sub-servicer will receive a portion of the servicer's compensation as its   
sub-servicing compensation.                                                     

   In addition to amounts payable to any sub-servicer, the servicer or
trustee may, to the extent provided in the related prospectus supplement, pay   
certain expenses incurred, including payment of the fees and disbursements of   
the trustee and any credit support provider. The servicing agreement and        
prospectus supplement with respect to a series of securities may provide that   
additional accounts                                                             

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be established by the servicer or the trustee into which the servicer or the    
trustee for the payment of fees.                                                

ANNUAL EVIDENCE AS TO THE COMPLIANCE OF THE MASTER SERVICER                     

     Each servicing agreement with respect to a series of securities, will
provide that on or before a specified date in each year, beginning with the     
first such date at least six months after the related cut-off date, a firm of   
independent public accountants will furnish a statement to the trustee to the   
effect that, on the basis of the examination by the firm conducted substantially
in compliance with either the Uniform Single Attestation Program for Mortgage   
Bankers or the Audit Program for Mortgages serviced for Freddie Mac, the        
servicing by or on behalf of the servicer of mortgage loans under servicing     
agreements substantially similar to each other, including the related pooling   
and servicing agreement or servicing agreement, was conducted in compliance with
the terms of those agreements except for any significant exceptions or errors in
records that, in the opinion of the firm, either the Audit Program for Mortgages
serviced for Freddie Mac, or paragraph 4 of the Uniform Single Attestation      
Program for Mortgage Bankers, requires it to report. In rendering its statement 
the accounting firm may rely, as to matters relating to the direct servicing of 
mortgage loans by sub-servicers, upon comparable statements for examinations    
conducted substantially in compliance with the Uniform Single Attestation       
Program for Mortgage Bankers or the Audit Program for Mortgages serviced for    
Freddie Mac, rendered within one year of the statement, of firms of independent 
public accountants with respect to the related sub-servicer.                    

       Each servicing agreement will also provide for delivery to the trustee,
on or before a specified date in each year, of an annual statement signed by two
officers of the servicer to the effect that the servicer has fulfilled its      
obligations under the related agreement throughout the preceding year.          

Copies of the annual accountants' statement and the statement of
officers of the servicer may be obtained by securityholders without charge upon 
written request to the servicer at the address set forth in the related         
prospectus supplement.                                                          

MATTERS REGARDING THE SERVICER AND THE DEPOSITOR                                

        The servicer under each servicing agreement will be named in the related
prospectus supplement. The entity serving as servicer may be the depositor or an
affiliate of the depositor and may have other normal business relationships with
the depositor or the depositor's affiliates.                                    

      Each servicing agreement will provide that the servicer may not resign
from its obligations and duties under the related agreement except by mutual    
consent of the servicer, the depositor, any credit support provider, the trustee
and the majority securityholders and only if its resignation, and the           
appointment of a successor, will not result in a downgrading of any class of    
securities, or upon a determination that its duties under the related agreement 
are no longer permissible under applicable law. No resignation will become      
effective until the trustee or a successor servicer has assumed the servicer's  
obligations and duties under the related agreement.                             

        Each servicing agreement will further provide that neither the servicer,
the depositor nor any director, officer, employee, or agent of the servicer or  
the depositor will be under any liability to the                                

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related trust fund or securityholders for any action taken, or for refraining   
from the taking of any action, in good faith pursuant to the related agreement, 
or for errors in judgment, but that neither the servicer, the depositor nor any 
such person will be protected against any liability which would otherwise be    
imposed by reason of willful misfeasance, bad faith or gross negligence in the  
performance of duties thereunder or by reason of reckless disregard of          
obligations and duties thereunder. Each pooling and servicing agreement and each
servicing agreement will further provide that the servicer, the depositor and   
any director, officer, employee or agent of the servicer or the depositor will  
be entitled to indemnification by the related trust fund and will be held       
harmless against any loss, liability or expense incurred in connection with any 
legal action relating to the related agreement or the securities, other than any
loss, liability or expense that is related to any specific mortgage loan or     
mortgage loans, unless that loss, liability or expense is otherwise reimbursable
pursuant to the related agreement, and other than any loss, liability or expense
incurred by reason of willful misfeasance, bad faith or gross negligence in the 
performance of duties thereunder or by reason of reckless disregard of          
obligations and duties thereunder. In addition, each pooling and servicing      
agreement and each servicing agreement will provide that neither the servicer   
nor the depositor will be under any obligation to appear in, prosecute or defend
any legal action which is not incidental to its respective responsibilities     
under the related agreement and which in its opinion may involve it in any      
expense or liability. The servicer or the depositor may, however, in its        
discretion undertake any such action which it may deem necessary or desirable   
with respect to the related agreement and the rights and duties of the parties  
thereto and the interests of the securityholders thereunder. In that event, the 
legal expenses and costs of the action and any liability resulting therefrom    
will be expenses, costs and liabilities of the securityholders, and the servicer
or the depositor, as the case may be, will be entitled to be reimbursed therefor
and to charge the trust fund. Distributions to securityholders will be reduced  
to pay for the reimbursement as set forth in the related prospectus supplement  
and servicing agreement.                                                        

        Any person into which the servicer may be merged or consolidated, or any
person resulting from any merger or consolidation to which the servicer is a    
party, or any person succeeding to the business of the servicer, will be the    
successor of the servicer under each agreement, provided that such person is    
qualified to sell mortgage loans to, and service mortgage loans on behalf of,   
Fannie Mae or Freddie Mac.                                                      

EVENTS OF DEFAULT UNDER THE GOVERNING AGREEMENT AND                             
RIGHTS UPON EVENTS OF DEFAULT                                                   

POOLING AND SERVICING AGREEMENT FOR CERTIFICATES                

    Unless otherwise provided in the related prospectus supplement for a
series of certificates, events of default under each pooling and servicing      
agreement will consist of:                                                      

        o   any failure by the servicer to distribute or cause to be distributed
          to securityholders, or to remit to the trustee for distribution to
           securityholders, any required payment that continues unremedied for
          one business day after the giving of written notice of the failure
            to the servicer by the trustee or the depositor, or to the servicer,
the depositor and the trustee by any certificateholder; 

       o   any failure by the servicer to make any required servicing advance,
       to the extent such failure materially and adversely affects the
interests of certificateholders, or any                 

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         required monthly advance to the extent of the full amount in each
         case which continues unremedied after the date upon which written
        notice of such failure, requiring the same to be remedied, shall
           have been given to the servicer by the trustee or the depositor, or
to the servicer, the depositor and the trustee by any   
certificateholder;                                      

 o   any failure by the servicer duly to observe or perform in any
            material respect any of its other covenants or obligations under the
      agreement which continues unremedied for sixty days, after the
      giving of written notice of the failure to the servicer by the
      trustee, the provider of credit support, if applicable, or the
           depositor, or to the servicer, the depositor and the trustee by any
certificateholder; and                                  

     o   events of insolvency, readjustment of debt, marshalling of assets
          and liabilities or similar proceedings and actions by or on behalf
         of the servicer indicating its insolvency or inability to pay its
obligations.                                            

      Unless otherwise provided in the prospectus supplement for a series of
certificates, so long as an event of default under a pooling and servicing      
agreement remains unremedied, the depositor or the trustee may, and at the      
direction of holders of certificates evidencing not less than 51% of the voting 
rights, the trustee shall, terminate all of the rights and obligations of the   
servicer under the pooling and servicing agreement relating to the trust fund   
and in and to the Mortgage Assets, whereupon the trustee will succeed to all of 
the responsibilities, duties and liabilities of the servicer under the agreement
and will be entitled to similar compensation arrangements. If the trustee is    
prohibited by law from obligating itself to make advances regarding delinquent  
Mortgage Assets, then the trustee will not be so obligated. If the trustee is   
unwilling or unable so to act, it may or, at the written request of the holders 
of certificates entitled to at least 51% of the voting rights, it shall appoint,
or petition a court of competent jurisdiction for the appointment of, a loan    
servicing institution acceptable to the rating agency with a net worth at the   
time of the appointment of at least $15,000,000 to act as successor to the      
servicer under the agreement. Pending the appointment of a successor, the       
trustee is obligated to act in the capacity of servicer. The trustee and any    
successor servicer may agree upon the servicing compensation to be paid, which  
in no event may be greater than the compensation payable to the servicer under  
the related agreement.                                                          

   The trustee is under no obligation to exercise any of the trusts or
powers vested in it by any pooling and servicing agreement or to make any       
investigation of matters arising thereunder or to institute, conduct or defend  
any litigation thereunder or in relation thereto at the request, order or       
direction of any of the holders of certificates covered by the agreement, unless
the certificateholders have offered to the trustee reasonable security or       
indemnity against the costs, expenses and liabilities which may be incurred.    

SERVICING AGREEMENT FOR NOTES                                   

    Unless otherwise provided in the related prospectus supplement for a
series of notes, a "servicing default" under the related servicing agreement    
generally will include:                                                         

 o   any failure by the servicer to make a required deposit to the
   distribution account or, if the servicer is so required, to
 distribute to the holders of any class of notes or equity

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       certificates of the series any required payment which continues
            unremedied for five business days (or other period of time described
         in the related prospectus supplement) after the giving of written
           notice of the failure to the servicer by the trustee or the issuer;

 o   any failure by the servicer duly to observe or perform in any
        material respect any other of its covenants or agreements in the
     servicing agreement with respect to the series of notes which
           continues unremedied for 60 days after the giving of written notice
    of the failure to the servicer by the trustee or the issuer;

     o   events of insolvency, readjustment of debt, marshalling of assets
         and liabilities or similar proceedings regarding the servicer and
         actions by the servicer indicating its insolvency or inability to
pay its obligations and                                 

        o   any other servicing default as set forth in the servicing agreement.

       So long as a servicing default remains unremedied, either the depositor
or the trustee may, by written notification to the servicer and to the issuer or
the trustee, as applicable, terminate all of the rights and obligations of the  
servicer under the servicing agreement, other than any right of the servicer as 
noteholder or as holder of the equity certificates and other than the right to  
receive servicing compensation and expenses for servicing the Mortgage Assets   
during any period prior to the date of the termination. Upon termination of the 
servicer, the trustee will succeed to all responsibilities, duties and          
liabilities of the servicer under the servicing agreement, other than the       
obligation to repurchase Mortgage Assets, and will be entitled to similar       
compensation arrangements. In the event that the trustee would be obligated to  
succeed the servicer but is unwilling so to act, it may appoint, or if it is    
unable so to act, it shall appoint, or petition a court of competent            
jurisdiction for the appointment of an approved mortgage servicing institution  
with a net worth of at least $1,000,000 to act as successor to the servicer     
under the servicing agreement. Pending the appointment of a successor, the      
trustee is obligated to act in the capacity of servicer. The trustee and the    
successor may agree upon the servicing compensation to be paid, which in no     
event may be greater than the compensation to the initial servicer under the    
servicing agreement.                                                            

INDENTURE                                                       

An event of default under the indenture generally will include: 

      o   a default for five days or more in the payment of any principal of
or interest on any note of the series;                  

        o   failure to perform any other covenant of the depositor or the issuer
      in the indenture which continues for a period of 60 days after
    notice of failure is given in accordance with the procedures
described in the related prospectus supplement;         

      o   any representation or warranty made by the depositor or the issuer
       in the indenture or in any related certificate or other writing
            having been incorrect in a material respect as of the time made, and
the breach is not cured within 30 days after notice of  

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          breach is given in accordance with the procedures described in the
related prospectus supplement;                          

        o   events of bankruptcy, insolvency, receivership or liquidation of the
depositor or the issuer; or                             

     o   any other event of default provided with respect to notes of that
series.                                                 

     If an event of default with respect to the notes of any series occurs
and is continuing, the trustee or the holders of a majority of the then         
aggregate outstanding amount of the notes of the series may declare the         
principal amount, or, if the notes of that series are Accrual Securities, the   
portion of the principal amount as may be specified in the terms of that series,
as provided in the related prospectus supplement, of all the notes of the series
to be due and payable immediately. Such declaration may, under some             
circumstances, be rescinded and annulled by the holders of a majority in        
aggregate outstanding amount of the related notes.                              

     If following an event of default with respect to any series of notes,
the notes of the series have been declared to be due and payable, the trustee   
may, in its discretion, notwithstanding the acceleration, elect to maintain     
possession of the collateral securing the notes of the series and to continue to
apply payments on the collateral as if there had been no declaration of         
acceleration if the collateral continues to provide sufficient funds for the    
payment of principal of and interest on the notes of the series as they would   
have become due if there had not been a declaration. In addition, the trustee   
may not sell or otherwise liquidate the collateral securing the notes of a      
series following an event of default, unless                                    

       o   the holders of 100% of the then aggregate outstanding amount of the
notes of the series consent to the sale,                

    o   the proceeds of the sale or liquidation are sufficient to pay in
          full the principal of and accrued interest, due and unpaid, on the
   outstanding notes of the series at the date of the sale, or

      o   the trustee determines that the collateral would not be sufficient
    on an ongoing basis to make all payments on the notes as the
         payments would have become due if the notes had not been declared
           due and payable, and the trustee obtains the consent of the holders
           of 66 2/3% of the then aggregate outstanding amount of the notes of
the series.                                             

       If the trustee liquidates the collateral in connection with an event of
default, the indenture may provide that the trustee will have a prior lien on   
the proceeds of any liquidation for unpaid fees and expenses. As a result, upon 
the occurrence of an event of default, the amount available for payments to the 
noteholders would be less than would otherwise be the case. However, the trustee
may not institute a proceeding for the enforcement of its lien except in        
connection with a proceeding for the enforcement of the lien of the indenture   
for the benefit of the noteholders after the occurrence of an event of default. 

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      If the principal of the notes of a series is declared due and payable,
as described above, the holders of any such notes issued at a discount from par 
may be entitled to receive no more than an amount equal to the unpaid principal 
amount thereof less the amount of the discount that is unamortized.             

        No noteholder or holder of an equity certificate generally will have any
right under an owner trust agreement or indenture to institute any proceeding   
with respect to the agreement unless:                                           

    o   the holder previously has given to the trustee written notice of
default and the default is continuing,                  

       o   the holders of notes or equity certificates of any class evidencing
            not less than 25% of the aggregate percentage interests constituting
   the class (1) have made written request upon the trustee to
            institute a proceeding in its own name as trustee thereunder and (2)
have offered to the trustee reasonable indemnity,       

      o   the trustee has neglected or refused to institute a proceeding for
60 days after receipt of the request and indemnity, and 

        o   no direction inconsistent with the written request has been given to
            the trustee during the 60 day period by the holders of a majority of
          the note balances of the class. However, the trustee will be under
          no obligation to exercise any of the trusts or powers vested in it
          by the applicable agreement or to institute, conduct or defend any
          litigation at the request of any of the holders of notes or equity
       certificates covered by the agreement, unless such holders have
           offered to the trustee reasonable security or indemnity against the
costs, expenses and liabilities which may be incurred.  

AMENDMENT OF THE GOVERNING AGREEMENTS                                           

     With respect to each series of certificates, each related pooling and
servicing agreement or trust agreement may be amended by the depositor, the     
servicer, if any, and the trustee, by written agreement, upon written consent of
any credit support provider, without notice to or the consent of any of the     
holders of certificates covered by the agreement, to cure any ambiguity, to     
correct, modify or supplement any provision in the agreement which may be       
inconsistent with any other provisions of the agreement, to comply with any     
changes in the Code, or to make any other provisions with respect to matters or 
questions arising under the agreement which are not inconsistent with the       
provisions of the agreement, provided that the action will not, as evidenced by 
an opinion of counsel delivered to the trustee,                                 

        o   adversely affect in any material respect the interests of any holder
of certificates covered by the agreement,               

       o   reduce in any manner the amount of or delay the timing of, payments
           received on Mortgage Assets which are required to be distributed on
any certificate without the consent of the holder of the
certificate, or                                         

   o   change the rights or obligations of any other party without the
consent of that party.                                  

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       However, with respect to any series of certificates as to which a REMIC
election is to be made, the trustee will not consent to any amendment of the    
agreement unless it shall first have received an opinion of counsel to the      
effect that the amendment will not cause the trust fund to fail to qualify as a 
REMIC at any time that the related certificates are outstanding.                

      With respect to each series of notes, each related servicing agreement
or indenture may be amended by the parties thereto without the consent of any of
the holders of the notes covered by the agreement, to cure any ambiguity, to    
correct, modify or supplement any provision in the agreement, or to make any    
other provisions with respect to matters or questions arising under the         
agreement which are not inconsistent with the provisions of the agreement,      
provided that such action will not adversely affect in any material respect the 
interests of any holder of notes covered by the agreement. Each agreement may   
also be amended by the parties thereto with the consent of the holders of notes 
evidencing not less than 66% of the voting rights, for any purpose, but that no 
amendment may                                                                   

 o      reduce in any manner the amount of or delay the timing of,
             payments received on trust fund assets which are required to be
               distributed on any note without the consent of the holder of that
note,                                             

    o      adversely affect in any material respect the interests of the
               holders of any class of notes in a manner other than as described
               in the preceding bullet point, without the consent of the holders
        of notes of that class evidencing not less than 66% of the
aggregate voting rights of that class, or         

       o      reduce the percentage of voting rights required by the preceding
            bullet point for the consent to any such amendment without the
               consent of the holders of all notes covered by the agreement then
              outstanding. The voting rights evidenced by any note will be the
             portion of the voting rights of all of the notes in the related
     series allocated in the manner described in the related
prospectus supplement.                            

OPTIONAL PURCHASE BY THE SERVICER OF DEFAULTED MORTGAGE LOANS                   

       The servicer under the related servicing agreement will have the option
to purchase from the trust fund any Mortgage Asset 90 days or more delinquent at
a purchase price generally equal to the outstanding principal balance of the    
delinquent Mortgage Asset as of the date of purchase, plus all accrued and      
unpaid interest on that principal balance.                                      

DUTIES OF THE TRUSTEE                                                           

The trustee will make no representations as to the validity or  
sufficiency of any agreement, the securities or any Mortgage Asset or related   
document and is not accountable for the use or application by or on behalf of   
the servicer of any funds paid to the servicer or its designee in respect of the
securities or the Mortgage Assets, or deposited into or withdrawn from the      
principal and interest account or any other account by or on behalf of the      
servicer. If no event of default has occurred and is continuing, the trustee is 
required to perform only those duties specifically required under the related   
agreement. However, upon receipt of the various certificates, reports or other  

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instruments required to be furnished to it, the trustee is required to examine  
the documents and to determine whether they conform to the requirements of the  
related agreement.                                                              

DESCRIPTION OF THE TRUSTEE                                                      

    The trustee or indenture trustee, each referred to as the "trustee",
under each pooling and servicing agreement, trust agreement or indenture will be
named in the related prospectus supplement. The owner trustee for each series of
notes will be named in the related prospectus supplement. The commercial bank,  
national banking association or trust company serving as trustee or owner       
trustee may have normal banking relationships with the depositor and its        
affiliates and with the servicer and its affiliates. The trustee may resign at  
any time in the manner set forth in the related agreement, in which event the   
servicer will be obligated to appoint a successor trustee. The trustee may be   
removed if it ceases to be eligible to continue as such under the related       
agreement or if it becomes insolvent. Any resignation or removal of the trustee 
and appointment of a successor trustee will not become effective until the      
acceptance of appointment by a successor trustee. The trustee may appoint       
separate trustees and co-trustees to the extent provided in the related         
agreement.                                                                      

 DESCRIPTION OF CREDIT SUPPORT

 For any series of securities, credit support may be provided with
respect to one or more classes thereof or the related Mortgage Assets. Credit   
support may be in the form of the subordination of one or more classes to other 
classes in a series of securities, letters of credit, insurance policies, surety
bonds, guarantees, the establishment of one or more reserve funds,              
cross-collateralization, overcollateralization or another method of credit      
support described in the related prospectus supplement, or any combination of   
the foregoing. If so provided in the related prospectus supplement, any form of 
credit support may be structured so as to be drawn upon by more than one series 
of securities.                                                                  

   The credit support provided for a series of securities will in most
cases not provide protection against all risks of loss and will not guarantee   
repayment of the entire principal balance of the securities and interest        
thereon. If losses or shortfalls occur that exceed the amount covered by credit 
support or that are not covered by credit support, securityholders will bear    
their allocable share of deficiencies. Moreover, if a form of credit support    
covers more than one pool of Mortgage Assets in a trust fund or more than one   
series of securities, holders of securities evidencing interests in any of the  
covered pools or covered trusts will be subject to the risk that the credit     
support will be exhausted by the claims of other covered pools or covered trusts
prior to that covered pool or covered trust receiving any of its intended share 
of the coverage.                                                                

    If credit support is provided with respect to one or more classes of
securities of a series, or the related Mortgage Assets, the related prospectus  
supplement will include a description of                                        

o   the nature and amount of coverage under such credit support,

        o   any conditions to payment thereunder not otherwise described in this
prospectus,                                             

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      o   the conditions under which the amount of coverage under the credit
support may be reduced, terminated or replaced, and     

o   the material provisions relating to the credit support.     

      Additionally, the related prospectus supplement will set forth certain
information with respect to the credit support provider, including:             

o   a brief description of its principal business activities,   

   o   its principal place of business, place of incorporation and the
            jurisdiction under which it is chartered or licensed to do business,

    o   if applicable, the identity of regulatory agencies that exercise
  primary jurisdiction over the conduct of its business, and

        o   its total assets and its stockholders' or policyholders' surplus, if
          applicable, as of the date specified in the prospectus supplement.

SUBORDINATE CERTIFICATES                                                        

One or more classes of securities of a series may be subordinate
securities. The rights of the holders of subordinate securities to receive      
distributions of principal and interest from the certificate account on any     
remittance date will be subordinated to the rights of the holders of senior     
securities to the extent specified in the related prospectus supplement. The    
subordination of a class may apply only in the event of, or may be limited to,  
certain types of losses or shortfalls. The related prospectus supplement will   
set forth information concerning the amount of subordination of a class or      
classes of subordinate securities in a series and the circumstances in which    
such subordination will be applied. If one or more classes of subordinate       
securities of a series are offered securities, the related prospectus supplement
will provide information as to the sensitivity of distributions on those        
securities based on certain default assumptions.                                

CROSS-SUPPORT PROVISIONS                                                        

        If so provided in the related prospectus supplement, the Mortgage Assets
for a series of securities may be divided into separate groups, each supporting 
a separate class or classes of securities of a series, and credit support may be
provided by cross-support provisions requiring that distributions be made on    
certain classes of securities evidencing interests in one group of Mortgage     
Assets prior to distributions on other classes of securities evidencing         
interests in a different group of Mortgage Assets. The prospectus supplement for
a series that includes a cross-support provision will describe the manner and   
conditions for applying such provisions.                                        

INSURANCE OR GUARANTEES WITH RESPECT TO THE MORTGAGE ASSETS                     

     The prospectus supplement for a series of securities may provide that
the Mortgage Assets in the related trust fund will be covered for various       
default risks by insurance policies, including FHA insurance or guarantees. A   
copy of any material instrument for a series will be filed with the             

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Commission as an exhibit to a Current Report on Form 8-K to be filed within 15  
days of issuance of the securities of the related series.                       

LETTER OF CREDIT                                                                

   Deficiencies in amounts otherwise payable on one or more classes of
securities in a series of securities may be covered by one or more letters of   
credit, issued by a bank or financial institution specified in the related      
prospectus supplement. Under a letter of credit, the letter of credit bank will 
be obligated to honor draws in respect of such deficiencies in an amount        
specified in the related prospectus supplement upon presentation of documents   
required under the letter of credit. If so specified in the related prospectus  
supplement, the letter of credit may permit draws in the event of only certain  
types of losses. The amount available under the letter of credit will, in all   
cases, be reduced to the extent of the unreimbursed payments thereunder and     
otherwise as described in the related prospectus supplement. The obligations of 
the letter of credit bank under the letter of credit for each series of         
securities will expire at the earlier of the date specified in the related      
prospectus supplement or the termination of the trust fund. A copy of any such  
letter of credit for a series will be filed with the Commission as an exhibit to
a Current Report on Form 8-K to be filed within 15 days of issuance of the      
securities of the related series.                                               

INSURANCE POLICIES AND SURETY BONDS WITH RESPECT TO THE SECURITIES              

   Deficiencies in amounts otherwise payable on one or more classes of
securities of a series will be covered by insurance policies and/or surety bonds
provided by one or more insurance companies or sureties. These instruments may  
cover timely distributions of interest only, timely distributions of interest   
and ultimate distribution of principal or timely distributions of interest and  
distributions of principal on the basis of a schedule of principal distributions
set forth in, or determined in the manner specified in, the related prospectus  
supplement. A copy of any such instrument for a series will be filed with the   
Commission as an exhibit to a Current Report on Form 8-K to be filed with the   
Commission within 15 days of issuance of the securities of the related series.  

RESERVE FUNDS OR SPREAD ACCOUNT                                                 

   Deficiencies in amounts otherwise payable on one or more classes of
securities of a series may be covered by one or more reserve funds in which     
cash, a letter of credit, permitted investments, a demand note or a combination 
thereof will be deposited, in the amounts so specified in the related prospectus
supplement. The reserve funds for a series may also be funded over time by      
depositing therein a specified amount of the distributions received on the      
related Mortgage Assets. A reserve fund for a series of securities which is     
funded over time by depositing therein a portion of the interest payment on each
Mortgage Asset will be referred to as a "spread account" in the related         
prospectus supplement and the pooling and servicing agreement or indenture.     

  Amounts on deposit in any reserve fund for a series of securities,
together with the reinvestment income thereon, if any, will be applied for the  
purposes, in the manner, and to the extent specified in the related prospectus  
supplement. A reserve fund may be provided to increase the likelihood of timely 
distributions of principal of or interest on the securities. If so specified in 
the related prospectus supplement, reserve funds may be established to provide  
limited protection against only certain types of losses and shortfalls.         
Following each remittance date amounts in a                                     

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reserve fund in excess of any amount required to be maintained therein may be   
released from the reserve fund under the conditions and to the extent specified 
in the related prospectus supplement and will not be available for further      
application to the securities.                                                  

   Moneys deposited in any reserve funds will be invested in permitted
instruments, except as otherwise specified in the related prospectus supplement.
Reinvestment income or other gain from these investments may be credited to the 
related reserve fund for the series, and any loss resulting from such           
investments will be charged to the reserve fund. However, this income may be    
payable to the servicer or another service provider as additional compensation. 

       Additional information concerning any reserve fund will be set forth in
the related prospectus supplement, including the following:                     

o   initial balance of the reserve fund,                        

o   the balance required to be maintained in the reserve fund,  

    o   the manner in which the required balance may decrease over time,

o   the manner of funding the reserve fund,                     

      o   the purposes for which funds in the reserve fund may be applied to
make distributions to securityholders,                  

    o   the use of any investment earnings and payment of any investment
losses in respect of the reserve fund, and              

       o   whether or not the reserve fund will be a part of the Trust Fund or
any REMIC.                                              

OVERCOLLATERALIZATION                                                           

       If so provided in the prospectus supplement for a series of securities,
a portion of the interest payment on each Mortgage Asset may be applied as an   
additional distribution in respect of principal to reduce the principal balance 
of one or more classes of securities and, thus, accelerate the rate of payment  
of principal on such class or classes of securities relative to payments of     
principal on the related Mortgage Assets. Any excess of the principal balance of
the Mortgage Assets over the principal balance of the related class of          
securities is referred to as "overcollateralization".                           

 DESCRIPTION OF PRIMARY INSURANCE POLICIES

       Each mortgage loan will be covered by a primary hazard insurance policy
and, if so specified in the prospectus supplement, a primary mortgage insurance 
policy.                                                                         

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PRIMARY MORTGAGE INSURANCE POLICIES                                             

        Although the terms and conditions of primary mortgage insurance policies
differ, each primary mortgage insurance policy will generally cover losses up to
an amount equal to the excess of the unpaid principal amount of a defaulted     
mortgage loan, plus accrued and unpaid interest thereon and some approved       
expenses, over a specified percentage of the value of the related mortgaged     
property.                                                                       

 As conditions to the filing or payment of a claim under a primary
mortgage insurance policy, the insured will typically be required, in the event 
of default by the borrower, to:                                                 

 o   advance or discharge (1) hazard insurance premiums and (2) as
            necessary and approved in advance by the insurer, real estate taxes,
       property protection expenses and foreclosure and related costs,

o   in the event of any physical loss or damage to the mortgaged
      property, have the mortgaged property restored to at least its
         condition at the effective date of the primary mortgage insurance
policy (ordinary wear and tear excepted), and           

        o   tender to the insurer good and merchantable title to, and possession
of, the mortgaged property.                             

PRIMARY HAZARD INSURANCE POLICIES                                               

        Each servicing agreement will require the servicer to cause the borrower
on each mortgage loan to maintain a primary hazard insurance policy providing   
for coverage of the standard form of fire insurance policy with extended        
coverage customary in the state in which the mortgaged property is located. The 
primary hazard coverage will be in general in an amount equal to the lesser of  
the principal balance owing on the mortgage loan and the amount necessary to    
fully compensate for any damage or loss to the improvements on the mortgaged    
property on a replacement cost basis, but in either case not less than the      
amount necessary to avoid the application of any co-insurance clause contained  
in the hazard insurance policy. The ability of the servicer to assure that      
hazard insurance proceeds are appropriately applied may be dependent upon its   
being named as an additional insured under any primary hazard insurance policy  
and under any flood insurance policy referred to in the paragraph below, and    
upon the borrower furnishing information to the servicer in respect of a claim. 
All amounts collected by the servicer under any primary hazard insurance policy,
except for amounts to be applied to the restoration or repair of the mortgaged  
property or released to the borrower in accordance with the servicer's normal   
servicing procedures, and subject to the terms and conditions of the related    
Mortgage and mortgage note, will be deposited in the certificate account. The   
agreement will provide that the servicer may satisfy its obligation to cause    
each borrower to maintain a hazard insurance policy by the servicer's           
maintaining a blanket policy insuring against hazard losses on the mortgage     
loans. If the blanket policy contains a deductible clause, the servicer will    
deposit in the certificate account all sums that would have been deposited in   
the certificate account but for that clause. The servicer also is required to   
maintain a fidelity bond and errors and omissions policy with respect to its    
officers and employees that provides coverage against losses that may be        
sustained as a result of an officer's or employee's misappropriation of funds or
errors and                                                                      

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omissions in failing to maintain insurance, subject to some limitations as to   
amount of coverage, deductible amounts, conditions, exclusions and exceptions.  

  In general, the standard form of fire and extended coverage policy
covers physical damage to or destruction of the improvements of the property by 
fire, lightning, explosion, smoke, windstorm and hail, and riot, strike and     
civil commotion, subject to the conditions and exclusions specified in each     
policy. Although the policies relating to the mortgage loans will be            
underwritten by different insurers under different state laws in accordance with
different applicable state forms, and therefore will not contain identical terms
and conditions, the basic terms thereof are dictated by respective state laws,  
and most hazard insurance policies typically do not cover any physical damage   
resulting from the following: war, revolution, governmental actions, floods and 
other water-related causes, earth movement, including earthquakes, landslides   
and mudflows, nuclear reactions, wet or dry rot, vermin, rodents, insects or    
domestic animals, theft and, in some cases, vandalism. This list is merely      
indicative of some kinds of uninsured risks and is not intended to be           
all-inclusive. When a mortgaged property is located at origination in a         
federally designated flood area and flood insurance is available, each agreement
will require the servicer to cause the borrower to acquire and maintain flood   
insurance in an amount equal in general to the lesser of (1) the amount         
necessary to fully compensate for any damage or loss to the improvements which  
are part of the mortgaged property on a replacement cost basis and (2) the      
maximum amount of insurance available under the federal flood insurance program,
whether or not the area is participating in the program.                        

The hazard insurance policies covering the mortgaged properties 
typically contain a co-insurance clause that in effect requires the insured at  
all times to carry insurance of a specified percentage, generally 80% to 90%, of
the full replacement value of the improvements on the property in order to      
recover the full amount of any partial loss. If the insured's coverage falls    
below this specified percentage, the co-insurance clause generally provides that
the insurer's liability in the event of partial loss does not exceed the lesser 
of (1) the replacement cost of the improvements less physical depreciation and  
(2) the proportion of the loss as the amount of insurance carried bears to the  
specified percentage of the full replacement cost of the improvements.          

        The servicer will not require that a hazard or flood insurance policy be
maintained for any cooperative loan. Generally, the cooperative is responsible  
for maintenance of hazard insurance for the property owned by the cooperative,  
and the tenant-stockholders of that cooperative do not maintain individual      
hazard insurance policies. However, if a cooperative and the related borrower on
a cooperative note do not maintain hazard insurance or do not maintain adequate 
coverage or any insurance proceeds are not applied to the restoration of the    
damaged property, damage to the related borrower's cooperative apartment or the 
cooperative's building could significantly reduce the value of the collateral   
securing the cooperative note.                                                  

  Since the amount of hazard insurance the servicer will cause to be
maintained on the improvements securing the mortgage loans declines as the      
principal balances owing thereon decrease, and since residential properties have
historically appreciated in value over time, hazard insurance proceeds collected
in connection with a partial loss may be insufficient to restore fully the      
damaged property. The terms of the mortgage loans provide that borrowers are    
required to present claims to insurers under hazard insurance policies          
maintained on the mortgaged properties. The servicer, on behalf of the trustee  
and securityholders, is obligated to present or cause to be presented claims    
under any blanket insurance policy insuring against hazard losses on mortgaged  
properties.                                                                     

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However, the ability of the servicer to present or cause to be presented such   
claims is dependent upon the extent to which information in this regard is      
furnished to the servicer by borrowers.                                         

FHA INSURANCE                                                                   

   The Federal Housing Administration is responsible for administering
various federal programs, including mortgage insurance, authorized under The    
Housing Act and the United States Housing Act of 1937, as amended. If so        
provided in the related prospectus supplement, some of the mortgage loans will  
be insured by the FHA.                                                          

     Section 223(f) of the Housing Act allows HUD to insure mortgage loans
made for the purchase or refinancing of existing apartment projects which are at
least three years old. Section 244 also provides for co-insurance of mortgage   
loans made under Section 223(f). Under Section 223(f), the loan proceeds cannot 
be used for substantial rehabilitation work, but repairs may be made for up to, 
in general, the greater of 15% of the value of the project or a dollar amount   
per apartment unit established from time to time by HUD. In general the loan    
term may not exceed 35 years and a loan to value ratio of no more than 85% is   
required for the purchase of a project and 70% for the refinancing of a project.

        HUD has the option, in most cases, to pay insurance claims in cash or in
debentures issued by HUD. Presently, claims are being paid in cash, and claims  
have not been paid in debentures since 1965. HUD debentures issued in           
satisfaction of FHA insurance claims bear interest at the applicable HUD        
debenture interest rate. The servicer will be obligated to purchase any         
debenture issued in satisfaction of a defaulted FHA insured mortgage loan       
serviced by it for an amount equal to the principal amount of any such          
debenture.                                                                      

       The servicer will be required to take steps as are reasonably necessary
to keep FHA insurance in full force and effect.                                 

   Some of the mortgage loans contained in a trust fund may be Title I
loans as described below and in the related prospectus supplement. The          
regulations, rules and procedures promulgated by the FHA under Title I contain  
the requirements under which lenders approved for participation in the Title I  
Program may obtain insurance against a portion of losses incurred with respect  
to eligible loans that have been originated and serviced in accordance with FHA 
regulations, subject to the amount of insurance coverage available in such Title
I lender's FHA reserve, as described below and in the related prospectus        
supplement. In general, an insurance claim against the FHA may be denied or     
surcharged if the Title I loan to which it relates does not strictly satisfy the
requirements of the National Housing Act and FHA regulations but FHA regulations
permit the Secretary of the Department of Housing and Urban Development, subject
to statutory limitations, to waive a Title I Lender's noncompliance with FHA    
regulations if enforcement would impose an injustice on the lender.             

    Unless otherwise specified in the related prospectus supplement, the
servicer will either serve as or contract with the person specified in the      
prospectus supplement to serve as the administrator for FHA claims pursuant to  
an FHA claims administration agreement. The FHA claims administrator will be    
responsible for administering, processing and submitting FHA claims with respect
to the Title I loans. The securityholders will be dependent on the FHA claims   

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administrator to (1) make claims on the Title I loans in accordance with FHA    
regulations and (2) remit all FHA insurance proceeds received from the FHA in   
accordance with the related agreement. The securityholders' rights relating to  
the receipt of payment from and the administration, processing and submission of
FHA claims by any FHA claims administrator is limited and governed by the       
related agreement and the FHA claims administration agreement and these         
functions are obligations of the FHA claims administrator, but not the FHA.     

  Under Title I, the FHA maintains an FHA insurance coverage reserve
account for each Title I lender. The amount in each Title I lender's FHA reserve
is a maximum of 10% of the amounts disbursed, advanced or expended by a Title I 
lender in originating or purchasing eligible loans registered with the FHA for  
Title I insurance, with certain adjustments permitted or required by FHA        
regulations. The balance of such FHA reserve is the maximum amount of insurance 
claims the FHA is required to pay to the related Title I lender. Mortgage loans 
to be insured under Title I will be registered for insurance by the FHA.        
Following either the origination or transfer of loans eligible under Title I,   
the Title I lender will submit such loans for FHA insurance coverage within its 
FHA reserve by delivering a transfer of note report or by an electronic         
submission to the FHA in the form prescribed under the FHA regulations. The     
increase in the FHA insurance coverage for such loans in the Title I lender's   
FHA reserve will occur on the date following the receipt and acknowledgment by  
the FHA of the transfer of note report for such loans. The insurance available  
to any trust fund will be subject to the availability, from time to time, of    
amounts in each Title I lender's FHA reserve, which will initially be limited to
the amount specified in the related prospectus supplement.                      

      If so provided in the related prospectus supplement the trustee or FHA
claims administrator may accept an assignment of the FHA reserve for the related
Title I loans, notify FHA of such assignment and request that the portion of the
depositor's FHA reserves allocable to the Title I loans be transferred to the   
trustee or the FHA claims administrator on the closing date. Alternatively, in  
the absence of such provision, the FHA reserves may be retained by the depositor
and, upon an insolvency and receivership of the depositor, the related trustee  
will notify FHA and request that the portion of the depositor's FHA reserves    
allocable to the Title I loans be transferred to the trustee or the FHA claims  
administrator. Although each trustee will request such a transfer of reserves,  
FHA is not obligated to comply with such a request, and may determine that it is
not in FHA's interest to permit a transfer of reserves. In addition, FHA has not
specified how insurance reserves would be allocated in a transfer, and there can
be no assurance that any reserve amount, if transferred to the trustee or the   
FHA claims administrator, as the case may be, would not be substantially less   
than 10% of the outstanding principal amount of the related Title I loans. It is
likely that the depositor, the trustee or the FHA claims administrator would be 
the lender of record on other Title I loans, so that any FHA reserves that are  
retained, or permitted to be transferred, would become commingled with FHA      
reserves available for other Title I loans. FHA also reserves the right to      
transfer reserves with "earmarking" (segregating reserves so that they will not 
be commingled with the reserves of the transferee) if it is in FHA's interest to
do so.                                                                          

        Under Title I, the FHA will reduce the insurance coverage available in a
Title I lender's FHA reserve with respect to loans insured under that Title I   
lender's contract of insurance by (1) the amount of FHA insurance claims        
approved for payment related to those loans and (2) the amount of reduction of  
the Title I lender's FHA reserve by reason of the sale, assignment or transfer  
of loans registered under the Title I lender's contract of insurance. The FHA   
insurance coverage also may be                                                  

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reduced for any FHA insurance claims previously disbursed to the Title I lender 
that are subsequently rejected by the FHA.                                      

    Unlike certain other government loan insurance programs, loans under
Title I (other than loans in excess of $25,000) are not subject to prior review 
by the FHA. The FHA disburses insurance proceeds with respect to defaulted loans
for which insurance claims have been filed by a Title I lender prior to any     
review of those loans. A Title I lender is required to repurchase a Title I loan
from the FHA that is determined to be ineligible for insurance after insurance  
claim payments for such loan have been paid to the lender. Under the FHA        
regulations, if the Title I lender's obligation to repurchase the Title I loan  
is unsatisfied, the FHA is permitted to offset the unsatisfied obligation       
against future insurance claim payments owed by the FHA to such lender. FHA     
regulations permit the FHA to disallow an insurance claim with respect to any   
loan that does not qualify for insurance for a period of up to two years after  
the claim is made and to require the Title I lender that has submitted the      
insurance claim to repurchase the loan.                                         

    The proceeds of loans under the Title I Program may be used only for
permitted purposes, including the alteration, repair or improvement of          
residential property, the purchase of a manufactured home or lot (or cooperative
interest therein) on which to place the home or the purchase of both a          
manufactured home and the lot (or cooperative interest therein) on which the    
home is placed.                                                                 

      Subject to certain limitations described below, eligible Title I loans
are generally insured by the FHA for 90% of an amount equal to the sum of       

       o   the net unpaid principal amount and the uncollected interest earned
to the date of default,                                 

      o   interest on the unpaid loan obligation from the date of default to
          the date of the initial submission of the insurance claim, plus 15
            calendar days (the total period not to exceed nine months) at a rate
of 7% per annum,                                        

o   uncollected court costs,                                    

o   title examination costs,                                    

     o   fees for required inspections by the lenders or its agents, up to
$75, and                                                

o   origination fees up to a maximum of 5% of the loan amount.  

     Accordingly if sufficient insurance coverage is available in such FHA
reserve, then the Title I lender bears the risk of losses on a Title I loan for 
which a claim for reimbursement is paid by the FHA of at least 10% of the unpaid
principal, uncollected interest earned to the date of default, interest from the
date of default to the date of the initial claim submission and certain         
expenses.                                                                       

        In general, the FHA will insure home improvement contracts up to $25,000
for a Single Family Property, with a maximum term of 20 years. The FHA will     
insure loans of up to $17,500 for manufactured homes which qualify as real      
estate under applicable state law and loans of up to                            

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$12,000 per unit for a $48,000 limit for four units for owner-occupied          
multifamily homes. If the loan amount is $15,000 or more, the FHA requires a    
drive-by appraisal, the current tax assessment value, or a full Uniform         
Residential Appraisal Report dated within 12 months of the closing to verify the
property's value. The maximum loan amount on transactions requiring an appraisal
is the amount of equity in the property shown by the market value determination 
of the property.                                                                

        With respect to Title I loans, the FHA regulations do not require that a
borrower obtain title or fire and casualty insurance. However, if the related   
mortgaged property is located in a flood hazard area, flood insurance in an     
amount at least equal to the loan amount is required. In addition, the FHA      
regulations do not require that the borrower obtain insurance against physical  
damage arising from earth movement (including earthquakes, landslides and       
mudflows). Accordingly, if a mortgaged property that secures a Title I loan     
suffers any uninsured hazard or casualty losses, holders of the related series  
of securities that are secured in whole or in part by such Title I loan may bear
the risk of loss to the extent that such losses are not recovered by foreclosure
on the defaulted loans or from any FHA insurance proceeds. Such loss may be     
otherwise covered by amounts available from the credit enhancement provided for 
the related series of securities, if specified in the related prospectus        
supplement.                                                                     

      Following a default on a Title I loan insured by the FHA, the servicer
may, subject to certain conditions and mandatory loss mitigation procedures,    
either commence foreclosure proceedings against the improved property securing  
the loan, if applicable, or submit a claim to FHA, but may submit a claim to FHA
after proceeding against the improved property only with the prior approval of  
the Secretary of HUD. The availability of FHA Insurance following a default on a
Title I loan is subject to a number of conditions, including strict compliance  
with FHA regulations in originating and servicing the Title I loan. Failure to  
comply with FHA regulations may result in a denial of or surcharge on the FHA   
insurance claim. Prior to declaring a Title I loan in default and submitting a  
claim to FHA, the servicer must take certain steps to attempt to cure the       
default, including personal contact with the borrower either by telephone or in 
a meeting and providing the borrower with 30 days' written notice prior to      
declaration of default. FHA may deny insurance coverage if the borrower's       
nonpayment is related to a valid objection to faulty contractor performance. In 
such event, the servicer or other entity as specified in the related prospectus 
supplement will seek to obtain payment by or a judgment against the borrower,   
and may resubmit the claim to FHA following such a judgment.                    

VA GUARANTEES                                                                   

       The United States Department of Veterans Affairs is an Executive Branch
Department of the United States, headed by the Secretary of Veterans Affairs.   
The VA currently administers a variety of federal assistance programs on behalf 
of eligible veterans and their dependents and beneficiaries. The VA administers 
a loan guaranty program pursuant to which the VA guarantees a portion of loans  
made to eligible veterans. If so provided in the prospectus supplement, some of 
the mortgage loans will be guaranteed by the VA.                                

Under the VA loan guaranty program, a VA loan may be made to any
eligible veteran by an approved private sector mortgage lender. The VA          
guarantees payment to the holder of that loan of a fixed percentage of the loan 
indebtedness, up to a maximum dollar amount, in the event of default by the     
veteran borrower. When a delinquency is reported to the VA and no realistic     
alternative to                                                                  

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foreclosure is developed by the loan holder or through the VA's supplemental    
servicing of the loan, the VA determines, through an economic analysis, whether 
the VA will (1) authorize the holder to convey the property securing the VA loan
to the Secretary of Veterans Affairs following termination or (2) pay the loan  
guaranty amount to the holder. The decision as to disposition of properties     
securing defaulted VA loans is made on a case-by-case basis using the procedures
set forth in 38 U.S.C. Section 3732(c), as amended.                             

       The servicer will be required to take steps as are reasonably necessary
to keep the VA guarantees in full force and effect.                             

LEGAL ASPECTS OF MORTGAGE ASSETS

       The following discussion contains general summaries of legal aspects of
loans secured by residential properties. Because these legal aspects are        
governed in part by applicable state law, which laws may differ substantially   
from state to state, the summaries do not purport to be complete nor to reflect 
the laws of any particular state, nor to encompass the laws of all states in    
which the security for the Mortgage Assets is situated.                         

MORTGAGE LOANS                                                                  

      The Single-Family Loans, multifamily loans, commercial loans and mixed
use loans will be secured by either mortgages, deeds of trust, security deeds or
deeds to secure debt depending upon the type of security instrument customary to
grant a security interest according to the prevailing practice in the state in  
which the mortgaged property subject to that mortgage loan is located. The      
filing of a mortgage or a deed of trust creates a lien upon or conveys title to 
the real property encumbered by such instrument and represents the security for 
the repayment of an obligation that is customarily evidenced by a promissory    
note. It is not prior to the lien for real estate taxes and assessments.        
Priority with respect to mortgages and deeds of trust depends on their terms and
generally on the order of recording with the applicable state, county or        
municipal office. There are two parties to a mortgage, the mortgagor, who is the
borrower/homeowner or the land trustee, and the mortgagee, who is the lender.   
Under the mortgage instrument, the mortgagor delivers to the mortgagee a note or
bond and the mortgage. In the case of a land trust, title to the property is    
held by a land trustee under a land trust agreement, while the                  
borrower/homeowner is the beneficiary of the land trust; at origination of a    
mortgage loan, the borrower executes a separate undertaking to make payments on 
the mortgage note. Although a deed of trust is similar to a mortgage, a deed of 
trust normally has three parties, the trustor, similar to a mortgagor, who may  
or may not be the borrower, the beneficiary, similar to a mortgagee, who is the 
lender, and the trustee, a third-party grantee. Under a deed of trust, the      
trustor grants the property, irrevocably until the debt is paid, in trust,      
generally with a power of sale, to the trustee to secure payment of the         
obligation. A security deed and a deed to secure debt are special types of deeds
which indicate on their face that they are granted to secure an underlying debt.
By executing a security deed or deed to secure debt, the grantor conveys title  
to, as opposed to merely creating a lien upon, the subject property to the      
grantee until the time as the underlying debt is repaid. The mortgagee's        
authority under a mortgage and the trustee's authority under a deed of trust,   
security deed or deed to secure debt are governed by the law of the state in    
which the real property is located, the express provisions of the mortgage,     

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deed of trust, security deed or deed to secure debt and, in some cases, the     
directions of the beneficiary.                                                  

MANUFACTURED HOME CONTRACTS                                                     

Under the laws of most states, manufactured housing that is not 
permanently affixed to its site constitutes personal property and is subject to 
the motor vehicle registration laws of the state or other jurisdiction in which 
the unit is located. In a few states, where certificates of title are not       
required for manufactured homes, security interests are perfected by the filing 
of a financing statement under Article 9 of the UCC which has been adopted by   
all states. Such financing statements are effective for five years and must be  
renewed at the end of each five years. The certificate of title laws adopted by 
the majority of states provide that ownership of motor vehicles and manufactured
housing shall be evidenced by a certificate of title issued by the motor        
vehicles department, or a similar entity, of the state. In the states that have 
enacted certificate of title laws, a security interest in a unit of manufactured
housing, so long as it is not attached to land in so permanent a fashion as to  
become a fixture, is generally perfected by the recording of the interest on the
certificate of title to the unit in the appropriate motor vehicle registration  
office or by delivery of the required documents and payment of a fee to such    
office, depending on state law.                                                 

      The servicer will be required under the related servicing agreement to
effect the notation or delivery of the required documents and fees, and to      
obtain possession of the certificate of title, as appropriate under the laws of 
the state in which any manufactured home is registered. If the servicer fails,  
due to clerical errors or otherwise, to effect the notation or delivery, or     
files the security interest under the wrong law, for example, under a motor     
vehicle title statute rather than under the UCC, in a few states, the trustee   
may not have a first priority security interest in the manufactured home        
securing a manufactured housing contract. As manufactured homes have become     
larger and often have been attached to their sites without any apparent         
intention by the borrowers to move them, courts in many states have held that   
manufactured homes may, under some circumstances, become subject to real estate 
title and recording laws. As a result, a security interest in a manufactured    
home could be rendered subordinate to the interests of other parties claiming an
interest in the home under applicable state real estate law. In order to perfect
a security interest in a manufactured home under real estate laws, the holder of
the security interest must file either a "fixture filing" under the provisions  
of the UCC or a real estate mortgage under the real estate laws of the state    
where the home is located. These filings must be made in the real estate records
office of the county where the home is located. Generally, manufactured housing 
contracts will contain provisions prohibiting the obligor from permanently      
attaching the manufactured home to its site. So long as the obligor does not    
violate this agreement, a security interest in the manufactured home will be    
governed by the certificate of title laws or the UCC, and the notation of the   
security interest on the certificate of title or the filing of a UCC financing  
statement will be effective to maintain the priority of the security interest in
the manufactured home. If, however, a manufactured home is permanently attached 
to its site, other parties could obtain an interest in the manufactured home    
that is prior to the security interest originally retained by the depositor.    

        The depositor will assign or cause to be assigned a security interest in
the manufactured homes to the trustee, on behalf of the securityholders. Neither
the depositor, the servicer nor the trustee will amend the certificates of title
to identify the trustee, on behalf of the securityholders, as the new secured   
party and, accordingly, the depositor will continue to be named as the secured  
party                                                                           

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on the certificates of title relating to the manufactured homes. In most states,
an assignment is an effective conveyance of a security interest in a            
manufactured home without amendment of any lien noted on the related certificate
of title and the new secured party succeeds to the depositor's rights as the    
secured party. However, in some states there exists a risk that, in the absence 
of an amendment to the certificate of title, the assignment of the security     
interest might not be held effective against creditors of the depositor or      
mortgage loan seller.                                                           

In the absence of fraud, forgery or permanent affixation of the 
manufactured home to its site by the manufactured home owner, or administrative 
error by state recording officials, the notation of the lien of the depositor on
the certificate of title or delivery of the required documents and fees will be 
sufficient to protect the trustee against the rights of subsequent purchasers of
a manufactured home or subsequent lenders who take a security interest in the   
manufactured home. If there are any manufactured homes as to which the depositor
has failed to perfect or cause to be perfected the security interest assigned to
the trust fund, the security interest would be subordinate to subsequent        
purchasers for value of manufactured homes and holders of perfected security    
interests. There also exists a risk in not identifying the trustee, on behalf of
the securityholders, as the new secured party on the certificate of title that, 
through fraud or negligence, the security interest of the trustee could be      
released.                                                                       

      If the owner of a manufactured home moves it to a state other than the
state in which the manufactured home initially is registered, under the laws of 
most states, the perfected security interest in the manufactured home would     
continue for four months after the relocation and thereafter until the owner    
re-registers the manufactured home in such state. If the owner were to relocate 
a manufactured home to another state and re-register the manufactured home in   
the new state, and if the depositor did not take steps to re-perfect its        
security interest in the new state, the security interest in the manufactured   
home would cease to be perfected. A majority of states generally require        
surrender of a certificate of title to re-register a manufactured home.         
Accordingly, the depositor must surrender possession if it holds the certificate
of title to the manufactured home or, in the case of manufactured homes         
registered in states that provide for notation of lien, the depositor would     
receive notice of surrender if the security interest in the manufactured home is
noted on the certificate of title. Accordingly, the depositor would have the    
opportunity to re-perfect its security interest in the manufactured home in the 
state of relocation. In states that do not require a certificate of title for   
registration of a manufactured home, re-registration could defeat perfection.   
Similarly, when an obligor under a manufactured housing conditional sales       
contract sells a manufactured home, the obligee must surrender possession of the
certificate of title or it will receive notice as a result of its lien noted    
thereon and accordingly will have an opportunity to require satisfaction of the 
related manufactured housing conditional sales contract before release of the   
lien. Under each related servicing agreement, the servicer will be obligated to 
take such steps, at the servicer's expense, as are necessary to maintain        
perfection of security interests in the manufactured homes.                     

Under the laws of most states, liens for repairs performed on a 
manufactured home take priority even over a perfected security interest. The    
depositor will obtain the representation of the mortgage loan seller that it has
no knowledge of any such liens with respect to any manufactured home securing a 
manufactured home loan. However, liens could arise at any time during the term  
of a manufactured home loan. No notice will be given to the trustee or          
securityholders in the event a lien for repairs arises.                         

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HOME IMPROVEMENT CONTRACTS                                                      

 The home improvement contracts, other than those home improvement
contracts that are unsecured or secured by mortgages on real estate generally   
are "chattel paper" or constitute "purchase money security interests", each as  
defined in the UCC. Pursuant to the UCC, the sale of chattel paper is treated in
a manner similar to perfection of a security interest in chattel paper. Under   
the related agreement, the depositor will transfer physical possession of the   
contracts to the trustee or a designated custodian or may retain possession of  
the contracts as custodian for the trustee. In addition, the depositor will make
an appropriate filing of a UCC-1 financing statement in the appropriate states  
to give notice of the trustee's ownership of the contracts. The contracts will  
not be stamped or otherwise marked to reflect their assignment from the         
depositor to the trustee. Therefore, if through negligence, fraud or otherwise, 
a subsequent purchaser were able to take physical possession of the contracts   
without notice of such assignment, the trustee's interest in the contracts could
be defeated.                                                                    

        The contracts that are secured by the home improvements financed thereby
grant to the originator of the contracts a purchase money security interest in  
such home improvements to secure all or part of the purchase price of the home  
improvements and related services. A financing statement generally is not       
required to be filed to perfect a purchase money security interest in consumer  
goods. Such purchase money security interests are assignable. In general, a     
purchase money security interest grants to the holder a security interest that  
has priority over a conflicting security interest in the same collateral and the
proceeds of such collateral. However, to the extent that the collateral subject 
to a purchase money security interest becomes a fixture, in order for the       
related purchase money security interest to take priority over a conflicting    
interest in the fixture, the holder's interest in such home improvement must    
generally be perfected by a timely fixture filing. In general, under the UCC, a 
security interest does not exist under the UCC in ordinary building material    
incorporated into an improvement on land. Home improvement contracts that       
finance lumber, bricks, other types of ordinary building material or other goods
that are deemed to lose such characterization, upon incorporation of the        
materials into the related property, will not be secured by a purchase money    
security interest in the home improvement being financed.                       

  So long as the home improvement has not become subject to the real
estate law, a creditor can repossess a home improvement securing a contract by  
voluntary surrender, "self-help" repossession that is "peaceful", i.e., without 
breach of the peace, or, in the absence of voluntary surrender and the ability  
to repossess without breach of the peace, judicial process. The holder of a     
contract must give the debtor a number of days' notice, which varies from 10 to 
30 days or more depending on the state, prior to commencement of any            
repossession. The UCC and consumer protection laws in most states restrict      
repossession sales, including requiring prior notice to the debtor and          
commercial reasonableness in effecting such a sale. The law in most states also 
requires that the debtor be given notice of any sale prior to resale of the     
related property so that the debtor may redeem it at or before such resale.     

   Under the laws applicable in most states, a creditor is entitled to
obtain a deficiency judgment from a debtor for any deficiency on repossession   
and resale of the property securing the debtor's loan. However, some states     
impose prohibitions or limitations on deficiency judgments and in many cases the
defaulting borrower would have no assets with which to pay a judgment.          

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      Other statutory provisions, including federal and state bankruptcy and
insolvency laws and general equity principles, may limit or delay the ability of
a lender to repossess and resell collateral or enforce a deficiency judgment.   

FORECLOSURE ON MORTGAGES                                                        

     Foreclosure is a legal procedure that allows the mortgagee to recover
its mortgage debt by enforcing its rights and available remedies under the      
mortgage. Foreclosure of a mortgage is generally accomplished by judicial       
action. The action is initiated by the service of legal pleadings upon all      
parties having an interest of record in the real property. Delays in completion 
of the foreclosure may occasionally result from difficulties in locating        
necessary parties defendant. Judicial foreclosure proceedings are often not     
contested by any of the parties defendant. However, when the mortgagee's right  
to foreclose is contested, the legal proceedings necessary to resolve the issue 
can be time-consuming. After the completion of a judicial foreclosure, the court
would issue a judgment of foreclosure and would generally appoint a referee or  
other court officer to conduct the sale of the property.                        

Foreclosure of a deed of trust is generally accomplished by a   
non-judicial trustee's sale under a specific provision in the deed of trust,    
which authorizes the trustee to sell the property upon any default by the       
borrower under the terms of the note or deed of trust. In some states, prior to 
the sale, the trustee must record a notice of default and send a copy to the    
borrower-trustor and to any person who has recorded a request for a copy of a   
notice of default and notice of sale. In addition, prior to the sale, the       
trustee in some states must provide notice to any other individual having an    
interest in the real property, including any junior lienholder. The trustor,    
borrower, or any person having a junior encumbrance on the real estate, may,    
during a reinstatement period, cure the default by paying the entire amount in  
arrears plus the costs and expenses incurred in enforcing the obligation.       
Generally, state law controls the amount of foreclosure expenses and costs,     
including attorneys' fees, that may be recovered by a lender. If the deed of    
trust is not reinstated, a notice of sale must be posted in a public place and, 
in most states, published for a specific period of time in one or more          
newspapers. In addition, some state laws require that a copy of the notice of   
sale be posted on the property, recorded and sent to all parties having an      
interest in the real property.                                                  

      An action to foreclose a mortgage is an action to recover the mortgage
debt by enforcing the mortgagee's rights under the mortgage and in the mortgaged
property. It is regulated by statutes and rules and subject throughout to the   
court's equitable powers. Generally, a mortgagor is bound by the terms of the   
mortgage note and the mortgage as made and cannot be relieved from its own      
default. However, since a foreclosure action is equitable in nature and is      
addressed to a court of equity, the court may relieve a mortgagor of a default  
and deny the mortgagee foreclosure on proof that the mortgagor's default was    
neither willful nor in bad faith and that the mortgagee's action was such as to 
establish a waiver, or fraud, bad faith, oppressive or unconscionable conduct as
to warrant a court of equity to refuse affirmative relief to the mortgagee. In  
some cases a court of equity may relieve the mortgagor from an entirely         
technical default where the default was not willful.                            

      A foreclosure action or sale pursuant to a power of sale is subject to
most of the delays and expenses of other lawsuits if defenses or counterclaims  
are interposed, sometimes requiring up to several years to complete. Moreover,  
recent judicial decisions suggest that a non-collusive, regularly conducted     
foreclosure sale or sale pursuant to a power of sale may be challenged as a     

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fraudulent conveyance, regardless of the parties' intent, if a court determines 
that the sale was for less than fair consideration and the sale occurred while  
the mortgagor was insolvent and within one year, or within the state statute of 
limitations if the trustee in bankruptcy elects to proceed under state          
fraudulent conveyance law, of the filing of bankruptcy. Similarly, a suit       
against the debtor on the mortgage note may take several years.                 

      In case of foreclosure under either a mortgage or a deed of trust, the
sale by the referee or other designated officer or by the trustee is a public   
sale. However, because of the difficulty potential third party purchasers at the
sale have in determining the exact status of title and because the physical     
condition of the property may have deteriorated during the foreclosure          
proceedings, it is uncommon for a third party to purchase the property at the   
foreclosure sale. Rather, it is common for the lender to purchase the property  
from the trustee or referee for an amount equal to the principal amount of the  
mortgage or deed of trust plus accrued and unpaid interest and the expenses of  
foreclosure. Generally, state law controls the amount of foreclosure costs and  
expenses, including attorney's and trustee's fees, which may be recovered by a  
lender. In some states there is a statutory minimum purchase price which the    
lender may offer for the property. Thereafter, subject to the right of the      
borrower in some states to remain in possession during the redemption period,   
the lender will assume the burdens of ownership, including obtaining casualty   
insurance, paying taxes and making repairs at its own expense as are necessary  
to render the property suitable for sale. The lender will commonly obtain the   
services of a real estate broker and pay the broker's commission in connection  
with the sale of the property. Depending upon market conditions, the ultimate   
proceeds of the sale of the property may not equal the lender's investment in   
the property. Any loss may be reduced by the receipt of any mortgage insurance  
proceeds.                                                                       

      A junior mortgagee may not foreclose on the property securing a junior
mortgage unless it forecloses subject to the senior mortgages, in which case it 
must either pay the entire amount due on the senior mortgages to the senior     
mortgagees prior to or at the time of the foreclosure sale or undertake the     
obligation to make payments on the senior mortgages if the mortgagor is in      
default thereunder. In either event the amounts expended will be added to the   
balance due on the junior loan, and may be subrogated to the rights of the      
senior mortgagees. In addition, if the foreclosure of a junior mortgage triggers
the enforcement of a "due-on-sale" clause in a senior mortgage, the junior      
mortgagee may be required to pay the full amount of the senior mortgages to the 
senior mortgagees. Accordingly, with respect to those mortgage loans which are  
junior mortgage loans, if the lender purchases the property, the lender's title 
will be subject to all senior liens and claims and some governmental liens.     

 The proceeds received by the referee or trustee from the sale are
applied first to the costs, fees and expenses of sale, real estate taxes and    
then in satisfaction of the indebtedness secured by the mortgage or deed of     
trust under which the sale was conducted. Any remaining proceeds are generally  
payable to the holders of junior mortgages or deeds of trust and other liens and
claims in order of their priority, whether or not the borrower is in default.   
Any additional proceeds are generally payable to the mortgagor or trustor. The  
payment of the proceeds to the holders of junior mortgages may occur in the     
foreclosure action of the senior mortgagee or may require the institution of    
separate legal proceedings.                                                     

   If the servicer were to foreclose on any junior lien it would do so
subject to any related senior lien. In order for the debt related to the junior 
mortgage loan to be paid in full at the sale, a                                 

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bidder at the foreclosure sale of the junior mortgage loan would have to bid an 
amount sufficient to pay off all sums due under the junior mortgage loan and the
senior lien or purchase the mortgaged property subject to the senior lien. If   
proceeds from a foreclosure or similar sale of the mortgaged property are       
insufficient to satisfy all senior liens and the junior mortgage loan in the    
aggregate, the trust fund as the holder of the junior lien and, accordingly,    
holders of one or more classes of related securities bear (1) the risk of delay 
in distributions while a deficiency judgment against the borrower is obtained   
and (2) the risk of loss if the deficiency judgment is not realized upon.       
Moreover, deficiency judgments may not be available in some jurisdictions. In   
addition, liquidation expenses with respect to defaulted junior mortgage loans  
do not vary directly with the outstanding principal balance of the loans at the 
time of default. Therefore, assuming that the servicer took the same steps in   
realizing upon a defaulted junior mortgage loan having a small remaining        
principal balance as it would in the case of a defaulted junior mortgage loan   
having a large remaining principal balance, the amount realized after expenses  
of liquidation would be smaller as a percentage of the outstanding principal    
balance of the small junior mortgage loan than would be the case with the       
defaulted junior mortgage loan having a large remaining principal balance.      

     In foreclosure, courts have imposed general equitable principles. The
equitable principles are generally designed to relieve the borrower from the    
legal effect of its defaults under the loan documents. Examples of judicial     
remedies that have been fashioned include judicial requirements that the lender 
undertake affirmative and expensive actions to determine the causes for the     
borrower's default and the likelihood that the borrower will be able to         
reinstate the loan. In some cases, courts have substituted their judgment for   
the lender's judgment and have required that lenders reinstate loans or recast  
payment schedules in order to accommodate borrowers who are suffering from      
temporary financial disability. In other cases, courts have limited the right of
a lender to foreclose if the default under the mortgage instrument is not       
monetary, such as the borrower's failure to adequately maintain the property or 
the borrower's execution of a second mortgage or deed of trust affecting the    
property. Finally, some courts have been faced with the issue of whether or not 
federal or state constitutional provisions reflecting due process concerns for  
adequate notice require that borrowers under deeds of trust or mortgages receive
notices in addition to the statutorily-prescribed minimums. For the most part,  
these cases have upheld the notice provisions as being reasonable or have found 
that the sale by a trustee under a deed of trust, or under a mortgage having a  
power of sale, does not involve sufficient state action to afford constitutional
protection to the borrower.                                                     

      With respect to a trust fund for which a REMIC election has been made,
the servicer, under the REMIC provisions of the Code and the pooling and        
servicing agreement, may be required to hire an independent contractor to       
operate any REO Property. The costs of such operation may be significantly      
greater than the cost of direct operation by the servicer.                      

       Some states impose prohibitions or limitations on remedies available to
the mortgagee, including the right to recover the debt from the mortgagor. See  
"--Anti-Deficiency Legislation and Other Limitations on Lenders" below.         

      In certain jurisdictions, real property transfer or recording taxes or
fees may be imposed on the trust fund for which a REMIC election has been made  
with respect to its acquisition (by foreclosure or otherwise) and disposition of
REO Property, and any taxes or fees imposed may                                 

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reduce Liquidation Proceeds with respect to such REO Property, as well as       
distributions payable to the securityholders.                                   

FORECLOSURE ON MORTGAGED PROPERTIES LOCATED IN THE COMMONWEALTH OF PUERTO RICO  

      Under the laws of the Commonwealth of Puerto Rico the foreclosure of a
real estate mortgage usually follows an ordinary "civil action" filed in the    
Superior Court for the district where the mortgaged property is located. If the 
defendant does not contest the action filed, a default judgment is rendered for 
the plaintiff and the mortgaged property is sold at public auction, after       
publication of the sale for two weeks, by posting written notice in three public
places in the municipality where the auction will be held, in the tax collection
office and in the public school of the municipality where the mortgagor resides,
if known. If the residence of the mortgagor is not known, publication in one of 
the newspapers of general circulation in the Commonwealth of Puerto Rico must be
made at least once a week for two weeks. There may be as many as three public   
sales of the mortgaged property. If the defendant contests the foreclosure, the 
case may be tried and judgment rendered based on the merits of the case.        

    There are no redemption rights after the public sale of a foreclosed
property under the laws of the Commonwealth of Puerto Rico. Commonwealth of     
Puerto Rico law provides for a summary proceeding for the foreclosure of a      
mortgage, but it is very seldom used because of concerns regarding the validity 
of these actions. The process may be expedited if the mortgagee can obtain the  
consent of the defendant to the execution of a deed in lieu of foreclosure.     

     Under Commonwealth of Puerto Rico law, in the case of the public sale
upon foreclosure of a mortgaged property that (1) is subject to a mortgage loan 
that was obtained for a purpose other than the financing or refinancing of the  
acquisition, construction or improvement of the property and (2) is occupied by 
the mortgagor as his principal residence, the mortgagor of the property has a   
right to be paid the first $1,500 from the proceeds obtained on the public sale 
of the property. The mortgagor can claim this sum of money from the mortgagee at
any time prior to the public sale or up to one year after the sale. Such payment
would reduce the amount of sales proceeds available to satisfy the mortgage loan
and may increase the amount of the loss.                                        

REPOSSESSION WITH RESPECT TO MANUFACTURED HOME CONTRACTS                        

    Repossession of manufactured housing is governed by state law. A few
states have enacted legislation that requires that the debtor be given an       
opportunity to cure its default (typically 30 days to bring the account current)
before repossession can commence. Unless a manufactured home has become so      
attached to real estate that it would be treated as a part of the real estate   
under the law of the state where it is located, repossession of the manufactured
home in the event of a default by the obligor will generally be governed by the 
UCC. Article 9 of the UCC provides the statutory framework for the repossession 
of manufactured housing. While the UCC as adopted by the various states may vary
in some minimal ways, the general repossession procedure established by the UCC 
is as follows:                                                                  

      o   Except in those states where the debtor must receive notice of the
           right to cure a default, repossession can commence immediately upon
         default without prior notice. Repossession may be effected either
through self-help pursuant to a peaceable               

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       retaking without court order, voluntary repossession or through
          judicial process by means of repossession pursuant to court-issued
         writ of replevin. The self-help or voluntary repossession methods
           are more commonly employed, and are accomplished simply by retaking
         possession of the manufactured home. In cases in which the debtor
          objects or raises a defense to repossession, a court order must be
            obtained from the appropriate state court, and the manufactured home
           must then be repossessed in accordance with that order. Whether the
        method employed is self-help, voluntary repossession or judicial
       repossession, the repossession can be accomplished either by an
    actual physical removal of the manufactured home to a secure
          location for refurbishment and resale or by removing the occupants
       and their belongings from the manufactured home and maintaining
     possession of the manufactured home on the location where the
       occupants were residing. Various factors may affect whether the
            manufactured home is physically removed or left on location, such as
           the nature and term of the lease of the site on which it is located
 and the condition of the unit. In many cases, leaving the
          manufactured home on location is preferable if the home is already
      set up because the expenses of retaking and redelivery will be
          saved. However, in those cases where the home is left on location,
expenses for site rentals will usually be incurred.     

       o   Once repossession has been achieved, preparation for the subsequent
          disposition of the manufactured home can commence. The disposition
           may be by public or private sale provided the method, manner, time,
place and terms of the sale are commercially reasonable.

       o   Sale proceeds are to be applied first to repossession expenses such
           as those expenses incurred in retaking, storage, preparing for sale
          including refurbishing costs and selling, and then to satisfaction
     of the indebtedness. While some states impose prohibitions or
           limitations on deficiency judgments if the net proceeds from resale
           do not cover the full amount of the indebtedness, the remainder may
         be sought from the debtor in the form of a deficiency judgment in
            those states that do not prohibit or limit deficiency judgments. The
         deficiency judgment is a personal judgment against the debtor for
            the shortfall. Occasionally, after resale of a manufactured home and
       payment of all expenses and indebtedness, there is a surplus of
     funds. In that case, the UCC requires the party suing for the
           deficiency judgment to remit the surplus to the debtor. Because the
         defaulting owner of a manufactured home generally has very little
        capital or income available following repossession, a deficiency
         judgment may not be sought in many cases or, if obtained, will be
            settled at a significant discount in light of the defaulting owner's
strained financial condition.                           

JUNIOR MORTGAGES                                                                

      Some of the mortgage loans may be secured by junior mortgages or deeds
of trust, which are junior to senior mortgages or deeds of trust which are not  
part of the trust fund. The rights of the securityholders as the holders of a   
junior deed of trust or a junior mortgage are subordinate in lien priority and  
in payment priority to those of the holder of the senior mortgage or deed of    
trust, including the prior rights of the senior mortgagee or beneficiary to     
receive and apply hazard insurance and condemnation proceeds and, upon default  
of the mortgagor, to cause a foreclosure on                                     

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the property. Upon completion of the foreclosure proceedings by the holder of   
the senior mortgage or the sale pursuant to the deed of trust, the junior       
mortgagee's or junior beneficiary's lien will be extinguished unless the junior 
lienholder satisfies the defaulted senior loan or asserts its subordinate       
interest in a property in foreclosure proceedings. See "--Foreclosure on        
Mortgages".                                                                     

  Furthermore, the terms of the junior mortgage or deed of trust are
subordinate to the terms of the senior mortgage or deed of trust. If there is a 
conflict between the terms of the senior mortgage or deed of trust and the      
junior mortgage or deed of trust, the terms of the senior mortgage or deed of   
trust will govern generally. Upon a failure of the mortgagor or trustor to      
perform any of its obligations, the senior mortgagee or beneficiary, subject to 
the terms of the senior mortgage or deed of trust, may have the right to perform
the obligation itself. Generally, all sums so expended by the mortgagee or      
beneficiary become part of the indebtedness secured by the mortgage or deed of  
trust. To the extent a senior mortgagee expends sums, these sums will generally 
have priority over all sums due under the junior mortgage.                      

RIGHTS OF REDEMPTION                                                            

      Mortgage Loans. In some states, after sale pursuant to a deed of trust
or foreclosure of a mortgage, the trustor or mortgagor and some foreclosed      
junior lienors are given a statutory period in which to redeem the property from
the foreclosure sale. The right of redemption should be distinguished from the  
equity of redemption, which is a nonstatutory right that must be exercised prior
to the foreclosure sale. In some states, redemption may occur only upon payment 
of the entire principal balance of the loan, accrued interest and expenses of   
foreclosure. In other states, redemption may be authorized if the former        
borrower pays only a portion of the sums due. The effect of a statutory right of
redemption is to diminish the ability of the lender to sell the foreclosed      
property. The right of redemption would defeat the title of any purchaser       
acquired at a public sale. Consequently, the practical effect of a right of     
redemption is to force the lender to retain the property and pay the expenses of
ownership and maintenance of the property until the redemption period has       
expired. In some states, there is no right to redeem property after a trustee's 
sale under a deed of trust.                                                     

    Manufactured Home Contracts. While state laws do not usually require
notice to be given to debtors prior to repossession, many states do require     
delivery of a notice of default and of the debtor's right to cure defaults      
before repossession of a manufactured home. The law in most states also requires
that the debtor be given notice of sale prior to the resale of the home so that 
the owner may redeem at or before resale. In addition, the sale must comply with
the requirements of the UCC.                                                    

ANTI-DEFICIENCY LEGISLATION AND OTHER LIMITATIONS ON LENDERS                    

      Single Family, Multifamily and Commercial Properties. Some states have
imposed statutory prohibitions that limit the remedies of a beneficiary under a 
deed of trust or a mortgagee under a mortgage. In some states, statutes limit   
the right of the beneficiary or mortgagee to obtain a deficiency judgment       
against the borrower following foreclosure or sale under a deed of trust. A     
deficiency judgment is a personal judgment against the former borrower equal in 
most cases to the difference between the net amount realized upon the public    
sale of the real property and the amount due to the lender. Other statutes      
require the beneficiary or mortgagee to exhaust the security                    

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afforded under a deed of trust or mortgage by foreclosure in an attempt to      
satisfy the full debt before bringing a personal action against the borrower.   
Finally, other statutory provisions limit any deficiency judgment against the   
former borrower following a judicial sale to the excess of the outstanding debt 
over the fair market value of the property at the time of the public sale. The  
purpose of these statutes is generally to prevent a beneficiary or a mortgagee  
from obtaining a large deficiency judgment against the former borrower as a     
result of low or no bids at the judicial sale.                                  

 In addition to laws limiting or prohibiting deficiency judgments,
numerous other statutory provisions, including the federal bankruptcy laws and  
state laws affording relief to debtors, may interfere with or affect the ability
of the secured mortgage lender to realize upon collateral or enforce a          
deficiency judgment. For example, with respect to federal bankruptcy law, the   
filing of a petition acts as a stay against the enforcement of remedies of      
collection of a debt. Moreover, a court with federal bankruptcy jurisdiction may
permit a debtor through his or her Chapter 13 rehabilitative plan to cure a     
monetary default with respect to a mortgage loan on a debtor's residence by     
paying arrearages within a reasonable time period and reinstating the original  
mortgage loan payment schedule even though the lender accelerated the mortgage  
loan and final judgment of foreclosure had been entered in state court (provided
no sale of the property had yet occurred) prior to the filing of the debtor's   
Chapter 13 petition. Some courts with federal bankruptcy jurisdiction have      
approved plans, based on the particular facts of the reorganization case, that  
effected the curing of a mortgage loan default by paying arrearages over a      
number of years.                                                                

        Courts with federal bankruptcy jurisdiction have also indicated that the
terms of a mortgage loan secured by property of the debtor may be modified if   
the borrower has filed a petition under Chapter 13. These courts have suggested 
that the modifications may include reducing the amount of each monthly payment, 
changing the rate of interest, altering the repayment schedule and reducing the 
lender's security interest to the value of the residence, thus leaving the      
lender a general unsecured creditor for the difference between the value of the 
residence and the outstanding balance of the loan. Federal bankruptcy law and   
limited case law indicate that the foregoing modifications could not be applied 
to the terms of a loan secured by property that is the principal residence of   
the debtor. In all cases, the secured creditor is entitled to the value of its  
security plus post-petition interest, attorneys' fees and costs to the extent   
the value of the security exceeds the debt.                                     

     The Bankruptcy Reform Act of 1994 established the National Bankruptcy
Review Commission for purposes of analyzing the nation's bankruptcy laws and    
making recommendations to Congress for legislative changes to the bankruptcy    
laws. A similar commission was involved in developing the Bankruptcy Code. The  
NBRC delivered its report to Congress, the President of the United States and   
the Chief Justice of the Supreme Court on October 20, 1997. Among other topics, 
high leverage loans were addressed in the NBRC's report. Despite some           
ambiguities, the NBRC's report appears to recommend that Congress amend         
Bankruptcy Code section 1322(b)(2) by treating a claim secured only by a junior 
security interest in a debtor's principal residence as protected only to the    
extent that the claim was secured when the security interest was made if the    
value of the property securing the junior security interest is less than such   
amount. However, the express language of the report implies that a claim secured
only by a junior security interest in a debtor's principal residence may not be 
modified to reduce the claim below the appraised value of the property at the   
time the security interest was made. A strong dissent by some members of the    
NBRC recommends that the protections of Bankruptcy Code section 1322(b)(2) be   
extended to creditors principally secured by the debtor's principal residence.  
Additionally, the NBRC's report recommends that a creditor's                    

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secured claim in real property should be determined by the property's fair      
market value, less hypothetical costs of sale. The standard advocated by this   
recommendation would not apply to mortgages on the primary residence of a       
Chapter 11 or 13 debtor who retains the residence if the mortgages are protected
from modification such as those senior mortgages not subject to modification    
pursuant to Bankruptcy Code Sections 1322(b)(2) and 1123(b)(5). The final NBRC  
report may ultimately lead to substantive changes to the existing Bankruptcy    
Code, such as reducing outstanding loan balances to the appraised value of a    
debtor's principal residence at the time the security interest in the property  
was taken, which could affect the mortgage loans included in a trust fund and   
the enforcement of rights therein.                                              

     In the case of income-producing multifamily properties and commercial
properties, federal bankruptcy law may also have the effect of interfering with 
or affecting the ability of the secured lender to enforce the borrower's        
assignment of rents and leases related to the mortgaged property. Under Section 
362 of the Bankruptcy Code, the lender will be stayed from enforcing the        
assignment, and the legal proceedings necessary to resolve the issue could be   
time-consuming, with resulting delays in the lender's receipt of the rents.     

        Some tax liens arising under the Code, may in some circumstances provide
priority over the lien of a mortgage or deed of trust. In addition, substantive 
requirements are imposed upon mortgage lenders in connection with the           
origination and the servicing of single family mortgage loans by numerous       
federal and some state consumer protection laws. These laws include the Federal 
Truth-in-Lending Act, Regulation Z, Real Estate Settlement Procedures Act,      
Regulation X, Equal Credit Opportunity Act, Regulation B, Fair Credit Billing   
Act, Fair Housing Act, Fair Credit Reporting Act and related statutes. These    
federal laws impose specific statutory liabilities upon lenders who originate   
mortgage loans and who fail to comply with the provisions of the law. In some   
cases, this liability may affect assignees of the mortgage loans. In particular,
the originators' failure to comply with certain requirements of the Federal     
Truth-in-Lending Act, as implemented by Regulation Z, could subject both        
originators and assignees of the obligations to monetary penalties and could    
result in obligors' rescinding loans against either originators or assignees.   

    In addition, some of the mortgage loans included in a trust fund may
also be subject to the Home Ownership and Equity Protection Act of 1994, if the 
mortgage loans were originated on or after October 1, 1995, are not mortgage    
loans made to finance the purchase of the mortgaged property and have interest  
rates or origination costs in excess of certain prescribed levels. The          
Homeownership Act requires certain additional disclosures, specifies the timing 
of the disclosures and limits or prohibits inclusion of certain provisions in   
mortgages subject to the Homeownership Act. Remedies available to the mortgagor 
include monetary penalties, as well as recission rights if the appropriate      
disclosures were not given as required or if the particular mortgage includes   
provisions prohibited by law. The Homeownership Act also provides that any      
purchaser or assignee of a mortgage covered by the Homeownership Act is subject 
to all of the claims and defenses to loan payment, whether under the Federal    
Truth-in-Lending Act, as amended by the Homeownership Act or other law, which   
the borrower could assert against the original lender unless the purchaser or   
assignee did not know and could not with reasonable diligence have determined   
that the mortgage loan was subject to the provisions of the Homeownership Act.  
The maximum damages that may be recovered under the Homeownership Act from an   
assignee is the remaining amount of indebtedness plus the total amount paid by  
the borrower in connection with the mortgage loan.                              

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   Manufactured Housing Contracts. In addition to the laws limiting or
prohibiting deficiency judgments, numerous other statutory provisions, including
federal bankruptcy laws and related state laws, may interfere with or affect the
ability of a lender to realize upon collateral and/or enforce a deficiency      
judgment. For example, in a Chapter 13 proceeding under the federal bankruptcy  
law, a court may prevent a lender from repossessing a home, and, as part of the 
rehabilitation plan, reduce the amount of the secured indebtedness to the market
value of the home at the time of bankruptcy (as determined by the court),       
leaving the party providing financing as a general unsecured creditor for the   
remainder of the indebtedness. A bankruptcy court may also reduce the monthly   
payments due under a contract or change the rate of interest and time of        
repayment of the indebtedness.                                                  

CONSUMER PROTECTION LAWS WITH RESPECT TO MANUFACTURED HOUSING CONTRACTS AND HOME
IMPROVEMENT CONTRACTS                                                           

      Numerous federal and state consumer protection laws impose substantial
requirements upon creditors involved in consumer finance. These laws include the
Federal Truth-in-Lending Act, Regulation Z, the Equal Credit Opportunity Act,   
Regulation B, the Fair Credit Reporting Act, the Real Estate Settlement         
Procedures Act, Regulation X, the Fair Housing Act and related statutes. These  
laws can impose specific statutory liabilities upon creditors who fail to comply
with their provisions. In some cases, this liability may affect an assignee's   
ability to enforce a contract. In particular, the originators' failure to comply
with certain requirements of the Federal Truth-in-Lending Act, as implemented by
Regulation Z, could subject both originators and assignees of the obligations to
monetary penalties and could result in obligors' rescinding the contracts       
against either the originators or assignees. Further, if the manufactured       
housing contracts or home improvement contracts are deemed high cost loans      
within the meaning of the Homeownership Act, they would be subject to the same  
provisions of the Homeownership Act as mortgage loans as described in           
"--Anti-Deficiency Legislation and Other Limitations on Lenders" above.         

   Manufactured housing contracts and home improvement contracts often
contain provisions obligating the obligor to pay late charges if payments are   
not timely made. In some cases, federal and state law may specifically limit the
amount of late charges that may be collected. Unless the prospectus supplement  
indicates otherwise, under the related servicing agreement, late charges will be
retained by the servicer as additional servicing compensation, and any inability
to collect these amounts will not affect payments to securityholders.           

      Courts have imposed general equitable principles upon repossession and
litigation involving deficiency balances. These equitable principles are        
generally designed to relieve a consumer from the legal consequences of a       
default.                                                                        

       In several cases, consumers have asserted that the remedies provided to
secured parties under the UCC and related laws violate the due process          
protections provided under the 14th Amendment to the Constitution of the United 
States. For the most part, courts have upheld the notice provisions of the UCC  
and related laws as reasonable or have found that the repossession and resale by
the creditor does not involve sufficient state action to afford constitutional  
protection to consumers.                                                        

The so-called "Holder-in-Due-Course" Rule of the Federal Trade  
Commission has the effect of subjecting a seller, and some related creditors and
their assignees, in a consumer credit transaction and any assignee of the       
creditor to all claims and defenses which the debtor in the transaction could   

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assert against the seller of the goods. Liability under the FTC Rule is limited 
to the amounts paid by a debtor on the contract, and the holder of the contract 
may also be unable to collect amounts still due thereunder.                     

Most of the manufactured housing contracts and home improvement 
contracts in a trust fund will be subject to the requirements of the FTC Rule.  
Accordingly, the trustee, as holder of the manufactured housing contracts, will 
be subject to any claims or defenses that the purchaser of the related          
manufactured home may assert against the seller of the manufactured home,       
subject to a maximum liability equal to the amounts paid by the obligor on the  
manufactured housing contract or home improvement contract. If an obligor is    
successful in asserting any such claim or defense, and if the mortgage loan     
seller had or should have had knowledge of such claim or defense, the servicer  
will have the right to require the mortgage loan seller to repurchase the       
manufactured housing contract or home improvement contract because of a breach  
of its mortgage loan seller's representation and warranty that no claims or     
defenses exist that would affect the obligor's obligation to make the required  
payments under the manufactured housing contract or home improvement contract.  
The mortgage loan seller would then have the right to require the originating   
dealer to repurchase the manufactured housing contract from it and might also   
have the right to recover from the dealer for any losses suffered by the        
mortgage loan seller with respect to which the dealer would have been primarily 
liable to the obligor.                                                          

OTHER LIMITATIONS                                                               

     In addition to the laws limiting or prohibiting deficiency judgments,
numerous other statutory provisions including federal bankruptcy laws and       
related state laws may interfere with or affect the ability of a lender to      
realize upon collateral or enforce a deficiency judgment. For example, in a     
Chapter 13 proceeding under the federal bankruptcy law, a court may prevent a   
lender from repossessing a home, and as part of the rehabilitation plan reduce  
the amount of the secured indebtedness to the market value of the home at the   
time of bankruptcy, as determined by the court, leaving the party providing     
financing as a general unsecured creditor for the remainder of the indebtedness.
A bankruptcy court may also reduce the monthly payments due under a contract or 
change the rate of interest and time of repayment of the indebtedness.          

ENFORCEABILITY OF PROVISIONS                                                    

The mortgage loans in a trust fund will in most cases contain   
due-on-sale clauses. These clauses permit the lender to accelerate the maturity 
of the loan if the borrower sells, transfers, or conveys the property without   
the prior consent of the lender. The enforceability of these clauses has been   
impaired in various ways in some states by statute or decisional law. The       
ability of lenders and their assignees and transferees to enforce due-on-sale   
clauses was addressed by the Garn-St Germain Depository Institutions Act of     
1982. This legislation, subject to certain exceptions, preempts state           
constitutional, statutory and case law that prohibits the enforcement of        
due-on-sale clauses. The Garn-St Germain Act does "encourage" lenders to permit 
assumptions of loans at the original rate of interest or at some other rate less
than the average of the original rate and the market rate.                      

        The Garn-St Germain Act also sets forth nine specific instances in which
a mortgage lender covered by the Garn-St Germain Act, including federal savings 
and loan associations and federal                                               

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savings banks, may not exercise a due-on-sale clause, even though a transfer of 
the property may have occurred. These include intra-family transfers, certain   
transfers by operation of law, leases of fewer than three years and the creation
of a junior encumbrance. Regulations promulgated under the Garn-St Germain Act  
also prohibit the imposition of a prepayment penalty upon the acceleration of a 
loan pursuant to a due-on-sale clause.                                          

      The inability to enforce a due-on-sale clause may result in a mortgage
loan bearing an interest rate below the current market rate being assumed by a  
new home buyer rather than being paid off, which may have an impact upon the    
average life of the mortgage loans related to a series and the number of        
mortgage loans that may be outstanding until maturity.                          

   Transfer of Manufactured Homes under Manufactured Housing Contracts

        Generally, manufactured housing contracts contain provisions prohibiting
the sale or transfer of the related manufactured homes without the consent of   
the obligee on the contract and permitting the acceleration of the maturity of  
the contract by the obligee on the contract upon any sale or transfer that is   
not consented to. The servicer will, to the extent it has knowledge of the      
conveyance or proposed conveyance, exercise or cause to be exercised its rights 
to accelerate the maturity of the related manufactured housing contract through 
enforcement of due-on-sale clauses, subject to applicable state law. In some    
cases, the transfer may be made by a delinquent obligor in order to avoid a     
repossession proceeding with respect to a manufactured home.                    

In the case of a transfer of a manufactured home as to which the
servicer desires to accelerate the maturity of the related manufactured housing 
contract, the servicer's ability to do so will depend on the enforceability     
under state law of the due-on-sale clause. The Garn-St Germain Act preempts,    
subject to certain exceptions and conditions, state laws prohibiting enforcement
of due-on-sale clauses applicable to the manufactured homes. Consequently, in   
some cases the servicer may be prohibited from enforcing a due-on-sale clause in
respect of some manufactured homes.                                             

Prepayment Charges and Prepayments                              

       The regulations of the Federal Home Loan Bank Board, predecessor to the
Office of Thrift Supervision, prohibit the imposition of a prepayment penalty or
equivalent fee for or in connection with the acceleration of a loan by exercise 
of a due-on-sale clause. A mortgagee to whom a prepayment in full has been      
tendered may be compelled to give either a release of the mortgage or an        
instrument assigning the existing mortgage to a refinancing lender.             

LEASES AND RENTS                                                                

  Mortgages that encumber income-producing property often contain an
assignment of rents and leases and/or may be accompanied by a separate          
assignment of rents and leases, pursuant to which the borrower assigns to the   
lender the borrower's right, title and interest as landlord under each lease and
the income derived therefrom, and, unless rents are to be paid directly to the  
lender, retains a revocable license to collect the rents for so long as there is
no default. If the borrower defaults, the license terminates and the lender is  
entitled to collect the rents. Local law may require that the lender take       
possession of the property and/or obtain a court-appointed receiver before      
becoming entitled to collect the rents. In addition, if bankruptcy or similar   
proceedings are                                                                 

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commenced by or in respect of the borrower, the lender's ability to collect the 
rents may be adversely affected. In the event of borrower default, the amount of
rent the lender is able to collect from the tenants can significantly affect the
value of the lender's security interest.                                        

SUBORDINATE FINANCING                                                           

       When the mortgagor encumbers mortgaged property with one or more junior
liens, the senior lender is subjected to additional risk. First, the mortgagor  
may have difficulty servicing and repaying multiple loans. In addition, if the  
junior loan permits recourse to the mortgagor, as junior loans often do, and the
senior loan does not, a mortgagor may be more likely to repay sums due on the   
junior loan than those on the senior loan. Second, acts of the senior lender    
that prejudice the junior lender or impair the junior lender's security may     
create a superior equity in favor of the junior lender. For example, if the     
mortgagor and the senior lender agree to an increase in the principal amount of 
or the interest rate payable on the senior loan, the senior lender may lose its 
priority to the extent an existing junior lender is harmed or the mortgagor is  
additionally burdened. Third, if the mortgagor defaults on the senior loan or   
any junior loan or both, the existence of junior loans and actions taken by     
junior lenders can impair the security available to the senior lender and can   
interfere with or delay the taking of action by the senior lender. Moreover, the
bankruptcy of a junior lender may operate to stay foreclosure or similar        
proceeds by the senior lender.                                                  

APPLICABILITY OF USURY LAWS                                                     

        Title V of the Depository Institutions Deregulation and Monetary Control
Act of 1980 provides that state usury limitations shall not apply to certain    
types of residential first mortgage loans originated by certain lenders after   
March 31, 1980. A similar federal statute was in effect with respect to mortgage
loans made during the first three months of 1980. The Office of Thrift          
Supervision is authorized to issue rules and regulations and to publish         
interpretations governing implementation of Title V. The statute authorized any 
state to reimpose interest rate limits by adopting before April 1, 1983 a law or
constitutional provision that expressly rejects application of the federal law. 
In addition, even where Title V is not so rejected, any state is authorized by  
the law to adopt a provision limiting discount points or other charges on       
mortgage loans covered by Title V. Some states have taken action to reimpose    
interest rate limits or to limit discount points or other charges.              

   The depositor has been advised by counsel that a court interpreting
Title V would hold that mortgage loans originated on or after January 1, 1980   
are subject to federal preemption. Therefore, in a state that has not taken the 
requisite action to reject application of Title V or to adopt a provision       
limiting discount points or other charges prior to origination of the mortgage  
loans, any such limitation under the state's usury law would not apply to the   
mortgage loans.                                                                 

        In any state in which application of Title V has been expressly rejected
or a provision limiting discount points or other charges is adopted, no mortgage
loans originated after the date of such state action will be eligible for       
inclusion in a trust fund if the mortgage loans bear interest or provide for    
discount points or charges in excess of permitted levels. No mortgage loan      
originated prior to January 1, 1980 will bear interest or provide for discount  
points or charges in excess of permitted levels.                                

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      Title V also provides that state usury limitations do not apply to any
loan that is secured by a first lien on certain kinds of manufactured housing if
certain conditions are met, including the terms of any prepayments, late charges
and deferral fees and requiring a 30-day notice period prior to instituting any 
action leading to repossession of or foreclosure with respect to the related    
unit. Title V authorized any state to reimpose limitations on interest rates and
finance charges by adopting before April 1, 1983 a law or constitutional        
provision which expressly rejects application of the federal law. Fifteen states
adopted such a law prior to the April 1, 1983 deadline. In addition, even where 
Title V was not so rejected, any state is authorized by the law to adopt a      
provision limiting discount points or other charges on loans covered by Title V.
In any state in which application of Title V was expressly rejected or a        
provision limiting discount points or other charges has been adopted, no        
manufactured housing contract which imposes finance charges or provides for     
discount points or charges in excess of permitted levels has been included in   
the trust fund.                                                                 

ALTERNATIVE MORTGAGE INSTRUMENTS                                                

ARM Loans originated by non-federally chartered lenders have    
historically been subject to a variety of restrictions. These restrictions      
differed from state to state, resulting in difficulties in determining whether a
particular alternative mortgage instrument originated by a state-chartered      
lender complied with applicable law. These difficulties were simplified         
substantially as a result of the enactment of Title VIII of the Garn-St Germain 
Act. Title VIII provides that notwithstanding any state law to the contrary, (1)
state-chartered banks may originate "alternative mortgage instruments",         
including ARM Loans, in accordance with regulations promulgated by the          
Comptroller of the Currency with respect to origination of alternative mortgage 
instruments by national banks, (2) state-chartered credit unions may originate  
alternative mortgage instruments in accordance with regulations promulgated by  
the National Credit Union Administration with respect to origination of         
alternative mortgage instruments by federal credit unions and (3) all other     
non-federally chartered housing creditors, including, without limitation,       
state-chartered savings and loan associations, savings banks and mutual savings 
banks and mortgage banking companies may originate alternative mortgage         
instruments in accordance with the regulations promulgated by the Federal Home  
Loan Bank Board, predecessor to the Office of Thrift Supervision, with respect  
to origination of alternative mortgage instruments by federal savings and loan  
associations. Title VIII further provides that any state may reject             
applicability of the provisions of Title VIII by adopting prior to October 15,  
1985 a law or constitutional provision expressly rejecting the applicability of 
such provisions. Some states have taken this type of action.                    

   The depositor has been advised by counsel that a court interpreting
Title VIII would hold that ARM Loans that were originated by state-chartered    
lenders before the date of enactment of any state law or constitutional         
provision rejecting applicability of Title VIII would not be subject to state   
laws imposing restrictions or prohibitions on the ability of state-chartered    
lenders to originate alternative mortgage instruments.                          

All of the ARM Loans in a trust fund that were originated by a  
state-chartered lender after the enactment of a state law or constitutional     
provision rejecting the applicability of Title VIII will have complied with     
applicable state law. All of the ARM Loans in a trust fund that were originated 
by federally chartered lenders or that were originated by state-chartered       
lenders prior to enactment of a state law or constitutional provision rejecting 
the applicability of Title VIII will have been originated in compliance with all
applicable federal regulations.                                                 

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FORMALDEHYDE LITIGATION WITH RESPECT TO MANUFACTURED HOMES                      

       A number of lawsuits are pending in the United States alleging personal
injury from exposure to the chemical formaldehyde, which is present in many     
building materials including components of manufactured housing such as plywood 
flooring and wall paneling. Some of these lawsuits are pending against          
manufacturers of manufactured housing, suppliers of component parts, and related
persons in the distribution process. The depositor is aware of a limited number 
of cases in which plaintiffs have won judgments in these lawsuits.              

       Under the FTC Rule, which is described above under "Consumer Protection
Laws", the holder of any loan or contract secured by a manufactured home with   
respect to which a formaldehyde claim has been successfully asserted may be     
liable to the obligor for the amount paid by the obligor on the related loan or 
contract and may be unable to collect amounts still due under the loan or       
contract. The successful assertion of such claim will constitute a breach of a  
representation or warranty of the mortgage loan seller, and the securityholders 
would suffer a loss only to the extent that (1) the mortgage loan seller        
breached its obligation to repurchase the loan or contract in the event an      
obligor is successful in asserting the claim, and (2) the mortgage loan seller, 
the depositor or the trustee were unsuccessful in asserting any claim of        
contribution or subrogation on behalf of the securityholders against the        
manufacturer or other persons who were directly liable to the plaintiff for the 
damages. Typical products liability insurance policies held by manufacturers and
component suppliers of manufactured homes may not cover liabilities arising from
formaldehyde in manufactured housing, with the result that recoveries from the  
manufacturers, suppliers or other persons may be limited to their corporate     
assets without the benefit of insurance.                                        

SOLDIERS' AND SAILORS' CIVIL RELIEF ACT OF 1940                                 

       Under the terms of the Soldiers' and Sailors' Civil Relief Act of 1940,
as amended, a borrower who enters military service after the origination of that
borrower's mortgage loan, including a borrower who was in reserve status and is 
called to active duty after origination of the mortgage loan, may not be charged
interest, including fees and charges, above an annual rate of 6% during the     
period of that borrower's active duty status unless a court orders otherwise    
upon application of the lender. The Relief Act applies to borrowers who are     
members of the Army, Navy, Air Force, Marines, National Guard, Reserves, Coast  
Guard, and officers of the U.S. Public Health Service assigned to duty with the 
military. Because the Relief Act applies to borrowers who enter military        
service, including reservists who are called to active duty, after origination  
of the related mortgage loan no information can be provided as to the number of 
loans that may be affected by the Relief Act. Application of the Relief Act     
would adversely affect, for an indeterminate period of time, the ability of the 
servicer to collect full amounts of interest on the applicable mortgage loans.  
Any shortfalls in interest collections resulting from the application of the    
Relief Act would result in a reduction of the amounts distributable to the      
holders of the related series of securities, and would not be covered by        
advances or, unless specified in the related prospectus supplement, any form of 
credit support provided in connection with the securities. In addition, the     
Relief Act imposes limitations that would impair the ability of the servicer to 
foreclose on an affected mortgage loan or enforce rights under a manufactured   
housing contract or home improvement contract during the borrower's period of   
active duty status and under some circumstances during an additional three month
period thereafter. Thus, if the Relief Act applies to any Mortgage Asset which  
goes into default, there may be delays in payment on the related securities. Any
other interest shortfalls, deferrals or forgiveness                             

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of payments on the Mortgage Assets resulting from similar legislation or        
regulations may result in delays in payment or losses to securityholders if     
credit support has been exhausted or is no longer in effect or does not cover   
such shortfall.                                                                 

ENVIRONMENTAL LEGISLATION                                                       

        Under the federal Comprehensive Environmental Response, Compensation and
Liability Act, as amended, and under some state laws, a secured party which     
takes a deed-in-lieu of foreclosure, purchases a mortgaged property at a        
foreclosure sale, or operates a mortgaged property may become liable for the    
costs of cleaning up hazardous substances regardless of whether they have       
contaminated the property. CERCLA imposes strict as well as joint and several   
liability on several classes of potentially responsible parties, including      
current owners and operators of the property who did not cause or contribute to 
the contamination. Furthermore, liability under CERCLA is not limited to the    
original or unamortized principal balance of a loan or to the value of the      
property securing a loan. Lenders may be held liable under CERCLA as owners or  
operators unless they qualify for the secured creditor exemption to CERCLA. This
exemption exempts from the definition of owners and operators those who without 
participating in the management of a facility hold indicia of ownership         
primarily to protect a security interest in the facility. What constitutes      
sufficient participation in the management of a property securing a loan or the 
business of a borrower to render the exemption unavailable to a lender has been 
a matter of interpretation by the courts. CERCLA has been interpreted to impose 
liability on a secured party even absent foreclosure where the party            
participated in the financial management of the borrower's business to a degree 
indicating a capacity to influence waste disposal decisions. However, court     
interpretations of the secured creditor exemption have been inconsistent. In    
addition, when lenders foreclose and become owners of collateral property courts
are inconsistent as to whether that ownership renders the secured creditor      
exemption unavailable. Other federal and state laws may impose liability on a   
secured party which takes a deed-in-lieu of foreclosure, purchases a mortgaged  
property at a foreclosure sale, or operates a mortgaged property on which       
contaminants other than CERCLA hazardous substances are present, including      
petroleum, agricultural chemicals, hazardous wastes, asbestos, radon, and       
lead-based paint. Such cleanup costs may be substantial. It is possible that the
cleanup costs could become a liability of a trust fund and reduce the amounts   
otherwise distributable to the holders of the related series of securities.     
Moreover, some federal statutes and some states by statute impose an            
environmental lien for any cleanup costs incurred by the state on the property  
that is the subject of the cleanup costs. All subsequent liens on a property    
generally are subordinated to an environmental lien and in some states even     
prior recorded liens are subordinated to environmental liens. In the latter     
states, the security interest of the trust fund in a related parcel of real     
property that is subject to an environmental lien could be adversely affected.  

        Traditionally, many residential mortgage lenders have not taken steps to
evaluate whether contaminants are present with respect to any mortgaged property
prior to the origination of the mortgage loan or prior to foreclosure or        
accepting a deed-in-lieu of foreclosure. Accordingly, the servicer has not made 
and will not make such evaluations prior to the origination of the mortgage     
loans. Neither the servicer nor any replacement servicer will be required by any
servicing agreement to undertake any environmental evaluations prior to         
foreclosure or accepting a deed-in-lieu of foreclosure. The servicer will not   
make any representations or warranties or assume any liability with respect to  
the absence or effect of contaminants on any related real property or any       
casualty resulting from the presence or effect of contaminants. The servicer    
will not be obligated to foreclose                                              

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on related real property or accept a deed-in-lieu of foreclosure if it knows or 
reasonably believes that there are material contaminated conditions on a        
property. A failure so to foreclose may reduce the amounts otherwise available  
to securityholders of the related series.                                       

FORFEITURES IN DRUG AND RICO PROCEEDINGS                                        

Federal law provides that property owned by persons convicted of
drug-related crimes or of criminal violations of the Racketeer Influenced and   
Corrupt Organizations statute can be seized by the government if the property   
was used in or purchased with the proceeds of these crimes. Under procedures    
contained in the Comprehensive Crime Control Act of 1984 the government may     
seize the property even before conviction. The government must publish notice of
the forfeiture proceeding and may give notice to all parties "known to have an  
alleged interest in the property", including the holders of mortgage loans.     

   A lender may avoid forfeiture of its interest in the property if it
establishes that: (1) its mortgage was executed and recorded before commission  
of the crime upon which the forfeiture is based, or (2) the lender was at the   
time of execution of the mortgage "reasonably without cause to believe" that the
property was used in or purchased with the proceeds of illegal drug or RICO     
activities.                                                                     

NEGATIVE AMORTIZATION LOANS                                                     

  A recent case decided by the United States Court of Appeals, First
Circuit, held that state restrictions on the compounding of interest are not    
preempted by the provisions of the Depository Institutions Deregulation and     
Monetary Control Act of 1980 and as a result, a mortgage loan that provided for 
negative amortization violated New Hampshire's requirement that first mortgage  
loans provide for computation of interest on a simple interest basis. The       
holding was limited to the effect of DIDMC on state laws regarding the          
compounding of interest and the court did not address the applicability of the  
Alternative Mortgage Transaction Parity Act of 1982, which authorizes lender to 
make residential mortgage loans that provide for negative amortization. The     
First Circuit's decision is binding authority only on Federal District Courts in
Maine, New Hampshire, Massachusetts, Rhode Island and Puerto Rico.              

INSTALLMENT CONTRACTS                                                           

        The trust fund may also consist of installment sales contracts. Under an
installment sales contract the seller, referred to in this section as the       
"lender", retains legal title to the property and enters into an agreement with 
the purchaser, referred to in this section as the "borrower", for the payment of
the purchase price, plus interest, over the term of such contract. Only after   
full performance by the borrower of the installment contract is the lender      
obligated to convey title to the property to the purchaser. As with mortgage or 
deed of trust financing, during the effective period of the installment contract
the borrower is generally responsible for maintaining the property in good      
condition and for paying real estate taxes, assessments and hazard insurance    
premiums associated with the property.                                          

     The method of enforcing the rights of the lender under an installment
contract varies on a state-by-state basis depending upon the extent to which    
state courts are willing or able pursuant to                                    

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state statute to enforce the contract strictly according to its terms. The terms
of installment contracts generally provide that upon a default by the borrower, 
the borrower loses his or her right to occupy the property, the entire          
indebtedness is accelerated and the buyer's equitable interest in the property  
is forfeited. The lender in such a situation is not required to foreclose in    
order to obtain title to the property, although in some cases a quiet title     
action is pursued if the borrower has filed the installment contract in local   
land records and an ejectment action may be necessary to recover possession. In 
a few states, particularly in cases of borrower default during the early years  
of an installment contract, the courts will permit ejectment of the buyer and a 
forfeiture of his or her interest in the property. However, most state          
legislatures have enacted provisions by analogy to mortgage law protecting      
borrowers under installment contracts from the harsh consequences of forfeiture.
Under such statutes a judicial or nonjudicial foreclosure may be required, the  
lender may be required to give notice of default and the borrower may be granted
some grace period during which the installment contract may be reinstated upon  
full payment of the defaulted amount and the borrower may have a                
post-foreclosure statutory redemption right. In other states courts in equity   
may permit a borrower with significant investment in the property under an      
installment contract for the sale of real estate to share in the proceeds of    
sale of the property after the indebtedness is repaid or may otherwise refuse to
enforce the forfeiture clause. Nevertheless, generally the lender's procedures  
for obtaining possession and clear title under an installment contract in a     
given state are simpler and less time consuming and costly than are the         
procedures for foreclosing and obtaining clear title to a property subject to   
one or more liens.                                                              

 FEDERAL INCOME TAX CONSEQUENCES

GENERAL                                                                         

   The following discussion is the opinion of Thacher Proffitt & Wood,
counsel to the depositor, with respect to the anticipated material federal      
income tax consequences of the purchase, ownership and disposition of the       
securities offered under this prospectus and the prospectus supplement as it    
relates to matters of law or legal conclusions. This discussion is directed     
solely to securityholders that hold the securities as capital assets within the 
meaning of Section 1221 of the Code and does not purport to discuss all federal 
income tax consequences that may be applicable to the individual circumstances  
of banks, insurance companies, foreign investors, tax-exempt organizations,     
dealers in securities or currencies, mutual funds, real estate investment       
trusts, natural persons, cash method taxpayers, S corporations, estates and     
trusts, securityholders that hold the securities as part of a hedge, straddle   
or, an integrated or conversion transaction, or securityholders whose           
"functional currency" is not the United States dollar.                          

    The authorities on which this discussion and the opinion referred to below
are based are subject to change or differing interpretations which could apply  
retroactively. Prospective investors should note that no rulings have been or   
will be sought from the IRS with respect to any of the federal income tax       
consequences discussed below, and no assurance can be given that the IRS will   
not take contrary positions. Taxpayers and preparers of tax returns should be   
aware that under applicable Treasury regulations a provider of advice on        
specific issues of law is not considered an income tax return preparer unless   
the advice (1) is given with respect to events that                             

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have occurred at the time the advice is rendered and is not given with respect  
to the consequences of contemplated actions, and (2) is directly relevant to the
determination of an entry on a tax return. Accordingly, it is suggested that    
taxpayers consult their own tax advisors and tax return preparers regarding the 
preparation of any item on a tax return, even where the anticipated tax         
treatment has been discussed in this prospectus. In addition to the federal     
income tax consequences described in this prospectus, potential investors should
consider the state and local tax consequences, if any, of the purchase,         
ownership and disposition of the securities. See "State and Other Tax           
Consequences."                                                                  

The following discussion addresses securities of four general types:  

    o  REMIC Certificates representing interests in a trust fund, or a portion
     thereof, that the Trustee will elect to have treated as a REMIC under
the REMIC Provisions of the Code,                               

o  Notes constituting indebtedness for federal income tax purposes.   

 o  Grantor Trust Certificates representing interests in a Grantor Trust
Fund as to which no REMIC election will be made,                

   o  Partnership Certificates representing interests in a Partnership Trust
       Fund which is treated as a partnership for federal income tax purposes,
and                                                             

The prospectus supplement for each series of certificates will indicate whether 
one or more REMIC elections will be made for the related trust fund and will    
identify all regular interests and residual interests in the REMIC or REMICs.   
For purposes of this tax discussion, references to a securityholder or a holder 
are to the beneficial owner of a security.                                      

   The following discussion is based in part upon the OID Regulations and in
part upon REMIC Regulations. The OID Regulations do not adequately address      
issues relevant to the offered securities. In some instances the OID Regulations
provide that they are not applicable to securities like the offered securities. 

REMICs                                                                          

     Classification of REMICs. On or prior to the date of the related prospectus
supplement with respect to the issuance of each series of REMIC Certificates, in
the opinion of counsel to the depositor, assuming compliance with all provisions
of the related pooling and servicing agreement, for federal income tax purposes 
the related trust fund or each applicable portion of the related trust fund will
qualify as a REMIC and the offered REMIC Certificates will be considered to     
evidence ownership of REMIC Regular Certificates or REMIC Residual Certificates 
in that REMIC within the meaning of the REMIC Provisions.                       

    If an entity electing to be treated as a REMIC fails to comply with one or
more of the ongoing requirements of the Code for status as a REMIC during any   
taxable year, the Code provides that the entity will not be treated as a REMIC  
for that year and for later years. In that                                      

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event, the entity may be taxable as a corporation under Treasury regulations,   
and the related REMIC Certificates may not be accorded the status or given the  
tax treatment described under "Taxation of Owners of REMIC Regular Certificates"
and "Taxation of Owners of REMIC Residual Certificates". Although the Code      
authorizes the Treasury Department to issue regulations providing relief in the 
event of an inadvertent termination of REMIC status, these regulations have not 
been issued. If these regulations are issued, relief in the event of an         
inadvertent termination may be accompanied by sanctions, which may include the  
imposition of a corporate tax on all or a portion of the REMIC's income for the 
period in which the requirements for status as a REMIC are not satisfied. The   
pooling and servicing agreement with respect to each REMIC will include         
provisions designed to maintain the trust fund's status as a REMIC under the    
REMIC Provisions. It is not anticipated that the status of any trust fund as a  
REMIC will be inadvertently terminated.                                         

Characterization of Investments in REMIC Certificates. In general, the
REMIC Certificates will be real estate assets within the meaning of Section     
856(c)(4)(A) of the Code and assets described in Section 7701(a)(19)(C) of the  
Code in the same proportion as the assets of the REMIC underlying the           
certificates. If 95% or more of the assets of the REMIC qualify for either of   
the treatments described in the previous sentence at all times during a calendar
year, the REMIC Certificates will qualify for the corresponding status in their 
entirety for that calendar year. Interest, including original issue discount, on
the REMIC Regular Certificates and income allocated to the class of REMIC       
Residual Certificates will be interest described in Section 856(c)(3)(B) of the 
Code to the extent that the certificates are treated as real estate assets      
within the meaning of Section 856(c)(4)(A) of the Code. In addition, the REMIC  
Regular Certificates will be qualified mortgages within the meaning of Section  
860G(a)(3) of the Code if transferred to another REMIC on its startup day in    
exchange for regular or residual interests of that REMIC. The determination as  
to the percentage of the REMIC's assets that constitute assets described in     
these sections of the Code will be made for each calendar quarter based on the  
average adjusted basis of each category of the assets held by the REMIC during  
the calendar quarter. The Trustee will report those determinations to           
certificateholders in the manner and at the times required by Treasury          
regulations.                                                                    

   The assets of the REMIC will include mortgage loans, payments on mortgage
loans held prior to the remittance of these payments to the REMIC Certificates  
and any property acquired by foreclosure held prior to the sale of this         
property, and may include amounts in reserve accounts. It is unclear whether    
property acquired by foreclosure held prior to the sale of this property and    
amounts in reserve accounts would be considered to be part of the mortgage      
loans, or whether these assets otherwise would receive the same treatment as the
mortgage loans for purposes of all of the Code sections discussed in the        
immediately preceding paragraph. The related prospectus supplement will describe
the mortgage loans that may not be treated entirely as assets described in the  
sections of the Code discussed in the immediately preceding paragraph. The REMIC
Regulations do provide, however, that cash received from payments on mortgage   
loans held pending remittance is considered part of the mortgage loans for      
purposes of Section 856(c)(4)(A) of the Code. Furthermore, foreclosure property 
will qualify as real estate assets under Section 856(c)(4)(A) of the Code.      

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     Tiered REMIC Structures. For some series of REMIC Certificates, two or more
separate elections may be made to treat designated portions of the related trust
fund as REMICs for federal income tax purposes, creating a tiered REMIC         
structure. As to each series of REMIC Certificates, in the opinion of counsel to
the depositor, assuming compliance with all provisions of the related pooling   
and servicing agreement, each of the REMICs in that series will qualify as a    
REMIC and the REMIC Certificates issued by these REMICs will be considered to   
evidence ownership of REMIC Regular Certificates or REMIC Residual Certificates 
in the related REMIC within the meaning of the REMIC Provisions.                

   Solely for purposes of determining whether the REMIC Certificates will be
real estate assets within the meaning of Section 856(c)(4)(A) of the Code, and  
loans secured by an interest in real property under Section 7701(a)(19)(C) of   
the Code, and whether the income on the certificates is interest described in   
Section 856(c)(3)(B) of the Code, all of the REMICs in that series will be      
treated as one REMIC.                                                           

Taxation of Owners of REMIC Regular Certificates.                     

General. Except as otherwise stated in this discussion, REMIC Regular 
Certificates will be treated for federal income tax purposes as debt instruments
issued by the REMIC and not as ownership interests in the REMIC or its assets.  
Moreover, holders of REMIC Regular Certificates that ordinarily report income   
under a cash method of accounting will be required to report income for REMIC   
Regular Certificates under an accrual method.                                   

 Original Issue Discount. A REMIC Regular Certificate may be issued with
original issue discount within the meaning of Section 1273(a) of the Code. Any  
holder of a REMIC Regular Certificate issued with original issue discount       
generally will be required to include original issue discount in income as it   
accrues, in accordance with the constant yield method, in advance of the receipt
of the cash attributable to that income. In addition, Section 1272(a)(6) of the 
Code provides special rules applicable to REMIC Regular Certificates and some   
other debt instruments issued with original issue discount. Regulations have not
been issued under that section.                                                 

The Code requires that a reasonable Prepayment Assumption be used for 
mortgage loans held by a REMIC in computing the accrual of original issue       
discount on REMIC Regular Certificates issued by that REMIC, and that           
adjustments be made in the amount and rate of accrual of that discount to       
reflect differences between the actual prepayment rate and the Prepayment       
Assumption. The Prepayment Assumption is to be determined in a manner prescribed
in Treasury regulations; as noted above, those regulations have not been issued.
The committee report accompanying the Tax Reform Act of 1986 indicates that the 
regulations will provide that the Prepayment Assumption used for a REMIC Regular
Certificate must be the same as that used in pricing the initial offering of the
REMIC Regular Certificate. The Prepayment Assumption used in reporting original 
issue discount for each series of REMIC Regular Certificates will be consistent 
with this standard and will be disclosed in the related prospectus supplement.  
However, none of the depositor, the master servicer or the trustee will make any
representation that the mortgage loans will in fact prepay at a rate conforming 
to the Prepayment Assumption or at any other rate.                              

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     The original issue discount, if any, on a REMIC Regular Certificate will be
the excess of its stated redemption price at maturity over its issue price. The 
issue price of a particular class of REMIC Regular Certificates will be the     
first cash price at which a substantial amount of REMIC Regular Certificates of 
that class is sold, excluding sales to bond houses, brokers and underwriters. If
less than a substantial amount of a particular class of REMIC Regular           
Certificates is sold for cash on or prior to the closing date, the issue price  
for that class will be the fair market value of that class on the closing date. 
Under the OID Regulations, the stated redemption price of a REMIC Regular       
Certificate is equal to the total of all payments to be made on the certificate 
other than qualified stated interest. "Qualified stated interest" is interest   
that is unconditionally payable at least annually during the entire term of the 
instrument at a single fixed rate, a qualified floating rate, an objective rate,
a combination of a single fixed rate and one or more qualified floating rates or
one qualified inverse floating rate, or a combination of qualified floating     
rates that does not operate in a manner that accelerates or defers interest     
payments on the REMIC Regular Certificate.                                      

In the case of REMIC Regular Certificates bearing adjustable interest 
rates, the determination of the total amount of original issue discount and the 
timing of the inclusion thereof will vary according to the characteristics of   
the REMIC Regular Certificates. If the original issue discount rules apply to   
the certificates in a particular series, the related prospectus supplement will 
describe the manner in which these rules will be applied with respect to the    
certificates in that series that bear an adjustable interest rate in preparing  
information returns to the certificateholders and the IRS.                      

    The first interest payment on a REMIC Regular Certificate may be made more
than one month after the date of issuance, which is a period longer than the    
subsequent monthly intervals between interest payments. Assuming the accrual    
period for original issue discount is each monthly period that ends on the day  
prior to each remittance date, in some cases, as a consequence of this long     
first accrual period, some or all interest payments may be required to be       
included in the stated redemption price of the REMIC Regular Certificate and    
accounted for as original issue discount. Because interest on REMIC Regular     
Certificates must in any event be accounted for under an accrual method,        
applying this analysis would result in only a slight difference in the timing of
the inclusion in income of the yield on the REMIC Regular Certificates.         

     If the accrued interest to be paid on the first remittance date is computed
with respect to a period that begins prior to the closing date, a portion of the
purchase price paid for a REMIC Regular Certificate will reflect the accrued    
interest. In these cases, information returns to the certificateholders and the 
IRS will take the position that the portion of the purchase price paid for the  
interest accrued for periods prior to the closing date is part of the overall   
cost of the REMIC Regular Certificate, and not a separate asset the cost of     
which is recovered entirely out of interest received on the next remittance     
date), and that portion of the interest paid on the first remittance date in    
excess of interest accrued for a number of days corresponding to the number of  
days from the closing date to the first remittance date should be included in   
the stated redemption price of the REMIC Regular Certificate. However, the OID  
Regulations state that all or some portion of the accrued interest may be       
treated as a separate asset the cost of which is recovered entirely out         

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of interest paid on the first remittance date. It is unclear how an election to 
do so would be made under the OID Regulations and whether this election could be
made unilaterally by a certificateholder.                                       

     Notwithstanding the general definition of original issue discount, original
issue discount on a REMIC Regular Certificate will be considered to be de       
minimis if it is less than 0.25% of the stated redemption price of the REMIC    
Regular Certificate multiplied by its weighted average life. For this purpose,  
the weighted average life of a REMIC Regular Certificate is computed as the sum 
of the amounts determined, as to each payment included in the stated redemption 
price of the REMIC Regular Certificate, by multiplying (1) the number of        
complete years from the issue date until that payment is expected to be made,   
presumably taking into account the Prepayment Assumption, by (2) a fraction, the
numerator of which is the amount of the payment, and the denominator of which is
the stated redemption price at maturity of the REMIC Regular Certificate. Under 
the OID Regulations, original issue discount of only a de minimis amount, other 
than de minimis original issue discount attributable to a teaser interest rate  
or an initial interest holiday, will be included in income as each payment of   
stated principal is made, based on the product of the total amount of the de    
minimis original issue discount attributable to that certificate and a fraction,
the numerator of which is the amount of the principal payment and the           
denominator of which is the outstanding stated principal amount of the REMIC    
Regular Certificate. The OID Regulations also would permit a certificateholder  
to elect to accrue de minimis original issue discount into income currently     
based on a constant yield method. See "Taxation of Owners of REMIC Regular      
Certificates--Market Discount" for a description of this election under the OID 
Regulations.                                                                    

     If original issue discount on a REMIC Regular Certificate is in excess of a
de minimis amount, the holder of the certificate must include in ordinary gross 
income the sum of the daily portions of original issue discount for each day    
during its taxable year on which it held the REMIC Regular Certificate,         
including the purchase date but excluding the disposition date. In the case of  
an original holder of a REMIC Regular Certificate, the daily portions of        
original issue discount will be determined as described in the following        
paragraph.                                                                      

    As to each "accrual period," that is, each period that ends on a date that
corresponds to the day prior to each remittance date and begins on the first day
following the immediately preceding accrual period, except the first accrual    
period, which begins on the closing date, a calculation will be made of the     
portion of the original issue discount that accrued during the accrual period.  
The portion of original issue discount that accrues in any accrual period will  
equal the excess, if any, of (1) the sum of (a) the present value, as of the end
of the accrual period, of all of the remittances remaining to be made on the    
REMIC Regular Certificate, if any, in future periods and (b) the remittances    
made on the REMIC Regular Certificate during the accrual period of amounts      
included in the stated redemption price, over (2) the adjusted issue price of   
the REMIC Regular Certificate at the beginning of the accrual period. The       
present value of the remaining remittances referred to in the preceding sentence
will be calculated (1) assuming that remittances on the REMIC Regular           
Certificate will be received in future periods based on the mortgage loans being
prepaid at a rate equal to the Prepayment Assumption, (2) using a discount rate 
equal to the original yield to maturity of the certificate and (3) taking into  
account events, including actual                                                

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prepayments, that have occurred before the close of the accrual period. For     
these purposes, the original yield to maturity of the certificate will be       
calculated based on its issue price and assuming that remittances on the        
certificate will be made in all accrual periods based on the mortgage loans     
being prepaid at a rate equal to the Prepayment Assumption. The adjusted issue  
price of a REMIC Regular Certificate at the beginning of any accrual period will
equal the issue price of the certificate, increased by the aggregate amount of  
original issue discount that accrued with respect to the certificate in prior   
accrual periods, and reduced by the amount of any remittances made on the       
certificate in prior accrual periods of amounts included in the stated          
redemption price. The original issue discount accruing during any accrual period
will be allocated ratably to each day during the accrual period to determine the
daily portion of original issue discount for that day.                          

A subsequent purchaser of a REMIC Regular Certificate that purchases a
certificate that is treated as having been issued with original issue discount  
at a cost, excluding any portion of the cost attributable to accrued qualified  
stated interest, less than its remaining stated redemption price will also be   
required to include in gross income the daily portions of any original issue    
discount for the certificate. However, each daily portion will be reduced, if   
the cost of the certificate is in excess of its adjusted issue price in         
proportion to the ratio the excess bears to the aggregate original issue        
discount remaining to be accrued on the REMIC Regular Certificate. The "adjusted
issue price" of a REMIC Regular Certificate on any given day equals the sum of  
(1) the adjusted issue price or, in the case of the first accrual period, the   
issue price, of the certificate at the beginning of the accrual period which    
includes that day and (2) the daily portions of original issue discount for all 
days during the accrual period prior to that day.                               

Market Discount. A certificateholder that purchases a REMIC Regular   
Certificate at a market discount will recognize gain upon receipt of each       
remittance representing stated redemption price. A REMIC Regular Certificate    
issued without original issue discount will have market discount if purchased   
for less than its remaining stated principal amount and a REMIC Regular         
Certificate issued with original issue discount will have market discount if    
purchased for less than its adjusted issue price. Under Section 1276 of the     
Code, a certificateholder that purchases a REMIC Regular Certificate at a market
discount generally will be required to allocate the portion of each remittance  
representing stated redemption price first to accrued market discount not       
previously included in income, and to recognize ordinary income to that extent. 
A certificateholder may elect to include market discount in income currently as 
it accrues rather than including it on a deferred basis. If made, the election  
will apply to all market discount bonds acquired by the certificateholder on or 
after the first day of the first taxable year to which the election applies. In 
addition, the OID Regulations permit a certificateholder to elect to accrue all 
interest and discount in income as interest, and to amortize premium, based on a
constant yield method. If such an election were made with respect to a REMIC    
Regular Certificate with market discount, the certificateholder would be deemed 
to have made an election to include currently market discount in income with    
respect to all other debt instruments having market discount that the           
certificateholder acquires during the taxable year of the election or later     
taxable years, and possibly previously acquired instruments. Similarly, a       
certificateholder that made this election for a certificate that is acquired at 
a premium would be deemed to have made an election to amortize bond premium with
respect to all debt instruments having amortizable bond premium                 

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that the certificateholder owns or acquires. See "Taxation of Owners of REMIC   
Regular Certificates--Premium" below. Each of these elections to accrue         
interest, discount and premium with respect to a certificate on a constant yield
method or as interest would be irrevocable, except with the approval of the IRS.

   However, market discount with respect to a REMIC Regular Certificate will
be considered to be de minimis for purposes of Section 1276 of the Code if the  
market discount is less than 0.25% of the remaining stated redemption price of  
the REMIC Regular Certificate multiplied by the number of complete years to     
maturity remaining after the date of its purchase. In interpreting a similar    
rule with respect to original issue discount on obligations payable in          
installments, the OID Regulations refer to the weighted average maturity of     
obligations, and it is likely that the same rule will be applied with respect to
market discount, presumably taking into account the Prepayment Assumption. If   
market discount is treated as de minimis under this rule, it appears that the   
actual discount would be treated in a manner similar to original issue discount 
of a de minimis amount. See "Taxation of Owners of REMIC Regular Certificates-- 
Original Issue Discount" above. This treatment would result in discount being   
included in income at a slower rate than discount would be required to be       
included in income using the method described above.                            

Section 1276(b)(3) of the Code specifically authorizes the Treasury   
Department to issue regulations providing for the method for accruing market    
discount on debt instruments, the principal of which is payable in more than one
installment. Until regulations are issued by the Treasury Department, the rules 
described in the committee report apply. The committee report indicates that in 
each accrual period market discount on REMIC Regular Certificates should accrue,
at the certificateholder's option: (1) on the basis of a constant yield method, 
(2) in the case of a REMIC Regular Certificate issued without original issue    
discount, in an amount that bears the same ratio to the total remaining market  
discount as the stated interest paid in the accrual period bears to the total   
amount of stated interest remaining to be paid on the REMIC Regular Certificate 
as of the beginning of the accrual period, or (3) in the case of a REMIC Regular
Certificate issued with original issue discount, in an amount that bears the    
same ratio to the total remaining market discount as the original issue discount
accrued in the accrual period bears to the total original issue discount        
remaining on the REMIC Regular Certificate at the beginning of the accrual      
period. Moreover, the Prepayment Assumption used in calculating the accrual of  
original issue discount is also used in calculating the accrual of market       
discount. Because the regulations referred to in this paragraph have not been   
issued, it is not possible to predict what effect these regulations might have  
on the tax treatment of a REMIC Regular Certificate purchased at a discount in  
the secondary market.                                                           

    To the extent that REMIC Regular Certificates provide for monthly or other
periodic remittances throughout their term, the effect of these rules may be to 
require market discount to be includible in income at a rate that is not        
significantly slower than the rate at which the discount would accrue if it were
original issue discount. Moreover, in any event a holder of a REMIC Regular     
Certificate generally will be required to treat a portion of any gain on the    
sale or exchange of the certificate as ordinary income to the extent of the     
market discount accrued to the date of disposition under one of these methods,  
less any accrued market discount previously reported as ordinary income.        

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Further, under Section 1277 of the Code a holder of a REMIC Regular   
Certificate may be required to defer a portion of its interest deductions for   
the taxable year attributable to any indebtedness incurred or continued to      
purchase or carry a REMIC Regular Certificate purchased with market discount.   
For these purposes, the de minimis rule applies. Any such deferred interest     
expense would not exceed the market discount that accrues during the taxable    
year and is, in general, allowed as a deduction not later than the year in which
the market discount is includible in income. If a holder elects to include      
market discount in income currently as it accrues on all market discount        
instruments acquired by the holder in that taxable year or later taxable years, 
the interest deferral rule will not apply.                                      

 Premium. A REMIC Regular Certificate purchased at a cost, excluding any
portion of the cost attributable to accrued qualified stated interest, greater  
than its remaining stated redemption price will be considered to be purchased at
a premium. The holder of a REMIC Regular Certificate may elect under Section 171
of the Code to amortize the premium under the constant yield method over the    
life of the certificate. If made, the election will apply to all debt           
instruments having amortizable bond premium that the holder owns or subsequently
acquires. Amortizable premium will be treated as an offset to interest income on
the related debt instrument, rather than as a separate interest deduction. The  
OID Regulations also permit certificateholders to elect to include all interest,
discount and premium in income based on a constant yield method, further        
treating the certificateholder as having made the election to amortize premium  
generally. See "Taxation of Owners of REMIC Regular Certificates--Market        
Discount" above. The committee report states that the same rules that apply to  
accrual of market discount, which rules will require use of a Prepayment        
Assumption in accruing market discount with respect to REMIC Regular            
Certificates without regard to whether the certificates have original issue     
discount, will also apply in amortizing bond premium under Section 171 of the   
Code.                                                                           

   Realized Losses. Under Section 166 of the Code, both corporate holders of
the REMIC Regular Certificates and noncorporate holders of the REMIC Regular    
Certificates that acquire the certificates in connection with a trade or        
business should be allowed to deduct, as ordinary losses, any losses sustained  
during a taxable year in which their certificates become wholly or partially    
worthless as the result of one or more realized losses on the mortgage loans.   
However, it appears that a noncorporate holder that does not acquire a REMIC    
Regular Certificate in connection with a trade or business will not be entitled 
to deduct a loss under Section 166 of the Code until the holder's certificate   
becomes wholly worthless, i.e., until its outstanding principal balance has been
reduced to zero, and that the loss will be characterized as a short-term capital
loss.                                                                           

Each holder of a REMIC Regular Certificate will be required to accrue 
interest and original issue discount with respect to the certificate, without   
giving effect to any reduction in remittances attributable to defaults or       
delinquencies on the mortgage loans or the certificate underlying the REMIC     
Certificates, as the case may be, until it can be established the reduction     
ultimately will not be recoverable. As a result, the amount of taxable income   
reported in any period by the holder of a REMIC Regular Certificate could exceed
the amount of economic income actually realized by that holder in the period.   
Although the holder of a REMIC Regular Certificate eventually will recognize a  
loss or reduction in income attributable to previously accrued and              

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included income that as the result of a realized loss ultimately will not be    
realized, the law is unclear with respect to the timing and character of this   
loss or reduction in income.                                                    

Taxation of Owners of REMIC Residual Certificates                           

General. Although a REMIC is a separate entity for federal income tax 
purposes, a REMIC generally is not subject to entity-level taxation, except with
regard to prohibited transactions and some other transactions. See "--Prohibited
Transactions Tax and Other Taxes" below. Rather, the taxable income or net loss 
of a REMIC is generally taken into account by the holder of the REMIC Residual  
Certificates. Accordingly, the REMIC Residual Certificates will be subject to   
tax rules that differ significantly from those that would apply if the REMIC    
Residual Certificates were treated for federal income tax purposes as direct    
ownership interests in the mortgage loans or as debt instruments issued by the  
REMIC.                                                                          

A holder of a REMIC Residual Certificate generally will be required to
report its daily portion of the taxable income or, subject to the limitations   
noted in this discussion, the net loss of the REMIC for each day during a       
calendar quarter that the holder owned the REMIC Residual Certificate. For this 
purpose, the taxable income or net loss of the REMIC will be allocated to each  
day in the calendar quarter ratably using a 30 days per month/90 days per       
quarter/360 days per year convention unless otherwise disclosed in the related  
prospectus supplement. The daily amounts so allocated will then be allocated    
among the REMIC Residual Certificateholders in proportion to their respective   
ownership interests on that day. Any amount included in the gross income or     
allowed as a loss of any REMIC Residual Certificateholder by virtue of this     
paragraph will be treated as ordinary income or loss. The taxable income of the 
REMIC will be determined under the rules described below in "Taxable Income of  
the REMIC" and will be taxable to the REMIC Residual Certificateholders without 
regard to the timing or amount of cash remittances by the REMIC. Ordinary income
derived from REMIC Residual Certificates will be portfolio income for purposes  
of the taxation of taxpayers subject to limitations under Section 469 of the    
Code on the deductibility of passive losses.                                    

 A holder of a REMIC Residual Certificate that purchased the certificate
from a prior holder of that certificate also will be required to report on its  
federal income tax return amounts representing its daily share of the taxable   
income, or net loss, of the REMIC for each day that it holds the REMIC Residual 
Certificate. Those daily amounts generally will equal the amounts of taxable    
income or net loss. The committee report indicates that some modifications of   
the general rules may be made, by regulations, legislation or otherwise to      
reduce, or increase, the income of a REMIC Residual Certificateholder that      
purchased the REMIC Residual Certificate from a prior holder of the certificate 
at a price greater than, or less than, the adjusted basis, the REMIC Residual   
Certificate would have had in the hands of an original holder of the            
certificate. The REMIC Regulations, however, do not provide for any such        
modifications.                                                                  

Any payments received by a holder of a REMIC Residual Certificate in  
connection with the acquisition of the REMIC Residual Certificate will be taken 
into account in determining the income of the holder for federal income tax     
purposes. Although it appears likely that any of these payments would be        
includible in income immediately upon its receipt, the IRS might assert that    

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these payments should be included in income over time according to an           
amortization schedule or according to some other method. Because of the         
uncertainty concerning the treatment of these payments, holders of REMIC        
Residual Certificates should consult their tax advisors concerning the treatment
of these payments for income tax purposes.                                      

    The amount of income REMIC Residual Certificateholders will be required to
report, or the tax liability associated with the income, may exceed the amount  
of cash remittances received from the REMIC for the corresponding period.       
Consequently, REMIC Residual Certificateholders should have other sources of    
funds sufficient to pay any federal income taxes due as a result of their       
ownership of REMIC Residual Certificates or unrelated deductions against which  
income may be offset, subject to the rules relating to excess inclusions, and   
noneconomic residual interests discussed at "-Noneconomic REMIC Residual        
Certificates". The fact that the tax liability associated with the income       
allocated to REMIC Residual Certificateholders may exceed the cash remittances  
received by the REMIC Residual Certificateholders for the corresponding period  
may significantly adversely affect the REMIC Residual Certificateholders'       
after-tax rate of return. This disparity between income and remittances may not 
be offset by corresponding losses or reductions of income attributable to the   
REMIC Residual Certificateholder until subsequent tax years and, then, may not  
be completely offset due to changes in the Code, tax rates or character of the  
income or loss.                                                                 

     Taxable Income of the REMIC. The taxable income of the REMIC will equal the
income from the mortgage loans and other assets of the REMIC plus any           
cancellation of indebtedness income due to the allocation of realized losses to 
REMIC Regular Certificates, less the deductions allowed to the REMIC for        
interest, including original issue discount and reduced by any premium on       
issuance, on the REMIC Regular Certificates, whether or not offered by the      
prospectus, amortization of any premium on the mortgage loans, bad debt losses  
with respect to the mortgage loans and, except as described below, for          
servicing, administrative and other expenses.                                   

For purposes of determining its taxable income, the REMIC will have an
initial aggregate basis in its assets equal to the sum of the issue prices of   
all REMIC Certificates, or if a class of REMIC Certificates is not sold         
initially, their fair market values. The aggregate basis will be allocated among
the mortgage loans and the other assets of the REMIC in proportion to their     
respective fair market values. The issue price of any offered REMIC Certificates
will be determined in the manner described above under "--Taxation of Owners of 
REMIC Regular Certificates--Original Issue Discount." The issue price of a REMIC
Certificate received in exchange for an interest in the mortgage loans or other 
property will equal the fair market value of the interests in the mortgage loans
or other property. Accordingly, if one or more classes of REMIC Certificates are
retained initially rather than sold, the Trustee may be required to estimate the
fair market value of the interests in order to determine the basis of the REMIC 
in the mortgage loans and other property held by the REMIC.                     

Subject to possible application of the de minimis rules, the method of
accrual by the REMIC of original issue discount income and market discount      
income with respect to mortgage loans that it holds will be equivalent to the   
method for accruing original issue discount income for                          

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holders of REMIC Regular Certificates. However, a REMIC that acquires loans at a
market discount must include the market discount in income currently, as it     
accrues, on a constant yield basis. See "--Taxation of Owners of REMIC Regular  
Certificates" above, which describes a method for accruing discount income that 
is analogous to that required to be used by a REMIC as to mortgage loans with   
market discount that it holds.                                                  

   A mortgage loan will be deemed to have been acquired with either discount
or premium to the extent that the REMIC's basis in the mortgage loan is either  
less than or greater than its stated redemption price. Any discount will be     
includible in the income of the REMIC as it accrues, in advance of receipt of   
the cash attributable to the income, under a method similar to the method       
described above for accruing original issue discount on the REMIC Regular       
Certificates. It is anticipated that each REMIC will elect under Section 171 of 
the Code to amortize any premium on the mortgage loans. Premium on any mortgage 
loan to which the election applies may be amortized under a constant yield      
method, presumably taking into account a Prepayment Assumption. This election   
would not apply to any mortgage loan originated on or before September 27, 1985,
premium on which should be allocated among the principal payments on that       
mortgage loan and be deductible by the REMIC as those payments become due or    
upon the prepayment of the mortgage loan.                                       

   A REMIC will be allowed deductions for interest, including original issue
discount, on the REMIC Regular Certificates, whether or not offered by this     
prospectus, equal to the deductions that would be allowed if these REMIC Regular
Certificates were indebtedness of the REMIC. Original issue discount will be    
considered to accrue for this purpose as described above under "--Taxation of   
Owners of REMIC Regular Certificates--Original Issue Discount," except that the 
de minimis rule and the adjustments for subsequent holders of these REMIC       
Regular Certificates will not apply.                                            

    If a class of REMIC Regular Certificates is issued with issue premium, the
net amount of interest deductions that are allowed the REMIC in each taxable    
year for the REMIC Regular Certificates of that class will be reduced by an     
amount equal to the portion of the issue premium that is considered to be       
amortized or repaid in that year. "Issue premium" is the excess of the issue    
price of a REMIC Regular Certificate over its stated redemption price. Although 
the matter is not entirely clear, it is likely that issue premium would be      
amortized under a constant yield method in a manner analogous to the method of  
accruing original issue discount described above under "--Taxation of Owners of 
REMIC Regular Certificates--Original Issue Discount."                           

    As a general rule, the taxable income of a REMIC will be determined in the
same manner as if the REMIC were an individual having the calendar year as its  
taxable year and using the accrual method of accounting. However, no item of    
income, gain, loss or deduction allocable to a prohibited transaction will be   
taken into account. See "--Prohibited Transactions Tax and Other Taxes" below.  
Further, the limitation on miscellaneous itemized deductions imposed on         
individuals by Section 67 of the Code, allowing these deductions only to the    
extent they exceed in the aggregate two percent of the taxpayer's adjusted gross
income, will not be applied at the REMIC level and the REMIC will be allowed    
deductions for servicing, administrative and other non-interest expenses in     
determining its taxable income. These expenses will be allocated as a           

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separate item to the holders of REMIC Certificates, subject to the limitation of
Section 67 of the Code. See "--Possible Pass-Through of Miscellaneous Itemized  
Deductions" below. If the deductions allowed to the REMIC exceed its gross      
income for a calendar quarter, the excess will be the net loss for the REMIC for
that calendar quarter.                                                          

Basis Rules, Net Losses and Remittances. The adjusted basis of a REMIC
Residual Certificate will be equal to the amount paid for the REMIC Residual    
Certificate, increased by amounts included in the income of the REMIC Residual  
Certificateholder and decreased, but not below zero, by remittances made, and by
net losses allocated, to the REMIC Residual Certificateholder.                  

    A REMIC Residual Certificateholder is not allowed to take into account any
net loss for any calendar quarter to the extent the net loss exceeds the REMIC  
Residual Certificateholder's adjusted basis in its REMIC Residual Certificate as
of the close of the calendar quarter, determined without regard to the net loss.
Any loss that is not currently deductible by reason of this limitation may be   
carried forward indefinitely to future calendar quarters and, subject to the    
same limitation, may be used only to offset income from the REMIC Residual      
Certificate. The ability of REMIC Residual Certificateholders to deduct net     
losses may be subject to additional limitations under the Code, as to which     
REMIC Residual Certificateholders should consult their tax advisors.            

Any remittance on a REMIC Residual Certificate will be treated as a   
non-taxable return of capital to the extent it does not exceed the holder's     
adjusted basis in the REMIC Residual Certificate. To the extent a remittance on 
a REMIC Residual Certificate exceeds this adjusted basis, it will be treated as 
gain from the sale of the REMIC Residual Certificate. Holders of REMIC Residual 
Certificates may be entitled to remittances early in the term of the related    
REMIC under circumstances in which their bases in the REMIC Residual            
Certificates will not be sufficiently large that the remittances will be treated
as nontaxable returns of capital. Their bases in the REMIC Residual Certificates
will initially equal the amount paid for the REMIC Residual Certificates and    
will be increased by the REMIC Residual Certificateholders' allocable shares of 
taxable income of the REMIC. However, these bases increases may not occur until 
the end of the calendar quarter, or perhaps the end of the calendar year, with  
respect to which the REMIC taxable income is allocated to the REMIC Residual    
Certificateholders. To the extent the REMIC Residual Certificateholders' initial
bases are less than the remittances to the REMIC Residual Certificateholders,   
and increases in initial bases either occur after the remittances or, together  
with their initial bases, are less than the amount of the remittances, gain will
be recognized by the REMIC Residual Certificateholders on these remittances and 
will be treated as gain from the sale of their REMIC Residual Certificates.     

  The effect of these rules is that a REMIC Residual Certificateholder may
not amortize its basis in a REMIC Residual Certificate, but may only recover its
basis through remittances, through the deduction of any net losses of the REMIC 
or upon the sale of its REMIC Residual Certificate. See "--Sales of REMIC       
Certificates" below. For a discussion of possible modifications of these rules  
that may require adjustments to income of a holder of a REMIC Residual          
Certificate other than an original holder in order to reflect any difference    
between the                                                                     

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cost of the REMIC Residual Certificate to the REMIC Residual Certificateholder  
and the adjusted basis the REMIC Residual Certificate would have in the hands of
an original holder, see "--Taxation of Owners of REMIC Residual                 
Certificates--General" above.                                                   

   Excess Inclusions. Any excess inclusions with respect to a REMIC Residual
Certificate will be subject to federal income tax in all events. In general, the
"excess inclusions" with respect to a REMIC Residual Certificate for any        
calendar quarter will be the excess, if any, of (1) the daily portions of REMIC 
taxable income allocable to the REMIC Residual Certificate over (2) the sum of  
the daily accruals for each day during the quarter that the REMIC Residual      
Certificate was held by the REMIC Residual Certificateholder. The "daily        
accruals" of a REMIC Residual Certificateholder will be determined by allocating
to each day during a calendar quarter its ratable portion of the product of the 
adjusted issue price of the REMIC Residual Certificate at the beginning of the  
calendar quarter and 120% of the long-term Federal rate in effect on the closing
date. For this purpose, the adjusted issue price of a REMIC Residual Certificate
as of the beginning of any calendar quarter will be equal to the issue price of 
the REMIC Residual Certificate, increased by the sum of the daily accruals for  
all prior quarters and decreased, but not below zero, by any remittances made   
with respect to the REMIC Residual Certificate before the beginning of that     
quarter. The issue price of a REMIC Residual Certificate is the initial offering
price to the public, excluding bond houses and brokers, at which a substantial  
amount of the REMIC Residual Certificates were sold. The "long-term Federal     
rate" is an average of current yields on Treasury securities with a remaining   
term of greater than nine years, computed and published monthly by the IRS.     
Although it has not done so, the Treasury has authority to issue regulations    
that would treat the entire amount of income accruing on a REMIC Residual       
Certificate as an excess inclusion if the REMIC Residual Certificates are       
considered to have significant value.                                           

    For REMIC Residual Certificateholders, an excess inclusion (1) will not be
permitted to be offset by deductions, losses or loss carryovers from other      
activities, (2) will be treated as unrelated business taxable income to an      
otherwise tax-exempt organization and (3) will not be eligible for any rate     
reduction or exemption under any applicable tax treaty with respect to the 30%  
United States withholding tax imposed on remittances to REMIC Residual          
Certificateholders that are foreign investors. See, however, "--Foreign         
Investors in REMIC Certificates," below.                                        

     Furthermore, for purposes of the alternative minimum tax, excess inclusions
will not be permitted to be offset by the alternative tax net operating loss    
deduction and alternative minimum taxable income may not be less than the       
taxpayer's excess inclusions. The latter rule has the effect of preventing      
nonrefundable tax credits from reducing the taxpayer's income tax to an amount  
lower than the alternative minimum tax on excess inclusions.                    

In the case of any REMIC Residual Certificates held by a real estate  
investment trust, the aggregate excess inclusions with respect to the REMIC     
Residual Certificates, as reduced, but not below zero, by the real estate       
investment trust taxable income, will be allocated among the shareholders of the
trust in proportion to the dividends received by the shareholders from the      
trust, and any amount so allocated will be treated as an excess inclusion with  
respect to a REMIC                                                              

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Residual Certificate as if held directly by the shareholder. "Real estate       
investment trust taxable income" is defined by Section 857(b)(2) of the Code,   
and as used in the prior sentence does not include any net capital gain.        
Treasury regulations yet to be issued could apply a similar rule to regulated   
investment companies, common trust funds and cooperatives; the REMIC Regulations
currently do not address this subject.                                          

Noneconomic REMIC Residual Certificates. Under the REMIC Regulations, 
transfers of noneconomic REMIC Residual Certificates will be disregarded for all
federal income tax purposes if "a significant purpose of the transfer was to    
enable the transferor to impede the assessment or collection of tax." If the    
transfer is disregarded, the purported transferor will continue to remain liable
for any taxes due with respect to the income on the noneconomic REMIC Residual  
Certificate. The REMIC Regulations provide that a REMIC Residual Certificate is 
"noneconomic" unless, based on the Prepayment Assumption and on any required or 
permitted clean up calls, or required liquidation provided for in the REMIC's   
organizational documents, (1) the present value of the expected future          
remittances, discounted using the applicable Federal rate for obligations whose 
term ends on the close of the last quarter in which excess inclusions are       
expected to accrue with respect to the REMIC Residual Certificate, on the REMIC 
Residual Certificate equals at least the present value of the expected tax on   
the anticipated excess inclusions, and (2) the transferor reasonably expects    
that the transferee will receive remittances with respect to the REMIC Residual 
Certificate at or after the time the taxes accrue on the anticipated excess     
inclusions in an amount sufficient to satisfy the accrued taxes. Accordingly,   
all transfers of REMIC Residual Certificates that may constitute noneconomic    
residual interests will be subject to restrictions under the terms of the       
related pooling and servicing agreement that are intended to reduce the         
possibility of any such transfer being disregarded. These restrictions will     
require each party to a transfer to provide an affidavit that no purpose of the 
transfer is to impede the assessment or collection of tax, including            
representations as to the financial condition of the prospective transferee, for
which the transferor is also required to make a reasonable investigation to     
determine the transferee's historic payment of its debts and ability to continue
to pay its debts as they come due in the future. Prior to purchasing a REMIC    
Residual Certificate, prospective purchasers should consider the possibility    
that a purported transfer of the REMIC Residual Certificate by such a purchaser 
to another purchaser at some future date may be disregarded in accordance with  
the rule described in the first sentence of this paragraph, which would result  
in the retention of tax liability by the purchaser.                             

The related prospectus supplement will disclose whether offered REMIC 
Residual Certificates may be considered noneconomic residual interests under the
REMIC Regulations; provided, however, that any disclosure that a REMIC Residual 
Certificate will not be considered noneconomic will be based upon assumptions,  
and the depositor will make no representation that a REMIC Residual Certificate 
will not be considered noneconomic for purposes of the above-described rules.   
See "--Foreign Investors in REMIC Certificates--REMIC Residual Certificates"    
below for additional restrictions applicable to transfers of REMIC Residual     
Certificates to foreign persons.                                                

    Mark-to-Market Rules. In general, all securities owned by a dealer, except
to the extent that the dealer has specifically identified a security as held for
investment, must be marked to market                                            

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in accordance with the applicable Code provision and the related regulations.   
However, the IRS recently issued regulations which provide that for purposes of 
this mark-to-market requirement, a REMIC Residual Certificate acquired after    
January 4, 1995 is not treated as a security and thus may not be marked to      
market. Prospective purchasers of a REMIC Residual Certificate should consult   
their tax advisors regarding the possible application of the mark-to-market     
requirement to REMIC Residual Certificates.                                     

Possible Pass-Through of Miscellaneous Itemized Deductions. Fees and  
expenses of a REMIC generally will be allocated to the holders of the related   
REMIC Residual Certificates. The applicable Treasury regulations indicate,      
however, that in the case of a REMIC that is similar to a single class grantor  
trust, all or a portion of these fees and expenses should be allocated to the   
holders of the related REMIC Regular Certificates. Except as stated in the      
related prospectus supplement, these fees and expenses will be allocated to     
holders of the related REMIC Residual Certificates in their entirety and not to 
the holders of the related REMIC Regular Certificates.                          

   With respect to REMIC Residual Certificates or REMIC Regular Certificates
the holders of which receive an allocation of fees and expenses in accordance   
with the preceding discussion, if any holder thereof is an individual, estate or
trust, or a pass-through entity beneficially owned by one or more individuals,  
estates or trusts, (1) an amount equal to the individual's, estate's or trust's 
share of the fees and expenses will be added to the gross income of the holder  
and (2) the individual's, estate's or trust's share of the fees and expenses    
will be treated as a miscellaneous itemized deduction allowable subject to the  
limitation of Section 67 of the Code, which permits these deductions only to the
extent they exceed in the aggregate two percent of a taxpayer's adjusted gross  
income. In addition, Section 68 of the Code provides that the amount of itemized
deductions otherwise allowable for an individual whose adjusted gross income    
exceeds a specified amount will be reduced by the lesser of (1) 3% of the excess
of the individual's adjusted gross income over that amount or (2) 80% of the    
amount of itemized deductions otherwise allowable for the taxable year. The     
amount of additional taxable income reportable by REMIC Certificateholders that 
are subject to the limitations of either Section 67 or Section 68 of the Code   
may be substantial. Furthermore, in determining the alternative minimum taxable 
income of such a holder of a REMIC Certificate that is an individual, estate or 
trust, or a pass-through entity beneficially owned by one or more individuals,  
estates or trusts, no deduction will be allowed for the holder's allocable      
portion of servicing fees and other miscellaneous itemized deductions of the    
REMIC, even though an amount equal to the amount of the fees and other          
deductions will be included in the holder's gross income. Accordingly, these    
REMIC Certificates may not be appropriate investments for individuals, estates, 
or trusts, or pass-through entities beneficially owned by one or more           
individuals, estates or trusts. Prospective investors should consult with their 
own tax advisors prior to making an investment in the certificates.             

  Sales of REMIC Certificates. If a REMIC Certificate is sold, the selling
Certificateholder will recognize gain or loss equal to the difference between   
the amount realized on the sale and its adjusted basis in the REMIC Certificate.
The adjusted basis of a REMIC Regular Certificate generally will equal the cost 
of the REMIC Regular Certificate to the certificateholder, increased by income  
reported by such certificateholder with respect to the REMIC Regular            
Certificate,                                                                    

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including original issue discount and market discount income, and reduced, but  
not below zero, by remittances on the REMIC Regular Certificate received by the 
certificateholder and by any amortized premium. The adjusted basis of a REMIC   
Residual Certificate will be determined as described under "--Taxation of Owners
of REMIC Residual Certificates--Basis Rules, Net Losses and Remittances." Except
as provided in the following four paragraphs, any such gain or loss will be     
capital gain or loss, provided the REMIC Certificate is held as a capital asset 
within the meaning of Section 1221 of the Code.                                 

   Gain from the sale of a REMIC Regular Certificate that might otherwise be
capital gain will be treated as ordinary income to the extent the gain does not 
exceed the excess, if any, of (1) the amount that would have been includible in 
the seller's income with respect to the REMIC Regular Certificate assuming that 
income had accrued thereon at a rate equal to 110% of the applicable Federal    
rate, determined as of the date of purchase of the REMIC Regular Certificate,   
over (2) the amount of ordinary income actually includible in the seller's      
income prior to the sale. In addition, gain recognized on the sale of a REMIC   
Regular Certificate by a seller who purchased the REMIC Regular Certificate at a
market discount will be taxable as ordinary income in an amount not exceeding   
the portion of the discount that accrued during the period the REMIC Certificate
was held by the holder, reduced by any market discount included in income under 
the rules described above under "--Taxation of Owners of REMIC Regular          
Certificates--Market Discount" and "--Premium."                                 

    REMIC Certificates will be evidences of indebtedness within the meaning of
Section 582(c)(1) of the Code, so that gain or loss recognized from the sale of 
a REMIC Certificate by a bank or thrift institution to which this section       
applies will be ordinary income or loss.                                        

 A portion of any gain from the sale of a REMIC Regular Certificate that
might otherwise be capital gain may be treated as ordinary income to the extent 
that the certificate is held as part of a conversion transaction within the     
meaning of Section 1258 of the Code. A "conversion transaction" generally is one
in which the taxpayer has taken two or more positions in the same or similar    
property that reduce or eliminate market risk, if substantially all of the      
taxpayer's return is attributable to the time value of the taxpayer's net       
investment in the transaction. The amount of gain so realized in a conversion   
transaction that is recharacterized as ordinary income generally will not exceed
the amount of interest that would have accrued on the taxpayer's net investment 
at 120% of the appropriate applicable Federal rate at the time the taxpayer     
enters into the conversion transaction, subject to appropriate reduction for    
prior inclusion of interest and other ordinary income items from the            
transaction.                                                                    

  Finally, a taxpayer may elect to have net capital gain taxed at ordinary
income rates rather than capital gains rates in order to include the net capital
gain in total net investment income for the taxable year, for purposes of the   
rule that limits the deduction of interest on indebtedness incurred to purchase 
or carry property held for investment to a taxpayer's net investment income.    

    Except as may be provided in Treasury regulations yet to be issued, if the
seller of a REMIC Residual Certificate reacquires the REMIC Residual            
Certificate, or acquires any other residual interest in a REMIC or any similar  
interest in a taxable mortgage pool, as defined in Section                      

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7701(i) of the Code, during the period beginning six months before, and ending  
six months after, the date of the sale, such sale will be subject to the wash   
sale rules of Section 1091 of the Code. In that event, any loss realized by the 
REMIC Residual Certificateholder on the sale will not be deductible, but instead
will be added to the REMIC Residual Certificateholder's adjusted basis in the   
newly-acquired asset.                                                           

Prohibited Transactions and Other Possible REMIC Taxes. In the event a
REMIC engages in a prohibited transaction, the Code imposes a 100% tax on the   
income derived by the REMIC from the prohibited transaction. In general, subject
to specified exceptions, a prohibited transaction means the disposition of a    
mortgage loan, the receipt of income from a source other than a mortgage loan or
other permitted investments, the receipt of compensation for services, or gain  
from the disposition of an asset purchased with the payments on the mortgage    
loans for temporary investment pending remittance on the REMIC Certificates. It 
is not anticipated that any REMIC will engage in any prohibited transactions in 
which it would recognize a material amount of net income.                       

In addition, a contribution to a REMIC made after the day on which the
REMIC issues all of its interests could result in the imposition on the REMIC of
a tax equal to 100% of the value of the contributed property. Each pooling and  
servicing agreement will include provisions designed to prevent the acceptance  
of any contributions that would be subject to this tax.                         

     REMICs also are subject to federal income tax at the highest corporate rate
on net income from foreclosure property, determined by reference to the rules   
applicable to real estate investment trusts. "Net income from foreclosure       
property" generally means gain from the sale of a foreclosure property that is  
inventory property and gross income from foreclosure property other than        
qualifying rents and other qualifying income for a real estate investment trust.
It is not anticipated that any REMIC will recognize net income from foreclosure 
property subject to federal income tax.                                         

   To the extent permitted by then applicable laws, any tax resulting from a
prohibited transaction, tax resulting from a contribution made after the closing
date, tax on net income from foreclosure property or state or local income or   
franchise tax that may be imposed on the REMIC will be borne by the related     
master servicer or trustee in either case out of its own funds, provided that   
the master servicer or the trustee, as the case may be, has sufficient assets to
do so, and provided further that the tax arises out of a breach of the master   
servicer's or the trustee's obligations, as the case may be, under the related  
pooling and servicing agreement and in respect of compliance with applicable    
laws and regulations. Any of these taxes not borne by the master servicer or the
trustee will be charged against the related trust fund resulting in a reduction 
in amounts payable to holders of the related REMIC Certificates.                

     Tax and Restrictions on Transfers of REMIC Residual Certificates to Certain
Organizations. If a REMIC Residual Certificate is transferred to a disqualified 
organization, a tax would be imposed in an amount equal to the product of (1)   
the present value, discounted using the applicable Federal rate for obligations 
whose term ends on the close of the last quarter in which excess inclusions are 
expected to accrue with respect to the REMIC Residual                           

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Certificate, of the total anticipated excess inclusions with respect to the     
REMIC Residual Certificate for periods after the transfer and (2) the highest   
marginal federal income tax rate applicable to corporations. The anticipated    
excess inclusions must be determined as of the date that the REMIC Residual     
Certificate is transferred and must be based on events that have occurred up to 
the time of the transfer, the Prepayment Assumption and any required or         
permitted clean up calls or required liquidation provided for in the REMIC's    
organizational documents. The tax generally would be imposed on the transferor  
of the REMIC Residual Certificate, except that where the transfer is through an 
agent for a disqualified organization, the tax would instead be imposed on the  
agent. However, a transferor of a REMIC Residual Certificate would in no event  
be liable for the tax with respect to a transfer if the transferee furnishes to 
the transferor an affidavit that the transferee is not a disqualified           
organization and, as of the time of the transfer, the transferor does not have  
actual knowledge that the affidavit is false. Moreover, an entity will not      
qualify as a REMIC unless there are reasonable arrangements designed to ensure  
that (1) residual interests in the entity are not held by disqualified          
organizations and (2) information necessary for the application of the tax      
described herein will be made available. Restrictions on the transfer of REMIC  
Residual Certificates and other provisions that are intended to meet this       
requirement will be included in the pooling and servicing agreement, and will be
discussed more fully in any prospectus supplement relating to the offering of   
any REMIC Residual Certificate.                                                 

    In addition, if a pass-through entity includes in income excess inclusions
with respect to a REMIC Residual Certificate, and a disqualified organization is
the record holder of an interest in the entity, then a tax will be imposed on   
the entity equal to the product of (1) the amount of excess inclusions on the   
REMIC Residual Certificate that are allocable to the interest in the            
pass-through entity held by the disqualified organization and (2) the highest   
marginal federal income tax rate imposed on corporations. A pass-through entity 
will not be subject to this tax for any period, however, if each record holder  
of an interest in the pass-through entity furnishes to the pass-through entity  
(1) the holder's social security number and a statement under penalties of      
perjury that the social security number is that of the record holder or (2) a   
statement under penalties of perjury that the record holder is not a            
disqualified organization. Notwithstanding the preceding two sentences, in the  
case of a REMIC Residual Certificate held by an electing large partnership, as  
defined in Section 775 of the Code, all interests in the partnership shall be   
treated as held by disqualified organizations, without regard to whether the    
record holders of the partnership furnish statements described in the preceding 
sentence, and the amount that is subject to tax under the second preceding      
sentence is excluded from the gross income of the partnership allocated to the  
partners, in lieu of allocating to the partners a deduction for the tax paid by 
the partnership.                                                                

For these purposes, a "disqualified organization" means:              

o  the United States, any State or political subdivision thereof, any 
    foreign government, any international organization, or any agency or
instrumentality of the foregoing (but would not include         
      instrumentalities described in Section 168(h)(2)(D) of the Code or the
Federal Home Loan Mortgage Corporation,                         

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   o  any organization (other than a cooperative described in Section 521 of
      the Code) that is exempt from federal income tax, unless it is subject
to the tax imposed by Section 511 of the Code or                

o  any organization described in Section 1381(a)(2)(C) of the Code.   

    For these purposes, a "pass-through entity" means any regulated investment
company, real estate investment trust, trust, partnership or certain other      
entities described in Section 860E(e)(6) of the Code. In addition, a person     
holding an interest in a pass-through entity as a nominee for another person    
will, with respect to the interest, be treated as a pass-through entity.        

     Termination. A REMIC will terminate immediately after the remittance date
following receipt by the REMIC of the final payment in respect of the mortgage  
loans or upon a sale of the REMIC's assets following the adoption by the REMIC  
of a plan of complete liquidation. The last remittance on a REMIC Regular       
Certificate will be treated as a payment in retirement of a debt instrument. In 
the case of a REMIC Residual certificate, if the last remittance on the REMIC   
Residual Certificate is less than the REMIC Residual Certificateholder's        
adjusted basis in the Certificate, the REMIC Residual Certificateholder should, 
but may not, be treated as realizing a loss equal to the amount of the          
difference, and the loss may be treated as a capital loss.                      

  Reporting and Other Administrative Matters. Solely for purposes of the
administrative provisions of the Code, the REMIC will be treated as a           
partnership and REMIC Residual Certificateholders will be treated as partners.  
The Trustee or other party specified in the related prospectus supplement will  
file REMIC federal income tax returns on behalf of the related REMIC, and under 
the terms of the related Agreement, will either (1) be irrevocably appointed by 
the holders of the largest percentage interest in the related REMIC Residual    
Certificates as their agent to perform all of the duties of the tax matters     
person with respect to the REMIC in all respects or (2) will be designated as   
and will act as the tax matters person with respect to the related REMIC in all 
respects and will hold at least a nominal amount of REMIC Residual Certificates.

The Trustee, as the tax matters person or as agent for the tax matters
person, subject to notice requirements and various restrictions and limitations,
generally will have the authority to act on behalf of the REMIC and the REMIC   
Residual Certificateholders in connection with the administrative and judicial  
review of items of income, deduction, gain or loss of the REMIC, as well as the 
REMIC's classification. REMIC Residual Certificateholders generally will be     
required to report such REMIC items consistently with their treatment on the    
REMIC's tax return and may in some circumstances be bound by a settlement       
agreement between the Trustee, as either tax matters person or as agent for the 
tax matters person, and the IRS concerning any such REMIC item. Adjustments made
to the REMIC tax return may require a REMIC Residual Certificateholder to make  
corresponding adjustments on its return, and an audit of the REMIC's tax return,
or the adjustments resulting from such an audit, could result in an audit of a  
REMIC Residual Certificateholder's return. Any person that holds a REMIC        
Residual Certificate as a nominee for another person may be required to furnish 
the REMIC, in a manner to be provided in Treasury regulations, with the name and
address of the person and other information.                                    

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   Reporting of interest income, including any original issue discount, with
respect to REMIC Regular Certificates is required annually, and may be required 
more frequently under Treasury regulations. These information reports generally 
are required to be sent to individual holders of REMIC regular interests and the
IRS; holders of REMIC Regular Certificates that are corporations, trusts,       
securities dealers and some other non-individuals will be provided interest and 
original issue discount income information and the information set forth in the 
following paragraph upon request in accordance with the requirements of the     
applicable regulations. The information must be provided by the later of 30 days
after the end of the quarter for which the information was requested, or two    
weeks after the receipt of the request. The REMIC must also comply with rules   
requiring a REMIC Regular Certificate issued with original issue discount to    
disclose on its face the amount of original issue discount and the issue date,  
and requiring the information to be reported to the IRS. Reporting with respect 
to the REMIC Residual Certificates, including income, excess inclusions,        
investment expenses and relevant information regarding qualification of the     
REMIC's assets will be made as required under the Treasury regulations,         
generally on a quarterly basis.                                                 

As applicable, the REMIC Regular Certificate information reports will 
include a statement of the adjusted issue price of the REMIC Regular Certificate
at the beginning of each accrual period. In addition, the reports will include  
information required by regulations with respect to computing the accrual of any
market discount. Because exact computation of the accrual of market discount on 
a constant yield method would require information relating to the holder's      
purchase price that the REMIC may not have, Treasury regulations only require   
that information pertaining to the appropriate proportionate method of accruing 
market discount be provided. See "--Taxation of Owners of REMIC Regular         
Certificates--Market Discount."                                                 

     The responsibility for complying with the foregoing reporting rules will be
borne by the Trustee or other party designated in the related prospectus        
supplement.                                                                     

     Backup Withholding With Respect to REMIC Certificates. Payments of interest
and principal, as well as payments of proceeds from the sale of REMIC           
Certificates, may be subject to the backup withholding tax under Section 3406 of
the Code at a rate of 31% if recipients of the payments fail to furnish to the  
payor certain information, including their taxpayer identification numbers, or  
otherwise fail to establish an exemption from the backup withholding tax. Any   
amounts deducted and withheld from a remittance to a recipient would be allowed 
as a credit against the recipient's federal income tax. Furthermore, penalties  
may be imposed by the IRS on a recipient of payments that is required to supply 
information but that does not do so in the proper manner.                       

Foreign Investors in REMIC Certificates. A REMIC Regular          
Certificateholder that is not a United States Person and is not subject to      
federal income tax as a result of any direct or indirect connection to the      
United States in addition to its ownership of a REMIC Regular Certificate will  
not be subject to United States federal income or withholding tax in respect of 
a remittance on a REMIC Regular Certificate, provided that the holder complies  
to the extent necessary with identification requirements, including delivery of 
a statement, signed by the certificateholder under penalties of perjury,        
certifying that the certificateholder is not a United States Person and         

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providing the name and address of the certificateholder. It is possible that the
IRS may assert that the foregoing tax exemption should not apply with respect to
a REMIC Regular Certificate held by a REMIC Residual Certificateholder that owns
directly or indirectly a 10% or greater interest in the REMIC Residual          
Certificates. If the holder does not qualify for exemption, remittances of      
interest, including remittances in respect of accrued original issue discount,  
to the holder may be subject to a tax rate of 30%, subject to reduction under   
any applicable tax treaty.                                                      

   In addition, the foregoing rules will not apply to exempt a United States
shareholder of a controlled foreign corporation from taxation on the United     
States shareholder's allocable portion of the interest income received by the   
controlled foreign corporation.                                                 

    Further, it appears that a REMIC Regular Certificate would not be included
in the estate of a non-resident alien individual and would not be subject to    
United States estate taxes. However, it is suggested that certificateholders who
are non-resident alien individuals consult their tax advisors concerning this   
question.                                                                       

   Except as stated in the related prospectus supplement, transfers of REMIC
Residual Certificates to investors that are not United States Persons will be   
prohibited under the related pooling and servicing agreement.                   

New Withholding Regulations                                           

    The IRS has issued new regulations which make certain modifications to the
withholding, backup withholding and information reporting rules described above.
The new regulations attempt to unify certification requirements and modify      
reliance standards. These regulations will generally be effective for payments  
made after December 31, 2000. Prospective investors are urged to consult their  
tax advisors regarding these regulations.                                       

NOTES                                                                           

   On or prior to the date of the related prospectus supplement with respect
to the proposed issuance of each series of notes, in the opinion of counsel to  
the depositor, assuming compliance with all provisions of the indenture, owner  
trust agreement and other related documents, for federal income tax purposes (1)
the notes will be treated as indebtedness and (2) the Issuer, as created        
pursuant to the terms and conditions of the owner trust agreement, will not be  
characterized as an association, or publicly traded partnership, taxable as a   
corporation or as a taxable mortgage pool. For purposes of this tax discussion, 
references to a noteholder or a holder are to the beneficial owner of a note.   

Status as Real Property Loans                                         

(1) Notes held by a domestic building and loan association will not   
constitute "loans . . . secured by an interest in real property" within the     
meaning of Code section 7701(a)(19)(C)(v); and (2) notes held by a real estate  
investment trust will not constitute real estate assets within the meaning of   
Code section 856(c)(4)(A) and interest on notes will not be considered "interest
on                                                                              

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obligations secured by mortgages on real property" within the meaning of Code   
section 856(c)(3)(B).                                                           

Taxation of Noteholders                                               

Notes generally will be subject to the same rules of taxation as REMIC
Regular Certificates issued by a REMIC, as described above, except that (1)     
income reportable on the notes is not required to be reported under the accrual 
method unless the holder otherwise uses the accrual method and (2) the special  
rule treating a portion of the gain on sale or exchange of a REMIC Regular      
Certificate as ordinary income is inapplicable to the notes. See "--REMICs      
--Taxation of Owners of REMIC Regular Certificates" and "-- Sales of REMIC      
Certificates."                                                                  

GRANTOR TRUST FUNDS                                                             

Classification of Grantor Trust Funds                                 

   On or prior to the date of the related prospectus supplement with respect
to the proposed issuance of each series of Grantor Trust Certificates, in the   
opinion of counsel to the depositor, assuming compliance with all provisions of 
the related pooling and servicing agreement, the related Grantor Trust Fund will
be classified as a grantor trust under subpart E, part I of subchapter J of     
Chapter 1 of the Code and not as a partnership or an association taxable as a   
corporation.                                                                    

Characterization of Investments in Grantor Trust Certificates         

Grantor Trust Fractional Interest Certificates. In the case of Grantor
Trust Fractional Interest Certificates, except as disclosed in the related      
prospectus supplement, in the opinion of counsel to the depositor, Grantor Trust
Fractional Interest Certificates will represent interests in (1) "loans . . .   
secured by an interest in real property" within the meaning of Section          
7701(a)(19)(C)(v) of the Code; (2) "obligation[s] (including any participation  
or certificate of beneficial ownership therein) which . . .[are] principally    
secured by an interest in real property" within the meaning of Section          
860G(a)(3) of the Code; and (3) real estate assets within the meaning of Section
856(c)(4)(A) of the Code. In addition, counsel to the depositor will deliver an 
opinion that interest on Grantor Trust Fractional Interest Certificates will to 
the same extent be considered "interest on obligations secured by mortgages on  
real property or on interests in real property" within the meaning of Section   
856(c)(3)(B) of the Code.                                                       

 The assets constituting certain Grantor Trust Funds may include buydown
mortgage loans. The characterization of an investment in buydown mortgage loans 
will depend upon the precise terms of the related buydown agreement, but to the 
extent that such buydown mortgage loans are secured by a bank account or other  
personal property, they may not be treated in their entirety as assets described
in the foregoing sections of the Code. No directly applicable precedents exist  
with respect to the federal income tax treatment or the characterization of     
investments in buydown mortgage loans. Accordingly, holders of Grantor Trust    
Certificates should consult their                                               

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own tax advisors with respect to the characterization of investments in Grantor 
Trust Certificates representing an interest in a Grantor Trust Fund that        
includes buydown mortgage loans.                                                

    Grantor Trust Strip Certificates. Even if Grantor Trust Strip Certificates
evidence an interest in a Grantor Trust Fund consisting of mortgage loans that  
are "loans . . . secured by an interest in real property" within the meaning of 
Section 7701(a)(19)(C)(v) of the Code, and real estate assets within the meaning
of Section 856(c)(4)(A) of the Code, and the interest on the mortgage loans is  
"interest on obligations secured by mortgages on real property" within the      
meaning of Section 856(c)(3)(B) of the Code, it is unclear whether the Grantor  
Trust Strip Certificates, and income from the Grantor Trust Certificates will be
characterized the same way. However, the policies underlying these sections, to 
encourage or require investments in mortgage loans by thrift institutions and   
real estate investment trusts, may suggest that this characterization is        
appropriate. Counsel to the depositor will not deliver any opinion on these     
questions. It is suggested that prospective purchasers to which the             
characterization of an investment in Grantor Trust Strip Certificates is        
material consult their tax advisors regarding whether the Grantor Trust Strip   
Certificates, and the income therefrom, will be so characterized.               

    The Grantor Trust Strip Certificates will be "obligation[s] (including any
participation or certificate of beneficial ownership therein) which . . .[are]  
principally secured by an interest in real property" within the meaning of      
Section 860G(a)(3)(A) of the Code.                                              

Taxation of Owners of Grantor Trust Fractional Interest Certificates. 
Holders of a particular series of Grantor Trust Fractional Interest Certificates
generally will be required to report on their federal income tax returns their  
shares of the entire income from the mortgage loans, including amounts used to  
pay reasonable servicing fees and other expenses, and will be entitled to deduct
their shares of any such reasonable servicing fees and other expenses. Because  
of stripped interests, market or original issue discount, or premium, the amount
includible in income on account of a Grantor Trust Fractional Interest          
Certificate may differ significantly from the amount distributable on the same  
certificate representing interest on the mortgage loans. Under Section 67 of the
Code, an individual, estate or trust holding a Grantor Trust Fractional Interest
Certificate directly or through some pass-through entities will be allowed a    
deduction for the reasonable servicing fees and expenses only to the extent that
the aggregate of the holder's miscellaneous itemized deductions exceeds two     
percent of the holder's adjusted gross income. In addition, Section 68 of the   
Code provides that the amount of itemized deductions otherwise allowable for an 
individual whose adjusted gross income exceeds a specified amount will be       
reduced by the lesser of (1) 3% of the excess of the individual's adjusted gross
income over the amount or (2) 80% of the amount of itemized deductions otherwise
allowable for the taxable year. The amount of additional taxable income         
reportable by holders of Grantor Trust Fractional Interest Certificates who are 
subject to the limitations of either Section 67 or Section 68 of the Code may be
substantial. Further, certificateholders other than corporations subject to the 
alternative minimum tax may not deduct miscellaneous itemized deductions in     
determining the holder's alternative minimum taxable income. Although it is not 
entirely clear, it appears that in transactions in which multiple classes of    
Grantor Trust Certificates, including Grantor Trust Strip Certificates, are     
issued, the fees and expenses should be allocated among the classes of Grantor  

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Trust Certificates using a method that recognizes that each such class benefits 
from the related services. In the absence of statutory or administrative        
clarification as to the method to be used, it is intended to base information   
returns or reports to the IRS and certificateholders on a method that allocates 
the expenses among classes of Grantor Trust Certificates with respect to each   
period on the remittances made to each such class during that period.           

The federal income tax treatment of Grantor Trust Fractional Interest 
Certificates of any series will depend on whether they are subject to the       
stripped bond rules of Section 1286 of the Code. Grantor Trust Fractional       
Interest Certificates may be subject to those rules if (1) a class of Grantor   
Trust Strip Certificates is issued as part of the same series of certificates or
(2) the depositor or any of its affiliates retains, for its own account or for  
purposes of resale, a right to receive a specified portion of the interest      
payable on the mortgage loans. Further, the IRS has ruled that an unreasonably  
high servicing fee retained by a seller or servicer will be treated as a        
retained ownership interest in mortgages that constitutes a stripped coupon. For
purposes of determining what constitutes reasonable servicing fees for various  
types of mortgages the IRS has established safe harbors. The servicing fees paid
with respect to the mortgage loans for a series of Grantor Trust Certificates   
may be higher than those safe harbors and, accordingly, may not constitute      
reasonable servicing compensation. The related prospectus supplement will       
include information regarding servicing fees paid to the master servicer, any   
subservicer or their respective affiliates necessary to determine whether the   
safe harbor rules apply.                                                        

If Stripped Bond Rules Apply. If the stripped bond rules apply, each  
Grantor Trust Fractional Interest Certificate will be treated as having been    
issued with original issue discount within the meaning of Section 1273(a) of the
Code, subject, however, to the discussion in the sixth following paragraph      
regarding the treatment of some stripped bonds as market discount bonds and the 
discussion regarding de minimis market discount. See "--Taxation of Owners of   
Grantor Trust Fractional Interest Certificates-- Discount" below. Under the     
stripped bond rules, the holder of a Grantor Trust Fractional Interest          
Certificate, whether a cash or accrual method taxpayer, will be required to     
report interest income from its Grantor Trust Fractional Interest Certificate   
for each month in an amount equal to the income that accrues on the certificate 
in that month calculated under a constant yield method, in accordance with the  
rules of the Code relating to original issue discount.                          

The original issue discount on a Grantor Trust Fractional Interest    
Certificate will be the excess of the certificate's stated redemption price over
its issue price. The issue price of a Grantor Trust Fractional Interest         
Certificate as to any purchaser will be equal to the price paid by the purchaser
for the Grantor Trust Fractional Interest Certificate. The stated redemption    
price of a Grantor Trust Fractional Interest Certificate will be the sum of all 
payments to be made on the certificate, other than qualified stated interest, if
any, as well as the certificate's share of reasonable servicing fees and other  
expenses. See "--Taxation of Owners of Grantor Trust Fractional Interest        
Certificates-- Stripped Bond Rules Do Not Apply" for a definition of qualified  
stated interest. In general, the amount of the income that accrues in any month 
would equal the product of the holder's adjusted basis in the Grantor Trust     
Fractional Interest Certificate at the beginning of the month, see "Sales of    
Grantor Trust Certificates", and the yield of the Grantor Trust Fractional      
Interest Certificate to the holder. This yield would be computed at the rate,   

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compounded based on the regular interval between remittance dates, that, if used
to discount the holder's share of future payments on the mortgage loans, would  
cause the present value of those future payments to equal the price at which the
holder purchased the certificate. In computing yield under the stripped bond    
rules, a certificateholder's share of future payments on the mortgage loans will
not include any payments made in respect of any ownership interest in the       
mortgage loans retained by the depositor, the master servicer, any subservicer  
or their respective affiliates, but will include the certificateholder's share  
of any reasonable servicing fees and other expenses.                            

    To the extent the Grantor Trust Fractional Interest Certificates represent
an interest in any pool of debt instruments the yield on which may be affected  
by reason of prepayments, Section 1272(a)(6) of the Code requires (1) the use of
a reasonable Prepayment Assumption in accruing original issue discount and (2)  
adjustments in the accrual of original issue discount when prepayments do not   
conform to the Prepayment Assumption. It is unclear whether those provisions    
would be applicable to the Grantor Trust Fractional Interest Certificates that  
do not represent an interest in any pool of debt instruments the yield on which 
may be affected by reason of prepayments, or whether use of a reasonable        
Prepayment Assumption may be required or permitted without reliance on these    
rules. It is also uncertain, if a Prepayment Assumption is used, whether the    
assumed prepayment rate would be determined based on conditions at the time of  
the first sale of the Grantor Trust Fractional Interest Certificate or, for a   
particular holder, at the time of purchase of the Grantor Trust Fractional      
Interest Certificate by that holder. It is suggested that Certificateholders    
consult their own tax advisors concerning reporting original issue discount with
respect to Grantor Trust Fractional Interest Certificates and, in particular,   
whether a Prepayment Assumption should be used in reporting original issue      
discount.                                                                       

    In the case of a Grantor Trust Fractional Interest Certificate acquired at
a price equal to the principal amount of the mortgage loans allocable to the    
certificate, the use of a Prepayment Assumption generally would not have any    
significant effect on the yield used in calculating accruals of interest income.
In the case, however, of a Grantor Trust Fractional Interest Certificate        
acquired at a price less than or greater than the principal amount of the       
certificate, that is, at a discount or a premium, the use of a reasonable       
Prepayment Assumption would increase or decrease the yield, and thus accelerate 
or decelerate, respectively, the reporting of income.                           

   If a Prepayment Assumption is not used, then when a mortgage loan prepays
in full, the holder of a Grantor Trust Fractional Interest Certificate acquired 
at a discount or a premium generally will recognize ordinary income or loss     
equal to the difference between the portion of the prepaid principal amount of  
the mortgage loan that is allocable to the certificate and the portion of the   
adjusted basis of the certificate that is allocable to the certificateholder's  
interest in the mortgage loan. If a Prepayment Assumption is used, it appears   
that no separate item of income or loss should be recognized upon a prepayment. 
Instead, a prepayment should be treated as a partial payment of the stated      
redemption price of the Grantor Trust Fractional Interest Certificate and       
accounted for under a method similar to that described for taking account of    
original issue discount on REMIC Regular Certificates. See "--REMICs--Taxation  
of Owners of REMIC Regular Certificates--Original Issue Discount." It is unclear
whether any other                                                               

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adjustments would be required to reflect differences between an assumed         
prepayment rate and the actual rate of prepayments.                             

It is intended to base information reports or returns to the IRS and  
certificateholders in transactions subject to the stripped bond rules on a      
Prepayment Assumption that will be disclosed in the related prospectus          
supplement and on a constant yield computed using a representative initial      
offering price for each class of certificates. However, none of the depositor,  
the master servicer or the trustee will make any representation that the        
mortgage loans will in fact prepay at a rate conforming to the Prepayment       
Assumption or any other rate and certificateholders should bear in mind that the
use of a representative initial offering price will mean that the information   
returns or reports, even if otherwise accepted as accurate by the IRS, will in  
any event be accurate only as to the initial certificateholders of each series  
who bought at that price.                                                       

   Under Treasury regulation Section 1.1286-1, some stripped bonds are to be
treated as market discount bonds and any purchaser of a stripped bond treated as
a market discount bond is to account for any discount on the bond as market     
discount rather than original issue discount. This treatment only applies,      
however, if immediately after the most recent disposition of the bond by a      
person stripping one or more coupons from the bond and disposing of the bond or 
coupon (1) there is no, or only a de minimis amount of, original issue discount 
or (2) the annual stated rate of interest payable on the original bond is no    
more than one percentage point lower than the gross interest rate payable on the
original mortgage loan, before subtracting any servicing fee or any stripped    
coupon. If interest payable on a Grantor Trust Fractional Interest Certificate  
is more than one percentage point lower than the gross interest rate payable on 
the mortgage loans, the related prospectus supplement will disclose that fact.  
If the original issue discount or market discount on a Grantor Trust Fractional 
Interest Certificate determined under the stripped bond rules is less than 0.25%
of the stated redemption price multiplied by the weighted average maturity of   
the mortgage loans, then that original issue discount or market discount will be
considered to be de minimis. Original issue discount or market discount of only 
a de minimis amount will be included in income in the same manner as de minimis 
original issue and market discount described in "--Characteristics of           
Investments in Grantor Trust Certificates-- If Stripped Bond Rules Do Not Apply"
and "--Market Discount" below.                                                  

 If Stripped Bond Rules Do Not Apply. Subject to the discussion below on
original issue discount, if the stripped bond rules do not apply to a Grantor   
Trust Fractional Interest Certificate, the certificateholder will be required to
report its share of the interest income on the mortgage loans in accordance with
the certificateholder's normal method of accounting. The original issue discount
rules will apply to a Grantor Trust Fractional Interest Certificate to the      
extent it evidences an interest in mortgage loans issued with original issue    
discount.                                                                       

   The original issue discount, if any, on the mortgage loans will equal the
difference between the stated redemption price of the mortgage loans and their  
issue price. Under the OID Regulations, the stated redemption price is equal to 
the total of all payments to be made on the mortgage loan other than qualified  
stated interest. "Qualified stated interest" is interest that is unconditionally
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objective rate, a combination of a single fixed rate and one or more qualified  
floating rates or one qualified inverse floating rate, or a combination of      
qualified floating rates that does not operate in a manner that accelerates or  
defers interest payments on the mortgage loan. In general, the issue price of a 
mortgage loan will be the amount received by the borrower from the lender under 
the terms of the mortgage loan, less any points paid by the borrower, and the   
stated redemption price of a mortgage loan will equal its principal amount,     
unless the mortgage loan provides for an initial below-market rate of interest  
or the acceleration or the deferral of interest payments. The determination as  
to whether original issue discount will be considered to be de minimis will be  
calculated using the same test described in the REMIC discussion. See           
"--Taxation of Owners of REMIC Regular Certificates--Original Issue Discount"   
above.                                                                          

In the case of mortgage loans bearing adjustable or variable interest 
rates, the related prospectus supplement will describe the manner in which the  
rules will be applied with respect to those mortgage loans by the master        
servicer or the trustee in preparing information returns to the                 
certificateholders and the IRS.                                                 

If original issue discount is in excess of a de minimis amount, all   
original issue discount with respect to a mortgage loan will be required to be  
accrued and reported in income each month, based on a constant yield. Section   
1272(a)(6) of the Code requires that a Prepayment Assumption be made in         
computing yield with respect to any pool of debt instruments the yield on which 
may be affected by reason of prepayments. Accordingly, for certificates backed  
by these pools, it is intended to base information reports and returns to the   
IRS and certificateholders on the use of a Prepayment Assumption. However, in   
the case of certificates not backed by these pools, it currently is not intended
to base the reports and returns on the use of a Prepayment Assumption. It is    
suggested that certificateholders consult their own tax advisors concerning     
whether a Prepayment Assumption should be used in reporting original issue      
discount with respect to Grantor Trust Fractional Interest Certificates.        
Certificateholders should refer to the related prospectus supplement with       
respect to each series to determine whether and in what manner the original     
issue discount rules will apply to mortgage loans in the series.                

A purchaser of a Grantor Trust Fractional Interest Certificate that   
purchases the Grantor Trust Fractional Interest Certificate at a cost less than 
the certificate's allocable portion of the aggregate remaining stated redemption
price of the mortgage loans held in the related trust fund will also be required
to include in gross income the certificate's daily portions of any original     
issue discount with respect to the mortgage loans. However, each such daily     
portion will be reduced, if the cost of the Grantor Trust Fractional Interest   
Certificate to the purchaser is in excess of the certificate's allocable portion
of the aggregate adjusted issue prices of the mortgage loans held in the related
trust fund, approximately in proportion to the ratio the excess bears to the    
certificate's allocable portion of the aggregate original issue discount        
remaining to be accrued on the mortgage loans. The adjusted issue price of a    
mortgage loan on any given day equals the sum of (1) the adjusted issue price,  
or, in the case of the first accrual period, the issue price, of the mortgage   
loan at the beginning of the accrual period that includes that day and (2) the  
daily portions of original issue discount for all days during the accrual period
prior to that day. The adjusted issue price of a mortgage loan at the beginning 
of any accrual period will equal the issue price of the mortgage loan, increased
by the aggregate amount of original issue discount with                         

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respect to the mortgage loan that accrued in prior accrual periods, and reduced 
by the amount of any payments made on the mortgage loan in prior accrual periods
of amounts included in its stated redemption price.                             

 In addition to its regular reports, the master servicer or the trustee,
except as provided in the related prospectus supplement, will provide to any    
holder of a Grantor Trust Fractional Interest Certificate such information as   
the holder may reasonably request from time to time with respect to original    
issue discount accruing on Grantor Trust Fractional Interest Certificates. See  
"Grantor Trust Reporting" below.                                                

 Market Discount. If the stripped bond rules do not apply to the Grantor
Trust Fractional Interest Certificate, a certificateholder may be subject to the
market discount rules of Sections 1276 through 1278 of the Code to the extent an
interest in a mortgage loan is considered to have been purchased at a market    
discount, that is, in the case of a mortgage loan issued without original issue 
discount, at a purchase price less than its remaining stated redemption price,  
or in the case of a mortgage loan issued with original issue discount, at a     
purchase price less than its adjusted issue price. If market discount is in     
excess of a de minimis amount, the holder generally will be required to include 
in income in each month the amount of the discount that has accrued through the 
month that has not previously been included in income, but limited, in the case 
of the portion of the discount that is allocable to any mortgage loan, to the   
payment of stated redemption price on the mortgage loan that is received by, or,
in the case of accrual basis certificateholders, due to, the trust fund in that 
month. A certificateholder may elect to include market discount in income       
currently as it accrues under a constant yield method based on the yield of the 
certificate to the holder rather than including it on a deferred basis under    
rules similar to those described in "--Taxation of Owners of REMIC Regular      
Certificates--Market Discount" above.                                           

    Section 1276(b)(3) of the Code authorized the Treasury Department to issue
regulations providing for the method for accruing market discount on debt       
instruments, the principal of which is payable in more than one installment.    
Until such time as regulations are issued by the Treasury Department, some rules
described in the committee report will apply. Under those rules, in each accrual
period market discount on the mortgage loans should accrue, at the              
certificateholder's option: (1) on the basis of a constant yield method, (2) in 
the case of a mortgage loan issued without original issue discount, in an amount
that bears the same ratio to the total remaining market discount as the stated  
interest paid in the accrual period bears to the total stated interest remaining
to be paid on the mortgage loan as of the beginning of the accrual period, or   
(3) in the case of a mortgage loan issued with original issue discount, in an   
amount that bears the same ratio to the total remaining market discount as the  
original issue discount accrued in the accrual period bears to the total        
original issue discount remaining at the beginning of the accrual period. The   
Prepayment Assumption, if any, used in calculating the accrual of original issue
discount is to be used in calculating the accrual of market discount. The effect
of using a Prepayment Assumption could be to accelerate the reporting of the    
discount income. Because the regulations referred to in this paragraph have not 
been issued, it is not possible to predict what effect the regulations might    
have on the tax treatment of a mortgage loan purchased at a discount in the     
secondary market.                                                               

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 Because the mortgage loans will provide for periodic payments of stated
redemption price, the market discount may be required to be included in income  
at a rate that is not significantly slower than the rate at which the discount  
would be included in income if it were original issue discount.                 

   Market discount with respect to mortgage loans may be considered to be de
minimis and, if so, will be includible in income under de minimis rules similar 
to those described above in "--REMICs--Taxation of Owners of REMIC Regular      
Certificates--Original Issue Discount" with the exception that it is less likely
that a Prepayment Assumption will be used for purposes of these rules with      
respect to the mortgage loans.                                                  

Further, under the rules described in "--REMICs--Taxation of Owners of
REMIC Regular Certificates--Market Discount," above, any discount that is not   
original issue discount and exceeds a de minimis amount may require the deferral
of interest expense deductions attributable to accrued market discount not yet  
includible in income, unless an election has been made to report market discount
currently as it accrues. This rule applies without regard to the origination    
dates of the mortgage loans.                                                    

Premium. If a certificateholder is treated as acquiring the underlying
mortgage loans at a premium, that is, at a price in excess of their remaining   
stated redemption price, the certificateholder may elect under Section 171 of   
the Code to amortize using a constant yield method the portion of the premium   
allocable to mortgage loans originated after September 27, 1985. Amortizable    
premium is treated as an offset to interest income on the related debt          
instrument, rather than as a separate interest deduction. However, premium      
allocable to mortgage loans originated before September 28, 1985 or to mortgage 
loans for which an amortization election is not made, should be allocated among 
the payments of stated redemption price on the mortgage loan and be allowed as a
deduction as these payments are made, or, for a certificateholder using the     
accrual method of accounting, when the payments of stated redemption price are  
due.                                                                            

   It is unclear whether a Prepayment Assumption should be used in computing
amortization of premium allowable under Section 171 of the Code. If premium is  
not subject to amortization using a Prepayment Assumption and a mortgage loan   
prepays in full, the holder of a Grantor Trust Fractional Interest Certificate  
acquired at a premium should recognize a loss, equal to the difference between  
the portion of the prepaid principal amount of the mortgage loan that is        
allocable to the certificate and the portion of the adjusted basis of the       
certificate that is allocable to the mortgage loan. If a Prepayment Assumption  
is used to amortize such premium, it appears that such a loss would be          
unavailable. Instead, if a Prepayment Assumption is used, a prepayment should be
treated as a partial payment of the stated redemption price of the Grantor Trust
Fractional Interest Certificate and accounted for under a method similar to that
described for taking account of original issue discount on REMIC Regular        
Certificates. See "REMICs--Taxation of Owners of REMIC Regular                  
Certificates--Original Issue Discount." It is unclear whether any other         
adjustments would be required to reflect differences between the Prepayment     
Assumption used, and the actual rate of prepayments.                            

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     Taxation of Owners of Grantor Trust Strip Certificates. The stripped coupon
rules of Section 1286 of the Code will apply to the Grantor Trust Strip         
Certificates. Except as described above in "Characterization of Investments in  
Grantor Trust Certificates--If Stripped Bond Rules Apply," no regulations or    
published rulings under Section 1286 of the Code have been issued and some      
uncertainty exists as to how it will be applied to securities such as the       
Grantor Trust Strip Certificates. Accordingly, it is suggested that holders of  
Grantor Trust Strip Certificates consult their own tax advisors concerning the  
method to be used in reporting income or loss with respect to the certificates. 

     The OID Regulations do not apply to stripped coupons, although they provide
general guidance as to how the original issue discount sections of the Code will
be applied. In addition, the discussion below is subject to the discussion under
"-- Application of Contingent Payment Rules" and assumes that the holder of a   
Grantor Trust Strip Certificate will not own any Grantor Trust Fractional       
Interest Certificates.                                                          

  Under the stripped coupon rules, it appears that original issue discount
will be required to be accrued in each month on the Grantor Trust Strip         
Certificates based on a constant yield method. In effect, each holder of Grantor
Trust Strip Certificates would include as interest income in each month an      
amount equal to the product of the holder's adjusted basis in the Grantor Trust 
Strip Certificate at the beginning of that month and the yield of the Grantor   
Trust Strip Certificate to the holder. The yield would be calculated based on   
the price paid for that Grantor Trust Strip Certificate by its holder and the   
payments remaining to be made thereon at the time of the purchase, plus an      
allocable portion of the servicing fees and expenses to be paid with respect to 
the mortgage loans. See "Characterization of Investments in Grantor Trust       
Certificates-- Stripped Bond Rules Apply" above.                                

   As noted above, Section 1272(a)(6) of the Code requires that a Prepayment
Assumption be used in computing the accrual of original issue discount with     
respect to some categories of debt instruments, and that adjustments be made in 
the amount and rate of accrual of the discount when prepayments do not conform  
to the Prepayment Assumption. To the extent the Grantor Trust Strip Certificates
represent an interest in any pool of debt instruments the yield on which may be 
affected by reason of prepayments, those provisions apply to Grantor Trust Strip
Certificates. It is unclear whether those provisions would be applicable to the 
Grantor Trust Strip Certificates that do not represent an interest in any such  
pool, or whether use of a Prepayment Assumption may be required or permitted in 
the absence of these provisions. It is also uncertain, if a Prepayment          
Assumption is used, whether the assumed prepayment rate would be determined     
based on conditions at the time of the first sale of the Grantor Trust Strip    
Certificate or, with respect to any subsequent holder, at the time of purchase  
of the Grantor Trust Strip Certificate by that holder.                          

The accrual of income on the Grantor Trust Strip Certificates will be 
significantly slower if a Prepayment Assumption is permitted to be made than if 
yield is computed assuming no prepayments. It currently is intended to base     
information returns or reports to the IRS and certificateholders on the         
Prepayment Assumption disclosed in the related prospectus supplement and on a   
constant yield computed using a representative initial offering price for each  
class of                                                                        

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certificates. However, none of the depositor, the master servicer or the trustee
will make any representation that the mortgage loans will in fact prepay at a   
rate conforming to the Prepayment Assumption or at any other rate and           
certificateholders should bear in mind that the use of a representative initial 
offering price will mean that the information returns or reports, even if       
otherwise accepted as accurate by the IRS, will in any event be accurate only as
to the initial certificateholders of each series who bought at that price.      
Prospective purchasers of the Grantor Trust Strip Certificates should consult   
their own tax advisors regarding the use of the Prepayment Assumption.          

It is unclear under what circumstances, if any, the prepayment of a   
mortgage loan will give rise to a loss to the holder of a Grantor Trust Strip   
Certificate. If a Grantor Trust Strip Certificate is treated as a single        
instrument rather than an interest in discrete mortgage loans and the effect of 
prepayments is taken into account in computing yield with respect to the Grantor
Trust Strip Certificate, it appears that no loss may be available as a result of
any particular prepayment unless prepayments occur at a rate faster than the    
Prepayment Assumption. However, if a Grantor Trust Strip Certificate is treated 
as an interest in discrete mortgage loans, or if the Prepayment Assumption is   
not used, then, when a mortgage loan is prepaid, the holder of a Grantor Trust  
Strip Certificate should be able to recognize a loss equal to the portion of the
adjusted issue price of the Grantor Trust Strip Certificate that is allocable to
the mortgage loan.                                                              

Possible Application of Contingent Payment Rules. The coupon stripping
rules' general treatment of stripped coupons is to regard them as newly issued  
debt instruments in the hands of each purchaser. To the extent that payments on 
the Grantor Trust Strip Certificates would cease if the mortgage loans were     
prepaid in full, the Grantor Trust Strip Certificates could be considered to be 
debt instruments providing for contingent payments. Under the OID Regulations,  
debt instruments providing for contingent payments are not subject to the same  
rules as debt instruments providing for noncontingent payments. Regulations were
promulgated on June 14, 1996, regarding contingent payment debt instruments (the
"Contingent Payment Regulations"), but it appears that Grantor Trust Strip      
Certificates, to the extent subject to Section 1272(a)(6) of the Code as        
described above, or due to their similarity to other mortgage-backed securities 
(such as REMIC regular interests and debt instruments subject to Section        
1272(a)(6) of the Code) that are expressly excepted from the application of the 
Contingent Payment Regulations, are or may be excepted from these regulations.  
Like the OID Regulations, the Contingent Payment Regulations do not specifically
address securities, such as the Grantor Trust Strip Certificates, that are      
subject to the stripped bond rules of Section 1286 of the Code.                 

  If the contingent payment rules under the Contingent Payment Regulations
were to apply, the holder of a Grantor Trust Strip Certificate would be required
to apply the noncontingent bond method. Under the noncontingent bond method, the
issuer of a Grantor Trust Strip Certificate determines a projected payment      
schedule on which interest will accrue. Holders of Grantor Trust Strip          
Certificates are bound by the issuer's projected payment schedule. The projected
payment schedule consists of all noncontingent payments and a projected amount  
for each contingent payment based on the projected yield of the Grantor Trust   
Strip Certificate.                                                              

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  The projected amount of each payment is determined so that the projected
payment schedule reflects the projected yield. The projected amount of each     
payment must reasonably reflect the relative expected values of the payments to 
be received by the holder of a Grantor Trust Strip Certificate. The projected   
yield referred to above is a reasonable rate, not less than the applicable      
Federal rate that, as of the issue date, reflects general market conditions, the
credit quality of the issuer, and the terms and conditions of the mortgage      
loans. The holder of a Grantor Trust Strip Certificate would be required to     
include as interest income in each month the adjusted issue price of the Grantor
Trust Strip Certificate at the beginning of the period multiplied by the        
projected yield, and would add to, or subtract from, the income any variation   
between the payment actually received in that month and the payment originally  
projected to be made in that month.                                             

    Assuming that a Prepayment Assumption were used, if the Contingent Payment
Regulations or their principles were applied to Grantor Trust Strip             
Certificates, the amount of income reported with respect thereto would be       
substantially similar to that described under "Taxation of Owners of Grantor    
Trust Strip Certificates". Certificateholders should consult their tax advisors 
concerning the possible application of the contingent payment rules to the      
Grantor Trust Strip Certificates.                                               

Sales of Grantor Trust Certificates. Any gain or loss equal to the    
difference between the amount realized on the sale or exchange of a Grantor     
Trust Certificate and its adjusted basis recognized on the sale or exchange of a
Grantor Trust Certificate by an investor who holds the Grantor Trust Certificate
as a capital asset will be capital gain or loss, except to the extent of accrued
and unrecognized market discount, which will be treated as ordinary income, and,
in the case of banks and other financial institutions, except as provided under 
Section 582(c) of the Code. The adjusted basis of a Grantor Trust Certificate   
generally will equal its cost, increased by any income reported by the seller,  
including original issue discount and market discount income, and reduced, but  
not below zero, by any previously reported losses, any amortized premium and by 
any remittances with respect to the Grantor Trust Certificate.                  

    Gain or loss from the sale of a Grantor Trust Certificate may be partially
or wholly ordinary and not capital in some circumstances. Gain attributable to  
accrued and unrecognized market discount will be treated as ordinary income, as 
will gain or loss recognized by banks and other financial institutions subject  
to Section 582(c) of the Code. Furthermore, a portion of any gain that might    
otherwise be capital gain may be treated as ordinary income to the extent that  
the Grantor Trust Certificate is held as part of a conversion transaction within
the meaning of Section 1258 of the Code. A "conversion transaction" generally is
one in which the taxpayer has taken two or more positions in the same or similar
property that reduce or eliminate market risk, if substantially all of the      
taxpayer's return is attributable to the time value of the taxpayer's net       
investment in the transaction. The amount of gain realized in a conversion      
transaction that is recharacterized as ordinary income generally will not exceed
the amount of interest that would have accrued on the taxpayer's net investment 
at 120% of the appropriate applicable Federal rate at the time the taxpayer     
enters into the conversion transaction, subject to appropriate reduction for    
prior inclusion of interest and other ordinary income items from the            
transaction. Finally, a taxpayer may elect to have net capital gain taxed at    
ordinary income rates rather than capital gains rates in order to include the   
net capital gain in total net investment income for that taxable                

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year, for purposes of the rule that limits the deduction of interest on         
indebtedness incurred to purchase or carry property held for investment to a    
taxpayer's net investment income.                                               

     Grantor Trust Reporting. The master servicer or the trustee will furnish to
each holder of a Grantor Trust Fractional Interest Certificate with each        
remittance a statement setting forth the amount of the remittance allocable to  
principal on the underlying mortgage loans and to interest thereon at the       
related pass-through rate. In addition, the master servicer or the trustee will 
furnish, within a reasonable time after the end of each calendar year, to each  
holder of a Grantor Trust Certificate who was a holder at any time during that  
year, information regarding the amount of any servicing compensation received by
the master servicer and subservicer and any other customary factual information 
as the master servicer or the trustee deems necessary or desirable to enable    
holders of Grantor Trust Certificates to prepare their tax returns and will     
furnish comparable information to the IRS as and when required by law to do so. 
Because the rules for accruing discount and amortizing premium with respect to  
the Grantor Trust Certificates are uncertain in various respects, there is no   
assurance the IRS will agree with the trust fund's information reports of these 
items of income and expense. Moreover, these information reports, even if       
otherwise accepted as accurate by the IRS, will in any event be accurate only as
to the initial certificateholders that bought their certificates at the         
representative initial offering price used in preparing the reports.            

Except as disclosed in the related prospectus supplement, the         
responsibility for complying with the foregoing reporting rules will be borne by
the master servicer or the trustee.                                             

  Backup Withholding. In general, the rules described in "--REMICS--Backup
Withholding with Respect to REMIC Certificates" will also apply to Grantor Trust
Certificates.                                                                   

     Foreign Investors. In general, the discussion with respect to REMIC Regular
Certificates in "REMICS--Foreign Investors in REMIC Certificates" applies to    
Grantor Trust Certificates except that Grantor Trust Certificates will, except  
as disclosed in the related prospectus supplement, be eligible for exemption    
from U.S. withholding tax, subject to the conditions described in the           
discussion, only to the extent the related mortgage loans were originated after 
July 18, 1984 and only to the extent such mortgage loans have not been converted
to real property.                                                               

    To the extent that interest on a Grantor Trust Certificate would be exempt
under Sections 871(h)(1) and 881(c) of the Code from United States withholding  
tax, and the Grantor Trust Certificate is not held in connection with a         
certificateholder's trade or business in the United States, the Grantor Trust   
Certificate will not be subject to United States estate taxes in the estate of a
non-resident alien individual.                                                  

PARTNERSHIP TRUST FUNDS                                                         

   Classification of Partnership Trust Funds. With respect to each series of
Partnership Certificates, in the opinion of counsel to the depositor, the trust 
fund will not be a taxable mortgage pool or an association, or publicly traded  
partnership, taxable as a corporation for                                       

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federal income tax purposes. This opinion will be based on the assumption that  
the terms of the related pooling and servicing agreement and related documents  
will be complied with, and on counsel's conclusions that the nature of the      
income of the trust fund will exempt it from the rule that certain publicly     
traded partnerships are taxable as corporations.                                

If the trust fund were taxable as a corporation for federal income tax
purposes, the trust fund would be subject to corporate income tax on its taxable
income. The trust fund's taxable income would include all its income on the     
related mortgage loans, possibly reduced by its interest expense on any         
outstanding debt securities. Any corporate income tax could materially reduce   
cash available to make remittances on the Partnership Certificates and          
certificateholders could be liable for any tax that is unpaid by the trust fund.

  Characterization of Investments in Partnership Certificates. For federal
income tax purposes, (1) Partnership Certificates held by a thrift institution  
taxed as a domestic building and loan association will not constitute "loans ...
secured by an interest in real property" within the meaning of Code Section     
7701(a)(19)(C)(v); (2) Partnership Certificates held by a real estate investment
trust will constitute real estate assets within the meaning of Code Section     
856(c)(4)(A) and interest on Partnership Certificates will be treated as        
"interest on obligations secured by mortgages on real property or on interests  
in real property" within the meaning of Code Section 856(c)(3)(B), based on the 
real estate investments trust's proportionate interest in the assets of the     
Partnership Trust Fund based on capital accounts; and (3) Partnership           
Certificates held by a regulated investment company will not constitute         
Government securities within the meaning of Code Section 851(b)(3)(A)(i).       

Taxation of Owners of Partnership Certificates                        

   Treatment of the Partnership Trust Fund as a Partnership. If specified in
the prospectus supplement, the depositor will agree, and the certificateholders 
will agree by their purchase of Certificates, to treat the Partnership Trust    
Fund as a partnership for purposes of federal and state income tax, franchise   
tax and any other tax measured in whole or in part by income, with the assets of
the partnership being the assets held by the Partnership Trust Fund, the        
partners of the partnership being the certificateholders, including the         
depositor. However, the proper characterization of the arrangement involving the
Partnership Trust Fund, the Partnership Certificates and the depositor is not   
clear, because there is no authority on transactions closely comparable to that 
contemplated in the prospectus.                                                 

A variety of alternative characterizations are possible. For example, 
because one or more of the classes of Partnership Certificates have certain     
features characteristic of debt, the Partnership Certificates might be          
considered debt of the depositor or the Partnership Trust Fund. Any alternative 
characterization would not result in materially adverse tax consequences to     
Certificateholders as compared to the consequences from treatment of the        
Partnership Certificates as equity in a partnership, described below. The       
following discussion assumes that the Partnership Certificates represent equity 
interests in a partnership.                                                     

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     Partnership Taxation. As a partnership, the Partnership Trust Fund will not
be subject to federal income tax. Rather, each Certificateholder will be        
required to separately take into account the holder's allocated share of income,
gains, losses, deductions and credits of the Partnership Trust Fund. It is      
anticipated that the Partnership Trust Fund's income will consist primarily of  
interest earned on the mortgage loans, including appropriate adjustments for    
market discount, original issue discount and bond premium, as described above   
under "-- Grantor Trust Funds -- Taxation of Owners of Grantor Trust Fractional 
Interest Certificates - If Stripped Bond Ruled Do Not Apply--", "-- Market      
Discount" and "--Premium", and any gain upon collection or disposition of       
mortgage loans. The Partnership Trust Fund's deductions will consist primarily  
of interest accruing with respect to any outstanding debt securities, servicing 
and other fees, and losses or deductions upon collection or disposition of any  
outstanding debt securities.                                                    

    The tax items of a partnership are allocable to the partners in accordance
with the Code, Treasury regulations and the partnership agreement, which will   
include a pooling and servicing agreement and related documents. The pooling and
servicing agreement will provide, in general, that the Certificateholders will  
be allocated taxable income of the Partnership Trust Fund for each due period   
equal to the sum of (1) the interest that accrues on the Partnership            
Certificates in accordance with their terms for due period, including interest  
accruing at the applicable pass-through rate for such due period and interest on
amounts previously due on the Partnership Certificates but not yet distributed; 
(2) any Partnership Trust Fund income attributable to discount on the mortgage  
loans that corresponds to any excess of the principal amount of the Partnership 
Certificates over their initial issue price; and (3) any other amounts of income
payable to the certificateholders for the due period. The allocation will be    
reduced by any amortization by the Partnership Trust Fund of premium on mortgage
loans that corresponds to any excess of the issue price of Partnership          
Certificates over their principal amount. All remaining taxable income of the   
Partnership Trust Fund will be allocated to the depositor. Based on the economic
arrangement of the parties, this approach for allocating Partnership Trust Fund 
income should be permissible under applicable Treasury regulations, although no 
assurance can be given that the IRS would not require a greater amount of income
to be allocated to certificateholders. Moreover, even under that method of      
allocation, certificateholders may be allocated income equal to the entire      
pass-through rate plus the other items described under that method even though  
the Trust Fund might not have sufficient cash to make current cash remittances  
of these amounts. Thus, cash basis holders will in effect be required to report 
income from the Partnership Certificates on the accrual basis and               
certificateholders may become liable for taxes on Partnership Trust Fund income 
even if they have not received cash from the Partnership Trust Fund to pay these
taxes.                                                                          

All of the taxable income allocated to a certificateholder that is a  
pension, profit sharing or employee benefit plan or other tax-exempt entity,    
including an individual retirement account, will constitute unrelated business  
taxable income generally taxable to that holder under the Code.                 

  A share of expenses of the Partnership Trust Fund, including fees of the
master servicer but not interest expense, allocable to an individual, estate or 
trust certificateholder would be miscellaneous itemized deductions subject to   
the limitations described above under "--Grantor Trust Funds -- Taxation of     
Owners of Grantor Trust Fractional Interest Certificates."                      

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Accordingly, deductions for these expenses might be disallowed to the individual
in whole or in part and might result in that holder being taxed on an amount of 
income that exceeds the amount of cash actually distributed to the holder over  
the life of the Partnership Trust Fund.                                         

    Discount income or premium amortization with respect to each mortgage loan
would be calculated in a manner similar to the description under "-- Grantor    
Trust Funds -- Taxation of Owners of Grantor Trust Fractional Interest          
Certificates - If Stripped Bond Rules Do Not Apply." Notwithstanding this       
description, it is intended that the Partnership Trust Fund will make all tax   
calculations relating to income and allocations to certificateholders on an     
aggregate basis for all mortgage loans held by the Partnership Trust Fund rather
than on a mortgage loan-by-mortgage loan basis. If the IRS were to require that 
these calculations be made separately for each mortgage loan, the Partnership   
Trust Fund might be required to incur additional expense, but it is believed    
that there would not be a material adverse effect on certificateholders.        

Discount and Premium. Unless indicated otherwise in the applicable    
prospectus supplement, it is not anticipated that the mortgage loans will have  
been issued with original issue discount and, therefore, the Partnership Trust  
Fund should not have original issue discount income. However, the purchase price
paid by the Partnership Trust Fund for the mortgage loans may be greater or less
than the remaining principal balance of the mortgage loans at the time of       
purchase. If so, the mortgage loans will have been acquired at a premium or     
discount, as the case may be. See "--Grantor Trust Funds -- Taxation of Owners  
of Grantor Trust Fractional Interest Certificates -- Market Discount" and       
"Premium." As stated in the previous paragraph, the Partnership Trust Fund      
intends to make any calculation of original issue discount on an aggregate      
basis, but might be required to recompute it on a mortgage loan-by-mortgage loan
basis.                                                                          

If the Partnership Trust Fund acquires the mortgage loans at a market 
discount or premium, the Partnership Trust Fund will elect to include any       
discount in income currently as it accrues over the life of the mortgage loans  
or to offset any premium against interest income on the mortgage loans. As      
stated in the second preceding paragraph, a portion of the market discount      
income or premium deduction may be allocated to certificateholders.             

 Section 708 Termination. Under Section 708 of the Code, the Partnership
Trust Fund will be deemed to terminate for federal income tax purposes if 50% or
more of the capital and profits interests in the Partnership Trust Fund are sold
or exchanged within a 12-month period. A 50% or greater transfer would cause a  
deemed contribution of the assets of a Partnership Trust Fund, the old          
partnership, to a new Partnership Trust Fund, the new partnership, in exchange  
for interests in the new partnership. These interests would be deemed           
distributed to the partners of the old partnership in liquidation thereof, which
would not constitute a sale or exchange.                                        

Disposition of Certificates. Generally, capital gain or loss will be  
recognized on a sale of Partnership Certificates in an amount equal to the      
difference between the amount realized and the seller's tax basis in the        
Partnership Certificates sold. A certificateholder's tax basis in an Partnership
Certificate will generally equal the holder's cost increased by the holder's    
share of Partnership Trust Fund income includible in income and decreased by any
remittances received with respect to the Partnership Certificate. In addition,  
both the tax basis in the Partnership                                           

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Certificates and the amount realized on a sale of an Partnership Certificate    
would include the holder's share of any liabilities of the Partnership Trust    
Fund. A holder acquiring Partnership Certificates at different prices may be    
required to maintain a single aggregate adjusted tax basis in such Partnership  
Certificates, and, upon sale or other disposition of some of the Partnership    
Certificates, allocate a portion of the aggregate tax basis to the Partnership  
Certificates sold, rather than maintaining a separate tax basis in each         
Partnership Certificate for purposes of computing gain or loss on a sale of that
Partnership Certificate.                                                        

Any gain on the sale of an Partnership Certificate attributable to the
holder's share of unrecognized accrued market discount on the mortgage loans    
would generally be treated as ordinary income to the holder and would give rise 
to special tax reporting requirements. The Partnership Trust Fund does not      
expect to have any other assets that would give rise to such special reporting  
considerations. Thus, to avoid those special reporting requirements, the        
Partnership Trust Fund will elect to include market discount in income as it    
accrues.                                                                        

If a certificateholder is required to recognize an aggregate amount of
income, not including income attributable to disallowed itemized deductions,    
over the life of the Partnership Certificates that exceeds the aggregate cash   
remittances with respect thereto, the excess will generally give rise to a      
capital loss upon the retirement of the Partnership Certificates.               

Allocations Between Transferors and Transferees. In general, the      
Partnership Trust Fund's taxable income and losses will be determined each due  
period and the tax items for a particular due period will be apportioned among  
the certificateholders in proportion to the principal amount of Partnership     
Certificates owned by them as of the close of the last day of such due period.  
As a result, a holder purchasing Partnership Certificates may be allocated tax  
items which will affect its tax liability and tax basis attributable to periods 
before the actual transaction.                                                  

The use of a due period convention may not be permitted by existing   
regulations. If a due period convention is not allowed or only applies to       
transfers of less than all of the partner's interest, taxable income or losses  
of the Partnership Trust Fund might be reallocated among the certificateholders.
The depositor will be authorized to revise the Partnership Trust Fund's method  
of allocation between transferors and transferees to conform to a method        
permitted by future regulations.                                                

Section 731 Remittances. In the case of any remittance to a           
certificateholder, no gain will be recognized to that certificateholder to the  
extent that the amount of any money distributed with respect to such Partnership
Certificate exceeds the adjusted basis of the certificateholder's interest in   
the Partnership Certificate. To the extent that the amount of money distributed 
exceeds the certificateholder's adjusted basis, gain will be currently          
recognized. In the case of any remittance to a certificateholder, no loss will  
be recognized except upon a remittance in liquidation of a certificateholder's  
interest. Any gain or loss recognized by a certificateholder will be capital    
gain or loss.                                                                   

Section 754 Election. In the event that a certificateholder sells its 
Partnership Certificates at a profit, the purchasing certificateholder will have
a higher basis in the Partnership Certificates                                  

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than the selling certificateholder had. An opposite result will follow if the   
Partnership Certificate is sold at a loss. The tax basis of the Partnership     
Trust Fund's assets would not be adjusted to reflect that higher or lower basis 
unless the Partnership Trust Fund were to file an election under Section 754 of 
the Code. In order to avoid the administrative complexities that would be       
involved in keeping accurate accounting records, as well as potentially onerous 
information reporting requirements, the Partnership Trust Fund will not make    
such election. As a result, a certificateholder might be allocated a greater or 
lesser amount of Partnership Trust Fund income than would be appropriate based  
on their own purchase price for Partnership Certificates.                       

Administrative Matters. The trustee is required to keep or have kept  
complete and accurate books of the Partnership Trust Fund. Such books will be   
maintained for financial reporting and tax purposes on an accrual basis and the 
fiscal year of the Partnership Trust Fund will be the calendar year. The trustee
will file a partnership information return, IRS Form 1065, with the IRS for each
taxable year of the Partnership Trust Fund and will report each                 
certificateholder's allocable share of items of Partnership Trust Fund income   
and expense to holders and the IRS on Schedule K-1. The trustee will provide the
Schedule K-1 information to nominees that fail to provide the Partnership Trust 
Fund with the information statement described below and the nominees will be    
required to forward this information to the beneficial owners of the Partnership
Certificates. Generally, holders must file tax returns that are consistent with 
the information return filed by the Partnership Trust Fund or be subject to     
penalties unless the holder notifies the IRS of all such inconsistencies.       

Under Section 6031 of the Code, any person that holds Partnership     
Certificates as a nominee at any time during a calendar year is required to     
furnish the Partnership Trust Fund with a statement containing information on   
the nominee, the beneficial owners and the Partnership Certificates so held.    
Such information includes (1) the name, address and taxpayer identification     
number of the nominee and (2) as to each beneficial owner (x) the name, address 
and identification number of that person, (y) whether that person is a United   
States Person, a tax-exempt entity or a foreign government, an international    
organization, or any wholly-owned agency or instrumentality of either of the    
foregoing, and (z) certain information on Partnership Certificates that were    
held, bought or sold on behalf of that person throughout the year. In addition, 
brokers and financial institutions that hold Partnership Certificates through a 
nominee are required to furnish directly to the trustee information as to       
themselves and their ownership of Partnership Certificates. A clearing agency   
registered under Section 17A of the Exchange Act is not required to furnish any 
information statement to the Partnership Trust Fund. The information referred to
above for any calendar year must be furnished to the Partnership Trust Fund on  
or before the following January 31. Nominees, brokers and financial institutions
that fail to provide the Partnership Trust Fund with the information described  
above may be subject to penalties.                                              

    The depositor will be designated as the tax matters partner in the pooling
and servicing agreement and will be responsible for representing the            
certificateholders in any dispute with the IRS. The Code provides for           
administrative examination of a partnership as if the partnership were a        
separate and distinct taxpayer. Generally, the statute of limitations for       
partnership items does not expire until three years after the date on which the 
partnership information return is filed. Any adverse determination following an 
audit of the return of the Partnership Trust Fund                               

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by the appropriate taxing authorities could result in an adjustment of the      
returns of the certificateholders, and, under certain circumstances, a          
certificateholder may be precluded from separately litigating a proposed        
adjustment to the items of the Partnership Trust Fund. An adjustment could also 
result in an audit of a certificateholder's returns and adjustments of items not
related to the income and losses of the Partnership Trust Fund.                 

     Tax Consequences to Foreign Certificateholders. It is not clear whether the
Partnership Trust Fund would be considered to be engaged in a trade or business 
in the United States for purposes of federal withholding taxes with respect to  
non-United States Persons, because there is no clear authority dealing with that
issue under facts substantially similar to those in this case. Although it is   
not expected that the Partnership Trust Fund would be engaged in a trade or     
business in the United States for these purposes, the Partnership Trust Fund    
will withhold as if it were so engaged in order to protect the Partnership Trust
Fund from possible adverse consequences of a failure to withhold. The           
Partnership Trust Fund expects to withhold on the portion of its taxable income 
that is allocable to foreign certificateholders pursuant to Section 1446 of the 
Code as if this income were effectively connected to a U.S. trade or business,  
at a rate of 35% for foreign holders that are taxable as corporations and 39.6% 
for all other foreign holders. Amounts withheld will be deemed distributed to   
the foreign certificateholders. Subsequent adoption of Treasury regulations or  
the issuance of other administrative pronouncements may require the Partnership 
Trust Fund to change its withholding procedures. In determining a holder's      
withholding status, the Partnership Trust Fund may rely on IRS Form W-8, IRS    
Form W-9 or the holder's certification of nonforeign status signed under        
penalties of perjury.                                                           

Each foreign holder might be required to file a U.S. individual or    
corporate income tax return, including, in the case of a corporation, the branch
profits tax, on its share of the Partnership Trust Fund's income. Each foreign  
holder must obtain a taxpayer identification number from the IRS and submit that
number to the Partnership Trust Fund on Form W-8 in order to assure appropriate 
crediting of the taxes withheld. A foreign holder generally would be entitled to
file with the IRS a claim for refund with respect to taxes withheld by the      
Partnership Trust Fund, taking the position that no taxes were due because the  
Partnership Trust Fund was not engaged in a U.S. trade or business. However,    
interest payments made or accrued to a certificateholder who is a foreign person
generally will be considered guaranteed payments to the extent such payments are
determined without regard to the income of the Partnership Trust Fund. If these 
interest payments are properly characterized as guaranteed payments, then the   
interest will not be considered portfolio interest. As a result,                
certificateholders who are foreign persons will be subject to United States     
federal income tax and withholding tax at a rate of 30 percent, unless reduced  
or eliminated pursuant to an applicable treaty. In that event, a foreign holder 
would only be entitled to claim a refund for that portion of the taxes in excess
of the taxes that should be withheld with respect to the guaranteed payments.   

  Backup Withholding. Remittances made on the Partnership Certificates and
proceeds from the sale of the Partnership Certificates will be subject to a     
backup withholding tax of 31% if, in general, the certificateholder fails to    
comply with certain identification procedures, unless the holder is an exempt   
recipient under applicable provisions of the Code.                              

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     It is suggested that prospective purchasers consult their tax advisors with
respect to the tax consequences to them of the purchase, ownership and          
disposition of REMIC Certificates, Notes, Grantor Trust Certificates and        
Partnership Certificates, including the tax consequences under state, local,    
foreign and other tax laws and the possible effects of changes in federal or    
other tax laws.                                                                 

STATE AND OTHER TAX CONSEQUENCES

  In addition to the federal income tax consequences described in "Federal
Income Tax Consequences", potential investors should consider the state and     
local tax consequences of the acquisition, ownership, and disposition of the    
securities offered hereunder. State tax law may differ substantially from the   
corresponding federal tax law, and the discussion above does not purport to     
describe any aspect of the tax laws of any state or other jurisdiction.         
Therefore, prospective investors should consult their own tax advisors with     
respect to the various tax consequences of investments in the securities offered
hereunder.                                                                      

ERISA CONSIDERATIONS

Sections 404 and 406 of the Employee Retirement Income Security Act of
1974, as amended, impose fiduciary and prohibited transaction restrictions on   
employee pension and welfare benefit plans subject to ERISA and on some other   
retirement plans and arrangements, including individual retirement accounts and 
annuities, Keogh plans and bank collective investment funds and insurance       
company general and separate accounts in which plans subject to ERISA are       
invested. Section 4975 of the Code imposes essentially the same prohibited      
transaction restrictions on tax-qualified retirement plans described in Section 
401(a) of the Code and on Individual Retirement Accounts described in Section   
408 of the Code. ERISA and the Code prohibit a broad range of transactions      
involving assets of ERISA plans and tax plans which are collectively referred to
in this prospectus as "Plans" and persons who have certain specified            
relationships to such plans, unless a statutory or administrative exemption is  
available with respect to the transaction.                                      

Some employee benefit plans, such as governmental plans, as defined in
Section 3(32) of ERISA, and, if no election has been made under Section 410(d)  
of the Code, church plans, as defined in Section 3(33) of ERISA, are not subject
to ERISA requirements. Accordingly, assets of such plans may be invested in the 
securities without regard to the ERISA considerations described below, subject  
to the provisions of other applicable federal, state and local law. Any plan    
which is qualified and exempt from taxation under Sections 401(a) and 501(a) of 
the Code, however, is subject to the prohibited transaction rules set forth in  
Section 503 of the Code.                                                        

Transactions involving the trust fund might be deemed to constitute   
prohibited transactions under ERISA and the Code with respect to a Plan that    
purchases the securities, if the mortgage loans, and other assets included in a 
trust fund are deemed to be assets of the Plan. The U.S. Department of Labor has
promulgated regulations at 29 C.F.R. ss.2510. 3-101 defining the term "Plan     
Assets" for purposes of applying the general fiduciary responsibility provisions
of ERISA and the prohibited transaction provisions of ERISA and the Code. Under 
the DOL Regulations, generally, when a Plan acquires an "equity interest" in    
another entity, such as the trust fund, the underlying assets of that entity may
be considered to be Plan Assets unless certain exceptions apply. Exceptions     
contained in                                                                    

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the DOL Regulations provide that a Plan's assets will not include an undivided  
interest in each asset of an entity in which such Plan makes an equity          
investment if:                                                                  

o   the entity is an operating company;         

      o   the equity investment made by the Plan is either a
                  "publicly-offered security" that is "widely held," both as
                  defined in the DOL Regulations, or a security issued by an
                  investment company registered under the Investment Company
Act of 1940, as amended; or             

             o   Benefit Plan Investors do not own 25% or more in value of
                any class of equity securities issued by the entity. For
                this purpose, "Benefit Plan Investors" include plans, as
                  well as any "employee benefit plan", as defined in Section
                3(3) or ERISA, which is not subject to Title I of ERISA,
                  such as governmental plans, as defined in Section 3(32) of
               ERISA, and church plans, as defined in Section 3(33) of
                   ERISA, which have not made an election under Section 410(d)
                   of the Code, and any entity whose underlying assets include
                   Plan Assets by reason of a Plan's investment in the entity.
              In addition, the DOL Regulations provide that the term
                    "equity interest" means any interest in an entity other than
            an instrument which is treated as indebtedness under
                 applicable local law and which has no "substantial equity
                 features". Under the DOL Regulations, Plan Assets will be
                  deemed to include an interest in the instrument evidencing
                 the equity interest of a Plan, such as a Certificate or a
                    Note with "substantial equity features", and, because of the
                   factual nature of certain of the rules set forth in the DOL
            Regulations, Plan Assets may be deemed to include an
                  interest in the underlying assets of the entity in which a
                  Plan acquires an interest, such as the trust fund. Without
               regard to whether the notes are characterized as equity
                   interests, the purchase, sale and holding of notes by or on
              behalf of a Plan could be considered to give rise to a
                   prohibited transaction if the issuer, the trustee or any of
             their respective affiliates is or becomes a "Party in
                  Interest" within the meaning of ERISA with respect to such
                    Plan. Neither Plans nor persons investing Plan Assets should
                    acquire or hold securities in reliance upon the availability
   of any exception under the DOL Regulations.

ERISA generally imposes on Plan fiduciaries certain general fiduciary 
requirements, including those of investment prudence and diversification and the
requirement that a Plan's investments be made in accordance with the documents  
governing the Plan. Any person who has discretionary authority or control with  
respect to the management or disposition of Plan Assets and any person who      
provides investment advice with respect to such Plan Assets for a fee is a      
fiduciary of the investing Plan. If the mortgage loans, and other assets        
included in the trust fund were to constitute Plan Assets, then any party       
exercising management or discretionary control with respect to those Plan Assets
may be deemed to be a Plan "fiduciary," and thus subject to the fiduciary       
responsibility provisions of ERISA and the prohibited transaction provisions of 
ERISA and Section 4975 of the Code with respect to any investing Plan. In       
addition, the acquisition or holding of securities by or on behalf of a Plan or 
with Plan Assets, as well as the operation of the trust fund, may constitute or 

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involve a prohibited transaction under ERISA and the Code unless a statutory or 
administrative exemption is available.                                          

    The DOL issued an individual prohibited transactions exemption, to certain
underwriters, which generally exempts from the application of the prohibited    
transaction provisions of Section 406 of ERISA, and the excise taxes imposed on 
such prohibited transactions pursuant to Section 4975(a) and (b) of the Code,   
certain transactions, among others, relating to the servicing and operation of  
mortgage pools and the initial purchase, holding and subsequent resale of       
mortgage pass-through certificates underwritten by an Underwriter, provided that
certain conditions set forth in the Exemption are satisfied. For purposes of    
this Section "ERISA Considerations", the term "Underwriter" shall include (a)   
the underwriter, (b) any person directly or indirectly, through one or more     
intermediaries, controlling, controlled by or under common control with the     
underwriter and (c) any member of the underwriting syndicate or selling group of
which a person described in (a) or (b) is a manager or co-manager with respect  
to a class of certificates.                                                     

     The underwriters' exemption sets forth six general conditions which must be
satisfied for the underwriters' exemption to apply. First, the acquisition of   
certificates by a Plan or with Plan Assets must be on terms that are at least as
favorable to the Plan as they would be in an arm's-length transaction with an   
unrelated party. Second, the underwriters' exemption only applies to            
certificates evidencing rights and interests that are not subordinated to the   
rights and interests evidenced by other certificates of the same trust. Third,  
the certificates at the time of acquisition by a Plan or with Plan Assets must  
be rated in one of the three highest generic rating categories by Standard &    
Poor's Structured Rating Group, Moody's Investors Service, Inc., Duff & Phelps  
Credit Rating Co. or Fitch IBCA, Inc. Fourth, the trustee cannot be an affiliate
of any member of the "Restricted Group" which consists of any Underwriter, the  
depositor, the trustee, the servicer, any sub-servicer and any obligor with     
respect to assets included in the trust fund constituting more than 5% of the   
aggregate unamortized principal balance of the assets in the trust fund as of   
the date of initial issuance of the certificates. Fifth, the sum of all payments
made to and retained by the Underwriter(s) must represent not more than         
reasonable compensation for underwriting the certificates; the sum of all       
payments made to and retained by the depositor pursuant to the assignment of the
assets to the related trust fund must represent not more than the fair market   
value of such obligations; and the sum of all payments made to and retained by  
the servicer and any sub-servicer must represent not more than reasonable       
compensation for such person's services under the related agreement and         
reimbursement of such person's reasonable expenses in connection therewith.     
Sixth, the underwriters' exemption states that the investing Plan or Plan Asset 
investor must be an "accredited investor" as defined in Rule 501(a)(1) of       
Regulation D of the Commission under the Securities Act of 1933, as amended.    

The underwriters' exemption also requires that the trust fund meet the
following requirements:                                                         

            o   the trust fund must consist solely of assets of the type
          that have been included in other investment pools;

              o   certificates evidencing interests in such other investment
              pools must have been rated in one of the three highest
                 generic categories of one of the rating agencies named in
                  the underwriters' exemption for at least one year prior to

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                the acquisition of the certificates by or on behalf of a
Plan or with Plan Assets; and           

              o   certificates evidencing interests in such other investment
                    pools must have been purchased by investors other than Plans
             for at least one year prior to any acquisition of the
                   certificates by or on behalf of a Plan or with Plan Assets.

    Any transferee of the certificates will be deemed to have represented that
either (a) such transferee is not a Plan and is not purchasing such certificates
by or on behalf of or with "Plan Assets" of any Plan or (b) the purchase of any 
such certificate by or on behalf of or with "Plan Assets" of any Plan is        
permissible under applicable law, will not result in any non-exempt prohibited  
transaction under ERISA or Section 4975 of the Code and will not subject the    
servicer, the depositor or the trustee to any obligation in addition to those   
undertaken in the related agreement. A fiduciary of a Plan or any person        
investing Plan Assets to purchase a certificate must make its own determination 
that the conditions set forth above will be satisfied with respect to such      
certificate.                                                                    

     If the general conditions of the underwriters' exemption are satisfied, the
underwriters' exemption may provide an exemption from the restrictions imposed  
by Sections 406(a) and 407(a) of ERISA, and the excise taxes imposed by Sections
4975(a) and (b) of the Code by reason of Sections 4975(c)(1)(A) through (D) of  
the Code, in connection with the direct or indirect sale, exchange or transfer  
of certificates in the initial issuance of such certificates or the direct or   
indirect acquisition or disposition in the secondary market of certificates by a
Plan or with Plan Assets or the continued holding of a certificate acquired by a
Plan or with Plan Assets pursuant to either of the foregoing. However, no       
exemption is provided from the restrictions of Sections 406(a)(1)(E), 406(a)(2) 
and 407 of ERISA for the acquisition or holding of a certificate on behalf of an
"Excluded Plan" by any person who has discretionary authority or renders        
investment advice with respect to the assets of such Excluded Plan. For purposes
of the certificates, an Excluded Plan is a Plan sponsored by any member of the  
Restricted Group.                                                               

If certain specific conditions of the underwriters' exemption are also
satisfied, the underwriters' exemption may provide an exemption from the        
restrictions imposed by Sections 406(b)(1) and (b)(2) of ERISA, and the excise  
taxes imposed by Sections 4975(a) and (b) of the Code by reason of Section      
4975(c)(1)(E) of the Code, in connection with (1) the direct or indirect sale,  
exchange or transfer of certificates in the initial issuance of certificates    
between the depositor or an Underwriter and a Plan when the person who has      
discretionary authority or renders investment advice with respect to the        
investment of Plan Assets in the certificates is (a) a mortgagor with respect to
5% or less of the fair market value of the trust fund assets or (b) an affiliate
of such a person, (2) the direct or indirect acquisition or disposition in the  
secondary market of certificates by a Plan or with Plan Assets and (3) the      
continued holding of certificates acquired by a Plan or with Plan Assets        
pursuant to either of the foregoing.                                            

    Further, if certain specific conditions of the underwriters' exemption are
satisfied, the underwriters' exemption may provide an exemption from the        
restrictions imposed by Sections 406(a), 406(b) and 407 of ERISA, and the excise
taxes imposed by Sections 4975(a) and (b) of the Code by reason of Section      
4975(c) of the Code for transactions in connection with the servicing,          
management and operation of the trust fund. The depositor expects that the      
specific conditions of the underwriters' exemption required for this purpose    
will be satisfied with respect to the                                           

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certificates so that the underwriters' exemption would provide an exemption from
the restrictions imposed by Sections 406(a) and (b) of ERISA (as well as the    
excise taxes imposed by Sections 4975(a) and (b) of the Code by reason of       
Section 4975(c) of the Code) for transactions in connection with the servicing, 
management and operation of the trust fund, provided that the general conditions
of the underwriters' exemption are satisfied.                                   

The underwriters' exemption also may provide an exemption from the    
restrictions imposed by Sections 406(a) and 407(a) of ERISA, and the excise     
taxes imposed by Section 4975(a) and (b) of the Code by reason of Sections      
4975(c)(1)(A) through (D) of the Code if such restrictions are deemed to        
otherwise apply merely because a person is deemed to be a Party in Interest with
respect to an investing Plan by virtue of providing services to the Plan (or by 
virtue of having certain specified relationships to such a person) solely as a  
result of the Plan's ownership of certificates.                                 

     On July 21, 1997, the DOL published in the Federal Register an amendment to
the underwriters' exemption, which will extend exemptive relief to certain      
mortgage-backed and asset-backed securities transactions using pre-funding      
accounts for trusts issuing pass-through certificates. With respect to the      
certificates, the amendment will generally allow mortgage loans supporting      
payments to certificateholders, and having a value equal to no more than 25% of 
the total principal amount of the certificates being offered by a trust fund, to
be transferred to such trust fund within a pre-funding period no longer than 90 
days or three months following the closing date instead of requiring that all   
such mortgage loans be either identified or transferred on or before the closing
date. In general, the relief applies to the purchase, sale and holding of       
certificates which otherwise qualify for the underwriters' exemption, provided  
that the following general conditions are met:                                  

       (1) the ratio of the amount allocated to the pre-funding account to the
    total principal amount of the certificates being offered must be less than
     or equal to: (a) 40% for transactions occurring on or after January 1, 1992
but prior to May 23, 1997 and (b) 25% for transactions occurring on or
after May 23, 1997;                                                   

       (2) all additional mortgage loans transferred to the related trust fund
    after the date of initial issuance of a series of securities must meet the
  same terms and conditions for eligibility as the original mortgage loans
used to create the trust fund, which terms and conditions have been   
     approved by one of the rating agencies named in the underwriters exemption;

      (3) the transfer of subsequent mortgage loans to the trust fund during
   the pre-funding period must not result in the certificates covered by the
underwriters' exemptions receiving a lower credit rating from a rating
    agency upon termination of the pre-funding period than the rating that was
 obtained at the time of the initial issuance of the certificates by the
trust fund;                                                           

      (4) solely as a result of the use of pre-funding, the weighted average
   annual percentage interest rate for all of the mortgage loans included in
 the trust fund on the closing date and subsequent mortgage loans in the
   trust fund at the end of the pre-funding period must not be more than 100
     basis points lower than the weighted average interest rate for the mortgage
loans which were transferred to the trust fund on the closing date;   

(5) for transactions occurring on or after May 23, 1997, either:

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              (a) the characteristics of the subsequent mortgage loans must be
monitored by an insurer or other credit support provider which is     
independent of the depositor; or                                      

          (b) an independent accountant retained by the depositor must
 provide the depositor with a letter (with copies provided to the rating
  agency rating the certificates, the Underwriter and the trustee) stating
     whether or not the characteristics of the subsequent mortgage loans conform
to the characteristics described in this prospectus or the prospectus 
supplement and the governing agreement. In preparing such letter, the 
independent accountant must use the same type of procedures as were   
   applicable to the mortgage loans which were transferred to the trust fund
as of the closing date;                                               

    (6) the pre-funding period must end no later than three months or 90
days after the closing date or earlier in certain circumstances if the
pre-funding account falls below the minimum level specified in the    
agreement or an event of default occurs;                              

  (7) amounts transferred to any pre-funding account and capitalized
  interest account used in connection with the pre-funding may be invested
   only in investments which are permitted by the rating agencies rating the
certificates and must:                                                

              (a) be 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 that such obligations are 
backed by the full faith and credit of the United States; or          

               (b) have been rated, or the obligor has been rated, in one of the
     three highest generic rating categories by one of the rating agencies named
in the underwriters' exemption;                                       

      (8) the prospectus or prospectus supplement must describe the duration
of the pre-funding period;                                            

 (9) the trustee, or any agent with which the trustee contracts to
provide trust services, must be a substantial financial institution or
     trust company experienced in trust activities and familiar with its duties,
     responsibilities and liabilities with ERISA. The trustee, as legal owner of
the trust fund, must enforce all the rights created in favor of       
certificateholders of the trust fund, including employee benefit plans
subject to ERISA.                                                     

    In addition to the underwriters' exemption, a Plan fiduciary or other Plan
Asset investor should consider the availability of certain class exemptions     
granted by the DOL, which may provide relief from certain of the prohibited     
transaction provisions of ERISA and the related excise tax provisions of the    
Code, including Prohibited Transaction Class Exemption 83-1, regarding          
transactions involving mortgage pool investment trusts; PTCE 84-14, regarding   
transactions effected by a "qualified professional asset manager"; PTCE 90-1,   
regarding transactions by insurance company pooled separate accounts; PTCE      
91-38, regarding investments by bank collective investment funds; PTCE 95-60,   
regarding transactions by insurance company general accounts; and PTCE 96-23,   
regarding transactions effected by an "in-house asset manager. "                

     In addition to any exemption that may be available under PTCE 95-60 for the
purchase and holding of the securities by an insurance company general account, 
the Small Business Job                                                          

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Protection Act of 1996 added a new Section 401(c) to ERISA, which provides      
certain exemptive relief from the provisions of Part 4 of Title I of ERISA and  
Section 4975 of the Code, including the prohibited transaction restrictions     
imposed by ERISA and the related excise taxes imposed by the Code, for          
transactions involving an insurance company general account. Pursuant to Section
401(c) of ERISA, the DOL is required to issue final regulations no later than   
December 31, 1997 which are to provide guidance for the purpose of determining, 
in cases where insurance policies supported by an insurer's general account are 
issued to or for the benefit of a Plan on or before December 31, 1998, which    
general account assets constitute Plan Assets. Section 401(c) of ERISA generally
provides that, until the date which is 18 months after the 401(c) Regulations   
become final, no person shall be subject to liability under Part 4 of Title I of
ERISA and Section 4975 of the Code on the basis of a claim that the assets of an
insurance company general account constitute Plan Assets, unless (1) as         
otherwise provided by the Secretary of Labor in the 401(c) Regulations to       
prevent avoidance of the regulations or (2) an action is brought by the         
Secretary of Labor for certain breaches of fiduciary duty which would also      
constitute a violation of federal or state criminal law. Any assets of an       
insurance company general account which support insurance policies issued to a  
Plan after December 31, 1998 or issued to Plans on or before December 31, 1998  
for which the insurance company does not comply with the 401(c) Regulations may 
be treated as Plan Assets. In addition, because Section 401(c) does not relate  
to insurance company separate accounts, separate account assets are still       
treated as Plan Assets of any Plan invested in such separate account. Insurance 
companies contemplating the investment of general account assets in the         
securities should consult with their legal counsel with respect to the          
applicability of Section 401(c) of ERISA, including the general account's       
ability to continue to hold the securities after the date which is 18 months    
after the date the 401(c) Regulations become final.                             

REPRESENTATION FROM PLANS INVESTING IN NOTES WITH "SUBSTANTIAL EQUITY FEATURES" 
OR CERTAIN SECURITIES                                                           

  Because the exemptive relief afforded by the underwriters' exemption, or
any similar exemption that might be available, will not apply to the purchase,  
sale or holding of securities such as: notes with "substantial equity features,"
subordinate securities, REMIC Residual Certificates and any securities which are
not rated in one of the three highest generic rating categories by the rating   
agencies named in the underwriters' exemption, transfers of any such securities 
to a Plan, to a trustee or other person acting on behalf of any Plan, or to any 
other person investing Plan Assets to effect such acquisition will not be       
registered by the trustee unless the transferee provides the depositor, the     
trustee and the servicer with an opinion of counsel satisfactory to the         
depositor, the trustee and the servicer, which opinion will not be at the       
expense of the depositor, the trustee or the servicer, that the purchase of such
securities by or on behalf of such Plan 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 depositor, the       
trustee or the servicer to any obligation in addition to those undertaken in the
related agreement.                                                              

In lieu of such opinion of counsel, the transferee may provide a      
certification substantially to the effect that the purchase of securities by or 
on behalf of such Plan 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 depositor, the trustee or the servicer to  
any obligation in addition to those undertaken in the Agreement and the         
following statements are correct:                                               

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o  the transferee is an insurance company;                            

  o  the source of funds used to purchase such securities is an "insurance
company general account", as such term is defined in PTCE 95-60;

o  the conditions set forth in PTCE 95-60 have been satisfied; and    

o  there is no Plan with respect to which the amount of such general  
        account's reserves and liabilities for contracts held by or on behalf of
     such Plan and all other Plans maintained by the same employer, or any
      "affiliate" thereof, as defined in PTCE 95-60, or by the same employee
       organization exceed 10% of the total of all reserves and liabilities of
       such general account, as determined under PTCE 95-60, as of the date of
the acquisition of such securities.                             

     An opinion of counsel or certification will not be required with respect to
the purchase of DTC registered securities. Any purchaser of a DTC registered    
security will be deemed to have represented by such purchase that either (a)    
such purchaser is not a Plan and is not purchasing such securities on behalf of,
or with Plan Assets of, any Plan or (b) the purchase of any such security by or 
on behalf of, or with Plan Assets of, any Plan is permissible under applicable  
law, will not result in any non-exempt prohibited transaction under ERISA or    
Section 4975 of the Code and will not subject the depositor, the trustee or the 
servicer to any obligation in addition to those undertaken in the related       
agreement.                                                                      

TAX EXEMPT INVESTORS                                                            

    A Plan that is exempt from federal income taxation pursuant to Section 501
of the Code nonetheless will be subject to federal income taxation to the extent
that its income is "unrelated business taxable income" ("UBTI") within the      
meaning of Section 512 of the Code. All "excess inclusion" of a REMIC allocated 
to a REMIC Residual Certificate and held by a tax-exempt investor will be       
considered UBTI and thus will be subject to federal income tax. See "Federal    
Income Tax Consequences--REMICs--Taxation of Owners of REMIC Residual           
Certificates--Excess Inclusions" above.                                         

CONSULTATION WITH COUNSEL                                                       

     There can be no assurance that any DOL exemption will apply with respect to
any particular Plan that acquires the securities or, even if all the conditions 
specified therein were satisfied, that any such exemption would apply to        
transactions involving the trust fund. Prospective Plan investors should consult
with their legal counsel concerning the impact of ERISA and the Code and the    
potential consequences to their specific circumstances prior to making an       
investment in the securities. Neither the depositor, the trustee, the servicer  
nor any of their respective affiliates will make any representation to the      
effect that the securities satisfy all legal requirements with respect to the   
investment therein by Plans generally or any particular Plan or to the effect   
that the securities are an appropriate investment for Plans generally or any    
particular Plan.                                                                

     BEFORE PURCHASING THE SECURITIES, A FIDUCIARY OF A PLAN OR OTHER PLAN ASSET
INVESTOR SHOULD ITSELF CONFIRM THAT (A) ALL THE SPECIFIC AND GENERAL CONDITIONS 
SET FORTH IN THE UNDERWRITERS'                                                  

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EXEMPTION, ONE OF THE CLASS EXEMPTIONS OR SECTION 401(C) OF ERISA WOULD BE      
SATISFIED AND (B) IN THE CASE OF A SECURITY PURCHASED UNDER THE UNDERWRITERS'   
EXEMPTION, THE SECURITY CONSTITUTES A "CERTIFICATE" FOR PURPOSES OF THE         
UNDERWRITERS' EXEMPTION. IN ADDITION TO MAKING ITS OWN DETERMINATION AS TO THE  
AVAILABILITY OF THE EXEMPTIVE RELIEF PROVIDED IN THE UNDERWRITERS' EXEMPTION,   
ONE OF THE CLASS EXEMPTIONS OR SECTION 401(C) OF ERISA, THE PLAN FIDUCIARY      
SHOULD CONSIDER ITS GENERAL FIDUCIARY OBLIGATIONS UNDER ERISA IN DETERMINING    
WHETHER TO PURCHASE THE SECURITIES ON BEHALF OF A PLAN.                         

LEGAL INVESTMENT

    The prospectus supplement for each series of securities will specify which
classes of securities of such series, if any, will constitute "mortgage related 
securities" for purposes of the Secondary Mortgage Market Enhancement Act of    
1984. Any class of securities that is not rated in one of the two highest rating
categories by one or more nationally recognized statistical rating agencies or  
that represents an interest in a trust fund that includes junior mortgage loans 
will not constitute "mortgage related securities" for purposes of SMMEA         
"Mortgage related securities" are legal investments to the same extent that,    
under applicable law, obligations issued by or guaranteed as to principal and   
interest by the United States or any agency or instrumentality thereof          
constitute legal investments for persons, trusts, corporations, partnerships,   
associations, business trusts and business entities, including depository       
institutions, insurance companies and pension funds created pursuant to or      
existing under the laws of the United States or of any state, the authorized    
investments of which are subject to state regulation. Under SMMEA, if a state   
enacted legislation prior to October 3, 1991 specifically limiting the legal    
investment authority of any such entities with respect to "mortgage related     
securities", the securities would constitute legal investments for entities     
subject to such legislation only to the extent provided in such legislation.    
SMMEA provides, however, that in no event will the enactment of any such        
legislation affect the validity of any contractual commitment to purchase, hold 
or invest in "mortgage related securities", or require the sale or other        
disposition of such securities, so long as such contractual commitment was made 
or such securities acquired prior to the enactment of such legislation.         

  SMMEA also amended the legal investment authority of federally chartered
depository institutions as follows: federal savings and loan associations and   
federal savings banks may invest in, sell or otherwise deal with "mortgage      
related securities" without limitation as to the percentage of their assets     
represented thereby, federal credit unions may invest in such securities, and   
national banks may purchase such securities for their own account without regard
to the limitations generally applicable to investment securities set forth in 12
U.S.C. 24 (Seventh), subject in each case to such regulations as the applicable 
federal regulatory authority may prescribe.                                     

   On April 23, 1998, the Federal Financial Institutions Examination Council
issued a revised supervisory policy statement applicable to all depository      
institutions, setting forth guidelines for investments in "high-risk mortgage   
securities". The 1998 policy statement has been adopted by the Federal Reserve  
Board, the Office of the Comptroller of the Currency, the FDIC, the National    
Credit Union Administration and the Office of Thrift Supervision with an        
effective date of May 26, 1998. The 1998 policy statement rescinds a 1992 policy
statement that had required, prior to purchase, a depository institution to     
determine whether a mortgage derivative product that it is considering acquiring
is high-risk, and, if so, that the proposed acquisition would reduce the        
institution's overall                                                           

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interest rate risk. The 1998 policy statement eliminates former constraints on  
investing in certain "high-risk" mortgage derivative products and substitutes   
broader guidelines for evaluating and monitoring investment risk.               

On December 1, 1998, the Office of Thrift Supervision issued Thrift   
Bulletin 13a, entitled, "Management of Interest Rate Risk, Investment           
Securities, and Derivatives Activities", which is applicable to thrift          
institutions regulated by the OTS. Thrift Bulletin 13a has an effective date of 
December 1, 1998. One of the primary purposes of Thrift Bulletin 13a is to      
require thrift institutions, prior to taking any investment position, to (1)    
conduct a pre-purchase portfolio sensitivity analysis for any "significant      
transaction" involving securities or financial derivatives and (2) conduct a    
pre-purchase price sensitivity analysis of any "complex security" or financial  
derivative. For the purposes of Thrift Bulletin 13a, "complex security" includes
among other things any collateralized mortgage obligation or REMIC security,    
other than any "plain vanilla" mortgage pass-through security, that is,         
securities that are part of a single class of securities in the related pool,   
that are non-callable and do not have any special features. Accordingly, the    
offered securities may be viewed as "complex securities". The OTS recommends    
that while a thrift institution should conduct its own in-house pre-acquisition 
analysis, it may rely on an analysis conducted by an independent third-party as 
long as management understands the analysis and its key assumptions. Further,   
Thrift Bulletin 13a recommends that the use of "complex securities with high    
price sensitivity" be limited to transactions and strategies that lower a thrift
institution's portfolio interest rate risk. Thrift Bulletin 13a warns that an   
investment in complex securities by thrift institutions that do not have        
adequate risk measurement, monitoring and control systems may be viewed by the  
OTS examiners as an unsafe and unsound practice.                                

Prospective investors in the securities, including in particular the  
classes of securities that do not constitute "mortgage related securities" for  
purposes of SMMEA should consider the matters discussed in the following        
paragraph.                                                                      

There may be other restrictions on the ability of certain investors,  
including depository institutions, either to purchase securities or to purchase 
securities representing more than a specified percentage of the investor's      
assets. Investors should consult their own legal advisors in determining whether
and to what extent the securities constitute legal investments for such         
investors or are subject to investment, capital or other restrictions, and, if  
applicable, whether SMMEA has been overridden in any jurisdiction relevant to   
such investor.                                                                  

 METHODS OF DISTRIBUTION

 The securities offered hereby and by the related prospectus supplements
will be offered in series through one or more of the methods described below.   
The prospectus supplement prepared for each series will describe the method of  
offering being utilized for that series and will state the net proceeds to the  
depositor from such sale.                                                       

     The depositor intends that securities will be offered through the following
methods from time to time and that offerings may be made concurrently through   
more than one of these methods or that an offering of the securities of a       
particular series may be made through a combination of two or more of these     
methods. Such methods are as follows:                                           

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        1. By negotiated firm commitment or best efforts underwriting and public
re-offering by underwriters;                                            

      2. By placements by the depositor with institutional investors through
dealers; and                                                            

      3. By direct placements by the depositor with institutional investors.

If underwriters are used in a sale of any securities, other than in   
connection with an underwriting on a best efforts basis, such securities will be
acquired by the underwriters for their own account and may be resold from time  
to time in one or more transactions, including negotiated transactions, at fixed
public offering prices or at varying prices to be determined at the time of sale
or at the time of commitment therefor. Such underwriters may be broker-dealers  
affiliated with the depositor whose identities and relationships to the         
depositor will be as set forth in the related prospectus supplement. The        
managing underwriter or underwriters with respect to the offer and sale of the  
securities of a particular series will be set forth on the cover of the         
prospectus supplement relating to such series and the members of the            
underwriting syndicate, if any, will be named in such prospectus supplement.    

 In connection with the sale of the securities offered, underwriters may
receive compensation from the depositor or from purchasers of such securities in
the form of discounts, concessions or commissions. Underwriters and dealers     
participating in the distribution of the securities may be deemed to be         
underwriters in connection with such certificates, and any discounts or         
commissions received by them from the depositor and any profit on the resale of 
offered securities by them may be deemed to be underwriting discounts and       
commissions under the Securities Act of 1933, as amended.                       

     It is anticipated that the underwriting agreement pertaining to the sale of
offered securities of any series will provide that the obligations of the       
underwriters will be subject to certain conditions precedent, that the          
underwriters will be obligated to purchase all such certificates if any are     
purchased, other than in connection with an underwriting on a best efforts      
basis, and that, in limited circumstances, the depositor will indemnify the     
several underwriters and the underwriters will indemnify the depositor against  
certain civil liabilities, including liabilities under the Securities Act of    
1933 or will contribute to payments required to be made in respect thereof.     

    The prospectus supplement with respect to any series offered by placements
through dealers will contain information regarding the nature of such offering  
and any agreements to be entered into between the depositor and purchasers of   
offered securities of the series.                                               

   The depositor anticipates that the securities offered hereby will be sold
primarily to institutional investors or sophisticated non-institutional         
investors. Purchasers of offered securities, including dealers, may, depending  
on the facts and circumstances of such purchases, be deemed to be "underwriters"
within the meaning of the Securities Act of 1933 in connection with reoffers and
sales by them of the offered securities. Holders of offered securities should   
consult with their legal advisors in this regard prior to any such reoffer or   
sale.                                                                           

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 LEGAL MATTERS

     Certain legal matters in connection with the securities will be passed upon
for the depositor by Thacher Proffitt & Wood, New York, New York.               

 FINANCIAL INFORMATION

     The depositor has determined that its financial statements are not material
to the offering made hereby. Any prospective purchaser that desires to review   
financial information concerning the depositor will be provided by the depositor
on request with a copy of the most recent financial statements of the depositor.

RATING

It is a condition to the issuance of any class of securities that they
shall have been rated not lower than investment grade, that is, in one of the   
four highest rating categories, by at least one nationally recognized           
statistical rating organization.                                                

     Any such ratings on the securities address the likelihood of receipt by the
holders thereof of all collections on the underlying mortgage assets to which   
such holders are entitled. These ratings address the structural, legal and      
issuer-related aspects associated with such securities, the nature of the       
underlying mortgage assets and the credit quality of the guarantor, if any. The 
ratings do not represent any assessment of the likelihood of principal          
prepayments by borrowers or of the degree by which prepayments might differ from
those originally anticipated. As a result, securityholders might suffer a lower 
than anticipated yield, and, in addition, holders of Strip Securities in extreme
cases might fail to recoup their initial investments.                           

 AVAILABLE INFORMATION

The depositor is subject to the informational requirements of the     
Securities Exchange Act of 1934 and in accordance therewith files reports and   
other information with the Securities and Exchange Commission. Such reports and 
other information filed by the depositor can be inspected and copied at the     
public reference facilities maintained by the Commission at its Public Reference
Section, 450 Fifth Street, N.W., Washington, D.C. 20549, and its Regional       
Offices located as follows: Chicago Regional Office, 500 West Madison, 14th     
Floor, Chicago, Illinois 60661; New York Regional Office, Seven World Trade     
Center, New York, New York 10048. Copies of such material can also be obtained  
from the Public Reference Section of the Commission, 450 Fifth Street, N.W.,    
Washington, D.C. 20549, at prescribed rates and electronically through the      
Commission's Electronic Data Gathering, Analysis and Retrieval System at the    
Commission's Web site (http:\\www.sec.gov). The depositor does not intend to    
send any financial reports to securityholders.                                  

  This prospectus does not contain all of the information set forth in the
registration statement, of which this prospectus forms a part, and exhibits     
thereto which the depositor has filed with the Commission under the securities  
Act of 1933 and to which reference is hereby made.                              

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 INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

    There are incorporated into this prospectus by reference all documents and
reports filed or caused to be filed by the depositor with respect to a trust    
fund pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange   
Act of 1934, prior to the termination of the offering of securities offered     
hereby evidencing interest in a trust fund. The depositor will provide or cause 
to be provided without charge to each person to whom this prospectus is         
delivered in connection with the offering of one or more classes of securities  
offered hereby, a copy of any or all documents or reports incorporated herein by
reference, in each case to the extent such documents or reports relate to one or
more of such classes of such offered securities, other than the exhibits to such
documents (unless such exhibits are specifically incorporated by reference in   
such documents). Requests to the depositor should be directed in writing to its 
principal executive office at One Lincoln Centre, Oakbrook Terrace, Illinois    
60181, Attention: Secretary, or by telephone at (708) 916-4000. The depositor   
has determined that its financial statements are not material to the offering of
any securities offered hereby.                                                  

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GLOSSARY

ACCRUAL SECURITIES: A class of securities as to which accrued interest or a     
portion thereof will not be distributed but rather will be added to the         
principal balance of the security on each distribution date in the manner       
described in the related prospectus supplement.                                 

APPLICABLE FEDERAL RATE: A rate based on the average of current yields on       
Treasury securities, which rate is computed and published monthly by the IRS.   

ARM LOAN: A mortgage loan with an interest rate that adjusts periodically, with 
a corresponding adjustment in the amount of the monthly payment, to equal the   
sum of a fixed percentage amount and an index.                                  

CERCLA: The Comprehensive Environmental Response, Compensation and Liability    
Act, as amended.                                                                

CLEAN-UP CALL: The right of the party entitled to effect a termination of a     
trust fund upon the aggregate principal balance of the outstanding trust fund   
assets for the series at that time being less than the percentage, as specified 
in the related prospectus supplement, of the aggregate principal balance of the 
trust fund assets at the cut-off date for that series and which percentage will 
be between 25% and 0%.                                                          

CLOSING DATE: With respect to any series of securities, the date on which the   
securities are issued.                                                          

CODE:  The Internal Revenue Code of 1986, as amended.                           

COMMISSION: The Securities and Exchange Commission.                             

CPR: The Constant Prepayment Rate model, which assumes that the outstanding     
principal balance of a pool of mortgage loans prepays at a specified constant   
annual rate. In generating monthly cash flows, this rate is converted to an     
equivalent constant monthly rate.                                               

CRIME CONTROL ACT:  The Comprehensive Crime Control Act of 1984.                

DIDMC: The Depository Institutions Deregulation and Monetary Control Act of     
1980.                                                                           

DOL:  The U.S. Department of Labor.                                             

DOL REGULATIONS: The regulations promulgated by the U.S. Department of Labor at 
29 C.F.R. ss.2510. 3-101                                                        

DUE PERIOD: The second day of the month immediately preceding the month in which
the distribution date occurs, or the day after the cut-off date in the case of  
the first Due Period, and ending on the first day of the month of the related   
distribution date, unless the prospectus supplement specifies otherwise.        

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EQUITY CERTIFICATES: Where the issuer is an owner trust, the certificates       
evidencing ownership of the trust fund.                                         

ERISA PERMITTED INVESTMENTS: The types of investments permitted by the rating   
agencies named in the Prohibited Transaction Exemption 91-23 issued by the DOL  
in which funds in a pre-funding account may be invested.                        

FTC RULE: The "Holder in the Due Course" Rule of the Federal Trade Commission.  

GARN-ST. GERMAIN ACT:  The Garn-St. Germain Depositor Institutions Act of 1982. 

GRANTOR TRUST CERTIFICATE: A certificate representing an interest in a Grantor  
Trust Fund.                                                                     

GRANTOR TRUST FRACTIONAL CERTIFICATE: A Grantor Trust Certificate representing  
an undivided equitable ownership interest in the principal of the mortgage loans
constituting the related Grantor Trust Fund, together with interest on the      
Grantor Trust Certificates at a pass-through rate.                              

GRANTOR TRUST STRIP CERTIFICATE: A certificate representing ownership of all or 
a portion of the difference between interest paid on the mortgage loans         
constituting the related Grantor Trust Fund (net of normal administration fees  
of the depositor) and interest paid to the holders of Grantor Trust Fractional  
Interest Certificates issued with respect to the Grantor Trust Fund. A Grantor  
Trust Strip Certificate may also evidence a nominal ownership interest in the   
principal of the mortgage loans constituting the related Grantor Trust Fund.    

GRANTOR TRUST FUND: A trust fund as to which no REMIC election will be made and 
which qualifies as a grantor trust within the meaning of Subpart E, part I,     
subchapter J of Chapter 1 of the Code.                                          

HIGH COST LOAN: A Mortgage Asset subject to the Home Ownership and Equity       
Protection Act of 1994.                                                         

HOMEOWNERSHIP ACT: The Home Ownership and Equity Protection Act of 1994.        

INSURANCE PROCEEDS: Proceeds received with respect to a Mortgage Asset under any
hazard insurance policy, special insurance policy, primary insurance policy, FHA
insurance policy, VA guarantee, bankruptcy bond or mortgage pool insurance      
policy, to the extent such proceeds are not applied to the restoration of the   
property or released to the mortgagor in accordance with normal servicing       
procedures.                                                                     

LIQUIDATED LOAN: A defaulted mortgage loan that is finally liquidated, through  
foreclosure sale or otherwise.                                                  

LIQUIDATION PROCEEDS: All amounts, other than Insurance Proceeds, received and  
retained in connection with the liquidation of a defaulted Mortgage Asset, by   
foreclosure or otherwise.                                                       

MORTGAGE: The mortgage, deed of trust or similar instrument securing a mortgage 
loan.                                                                           

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MORTGAGE ASSET: A mortgage loan, manufactured housing conditional sales contract
or installment agreement or a home improvement installment sales contract or    
installment loan agreement.                                                     

NBRC: The National Bankruptcy Review Commission.                                

NCUA:  The National Credit Union Administration.                                

NONRECOVERABLE ADVANCE: An advance made or to be made with respect to a Mortgage
Asset which the servicer determines is not ultimately recoverable from Related  
Proceeds.                                                                       

OID REGULATIONS: The rules governing original issue discount that are set forth 
in Sections 1271-1273 and 1275 of the Code and in the related Treasury          
regulations.                                                                    

PARTNERSHIP CERTIFICATE: A certificate representing an interest in a Partnership
Trust Fund.                                                                     

PARTNERSHIP TRUST FUND: A trust fund as to which no REMIC election will be made 
and which qualifies as a partnership within the meaning of subchapter K of      
Chapter 1 of the Code.                                                          

PLANS: Employee pension and welfare benefit plans subject to ERISA and          
tax-qualified retirement plans described in Section 401(a) of the Code or       
Individual Retirement Accounts described in Section 408 of the Code.            

PREPAYMENT ASSUMPTION: With respect to a REMIC Regular Certificate or a Grantor 
Trust Certificate, the assumption as to the rate of prepayments of the principal
balances of mortgage loans held by the trust fund used in pricing the initial   
offering of that security.                                                      

PREPAYMENT PERIOD: The calendar month immediately preceding the month in which  
the distribution date occurs, unless the prospectus supplement specifies        
otherwise.                                                                      

PTCE: Prohibited Transaction Class Exemption                                    

PURCHASE PRICE: As to any mortgage loan, an amount equal to the sum of (1) the  
unpaid principal balance of the mortgage loan, (2) unpaid accrued interest on   
the principal balance at the rate at which interest accrues on the mortgage loan
from the date as to which interest was last paid to but not including the due   
date in the Due Period most recently ended prior to such date of purchase and   
(3) any unreimbursed servicing advances or expenses payable or reimbursable to  
the servicer with respect to that mortgage loan, unless the prospectus          
supplement specifies otherwise.                                                 

RECORD DATE: The last business day of the month preceding the month in which a  
distribution date occurs, unless the prospectus supplement specifies otherwise. 

RELATED PROCEEDS: Recoveries on a Mortgage Asset related to amounts which the   
servicer has previously advanced to the related trust fund.                     

RELEASED MORTGAGED PROPERTY PROCEEDS: Proceeds received in connection with the  
taking of an entire mortgaged property by exercise of the power of eminent      
domain or condemnation or any                                                   

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release of a part of the mortgaged property from the lien of the related        
Mortgage, whether by partial condemnation, sale or otherwise.                   

RELIEF ACT: The Soldiers' and Sailors' Civil Relief Act of 1940.                

REMIC: A real estate mortgage investment conduit as defined in Sections 860A    
through 860G of the Code.                                                       

REMIC CERTIFICATES: Certificates evidencing interests in a trust fund as to     
which a REMIC election has been made.                                           

REMIC PROVISIONS:  Sections 860A through 860G of the Code.                      

REMIC REGULAR CERTIFICATE: A REMIC Certificate designated as a regular interest 
in the related REMIC.                                                           

REMIC RESIDUAL CERTIFICATE: A REMIC Certificate designated as a residual        
interest in the related REMIC.                                                  

REMIC REGULATIONS: The REMIC Provisions and the related Treasury regulations.   

REO PROPERTY: A mortgaged property acquired for the benefit of securityholders  
by foreclosure or by deed-in-lieu of foreclosure or otherwise.                  

RETAINED INTEREST: A portion of the interest payments on a trust fund asset that
may be retained by the depositor or any previous owner of the asset.            

RICO: The Racketeer Influenced and Corrupt Organizations statute.               

SAIF:  The Savings Association Insurance Fund.                                  

SCHEDULED PRINCIPAL BALANCE: As to any Mortgage Asset, the unpaid principal     
balance thereof as of the date of determination, reduced by the principal       
portion of all monthly payments due but unpaid as of the date of determination. 

SENIOR/SUBORDINATE SERIES: A series of securities of which one or more classes  
is senior in right of payment to one or more other classes to the extent        
described in the related prospectus supplement.                                 

SINGLE FAMILY LOANS: A loan secured by a first or junior lien on a Single Family
Property.                                                                       

SINGLE FAMILY PROPERTIES: One- to four-family residential properties including  
detached and attached dwellings, townhouses, rowhouses, individual condominium  
units, individual units in planned-unit developments, individual units in de    
minimus planned-unit developments or manufactured homes that are permanently    
affixed to their sites.                                                         

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STRIP SECURITIES: A class of securities which are entitled to (a) principal     
distributions, with disproportionate, nominal or no interest distributions, or  
(b) interest distributions, with disproportionate, nominal or no principal      
distributions.                                                                  

STRIPPED INTEREST: The distributions of interest on a Strip Security with no or 
a nominal principal balance.                                                    

STRIPPED INTEREST SECURITIES: A class of securities which are entitled to       
interest distributions, with disproportionate, nominal or no principal          
distributions.                                                                  

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

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You should rely on the information contained or incorporated by 
reference in this prospectus supplement and the accompanying prospectus. We have
not authorized anyone to provide you with any other information or to make any  
representations not contained in this prospectus supplement and the prospectus. 
This prospectus supplement and the prospectus does not constitute an offer to   
sell, or a solicitation of an offer to buy, the securities offered hereby by    
anyone in any jurisdiction in which the person making such offer or solicitation
is not qualified to do so or to anyone to whom it is unlawful to make any such  
offer or solicitation. We represent the accuracy of this information in this    
prospectus supplement and the accompanying prospectus only as of the dates on   
their respective covers.                                                        

$515,000,000

AFC MORTGAGE LOAN ASSET BACKED NOTES
 SERIES 1999-3

 AFC TRUST SERIES 1999-3
ISSUER

 SUPERIOR BANK FSB
 SELLER AND SERVICER

 $315,000,000 CLASS 1A NOTES
 VARIABLE NOTE INTEREST RATE

 $200,000,000 CLASS 2A NOTES
 VARIABLE NOTE INTEREST RATE

 -----------------------
 PROSPECTUS SUPPLEMENT
 -----------------------

 MERRILL LYNCH & CO.
 J.P. MORGAN & CO.

SEPTEMBER 20, 1999

Dealers will be required to deliver a prospectus supplement and 
prospectus when acting as underwriters of the notes offered hereby and with     
respect to their unsold allotments or subscriptions. In addition, all dealers   
selling the notes, whether or not participating in this offering, may be        
required to deliver a prospectus supplement and prospectus until ninety days    
after the date of this prospectus supplement.