C-Bass Mortgage Loan As-BCK NT Sal Mort LN Tr Ser 2001-CB4 – ‘8-K’ for 12/14/01 – EX-4.3

On:  Wednesday, 2/6/02   ·   For:  12/14/01   ·   Accession #:  882377-2-79   ·   File #:  33-11429-03

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Current Report   —   Form 8-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 8-K         Salomon Brothers Mortgage Securities Vii Inc           3     11K 
 2: EX-4.3      Servicing Agreement                                   48    195K 
 3: EX-4.4      Amended and Restated Trust Agreement                  75    237K 
 4: EX-4.5      Indenture                                            281   1.07M 
 5: EX-10.1     Mortgage Loan Purchase Agreeement                     30    100K 

EX-4.3   —   Servicing Agreement
Exhibit Table of Contents

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 EXHIBIT 4.3

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

 LITTON LOAN SERVICING LP,
 as Servicer

 SALOMON MORTGAGE LOAN TRUST, SERIES 2001-CB4,
 as Issuer

 and

U.S. BANK NATIONAL ASSOCIATION
as Indenture Trustee

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

 SERVICING AGREEMENT
 Dated as of December 14, 2001

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

C-BASS Mortgage Loan Asset-Backed Notes, Series 2001-CB4

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

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                                     TABLE OF CONTENTS                                                 

                                                                                                   Page
                                                                                                       
                                         ARTICLE I                                                     

                                        Definitions                                                    
Section 1.01.  Definitions............................................................................1
Section 1.02.  Other Definitional Provisions..........................................................1

                                        ARTICLE II                                                     

                              Representations and Warranties                                           
Section 2.01.  Representations and Warranties Regarding the Servicer..................................3
Section 2.02.  Representations and Warranties of the Issuer...........................................5
Section 2.03.  Repurchase or Substitution of Mortgage Loans...........................................5

                                        ARTICLE III                                                    

                               Administration and Servicing                                            
                                     of Mortgage Loans                                                 
Section 3.01.  Servicer to Act as Servicer............................................................6
Section 3.02.  Collection of Certain Mortgage Loan Payments...........................................8
Section  3.03. Realization Upon Defaulted Mortgage Loans..............................................8
Section 3.04.  Collection Account....................................................................10
Section 3.05.  Permitted Withdrawals from the Collection Account.....................................11
Section 3.06.  Establishment of Escrow Accounts; Deposits in Escrow Accounts.........................12
Section 3.07.  Permitted Withdrawals From Escrow Account.............................................13
Section 3.08.  Payment of Taxes, Insurance and Other Charges; Collections                              
               Thereunder............................................................................13
Section 3.09.  Transfer of Accounts..................................................................14
Section 3.10.  Maintenance of Hazard Insurance.......................................................15
Section 3.11.  Maintenance of Mortgage Impairment Insurance Policy...................................15
Section 3.12.  Fidelity Bond, Errors and Omissions Insurance.........................................16
Section 3.13.  Title, Management and Disposition of REO Property.....................................16
Section 3.14.  Due-on-Sale Clauses; Assumption and Substitution Agreements...........................19
Section 3.15.  Notification of Adjustments...........................................................20
Section 3.16.  Optional and Mandatory Purchases of Mortgage Loans by Servicer........................20
Section 3.17.  Indenture Trustee to Cooperate; Release of Files......................................21
Section 3.18.  Servicing Compensation................................................................22
Section 3.19.  Annual Statement as to Compliance.....................................................23
Section 3.20.  Annual Independent Certified Public Accountants' Reports..............................23
Section 3.21.  Access to Certain Documentation and Information Regarding the                           
               Mortgage Loans........................................................................24
Section 3.22.  Reserved..............................................................................24
Section 3.23.  Obligations of the Servicer in Respect of Compensating Interest.......................24

                            i                                                                          

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Section 3.24.  Obligations of the Servicer in Respect of Mortgage Rates and                            
               Monthly Payments......................................................................25
Section 3.25.  Investment of Funds in the Collection Account.........................................25
Section 3.26.  Liability of Servicer; Indemnification................................................26
Section 3.27.  Reports of Foreclosure and Abandonment of Mortgaged Properties........................27

                                         ARTICLE V                                                     

                                       The Servicer                                                    
Section 5.01.  Liability of the Servicer.............................................................30
Section 5.02.  Merger or Consolidation of, or Assumption of the Obligations of,                        
               the Servicer..........................................................................30
Section 5.03.  Limitation on Liability of the Servicer and Others....................................30
Section 5.04.  Servicer Not to Resign................................................................31
Section 5.05.  Delegation of Duties..................................................................31

                                        ARTICLE VI                                                     

                                          Default                                                      
Section 6.01.  Servicer Events of Termination........................................................34
Section 6.02.  Indenture Trustee to Act; Appointment of Successor....................................36
Section 6.03.  Waiver of Defaults....................................................................37
Section 6.04.  Notification to Noteholders...........................................................37
Section 6.05.  Survivability of Servicer Liabilities.................................................37

                                        ARTICLE VII                                                    

                                 Miscellaneous Provisions                                              
Section 7.01.  Amendment.............................................................................38
Section 7.02.  Governing Law; Jurisdiction...........................................................38
Section 7.03.  Notices...............................................................................38
Section 7.04.  Severability of Provisions............................................................39
Section 7.05.  Article and Section References........................................................39
Section 7.06.  Notice to the Rating Agencies.........................................................39
Section 7.07.  Further Assurances....................................................................40
Section 7.08.  Benefits of Servicing Agreement.......................................................40
Section 7.09.  Benefits of Servicing Agreement.......................................................40

EXHIBIT A         Form of Request for Release of Documents                      
EXHIBIT B         Ineligible Foreclosure Property Loan Schedule                 

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     This is a Servicing Agreement, dated as of December 14, 2001, among
Litton Loan Servicing LP (the "Servicer"), Salomon Mortgage Loan Trust 2001-CB4 
(the "Issuer") and U.S. Bank National Association (the "Indenture Trustee").    

 W I T N E S S E T H  T H A T:
----------------------------

                 WHEREAS, the Servicer is engaged in the business of servicing
mortgage loans;                                                                 

                  WHEREAS, the Issuer desires to pledge to the Indenture Trustee
certain mortgage loans, identified on Schedule 1 hereto (the "Mortgage Loans")  
in connection with the issuance of the C-BASS Mortgage Loan Asset-Backed Notes, 
Series 2001-CB4 (the "Notes");                                                  

                 WHEREAS, the Issuer desires to contract with the Servicer for
the servicing responsibilities associated with such Mortgage Loans; and;        

               WHEREAS, the Issuer, the Servicer and the Indenture Trustee
desire to execute this Agreement to define each party's rights, duties and      
obligations relating to the servicing of the Mortgage Loans;                    

            NOW, THEREFORE, in consideration of the mutual covenants
herein contained, the parties hereto agree as follows:                          

 ARTICLE I

 Definitions

Section 1.01.     Definitions.              

           For all purposes of this Servicing Agreement, except as
otherwise expressly provided herein or unless the context otherwise requires,   
capitalized terms not otherwise defined herein shall have the meanings assigned 
to such terms in the Definitions contained in Appendix A to the Indenture dated 
December 14, 2001 (the "Indenture"), between Salomon Mortgage Loan Trust, Series
2001-CB4, as issuer, and U.S. Bank National Association, as indenture trustee,  
which is incorporated by reference herein. All other capitalized terms used     
herein shall have the meanings specified herein.                                

    Section 1.02.     Other Definitional Provisions.

                (a) All terms defined in this Servicing Agreement shall have
the defined meanings when used in any certificate or other document made or     
delivered pursuant hereto unless otherwise defined therein.                     

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                  (b) As used in this Servicing Agreement and in any certificate
or other document made or delivered pursuant hereto or thereto, accounting terms
not defined in this Servicing Agreement or in any such certificate or other     
document, and accounting terms partly defined in this Servicing Agreement or in 
any such certificate or other document, to the extent not defined, shall have   
the respective meanings given to them under generally accepted accounting       
principles. To the extent that the definitions of accounting terms in this      
Servicing Agreement or in any such certificate or other document are            
inconsistent with the meanings of such terms under generally accepted accounting
principles, the definitions contained in this Servicing Agreement or in any such
certificate or other document shall control.                                    

              (c) The words "hereof," "herein," "hereunder" and words of
similar import when used in this Servicing Agreement shall refer to this        
Servicing Agreement as a whole and not to any particular provision of this      
Servicing Agreement; Section and Exhibit references contained in this Servicing 
Agreement are references to Sections and Exhibits in or to this Servicing       
Agreement unless otherwise specified; and the term "including" shall mean       
"including without limitation."                                                 

                 (d) The definitions contained in this Servicing Agreement are
applicable to the singular as well as the plural forms of such terms and to the 
masculine as well as the feminine and neuter genders of such terms.             

                (e) Any agreement, instrument or statute defined or referred
to herein or in any instrument or certificate delivered in connection herewith  
means such agreement, instrument or statute as from time to time amended,       
modified or supplemented and includes (in the case of agreements or instruments)
references to all attachments thereto and instruments incorporated therein;     
references to a Person are also to its permitted successors and assigns.        

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ARTICLE II

Representations and Warranties

              Section 2.01. Representations and Warranties Regarding the
Servicer.       

                  The Servicer represents and warrants to the Issuer and for the
benefit of the Indenture Trustee, as pledgee of the Mortgage Loans, as of the   
Cut-off Date:                                                                   

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

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

        (iii) The Servicer is an approved seller/servicer of
        conventional mortgage loans for FNMA, and is an FHA Approved Mortgagee
        in good standing to service mortgages, is a VA Approved Lender and has
        not been suspended as a mortgagee or servicer by the FHA or VA and has
        the facilities, procedures and experienced personnel necessary for the
    sound servicing of mortgage loans of the same type as the Mortgage
         Loans. The Servicer is, and shall remain for as long as it is servicing
  the Mortgage Loans hereunder, in good standing as a FHA Approved
      Mortgagee and a VA Approved Lender and to service mortgage loans for
  HUD, FNMA or FHLMC, and no event has occurred, including but not
 limited to a change in insurance coverage, which would make the
Servicer unable to comply with HUD,                           

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        FNMA, FHLMC, FHA or VA eligibility requirements or which would require
notification to any of HUD, FNMA, FHLMC, FHA or VA;           

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

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

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

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

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

                 Within 90 days of the earlier of discovery by the Servicer or
receipt of notice by the Servicer of the breach of any representation, warranty 
or covenant of the Servicer set forth in this Section 2.01 which materially and 
adversely affects the interests of the Noteholders in any Mortgage Loan, the    
Servicer shall cure such breach in all material respects.                       

         It is understood and agreed that the representations,
warranties and covenants set forth in this Section 2.01 shall survive delivery  
of the Mortgage Files to the Indenture Trustee and shall inure to the benefit of
the Indenture Trustee, the Issuer, the Depositor and the Noteholders. Upon      
discovery by any of the Issuer, the Depositor, the Servicer, the Seller or the  
Indenture Trustee of a                                                          

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

               Section 2.02. Representations and Warranties of the Issuer.
The Issuer hereby represents and warrants to the Servicer and for the benefit of
the Indenture Trustee, as pledgee of the Mortgage Loans, as of the Cut-off Date:

              (i) The Issuer is a business trust duly formed and in good
      standing under the laws of the State of Delaware and has full power,
 authority and legal right to execute and deliver this Servicing
Agreement and to perform its obligations under this Servicing 
Agreement, and has taken all necessary action to authorize the
        execution, delivery and performance by it of this Servicing Agreement;
and                                                           

         (ii) The execution and delivery by the Issuer of this
Servicing Agreement and the performance by the Issuer of its  
 obligations under this Servicing Agreement will not violate any
       provision of any law or regulation governing the Issuer or any order,
   writ, judgment or decree of any court, arbitrator or governmental
         authority or agency applicable to the Issuer or any of its assets. Such
       execution, delivery, authentication and performance will not conflict
    with, or result in a breach or violation of, any mortgage, deed of
      trust, lease or other agreement or instrument to which the Issuer is
bound.                                                        

               Section 2.03. Repurchase or Substitution of Mortgage Loans.

               For any month in which the Seller (pursuant to the terms of
the Mortgage Loan Purchase Agreement) substitutes one or more Eligible          
Substitute Mortgage Loans for one or more Defective Mortgage Loans, the Servicer
will determine the amount (the "Substitution Adjustment Amount"), if any, by    
which the aggregate Purchase Price of all such Defective Mortgage Loans exceeds 
the aggregate, as to each such Eligible Substitute Mortgage Loan, of the        
principal balance thereof as of the date of substitution, together with one     
month's interest on such principal balance at the applicable Net Mortgage Rate. 
On the date of such substitution, the Seller will deliver or cause to be        
delivered to the Servicer for deposit in the Collection Account an amount equal 
to the Substitution Adjustment Amount, if any, and the Indenture Trustee, upon  
receipt of the related Eligible Substitute Mortgage Loan or Loans and           
certification by the Servicer of such deposit, shall release to the Seller the  
related Mortgage File or Files and shall execute and deliver such instruments of
transfer or assignment, in each case without recourse, as the Seller shall      
deliver to it and as shall be necessary to vest therein any Defective Mortgage  
Loan released pursuant hereto.                                                  

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 ARTICLE III

Administration and Servicing
 of Mortgage Loans

Section 3.01. Servicer to Act as Servicer.  

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

              Consistent with the terms of this Servicing Agreement, the
Servicer may waive, modify or vary any term of any Mortgage Loan or consent to  
the postponement of strict compliance with any such term or in any manner grant 
indulgence to any Mortgagor if in the Servicer's reasonable and prudent         
determination such waiver, modification, postponement or indulgence is not      
materially adverse to the Noteholders; provided, however, that the Servicer     
shall not make future advances and, unless the Mortgagor is in default with     
respect to the Mortgage Loan or such default is, in the judgment of the         
Servicer, reasonably foreseeable, the Servicer shall not permit any modification
with respect to any Mortgage Loan that would (i) change the Mortgage Rate, defer
or forgive the payment thereof of any principal or interest payments, reduce the
outstanding principal amount (except for actual payments of principal) or extend
the final maturity date with respect to such Mortgage Loan, (ii) in the case of 
FHA Loans and VA Loans, affect the FHA Insurance Contract or VA Guaranty        
Agreement, as the case may be, with respect to such Mortgage Loan, (iii) affect 
adversely the status of any REMIC under the Indenture as a REMIC or (iv) cause  
any REMIC under the Indenture to be subject to a tax on "prohibited             
transactions" or "contributions" pursuant to the REMIC Provisions.              
Notwithstanding the foregoing, the Servicer shall not permit any modification   
with respect to any Group I Mortgage Loan that would both (x) effect an exchange
or reissuance of such Group I Mortgage Loan under Section 1.860G-2(b) of the    
Treasury Regulations and (y) cause any REMIC under the Indenture constituting   
part of the Trust Estate to fail to qualify as a REMIC under the Code or the    
imposition of any tax on "prohibited transactions" or "contributions" after the 
Startup Day under the REMIC Provisions. Without limiting the generality of the  
foregoing, the Servicer shall continue, and is hereby authorized and empowered  
to execute and deliver on behalf of itself, and the Indenture Trustee, all      
instruments of satisfaction or cancellation, or of partial or full release,     
discharge and all other comparable instruments, with respect to the Mortgage    
Loans and with respect to the Mortgaged Property. The Servicer shall make all   
required Servicing Advances and shall service and administer the Mortgage Loans 
in accordance with Applicable Regulations, and shall provide to the Mortgagor   
any reports required to be provided to them thereby. If reasonably required by  
the Servicer, the Indenture Trustee shall furnish the Servicer                  

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with any powers of attorney and other documents necessary or appropriate to     
enable the Servicer to carry out its servicing and administrative duties under  
this Servicing Agreement.                                                       

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

          In servicing and administering the Mortgage Loans, the
Servicer shall employ procedures including collection procedures and exercise   
the same care that it customarily employs and exercises in servicing and        
administering mortgage loans for its own account giving due consideration to    
accepted mortgage servicing practices of prudent lending institutions, the FHA  
Insurance Contracts and the VA Guaranty Agreements, where applicable, and the   
Noteholders' reliance on the Servicer. The Servicer shall give prompt notice to 
the Indenture Trustee of any action, of which the Servicer has actual knowledge,
to (i) assert a claim against the Trust Estate or (ii) assert jurisdiction over 
the Trust Estate.                                                               

               Notwithstanding anything in this Servicing Agreement to the
contrary, in the event of a Principal Prepayment in full of a Mortgage Loan, the
Servicer may not waive any prepayment penalty or portion thereof required by the
terms of the related Mortgage Note unless (i) the Servicer determines that such 
waiver would maximize recovery of Liquidation Proceeds for such Mortgage Loan,  
taking into account the value of such prepayment penalty, or (ii) (A) the       
enforceability thereof is limited (1) by bankruptcy, insolvency, moratorium,    
receivership, or other similar law relating to creditors' rights generally or   
(2) due to acceleration in connection with a foreclosure or other involuntary   
payment, or (B) the enforceability is otherwise limited or prohibited by        
applicable law. In the event of a Principal Prepayment in full with respect to  
any Mortgage Loan, the Servicer shall deliver to the Indenture Trustee an       
Officer's Certificate no later than the third Business Day following the        
immediately succeeding Determination Date with a copy to the Class IX Noteholder
and the Class IN Noteholder (in the case of a Group I Mortgage Loan) or the     
Class IIX Noteholder and the Class IIN Noteholder (in the case of a Group II    
Mortgage Loan). If the Servicer has waived or does not collect all or a portion 
of a prepayment penalty relating to a Principal Prepayment in full due to any   
action or omission of the Servicer, other than as provided above, the Servicer  
shall, within 90 days of the date on which the Principal Prepayment in full is  
remitted to the Indenture Trustee, deliver to the Indenture Trustee the amount  
of such prepayment penalty (or such portion thereof as had been waived for      
deposit) into the Payment Account for payment in accordance with the terms of   
the Indenture.                                                                  

                With respect to each Mortgage Loan which is the subject of a
Principal Prepayment in full, the Indenture Trustee shall verify whether such   
Mortgage Loan was identified on the Mortgage Loan Schedule as being subject to a
prepayment penalty and, if such Mortgage Loan is so identified, whether the     
amount of the prepayment penalty remitted by the Servicer (including any        

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amounts to be remitted by the Servicer pursuant to the last sentence of the     
preceding paragraph), if any, is consistent with the amount of the prepayment   
penalty set forth in the Mortgage Loan Schedule. In the event that the Indenture
Trustee determines that a prepayment penalty received with respect to a         
Principal Prepayment in full is inconsistent with the prepayment penalty set    
forth in the Mortgage Loan Schedule for the related Mortgage Loan and such      
inconsistency results in the receipt of a reduced prepayment penalty, the       
Indenture Trustee shall provide notice to the Seller of such inconsistency.     
Within 90 days of receipt of such notice, the Seller shall remit to the         
Indenture Trustee for deposit in the Payment Account an amount equal to the     
difference between the amount of the prepayment penalties received by the       
Indenture Trustee and the amount of the prepayment penalties determined in      
accordance with the description thereof set forth in the Mortgage Loan Schedule 
for the related Mortgage Loans.                                                 

                  The Indenture Trustee shall prepare and deliver to the Issuer,
the Depositor and the owner of the Class IN Notes, Class IX Notes, Class IIN    
Notes and Class IIX Notes, on a monthly basis, a statement setting forth the    
amounts due and received with respect to prepayment penalties.                  

               Section 3.02. Collection of Certain Mortgage Loan Payments.

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

            Section 3.03. Realization Upon Defaulted Mortgage Loans.

            In the event that any payment due under any Conventional
Mortgage Loan is not paid when the same becomes due and payable, or in the event
the Mortgagor fails to perform any other covenant or obligation under the       
Mortgage Loan and such failure continues beyond any applicable grace period, the
Servicer shall take such action as it shall deem to be in the best interest of  
the Noteholders. In the event that any payment due under any FHA Loan becomes   
delinquent, the Servicer shall take all such actions as are in the best         
interests of the Noteholders and permitted under any applicable FHA loss        
mitigation proceedings, including, but not limited to, requesting the FHA to    
accept an assignment of such FHA Loan, and, upon the Servicer's determination   
that foreclosure is in the best interest of the Noteholders, commencing         
foreclosure proceedings. With respect to each VA Loan, the Servicer shall       
diligently seek to mitigate losses by utilizing all remedies available in the VA
Regulations. With respect to any defaulted Mortgage Loan, the Servicer shall    
have the right                                                                  

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to review the status of the related forbearance plan and, subject to the second 
paragraph of Section 3.01, may modify such forbearance plan.                    

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

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

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

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

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

                 If the Servicer determines, as described above, that it is in
the best economic interest of the Noteholders to take such actions as are       
necessary to bring any such Mortgaged Property into compliance with applicable  
environmental laws, or to take such action with respect to the containment,     
clean-up or remediation of hazardous substances, hazardous materials, hazardous 

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wastes, or petroleum-based materials affecting any such Mortgaged Property, then
the Servicer shall take such action as it deems to be in the best economic      
interest of the Noteholders. The cost of any such compliance, containment,      
cleanup or remediation shall be advanced by the Servicer, subject to the        
Servicer's right to be reimbursed therefor from the Collection Account as       
provided in Section 3.05(b).                                                    

Section 3.04. Collection Account.           

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

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

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

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

(iii) all proceeds from a cash liquidation; 

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

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

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

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

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                 (b) On behalf of the Trust Estate, the Servicer shall deliver
to the Indenture Trustee in immediately available funds for deposit in the      
Payment Account by the close of business New York time on the Servicer          
Remittance Date, that portion of the Available Funds (calculated without regard 
to the references in the definition thereof to amounts that may be deposited to 
the Payment Account from a different source as provided herein) then on deposit 
in the Collection Account.                                                      

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

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

           (i) any Advances, as required pursuant to Section 4.01;

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

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

            (iv) any amounts required to be deposited in the Payment
    Account pursuant to Sections 2.03, 3.04, 3.15, 3.16, 3.23, 3.28 or
4.01; and                                                     

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

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

           Section 3.05. Permitted Withdrawals from the Collection
Account.        

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

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            (a) to remit to the Indenture Trustee for deposit in the
Payment Account the amounts required to be so remitted pursuant to Section      
3.04(b) or permitted to be so remitted pursuant to the first sentence of Section
3.04(d);                                                                        

                (b) to reimburse itself for Advances and Servicing Advances;
provided that the Servicer's right to reimburse itself pursuant to this         
subclause (b) is limited to amounts received on the related Mortgage Loan which 
represent payments of (i) principal and/or interest respecting which any such   
Advance was made or (ii) Condemnation Proceeds, Insurance Proceeds or           
Liquidation Proceeds respecting which any such Servicing Advance was made;      

                (c) to reimburse itself for unreimbursed Servicing Advances,
any unpaid Servicing Fees and for unreimbursed Advances to the extent that such 
amounts are deemed to be Nonrecoverable Advances, and to reimburse itself for   
such amounts to the extent that such amounts are nonrecoverable from the        
disposition of REO Property pursuant to Section 3.03 or Section 3.13 hereof;    

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

          (e) to pay to itself as servicing compensation (a) any
interest earned on funds in the Collection Account (all such interest to be     
withdrawn monthly not later than each Servicer Remittance Date) and (b) the     
Servicing Fee from that portion of any payment or recovery as to interest to a  
particular Mortgage Loan to the extent not retained pursuant to Section         
3.04(a)(ii);                                                                    

            (f) to reimburse itself for any amounts paid pursuant to
Section 6.03 (and not otherwise previously reimbursed); and                     

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

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

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

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

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

            Section 3.07. Permitted Withdrawals From Escrow Account.

          Withdrawals from the Escrow Account may be made by the
Servicer (i) to effect timely payments of ground rents, taxes, assessments,     
water rates, fire, flood and hazard insurance premiums, Primary Insurance Policy
premiums, if applicable, and comparable items, (ii) to reimburse the Servicer   
for any Servicing Advance made by the Servicer with respect to a related        
Mortgage Loan but only from amounts received on the related Mortgage Loan which 
represent late payments or Late Collections of Escrow Payments thereunder, (iii)
to refund to the Mortgagor any funds as may be determined to be overages, (iv)  
for transfer to the Collection Account in accordance with the terms of this     
Servicing Agreement, (v) for application to restoration or repair of the        
Mortgaged Property, (vi) to pay to the Servicer, or to the Mortgagor to the     
extent required by the related Mortgage Loan or Applicable Regulations, any     
interest paid on the funds deposited in the Escrow Account, (vii) to clear and  
terminate the Escrow Account on the termination of this Servicing Agreement,    
(viii) to transfer to the Collection Account any insurance proceeds, or (ix) in 
the case of FHA Loans and VA Loans, for transfer to the Collection Account, fire
and hazard insurance proceeds and Escrow Payments with respect to any Mortgage  
Loan where the FHA or VA, as the case may be, has directed application of such  
funds as a credit against the proceeds of the FHA Insurance Contract or the VA  
Guaranty Agreement. As part of its servicing duties, the Servicer shall pay to  
the Mortgagor interest on funds in the Escrow Account, to the extent required by
the related Mortgage Loan or Applicable Regulations, and to the extent that     
interest earned on funds in the Escrow Account is insufficient, shall pay such  
interest from its own funds, without any reimbursement therefor.                

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

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

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               With respect to each first lien Mortgage Loan, the Servicer
shall maintain accurate records reflecting the status of ground rents, taxes,   
assessments, water rates and other charges which are or may become a lien upon  
the Mortgaged Property and the status of Primary Insurance Policy premiums and  
fire, flood and hazard insurance coverage and shall obtain, from time to time,  
all bills for the payment of such charges (including renewal premiums) and shall
effect payment thereof prior to the applicable penalty or termination date and  
at a time appropriate for securing maximum discounts allowable, employing for   
such purpose deposits of the Mortgagor in the Escrow Account which shall have   
been estimated and accumulated by the Servicer in amounts sufficient for such   
purposes, as allowed under the terms of the Mortgage or Applicable Regulations. 
To the extent that the Mortgage does not provide for Escrow Payments, the       
Servicer shall determine that any such payments are made by the Mortgagor at the
time they first become due. The Servicer assumes full responsibility for the    
timely payment of all such bills and shall effect timely payments of all such   
bills irrespective of the Mortgagor's faithful performance in the payment of    
same or the making of the Escrow Payments and shall make Servicing Advances from
its own funds to effect such payments.                                          

        The Servicer, on behalf of the Indenture Trustee, as
mortgagee, will maintain in full force and effect (to the extent a Mortgage Loan
has a Primary Insurance Policy) a Primary Insurance Policy issued by a Qualified
Insurer with respect to each Mortgage Loan for which such coverage is required. 
Such coverage will be maintained until the Combined Loan-to-Value Ratio of the  
related Mortgage Loan is reduced to 80% or less. The Servicer will not cancel or
refuse to renew any Primary Insurance Policy in effect on the Closing Date that 
is required to be kept in force under this Servicing Agreement unless a         
replacement Primary Insurance Policy for such canceled or non-renewed policy is 
obtained from and maintained with a Qualified Insurer. The Servicer shall not   
take any action which would result in non-coverage under any applicable Primary 
Insurance Policy of any loss which, but for the actions of the Servicer, would  
have been covered thereunder. In connection with any assumption or substitution 
agreement entered into or to be entered into pursuant to Section 3.14, the      
Servicer shall promptly notify the insurer under the related Primary Insurance  
Policy, if any, of such assumption or substitution of liability in accordance   
with the terms of such policy and shall take all actions which may be required  
by such insurer as a condition to the continuation of coverage under the Primary
Insurance Policy. If such Primary Insurance Policy is terminated as a result of 
such assumption or substitution of liability, the Servicer shall obtain a       
replacement Primary Insurance Policy as provided above.                         

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

Section 3.09. Transfer of Accounts.         

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

  Section 3.10. Maintenance of Hazard Insurance.

               The Servicer shall cause to be maintained for each Mortgage
Loan fire and hazard insurance with extended coverage as is customary in the    
area where the Mortgaged Property is located in an amount which is at least     
equal to the lesser of (i) the amount necessary to fully compensate for any     
damage or loss to the improvements which are a part of such property on a       
replacement cost basis, (ii) the Principal Balance of the Mortgage Loan, in each
case in an amount not less than such amount as is necessary to prevent the      
Mortgagor and/or the Mortgagee from becoming a co-insurer or (iii) the amount   
required under applicable HUD/FHA regulations. If the Mortgaged Property is in  
an area identified in the Federal Register by the Flood Emergency Management    
Agency as having special flood hazards and flood insurance has been made        
available, the Servicer will cause to be maintained a flood insurance policy    
meeting the requirements of the current guidelines of the Federal Insurance     
Administration with a generally acceptable insurance carrier, in an amount      
representing coverage not less than the least of (i) the Principal Balance of   
the Mortgage Loan, (ii) the maximum insurable value of the improvements securing
such Mortgage Loan or (iii) the maximum amount of insurance which is available  
under the Flood Disaster Protection Act of 1973, as amended. The Servicer shall 
also maintain on the REO Property for the benefit of the Noteholders, (x) fire  
and hazard insurance with extended coverage in an amount which is at least equal
to the replacement cost of the improvements which are a part of such property,  
(y) public liability insurance and, (z) to the extent required and available    
under the Flood Disaster Protection Act of 1973, as amended, flood insurance in 
an amount as provided above. Any amounts collected by the Servicer under any    
such policies other than amounts to be deposited in the Escrow Account and      
applied to the restoration or repair of the Mortgaged Property or REO Property, 
or released to the Mortgagor in accordance with the Servicer's normal servicing 
procedures, shall be deposited in the Collection Account, subject to withdrawal 
pursuant to Section 3.05. It is understood and agreed that no earthquake or     
other additional insurance is required to be maintained by the Servicer or the  
Mortgagor or maintained on property acquired in respect of the Mortgage Loan,   
other than pursuant to such Applicable Regulations as shall at any time be in   
force and as shall require such additional insurance. All such policies shall be
endorsed with standard mortgagee clauses with loss payable to the Servicer and  
shall provide for at least thirty days prior written notice of any cancellation,
reduction in the amount of or material change in coverage to the Servicer. The  
Servicer shall not interfere with the Mortgagor's freedom of choice in selecting
either his insurance carrier or agent; provided, however, that the Servicer     
shall not accept any such insurance policies from insurance companies unless    
such companies currently reflect a general policy rating of B:VI or better in   
Best's Key Rating Guide and are licensed to do business in the state wherein the
property subject to the policy is located.                                      

              Section 3.11. Maintenance of Mortgage Impairment Insurance
Policy.         

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

                Section 3.12. Fidelity Bond, Errors and Omissions Insurance.

              The Servicer shall maintain, at its own expense, a blanket
fidelity bond (the "Fidelity Bond") and an errors and omissions insurance       
policy, with broad coverage with financially responsible companies on all       
officers, employees or other persons acting in any capacity with regard to the  
Mortgage Loans to handle funds, money, documents and papers relating to the     
Mortgage Loans. The Fidelity Bond and errors and omissions insurance shall be in
the form of the Mortgage Banker's Blanket Bond and shall protect and insure the 
Servicer against losses, including forgery, theft, embezzlement, fraud, errors  
and omissions and negligent acts of such persons. Such Fidelity Bond shall also 
protect and insure the Servicer against losses in connection with the failure to
maintain any insurance policies required pursuant to this Servicing Agreement   
and the release or satisfaction of a Mortgage Loan without having obtained      
payment in full of the indebtedness secured thereby. No provision of this       
Section 3.12 requiring the Fidelity Bond and errors and omissions insurance     
shall diminish or relieve the Servicer from its duties and obligations as set   
forth in this Servicing Agreement. The minimum coverage under any such bond and 
insurance policy shall be at least equal to the corresponding amounts required  
by FNMA in the FNMA MBS Selling and Servicing Guide or by FHLMC in the FHLMC    
Servicer's Guide. Upon request of the Indenture Trustee, the Servicer shall     
cause to be delivered to the Indenture Trustee a certified true copy of the     
Fidelity Bond and errors and omissions insurance policy and a statement from the
surety and the insurer that such Fidelity Bond and errors and omissions         
insurance policy shall in no event be terminated or materially modified without 
thirty days' prior written notice to the Indenture Trustee.                     

          Section 3.13. Title, Management and Disposition of REO
Property.       

          (a) In the event that title to a Mortgaged Property is
acquired in foreclosure or by deed in lieu of foreclosure, the deed or          
certificate of sale shall be taken (pursuant to a limited power                 

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

           (b) In the event that the Trust Estate acquires any REO
Property as aforesaid or otherwise in connection with a default or imminent     
default on a Group I Mortgage Loan, the Servicer shall dispose of such REO      
Property before the end of the third calendar year beginning after the year of  
its acquisition by the Trust Estate for purposes of Section 860G(a)(8) of the   
Code or, at the expense of the Trust Estate, request from the Internal Revenue  
Service, more than 60 days before the day on which the above-mentioned grace    
period would otherwise expire, an extension of the above-mentioned grace period,
unless the Servicer obtains an Opinion of Counsel, addressed to the Servicer and
the Indenture Trustee, to the effect that the holding by the Trust Estate of    
such REO Property subsequent to such period will not: (i) result in the         
imposition of any tax on "prohibited transactions" as defined in Section 860F of
the Code; or (ii) cause any REMIC constituting any part of the Trust Estate to  
fail to qualify as a REMIC at any time that any Notes are outstanding, in which 
case the Trust Estate may continue to hold such REO Property (subject to any    
conditions contained in such Opinion of Counsel). The Servicer shall be entitled
to be reimbursed from the Collection Account for any costs incurred in obtaining
such Opinion of Counsel, as provided in Section 3.05.                           

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

                 The Servicer shall manage, conserve, protect and operate each
REO Property related to a Group I Mortgage Loan for the Noteholders and the     
Trust Estate solely for the purpose of its prompt disposition and sale in a     
manner which does not cause such REO Property to fail to qualify as "foreclosure
property" within the meaning of Section 860G(a)(8) of the Code or result in the 
receipt by the related REMIC of any "income from non-permitted assets" within   
the meaning of Section 860F(a)(2)(B) of the Code, or any "net income from       
foreclosure property" which is subject to taxation under the REMIC Provisions.  
The Servicer shall cause each REO Property to be inspected promptly upon the    
acquisition of title thereto and shall cause each REO Property to be            

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inspected at least annually thereafter. The Servicer shall make or cause to be  
made a written report of each such inspection. Such reports shall be retained in
the Mortgage Servicing File and copies thereof shall be forwarded by the        
Servicer to the Indenture Trustee upon request. The Servicer shall attempt to   
sell the same (and may temporarily rent the same) on such terms and conditions  
as the Servicer deems to be in the best interest of the Noteholders and the     
Trust Estate.                                                                   

         With respect to each REO Property, the Servicer shall
segregate and hold all funds collected and received in connection with the      
operation of the REO Property separate and apart from its own funds or general  
assets and shall establish and maintain with respect to all REO Property an REO 
Account or Accounts in the form of a time deposit or demand account, unless an  
Opinion of Counsel is obtained by the Servicer to the effect that the           
classification as a REMIC for federal income tax purposes of the arrangement    
under which the Mortgage Loans and the REO Property is held will not be         
adversely affected by holding such funds in another manner. Such REO Account    
shall be established with the Servicer or with a commercial bank, a mutual      
savings bank or a savings and loan association. The creation of any REO Account 
shall be evidenced by a letter agreement, in the case of an account held by a   
depository. In either case, an original of such certification or letter         
agreement shall be furnished to the Indenture Trustee upon request.             

             The Servicer shall deposit or cause to be deposited, on a
daily basis, within two Business Days of receipt, in each REO Account, all      
revenues received with respect to the related REO Property and shall withdraw   
therefrom funds necessary for the proper operation, management and maintenance  
of the REO Property, including the cost of maintaining any hazard insurance     
pursuant to Section 3.10 hereof and the fees of any managing agent acting on    
behalf of the Servicer. The Servicer shall have the right to earn interest, if  
any, on funds deposited in such REO Account. On or before each Determination    
Date, the Servicer shall withdraw from each REO Account and deposit into the    
Collection Account the net receipts from the REO Property on deposit in the REO 
Account and retain any interest.                                                

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

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

                Each REO Disposition shall be carried out by the Servicer at
such price and upon such terms and conditions as the Servicer deems to be in the
best interest of the Noteholders. If as of the date title to any REO Property   
was acquired by the Servicer there were outstanding unreimbursed Servicing      
Advances with respect to the REO Property, the Servicer, upon an REO Disposition
of such REO Property, shall be entitled to reimbursement for any related        
unreimbursed Servicing Advances from proceeds received in connection with such  
REO Disposition. The proceeds from the REO Disposition, net of any payment to   
the Servicer as provided above, shall be deposited in the REO Account and shall 
be transferred to the Collection Account on the                                 

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Determination Date in the month following receipt thereof for payment on the    
succeeding Servicer Remittance Date in accordance with the Indenture.           

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

                The Servicer shall not complete, or allow to be completed, a
foreclosure or accept a deed in lieu of a foreclosure with respect to any       
Ineligible Foreclosure Property Loan if it would cause the Indenture Trustee to 
hold REO Property from Ineligible Foreclosure Property Loans with an aggregate  
value in excess of 0.75% of the aggregate outstanding Principal Balance of the  
Mortgage Loans as of the end of the prior Collection Period. If the Value of REO
Property from Ineligible Foreclosure Property Loans equals or exceeds 1% of the 
outstanding Principal Balance of the Mortgage Loans as of the end of any        
Collection Period, the Seller shall purchase at the Purchase Price on or prior  
to the related Payment Date sufficient REO Property from Ineligible Foreclosure 
Property Loans to cause the Indenture Trustee to hold REO Property from         
Ineligible Foreclosure Property Loans with a Value of less than 1% of the       
outstanding Principal Balance of the Mortgage Loans and such proceeds shall be  
treated as received during the related Prepayment Period. If the Seller shall   
fail to purchase any REO Property as described in the preceding sentences, the  
Servicer shall sell such REO Property as soon as reasonably practicable and in a
commercially reasonable manner. For purposes of this paragraph the "Value" of   
REO Property from a Ineligible Foreclosure Property Loan shall be treated as    
equal to the Principal Balance of the related Ineligible Foreclosure Property   
Loan plus interest that had accrued on such Mortgage Loan as of the date of     
acquisition of the REO Property by the Indenture Trustee. The Indenture Trustee 
shall reconvey a Mortgage Loan so purchased in the same manner and under the    
same terms as specified in Section 2.03.                                        

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

                 When a Mortgaged Property has been or is about to be conveyed
by the Mortgagor, the Servicer shall, to the extent it has knowledge of such    
conveyance or prospective conveyance, exercise its rights to accelerate the     
maturity of the related Mortgage Loan under any "due-on-sale" clause contained  
in the related Mortgage or Mortgage Note; provided, however, that the Servicer  
shall not exercise any such right if the "due-on-sale" clause, in the reasonable
belief of the Servicer, is not enforceable under applicable law. An Opinion of  
Counsel at the expense of the Servicer (which expense shall constitute a        
Servicing Advance) delivered to the Indenture Trustee, the Issuer and the       
Depositor to the foregoing effect shall conclusively establish the              
reasonableness of such belief. In such event, the Servicer shall make reasonable
efforts to enter into an assumption and modification agreement with the Person  
to whom such property has been or is about to be conveyed, pursuant to which    
such Person becomes liable under the Mortgage Note and, unless prohibited by    
applicable law or the Mortgage, the Mortgagor remains liable thereon. If the    
foregoing is not permitted under applicable law, the Servicer is authorized to  
enter into a substitution of liability agreement with such Person, pursuant to  
which the original Mortgagor is released from liability and                     

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such Person is substituted as Mortgagor and becomes liable under the Note. The  
Mortgage Loan, as assumed, shall conform in all respects to the requirements,   
representations and warranties of this Servicing Agreement. The Servicer shall  
notify the Indenture Trustee that any such assumption or substitution agreement 
has been completed by forwarding to the Indenture Trustee (or the Custodian, as 
the case may be) the original copy of such assumption or substitution agreement 
(indicating the Mortgage File to which it relates) which copy shall be added by 
the Indenture Trustee (or the Custodian, as the case may be) to the related     
Mortgage File and which shall, for all purposes, be considered a part of such   
Mortgage File to the same extent as all other documents and instruments         
constituting a part thereof. The Servicer shall be responsible for recording any
such assumption or substitution agreements. In connection with any such         
assumption or substitution agreement, the Monthly Payment on the related        
Mortgage Loan shall not be changed but shall remain as in effect immediately    
prior to the assumption or substitution, the stated maturity or outstanding     
principal amount of such Mortgage Loan shall not be changed nor shall any       
required monthly payments of principal or interest be deferred or forgiven. Any 
fee collected by the Servicer for consenting to any such conveyance or entering 
into an assumption or substitution agreement shall be retained by or paid to the
Servicer as additional servicing compensation.                                  

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

Section 3.15. Notification of Adjustments.  

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

              Section 3.16. Optional and Mandatory Purchases of Mortgage
  Loans by Servicer.

                On or after March 31, 2002, as to any Mortgage Loan which is
Delinquent in payment by 120 days or more or any REO Property, the Servicer may,
at its option, purchase such Mortgage Loan from the Issuer at the Purchase Price
for such Mortgage Loan provided that the Servicer may exercise the purchase     
right during the period commencing on the first day of the calendar quarter     

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succeeding the calendar quarter in which the Initial Delinquency Date occurred  
and ending on the last Business Day of such calendar quarter. The "Initial      
Delinquency Date" of a Mortgage Loan shall mean the date on which the Mortgage  
Loan first became 120 days Delinquent or, in the event such loan is a           
Re-Performing Mortgage Loan which is Delinquent 120 days or more as of the      
Cut-Off Date, the date on which the such Re-Performing Mortgage Loan first      
becomes an additional 30 days or ore Delinquent.                                

             If the Servicer does not exercise the purchase right with
respect to a Mortgage Loan during the period specified in the preceding         
paragraph, such Mortgage Loan shall thereafter again become eligible for        
purchase pursuant to the preceding paragraph only after the Mortgage Loan ceases
to be 120 days or more Delinquent and thereafter becomes 120 day Delinquent     
again.                                                                          

          Prior to repurchase pursuant to this Section 3.16, the
Servicer shall be required to continue to make monthly advances pursuant to     
Section 4.01. The Servicer (or an affiliate of the Servicer) shall not use any  
procedure in selecting Mortgage Loans to be repurchased which is materially     
adverse to the interests of the Noteholders. Any such repurchase of a Mortgage  
Loan or REO Property pursuant to this Section 3.16 shall be accomplished by     
delivery to the Indenture Trustee for deposit in the Payment Account of the     
amount of the purchase price. The Indenture Trustee shall immediately effectuate
the conveyance of such delinquent Mortgage Loan or REO Property to the Servicer 
(or an affiliate of the Servicer) to the extent necessary, including the prompt 
delivery of all documentation to the Servicer (or an affiliate of the Servicer).
Furthermore, the Servicer may, at its option, write-off a second lien or third  
lien Mortgage Loan which becomes 180 or more days delinquent.                   

                Notwithstanding anything in this Section 3.16, the rights of
the Seller to repurchase a Mortgage Loan or REO Property which becomes 120 or   
more days delinquent shall be set forth in the Mortgage Loan Purchase Agreement.

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

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

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be chargeable to the Collection Account. In lieu of executing any such          
satisfaction or assignment, as the case may be, the Servicer may prepare and    
submit to the Indenture Trustee a satisfaction (or assignment without recourse, 
if requested by the Person or Persons entitled thereto) in form for execution by
the Indenture Trustee with all requisite information completed by the Servicer; 
in such event, the Indenture Trustee shall execute and acknowledge such         
satisfaction or assignment, as the case may be, and deliver the same with the   
related Mortgage File, as aforesaid.                                            

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

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

Section 3.18. Servicing Compensation.       

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

    Section 3.19. Annual Statement as to Compliance.

             (a) The Servicer, at its own expense, will deliver to the
Indenture Trustee, the Issuer and the Depositor, not later than 90 days         
following the end of the fiscal year of the Servicer which as of the Startup Day
ends on the last day of December, commencing in 2001, a Servicing Officer's     
certificate stating, as to each signer thereof, that (i) a review of the        
activities of the Servicer during such preceding fiscal year (or such shorter   
period in the case of the first such report) and of performance under this      
Servicing Agreement has been made under such officers' supervision, and (ii) to 
the best of such officers' knowledge, based on such review, the Servicer has    
fulfilled all its obligations under this Servicing Agreement for such year, or, 
if there has been a default in the fulfillment of all such obligations,         
specifying each such default known to such officers and the nature and status   
thereof including the steps being taken by the Servicer to remedy such default. 

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

                  Section 3.20. Annual Independent Certified Public Accountants'
Reports.        

               (a) Not later than 90 days following the end of each fiscal
year of the Servicer commencing in 2001, the Servicer, at its expense, shall    
cause a nationally recognized firm of independent certified public accountants  
to furnish to the Indenture Trustee, the Issuer and the Depositor a report      
stating that (i) it has obtained a letter of representation regarding certain   
matters from the management of the Servicer which includes an assertion that the
Servicer has complied with certain minimum residential mortgage loan servicing  
standards, identified in either the Uniform Single Attestation Program for      
Mortgage Bankers established by the Mortgage Bankers Association of America or  
the Audit Program for Mortgages serviced by FHLMC, with respect to the servicing
of residential mortgage loans during the most recently completed fiscal year and
(ii) on the basis of an examination conducted by such firm in accordance with   
standards established by the American Institute of Certified Public Accountants,
such representation is fairly stated in all material respects, subject to such  
exceptions and other qualifications that may be appropriate. Immediately upon   
receipt of such report, the Servicer shall furnish a copy of such report to the 
Indenture Trustee, the Issuer, the Depositor and each Rating Agency. Copies of  
such statement shall be provided by the                                         

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Indenture Trustee to any Noteholder upon request at the Servicer's expense,     
provided that such statement is delivered by the Servicer to the Indenture      
Trustee.                                                                        

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

           (c) The Indenture Trustee shall, on behalf of the Trust
Estate, prepare, sign and file with the Securities and Exchange Commission any  
and all reports, statements and information respecting the Trust Estate which   
the Depositor determines are required to be filed with the Securities and       
Exchange Commission pursuant to Sections 13(a) or 15(d) of the Securities       
Exchange Act of 1934, as amended, each such report, statement and information to
be filed on or prior to the required filing date for such report, statement or  
information. Upon the request of the Indenture Trustee, each of the Servicer and
the Issuer shall cooperate with the Indenture Trustee in the preparation of any 
such report and shall provide to the Indenture Trustee in a timely manner all   
such information or documentation as the Indenture Trustee may reasonably       
request in connection with the performance of its duties and obligations under  
this Section.                                                                   

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

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

Section 3.22. Reserved.                     

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

         Not later than the close of business on each Servicer
Remittance Date, the Servicer shall deliver to the Indenture Trustee for deposit
in the Payment Account an amount ("Compensating Interest") equal to the lesser  
of (A) the aggregate of the Prepayment Interest Shortfalls on the Actuarial     
Mortgage Loans for the related Payment Date resulting from Principal Prepayments
on the Actuarial Mortgage Loans during the related Prepayment Period and (B) 50%
of its aggregate Servicing Fee received in the related Collection Period. The   
Servicer shall apply Compensating Interest to offset any Prepayment Interest    
Shortfalls on the Actuarial Mortgage Loans. The Servicer shall not have the     
right to reimbursement for any amounts remitted to the Indenture Trustee in     
respect of Compensating Interest. Such amounts so remitted shall be included in 
the Available Funds and distributed therewith on the next Payment Date. The     
Servicer shall not be obligated to                                              

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pay Compensating Interest with respect to Prepayment Interest Shortfalls on     
Simple Interest Mortgage Loans or Relief Act Interest Shortfalls.               

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

         In the event that a shortfall in any collection on or
liability with respect to any Mortgage Loan results from or is attributable to  
adjustments to Mortgage Rates, Monthly Payments or Principal Balances that were 
made by the Servicer in a manner not consistent with the terms of the related   
Mortgage Note and this Servicing Agreement, the Servicer, upon discovery or     
receipt of notice thereof, immediately shall deliver to the Indenture Trustee   
for deposit in the Payment Account from its own funds the amount of any such    
shortfall and shall indemnify and hold harmless the Trust Estate, the Indenture 
Trustee, the Issuer, the Depositor and any successor servicer in respect of any 
such liability. Such indemnities shall survive the termination or discharge of  
this Servicing Agreement.                                                       

                Section 3.25. Investment of Funds in the Collection Account.

          (a) The Servicer may direct any depository institution
maintaining the Collection Account (for purposes of this Section 3.25, an       
"Investment Account"), to invest the funds in such Investment Account in one or 
more Permitted Investments bearing interest or sold at a discount, and maturing,
unless payable on demand, (i) no later than the Business Day immediately        
preceding the date on which such funds are required to be withdrawn from such   
account pursuant to this Servicing Agreement, if a Person other than the        
Indenture Trustee is the obligor thereon, and (ii) no later than the date on    
which such funds are required to be withdrawn from such account pursuant to this
Servicing Agreement, if the Indenture Trustee is the obligor thereon. All such  
Permitted Investments shall be held to maturity, unless payable on demand. Any  
investment of funds in an Investment Account shall be made in the name of the   
Servicer (in its capacity as such) or in the name of a nominee of the Indenture 
Trustee. The Indenture Trustee shall be entitled to sole possession (except with
respect to investment direction of funds held in the Collection Account) over   
each such investment and the income thereon, and any certificate or other       
instrument evidencing any such investment shall be delivered directly to the    
Indenture Trustee or its agent, together with any document of transfer necessary
to transfer title to such investment to the Indenture Trustee or its nominee. In
the event amounts on deposit in an Investment Account are at any time invested  
in a Permitted Investment payable on demand, the Indenture Trustee shall at the 
direction of the Servicer:                                                      

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

                  (y) demand payment of all amounts due thereunder promptly upon
      determination by a Responsible Officer of the Indenture Trustee that
such Permitted Investment would not                           

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     constitute a Permitted Investment in respect of funds thereafter on
deposit in the Investment Account.                            

                 (b) All income and gain realized from the investment of funds
in the Collection Account shall be for the benefit of the Servicer. The Servicer
shall deposit in the Collection Account the amount of any loss incurred in      
respect of any such Permitted Investment made with funds in such account        
immediately upon realization of such loss.                                      

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

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

         Section 3.26. Liability of Servicer; Indemnification.

                  (a) Subject to clause (b) below and Section 5.03, the Servicer
(except the Indenture Trustee if it is required to succeed the Servicer         
hereunder) indemnifies and holds the Indenture Trustee, the Issuer, the Owner   
Trustee, the Seller, the Depositor and each Noteholder harmless against any and 
all claims, losses, penalties, fines, forfeitures, reasonable legal fees and    
related costs, judgments, and any other costs, fees and expenses that the       
Indenture Trustee, the Issuer, the Depositor and any Noteholder may sustain in  
any way related to the failure of the Servicer to perform its duties and service
the Mortgage Loans in compliance with the Servicing Standards. The Servicer     
shall immediately notify the Indenture Trustee, the Issuer, the Owner Trustee,  
the Depositor and each Noteholder if a claim is made that may result in such    
claims, losses, penalties, fines, forfeitures, legal fees or related costs,     
judgments, or any other costs, fees and expenses, and the Servicer shall assume 
(with the consent of the Indenture Trustee) the defense of any such claim and   
pay all expenses in connection therewith, including reasonable counsel fees, and
promptly pay, discharge and satisfy any judgment or decree which may be entered 
against the Servicer, the Indenture Trustee, the Issuer, the Depositor and/or   
Noteholder in respect of such claim. The provisions of this Section 3.26 shall  
survive the termination of this Servicing Agreement and the payment of the      
outstanding Note.                                                               

           (b) Neither the Issuer nor the Servicer, nor any of the
directors, officers, employees or agents of the Issuer or the Servicer shall be 
under any liability to the Trust Estate or the Noteholders for any action taken,
or for refraining from the taking of any action, in good faith pursuant to this 
Servicing Agreement, or for errors in judgment; provided, however, that this    

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provision shall not protect the Issuer or the Servicer or any such Person       
against any breach of warranties or representations made herein, or against any 
specific liability imposed on the Servicer for a breach of the Servicing        
Standard, or against any liability which would otherwise be imposed by reason of
its respective willful misfeasance, bad faith, fraud or negligence in the       
performance of its duties or by reasons of negligent disregard of its respective
obligations or duties hereunder.                                                

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

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

                On or before the last day of February of each year beginning
in 2002, the Servicer shall file the reports of foreclosure and abandonment of  
any Mortgaged Property required by Section 6050J of the Code with the Internal  
Revenue Service and provide an Officer's Certificate certifying its compliance  
with this Section 3.27 to the Indenture Trustee. The reports from the Servicer  
shall be in form and substance sufficient to meet the reporting requirements    
imposed by such Section 6050J.                                                  

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ARTICLE IV

Advances

Section 4.01. Remittance Reports; Advances. 

               (a) On the second Business Day following each Determination
Date but in no event less than four Business Days prior to the related Payment  
Date, the Servicer shall deliver to the Indenture Trustee by telecopy (or by    
such other means as the Servicer and the Indenture Trustee may agree from time  
to time) a Remittance Report with respect to the related Payment Date. On the   
same date, the Servicer shall forward to the Indenture Trustee by overnight mail
a computer readable magnetic tape or diskette or in such other medium as may be 
agreed between the Servicer and the Indenture Trustee containing the information
set forth in such Remittance Report with respect to the related Payment Date.   
Not later than the close of business New York time on the fourth Business Day   
prior to the related Payment Date, the Servicer shall deliver or cause to be    
delivered to the Indenture Trustee in addition to the information provided on   
the Remittance Report, such other information reasonably available to it with   
respect to the Mortgage Loans as the Indenture Trustee may reasonably request or
order in order for the Indenture Trustee to perform the calculations necessary  
to make the payments contemplated by the Indenture and to prepare the statements
to Noteholders contemplated by the Indenture. The Indenture Trustee shall not be
responsible to recompute, recalculate or verify any information provided to it  
by the Servicer.                                                                

                 (b) The amount of Advances to be made by the Servicer for any
Payment Date shall equal, subject to Section 4.01(d), the aggregate amount of   
Monthly Payments (net of the related Servicing Fee), due during the related     
Collection Period in respect of the first lien Actuarial Mortgage Loans, which  
Monthly Payments were delinquent on a contractual basis as of the close of      
business on the related Determination Date. For purposes of the preceding       
sentence, the Monthly Payment on each Balloon Mortgage Loan with a delinquent   
Balloon Payment is equal to the assumed monthly payment that would have been due
on the related Due Date based on the original principal amortization schedule   
for the such Balloon Mortgage Loan. The Servicer shall not be obligated to make 
any Advance with respect to Simple Interest Mortgage Loans, REO Properties or   
second or third lien Actuarial Mortgage Loans.                                  

           On or before the close of business New York time on the
Servicer Remittance Date, the Servicer shall remit in immediately available     
funds to the Indenture Trustee for deposit in the Payment Account an amount     
equal to the aggregate amount of Advances, if any, to be made in respect of the 
Mortgage Loans for the related Payment Date either (i) from its own funds or    
(ii) from the Collection Account, to the extent of funds held therein for future
payment (in which case it will cause to be made an appropriate entry in the     
records of the Collection Account that amounts held for future payment have     
been, as permitted by this Section 4.01, used by the Servicer in discharge of   
any such Advance) or (iii) in the form of any combination of (i) and (ii)       
aggregating the total amount of Advances to be made by the Servicer with respect
to the Mortgage Loans. Any amounts held for future payment and so used shall be 
appropriately reflected in the Servicer's records and replaced by the Servicer  
by deposit in the Collection Account on or before any future Servicer Remittance

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Date to the extent that the Available Funds for the related Payment Date        
(determined without regard to Advances to be made on the Servicer Remittance    
Date) shall be less than the total amount that would be distributed to the      
Classes of Noteholders pursuant to the Indenture on such Payment Date if such   
amounts held for future payments had not been so used to make Advances. The     
Indenture Trustee will provide notice to the Servicer by telecopy by the close  
of business on any Servicer Remittance Date in the event that the amount        
remitted by the Servicer to the Indenture Trustee on such date is less than the 
Advances required to be made by the Servicer for the related Payment Date, as   
set forth in the related Remittance Report.                                     

               (c) The obligation of the Servicer to make such Advances is
mandatory, notwithstanding any other provision of this Servicing Agreement but  
subject to (d) below, and, with respect to any Mortgage Loan, shall continue    
until the earlier of such time as the Trust Estate acquires title to the related
Mortgaged Property or such Mortgage Loan is paid in full by the Mortgagor or    
disposed of by the Trust Estate, or until the recovery of all Liquidation       
Proceeds thereon.                                                               

           (d) Notwithstanding anything herein to the contrary, no
Advance or Servicing Advance shall be required to be made hereunder by the      
Servicer if such Advance would, if made, constitute a Nonrecoverable Advance.   
The determination by the Servicer that it has made a Nonrecoverable Advance or  
that any proposed Advance, if made, would constitute a Nonrecoverable Advance,  
shall be evidenced by an Officers' Certificate of the Servicer delivered to the 
Issuer, the Depositor and the Indenture Trustee.                                

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 ARTICLE V

The Servicer

Section 5.01. Liability of the Servicer.    

               The Servicer shall be liable in accordance herewith only to
the extent of the obligations specifically imposed upon and undertaken by the   
Servicer herein.                                                                

                  Section 5.02. Merger or Consolidation of, or Assumption of the
             Obligations of, the Servicer.

       Any entity into which the Servicer may be merged or
consolidated, or any entity resulting from any merger, conversion or            
consolidation to which the Servicer shall be a party, or any corporation        
succeeding to the business of the Servicer, shall be the successor of the       
Servicer hereunder, without the execution or filing of any paper or any further 
act on the part of any of the parties hereto, anything herein to the contrary   
notwithstanding; provided, however, that the successor Servicer shall satisfy   
all the requirements of Section 6.02 with respect to the qualifications of a    
successor Servicer.                                                             

             Section 5.03. Limitation on Liability of the Servicer and
Others.         

                Neither the Servicer nor any of the directors or officers or
employees or agents of the Servicer shall be under any liability to the Issuer, 
the Indenture Trustee, the Trust Estate or the Noteholders for any action taken 
or for refraining from the taking of any action by the Servicer in good faith   
pursuant to this Servicing Agreement, or for errors in judgment; provided,      
however, that this provision shall not protect the Servicer or any such Person  
against any liability which would otherwise be imposed by reason of its willful 
misfeasance, bad faith or gross negligence in the performance of duties of the  
Servicer or by reason of its reckless disregard of its obligations and duties of
the Servicer hereunder; provided, further, that this provision shall not be     
construed to entitle the Servicer to indemnity in the event that amounts        
advanced by the Servicer to retire any senior lien exceed Liquidation Proceeds  
(in excess of related liquidation expenses) realized with respect to the related
Mortgage Loan. The Servicer and any director or officer or employee or agent of 
the Servicer may rely in good faith on any document of any kind PRIMA FACIE     
properly executed and submitted by any Person respecting any matters arising    
hereunder. The Servicer and any director or officer or employee or agent of the 
Servicer shall be indemnified from the Trust Estate and held harmless against   
any loss, liability or expense incurred in connection with any legal action     
relating to this Servicing Agreement or the Notes, other than any loss,         
liability or expense related to any specific Mortgage Loan or Mortgage Loans    
(except as any such loss, liability or expense shall be otherwise reimbursable  
pursuant to this Servicing Agreement) and any loss, liability or expense        
incurred by reason of its willful misfeasance, bad faith or negligence in the   
performance of duties hereunder or by reason of its reckless disregard of       
obligations and duties hereunder. The Servicer may undertake any such action    
which it may deem necessary or desirable in respect of this Servicing Agreement,
and the rights and duties of the parties hereto and the interests of the        
Noteholders                                                                     

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hereunder. In such event, the reasonable legal expenses and costs of such action
and any liability resulting therefrom shall be expenses, costs and liabilities  
of the Trust Estate and the Servicer shall be entitled to be reimbursed therefor
only pursuant to Section 3.05. The Servicer's right to indemnity or             
reimbursement pursuant to this Section shall survive any resignation or         
termination of the Servicer pursuant to Section 5.04 or 6.01 with respect to any
losses, expenses, costs or liabilities arising prior to such resignation or     
termination (or arising from events that occurred prior to such resignation or  
termination). This paragraph shall apply to the Servicer solely in its capacity 
as Servicer hereunder and in no other capacities.                               

Section 5.04. Servicer Not to Resign.       

               Subject to the provisions of Section 6.01 and Section 5.02,
the Servicer shall not resign from the obligations and duties hereby imposed on 
it except (i) upon determination that the performance of its obligations or     
duties hereunder are no longer permissible under applicable law or are in       
material conflict by reason of applicable law with any other activities carried 
on by it or its subsidiaries or Affiliates, the other activities of the Servicer
so causing such a conflict being of a type and nature carried on by the Servicer
or its subsidiaries or Affiliates at the date of this Servicing Agreement or    
(ii) upon satisfaction of the following conditions: (a) the Servicer has        
proposed a successor servicer to the Indenture Trustee and the Issuer in writing
and such proposed successor servicer is reasonably acceptable to the Indenture  
Trustee and the Issuer; and (b) each Rating Agency shall have delivered a letter
to the Indenture Trustee and the Issuer prior to the appointment of the         
successor servicer stating that the proposed appointment of such successor      
servicer as Servicer hereunder will not result in the reduction or withdrawal of
the then current rating of the Notes or the ratings that are in effect;         
provided, however, that no such resignation by the Servicer shall become        
effective until such successor servicer or, in the case of (i) above, the       
Indenture Trustee shall have assumed the Servicer's responsibilities and        
obligations hereunder or the Indenture Trustee shall have designated a successor
servicer in accordance with Section 6.02. Any such resignation shall not relieve
the Servicer of responsibility for any of the obligations specified in Sections 
6.01 and 6.02 as obligations that survive the resignation or termination of the 
Servicer. Any such determination permitting the resignation of the Servicer     
pursuant to clause (i) above shall be evidenced by an Opinion of Counsel to such
effect delivered to the Indenture Trustee and the Issuer. Any such determination
permitting the resignation of the Servicer shall be evidenced by an Opinion of  
Counsel to such effect delivered to the Indenture Trustee.                      

Section 5.05. Delegation of Duties.         

                In the ordinary course of business, the Servicer at any time
may delegate any of its duties hereunder to any Person, including any of its    
Affiliates, who agrees to conduct such duties in accordance with standards      
comparable to those set forth in Section 3.01. Such delegation shall not relieve
the Servicer of its liabilities and responsibilities with respect to such duties
and shall not constitute a resignation within the meaning of Section 5.04. The  
Servicer shall provide the Indenture Trustee, the Issuer and the Rating Agencies
with 60 days prior written notice prior to the delegation of any of its duties  
to any Person other than any of the Servicer's Affiliates or their respective   
successors and assigns.                                                         

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                The Indenture Trustee and the Issuer hereby specifically (i)
consent to the pledge and assignment by the Servicer of all the Servicer's      
right, title and interest in, to and under this Servicing Agreement to the      
Servicing Rights Pledgee, for the benefit of certain lenders, and (ii) provided 
that no Servicer Event of Termination exists, agree that upon delivery to the   
Indenture Trustee and the Issuer by the Servicing Rights Pledgee of a letter    
signed by the Servicer whereunder the Servicer shall resign as Servicer under   
this Servicing Agreement, the Indenture Trustee shall appoint the Servicing     
Rights Pledgee or its designee as successor Servicer, provided that at the time 
of such appointment, the Servicing Rights Pledgee or such designee meets the    
requirements of a successor Servicer pursuant to Section 6.02(a) and agrees to  
be subject to the terms of this Servicing Agreement. If, pursuant to any        
provision hereof, the duties of the Servicer are transferred to a successor, the
entire amount of the Servicing Fee and other compensation payable to the        
Servicer pursuant hereto shall thereafter be payable to such successor.         

   Section 5.06. Optional Redemption of the Notes.

                  (a) The Servicer (or an affiliate of the Servicer) may, at its
option, purchase the Mortgage Loans in either Loan Group and redeem the Notes   
and the IX/N Interest or IIX/N Interest, as applicable, on the next succeeding  
Payment Date upon which the aggregate current Principal Balance of the Group I  
Mortgage Loans or Group II Mortgage Loans, as applicable, is less than 10% of   
the aggregate Principal Balance of the Group I Mortgage Loans or Group II       
Mortgage Loans, as applicable, as of the Cut-Off Date by purchasing all of the  
outstanding (i) Mortgage Loans in the related Loan Group at a price equal to the
sum of the outstanding Principal Balance of the related Mortgage Loans and      
except to the extent previously advanced by the Servicer, accrued and unpaid    
interest thereon at the weighted average of the Mortgage Rates through the end  
of the Collection Period preceding the final Payment Date plus unreimbursed     
Servicing Advances, Advances and any unpaid Servicing Fees and Special Servicing
Fees allocable to such Mortgage Loans and (ii) REO Properties in the related    
Loan Group at a price equal to their fair market value as determined in good    
faith by the Servicer (the "Redemption Price").                                 

                  The Redemption Price for the Group II Notes must be sufficient
to equal the sum of (a) 100% of the aggregate Note Balance then outstanding, (b)
the aggregate of any Group II Allocated Realized Loss Amount on the Group II    
Notes remaining unpaid immediately prior to such Payment Date, (c) the aggregate
of the Accrued Note Interest on the Group II Notes for such Payment Date, (d)   
the aggregate of any LIBOR Carryover Amounts on the Group II Notes for such     
Payment Date and (e) the aggregate of any Interest Carry Forward Amounts for    
such Payment Date. The Servicer will not be permitted to terminate the Mortgage 
Loans in Loan Group II unless the redemption price set forth in the previous    
sentence is paid to the Holders of the Group II Notes.                          

                  In connection with any such purchase pursuant to the preceding
paragraph, the Servicer shall deliver to the Indenture Trustee for deposit in   
the Payment Account all amounts then on deposit in the Collection Account (less 
amounts permitted to be withdrawn by the Servicer pursuant to Section 3.07),    
which deposit shall be deemed to have occurred immediately following such       
purchase.                                                                       

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              Any such purchase shall be accomplished by delivery to the
Indenture Trustee for deposit into the Payment Account as part of Available     
Funds on the Determination Date before such Payment Date of the Termination     
Price.                                                                          

                (b) In order to exercise the foregoing options, the Servicer
shall, not less than 15 days prior to the proposed Payment Date on which such   
redemption is to be made, deposit the aggregate redemption price specified in   
(a) above or the aggregate redemption price for the partial redemption specified
in (b) above with the Indenture Trustee (and the Indenture Trustee shall deposit
such funds in the Payment Account), and shall provide written notice of its     
exercise of such option to the Indenture Trustee and the Owner Trustee.         

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ARTICLE VI

 Default

 Section 6.01. Servicer Events of Termination.

               (a) If any one of the following events ("Servicer Events of
Termination") shall occur and be continuing:                                    

               (i) (A) The failure by the Servicer to make any Advance; or
    (B) any other failure by the Servicer to deposit in the Collection
      Account or Payment Account any deposit required to be made under the
    terms of this Servicing Agreement which continues unremedied for a
        period of one Business Day after the date upon which written notice of
     such failure shall have been given to the Servicer by the Indenture
   Trustee or by any Holder of a Note evidencing at least 25% of the
Voting Rights; or                                             

         (ii) The failure by the Servicer to make any required
         Servicing Advance which failure continues unremedied for a period of 30
         days, or the failure by the Servicer duly to observe or perform, in any
         material respect, any other covenants, obligations or agreements of the
  Servicer as set forth in this Servicing Agreement, which failure
     continues unremedied for a period of 30 days, after the date (A) on
which written notice of such failure, requiring the same to be
  remedied, shall have been given to the Servicer by the Indenture
   Trustee or by any Holder of a Note evidencing at least 25% of the
      Voting Rights or (B) actual knowledge of such failure by a Servicing
Officer of the Servicer; or                                   

                  (iii) The entry against the Servicer of a decree or order by a
     court or agency or supervisory authority having jurisdiction in the
     premises for the appointment of a trustee, conservator, receiver or
liquidator in any insolvency, conservatorship, receivership,  
        readjustment of debt, marshalling of assets and liabilities or similar
       proceedings, or for the winding up or liquidation of its affairs, and
        the continuance of any such decree or order unstayed and in effect for
a period of 60 days; or                                       

            (iv) The Servicer shall voluntarily go into liquidation,
       consent to the appointment of a conservator or receiver or liquidator
        or similar person in any insolvency, readjustment of debt, marshalling
        of assets and liabilities or similar proceedings of or relating to the
         Servicer or of or relating to all or substantially all of its property;
    or a decree or order of a court or agency or supervisory authority
having jurisdiction in the premises for the appointment of a  
        conservator, receiver, liquidator or similar person in any insolvency,
        readjustment of debt, marshalling of assets and liabilities or similar
         proceedings, or for the winding-up or liquidation of its affairs, shall
       have been entered against the Servicer and such decree or order shall
        have remained in force undischarged, unbonded or unstayed for a period
         of 60 days; or the Servicer shall admit in writing its inability to pay
 its debts generally as they become due, file a petition to take
advantage of any applicable insolvency or reorganization      

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 statute, make an assignment for the benefit of its creditors or
voluntarily suspend payment of its obligations; or            

          (v) The aggregate amount of cumulative Realized Losses
     incurred since the Cut-Off Date through the last day of the related
   Collection Period divided by the initial Pool Balance exceeds the
     applicable percentages set forth below with respect to such Payment
Date:                                                         

PAYMENT DATE OCCURRING IN                                  PERCENTAGE           
-------------------------                                  ----------           
December 2001 through November 2005                          3.00%              
December 2005 through November 2006                          3.75%              
December 2006 through November 2007                          4.25%              
December 2007 and thereafter                                 4.75%              

           (b) Then, and in each and every such case, so long as a
Servicer Event of Termination shall not have been remedied within the applicable
grace period, (x) with respect solely to clause (i)(A) above, if such Advance is
not made by 2:00 P.M., New York time, on the Business Day immediately following 
the Servicer Remittance Date, the Indenture Trustee may terminate all of the    
rights and obligations of the Servicer under this Servicing Agreement and the   
Indenture Trustee, or a successor servicer appointed in accordance with Section 
6.02, shall immediately make such Advance and assume, pursuant to Section 6.02, 
the duties of a successor Servicer and (y) in the case of (i)(B), (ii), (iii),  
(iv) and (v) above, the Indenture Trustee shall, at the direction of the Holders
of each Class of Notes evidencing Percentage Interests aggregating not less than
51%, by notice then given in writing to the Servicer (and to the Indenture      
Trustee if given by Holders of Notes), terminate all of the rights and          
obligations of the Servicer as servicer under this Servicing Agreement. Any such
notice to the Servicer shall also be given to each Rating Agency, the Issuer,   
the Depositor and the Seller. On or after the receipt by the Servicer (and by   
the Indenture Trustee if such notice is given by the Holders) of such written   
notice, all authority and power of the Servicer under this Servicing Agreement, 
whether with respect to the Notes or the Mortgage Loans or otherwise, shall pass
to and be vested in the Indenture Trustee pursuant to and under this Section;   
and, without limitation, the Indenture Trustee is hereby authorized and         
empowered to execute and deliver, on behalf of the Servicer, as attorney-in-fact
or otherwise, any and all documents and other instruments, and to do or         
accomplish all other acts or things necessary or appropriate to effect the      
purposes of such notice of termination, whether to complete the transfer and    
endorsement of each Mortgage Loan and Related Documents or otherwise. The       
Servicer agrees to cooperate with the Indenture Trustee (or the applicable      
successor Servicer) in effecting the termination of the responsibilities and    
rights of the Servicer hereunder, including, without limitation, the delivery to
the Indenture Trustee of all documents and records requested by it to enable it 
to assume the Servicer's functions under this Servicing Agreement within ten    
Business Days subsequent to such notice, the transfer within one Business Day   
subsequent to such notice to the Indenture Trustee (or the applicable successor 
Servicer) for the administration by it of all cash amounts that shall at the    
time be held by the Servicer and to be deposited by it in the Collection        
Account, the Payment Account, the Excess Reserve Fund Account, any REO Account  
or any Escrow Account or that have been deposited by the Servicer in such       
accounts or thereafter received by the Servicer with respect to the Mortgage    
Loans or any REO                                                                

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Property received by the Servicer. All reasonable costs and expenses (including 
attorneys' fees) incurred in connection with transferring the servicing to the  
successor Servicer and amending this Servicing Agreement to reflect such        
succession as Servicer pursuant to this Section shall be paid by the predecessor
Servicer (or if the predecessor Servicer is the Indenture Trustee, the initial  
Servicer) upon presentation of reasonable documentation of such costs and       
expenses.                                                                       

          Section 6.02. Indenture Trustee to Act; Appointment of
Successor.      

                  (a) Within 90 days of the time the Servicer (and the Indenture
Trustee, if notice is sent by the Holders) receives a notice of termination     
pursuant to Section 6.01 or 5.04, the Indenture Trustee (or such other successor
Servicer as is approved in accordance with this Servicing Agreement) shall be   
the successor in all respects to the Servicer in its capacity as servicer under 
this Servicing Agreement and the transactions set forth or provided for herein  
and shall be subject to all the responsibilities, duties and liabilities        
relating thereto placed on the Servicer by the terms and provisions hereof      
arising on and after its succession. As compensation therefor, the Indenture    
Trustee (or such other successor Servicer) shall be entitled to such            
compensation as the Servicer would have been entitled to hereunder if no such   
notice of termination had been given. Notwithstanding the above, (i) if the     
Indenture Trustee is unwilling to act as successor Servicer or (ii) if the      
Indenture Trustee is legally unable so to act, the Indenture Trustee shall      
appoint or petition a court of competent jurisdiction to appoint, any           
established housing and home finance institution, bank or other mortgage loan or
home equity loan servicer having a net worth of not less than $50,000,000 as the
successor to the Servicer hereunder in the assumption of all or any part of the 
responsibilities, duties or liabilities of the Servicer hereunder; provided,    
that the appointment of any such successor Servicer will not result in the      
qualification, reduction or withdrawal of the ratings assigned to the Notes or  
the ratings that are in effect by the Rating Agencies as evidenced by a letter  
to such effect from the Rating Agencies. Pending appointment of a successor to  
the Servicer hereunder, unless the Indenture Trustee is prohibited by law from  
so acting, the Indenture Trustee shall act in such capacity as hereinabove      
provided. In connection with such appointment and assumption, the successor     
shall be entitled to receive compensation out of payments on Mortgage Loans in  
an amount equal to the compensation which the Servicer would otherwise have     
received pursuant to Section 3.18 (or such other compensation as the Indenture  
Trustee and such successor shall agree, not to exceed the Servicing Fee). The   
successor servicer shall be entitled to withdraw from the Collection Account all
costs and expenses associated with the transfer of the servicing to the         
successor servicer. The appointment of a successor servicer shall not affect any
liability of the predecessor Servicer which may have arisen under this Servicing
Agreement prior to its termination as Servicer to pay any deductible under an   
insurance policy pursuant to Section 3.12 or to indemnify the Indenture Trustee 
and other Persons pursuant to Section 3.26, nor shall any successor Servicer be 
liable for any acts or omissions of the predecessor Servicer or for any breach  
by such Servicer of any of its representations or warranties contained herein or
in any related document or agreement. The Indenture Trustee and such successor  
shall take such action, consistent with this Servicing Agreement, as shall be   
necessary to effectuate any such succession.                                    

    In the event of a Servicer Event of Termination,
notwithstanding anything to the contrary above, the Indenture Trustee and the   
Issuer hereby agree that upon delivery to the Indenture                         

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Trustee by the Servicing Rights Pledgee of a letter signed by the Servicer      
within ten Business Days of when notification of such event shall have been     
provided to the Indenture Trustee, whereunder the Servicer shall resign as      
Servicer under this Servicing Agreement, the Indenture Trustee shall appoint the
Servicing Rights Pledgee or its designee as successor Servicer (provided that at
the time of such appointment the Servicing Rights Pledgee or such designee meets
the requirements of a successor Servicer set forth above) and the Servicing     
Rights Pledgee agrees to be subject to the terms of this Servicing Agreement.   

              (b) Any successor, including the Indenture Trustee, to the
Servicer as servicer shall during the term of its service as servicer continue  
to service and administer the Mortgage Loans for the benefit of Noteholders, and
maintain in force a policy or policies of insurance covering errors and         
omissions in the performance of its obligations as Servicer hereunder and a     
Fidelity Bond in respect of its officers, employees and agents to the same      
extent as the Servicer is so required pursuant to Section 3.12.                 

Section 6.03. Waiver of Defaults.           

               The Majority Noteholders may, on behalf of all Noteholders,
waive any events permitting removal of the Servicer as servicer pursuant to this
Article VI; provided, however, that the Majority Noteholders may not waive a    
default in making a required payment on a Note without the consent of the Holder
of such Note. Upon any waiver of a past default, such default shall cease to    
exist and any Servicer Event of Termination arising therefrom shall be deemed to
have been remedied for every purpose of this Servicing Agreement. No such waiver
shall extend to any subsequent or other default or impair any right consequent  
thereto except to the extent expressly so waived. Notice of any such waiver     
shall be given by the Indenture Trustee to the Rating Agencies.                 

Section 6.04. Notification to Noteholders.  

              (a) Upon any termination or appointment of a successor the
Servicer pursuant to this Article VI or Section 5.04, the Indenture Trustee     
shall give prompt written notice thereof to the Noteholders at their respective 
addresses appearing in the Note Register and each Rating Agency.                

               (b) No later than 60 days after the occurrence of any event
which constitutes or which, with notice or a lapse of time or both, would       
constitute a Servicer Event of Termination for five Business Days after a       
Responsible Officer of the Indenture Trustee becomes aware of the occurrence of 
such an event, the Indenture Trustee shall transmit by mail to all Noteholders  
notice of such occurrence unless such default or Servicer Event of Termination  
shall have been waived or cured. Such notice shall be given to the Rating       
Agencies promptly after any such occurrence.                                    

        Section 6.05. Survivability of Servicer Liabilities.

         Notwithstanding anything herein to the contrary, upon
termination of the Servicer hereunder, any liabilities of the Servicer which    
accrued prior to such termination shall survive such termination.               

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 ARTICLE VII

Miscellaneous Provisions

Section 7.01. Amendment.                    

                This Servicing Agreement may be amended from time to time by
the Issuer, the Indenture Trustee and the Servicer; provided that any amendment 
be accompanied by a letter from the Rating Agencies to the effect that the      
amendment will not result in the downgrading or withdrawal of the ratings then  
assigned to the Notes.                                                          

Section 7.02. Governing Law; Jurisdiction.  

                  This Servicing Agreement shall be construed in accordance with
the laws of the State of New York, and the obligations, rights and remedies of  
the parties hereunder shall be determined in accordance with such laws. With    
respect to any claim arising out of this Servicing Agreement, each party        
irrevocably submits to the exclusive jurisdiction of the courts of the State of 
New York and the United States District Court located in the Borough of         
Manhattan in The City of New York, and each party irrevocably waives any        
objection which it may have at any time to the laying of venue of any suit,     
action or proceeding arising out of or relating hereto brought in any such      
courts, irrevocably waives any claim that any such suit, action or proceeding   
brought in any such court has been brought in any inconvenient forum and further
irrevocably waives the right to object, with respect to such claim, suit, action
or proceeding brought in any such court, that such court does not have          
jurisdiction over such party, provided that service of process has been made by 
any lawful means.                                                               

Section 7.03. Notices.                      

             All directions, demands and notices hereunder shall be in
writing and shall be deemed to have been duly given if personally delivered at  
or mailed by first class mail, postage prepaid, or by express delivery service, 
to (a) in the case of the Indenture Trustee, 180 East Fifth Street, St. Paul,   
Minnesota, 55101, Attention: Structured Finance/SBMSVII 2001-CB4 (telecopy      
number (612) 244-0089), or such other address as may hereafter be furnished to  
the Issuer and the Servicer in writing by the Indenture Trustee, (b) in the case
of the Servicer, Litton Loan Servicing LP, 5373 W. Alabama, Suite 600, Houston, 
Texas 77056, Attention: Janice McClure, or such other address as may be         
furnished to the Issuer and the Indenture Trustee in writing by the Servicer and
(c) in the case of the Issuer (or the Owner Trustee on behalf of the Issuer),   
c/o Wilmington Trust Company, Rodney Square North, 1100 North Market Street,    
Wilmington, Delaware 19890, Attention: Corporate Trust Administration (telecopy 
number (302) 651-8882). Any notice required or permitted to be mailed to a      
Noteholder shall be given by first class mail, postage prepaid, at the address  
of such Holder as shown in the Note Register. Notice of any Servicer Event of   
Termination shall be given by telecopy and by certified mail. Any notice so     
mailed within the time prescribed in this Servicing Agreement shall be          
conclusively presumed to have duly been given when mailed, whether or not the   
Noteholder                                                                      

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receives such notice. A copy of any notice required to be telecopied hereunder  
shall also be mailed to the appropriate party in the manner set forth above.    

Section 7.04. Severability of Provisions.   

                  If any one or more of the covenants, agreements, provisions or
terms of this Servicing Agreement shall for any reason whatsoever be held       
invalid, then such covenants, agreements, provisions or terms shall be deemed   
severable from the remaining covenants, agreements, provisions or terms of this 
Servicing Agreement and shall in no way affect the validity or enforceability of
the other provisions of this Servicing Agreement or of the Notes or the rights  
of the Holders thereof.                                                         

 Section 7.05. Article and Section References.

             All article and Section references used in this Servicing
Agreement, unless otherwise provided, are to articles and Sections in this      
Servicing Agreement.                                                            

Section 7.06. Notice to the Rating Agencies.

                  (a) Each of the Indenture Trustee, the Issuer and the Servicer
shall be obligated to use its best reasonable efforts promptly to provide notice
to the Rating Agencies with respect to each of the following of which a         
Responsible Officer of the Indenture Trustee or Servicer, as the case may be,   
has actual knowledge:                                                           

          (i) any material change or amendment to this Servicing
Agreement;                                                    

                 (ii) the occurrence of any Servicer Event of Termination that
has not been cured or waived;                                 

         (iii) the resignation or termination of the Servicer;

       (iv) any change in the location of any Account; and

                 (vi) if the Indenture Trustee is acting as successor Servicer
     pursuant to Section 6.02 hereof, any event that would result in the
inability of the Indenture Trustee to make Advances.          

                  (vii) In addition, the Servicer shall promptly furnish to each
Rating Agency copies of the following:                        

           (A) each annual statement as to compliance described in
Section 3.19 hereof;                                          

             (B) each annual independent public accountants' servicing
report described in Section 3.20 hereof; and                  

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                (C) each notice delivered pursuant to Section 6.01(a) hereof
      which relates to the fact that the Servicer has not made an Advance.

             Any such notice pursuant to this Section 7.06 shall be in
writing and shall be deemed to have been duly given if personally delivered or  
mailed by first class mail, postage prepaid, or by express delivery service to  
Fitch, Inc., One State Street Plaza, New York, New York 10004, Attention: Agnes 
Teng; Standard & Poor's Ratings Services, 55 Water Street, New York, New York   
10041, Attention: Scott Mason; and Moody's Investors Services, Inc., 99 Church  
Street, New York, New York 10007, Attention: Jasper Brice.                      

Section 7.07. Further Assurances.           

         Notwithstanding any other provision of this Servicing
Agreement, the Indenture Trustee shall not have any obligation to consent to any
amendment or modification of this Servicing Agreement unless it have been       
provided reasonable security or indemnity against its out-of-pocket expenses    
(including reasonable attorneys' fees) to be incurred in connection therewith.  

  Section 7.08. Benefits of Servicing Agreement.

                  Nothing in this Servicing Agreement or in the Notes, expressed
or implied, shall give to any Person, other than the Noteholders and the parties
hereto and their successors hereunder, any benefit or any legal or equitable    
right, remedy or claim under this Servicing Agreement.                          

  Section 7.09. Benefits of Servicing Agreement.

               It is expressly understood and agreed by the parties hereto
that (a) this Servicing Agreement is executed and delivered by Wilmington Trust 
Company, not individually or personally but solely as Owner Trustee of Salomon  
Mortgage Loan Trust, Series 2001-CB4, in the exercise of the powers and         
authority conferred and vested in it, (b) each of the representations,          
undertakings and agreements herein made on the part of Salomon Mortgage Loan    
Trust, Series 2001-CB4 is made and intended not as personal represenations,     
undertakings and agreements by Wilmington Trust Company but is made and intended
for the purpose of binding only the Issuer, (c) nothing herein contained shall  
be construed as creating any liability on Wilmington Trust Company, individually
or personally, to perform any covenant either expressed or implied contained    
herein, all such liability, if any, being expressly waived by the parties hereto
and by any Person claiming by, through or under the parties hereto and (d) under
no circumstances shall Wilmington Trust Company be personally liable for the    
payment of any indebtedness or expenses of the Issuer or be liable for the      
breach or failure of any obligation, representation, warranty or covenant made  
or undertaken by the Issuer under this Servicing Agreement or any other related 
documents.                                                                      

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               IN WITNESS WHEREOF, the Servicer, the Indenture Trustee and
the Issuer have caused this Servicing Agreement to be duly executed by their    
respective officers or representatives all as of the day and year first above   
written.                                                                        

                 LITTON LOAN SERVICING LP,
   as Servicer

              By: /s/ Janice McClure
                                    --------------------------------------
              Name:   Janice McClure
                     Title:  Senior Vice President

                                    SALOMON MORTGAGE LOAN TRUST, SERIES 2001-CB4
 as Issuer

                                By: Wilmington Trust Company, not in its
                                       individual capacity but solely as Owner
       Trustee

                 By: /s/ Patricia A. Evans
                                    --------------------------------------
                 Name:   Patricia A. Evans
                                 Title:  Senior Financial Services Officer

                       U.S. BANK NATIONAL ASSOCIATION,
            as Indenture Trustee

                     By: /s/ Sheryl Christopherson
                                    --------------------------------------
                     Name:   Sheryl Christopherson
              Title:  Vice President

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 EXHIBIT A

REQUEST FOR RELEASE OF DOCUMENTS AND RECEIPT

To:      The Bank of New York                                                   
[Address]                                                     

                Re:      Servicing Agreement, dated as of December 14, 2001,
                        among U.S. Bank National Association, as Indenture
                         Trustee, Litton Loan Servicing LP, as Servicer, and
                      Salomon Mortgage Loan Trust, Series 2001-CB4, as
Issuer                    

               In connection with the administration of the Mortgage Loans
held by you as the Custodian on behalf of the Indenture Trustee, we request the 
release, and acknowledge receipt, of the (Custodial File/[specify documents])   
for the Mortgage Loan described below, for the reason indicated.                

Mortgagor's Name Address & Zip Code:                                            
-----------------------------------                                             

Mortgage Loan Number:                                                           
--------------------                                                            

Reason for Requesting Documents (check one)                                     
-------------------------------                                                 

_____   1.     Mortgage Loan Paid in Full. (The Servicer hereby certifies that  
             all amounts received in connection therewith have been credited
to the account of the Indenture Trustee.)         

_____   2.     Mortgage Loan Liquidated By (The Servicer hereb certifies that   
           all proceeds of foreclosure, insurance, condemnation or other
        liquidation have been finally received and credited to the
account of the Indenture Trustee.)                

_____   3.     Mortgage Loan in Foreclosure                                     

_____   4.     Other (explain)______________________________________________    

             If box 1 or 2 above is checked, and if all or part of the
Custodial File was previously released to us, please release to us our previous 
request and receipt on file with you, as well as any additional documents in    
your possession relating to the specified Mortgage Loan.                        

                 If box 3 or 4 above is checked, upon our return of all of the
above documents to you as the Custodian, please acknowledge your receipt by     
signing in the space indicated below, and returning this form.                  

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                                                   LITTON LOAN SERVICING LP,
                                               as Servicer

                                                     By:________________________
                                     Name:
                                      Title:

                                                     Date:______________________

Acknowledgment of Documents returned to the Custodian:                          

                                               THE BANK OF NEW YORK,
                                            as Custodian

                                                     By:________________________
                                     Name:
                                      Title:

                                                     Date:______________________

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 EXHIBIT B

 INELIGIBLE FORECLOSURE PROPERTY LOAN SCHEDULE

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘8-K’ Filing		Date		First		Last			Other Filings
		3/31/02		24					None on these Dates
Filed on:		2/6/02
For Period End:		12/14/01		2		46
									List all Filings