Salomon Brothers Mortgage Securities VII Inc – ‘424B5’ on 5/1/97 re: Salomon Bros Mort SEC VII Inc Mor Pa THR Cert Se 1997 Hud-1

As of:  Thursday, 5/1/97   ·   Accession #:  882377-97-162   ·   File #s:  333-22559, -02

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

 1: 424B5       Salomon Brothers Mortgage Securities Vii, Inc.       213   1.13M 

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PROSPECTUS SUPPLEMENT                                                           
(To Prospectus Dated March 6, 1997)                                             

MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1997-HUD1                            

SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.                                  
DEPOSITOR                                                                       

OCWEN FEDERAL BANK FSB                                                          
MASTER SERVICER                                                                 

The Series 1997-HUD1 Certificates (collectively, the "Certificates") will       
consist of 15 classes of certificates, designated as: (i) the Class A-1, Class  
A-2, Class A-3 and Class A-4 Certificates (collectively, the "Senior P&I        
Certificates"); (ii) the Class IO Certificates; (iii) the Class A-WAC           
Certificates (collectively with the Senior P&I Certificates and the Class IO    
Certificates, the "Senior Certificates"); (iv) the Class B-1, Class B-2, Class  
B-3, Class B-4, Class B-5 and Class B-6 Certificates (collectively, the "Class B
Certificates"; the Senior P&I Certificates and the Class B Certificates,        
together, the "P&I Certificates"; the Senior Certificates and the Class B       
Certificates, together, the "REMIC Regular Certificates"); and (v) the Class    
R-I, Class R-II and Class R-III Certificates (collectively, the "Residual       
Certificates").                                                                 

                                                  (COVER CONTINUED ON NEXT PAGE)
 -----------------------------

PROSPECTIVE INVESTORS SHOULD CONSIDER THE FACTORS SET FORTH UNDER "RISK FACTORS"
BEGINNING ON PAGE S-25 OF THIS PROSPECTUS SUPPLEMENT.                           
 -----------------------------

PROCEEDS OF THE ASSETS IN THE TRUST FUND ARE THE SOLE SOURCE OF PAYMENTS ON THE 
OFFERED CERTIFICATES. THE CERTIFICATES DO NOT REPRESENT AN OBLIGATION OF OR     
INTEREST IN THE DEPOSITOR, THE MORTGAGE LOAN SELLER, THE MASTER SERVICER, THE   
TRUSTEE, THE FISCAL AGENT OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THE    
CERTIFICATES NOR THE UNDERLYING MORTGAGE LOANS ARE INSURED OR GUARANTEED BY ANY 
GOVERNMENTAL AGENCY OR INSTRUMENTALITY.                                         

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND    
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES  
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE      
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY       
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.                           

THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED THE 
MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL       
OFFENSE.                                                                        

                                                        [Enlarge/Download Table]

====================================================================================================================================
                        INITIAL CERTIFICATE     PASS-THROUGH                                 INITIAL CERTIFICATE     PASS-THROUGH   
        CLASS           PRINCIPAL BALANCE(1)        RATE                     CLASS           PRINCIPAL BALANCE(1)        RATE       
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                    
A-1...................      $101,348,000           6.97%             A-WAC.................      $52,706,878(4)            (5)      
A-2...................      $ 18,362,000           7.37%             B-1...................      $12,231,000            7.75%(2)    
A-3...................      $ 26,662,000           7.51%             B-2...................      $ 8,969,000            7.75%(2)    
A-4...................      $ 51,185,000           7.70%(2)          B-3...................      $15,493,000            7.75%(2)    
IO....................      $272,574,770(3)        0.68%(5)(6)                                                                      
====================================================================================================================================

(1)  Approximate.                                                               
(2)  The Pass-Through Rate will equal the lesser of the rate stated above and   
the Weighted Average Stripped Net Mortgage Rate (as defined herein).  
(3)  Initial Notional Amount (approximate).                                     
(4)  The Class A-WAC Certificates have both a Certificate Balance and a Notional
    Amount. The initial Certificate Balance of the Class A-WAC Certificates is
    approximately $52,706,878 and is equal to the Cut-off Date Pool Arrearage,
     other than the portion thereof payable as fees and expenses. In addition to
an initial Certificate Balance, the Class A-WAC Certificates have an  
   initial Notional Amount, which is approximately $272,574,770 and is equal
to the aggregate initial Certificate Balance of the P&I Certificates. 
(5)  The Class IO and Class A-WAC Certificates accrue interest on the Notional  
     Amount thereof outstanding from time to time at the fixed Pass-Through Rate
set forth above (in the case of the Class IO Certificates) and at a   
   variable Pass-Through Rate calculated as described herein (in the case of
    the Class A-WAC Certificates). Interest does not accrue on the Certificate
    Balance of the Class A-WAC Certificates, and the Class IO Certificates are
interest-only certificates and do not have a Certificate Balance.     
(6)  Approximate.                                                               
--------------                                                                  

The Offered Certificates will be purchased by the Underwriter from the Depositor
and will be offered by the Underwriter from time to time to the public in       
negotiated transactions or otherwise at varying prices to be determined at the  
time of sale. Proceeds to the Depositor from the sale of the Offered            
Certificates, before deducting expenses payable by the Depositor, will be       
102.6895% of the initial Certificate Balance of the Offered Certificates (other 
than the Class IO Certificates), plus accrued interest on the Offered           
Certificates from the Cut-off Date.                                             

The Offered Certificates are offered subject to receipt and acceptance by the   
Underwriter, to prior sale and to the Underwriter's right to reject any order in
whole or in part and to withdraw, cancel or modify the offer without notice. It 
is expected that delivery of the Offered Certificates (other than the Class IO  
Certificates) will be made through the facilities of The Depository Trust       
Company, and the delivery of each other class of the Offered Certificates will  
be made at the offices of Salomon Brothers Inc, Seven World Trade Center, New   
York, New York 10048, in each case, on or about April 30, 1997 (the "Closing    
Date").                                                                         

--------------------                                                            
SALOMON BROTHERS INC                                                  
     ---------------------------------------------------------------------------

The date of this Prospectus Supplement is April 29, 1997.                       

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(COVER CONTINUED)                                                               

Only the Senior Certificates and the Class B-1, Class B-2 and Class B-3         
Certificates (collectively, the "Offered Certificates") are offered hereby. The 
rights of the holders of the Class B Certificates and the Residual Certificates 
to receive distributions with respect to the Mortgage Loans will be subordinate 
to the rights of the holders of the Senior Certificates, and the rights of the  
holders of the Residual Certificates to receive distributions with respect to   
the Mortgage Loans will be subordinate to the rights of the holders of the      
Senior Certificates and the Class B Certificates, in each case to the extent    
described herein. Further, the Class B Certificates of any class having a higher
numerical class designation are subordinated, to the extent described herein, to
the Class B Certificates of each class having a lower numerical class           
designation.                                                                    

Distributions on the Certificates will be made, to the extent of available      
funds, on the 25th day of each month (or, if any such 25th day is not a business
day, then on the next succeeding business day), beginning in May 1997 (each, a  
"Distribution Date"). As more fully described herein, distributions allocable to
interest accrued on each class of P&I Certificates and the Class A-WAC          
Certificates will be made on each Distribution Date based on the pass-through   
rate (the "Pass-Through Rate") then applicable to such class and the stated     
principal amount (the "Certificate Balance") or, in the case of the Class IO    
Certificates and Class A-WAC Certificates, the notional principal amount (the   
"Notional Amount"), of such class outstanding immediately prior to such         
Distribution Date and in accordance with the priorities described herein. The   
Residual Certificates will not accrue interest. Distributions allocable to      
principal or Arrearage (as defined below) on each class of P&I Certificates and 
the Class A-WAC Certificates will be made on each Distribution Date in the      
amounts and in accordance with the priorities described herein. The Class IO    
Certificates are interest-only certificates, will not have a Certificate Balance
and are not entitled to distributions allocable to principal or Arrearage. No   
class of Residual Certificates will have a Certificate Balance or entitle the   
holders thereof to receive distributions of principal or Arrearage.             

It is a condition to the issuance of the Certificates that each class of Senior 
Certificates be rated not lower than "AAA" by Duff & Phelps Credit Rating Co.   
("DCR") and "Aaa" by Moody's Investors Service, Inc. ("Moody's"), the Class B-1 
Certificates be rated not lower than "AA" by DCR and "Aa2" by Moody's, the Class
B-2 Certificates be rated not lower than "A" by DCR and "A2" by Moody's and the 
Class B-3 Certificates be rated not lower than "BBB" by DCR and "Baa2" by       
Moody's.                                                                        

The Certificates represent in the aggregate the entire beneficial ownership     
interest in a trust fund (the "Trust Fund") consisting primarily of a segregated
pool (the "Mortgage Pool") of approximately 6,738 conventional mortgage loans   
(the "Mortgage Loans") having, as of April 1, 1997 (the "Cut-off Date"), an     
aggregate Unpaid Principal Balance of approximately $272,574,770 (the "Cutoff   
Date Pool Unpaid Principal Balance"), an aggregate Arrearage of approximately   
$53,585,190 (the "Cut-off Date Pool Arrearage") and an aggregate Legal Balance  
of approximately $326,159,960 (the "Cut-off Date Pool Legal Balance"). The      
Arrearage has been repaid in full in 2,018 of the Mortgage Loans and, in certain
instances, Arrearage is no longer owed as the related Mortgage Loans have been  
modified to include the Arrearage in the principal balance thereof. In all such 
cases, the Arrearage is deemed to be zero. The Mortgage Loans were acquired by  
Salomon Brothers Realty Corp. (the "Mortgage Loan Seller"), an affiliate of the 
Depositor, from the United States Department of Housing and Urban Development   
("HUD") in 1996. Each Mortgage Loan is a fixed-rate or adjustable-rate loan     
secured by a first lien on residential real property and generally was          
originated as a 30-year, fully amortizing loan primarily under HUD's Section    
203(b) or 703 mortgage insurance programs. Each Mortgage Loan defaulted, and    
after default, such Mortgage Loan was determined by HUD to be eligible for      
forbearance relief and was assigned to HUD. Forbearance relief generally        
resulted in a reduction and/or suspension of the borrower's obligation to make  
scheduled monthly payments of principal and interest required under the loan's  
original terms (the "Original Scheduled Payment") for a period (the "Forbearance
Period") which typically lasted for 36 months. In each case, at the expiration  
of the Forbearance Period, the borrower's "Legal Balance" was equal to the sum  
of the Unpaid Principal Balance plus any Arrearage. The "Unpaid Principal       
Balance" equaled the unpaid principal balance of the Mortgage Loan as of the    
commencement of the Forbearance Period reduced by amounts, if any, paid in      
respect of principal during the Forbearance Period. The "Arrearage" equaled the 
sum of all accrued but unpaid interest on the Mortgage Loan at the end of the   
Forbearance Period and the amount of any tax and insurance advances made with   
respect to the Mortgage Loan from the acquisition of the Mortgage Loan by the   
Mortgage Loan Seller to but not including the Cut-off Date and, in certain      
cases, accrued but unpaid interest prior to the transfer of servicing to the    
Master Servicer. Following the expiration of the Forbearance Period, each       
borrower was and is required to make a payment (the "Modified Scheduled         
Payment") generally in an amount at least equal to the Original Scheduled       
Payment plus, to the extent of the borrower's ability to pay, an additional     
amount to be applied to pay down the Arrearage. AS OF THE CUTOFF DATE, NO       
MORTGAGE LOAN WILL BE INSURED OR GUARANTEED BY ANY GOVERNMENTAL ENTITY OR       
PRIVATE INSURER. ALL HUD INSURANCE WITH RESPECT TO THE MORTGAGE LOANS HAS       
TERMINATED. All of the Mortgage Loans are reperforming mortgage loans. As of the
Cut-off Date, except with respect to approximately 6.00% of the Mortgage Loans, 
by aggregate Unpaid Principal Balance as of the Cut-off Date, the borrower under
each Mortgage Loan has made at least 97.5% of the aggregate amount of Original  
Scheduled Payments due for the four calendar months preceding the Cut-off Date  
(regardless of either the timing of receipt of such payments or the payment     
history of such loans prior to December 1996). FOR FURTHER INFORMATION ABOUT THE
RECENT PAYMENT HISTORY OF THE MORTGAGE LOANS, SEE "RISK FACTORS--NATURE OF THE  
MORTGAGE LOANS" HEREIN, AND FOR FURTHER INFORMATION ABOUT THE MORTGAGE LOANS    
GENERALLY, SEE "THE MORTGAGE POOL" HEREIN.                                      

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The Senior P&I Certificates, the Class A-WAC Certificates and the Class B-1,    
Class B-2 and Class B-3 Certificates (collectively, the "Book-Entry             
Certificates") initially will be represented by Certificates registered in the  
name of CEDE & Co., as nominee of The Depository Trust Company ("DTC"). The     
interests of beneficial owners of the Book-Entry Certificates will be           
represented by book entries on the records of participating members of DTC.     
Definitive Certificates will be available for the Book-Entry Certificates only  
under the limited circumstances described herein. See "Description of the       
Certificates--Registration of BookEntry Certificates" herein. The Class IO      
Certificates will be issued in fully registered, certificated form.             

There is currently no secondary market for the Offered Certificates and there   
can be no assurance that a secondary market for the Offered Certificates will   
develop. Salomon Brothers Inc (the "Underwriter") intends to establish a market 
in the Offered Certificates, but is not obligated to do so. There is no         
assurance that any such market, if established, will continue. See "Secondary   
Market" herein. Any person purchasing any of the Offered Certificates (other    
than the Class IO Certificates) by, on behalf of or with the assets of a Plan   
(as defined herein) will be deemed to have made certain representations in      
connection with such purchase, as provided herein. The Class IO Certificates may
not be purchased by, on behalf of or with the assets of a Plan except upon the  
delivery of an opinion of counsel or a certification of facts, as provided      
herein. See "ERISA Considerations" and "Description of the                      
Certificates--Restrictions on Transfer of the Offered Certificates" herein.     

THE YIELD TO MATURITY ON THE OFFERED CERTIFICATES, PARTICULARLY THE CLASS IO    
CERTIFICATES AND THE CLASS A-WAC CERTIFICATES, WILL BE SENSITIVE TO THE RATE AND
TIMING OF PRINCIPAL PAYMENTS (INCLUDING PREPAYMENTS, DEFAULTS AND REPURCHASES   
AND, WITH RESPECT TO THE CLASS A-WAC CERTIFICATES, THE PAYMENT OF ARREARAGES).  
THE MORTGAGE LOANS GENERALLY MAY BE PREPAID IN FULL OR IN PART AT ANY TIME. A   
SLOWER (FASTER) THAN ANTICIPATED RATE OF PRINCIPAL PREPAYMENTS ON THE MORTGAGE  
LOANS WILL HAVE A NEGATIVE EFFECT ON THE YIELD TO MATURITY OF THE P&I           
CERTIFICATES AND THE CLASS A-WAC CERTIFICATES IF SUCH CERTIFICATES ARE PURCHASED
AT A DISCOUNT (PREMIUM). IN ADDITION, THE YIELD TO MATURITY ON THE CLASS B-1    
CERTIFICATES, THE CLASS B-2 CERTIFICATES AND THE CLASS B-3 CERTIFICATES WILL BE 
EXTREMELY SENSITIVE TO LOSSES DUE TO DEFAULTS ON THE MORTGAGE LOANS (AND THE    
TIMING THEREOF) TO THE EXTENT THAT SUCH LOSSES ARE NOT COVERED BY THE CLASSES OF
CLASS B CERTIFICATES WITH HIGHER NUMERICAL CLASS DESIGNATIONS. A RAPID RATE OF  
PRINCIPAL PREPAYMENTS ON THE MORTGAGE LOANS, TO THE EXTENT THAT SUCH PREPAYMENTS
ARE APPLIED TO REDUCE THE CERTIFICATE BALANCES OF THE CLASSES OF P&I            
CERTIFICATES, WILL HAVE A MATERIAL NEGATIVE EFFECT ON THE YIELD TO MATURITY OF  
THE CLASS IO CERTIFICATES AND THE CLASS A-WAC CERTIFICATES. IN ADDITION, THE    
AMOUNT OF INTEREST PAYABLE ON THE CLASS A-WAC CERTIFICATES, WHICH IS BASED ON   
THE WEIGHTED AVERAGE OF THE NET MORTGAGE RATES (AS DEFINED HEREIN) ON THE       
MORTGAGE LOANS, WILL DECREASE MORE SIGNIFICANTLY AS A RESULT OF PRINCIPAL       
PREPAYMENTS ON MORTGAGE LOANS WITH RELATIVELY HIGH NET MORTGAGE RATES. INVESTORS
IN THE CLASS IO CERTIFICATES AND THE CLASS A-WAC CERTIFICATES SHOULD CAREFULLY  
CONSIDER THE ASSOCIATED RISKS, INCLUDING, IN THE CASE OF THE CLASS IO           
CERTIFICATES, THE RISK THAT A RAPID RATE OF PRINCIPAL PREPAYMENTS ON THE        
MORTGAGE LOANS COULD RESULT IN THE FAILURE OF INVESTORS IN THE CLASS IO         
CERTIFICATES TO RECOVER FULLY THEIR INITIAL INVESTMENTS. THE YIELD TO INVESTORS 
IN THE OFFERED CERTIFICATES MAY BE ADVERSELY AFFECTED BY ANY SHORTFALLS IN      
INTEREST COLLECTED ON THE MORTGAGE LOANS DUE TO PREPAYMENTS, LIQUIDATIONS OR    
OTHERWISE. SHORTFALLS IN INTEREST COLLECTED ON THE MORTGAGE LOANS DUE TO        
PREPAYMENTS WILL BE OFFSET BY THE MASTER SERVICER BUT ONLY TO THE EXTENT        
DESCRIBED HEREIN. SEE "SUMMARY OF THE PROSPECTUS SUPPLEMENT--SPECIAL PREPAYMENT 
CONSIDERATIONS" AND "--SPECIAL YIELD CONSIDERATIONS" AND "YIELD ON THE          
CERTIFICATES" HEREIN.                                                           

As described herein, three separate "real estate mortgage investment conduit"   
("REMIC") elections will be made with respect to the Trust Fund for federal     
income tax purposes (the REMICs formed thereby, "REMIC I", "REMIC II" and "REMIC
III"). As described more fully herein, the REMIC Regular Certificates will be   
the "regular interests" in REMIC III and each class of the Residual Certificates
will be the sole class of "residual interests" in the related REMIC. See        
"Certain Federal Income Tax Consequences" herein and in the Prospectus.         

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

THE OFFERED CERTIFICATES OFFERED BY THIS PROSPECTUS SUPPLEMENT WILL CONSTITUTE A
SEPARATE SERIES OF CERTIFICATES BEING OFFERED BY THE DEPOSITOR PURSUANT TO ITS  
PROSPECTUS DATED MARCH 6, 1997, OF WHICH THIS PROSPECTUS SUPPLEMENT IS A PART   
AND WHICH ACCOMPANIES THIS PROSPECTUS SUPPLEMENT. THE PROSPECTUS CONTAINS       
IMPORTANT INFORMATION REGARDING THIS OFFERING WHICH IS NOT CONTAINED HEREIN, AND
PROSPECTIVE INVESTORS ARE URGED TO READ THE PROSPECTUS AND THIS PROSPECTUS      
SUPPLEMENT IN FULL.                                                             

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SUMMARY OF PROSPECTUS SUPPLEMENT

The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere herein and in the Prospectus.          
Capitalized terms used but not defined herein shall have the meanings assigned  
thereto in the Prospectus. An Index of Principal Definitions is included at the 
end of the Prospectus.                                                          

Title of Series.....................  Mortgage Pass-Through Certificates, Series
                        1997-HUD1 (collectively, the
                                      "Certificates") will consist of 15 classes
                                   of certificates, designated as: (i) the
                                     Class A-1, Class A-2, Class A-3 and Class
                               A-4 Certificates (collectively, the
                                      "Senior P&I Certificates"); (ii) the Class
                                  IO Certificates; (iii) the Class A-WAC
                                      Certificates (collectively with the Senior
                             P&I Certificates and the Class IO
                                     Certificates, the "Senior Certificates");
                                     (iv) the Class B-1, Class B-2, Class B-3,
                              Class B-4, Class B-5 and Class B-6
                                    Certificates (collectively, the "Class B
                                      Certificates"; the Senior P&I Certificates
                                   and the Class B Certificates, together,
                              the "P&I Certificates"; the Senior
                                      Certificates and the Class B Certificates,
                        together, the "REMIC Regular
                                  Certificates"); and (v) the Class R-I,
                                   Class R-II and Class R-III Certificates
                        (collectively, the "Residual
                                     Certificates"). The rights of the holders
                                    of the Class B Certificates and Residual
                                      Certificates to receive distributions with
                                 respect to the Mortgage Loans will be
                                    subordinate to the rights of the holders
                                      of the Senior Certificates, and the rights
                          of the holders of the Residual
                                      Certificates to receive distributions with
                                 respect to the Mortgage Loans will be
                                    subordinate to the rights of the holders
                                      of the Senior Certificates and the Class B
                                    Certificates, in each case to the extent
                                  described herein. Further, the Class B
                                     Certificates of any class having a higher
                           numerical class designation are
                                 subordinated, to the extent described
                                  herein, to the Class B Certificates of
                                     each class having a lower numerical class
        designation.

                                    The Certificates will be issued pursuant
                                    to a Pooling and Servicing Agreement, to
                             be dated as of April 1, 1997 (the
                                  "Agreement"), among the Depositor, the
                                Master Servicer, the Trustee and the
         Fiscal Agent.

Offered Certificates................  Only the Senior Certificates and the Class
                                     B-1, Class B-2 and Class B-3 Certificates
                                      (collectively, the "Offered Certificates")
                                    are offered hereby. The Class B-4, Class
                                   B- 5 and Class B-6 Certificates and the
                                 Residual Certificates are not offered
   hereby.

                                  Each class of the Offered Certificates
                             will have the approximate initial
                                      Certificate Balance and/or Notional Amount
                                     as set forth on the cover hereof and will
                                    have the Pass-Through Rate determined as
                                 provided under "Summary of Prospectus
                          Supplement--Description of the

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                                 Certificates" and "Description of the
                          Certificates--General" herein.

                                      As more fully described herein, the Senior
                                 Certificates (other than the Class IO
                                      Certificates) in the aggregate evidence an
                         initial undivided interest of
                                   approximately 76.73% in the Trust Fund,
                                      and the Class B-1, Class B-2 and Class B-3
                                   Certificates evidence initial undivided
                             interests of approximately 3.75%,
                                 approximately 2.75% and approximately
                                   4.75%, respectively, in the Trust Fund.
                                   The Offered Certificates are subject to
                                      various priorities for payment of interest
                                     and principal as described under "Summary
                                      of Prospectus Supplement--Distributions on
                                     the Certificates" and "Description of the
                              Certificates--Distributions on the
                 Certificates" herein.

                             Any person purchasing the Offered
                                 Certificates (other than the Class IO
                                      Certificates) by, on behalf of or with the
                                     assets of a Plan (as defined herein) will
                          be deemed to have made certain
                                   representations in connection with such
                                      purchase, as provided herein. The Class IO
                                    Certificates may not be purchased by, on
                                  behalf of or with the assets of a Plan
                                     except upon the delivery of an opinion of
                                   counsel or a certification of facts, as
                       provided herein. See "ERISA
                                   Considerations" and "Description of the
                                     Certificates--Restrictions on Transfer of
                             the Offered Certificates" herein.

Class B-4, Class B-5 and                                                        
Class B-6 Certificates and                                                
Residual Certificates............  The Class B-4, Class B-5 and Class B-6 
                                 Certificates have initial Certificate
                                  Balances of approximately $11,416,000,
                                      approximately $9,785,000 and approximately
                               $17,123,770, respectively, and will
                                   evidence initial undivided interests of
                                    approximately 3.50%, approximately 3.00%
                                     and approximately 5.25%, respectively, in
                                    the Trust Fund. The Class B-4, Class B-5
                             and Class B-6 Certificates have a
                                    Pass-Through Rate equal to the lesser of
                                     (i) 7.75% per annum and (ii) the Weighted
                                  Average Stripped Net Mortgage Rate (as
                                      defined herein). The Residual Certificates
                          have no Certificate Balance or
                                   Pass-Through Rate. The Class B-4, Class
                                  B-5 and Class B-6 Certificates and the
                                      Residual Certificates, which are not being
                               offered hereby, will be sold by the
                                    Depositor to Salomon Brothers Inc on the
         Closing Date.

Depositor of Mortgage Loans.........  Salomon Brothers Mortgage Securities VII, 
                                     Inc., an indirect wholly-owned subsidiary
                                      of Salomon Inc and an affiliate of Salomon
                                    Brothers Inc. See "The Depositor" in the
       Prospectus.

Mortgage Loan Seller................  Salomon Brothers Realty Corp., an indirect
                                      wholly-owned subsidiary of Salomon Inc and
                   an affiliate of Salomon

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                           Brothers Inc. See "The Mortgage
                                 Pool--Representations and Warranties"
   herein.

Master Servicer.....................  Ocwen Federal Bank FSB, a federally       
                                    chartered savings bank. See "Pooling and
                                     Servicing Agreement--The Master Servicer"
   herein.

Trustee.............................  LaSalle National Bank, a nationally       
                                  chartered bank and an affiliate of the
                             Fiscal Agent. The Trustee will be
                                      obligated to perform the Master Servicer's
                               obligation to make P&I Advances and
                                      certain other advances with respect to the
                                      Mortgage Loans under certain circumstances
                              described herein. See "Pooling and
                                     Servicing Agreement--The Trustee" herein.

Fiscal Agent........................  ABN AMRO Bank N.V., a Netherlands banking 
                               corporation and an affiliate of the
                             Trustee. The Fiscal Agent will be
                                      obligated to make P&I Advances and certain
                              other advances with respect to the
                                      Mortgage Loans under certain circumstances
                              described herein. See "Pooling and
                                  Servicing Agreement--The Fiscal Agent"
   herein.

Cut-off Date........................  April 1, 1997.                            

Closing Date........................  On or about April 30, 1997.               

Distribution Date...................  The 25th day of each month (or, if any    
                                    such 25th day is not a business day, the
                                     next succeeding business day), commencing
        in May 1997.

Determination Date..................  With respect to any Distribution Date, the
                                   13th day of the calendar month in which
                                      such Distribution Date occurs (or, if such
                               13th day is not a business day, the
                                immediately preceding business day).

Record Date.........................  The record date for each Distribution Date
                                     will be the close of business on the last
                                   business day of the month preceding the
                                 month in which such Distribution Date
                           occurs. See "Description of the
                          Certificates--General" herein.

Interest Accrual Period.............  With respect to any class of REMIC Regular
                                   Certificates and any Distribution Date,
                                     the calendar month preceding the month in
                                    which such Distribution Date occurs. See
               "Description of the
                              Certificates--Distributions on the
                 Certificates" herein.

Due Period and                                                                  
  Prepayment Period.................  With respect to any Distribution Date, the
                                     "Due Period" is the period that begins on
                                the second day of the calendar month
                             preceding the month in which such
                                    Distribution Date occurs and ends on the
                                first day of the month in which such
                                     Distribution Date occurs. With respect to
                                  any Distribution Date, the "Prepayment
                                   Period" is the previous calendar month.

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Registration; Denomination..........  The Senior P&I Certificates, the Class    
                                 A-WAC Certificates and the Class B-1,
                                Class B-2 and Class B-3 Certificates
                          (collectively, the "Book-Entry
                            Certificates") will initially be
                             represented by one or more global
                                  certificates registered in the name of
                                    CEDE & Co., as nominee of The Depository
                             Trust Company ("DTC"), in minimum
                            denominations of $10,000 initial
                                      Certificate Balance and integral multiples
                                  of $1.00 in excess thereof. Each Class
                                A-WAC Certificates will also have an
                                initial Notional Amount equal to the
                                      percentage interest of such Certificate in
                                  such class times the aggregate initial
                              Notional Amount of the Class A-WAC
                                Certificates. No person acquiring an
                                      interest in the Book-Entry Certificates (a
                                    "Certificate Owner") will be entitled to
                                      receive a Certificate in fully registered,
                            certificated form (a "Definitive
                                   Certificate"), except under the limited
                               circumstances described herein. See
               "Description of the
                                  Certificates--Definitive Certificates"
                                     herein. Instead, DTC will effect payments
                                    and transfers by means of its electronic
                                   record keeping services, acting through
                               certain participating organizations
                                ("Participants"). This may result in
                                      certain delays in receipt of distributions
                              by an investor and may restrict an
                            investor's ability to pledge its
                                securities. All references herein to
                                Certificateholders of the Book-Entry
                                   Certificates will reflect the rights of
                                     Certificate Owners, as such rights may be
                         exercised through DTC and its
                             Participants, except as otherwise
                                     specified herein. See "Description of the
                              Certificates-- Registration of the
                            Book-Entry Certificates" herein.

                                    The Class IO Certificates will be issued
                                in registered, certificated form, in
                               minimum denominations or percentage
                              interests corresponding to initial
                                    Notional Amounts of $10,000 and integral
                                  multiples of $1,000 in excess thereof,
                                     except that one Certificate of such class
                                    may be issued evidencing an amount equal
                                 to either (i) the sum of an otherwise
                                    authorized denomination thereof plus the
                              remainder of the aggregate initial
                                  Notional Amount for such class or (ii)
           such remainder.

The Mortgage Pool...................  The Mortgage Pool will consist of         
                                      approximately 6,738 residential fixed-rate
                                   or adjustable-rate, first lien seasoned
                                      mortgage loans (the "Mortgage Loans") with
                                  an aggregate Unpaid Principal Balance,
                                     exclusive of Arrearages, of approximately
                                $272,574,770 (the "Cut-off Date Pool
                                    Unpaid Principal Balance"), an aggregate
                                  Arrearage of approximately $53,585,190
                                      (the "Cut-off Date Pool Arrearage") and an
                                    aggregate Legal Balance of approximately
                                      $326,159,960 (the "Cut-off Date Pool Legal
                              Balance"). The Mortgage Loans were
                                     acquired by the Mortgage Loan Seller from
                                HUD in 1996. See "The Mortgage Pool"
   herein.

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                                   Substantially all of the Mortgage Loans
                             were originated as 30-year, fully
                                amortizing loans under HUD's Section
                                      203(b) or 703 mortgage insurance programs.
                                  A limited number of Mortgage Loans had
                               longer or shorter original terms to
                                   maturity and/or had graduated payments;
                                      however, the period of any reduced payment
                                   with respect to any Mortgage Loans that
                                   had graduated payments is now over. The
                                 goal of HUD's single-family insurance
                                   program is to make mortgage credit more
                                 readily available through the Federal
                                 Housing Administration (the "FHA") to
                                    American home buyers, particularly those
                                    with low or moderate income, by insuring
                                      private sector lenders against the risk of
                                     default. The FHA is part of, and provides
                                      insurance services for, HUD. HUD's Section
                                     203(b) or 703 mortgage insurance programs
                               insure mortgagees against losses on
                                   eligible mortgage loans used to finance
                           the purchase of proposed, under
                             construction, or existing one- to
                                 four-family dwellings or manufactured
                          homes, as well as to refinance
                                indebtedness on existing housing. In
                              connection with a default under an
                                      FHA-insured mortgage loan, the lender may,
                                    among other things, assign such mortgage
                              loan to HUD in order to obtain the
                               applicable insurance benefits. Each
                              Mortgage Loan defaulted, and after
                                      default, such Mortgage Loan was determined
                                 by HUD to be eligible for forbearance
                                    relief and was assigned to HUD. See "The
                                      Mortgage Pool--General" and "--The Section
                                      203(b) and 703 Insurance Programs" herein.

                               NO MORTGAGE LOAN WILL BE INSURED OR
                                    GUARANTEED BY ANY GOVERNMENTAL ENTITY OR
                                   PRIVATE INSURER. ALL HUD INSURANCE WITH
                             RESPECT TO THE MORTGAGE LOANS HAS
       TERMINATED.

                              Each Mortgage Loan is secured by a
                                    mortgage, deed of trust or other similar
                                      instrument (a "Mortgage") creating a first
                             lien on a residential property (a
                                    "Mortgaged Property"). Substantially all
                                   of the monthly payments on the Mortgage
                                  Loans are due on the first day of each
  month.

                                  Set forth below is certain information
                                regarding the Mortgage Loans and the
                                  Mortgaged Properties as of the Cut-off
                                     Date (except as otherwise indicated). All
                              such information is provided on an
                                   approximate basis. All weighted average
                              information provided below, except
                                    loan-to-value ratios, reflects weighting
                                     of the Mortgage Loans by their respective
                               Unpaid Principal Balances as of the
                                  Cut-off Date. In each case, the Unpaid
                                    Principal Balance has been calculated on
                                     the assumption that the principal portion
                                     of all Original Scheduled Payments due in
                                      respect of each Mortgage Loan on or before
       the Cut-off

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                                  Date have been received. In each case,
                                   Arrearage of the Mortgage Loan has been
                               calculated after application of all
                                      payments of Arrearage actually received as
                of the Cut-off Date.

                        Number of Mortgage Loans ..........              6,738
                        Cut-off Date Pool Legal Balance ...       $326,159,960
    Cut-off Date Pool Unpaid Principal
                          Balance .........................       $272,574,770
                        Cut-off Date Pool Arrearage .......        $53,585,190

                        Minimum Legal Balance .............            $179.76
                        Maximum Legal Balance .............        $200,633.83
                        Average Legal Balance .............         $48,406.05

                        Minimum Unpaid Principal Balance ..            $179.76
                        Maximum Unpaid Principal Balance ..        $200,633.83
                        Average Unpaid Principal Balance ..         $40,453.36

                        Minimum Arrearage .................                 $0
                        Maximum Arrearage .................         $81,162.03
                        Average Arrearage .................          $7,952.68

                        Minimum Mortgage Rate(1) ..........    0.38% per annum
                        Maximum Mortgage Rate(1) ..........   17.50% per annum
                        Weighted Average Mortgage Rate ....   9.763% per annum

    Minimum Remaining Term to Original
                          Stated Maturity (months) ........                  1
    Maximum Remaining Term to Original
                          Stated Maturity (months) ........                404
    Weighted Average Remaining Term to
                          Stated Original Maturity (months)                229

Weighted Average Loan-to-Value
                           Ratio(2) ........................             97.549%

----------                    
                    (1) The Minimum Mortgage Rate and Maximum Mortgage
                  Rate for the adjustable-rate Mortgage Loans were
                       determined based on the actual rate as of the Cut-off
Date.                         

                       (2) The "Loan-to-Value Ratio" of any Mortgage Loan is
                      calculated on the basis of the Legal Balance of such
                  Mortgage Loan and the average of the most recent
                  broker's price opinions in the possession of the
Master Servicer.              

                             The Mortgage Loans either contain
                                      due-on-sale provisions or are assumable by
                                   a creditworthy purchaser of the related
                                  Mortgaged Property. The Mortgage Loans
                                    generally provide that a full or partial
                                      prepayment can be made at any time without
                                    penalty. See "The Mortgage Pool" herein.

Description of                                                                  
the Certificates..................  The Certificates will represent in the  
                                     aggregate the entire beneficial ownership
                                    of a trust fund (the "Trust Fund") to be
                                     established by the Depositor, which Trust
     Fund will

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                                      consist primarily of the Mortgage Pool and
                   certain related assets.

                                     The initial aggregate Certificate Balance
                                  of the P&I Certificates will equal the
                                     aggregate Unpaid Principal Balance of the
                                  Mortgage Loans as of the Cut-off Date,
                                      after application of the principal portion
                                     of all Original Scheduled Payments due on
                               or before such date, whether or not
                                 received, and the initial Certificate
                                   Balance of the Class A-WAC Certificates
                                  will equal approximately 98.36% of the
                                     aggregate Arrearage of the Mortgage Loans
                                     as of the Cut-off Date, after application
                                 of all payments of Arrearage actually
                     received as of such date.

                                     The "Certificate Balance" of any class of
                               P&I Certificates or the Class A-WAC
                                Certificates outstanding at any time
                                   generally represents the maximum amount
                                    that the holders thereof are entitled to
                                 receive as distributions allocable to
                                  principal or Arrearage, as applicable,
                                    from the cash flow on the Mortgage Loans
                                   and the other assets in the Trust Fund.
                                      The Certificate Balance of each such class
                                     will be reduced on each Distribution Date
                                by any distributions of principal or
                                      Arrearage, as applicable, actually made on
                                     such class on such Distribution Date and,
                                      further, by any losses on or in respect of
                                     the Mortgage Loans and certain additional
                                 Trust Fund expenses allocated to such
                            class on such Distribution Date.

                                     Neither the Class IO Certificates nor any
                                      class of Residual Certificates will have a
                                      Certificate Balance or entitle the holders
                               thereof to receive distributions of
                   principal or Arrearage.

                                 Interest will accrue on each class of
                                     REMIC Regular Certificates. The per annum
                                   rate at which interest will accrue with
                                   respect to any such class is the "Pass-
                                     Through Rate" for such class. In the case
                              of each class of P&I Certificates,
                                    interest will accrue as described herein
                                    on the Certificate Balance of such class
                                      outstanding from time to time. In the case
                                  of the Class IO Certificates and Class
                                      A-WAC Certificates, however, interest will
                                    accrue as described herein on a notional
                                   principal amount ("Notional Amount") in
                                  respect of such class outstanding from
                                    time to time. The Notional Amount of the
                                  Class IO Certificates and of the Class
                                   A-WAC Certificates will in each case be
                               equal at all times to the aggregate
                          Certificate Balance of the P&I
                                   Certificates. The Residual Certificates
                                      will not accrue interest. See "Description
                              of the Certificates-- General" and
                                 "--Distributions on the Certificates"
   herein.

                                     The Pass-Through Rates for the Senior P&I
                                  Certificates (other than the Class A-4
                           Certificates) and for the Class

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                                  IO Certificates will, in each case, be
                                    fixed at the rate per annum specified on
                                    the cover hereof. The Pass-Through Rates
                                  for the Class A-4 Certificates and the
                              Class B-1, Class B-2 and Class B-3
                                   Certificates will, in each case and for
                                  any Distribution Date, be equal to the
                                      lesser of (i) the rate per annum specified
                                     on the cover hereof and (ii) the Weighted
                                  Average Stripped Net Mortgage Rate for
                                    such Distribution Date. The Pass-Through
                                      Rate for the Class A-WAC Certificates will
                                 be variable and, with respect to each
                                      Distribution Date, will equal the weighted
                              average of ten variable rates: the
                                 Component A-1 Rate, the Component A-2
                             Rate, the Component A-3 Rate, the
                                 Component A-4 Rate, the Component B-1
                             Rate, the Component B-2 Rate, the
                                 Component B-3 Rate, the Component B-4
                                Rate, the Component B-5 Rate and the
                             Component B-6 Rate, each weighted
                           according to the proportion the
                                    Certificate Balance of the related class
                                 of P&I Certificates (that is, the P&I
                                      Certificate with the same alphabetical and
                                    numerical class designation) outstanding
                                  immediately prior to such Distribution
                                    Date bears to the sum of the Certificate
                                  Balances of the P&I Certificates (and,
                                 therefore, the Notional Amount of the
                                 Class A-WAC Certificates) outstanding
                                  immediately prior to such Distribution
                                   Date. Each Component Rate is, as stated
                                    above, a variable rate and, with respect
                                      to each such Distribution Date, will equal
                                (but will not be less than zero) the
                                  Weighted Average Stripped Net Mortgage
                                     Rate for such Distribution Date minus (i)
                                   the Pass-Through Rate for the Class A-1
                                      Certificates, in the case of the Component
                                    A-1 Rate, (ii) the Pass-Through Rate for
                                      the Class A-2 Certificates, in the case of
                             the Component A-2 Rate, (iii) the
                               Pass-Through Rate for the Class A-3
                                      Certificates, in the case of the Component
                                    A-3 Rate, (iv) the Pass-Through Rate for
                                      the Class A-4 Certificates, in the case of
                           the Component A-4 Rate, (v) the
                              PassThrough Rate for the Class B-1
                                      Certificates, in the case of the Component
                                    B-1 Rate, (vi) the Pass-Through Rate for
                                      the Class B-2 Certificates, in the case of
                             the Component B-2 Rate, (vii) the
                               Pass-Through Rate for the Class B-3
                                      Certificates, in the case of the Component
                                      B-3 Rate, (viii) the Pass-Through Rate for
                                      the Class B-4 Certificates, in the case of
                            the Component B-4 Rate, (ix) the
                              PassThrough Rate for the Class B-5
                                      Certificates, in the case of the Component
                                      B-5 Rate and (x) the Pass-Through Rate for
                                      the Class B-6 Certificates, in the case of
                                the Component B-6 Rate. The Weighted
                                      Average Stripped Net Mortgage Rate for any
                                 Distribution Date is equal to (x) the
                                     weighted average of Net Mortgage Rates in
                                   effect for the Mortgage Loans as of the
                                  commencement of the related Due Period
                             minus (y) 0.68055% per annum. The

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                                    Net Mortgage Rate for each Mortgage Loan
                                   is generally equal to the Mortgage Rate
                                   minus the sum of the per annum rates at
                                   which the Master Servicer's fee and the
                                     Trustee's fee accrue. See "Description of
                          the Certificates--General" and
                                 "--Distributions on the Certificates"
   herein.

                               The Notional Amount of the Class IO
                                     Certificates and Class A-WAC Certificates
                                      is solely intended to be used for purposes
                                     of calculating the accrual of interest in
                                 respect of each such class and do not
                                   entitle the holder thereof to principal
                               distributions with respect thereto.

Distributions on                                                                
 the Certificates..................  Distributions on the Certificates will be
                                      made, to the extent of available funds, on
                                    each Distribution Date, beginning in May
                                     1997. The total of all payments and other
                                     collections (or advances in lieu thereof)
                                  on or in respect of the Mortgage Loans
                                  that are available for distribution to
                       holders of the Certificates
                                      ("Certificateholders") on any Distribution
                               Date is the "Available Distribution
                  Amount" for such date.

                                      In general, on each Distribution Date, the
                                  Available Distribution Amount for such
                              date will be distributed among the
                                      respective classes of Certificates for the
                                   following purposes and in the following
              order of priority:

                                     (1) to pay interest to the holders of the
                                          Senior Certificates of each class, PRO
                                       RATA based on entitlement, up to an
                                amount equal to the Interest
                                          Distribution Amount (as defined below)
                                    in respect of each such class of
                                      Certificates for such Distribution
         Date;

                                     (2) to pay interest to the holders of the
                                    Class B-1 Certificates, up to an
                                amount equal to the Interest
                                          Distribution Amount in respect of such
                                  class of Certificates for such
                      Distribution Date;

                                     (3) to pay interest to the holders of the
                                    Class B-2 Certificates, up to an
                                amount equal to the Interest
                                          Distribution Amount in respect of such
                                  class of Certificates for such
                      Distribution Date;

                                     (4) to pay interest to the holders of the
                                    Class B-3 Certificates, up to an
                                amount equal to the Interest
                                          Distribution Amount in respect of such
                                  class of Certificates for such
                      Distribution Date;

                                     (5) to pay interest to the holders of the
                                    Class B-4 Certificates, up to an
                                amount equal to the Interest
                                          Distribution Amount in respect of such
                                  class of Certificates for such
                      Distribution Date;

                                     (6) to pay interest to the holders of the
                                    Class B-5 Certificates, up to an
                                amount equal to the Interest
                       Distribution Amount

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                               in respect of such class of
                                      Certificates for such Distribution
         Date;

                                     (7) to pay interest to the holders of the
                                    Class B-6 Certificates, up to an
                                amount equal to the Interest
                                          Distribution Amount in respect of such
                                  class of Certificates for such
                      Distribution Date;

                                    (8) to pay principal sequentially to the
                                          holders of the Senior P&I Certificates
                                       from Class A-1 to Class A-4, in the
                                  order of their numerical class
                                       designation, in each case until the
                                          related Certificate Balance is reduced
                                         to zero, up to an amount equal to the
                                        Senior Principal Distribution Amount
                                         (as defined below), and to pay to the
                              holders of the Class A-WAC
                                          Certificates, up to an amount equal to
                                      the Basic Class A-WAC Distribution
                                       Amount (as defined below), provided
                                        that if the then remaining Available
                                        Distribution Amount is less than the
                                     aggregate of the Senior Principal
                                     Distribution Amount and the Basic
                                         Class A-WAC Distribution Amount, then
                                         distributions pursuant to this clause
                                     (8) will be allocated between the
                                          holders of the Senior P&I Certificates
                                       and the holders of the Class A- WAC
                                       Certificates on a PRO RATA basis in
                                    accordance with their respective
                 entitlements;

                                  (9) to pay to the holders of the Class
                                       A-WAC Certificates, up to an amount
                                       equal to the Additional Class A-WAC
                                   Distribution Amount (as defined
           below);

                                     (10) to pay principal to the holders of the
                                         Class B Certificates, up to an amount
                                         with respect to each class of Class B
                                      Certificates equal to such class's
                                        portion, as described herein, of the
                                      Subordinate Principal Distribution
                                      Amount (as defined below) for such
                          Distribution Date; and

                                 (11) to pay any remainder amount to the
                                         holders of the Residual Certificates.

                                   The "Interest Distribution Amount" with
                                     respect to any class of P&I Certificates,
                                  the Class IO Certificates or the Class
                                    A-WAC Certificates, for any Distribution
                               Date, will generally equal: (i) one
                                     month's interest (calculated on the basis
                                  of a 360-day year consisting of twelve
                            30-day months) at the applicable
                            Pass-Through Rate accrued on the
                                     Certificate Balance of such class, in the
                                     case of any class of P&I Certificates, or
                                     the Notional Amount of such class, in the
                                 case of the Class IO Certificates and
                                  Class A-WAC Certificates, in each case
                                 outstanding immediately prior to such
                                    Distribution Date; increased by (ii) the
                           excess, if any, of the Interest
                                      Distribution Amount for such class for the
                                    immediately preceding Distribution Date,
                                    if any, over the aggregate distributions
                                 of interest made with respect to such
                               class on such immediately preceding
                                    Distribution Date; and (iii) in the case
                                    of each such class, reduced (to not less
                             than zero) by the allocable share

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                                 for such class of Prepayment Interest
                                    Shortfalls (to the extent not covered by
                                    Compensating Interest paid by the Master
                                Servicer) and certain other interest
                        shortfalls described herein.

                                   With respect to each Distribution Date,
                                      the "Senior Principal Distribution Amount"
                                      will equal the lesser of (1) the aggregate
                                 Certificate Balance of the Senior P&I
                                      Certificates outstanding immediately prior
                                     to such Distribution Date and (2) the sum
                                    of (x) the Senior Percentage (as defined
                               below) of all scheduled payments of
                                      principal due on the Mortgage Loans during
                                  the related Due Period, whether or not
                                    received, and of the aggregate principal
                                      portion of any unscheduled net collections
                                    (other than amounts described in clauses
                                     (y) or (z) hereof and other than payments
                                     allocable to Arrearage) received on or in
                                    respect of the Mortgage Loans during the
                                related Prepayment Period, including
                                 proceeds from repurchases of Mortgage
                                   Loans, insurance proceeds, condemnation
                                      proceeds and liquidation proceeds, (y) the
                                    Senior Prepayment Percentage (as defined
                                  below) of all voluntary prepayments of
                                    principal received on the Mortgage Loans
                                during the related Prepayment Period
                                    (other than the amount thereof allocable
                                     to Arrearage) and (z) with respect to the
                                    principal portion of any net liquidation
                                proceeds received during the related
                                    Prepayment Period in connection with the
                                final liquidation of a Mortgage Loan
                                     during such Prepayment Period, the lesser
                                of the Senior Percentage of the then
                               scheduled principal balance of such
                                   Mortgage Loan and the Senior Prepayment
                                  Percentage of the principal portion of
                                     such net liquidation proceeds (other than
                           the amount thereof allocable to
                               Arrearage). See "Description of the
                              Certificates--Distributions on the
                 Certificates" herein.

                                   With respect to each Distribution Date,
                                the "Basic Class A- WAC Distribution
                                    Amount" will equal the lesser of (1) the
                                  Certificate Balance of the Class A-WAC
                                      Certificates outstanding immediately prior
                                  to such Distribution Date, and (2) the
                                 aggregate portion of (a) all Modified
                                  Scheduled Payments due on the Mortgage
                                   Loans during the related Due Period, to
                                the extent received and allocable to
                                     Arrearage, other than the portion thereof
                                     payable as fees and expenses, and (b) any
                                   unscheduled net collections received on
                                 the Mortgage Loans during the related
                                     Prepayment Period allocable to Arrearage,
                                     including voluntary prepayments, proceeds
                               from repurchases of Mortgage Loans,
                                     insurance proceeds, condemnation proceeds
                                    and liquidation proceeds, other than the
                               portion thereof payable as fees and
                          expenses. With respect to each
                                    Distribution Date, the "Additional Class
                                     A-WAC Distribution Amount" will equal the
                                    lesser of (1) the Certificate Balance of
                                    the Class A-WAC Certificates outstanding
                                  immediately prior to such Distribution
                              Date (net of the Basic Class A-WAC
                                     Distribution Amount for such Distribution
                                   Date) and (2) with respect to the final
                          liquidation of a Mortgage Loan

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                                     during the related Prepayment Period, the
                                    amount of any Arrearage remaining unpaid
                              with respect to such Mortgage Loan
                                following the receipt of all related
                                liquidation proceeds, other than the
                               portion thereof payable as fees and
     expenses.

                                    As further provided herein, all payments
                                     and recoveries in respect of any Mortgage
                                  Loan (exclusive of escrow payments and
                                "pay-aheads") will be applied by the
                                 Master Servicer first, to pay accrued
                                      interest on such Mortgage Loan; second, to
                                    pay scheduled principal on such Mortgage
                                   Loan; third, to repay Arrearage of such
                                Mortgage Loan; and fourth, to prepay
                                     Unpaid Principal Balance of such Mortgage
                                   Loan. This may result in an accelerated
                                      amortization of the Certificate Balance of
                                    the Class A-WAC Certificates relative to
                        the Senior P&I Certificates.

                            Holders of each class of Class B
                                    Certificates will be entitled to receive
                                    on each Distribution Date, to the extent
                           of the portion of the Available
                               Distribution Amount remaining after
                                    distribution on such date of the amounts
                                described in clauses (1) through (9)
                             above, distributions allocable to
                                     principal in reduction of the Certificate
                                    Balances thereof equal to the sum of the
                              following: (i) the related Class B
                                 Percentage (as defined herein) of all
                                      scheduled payments of principal due on the
                                 Mortgage Loans during the related Due
                                   Period, whether or not received, and of
                                  the aggregate principal portion of any
                                   unscheduled net collections (other than
                                      amounts described in clauses (ii) or (iii)
                                    hereof and other than payments allocable
                                      to Arrearage) received on or in respect of
                                 the Mortgage Loans during the related
                                      Prepayment Period, including proceeds from
                                    repurchases of Mortgage Loans, insurance
                               proceeds, condemnation proceeds and
                                   liquidation proceeds, (ii) such class's
                                 PRO RATA share (if any), as described
                                 herein, of the Subordinate Prepayment
                                      Percentage of all voluntary prepayments of
                                    principal received on the Mortgage Loans
                                during the related Prepayment Period
                                    (other than the amount thereof allocable
                                    to Arrearage), (iii) with respect to the
                                    principal portion of any net liquidation
                                proceeds received during the related
                                    Prepayment Period in connection with the
                                final liquidation of a Mortgage Loan
                               during such Prepayment Period, such
                               class's PRO RATA share (if any), as
                                      described herein, of the principal portion
                                   of such net liquidation proceeds (other
                                than the amount thereof allocable to
                                    Arrearage) to the extent not included in
                                    the Senior Principal Distribution Amount
                             and (iv) any amounts allocable to
                                   principal for any previous Distribution
                                  Date (calculated pursuant to the three
                          preceding clauses) that remain
                                      undistributed, to the extent that any such
                                    amounts are not attributable to Realized
                                    Losses that were allocated to Classes of
                                 Class B Certificates bearing a higher
                            numerical class designation. See
               "Description of the
                              Certificates--Distributions on the
                 Certificates" herein.

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                                      With respect to any Distribution Date, the
                               "Subordinate Principal Distribution
                                    Amount" will equal the lesser of (a) the
                                 balance of the Available Distribution
                                      Amount remaining after the distribution of
                                the amounts described in clauses (1)
                                      through (9) above and (b) the aggregate of
                             the sum for each class of Class B
                                    Certificates of the amounts described in
                    the preceding paragraph.

                                   The "Senior Percentage", the "Class B-1
                                    Percentage", the "Class B-2 Percentage",
                                      the "Class B-3 Percentage", the "Class B-4
                                   Percentage", the "Class B-5 Percentage"
                                    and the "Class B-6 Percentage" initially
                         will be approximately 72.48%,
                                     approximately 4.49%, approximately 3.29%,
                                     approximately 5.68%, approximately 4.19%,
                                 approximately 3.59% and approximately
                                     6.28%, respectively. Each such percentage
                                      will be recalculated for each Distribution
                                  Date to be a percentage (not to exceed
                                    100%) equal to the aggregate Certificate
                                      Balance of the Senior P&I Certificates, in
                                    the case of the Senior Percentage, or of
                           the applicable class of Class B
                                    Certificates, in the case of the Class B
                                 Percentages, in each case immediately
                                      prior to such Distribution Date divided by
                                     the aggregate scheduled principal balance
                                      of the Mortgage Loans as of the end of the
                                 Prepayment Period for the immediately
                                 preceding Distribution Date. For each
                                    Distribution Date occurring prior to the
                                      Distribution Date in May 2002, the "Senior
                                   Prepayment Percentage" will equal 100%,
                                      and until the earlier of such date and the
                                     date on which the Senior P&I Certificates
                                    are paid in full, no distributions based
                                   on principal prepayments or, in certain
                                   instances, the principal portion of net
                                 liquidation proceeds, on the Mortgage
                                    Loans will be distributed to the Class B
                                    Certificates. Thereafter, during certain
                                periods, subject to certain loss and
                            delinquency criteria, the Senior
                                    Prepayment Percentage may continue to be
                                      100% or otherwise disproportionately large
                                    (relative to the Senior Percentage) and,
                                    accordingly, the percentage of principal
                              prepayments payable to the Class B
                                 Certificates may continue to be 0% or
                                   otherwise disproportionately small. The
                                   "Subordinate Prepayment Percentage" for
                                 any Distribution Date will equal 100%
                                      minus the Senior Prepayment Percentage. As
                                     further provided herein, prepayments will
                          be allocated to the Senior P&I
                                    Certificates only after the satisfaction
                                     of any unpaid Arrearage with respect to a
                                  Mortgage Loan regardless of the Senior
                                  Prepayment Percentage at any time. See
                              "Description of the Certificates--
                                      Distributions on the Certificates" herein.

                                    Holders of the Class IO Certificates and
                                      the Residual Certificates are not entitled
                                     to receive any distributions allocable to
                   principal or Arrearage.

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Allocation of Losses;                                                           
  Subordination.....................  In general, losses on or in respect of the
                                  Mortgage Loans ("Realized Losses") and
                       certain Trust Fund expenses
                                      ("Extraordinary Trust Fund Expenses") will
                                be allocated first, to the Class B-6
                                  Certificates, second, to the Class B-5
                                 Certificates, third, to the Class B-4
                                  Certificates, fourth, to the Class B-3
                                 Certificates, fifth, to the Class B-2
                                    Certificates and sixth, to the Class B-1
                                Certificates, in each case until the
                                      Certificate Balance of such class has been
                                 reduced to zero, and thereafter, such
                                    losses and expenses will be allocated to
                                   the Senior Certificates (other than the
                                      Class IO Certificates) on a PRO RATA basis
                                 based on their respective Certificate
                          Balances then outstanding. The
                                subordination provided to the Senior
                                    Certificates by the Class B Certificates
                                      and to the Class B Certificates by classes
                               of Class B Certificates with higher
                                    numerical class designations is intended
                                    to cover Realized Losses on the Mortgage
                              Loans and Extraordinary Trust Fund
                               Expenses as further described under
               "Description of the
                               Certificates--Allocation of Losses;
                  Subordination" herein.

Sale of Defaulted                                                               
Mortgage Loans....................  If consent to the operation of the      
                                      provisions described below shall have been
                                   given by the Master Servicer, then with
                                respect to any Mortgage Loan that is
                                      delinquent in excess of the number of days
                                     provided in the Agreement, (i) the holder
                                   of a majority in Percentage Interest of
                                 the Class B-6 Certificates, or if the
                                Certificate Balance of the Class B-6
                                      Certificates has been reduced to zero, the
                              holder of a majority in Percentage
                                  Interest of the Class B-5 Certificates
                                    (the "Directing Holder"), may direct the
                                   Master Servicer to commence foreclosure
                             and (ii) prior to commencement of
                                 foreclosure of any Mortgage Loan, the
                                     Master Servicer will notify the Directing
                                  Holder of such proposed foreclosure in
                                    order to permit the Directing Holder the
                                    right to instruct the Master Servicer to
                                  delay the proposed foreclosure. In the
                                 case of the exercise by the Directing
                                    Holder of the right to direct the Master
                                     Servicer pursuant to either clause (i) or
                                   clause (ii) above, the Directing Holder
                                    will deposit into the Collateral Account
                                  (as defined herein) an amount equal to
                                     125% of the Valuation (as defined herein)
                                 of any such Mortgage Loan, plus three
                                    months' interest at the related Mortgage
                                     Rate. In general, upon final liquidation,
                                    the amount realized on any such Mortgage
                           Loan will be deposited into the
                                   Certificate Account, with the excess of
                                    the Valuation of such Mortgage Loan over
                                     such amount realized being withdrawn from
                               the Collateral Account. After final
                                liquidation with respect to any such
                                      Mortgage Loan, any amount remaining in the
                                   Collateral Account with respect to such
                                 Mortgage Loan will be remitted to the
                              Directing Holder. See "Pooling and
                                  Servicing Agreement--Sale of Defaulted
                   Mortgage Loans" herein.

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P&I Advances........................  The Master Servicer is required to make   
                                      advances in respect of delinquent payments
                                 of principal and interest, but not in
                               respect of Arrearage (except in the
                                    limited circumstances described herein),
                                subject to the limitations regarding
                                   recoverability as described herein. See
                                 "Description of the Certificates--P&I
                                    Advances" herein and "Description of the
                                Certificates--Advances in respect of
                             Delinquencies" in the Prospectus.

Servicing of                                                                    
the Mortgage Loans................  The Master Servicer will service the    
                                 Mortgage Loans in accordance with the
                                 terms of the Agreement. To the extent
                                      possible, the Master Servicer has and will
                                     enter into annual payment plans with each
                                   borrower pursuant to which the borrower
                              will be obligated to pay interest,
                                  principal, Arrearage and certain other
                            amounts (the "Modified Scheduled
                                 Payment"). The amount of the Modified
                                  Scheduled Payment with respect to each
                                 Mortgage Loan will be reviewed by the
                                   Master Servicer on an annual basis and,
                               based on the then current financial
                                    position of the borrower, either will be
                                      increased or decreased solely with respect
                                    to the portion of the Modified Scheduled
                                 Payment allocable to the repayment of
                                     Arrearage. The Master Servicer may not be
                                     able to foreclose on a Mortgaged Property
                                      in the event of a failure by a borrower to
                                     pay the Modified Scheduled Payment if the
                                    borrower is able to make a payment in an
                                 amount at least equal to the Original
                               Scheduled Payment and certain other
                                 conditions are met. See "The Mortgage
                                      Pool--The Section 203(b) and 703 Insurance
                                      Programs--SERVICING OF THE MORTGAGE LOANS"
                                     and "Pooling and Servicing Agreement--The
                    Master Servicer" herein.

Optional Termination................  At its option and subject to the          
                                   limitations provided herein, the Master
                                     Servicer may purchase all of the Mortgage
                                     Loans and any REO Properties in the Trust
                                      Fund on any Distribution Date on which the
                                    aggregate Legal Balance of such Mortgage
                                    Loans and the Mortgage Loans relating to
                                      such properties, after taking into account
                                all payments made in respect thereof
                             through the last day of the month
                                   preceding such date, is less than 5% of
                                    the Cut-off Date Pool Legal Balance. See
                  "Pooling and Servicing
                              Agreement--Termination" herein and
               "Description of the
                             Certificates--Termination" in the
       Prospectus.

General Prepayment                                                              
Considerations....................  The rate of distributions allocable to  
                          principal on each class of P&I
                                    Certificates will depend, in general, on
                                     the rate and timing of principal payments
                                  (including prepayments and collections
                           upon defaults, liquidations and
                                   repurchases) on the Mortgage Loans. The
                              rate of distributions allocable to
                                     principal on the Class A-WAC Certificates
                                     will depend on the rate and timing of the
                                      payment of Arrearage. As further described
   herein,

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                                prepayments will be allocated to the
                                  Senior P&I Certificates only after the
                                     satisfaction of any unpaid Arrearage with
                                    respect to a Mortgage Loan regardless of
                                   the Senior Prepayment Percentage at any
                              time. As is the case with mortgage
                                    pass-through certificates generally, the
                               Offered Certificates are subject to
                          substantial inherent cash-flow
                                    uncertainties because the Mortgage Loans
                                  may be prepaid at any time. Generally,
                              when prevailing interest rates are
                                    increasing, prepayment rates on mortgage
                                     loans tend to decrease; a decrease in the
                                  prepayment rates on the Mortgage Loans
                                      will result in a reduced rate of return of
                                 principal to investors in the Offered
                                 Certificates (other than the Class IO
                                     Certificates) at a time when reinvestment
                                    at such higher prevailing rates would be
                                  desirable. Conversely, when prevailing
                                    interest rates are declining, prepayment
                                     rates on mortgage loans tend to increase;
                                      an increase in the prepayment rates on the
                                   Mortgage Loans will result in a greater
                                    rate of return of principal to investors
                                   in the Offered Certificates (other than
                                     the Class IO Certificates) at a time when
                                     reinvestment at comparable yields may not
                                  be possible. Mortgagors may prepay the
                              Mortgage Loans at any time without
    penalty.

                                      Distributions of principal will be made to
                                  the classes of Senior P&I Certificates
                                 sequentially as described herein. The
                               timing of commencement of principal
                                  distributions and the weighted average
                                   life of each such class of Certificates
                            will be affected by the rates of
                            prepayment on the Mortgage Loans
                                 experienced both before and after the
                                      commencement of principal distributions on
            each such class.

                               As described herein, during certain
                                     periods all or a disproportionately large
                                      percentage of principal prepayments on the
                                      Mortgage Loans will be allocated among the
                                     Senior Certificates (other than the Class
                          IO Certificates) and none or a
                                  disproportionately small percentage of
                                      such prepayments will be distributed among
                                   the Class B Certificates. To the extent
                    that no prepayments or a
                                  disproportionately small percentage of
                                   such prepayments are distributed on the
                                   Class B Certificates, the subordination
                                   afforded the Senior Certificates by the
                                   Class B Certificates, in the absence of
                                offsetting Realized Losses allocated
                                      thereto, will be increased. The allocation
                                     among the classes of Class B Certificates
                                   of the portion of principal prepayments
                               and net liquidation proceeds on the
                                    Mortgage Loans that is not distributable
                                      to holders of the Senior Certificates will
                           be governed by certain loss and
                                  delinquency criteria described herein.

                   See "Description of the
                             Certificates-Distributions on the
                           Certificates" and "Yield on the
                                  Certificates" herein and "Maturity and
                             Prepayment Considerations" in the
                               Prospectus. For further information
                             regarding the effect of principal
                                     prepayments on the weighted average lives
             of the Senior P&I

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                                      Certificates, the Class A-WAC Certificates
                                      and the Class B-1, Class B-2 and Class B-3
                           Certificates, see "Yield on the
                              Certificates" herein and the table
                                    entitled "Percent of Initial Certificate
                                Balance Outstanding at the Following
                        Percentages of CPR" therein.

Special Yield                                                                   
  Considerations....................  The yield to maturity on each class of the
                                  Offered Certificates, particularly the
                                     Class IO Certificates and the Class A-WAC
                                     Certificates, will depend, in general, on
                                     the rate and timing of principal payments
                                  (including prepayments and collections
                           upon defaults, liquidations and
                                      repurchases) on the Mortgage Loans and the
                            allocation thereof to reduce the
                                      Certificate Balance and/or Notional Amount
                                  of such Certificates, as well as other
                            factors, such as interest at the
                                      Pass-Through Rate (as the same will change
                                      from time to time in the case of the Class
                                 A-WAC Certificates), and the purchase
                        price for such Certificates.

                                  The yield to investors on any class of
                                  Offered Certificates will be adversely
                                 affected by any allocation thereto of
                                      interest shortfalls on the Mortgage Loans.

                             In general, if a class of Offered
                                 Certificates (other than the Class IO
                                   Certificates) is purchased at a premium
                                     and principal distributions thereon occur
                                    at a rate faster than anticipated at the
                                   time of purchase, the investor's actual
                                     yield to maturity will be lower than that
                            assumed at the time of purchase.
                                 Conversely, in general, if a class of
                                      Offered Certificates (other than the Class
                              IO Certificates) is purchased at a
                                discount and principal distributions
                                    thereon occur at a rate slower than that
                                assumed at the time of purchase, the
                                    investor's actual yield to maturity will
                                      be lower than that originally anticipated.

                                  The proceeds to the Depositor from the
                                 sale of the Offered Certificates were
                           determined based on a number of
                               assumptions, including a prepayment
                                    assumption of 8% CPR (as defined herein)
                                    and weighted average lives corresponding
                                   thereto. No representation is made that
                                  the Mortgage Loans will prepay at that
                                rate or at any other rate. The yield
                                    assumptions for the Offered Certificates
                                  will vary as determined at the time of
 sale.

                               The multiple class structure of the
                                    Offered Certificates causes the yield of
                              certain classes to be particularly
                                sensitive to changes in the rates of
                                      prepayment of the Mortgage Loans and other
                factors, as follows:

                                    SENIOR P&I CERTIFICATES: Because
                                      distributions of principal will be
                                     made to the classes of Senior P&I
                                          Certificates sequentially as described
                                        herein, the yield to maturity on the
                                          Certificates of any such class will be
                                        sensitive to the rates of prepayment
                                     on the Mortgage Loans experienced

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                                          both before and after the commencement
                                      of principal distributions on such
          class.

                                       CLASS IO CERTIFICATES: The yield to
                                         maturity on the Class IO Certificates
                                      will be extremely sensitive to the
                                         rate of principal payments (including
                                    prepayments and collections upon
                              defaults, liquidations and
                                       repurchases) on the Mortgage Loans,
                                          which may fluctuate significantly from
                                       time to time. Prospective investors
                                   should consider fully the risks
                                        associated with an investment in the
                                        Class IO Certificates, including the
                                       risk that a rapid rate of principal
                                       payments on the Mortgage Loans will
                                        have a materially negative effect on
                                          the yield to investors in the Class IO
                                      Certificates and may result in the
                                        failure of investors in the Class IO
                                       Certificates to recover fully their
                       initial investment.

                                          CLASS A-WAC CERTIFICATES: The yield to
                               maturity of the Class A-WAC
                                   Certificates will be especially
                                sensitive to the prepayment,
                                        repurchase and default experience on
                                 the Mortgage Loans, which may
                                        fluctuate significantly from time to
                                       time. In addition, the aggregate of
                                        distributions in respect of, and the
                                         yield to maturity of, the Class A-WAC
                                       Certificates will be related to the
                                         rate and timing of the payment of the
                                Arrearage. Reductions in the
                                   Certificate Balances of the P&I
                                   Certificates will result in the
                                       reduction of the Notional Amount of
                                       the Class A-WAC Certificates, which
                                      will reduce the amount of interest
                              payable on the Class A-WAC
                                  Certificates. Losses and other
                                    shortfalls in collections on the
                                         Mortgage Loans allocated to the Class
                                         B Certificates will cause a reduction
                                       in the Certificate Balances thereof
                                        and a corresponding reduction in the
                                      Notional Amount of the Class A-WAC
                                       Certificates, which will reduce the
                                     amount of interest payable on the
                                 Class A- WAC Certificates. In
                                    addition, the amount of interest
                              payable on the Class A-WAC
                                   Certificates will decrease more
                                          significantly as a result of principal
                                      prepayments on Mortgage Loans with
                                       relatively high Net Mortgage Rates.

                                      CLASS B CERTIFICATES: The yield to
                                        maturity on the Class B Certificates
                                         will be extremely sensitive to losses
                                         due to defaults on the Mortgage Loans
                                    (and the timing thereof), to the
                                         extent such losses are not covered by
                                    Class B Certificates with higher
                                 numerical class designations.
                                         Furthermore, as described herein, the
                                      timing of receipt of principal and
                                    interest by any class of Class B
                                          Certificates may be adversely affected
                                         by losses even if such class does not
                              ultimately bear such loss.

Certain Federal Income Tax                                                      
Consequences......................  Three separate "real estate mortgage    
                                   investment conduit" ("REMIC") elections
                                  will be made with respect to the Trust
                                     Fund for federal income tax purposes (the
                                    REMICs formed thereby, "REMIC I", "REMIC
                          II" and "REMIC III"). Upon the

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                                 issuance of the Offered Certificates,
                                   Thacher Proffitt & Wood, counsel to the
                               Depositor, will deliver its opinion
                                  generally to the effect that, assuming
                                 compliance with all provisions of the
                             Agreement, for federal income tax
                                     purposes, REMIC I, REMIC II and REMIC III
                              will each qualify as a REMIC under
                                      Sections 860A through 860G of the Internal
                              Revenue Code of 1986 (the "Code").

                                     The assets of REMIC I will consist of the
                                      Mortgage Loans, any properties acquired on
                                    behalf of the Certificateholders and the
                                   Certificate Account. For federal income
                               tax purposes, (i) the REMIC Regular
                             Certificates will be the "regular
                                interests" in, and generally will be
                                      treated as debt obligations of, REMIC III,
                                      and (ii) the Class R-III Certificates will
                                     be the sole class of "residual interests"
         in REMIC III.

                                    The Offered Certificates will be treated
                          as assets described in Section
                                  7701(a)(19)(C) of the Internal Revenue
                                      Code of 1986 (the "Code") and "real estate
                                     assets" under Section 856(c)(5)(A) of the
                                  Code, generally in the same proportion
                                      that the assets in the Trust Fund would be
                                    so treated. In addition, interest on the
                                   Offered Certificates will be treated as
                               "interest on obligations secured by
                                     mortgages on real property" under Section
                                     856(c)(3)(B) of the Code generally to the
                                     extent that such Certificates are treated
                                 as "real estate assets" under Section
                                 856(c)(5)(A) of the Code. The Offered
                                Certificates also will be treated as
                               "qualified mortgages" under Section
                                860G(a)(3) of the Code. See "Certain
              Federal Income Tax
                             Consequences--Characterization of
                                     Investments in REMIC Certificates" herein
                  and in the Prospectus.

                                      For federal income tax reporting purposes,
                                     the Class IO Certificates and Class A-WAC
                                    Certificates will, but the other Classes
                                of Offered Certificates will not, be
                                      issued with "original issue discount". The
                                      prepayment assumption that will be used in
                              determining the rate of accrual of
                                    original issue discount, market discount
                                and amortizable premium, if any, for
                                  federal income tax purposes will be 8%
                                CPR. However, the Depositor makes no
                                  representation that the Mortgage Loans
                                      will in fact prepay or, if they do prepay,
                                   that they will prepay at any particular
                                      rate. If the method for computing original
                                      issue discount described herein results in
                                 a negative amount for any period with
                                    respect to an Offered Certificate issued
                            with original issue discount, in
                                   particular, a Class IO Certificate or a
                                  Class A-WAC Certificate, the amount of
                                     original issue discount allocable to such
                                      period will be zero and the holder of such
                                     a Certificate will be permitted to offset
                                    such negative amount only against future
                            original issue discount (if any)
                                 attributable to such Certificate. See
                               "Yield on the Certificates" herein.

                                 For further information regarding the
                              federal income tax consequences of
                                      investing in the Offered Certificates, see

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                                     "Certain Federal Income Tax Consequences"
                         herein and in the Prospectus.

Ratings.............................  It is a condition to the issuance of the  
                                  Certificates that each class of Senior
                                      Certificates be rated not lower than "AAA"
                                      by Duff & Phelps Credit Rating Co. ("DCR")
                                   and "Aaa" by Moody's Investors Service,
                           Inc. ("Moody's"), the Class B-1
                                     Certificates be rated not lower than "AA"
                                      by DCR and "Aa2" by Moody's, the Class B-2
                                    Certificates be rated not lower than "A"
                                    by DCR and "A2" by Moody's and the Class
                                    B-3 Certificates be rated not lower than
                               "BBB" by DCR and "Baa2" by Moody's.

                                    The Depositor has not requested that any
                               rating agency rate any class of the
                                     Offered Certificates other than as stated
                                   above. If another rating agency were to
                         rate any class of the Offered
                                Certificates, such rating agency may
                                      assign a rating different from the ratings
                                     described above. A security rating is not
                                 a recommendation to buy, sell or hold
                                     securities and may be subject to revision
                                      or withdrawal at any time by the assigning
                                  rating organization. A security rating
                             does not address the frequency of
                                  prepayments on the Mortgage Loans, the
                                      corresponding effect on yield to investors
                                or whether investors in the Class IO
                                  Certificates may fail to recover fully
                                   their initial investment. See "Yield on
                                      the Certificates" and "Ratings" herein and
                                     "Yield Considerations" in the Prospectus.

Legal Investment....................  The Senior Certificates and Class B-1     
                                  Certificates will constitute "mortgage
                                   related securities" for purposes of the
                                     Secondary Mortgage Market Enhancement Act
                                     of 1984 ("SMMEA") for so long as they are
                                   rated not lower than the second highest
                                  rating category by a Rating Agency (as
                                    defined in the Prospectus) and, as such,
                                 will be legal investments for certain
                                     entities to the extent provided in SMMEA.
                              SMMEA, however, provides for state
                               limitation on the authority of such
                                   entities to invest in "mortgage related
                           securities", provided that such
                                     restricting legislation was enacted prior
                                    to October 3, 1991. The other Classes of
                                    Offered Certificates will not constitute
                                      "mortgage related securities" for purposes
                                   of SMMEA. Institutions whose investment
                                      activities are subject to legal investment
                                laws and regulations or to review by
                                    regulatory authorities may be subject to
                                     restrictions on investment in the Offered
                                   Certificates, particularly the Class IO
                                      Certificates and Class A-WAC Certificates.
                                    Any such institution should consult with
                                   their own legal advisors in determining
                                  whether and to what extent the Offered
                                     Certificates constitute legal investments
                             or are subject to restrictions on
                                     investment. See "Legal Investment" herein
                  and in the Prospectus.

ERISA Considerations................  Any person acquiring the Offered          
                                 Certificates (other than the Class IO
                                     Certificates) by or on behalf of, or with
                                   the assets of, an employee benefit plan
                         subject to the subject to the

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                                      Employee Retirement Income Security Act of
                                   1974, as amended ("ERISA"), or the Code
                                   will be deemed to have represented that
                                     the purchase of such Offered Certificates
                                     is permissible under applicable law, will
                                      not constitute or result in any non-exempt
                                 prohibited transaction under ERISA or
                                 Section 4975 of the Code and will not
                             subject the Depositor, the Master
                                      Servicer, the Trustee, the Fiscal Agent or
                               the Trust Fund to any obligation in
                               addition to those undertaken in the
                                    Agreement. The Class IO Certificates may
                                     not be purchased by, on behalf of or with
                                the assets of a Plan except upon the
                                  delivery of an opinion of counsel or a
                               certification of facts, as provided
                               herein. A fiduciary of any employee
                                      benefit plan subject to ERISA and the Code
                                  should carefully review with its legal
                                    advisors whether the purchase or holding
                                    of the Certificates could give rise to a
                                 transaction that is prohibited or not
                                     otherwise permissible under ERISA and the
                                   Code. See "ERISA Considerations" herein
                  and in the Prospectus.

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RISK FACTORS

In addition to the matters described elsewhere in this Prospectus     
Supplement and the Prospectus, prospective investors should carefully consider  
the following factors before deciding to invest in the Offered Certificates.    

CLASS IO CERTIFICATES AND CLASS A-WAC CERTIFICATES                              

  Principal payments (including prepayments and collections upon defaults,
liquidations and repurchases) distributed in reduction of the Certificate       
Balances of the P&I Certificates will result in the corresponding reduction of  
the Notional Amount of the Class IO Certificates and of the Class AWAC          
Certificates, which will reduce the amount of interest payable on the Class IO  
Certificates and Class A-WAC Certificates. Losses and other shortfalls in       
collections on the Mortgage Loans allocated to the Class B Certificates will    
cause a reduction in the Certificate Balances thereof and a corresponding       
reduction in the Notional Amount of the Class IO Certificates and of the Class  
A-WAC Certificates, which will also reduce the amount of interest payable on the
Class IO Certificates and Class A-WAC Certificates. In addition, the amount of  
interest payable on the Class A-WAC Certificates will decrease more             
significantly as a result of principal prepayments on Mortgage Loans with       
relatively high Net Mortgage Rates.                                             

In addition to the right to receive interest on the related Notional  
Amount, the Class A-WAC Certificates represent the right to receive payments in 
respect of Arrearage. The rate at which the Arrearage is repaid on any Mortgage 
Loan is dependent on a variety of factors including the financial status of the 
borrower. To the extent that the rate of payment in respect of Arrearage is     
slower than expected, the weighted average life of the Class A-WAC Certificates 
will be longer than expected and to the extent that the rate of payment in      
respect of Arrearages is faster than expected, the weighted average life of the 
Class A-WAC Certificates will be shorter than expected. None of the Master      
Servicer, the Trustee or the Fiscal Agent will advance the portion of any       
Modified Scheduled Payment allocable to Arrearage. See "Description of the      
Certificates--P&I Advances" herein.                                             

SUBORDINATION; LOSSES ON THE MORTGAGE LOANS; VARIABILITY OF YIELD               

The Class B Certificates represent credit support for the Senior      
Certificates. The yield to maturity on the Class B Certificates will be         
extremely sensitive to the default and loss experience on or in respect of the  
Mortgage Loans and to the timing of any such defaults or losses. The rights of  
the holders of the Class B Certificates to receive distributions in respect of  
the Mortgage Loans will be subordinate to the rights of the holders of the      
Senior Certificates to the extent described herein. In general, all losses and  
other shortfalls in collections on the Mortgage Loans will be allocated to the  
Class B Certificates to the extent of amounts otherwise payable thereon prior to
any allocation of such losses and shortfalls to the Senior Certificates. Such   
allocation of losses and other shortfalls in collections on the Mortgage Loans  
will be effected by the priority of distributions on the Certificates and by    
reducing the Certificate Balance of the Class B Certificates. Although the      
Residual Certificates are subordinate to the Class B Certificates, the Residual 
Certificates do not have Certificate Balances and do not provide any material   
protection to the holders of the Class B Certificates against losses and other  
shortfalls in collections on the Mortgage Loans. Because of the sensitivity of  
the yield to maturity of the Class B Certificates to the default and loss       
experience of the Mortgage Pool, prospective investors are strongly advised to  
conduct their own investigation of the ability of the respective Mortgaged      
Properties to service the indebtedness secured thereby prior to making an       
investment in the Certificates. INVESTORS IN THE CLASS B CERTIFICATES SHOULD    
FULLY CONSIDER THE RISK OF LOSSES ON OR IN RESPECT OF THE MORTGAGE LOANS.       

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NATURE OF THE MORTGAGE LOANS                                                    

     As described herein under "The Mortgage Pool", all of the Mortgage Loans in
the past have defaulted and have been assigned to HUD pursuant to the HUD       
Assignment Program. The Mortgage Loans may have a greater than normal risk of   
future defaults and delinquencies, as compared to a pool of newly originated,   
high quality, one- to four-family residential mortgage loans of comparable size 
and geographic concentration. Repayment of the P&I Certificates and the Class   
A-WAC Certificates is dependent, among other things, upon the borrowers         
continuing to make Modified Scheduled Payments or, in the event of borrower     
default, upon the ability of the Master Servicer to sell or foreclose upon the  
Mortgage Loans or to acquire title to and liquidate the Mortgaged Properties.   
There can be no assurance whether the Master Servicer will be successful in such
efforts or as to the timing thereof; there are restrictions on the Master       
Servicer's actions in respect of foreclosure as described under "The Mortgage   
Pool--The Section 203(b) and 703 Insurance Programs" herein. Limitations on the 
Master Servicer's ability to foreclose may extend the weighted average lives of 
the Certificates and may increase the risk of Realized Losses on any Mortgage   
Loan.                                                                           

As of the Cut-off Date, with respect to approximately 94.00% of the   
Mortgage Loans, by aggregate Unpaid Principal Balance as of the Cut-off Date,   
the borrower under each Mortgage Loan has made at least 97.5% of the aggregate  
amount of Original Scheduled Payments due for the four calendar months preceding
the Cut-off Date (regardless of either the timing of receipt of such payments or
the payment history of such loans prior to December 1996). As of the Cut-off    
Date, with respect to approximately the remaining approximately 6.00% of the    
Mortgage Loans, by aggregate Unpaid Principal Balance as of the Cut-off Date,   
the borrower under each Mortgage Loan has made at least 75% but less than 97.5% 
(with a weighted average of 76.0%) of the aggregate amount of Original Scheduled
Payments due for the four calendar months preceding the Cut-off Date (regardless
of either the timing of receipt of such payments or the payment history of such 
loans prior to December 1996). THE RISK OF FUTURE DEFAULTS AND DELINQUENCIES,   
WHICH AS DESCRIBED ABOVE MAY BE GREATER THAN NORMAL WITH RESPECT TO THE MORTGAGE
LOANS GENERALLY, IS LIKELY TO BE EXCEPTIONALLY HIGH IN THE CASE OF THOSE        
MORTGAGE LOANS WHERE THE BORROWER HAS MADE LESS THAN 97.5% OF THE AGGREGATE     
AMOUNT OF SUCH FOUR PRECEDING ORIGINAL SCHEDULED PAYMENTS, AND THE DELINQUENCY, 
FORECLOSURE AND BORROWER BANKRUPTCY RATES FOR SUCH MORTGAGE LOANS ARE LIKELY TO 
GREATLY EXCEED SUCH RATES FOR THE MORTGAGE LOANS GENERALLY. INVESTORS SHOULD    
FULLY CONSIDER THE RISK THAT AT ANY TIME A SUBSTANTIAL NUMBER OF SUCH BORROWERS 
MAY CEASE MAKING PAYMENTS ON THEIR MORTGAGE LOANS.                              

BROKER'S PRICE OPINIONS                                                         

There were obtained for the Mortgage Loans, in substantially all cases
within the last year, broker's price opinions or "BPOs" for sales of the        
Mortgaged Properties. The BPOs were obtained either by HUD or the Mortgage Loan 
Seller. No assurance can be given that the actual proceeds from defaulted       
Mortgage Loans will equal, or otherwise be comparable to, those shown in the    
BPOs or that sales of the related Mortgage Loans can or will be made in periods 
comparable to the marketing time assumed for purposes of the BPOs.              

BANKRUPTCY OF CERTAIN BORROWERS                                                 

     A portion of the Trust Fund consists of Mortgage Loans, the borrowers under
which are the subject of a case under the Bankruptcy Code. In the event a       
bankruptcy petition is filed by or against a borrower, it is possible that      
holders of Certificates could experience a loss. As of the Cut-off Date,        
borrowers under approximately 7 Mortgage Loans, representing approximately      
$206,840 of the Cut-off Date Pool Unpaid Principal Balance and approximately    
$24,128 of the Cut-off Date Pool Arrearage are the subject of cases under the   
Bankruptcy Code or had confirmed bankruptcy plans. No assurance, however, can be
given as to either the number or the proportion of the borrowers that will      
become the subject of cases under the Bankruptcy Code in the future, the timing 
of the outcome of such cases or the aggregate Unpaid Principal Balance or       
Arrearage of the related Mortgage Loans.                                        

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Numerous statutory provisions of the Bankruptcy Code may interfere with or      
affect the ability of the Master Servicer to obtain payment of a Mortgage Loan, 
to realize upon collateral and/or to enforce a deficiency judgment.             

CONFLICTS OF INTEREST BETWEEN THE MASTER SERVICER AND THE TRUST FUND            

The Master Servicer may initially own the Class B-5 and Class B-6     
Certificates. If the Master Servicer causes foreclosures on Mortgage Loans and  
sales of the related Mortgaged Properties to occur more rapidly than assumed,   
the weighted average lives and yields of the Certificates may be affected       
without regard to the ability of a Certificateholder to reinvest funds at a     
comparable rate. Similarly, actions taken to delay foreclosures and sales (in   
order to postpone the incurrence of losses) may affect the weighted average     
lives and yields of the Certificates by postponing receipts of principal        
thereon.                                                                        

Investors should consider these potential conflicts of interest in the
context of making an investment in the Certificates and be aware that no formal 
policies or guidelines have been established to resolve or minimize these       
conflicts.                                                                      

SERVICER LIMITATIONS                                                            

  As provided herein, the Master Servicer may be limited in its ability to
foreclose on a Mortgaged Property in the event that a borrower defaults under a 
payment agreement, the terms of which require the borrower to pay a Modified    
Scheduled Payment that exceeds the Original Scheduled Payment. If there is a    
default under such a payment plan agreement, the Master Servicer will be        
required to renegotiate the payment plan agreement if the following requirements
are satisfied: (i) the borrower demonstrates a loss of income or other          
reasonable justification for the default; (ii) the borrower demonstrates that it
would be within the borrower's reasonable ability to pay an amount at least     
equal to the Original Scheduled Payment; and (iii) the borrower makes a lump sum
payment equal to the product of (A) the number of months that the borrower is   
delinquent under the existing payment plan agreement and (B) the new payment    
required to be made each month under the renegotiated payment plan agreement. If
the borrower does not cure the default, then the Master Servicer may take such  
action against the borrower and the Mortgaged Property as may be permitted      
pursuant to the terms of the Mortgage and Mortgage Note. If any Unpaid Principal
Balance (due to the possible delays in the amortization of principal during a   
Forbearance Period) or Arrearage remains unpaid at the original maturity for a  
Mortgage Loan, the borrower's obligation to repay such remaining amounts        
generally will be extended for the period of time (not to exceed ten years)     
required to repay in full the Unpaid Principal Balance and the Arrearage based  
on the Modified Scheduled Payment in effect on the original maturity date of the
Mortgage Loan. The limitation on the Master Servicer's ability to foreclose may 
extend the weighted average life of the Certificates. See "The Mortgage         
Pool--The Section 203(b) and 703 Insurance Programs--SERVICING OF THE MORTGAGE  
LOANS" herein.                                                                  

LIMITED OBLIGATIONS                                                             

 The Certificates will not represent an interest in or obligation of the
Depositor, the Master Servicer, the Mortgage Loan Seller, the Trustee, the      
Fiscal Agent or any of their respective affiliates. The only obligations of the 
foregoing entities with respect to the Certificates or any Mortgage Loan will be
the obligations of the Mortgage Loan Seller pursuant to certain limited         
representations and warranties made with respect to the Mortgage Loans and of   
the Master Servicer with respect to its servicing obligations under the         
Agreement (including the limited obligation to make certain P&I Advances).      
Neither the Offered Certificates nor the underlying Mortgage Loans will be      
guaranteed or insured by any governmental agency or instrumentality, or by the  
Depositor, the Master Servicer, the Mortgage Loan Seller, the Trustee, the      
Fiscal Agent or any of their respective affiliates. Proceeds of the assets      
included in the Trust Fund (including the Mortgage Loans) will be the sole      
source of payments on the Offered Certificates, and there will be no recourse to
the Depositor, the Master Servicer, the Mortgage                                

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Loan Seller, the Trustee, the Fiscal Agent or any other entity in the event that
such proceeds are insufficient or otherwise unavailable to make all payments    
provided for under the Offered Certificates.                                    

 THE MORTGAGE POOL

GENERAL                                                                         

   The Mortgage Pool will consist of approximately 6,738 mortgage loans (the
"Mortgage Loans") that are expected to have, as of April 1, 1997 (the "Cut-off  
Date"), an aggregate Unpaid Principal Balance, exclusive of Arrearages, of      
approximately $272,574,770 (the "Cut-off Date Pool Unpaid Principal Balance"),  
an aggregate Arrearage of approximately $53,585,190 (the "Cut-off Date Pool     
Arrearage"), and an aggregate Legal Balance of approximately $326,159,960 (the  
"Cut-off Date Pool Legal Balance"). The Mortgage Loans were acquired by the     
Mortgage Loan Seller, an affiliate of the Depositor, from the United States     
Department of Housing and Urban Development ("HUD") in 1996.                    

 Each Mortgage Loan is a fixed-rate or adjustable-rate loan secured by a
first lien on residential real property (the "Mortgaged Property") and generally
was originated as a 30-year, fully amortizing loan primarily under HUD's Section
203(b) or 703 mortgage insurance programs. See "--The Section 203(b) and 703    
Insurance Programs" below for a general description of the related program      
requirements. A limited number of Mortgage Loans had longer or shorter original 
terms to maturity and/or had graduated payments; however, the period of any     
reduced payment with respect to any Mortgage Loans that had graduated payments  
is now over. Each Mortgage Loan defaulted, and after default, the Mortgage Loan 
was determined by HUD to be eligible for forbearance relief under its Assignment
Program and was assigned to HUD. To be eligible for such relief, HUD must       
determine that the default was due to a one time event beyond the borrower's    
control and that the borrower demonstrated both an ability and willingness to   
repay all amounts owed in lieu of foreclosure. Forbearance relief under the     
Assignment Program generally resulted in a reduction and/or suspension of the   
borrower's obligation to make scheduled monthly payments of principal and       
interest required under the loan's original terms (the "Original Scheduled      
Payments") for a period (the "Forbearance Period") which typically extended for 
36 months (the payment, if any, made by the borrower during the Forbearance     
Period, the "Forbearance Payment"). In each case, following the expiration of   
the Forbearance Period, the borrower's "Legal Balance" was equal to the sum of  
the Unpaid Principal Balance plus any Arrearage. The "Unpaid Principal Balance" 
equaled the unpaid principal balance of the Mortgage Loan as of the commencement
of the Forbearance Period reduced by amounts, if any, paid in respect of such   
unpaid principal balance during the Forbearance Period. The "Arrearage" equaled 
the sum of all accrued but unpaid interest on the Mortgage Loan at the end of   
the Forbearance Period and the amount of any tax and insurance advances made    
with respect to the Mortgage Loan from the acquisition of the Mortgage Loan by  
the Mortgage Loan Seller to but not including the Cut-off Date and, in certain  
cases, accrued but unpaid interest prior to the transfer of servicing to the    
Master Servicer.                                                                

   Following the expiration of the Forbearance Period, each borrower was and
is required to make a payment (the "Modified Scheduled Payment") generally in an
amount at least equal to the Original Scheduled Payment plus, to the extent of  
the borrower's ability to pay, an additional amount to be applied to reduce the 
Arrearage (the "Arrearage Component"). The Arrearage Component generally will be
reviewed by the Master Servicer on an annual basis and may be increased or      
decreased based on the borrower's ability to pay. The Unpaid Principal Balance  
of each Mortgage Loan will bear interest at a specified rate (as to such        
Mortgage Loan, the "Mortgage Rate"); the Arrearage does not accrue interest. If 
any Unpaid Principal Balance (due to the possible delays in the amortization of 
principal during a Forbearance Period) or Arrearage remains unpaid at the       
original maturity for a Mortgage Loan, the borrower's obligation to repay such  
remaining amounts generally will be extended (the "Additional Extension         
Period"). It is anticipated that the Additional Extension Period will be the    
period of time required to repay in full the Unpaid Principal Balance and the   
Arrearage, not to exceed                                                        

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10 years, based on the Modified Scheduled Payment in effect on the original     
maturity date of the Mortgage Loan. Substantial Arrearage could remain          
outstanding following the final payment of Unpaid Principal Balance on any      
Mortgage Loan.                                                                  

     Except where indicated otherwise, references to percentages of the Mortgage
Loans under "The Mortgage Pool" herein are references to percentages of the     
Cut-off Date Pool Unpaid Principal Balance.                                     

ALL OF THE MORTGAGE LOANS ARE REPERFORMING MORTGAGE LOANS. AS OF THE  
CUT-OFF DATE, EXCEPT WITH RESPECT TO APPROXIMATELY 6.00% OF THE MORTGAGE LOANS, 
BY AGGREGATE UNPAID PRINCIPAL BALANCE AS OF THE CUT-OFF DATE, THE BORROWER UNDER
EACH MORTGAGE LOAN HAS MADE AT LEAST 97.5% OF THE AGGREGATE AMOUNT OF ORIGINAL  
SCHEDULED PAYMENTS DUE FOR THE FOUR CALENDAR MONTHS PRECEDING THE CUT-OFF DATE  
(REGARDLESS OF EITHER THE TIMING OF RECEIPT OF SUCH PAYMENTS OR THE PAYMENT     
HISTORY OF SUCH LOANS PRIOR TO DECEMBER 1996). SEE RISK FACTORS--NATURE OF THE  
MORTGAGE LOANS" HEREIN.                                                         

  Approximately 3.1% of the Mortgage Loans have adjustable Mortgage Rates.
Such Mortgage Loans provide for annual adjustment to the Mortgage Rate thereon  
based on the weekly average yield on U.S. Treasury securities adjusted to a     
constant maturity of one year as published by the Federal Reserve Board in      
Statistical Release H.15(519) (the "Index"), and for a corresponding adjustment 
to the monthly payments due thereon, in each case subject to the limitations    
described below. On each annual Adjustment Date, the Mortgage Rate on each such 
Mortgage Loan will be adjusted to equal the sum of (a) the Index and (b) a fixed
percentage amount (a "Gross Margin"); provided, however, that the Mortgage Rate 
will not increase or decrease in substantially all cases by more than 1.0% on   
any related Adjustment Date (the "Periodic Rate Cap"), and will not exceed a    
specified maximum Mortgage Rate over the life of such Mortgage Loan (the        
"Maximum Mortgage Rate") or be less than a specified minimum Mortgage Rate over 
the life of such Mortgage Loan (the "Minimum Mortgage Rate"). Effective with the
first payment due on each Mortgage Loan after each related Adjustment Date, the 
portion of the monthly payment allocable to principal and interest will be      
adjusted to an amount that will amortize fully the outstanding principal balance
of the related Mortgage Loan over its remaining term, and pay interest at the   
Mortgage Rate as so adjusted. Due to the application of the Periodic Rate Caps  
and the Maximum Mortgage Rates, the Mortgage Rate on each such Mortgage Loan, as
adjusted on any related Adjustment Date, may be less than the sum of the Index  
and Gross Margin, rounded as described herein. As of the Cut-off Date, the      
adjustable-rate Mortgage Loans had Gross Margins ranging from 0.00% to 2.98%,   
Minimum Mortgage Rates ranging from 1.00% to 5.50% per annum and Maximum        
Mortgage Rates ranging from 10.50% per annum to 15.50% per annum. With respect  
to the adjustable-rate Mortgage Loans as of the Cut-off Date, the weighted      
average Gross Margin was approximately 2.141%, the weighted average Minimum     
Mortgage Rate was approximately 3.26% per annum, the weighted average Maximum   
Mortgage Rate was approximately 13.16% per annum and the weighted average       
Mortgage Rate was approximately 7.16% per annum.                                

  No Mortgage Loan will be covered by a primary mortgage insurance policy.
Substantially all of the Mortgage Loans have scheduled monthly payments due on  
the first day of the month (with respect to each Mortgage Loan, a "Due Date").  
Each Mortgage Loan will contain either a customary "due-on-sale" clause or will 
be assumable by a creditworthy purchaser of the related Mortgaged Property.     

   Each Mortgage Loan had a Mortgage Rate as of the Cut-off Date of not less
than 0.38% per annum and not more than 17.50% per annum and as of the Cut-off   
Date, the weighted average Mortgage Rate was approximately 9.763% per annum.    

    The weighted average remaining term to maturity of the Mortgage Loans will
be approximately 19 years and 2 months as of the Cut-off Date. None of the      
Mortgage Loans will have a remaining term to maturity of greater than 404 months
as of the Cut-off Date. The latest original maturity date of any Mortgage Loan  
is in December 2030. 164 Mortgage Loans with a Legal Balance as of the Cut-off  
Date of approximately $4,275,442 have already passed their related maturity date
due to the effect of the Forbearance Period. The actual maturity date for each  
Mortgage Loan will generally extend                                             

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beyond the stated maturity date by at least the length of the related           
Forbearance Period and may extend beyond the stated maturity date significantly 
longer due to limitations on the ability of the Master Servicer to foreclose as 
described herein.                                                               

   The Mortgage Loans are expected to have the additional characteristics as
of the Cut-off Date listed on Appendix A hereto.                                

THE SECTION 203(B) AND 703 INSURANCE PROGRAMS                                   

MORTGAGE LOAN ORIGINATION CRITERIA                                    

 The following origination criteria are the current criteria for the HUD
Section 203(b) and 703 Mortgage Insurance Programs. Under the Section 203(b) and
703 Mortgage Insurance Programs, insurable mortgages are subject to size and    
loan-to-value restrictions. Currently, an insurable mortgage cannot exceed the  
lesser of (i) the statutory loan limit for the area and (ii) the applicable     
loan-to-value limit.                                                            

     The statutory loan limit is generally equal to the lesser of (i) the amount
derived from applying a fixed percentage (the "Limit Percentage") to a HUD      
determined median home price (the "Median Price") for single, two, three and    
four family homes in the related locale and (ii) 75% of the related size        
limitation in effect on September 30, 1992 for mortgages eligible for purchase  
by the Federal Home Loan Mortgage Corporation ("Freddie Mac"). The Limit        
Percentage for mortgages on single, two, three and four family homes is equal to
95%, 107%, 130% and 150%, respectively.                                         

     For the purposes of the loan-to-value criteria, properties are divided into
three main groups. The first group consists of principal residences (i) approved
for mortgage insurance (or for a Department of Veterans Affairs loan guaranty)  
before the start of construction, (ii) covered by an acceptable ten-year        
warranty plan or (iii) completed more than one year prior to the date of the    
application for the FHA Insurance. For this first group of properties, the      
maximum loan-to-value ratio (the "Maximum LTV") is as follows: (a) if the       
appraised value of the property is less than $50,000, the Maximum LTV is 97% of 
the appraised value, (b) if the appraised value of the property exceeds $50,000,
the Maximum LTV is 97% of the first $25,000 of the appraised value, 95% of the  
amount between $25,000 and $125,000, and 90% of any remaining amount over       
$125,000 or (c) certain higher percentages of up to 100% in certain instances if
the borrower qualifies as a veteran. The second group of properties includes    
principal residences which were less than one year old, not approved for        
insurance prior to construction and not covered by an acceptable warranty plan. 
These properties are subject to a Maximum LTV of 90% of appraised value. The    
third group of properties, secondary residences, is subject to a Maximum LTV of 
85%.                                                                            

    Closing costs are often financed under the Mortgage Loan and, accordingly,
notwithstanding the Maximum LTVs described above, there is an overall Maximum   
LTV ceiling applicable to any loan made to a borrower who is not a veteran. In  
such cases, the Maximum LTV is 98.75% of the appraised value of the property    
(97.75%, in the case of a mortgage with an appraised value in excess of         
$50,000), plus the amount of any mortgage insurance premium paid at the time the
mortgage is insured.                                                            

   In connection with HUD's credit analysis in the origination of a Mortgage
Loan, a prospective borrower must meet certain credit standards, make a         
sufficient downpayment (which varies by program) and have income which is       
sufficient to support the monthly payments. The acceptability of credit risk is 
determined by analyzing each borrower's credit history, stability and adequacy  
of income to support the mortgage and other obligations, and assets to close the
transaction.                                                                    

    Two separate debt-to-income ratios are computed by the lender to determine
the borrower's ability to repay the debt. Absent compensating factors, the total
mortgage payment generally does not exceed 20% of the borrower's gross income   
and the total mortgage payment and all limited recurring charges (I.E., real    
estate loans, child support, alimony) generally do not exceed 41% of gross      
income. HUD expects the lender to require sufficient documentation to support   
its decision to approve the                                                     

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mortgage loan. Credit documents may not be more than 120 days old. The          
application materials include a mortgage credit analysis worksheet, a           
residential mortgage credit report, a verification of employment and most recent
pay stub, a verification of deposit and most recent bank statements, federal    
income tax returns for the past two years, a verification of payment history of 
previous mortgages and an appraisal.                                            

HUD INSURANCE ASSIGNMENT PROGRAM                                      

The HUD Insurance Assignment Program offers qualified borrowers an    
opportunity to avoid foreclosure and retain their homes where at least three    
full monthly installments due on the mortgage note are unpaid after application 
of any partial payments that may have been accepted, but not yet applied to the 
mortgage account.                                                               

The procedures for the assignment of an insured mortgage include an   
affirmative determination by the mortgagee that certain borrower eligibility    
criteria have been met, including among other things (i) a determination that   
circumstances beyond the borrower's control caused the default and rendered the 
borrower unable to correct the delinquency within a reasonable time, taking into
consideration any curtailments of family income, uninsured damage to the        
mortgaged property, expenses related to any death or illness and other factors  
and (ii) a determination that there is a reasonable prospect that the borrower  
can resume full mortgage payments after a temporary period of reduced or        
suspended payments, not exceeding 36 months, and will be able to pay the        
mortgage in full by its original maturity date extended, if necessary, by up to 
10 years.                                                                       

  In certain instances, a mortgage loan is not eligible for the Assignment
Program. These instances include but are not limited to cases where (i) the     
mortgaged property has been abandoned or vacant for more than 60 days or (ii)   
the borrower (A) has indicated that it has no intention of fulfilling its       
obligation under the mortgage, (B) has two or more rental properties but does   
not apply rental income from the mortgaged property under review to the debt    
service on that property or (C) is a corporation or a partnership.              

    In any case where the mortgagee has determined that such criteria have not
been met, the borrower may present HUD with a direct request such approval. In  
all cases, however, the ultimate decision as to whether a mortgage loan will be 
accepted for assignment is made by HUD.                                         

SERVICING OF THE MORTGAGE LOANS                                       

   The Master Servicer will comply with each payment plan agreement, oral or
written, until the term thereof expires or until there is a default thereunder. 
As long as the borrower under a payment plan agreement makes the payments due   
under the payment plan agreement, the Master Servicer will accept and apply such
payments (exclusive of escrow payments and "pay-aheads") first, to pay interest 
then due and owing in respect of such loan; second, to pay scheduled principal  
then due and owing in respect of such loan; third, to repay Arrearage of such   
loan; and fourth, to prepay Unpaid Principal Balance of such loan.              

 The Master Servicer will review the financial status of borrowers under
payment plan agreements annually. If, based on such review, it would not        
reasonably be within the borrower's ability to pay a Modified Scheduled Payment 
in an amount that is at least equal to the Original Scheduled Payment, the      
Master Servicer may choose not to continue the payment plan agreement and may   
take such action against the borrower and the Mortgaged Property as may be      
permitted pursuant to the terms of the Mortgage and Mortgage Note.              

  A borrower may cure a default under a payment plan agreement by making a
lump sum payment in an amount necessary to cure the default. Additionally, if   
there is a default under a payment plan agreement, the terms of which require   
the borrower to pay a Modified Scheduled Payment that exceeds the Original      
Scheduled Payment, the Master Servicer will renegotiate the payment plan        
agreement if the following requirements are satisfied: (i) the borrower         
demonstrates a loss of income or other reasonable justification for the default;
(ii) the borrower demonstrates that it would be within the borrower's reasonable
ability to pay an amount at least equal to the Original Scheduled Payment;      

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and (iii) the borrower makes a lump sum payment equal to the product of (A) the 
number of months that the borrower is delinquent under the existing payment plan
agreement and (B) the new payment required to be made each month under the      
renegotiated payment plan agreement. If the borrower does not cure the default, 
then the Master Servicer may take such action against the borrower and the      
Mortgaged Property as may be permitted pursuant to the terms of the Mortgage and
Mortgage Note.                                                                  

If any Unpaid Principal Balance (due to the possible delays in the    
amortization of principal during a Forbearance Period) or Arrearage remains     
unpaid at the original maturity for a Mortgage Loan, the borrower's obligation  
to repay such remaining amounts generally will be extended (the "Additional     
Extension Period"). The Additional Extension Period generally will be the period
of time (not to exceed ten years) required to repay in full the Unpaid Principal
Balance and the Arrearage based on the Modified Scheduled Payment in effect on  
the original maturity date of the Mortgage Loan.                                

REPRESENTATIONS AND WARRANTIES                                                  

     The Mortgage Loan Seller will make representations and warranties as to the
accuracy in all material respects of certain identifying information furnished  
to the Trustee in respect of each such Mortgage Loan (E.G., Loan-to-Value Ratio 
(based on the Legal Balance of such Mortgage Loan and the average of the most   
recent broker's price opinions), principal balance as of the Cut-off Date,      
Mortgage Rate and maturity). In addition, the Mortgage Loan Seller will         
represent and warrant that, as of the Cut-off Date, except with respect to      
approximately 6.00% of the Mortgage Loans, by aggregate Unpaid Principal Balance
as of the Cut-off Date, the borrower under each Mortgage Loan will have made at 
least 97.5% of the aggregate amount of Original Scheduled Payments due for the  
four calendar months preceding the Cut-off Date (regardless of either (i) the   
timing of receipt of such payments or (ii) the payment history of such loans    
prior to December 1996). The Mortgage Loan Seller will also make representations
regarding ownership of the Mortgage Loans, lien status, title and taxes, among  
other items. See the Agreement for the exact representations and warranties to  
be made by the Mortgage Loan Seller. Upon a breach of any such representation of
the Mortgage Loan Seller that materially and adversely affects the value of a   
Mortgage Loan or the interests of the Certificateholders therein, the Mortgage  
Loan Seller will be obligated either to cure the breach in all material         
respects, repurchase the Mortgage Loan at the purchase price provided in the    
Agreement (the "Purchase Price") or substitute for such Mortgage Loan as        
described below.                                                                

   If the Mortgage Loan Seller discovers or receives notice of any breach of
its representations or warranties with respect to a Mortgage Loan, the Mortgage 
Loan Seller may, rather than repurchase the Mortgage Loan as provided above,    
remove such Mortgage Loan from the Trust Fund (a "Deleted Mortgage Loan") and   
substitute in its place one or more Mortgage Loans (each, a "Substitute Mortgage
Loan"), but only if such substitution is effected within two years of the date  
of initial issuance of the Certificates (plus permissible extensions). Any      
Substitute Mortgage Loan will, on the date of substitution, among other things  
(i) have an outstanding principal balance, after deduction of all scheduled     
payments due in the month of substitution, not in excess of (and not more than  
$10,000 less than) the outstanding principal balance, after deduction of all    
unpaid scheduled payments due as of the date of substitution, of the Deleted    
Mortgage Loan, (ii) have a Mortgage Rate not less than (and not more than 1%    
greater than) the Mortgage Rate of the Deleted Mortgage Loan, (iii) have a Net  
Mortgage Rate not less than (and not more than 1% greater than) the Mortgage    
Rate of the Deleted Mortgage Loan, (iv) have a remaining term to maturity not   
greater than (and not more than one year less than) that of the Deleted Mortgage
Loan, (v) pay the same or a greater percentage of its Original Scheduled        
Payment, (vi) have an Arrearage, if any, not greater than the Arrearage of the  
Deleted Mortgage Loan and (vii) comply with all of the representations and      
warranties set forth in the applicable mortgage loan purchase agreement as of   
the date of substitution. In connection with any substitution, an amount equal  
to the difference between the Purchase Price of the Deleted Mortgage Loan and   
the outstanding principal balance of the Substitute Mortgage Loan (after        
deduction of all                                                                

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scheduled payments due in the month of substitution), together with one month's 
interest at the applicable Net Mortgage Rate on such balance, will be deposited 
in the Certificate Account and distributed to Certificateholders on the first   
Distribution Date following the Prepayment Period in which the substitution     
occurred. In the event that one Substitute Mortgage Loan is substituted for more
than one Deleted Mortgage Loan, or more than one Substitute Mortgage Loan is    
substituted for one or more Deleted Mortgage Loans, then the amount described in
clause (i) will be determined on the basis of aggregate principal balances, the 
rates described in clauses (ii) and (iii) with respect to Deleted Mortgage Loans
will be determined on the basis of weighted average Mortgage Rates and Net      
Mortgage Rates, as the case may be, and the terms described in clause (iv) will 
be determined on the basis of weighted average remaining terms to maturity.     

   The obligation to repurchase or to substitute Mortgage Loans as described
above constitutes the sole remedy available to the Certificateholders or the    
Trustee for any breach of the above-described representations.                  

 YIELD ON THE CERTIFICATES

DELAY IN DISTRIBUTIONS ON THE CERTIFICATES                                      

  The effective yield to holders of the Certificates of each class will be
less than the yields otherwise produced by their respective Pass-Through Rates  
and purchase prices because (i) on the first Distribution Date, one month's     
interest is payable thereon even though 54 days will have elapsed from the date 
on which interest begins to accrue thereon, (ii) on each succeeding Distribution
Date the interest payable thereon is the interest accrued during the month      
preceding the month of such Distribution Date, which ends 24 days prior to such 
Distribution Date and (iii) during each Interest Accrual Period, interest       
accrues on a Certificate Balance or Notional Amount that is less than the       
Certificate Balance or Notional Amount of such class actually outstanding for   
the first 24 days of such Interest Accrual Period.                              

CERTAIN SHORTFALLS IN COLLECTIONS OF INTEREST                                   

When a principal prepayment in full is made on a Mortgage Loan, the   
mortgagor is charged interest only for the period from the Due Date of the      
preceding monthly payment up to the date of such prepayment, instead of for a   
full month. When a partial principal prepayment is made on a Mortgage Loan, the 
mortgagor is not charged interest on the amount of such prepayment for the month
in which such prepayment is made. In addition, the application of the Soldiers' 
and Sailors' Civil Relief Act of 1940, as amended (the "Relief Act"), to any    
Mortgage Loan will adversely affect, for an indeterminate period of time, the   
ability of the Master Servicer to collect full amounts of interest on such      
Mortgage Loan. See "Certain Legal Aspects of the Mortgage Loans--Soldiers' and  
Sailors' Civil Relief Act of 1940" in the Prospectus. The Master Servicer is    
obligated to pay from its own funds interest shortfalls attributable to full and
partial prepayments by the mortgagors on the Mortgage Loans, but only to the    
extent of the aggregate of its Servicing Fees (as defined herein) for the       
related Due Period. Accordingly, the effect of (i) any principal prepayments on 
the Mortgage Loans, to the extent that any resulting shortfall (a "Prepayment   
Interest Shortfall") exceeds any payments made by the Master Servicer from its  
own funds ("Compensating Interest") or (ii) any shortfalls resulting from the   
application of the Relief Act, will be to reduce the aggregate amount of        
interest collected that is available for distribution to Certificateholders     
entitled to payments of interest. Any such shortfalls will be allocated among   
the Certificates entitled to payments of interest, as provided under            
"Description of the Certificates--Distributions on the Certificates" herein.    

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GENERAL PREPAYMENT CONSIDERATIONS                                               

The rate of principal payments on each class of P&I Certificates, the 
aggregate amount of distributions on each class of Certificates and the yield to
maturity of each class of Certificates will be related to the rate and timing of
payments of principal on the Mortgage Loans. In addition, the aggregate of      
distributions in respect of, and the yield to maturity of, the Class A-WAC      
Certificates will be related to the rate and timing of the payment of the       
Arrearage. The rate of principal payments and Arrearage payments on the Mortgage
Loans will in turn be affected by the amortization schedules of such Mortgage   
Loans and by the rate of principal prepayments thereon (including for this      
purpose payments resulting from refinancings, liquidations of the Mortgage Loans
due to defaults, casualties, condemnations and repurchases, whether optional or 
required, by the Depositor or the Master Servicer, as the case may be). The     
Mortgage Loans may be prepaid by the mortgagors at any time without payment of  
any prepayment fee or penalty. As described under "Description of the           
Certificates--Distributions on the Certificates" herein, prior to the           
Distribution Date in May 2002, all principal prepayments on the Mortgage Loans  
will be allocated to the Senior Certificates (other than the Class IO           
Certificates). Thereafter, as further described herein, during certain periods, 
subject to certain loss and delinquency criteria described herein, the Senior   
Prepayment Percentage may continue to be disproportionately large (relative to  
the Senior Percentage) and the percentage of principal prepayments payable to   
the Class B Certificates may continue to be disproportionately small.           
Accordingly, the Class B Certificates will not be entitled to any principal     
prepayments for at least the first five years after the Closing Date (unless the
Certificate Balances of the Senior P&I Certificates have been reduced to zero   
before the end of such period), and may receive no prepayments or a             
disproportionately small portion of prepayments relative to the related Class B 
Percentage during certain periods thereafter. In addition, as described herein, 
prepayments will be allocated by the Master Servicer to any unpaid Arrearage    
prior to any allocation to Unpaid Principal Balance. The effect of that         
allocation will be to pay the Class A-WAC Certificates in reduction of their    
Certificate Balances prior to payments on any P&I Certificates regardless of the
Senior Prepayment Percentage then in effect.                                    

   Prepayments, liquidations and purchases of the Mortgage Loans will result
in distributions in respect of principal to the holders of the class or classes 
of Certificates then entitled to receive such distributions, and distributions  
in respect of Arrearage to the Class A-WAC Certificates, that otherwise would be
distributed over the remaining terms of the Mortgage Loans. See "Maturity and   
Prepayment Considerations" in the prospectus. Since the rates of payment of     
principal and Arrearage on the Mortgage Loans will depend on future events and a
variety of factors, no assurance can be given as to such rates or the rate of   
principal prepayments. The extent to which the yield to maturity of any class of
P&I Certificates may vary from the anticipated yield will depend upon the degree
to which they are purchased at a discount or premium and the degree to which the
timing of payments thereon is sensitive to prepayments on the Mortgage Loans.   
Further, in the case of any such Certificate purchased at a discount, an        
investor should consider the risk that a slower than anticipated rate of        
principal payments on the Mortgage Loans could result in an actual yield to such
investor that is lower than the anticipated yield and, in the case of any such  
Certificate purchased at a premium, the risk that a faster than anticipated rate
of principal payments could result in an actual yield to such investor that is  
lower than the anticipated yield. In general, the earlier a prepayment of       
principal on the Mortgage Loans, the greater will be the effect on the          
investor's yield to maturity. As a result, the effect on an investor's yield of 
principal payments occurring at a rate higher (or lower) than the rate          
anticipated by the investor during the period immediately following the issuance
of such Certificates would not be fully offset by a subsequent like reduction   
(or increase) in the rate of principal payments. The yield to maturity on the   
Class IO Certificates and Class A-WAC Certificates will be extremely sensitive  
to prepayments on the Mortgage Loans, and the yield to maturity on the Class    
A-WAC Certificates will also be extremely sensitive to payments in respect of   
Arrearage on the Mortgage Loans. See "--Yield Sensitivity of the Class IO       
Certificates" and "--Yield Sensitivity of the Class AWAC Certificates" herein.  

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   It is highly unlikely that the Mortgage Loans will prepay at any constant
rate until maturity or that all of the Mortgage Loans will prepay at the same   
rate. Moreover, the timing of prepayments on the Mortgage Loans may             
significantly affect the actual yield to maturity on the Certificates, even if  
the average rate of principal payments experienced over time is consistent with 
an investor's expectation.                                                      

    The rate of payments (including prepayments) on pools of mortgage loans is
influenced by a variety of economic, geographic, social and other factors. If   
prevailing mortgage rates fall significantly below the Mortgage Rates on the    
Mortgage Loans, the rate of prepayment and refinancing (and, potentially, the   
rate of payment in respect of Arrearage) would be expected to increase.         
Conversely, if prevailing mortgage rates rise significantly above the Mortgage  
Rates on the Mortgage Loans, the rate of prepayment on the Mortgage Loans (and, 
potentially, the rate of payment in respect of Arrearage) would be expected to  
decrease. Other factors affecting prepayment of mortgage loans include changes  
in mortgagors' housing needs, job transfers, unemployment, mortgagors' ability  
to obtain alternative credit, mortgagors' net equity in the mortgaged properties
and servicing decisions. There can be no certainty as to the rate of prepayments
on the Mortgage Loans or the rate of payment in respect of Arrearage during any 
period or over the life of the Certificates. See "Yield Considerations" and     
"Maturity and Prepayment Considerations" in the Prospectus.                     

   Because the Mortgage Rates on over 96.9% of the Mortgage Loans are fixed,
such rates will not change in response to changes in market interest rates.     
Accordingly, if mortgage market interest rates or market yields for securities  
similar to the Certificates were to rise, the market value of the Certificates  
may decline.                                                                    

    As described under "Description of the Certificates--Allocation of Losses;
Subordination", amounts otherwise distributable to holders of each class of     
Class B Certificates may be made available to protect the holders of the Senior 
Certificates and the classes, if any, of Class B Certificates with a lower      
numerical class designation, against interruptions in distributions due to      
certain borrower delinquencies, to the extent not covered by P&I Advances. Such 
delinquencies may affect the yield to investors on each class of Class B        
Certificates, and, even if subsequently cured, will affect the timing of the    
receipt of distributions by the holders of such classes of Class B Certificates.
In addition, a larger than expected rate of delinquencies or losses will also   
affect the rate of principal payments on the Class B Certificates if it delays  
the scheduled reduction of the Senior Prepayment Percentage or triggers an      
increase of the Senior Prepayment Percentage to 100%.                           

WEIGHTED AVERAGE LIFE                                                           

  Weighted average life refers to the amount of time that will elapse from
the date of issuance of a security until each dollar of principal of such       
security will be repaid to the investor. The weighted average life of the       
Certificates of each class will be influenced by the rate at which principal on 
the Mortgage Loans is paid, which may be in the form of scheduled payments or   
prepayments (including prepayments of principal by the borrower as well as      
amounts received by virtue of condemnation, insurance or foreclosure with       
respect to the Mortgage Loans).                                                 

     Distributions of principal to the Certificates will be made in the priority
described herein. The timing of commencement of principal distributions to each 
class of Senior Certificates (other than the Class IO Certificates) and to each 
class of Class B Certificates and the weighted average life of each such class  
will be affected by the rates of prepayment on the Mortgage Loans experienced   
both before and after the commencement of principal distributions on each such  
class.                                                                          

Prepayments on mortgage loans are commonly measured relative to a     
prepayment standard or model. The model used in this Memorandum, the Constant   
Prepayment Rate model ("CPR") assumes that the outstanding principal balance of 
a pool of mortgage loans prepays at a specified constant annual rate or CPR. In 
generating monthly cash flows, this rate is converted to an equivalent constant 
monthly rate. No representation is made that the Mortgage Loans will prepay at  
that or any other rate.                                                         

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 The following table indicates the percentage of the initial Certificate
Balance of the indicated Classes of the Certificates that would be outstanding  
after each of the dates shown at various constant percentages of CPR and the    
corresponding weighted average lives of such Certificates. The table is based on
the following assumptions (the "Modeling Assumptions"): (i) the Mortgage Pool   
consists of 31 fixed-rate Mortgage Loans with the characteristics set forth in  
the table below, (ii) distributions on such Certificates are received, in cash, 
on the 25th day of each month, commencing in May 1997, (iii) the Mortgage Loans 
prepay at the constant percentages of CPR indicated, (iv) no defaults or        
delinquencies occur in the payment by mortgagors of principal and interest on   
the Mortgage Loans and no shortfalls due to the application of the Relief Act   
are incurred, (v) no person purchases from the Trust Fund any Mortgage Loan     
pursuant to any obligation or option under the Agreement, except as stated      
herein, (vi) scheduled monthly payments on the Mortgage Loans are received on   
the first day of each month commencing in May 1997, and are computed prior to   
giving effect to any prepayments received in the prior month, (vii) prepayments 
representing payment in full of individual Mortgage Loans are received on the   
last day of each month commencing in April 1997, (viii) the Certificates are    
purchased on April 30, 1997, (ix) Modified Scheduled Payments (for Mortgage     
Loans that have Arrearage) as a percentage of Original Scheduled Payments (such 
percentage, the "Arrearage Repayment Percentage") are equal to approximately    
120% at all levels of CPR, (x) expenses and fees of 0.50375% of the Unpaid      
Principal Balances of the Mortgage loans are paid as provided herein to the     
Master Servicer and the Trustee, (xi) expenses and fees of 0.40375% of the      
aggregate outstanding Arrearage are paid as provided herein to the Master       
Servicer and the Trustee and the Arrearage was assumed to pay at 8% CPR and     
(xii) no Mortgage Loan will mature later than 480 months after the Cut-off Date.

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                                 ASSUMED MORTGAGE LOAN CHARACTERISTICS                                         

                          Unpaid Principal                              Monthly Payment in    Remaining Term to
                              Balance                                   respect of Principal    Stated Maturity
                       as of the Cut-off Date    Mortgage Rate(%)         and Interest(1)          (Months)    
                       ----------------------    ----------------         ---------------          --------    
                                                                                                               
                          $     23,903.46             7.7740               $    3,075.69                8      
                               162,592.82             8.3094                    8,733.64               20      
                               447,656.63             8.3686                   16,107.78               31      
                               830,224.70             7.7713                   22,182.51               43      
                             1,065,794.04             7.9706                   23,196.28               55      
                             1,579,417.70             8.0213                   29,674.81               66      
                             1,619,749.89             8.6552                   26,968.17               79      
                             1,871,545.42             9.0546                   28,724.34               90      
                             2,130,930.68             8.4808                   29,194.13              103      
                             2,440,368.33             8.7752                   31,628.97              114      
                             2,814,336.77             8.6221                   33,861.73              127      
                             2,961,196.65             9.1048                   34,691.51              138      
                             3,531,254.32             9.6236                   40,557.88              150      
                             2,390,238.91             9.4350                   26,065.22              163      
                             2,610,194.06             9.4535                   27,537.87              175      
                             3,259,561.99             9.9624                   34,388.56              187      
                             4,723,412.35             9.9350                   48,508.31              199      
                             4,744,875.83            10.2970                   48,750.62              211      
                             6,536,259.48             9.7592                   63,605.66              223      
                             9,991,563.39             9.9518                   96,753.67              235      
                             9,929,656.80            10.0430                   95,378.45              246      
                            10,261,814.29            10.1590                   97,904.25              259      
                            18,947,081.14            10.1590                  178,585.80              271      
                            35,012,407.08             9.5693                  312,179.10              283      
                            26,747,861.76             9.7746                  239,971.80              294      
                            29,270,032.53            10.0480                  265,810.00              306      
                            33,150,734.87             9.8264                  293,203.90              319      
                            33,464,577.37             9.8689                  294,983.60              330      
                            18,472,042.79             9.5360                  157,377.30              341      
                             1,583,484.07             9.2232                   12,996.19              360      
                            53,585,190.00(2)            N/A                   423,043.00(3)           480      
                           --------------                                   ------------              ---      
Total or Weighted                                                                                              
Average...............    $326,159,960.12             9.7628(4)            $3,045,640.74              275(5)   
                           ==============             ======                ============              ===      

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

(1)  Calculated with respect to each Mortgage Loan based on remaining term to   
stated maturity.                                                      

(2)  Arrearage as of the Cut-off Date.                                          

(3)  Monthly Payment of Arrearage.                                              

(4)  Weighted Average Mortgage Rate on Unpaid Principal Balances (but not on    
Arrearage) as of the Cut-off Date.                                    

(5)  Weighted Average Remaining Term to Stated of Maturity does not include the 
Remaining Term to Stated Maturity of the Arrearage of 480 months.     

There will be discrepancies between the characteristics of the actual 
Mortgage Loans and the characteristics assumed in preparing the table below. For
instance, some of the Mortgage Loans are adjustable-rate Mortgage Loans, but the
table has been prepared assuming that all the Mortgage                          

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Loans are fixed-rate Mortgage Loans. Any such discrepancy may have an effect    
upon the percentages of the initial Certificate Balances outstanding (and the   
weighted average lives) of the Classes of Certificates set forth in the table.  
In addition, to the extent that the actual Mortgage Loans included in the       
Mortgage Pool have characteristics that differ from those assumed in preparing  
the tables below, such classes of Certificates may mature earlier or later than 
indicated by the table below. Based on the foregoing assumptions, the tables    
below indicates the weighted average life of each class of Senior P&I           
Certificates, the Class A-WAC Certificates and the Class B-1, Class B-2 and     
Class B-3 Certificates and sets forth the percentage of the initial Certificate 
Balance of each such class of Certificates that would be outstanding after each 
of the dates shown, at various percentages of CPR. Neither the prepayment model 
used herein nor any other prepayment model or assumption purports to be an      
historical description of prepayment experience or a prediction of the          
anticipated rate of prepayment of any pool of mortgage loans, including the     
Mortgage Loans included in the Trust Fund. Variations in the prepayment         
experience and the balance of the Mortgage Loans that prepay may increase or    
decrease the percentages of initial Certificate Balance (and weighted average   
lives) shown in the following table. Such variations may occur even if the      
average prepayment experience of all such Mortgage Loans equals any of the      
specified percentages of the prepayment assumption. The table below assumes the 
Mortgage Loans prepay at specified percentages of CPR; however, due to the      
allocation of principal on a specific Mortgage Loan to Arrearage prior to Unpaid
Principal Balance as described herein, there may be variations from the         
percentages shown even if the Mortgage Loans as a whole prepay at the specified 
percentages of CPR.                                                             

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                                    PERCENT OF INITIAL CERTIFICATE BALANCE OUTSTANDING AT THE                                      
                                                  SPECIFIED PERCENTAGES OF CPR                                                     

                                          CLASS A-1 CERTIFICATES                                   CLASS A-2 CERTIFICATES          
                             -----------------------------------------------         ----------------------------------------------
DISTRIBUTION DATE             0%     3%     6%     8%    10%    12%     14%           0%      3%     6%     8%    10%    12%    14%
-----------------            ---    ---    ---    ---   -----  -----   -----         ---     ---    ---    ---   -----  -----  ----
                                                                                                                                   
Closing Date...............  100    100    100    100    100    100     100          100     100    100    100    100    100    100
April 1998.................   96     88     81     75     70     65      59          100     100    100    100    100    100    100
April 1999.................   92     77     62     53     43     34      25          100     100    100    100    100    100    100
April 2000.................   88     66     45     32     20      8       0          100     100    100    100    100    100     79
April 2001.................   84     56     30     14      0      0       0          100     100    100    100     95     18      0
April 2002.................   79     45     15      0      0      0       0          100     100    100     85      0      0      0
April 2003.................   74     36      3      0      0      0       0          100     100    100     11      0      0      0
April 2004.................   69     27      0      0      0      0       0          100     100     57      0      0      0      0
April 2005.................   64     19      0      0      0      0       0          100     100      6      0      0      0      0
April 2006.................   58     11      0      0      0      0       0          100     100      0      0      0      0      0
April 2007.................   52      4      0      0      0      0       0          100     100      0      0      0      0      0
April 2008.................   46      0      0      0      0      0       0          100      82      0      0      0      0      0
April 2009.................   39      0      0      0      0      0       0          100      44      0      0      0      0      0
April 2010.................   32      0      0      0      0      0       0          100       6      0      0      0      0      0
April 2011.................   25      0      0      0      0      0       0          100       0      0      0      0      0      0
April 2012.................   17      0      0      0      0      0       0          100       0      0      0      0      0      0
April 2013.................    8      0      0      0      0      0       0          100       0      0      0      0      0      0
April 2014.................    0      0      0      0      0      0       0           96       0      0      0      0      0      0
April 2015.................    0      0      0      0      0      0       0           43       0      0      0      0      0      0
April 2016.................    0      0      0      0      0      0       0            0       0      0      0      0      0      0
April 2017.................    0      0      0      0      0      0       0            0       0      0      0      0      0      0
April 2018.................    0      0      0      0      0      0       0            0       0      0      0      0      0      0
April 2019.................    0      0      0      0      0      0       0            0       0      0      0      0      0      0
April 2020.................    0      0      0      0      0      0       0            0       0      0      0      0      0      0
April 2021.................    0      0      0      0      0      0       0            0       0      0      0      0      0      0
April 2022.................    0      0      0      0      0      0       0            0       0      0      0      0      0      0
April 2023.................    0      0      0      0      0      0       0            0       0      0      0      0      0      0
April 2024.................    0      0      0      0      0      0       0            0       0      0      0      0      0      0
April 2025.................    0      0      0      0      0      0       0            0       0      0      0      0      0      0
April 2026.................    0      0      0      0      0      0       0            0       0      0      0      0      0      0
April 2027.................    0      0      0      0      0      0       0            0       0      0      0      0      0      0
  Weighted Average Life in                                                                                                         
Years(1)................... 9.77    4.81  2.87   2.25   1.84   1.56    1.34        17.90   11.87   7.18   5.50   4.46   3.76   3.24
  Weighted Average Life in                                                                                                         
Years(2)................... 9.77    4.81  2.87   2.25   1.84   1.56    1.34        17.90   11.87   7.18   5.50   4.46   3.76   3.24

-----------------                                                               
(1)  The weighted average life of a Certificate is determined by (a) multiplying
  the amount of each distribution of principal by the number of years from
   the date of issuance of the Certificate to the related Distribution Date,
    (b) adding the results and (c) dividing the sum by the initial Certificate
Balance of the Certificate.                                           

(2)  Calculated pursuant to footnote one but assumes the Master Servicer        
exercises its option to purchase the Mortgage Loans. See "Pooling and 
Servicing Agreement--Termination" herein                              

                                                 (TABLE CONTINUED ON NEXT PAGE.)

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                                    PERCENT OF INITIAL CERTIFICATE BALANCE OUTSTANDING AT THE                                      
                                                  SPECIFIED PERCENTAGES OF CPR                                                     

                                           CLASS A-3 CERTIFICATES                               CLASS A-4 CERTIFICATES             
                              --------------------------------------------         ------------------------------------------------
DISTRIBUTION DATE              0%     3%      6%    8%    10%    12%   14%          0%     3%      6%     8%     10%    12%     14%
-----------------             ---    ---     ---   ---   ----   ----  ----         ---    ---     ---    ---    ----   ----    ----
                                                                                                                                   
Closing Date...............   100    100     100   100    100    100   100         100    100     100    100     100    100     100
April 1998.................   100    100     100   100    100    100   100         100    100     100    100     100    100     100
April 1999.................   100    100     100   100    100    100   100         100    100     100    100     100    100     100
April 2000.................   100    100     100   100    100    100   100         100    100     100    100     100    100     100
April 2001.................   100    100     100   100    100    100    63         100    100     100    100     100    100     100
April 2002.................   100    100     100   100     96     39     0         100    100     100    100     100    100      93
April 2003.................   100    100     100   100     43      0     0         100    100     100    100     100     92      65
April 2004.................   100    100     100    65      0      0     0         100    100     100    100     100     70      45
April 2005.................   100    100     100    30      0      0     0         100    100     100    100      83     55      32
April 2006.................   100    100      74     1      0      0     0         100    100     100    100      70     44      24
April 2007.................   100    100      48     0      0      0     0         100    100     100     89      60     37      20
April 2008.................   100    100      24     0      0      0     0         100    100     100     78      52     32      16
April 2009.................   100    100       1     0      0      0     0         100    100     100     69      45     26      13
April 2010.................   100    100       0     0      0      0     0         100    100      90     60      38     22      11
April 2011.................   100     79       0     0      0      0     0         100    100      79     52      32     18       9
April 2012.................   100     53       0     0      0      0     0         100    100      70     45      27     15       7
April 2013.................   100     28       0     0      0      0     0         100    100      61     38      22     12       6
April 2014.................   100      2       0     0      0      0     0         100    100      52     32      18     10       4
April 2015.................   100      0       0     0      0      0     0         100     88      44     26      15      8       3
April 2016.................    92      0       0     0      0      0     0         100     76      36     21      12      6       3
April 2017.................    53      0       0     0      0      0     0         100     63      29     17       9      5       2
April 2018.................    13      0       0     0      0      0     0         100     51      23     13       7      3       1
April 2019.................     0      0       0     0      0      0     0          85     40      17     10       5      2       1
April 2020.................     0      0       0     0      0      0     0          64     29      12      7       3      2       1
April 2021.................     0      0       0     0      0      0     0          45     20       8      4       2      1       0
April 2022.................     0      0       0     0      0      0     0          29     12       5      3       1      1       0
April 2023.................     0      0       0     0      0      0     0          16      7       3      1       1      0       0
April 2024.................     0      0       0     0      0      0     0           7      3       1      0       0      0       0
April 2025.................     0      0       0     0      0      0     0           1      1       0      0       0      0       0
April 2026.................     0      0       0     0      0      0     0           0      0       0      0       0      0       0
April 2027.................     0      0       0     0      0      0     0           0      0       0      0       0      0       0
  Weighted Average Life in                                                                                                         
Years(1)................... 20.09  15.15   10.00  7.50   5.92   4.90  4.19       24.00  21.41   17.83  15.17   12.54  10.16    8.09
  Weighted Average Life in                                                                                                         
Years(2)................... 20.09  15.15   10.00  7.50   5.92   4.90  4.19       23.73  21.07   17.42  14.73   12.12   9.80    7.84

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

(1)  The weighted average life of a Certificate is determined by (a) multiplying
  the amount of each distribution of principal by the number of years from
   the date of issuance of the Certificate to the related Distribution Date,
    (b) adding the results and (c) dividing the sum by the initial Certificate
Balance of the Certificate.                                           

(2)  Calculated pursuant to footnote one but assumes the Master Servicer        
exercises its option to purchase the Mortgage Loans. See "Pooling and 
Servicing Agreement--Termination" herein.                             

                                                 (TABLE CONTINUED ON NEXT PAGE.)

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                                  PERCENT OF INITIAL CERTIFICATE BALANCE OUTSTANDING AT THE                                      
                                                SPECIFIED PERCENTAGES OF CPR                                                     

                                        CLASS A-WAC CERTIFICATES                  CLASS B-1, CLASS B-2 AND CLASS B-3 CERTIFICATES
                              -------------------------------------------         -----------------------------------------------
DISTRIBUTION DATE              0%    3%     6%    8%     10%    12%   14%          0%     3%     6%     8%    10%    12%     14% 
-----------------             ---   ---    ---   ---    ----   ----  ----         ---    ---    ---    ---   ----   ----    ---- 
                                                                                                                                 
Closing Date................  100   100    100   100     100    100   100         100    100    100    100    100    100     100 
April 1998..................   91    88     85    83      82     80    78          98     98     98     98     98     98      98 
April 1999..................   81    77     72    69      66     63    60          96     96     96     96     96     96      96 
April 2000..................   72    66     60    56      52     49    45          94     94     94     94     94     94      94 
April 2001..................   63    55     49    45      41     37    34          92     92     92     92     92     92      92 
April 2002..................   53    46     39    35      31     28    25          89     89     89     89     89     89      89 
April 2003..................   44    37     30    26      23     20    17          87     86     85     85     84     84      83 
April 2004..................   34    28     22    19      16     14    12          84     82     81     79     78     77      76 
April 2005..................   25    19     15    13      10      9     7          81     78     75     73     71     69      67 
April 2006..................   15    11      9     7       6      5     4          78     74     69     66     63     60      57 
April 2007..................    5     4      3     2       2      1     1          75     69     62     58     54     51      47 
April 2008..................    0     0      0     0       0      0     0          72     64     56     51     47     43      39 
April 2009..................    0     0      0     0       0      0     0          69     59     50     45     40     36      32 
April 2010..................    0     0      0     0       0      0     0          65     54     45     39     34     30      26 
April 2011..................    0     0      0     0       0      0     0          61     49     40     34     29     25      21 
April 2012..................    0     0      0     0       0      0     0          57     45     35     29     24     20      17 
April 2013..................    0     0      0     0       0      0     0          53     40     30     25     20     17      13 
April 2014..................    0     0      0     0       0      0     0          48     36     26     21     17     13      11 
April 2015..................    0     0      0     0       0      0     0          43     31     22     17     13     11       8 
April 2016..................    0     0      0     0       0      0     0          38     27     18     14     11      8       6 
April 2017..................    0     0      0     0       0      0     0          33     22     15     11      8      6       5 
April 2018..................    0     0      0     0       0      0     0          28     18     12      9      6      5       3 
April 2019..................    0     0      0     0       0      0     0          22     14      9      6      5      3       2 
April 2020..................    0     0      0     0       0      0     0          17     10      6      4      3      2       1 
April 2021..................    0     0      0     0       0      0     0          12      7      4      3      2      1       1 
April 2022..................    0     0      0     0       0      0     0           8      4      2      2      1      1       0 
April 2023..................    0     0      0     0       0      0     0           4      2      1      1      1      0       0 
April 2024..................    0     0      0     0       0      0     0           2      1      0      0      0      0       0 
April 2025..................    0     0      0     0       0      0     0           0      0      0      0      0      0       0 
April 2026..................    0     0      0     0       0      0     0           0      0      0      0      0      0       0 
April 2027..................    0     0      0     0       0      0     0           0      0      0      0      0      0       0 
  Weighted Average Life in                                                                                                       
Years(1).................... 5.35  4.82   4.35  4.06    3.80   3.55  3.33       15.60  13.93  12.64  11.94  11.34  10.82   10.37 
  Weighted Average Life in                                                                                                       
Years(2).................... 5.35  4.82   4.35  4.06    3.80   3.55  3.33       15.53  13.81  12.44  11.65  10.95  10.33    9.77 

-----------------                                                               
(1)  The weighted average life of a Certificate is determined by (a) multiplying
  the amount of each distribution of principal by the number of years from
   the date of issuance of the Certificate to the related Distribution Date,
    (b) adding the results and (c) dividing the sum by the initial Certificate
Balance of the Certificate.                                           

(2)  Calculated pursuant to footnote one but assumes the Master Servicer        
exercises its option to purchase the Mortgage Loans. See "Pooling and 
Servicing Agreement--Termination" herein.                             

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   There is no assurance that prepayments of the Mortgage Loans will conform
to any of the levels of the CPR indicated in the tables above, or to any other  
level, or that the actual weighted average life of any class of Certificates    
will conform to any of the weighted average lives set forth in the tables above.
Furthermore, the information contained in the tables with respect to the        
weighted average life of each class of Senior P&I Certificates, the Class A-WAC 
Certificates and the Class B-1, Class B-2 and Class B-3 Certificates is not     
necessarily indicative of the weighted average life of each such class that     
might be calculated or projected under different or varying prepayment          
assumptions.                                                                    

     The characteristics of the Mortgage Loans will differ from those assumed in
preparing the tables above. In addition, it is unlikely that any Mortgage Loan  
will prepay at any constant percentage of CPR until maturity or that all of the 
Mortgage Loans will prepay at the same rate. The timing of changes in the rate  
of prepayments may significantly affect the actual yield to maturity to         
investors, even if the average rate of principal prepayments is consistent with 
the expectations of investors.                                                  

YIELD SENSITIVITY OF THE CLASS IO CERTIFICATES                                  

The yield to maturity of the Class IO Certificates will be extremely  
sensitive to the prepayment, repurchase and default experience on the Mortgage  
Loans, which may fluctuate significantly from time to time. A rapid rate of     
principal payments on the Mortgage Loans will have a materially negative effect 
on the yield to maturity of the Class IO Certificates.                          

There can be no assurance that the Mortgage Loans will prepay at any  
particular rate. Prospective investors in the Class IO Certificates should fully
consider the associated risks, including the risk that such investors may not   
fully recover their initial investment.                                         

    The following table indicates the sensitivity of the yield of the Class IO
Certificates to various rates of prepayment on the Mortgage Loans and the       
corresponding pre-tax yield on a corporate bond equivalent basis. The table set 
forth below has been prepared based on the Modeling Assumptions.                

PRE-TAX YIELD TO MATURITY ON THE CLASS IO CERTIFICATES
 AT VARIOUS PERCENTAGES OF CPR

                    PERCENTAGES OF CPR
ASSUMED AGGREGATE     ----------------------------------------------------------
PURCHASE PRICE          0%        3%         6%        8%       10%       12% 
-----------------     --------  ---------  --------  --------  --------  -------
$10,030,266.58.......  15.87%    12.65%      9.39%     7.18%    4.94%     2.69% 

   On the basis of a CPR of approximately 14% and the purchase price assumed
above, the yield to maturity of the Class IO Certificates would be approximately
0%. If the actual prepayment rate were to exceed such rate, initial investors in
the Class IO Certificates would not fully recover their initial investment.     

The pre-tax yields set forth in the preceding table were calculated by
determining the monthly discount rates that, when applied to the assumed streams
of cash flows to be paid on the Class IO Certificates, would cause the          
discounted present value of such assumed stream of cash flows to equal the      
assumed aggregate purchase price of such Class IO Certificates, which includes  
accrued interest, and by converting such monthly rates to corporate bond        
equivalent rates. Such calculation does not take into account shortfalls in     
collection of interest due to prepayments (or other liquidations) on the        
Mortgage Loans or the interest rates at which investors may be able to reinvest 
funds received by them as distributions on the Class IO Certificates and        
consequently does not purport to reflect the return on any investment in the    
Class IO Certificates when such reinvestment rates are considered.              

     The characteristics of the Mortgage Loans will differ from those assumed in
preparing the table above. There can be no assurance that the cash flows on the 
Class IO Certificates will correspond to those used to determine the pre-tax    
yields shown above or that the aggregate purchase price of the Class IO         
Certificates will be as assumed. It is unlikely that any Mortgage Loan will     
prepay at the                                                                   

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specified percentages of the CPR until maturity or that all of the Mortgage     
Loans will prepay at the same rate. The timing of changes in the rate of        
prepayments may significantly affect the actual yield to maturity to investors, 
even if the average rate of principal prepayments is consistent with the        
expectations of investors. There can be no assurance that the Mortgage Loans    
will prepay at any of the rates shown in the table or at any other particular   
rate. Investors must make their own decisions as to the appropriate prepayment  
assumptions to be used in deciding whether to purchase the Class IO             
Certificates.                                                                   

YIELD SENSITIVITY OF THE CLASS A-WAC CERTIFICATES                               

  The yield to maturity of the Class A-WAC Certificates will be especially
sensitive to the prepayment, repurchase and default experience on the Mortgage  
Loans, which may fluctuate significantly from time to time. In addition, the    
aggregate of distributions in respect of, and the yield to maturity of, the     
Class A-WAC Certificates will be related to the rate and timing of the payment  
of the Arrearage. The pre-tax yields set forth in the following tables were     
calculated by determining the monthly discount rates that, when applied to the  
assumed streams of cash flows to be paid on the Class A-WAC Certificates, would 
cause the discounted present value of such assumed stream of cash flows to equal
the assumed aggregate purchase price of such Class A-WAC Certificates, which    
includes accrued interest, and by converting such monthly rates to corporate    
bond equivalent rates. Such calculation does not take into account the interest 
rates at which investors may be able to reinvest funds received by them as      
distributions on the Class A-WAC Certificates and consequently does not purport 
to reflect the return on any investment in the Class A-WAC Certificates when    
such reinvestment rates are considered.                                         

     The characteristics of the Mortgage Loans will differ from those assumed in
preparing the tables below. There can be no assurance that the Mortgage Loans   
will prepay at any of the rates shown in the tables or at any other particular  
rate, that the cash flows on the Class A-WAC Certificates will correspond to    
those used to determine the pre-tax yields shown below or that the aggregate    
purchase price of the Class A-WAC Certificates will be as assumed. In addition, 
it is unlikely that any Mortgage Loan will prepay at the specified percentages  
of CPR until maturity or that all of the Mortgage Loans will prepay at the same 
rate. Timing of changes in the rate of prepayments may significantly affect the 
actual yield to maturity to investors, even if the average rate of principal    
prepayments is consistent with the expectations of investors. Because the       
portion of interest payments allocable to the holders of the Class A-WAC        
Certificates varies from Mortgage Loan to Mortgage Loan and is greater with     
respect to Mortgage Loans with higher Mortgage Rates, the yield on the Class    
A-WAC Certificates will be lower than indicated in the table below with respect 
to any particular average prepayment rate if Mortgage Loans with higher Mortgage
Rates prepay faster than Mortgage Loans with lower Mortgage Rates (assuming the 
same Mortgage Loan principal balance). Investors must make their own decisions  
as to the appropriate prepayment assumptions to be used in deciding whether to  
purchase the Class A-WAC Certificates.                                          

 The following table indicates the sensitivity of the yield of the Class
A-WAC Certificates to various rates of prepayment on the Mortgage Loans and     
various Arrearage Repayment Percentages and the corresponding pre-tax yield on a
corporate bond equivalent basis. The table set forth below has been prepared    
based on the Modeling Assumptions and assuming that the purchase price for the  
Class A-WAC Certificates is 99.75% of the Certificate Balance thereof plus      
accrued interest on the Notional Amount thereof (as such accrued interest varies
at each percentage of CPR).                                                     

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                                            PRE-TAX YIELD TO MATURITY                                                   
                                         ON THE CLASS A-WAC CERTIFICATES                                                
                                          AT VARIOUS PERCENTAGES OF CPR                                                 
                                       (ASSUMING NO OPTIONAL TERMINATION)                                               

      ARREARAGE                                                                                                         
      REPAYMENT                                                                                                         
     PERCENTAGE                                                 PERCENTAGES OF CPR                                      
----------------------  ------------------------------------------------------------------------------------------------
                            0%              3%             6%            8%          10%            12%            14%  
                        -----------    -----------    -----------    ----------   ---------      ---------     ---------
                                                                                                                        
105%.................      5.21%          5.19%          5.16%         5.15%        5.14%          5.13%          5.12% 
110%.................      7.72%          7.05%          6.57%         6.33%        6.15%          6.00%          5.88% 
115%.................      9.64%          8.65%          7.90%         7.51%        7.19%          6.93%          6.72% 
120%.................     11.26%         10.07%          9.13%         8.63%        8.21%          7.86%          7.56% 
125%.................     12.68%         11.36%         10.27%         9.69%        9.19%          8.76%          8.39% 
130%.................     13.98%         12.54%         11.34%        10.68%       10.12%          9.62%          9.18% 
135%.................     15.16%         13.64%         12.35%        11.63%       11.00%         10.45%          9.96% 
140%.................     16.26%         14.67%         13.30%        12.52%       11.84%         11.24%         10.70% 

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                                            PRE-TAX YIELD TO MATURITY                                                   
                                         ON THE CLASS A-WAC CERTIFICATES                                                
                                          AT VARIOUS PERCENTAGES OF CPR                                                 
                                      (ASSUMING OPTIONAL TERMINATION ON THE                                             
                                      EARLIEST PERMITTED DISTRIBUTION DATE)                                             
      ARREARAGE                                                                                                         
      REPAYMENT                                                                                                         
     PERCENTAGE                                                 PERCENTAGES OF CPR                                      
----------------------  ------------------------------------------------------------------------------------------------
                            0%            3%            6%             8%           10%            12%             14%  
                        ----------    ---------     ----------     ----------    ---------      ---------      ---------
                                                                                                                        
105%.................     5.40%         5.36%         5.29%          5.25%         5.22%          5.20%           5.17% 
110%.................     7.71%         7.04%         6.54%          6.30%         6.11%          5.96%           5.83% 
115%.................     9.63%         8.64%         7.87%          7.47%         7.14%          6.86%           6.62% 
120%.................    11.25%        10.06%         9.11%          8.60%         8.16%          7.79%           7.47% 
125%.................    12.68%        11.35%        10.26%          9.66%         9.14%          8.69%           8.30% 
130%.................    13.97%        12.54%        11.33%         10.66%        10.07%          9.56%           9.10% 
135%.................    15.16%        13.64%        12.34%         11.60%        10.96%         10.39%           9.87% 
140%.................    16.26%        14.66%        13.29%         12.50%        11.81%         11.18%          10.62% 

YIELD SENSITIVITY OF THE CLASS B-1, CLASS B-2 AND CLASS B-3 CERTIFICATES        

     If the Certificate Balances of the Class B Certificates not offered hereby,
the Class B-3 Certificates and the Class B-2 Certificates have been reduced to  
zero, the yield to maturity on the Class B-1 Certificates will become extremely 
sensitive to losses on the Mortgage Loans (and the timing thereof) that are     
covered by subordination, because the entire amount of such losses will be      
allocated to the Class B-1 Certificates. If the Certificate Balances of the     
Class B Certificates not offered hereby and the Class B-3 Certificates have been
reduced to zero, the yield to maturity on the Class B-2 Certificates will become
extremely sensitive to losses on the Mortgage Loans (and the timing thereof)    
that are covered by subordination, because the entire amount of such losses will
be allocated to the Class B-2 Certificates. If the Certificate Balances of the  
Class B Certificates not offered hereby have been reduced to zero, the yield to 
maturity on the Class B-3 Certificates will become extremely sensitive to losses
on the Mortgage Loans (and the timing thereof) that are covered by              
subordination, because the entire amount of such losses will be allocated to the
Class B-3 Certificates. The percentage interest in the Trust Fund initially     
evidenced by the Class B-1, Class B-2, Class B-3, Class B-4, Class B-5 and Class
B-6 Certificates will be approximately 3.75%, approximately 2.75%, approximately
4.75%, approximately 3.50%, approximately 3.00% and approximately 5.25%,        
respectively. Investors in the Class B-1, Class B-2 and Class B-3 Certificates  
should fully consider the risk that Realized Losses on the Mortgage Loans could 
result in the failure of such investors to fully recover their investments.     

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 DESCRIPTION OF THE CERTIFICATES

GENERAL                                                                         

   The Series 1997-HUD1 Certificates (collectively, the "Certificates") will
consist of 15 classes of certificates, designated as: (i) the Class A-1, Class  
A-2, Class A-3 and Class A-4 Certificates (collectively, the "Senior P&I        
Certificates"); (ii) the Class IO Certificates; (iii) the Class A-WAC           
Certificates (collectively with the Senior P&I Certificates and the Class IO    
Certificates, the "Senior Certificates"); (iv) the Class B-1, Class B-2, Class  
B-3, Class B-4, Class B-5 and Class B-6 Certificates (collectively, the "Class B
Certificates"; the Senior P&I Certificates and the Class B Certificates,        
together, the "P&I Certificates"; the Senior Certificates and the Class B       
Certificates, together, the "REMIC Regular Certificates"); and (v) the Class    
R-I, Class R-II and Class R-III Certificates (collectively, the "Residual       
Certificates"). Only the Senior Certificates and the Class B-1, Class B-2 and   
Class B-3 Certificates (collectively, the "Offered Certificates") are offered   
hereby. The rights of the holders of the Class B Certificates and the Residual  
Certificates to receive distributions with respect to the Mortgage Loans will be
subordinate to the rights of the holders of the Senior Certificates, and the    
rights of the holders of the Residual Certificates to receive distributions with
respect to the Mortgage Loans will be subordinate to the rights of the holders  
of the Senior Certificates and the Class B Certificates, in each case to the    
extent described herein. Further, the Class B Certificates of any class having a
higher numerical class designation are subordinated, to the extent described    
herein, to the Class B Certificates of each class having a lower numerical class
designation.                                                                    

     The Certificates represent in the aggregate the entire beneficial ownership
interest in a Trust Fund (the "Trust Fund") consisting primarily of a segregated
pool (the "Mortgage Pool") of approximately 6,738 conventional mortgage loans   
(the "Mortgage Loans") that have, as of April 1, 1997 (the "Cut-off Date"), an  
aggregate Unpaid Principal Balance of approximately $272,574,770 (the "Cut-off  
Date Pool Unpaid Principal Balance"), an aggregate Arrearage of approximately   
$53,585,190 (the "Cut-off Date Pool Arrearage") and an aggregate Legal Balance  
of approximately $326,159,960 (the "Cut-off Date Pool Legal Balance"). See "The 
Mortgage Pool" for additional information regarding the Mortgage Loans.         

The Senior P&I Certificates and the Class B-1, Class B-2 and Class B-3
Certificates will have the approximate initial Certificate Balances as set forth
on the cover hereof and will have the PassThrough Rates determined as provided  
under "Summary of Prospectus Supplement--Description of the Certificates"       
herein. The Class IO Certificates will have the approximate initial Notional    
Amount as set forth on the cover hereof and will accrue interest on the Notional
Amount thereof outstanding from time to time at the fixed Pass-Through Rate of  
0.68055% per annum. The Class A-WAC Certificates will have the approximate      
initial Certificate Balance and Notional Amount as set forth on the cover hereof
and will accrue interest only on the Notional Amount thereof outstanding from   
time to time at the variable Pass-Through Rate determined as provided under     
"Summary of Prospectus Supplement--Description of the Certificates" herein. The 
Class B-4, Class B-5 and Class B-6 Certificates will have a initial Certificate 
Balances equal to approximately $11,416,000, approximately $9,785,000 and       
approximately $17,123,770, respectively. The Class B-4, Class B-5 and Class B-6 
Certificates have a Pass-Through Rate equal to the lesser of (i) 7.75% per annum
and (ii) the Weighted Average Stripped Net Mortgage Rate. The Residual          
Certificates have no Certificate Balance or Pass-Through Rate. The Residual     
Certificates represent the right to receive distributions in respect of the     
Trust Fund on any Distribution Date after all required payments of principal,   
interest and Arrearage have been made on such date in respect of the other      
Classes of Certificates, although it is not anticipated that funds will be      
available for any such additional distribution. The Class B-4, Class B-5, Class 
B-6 Certificates and the Residual Certificates, which are not being offered     
hereby, will be sold by the Depositor to Salomon Brothers Inc on the Closing    
Date.                                                                           

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     The Trust Fund to be established by the Depositor will consist primarily of
the Mortgage Pool and certain related assets. The initial aggregate Certificate 
Balance of the P&I Certificates will equal the aggregate Unpaid Principal       
Balance of the Mortgage Loans as of the Cut-off Date, after application of the  
principal portion of all Modified Scheduled Payments due on or before such date,
whether or not received, and the initial Certificate Balance of the Class A-WAC 
Certificates will equal approximately 98.36% of the aggregate Arrearage of the  
Mortgage Loans as of the Cut-off Date, after application of all payments of     
Arrearage actually received as of such date.                                    

   The "Certificate Balance" of the Class A-WAC Certificates or any class of
P&I Certificates outstanding at any time generally represents the maximum amount
that the holders thereof are entitled to receive as distributions allocable to  
Arrearage or principal, as applicable, from the cash flow on the Mortgage Loans 
and the other assets in the Trust Fund. The Certificate Balance of each such    
class will be reduced on each Distribution Date by any distributions of         
Arrearage or principal, as applicable, actually made on such class on such      
Distribution Date and with respect to any class of P&I Certificates (and,       
correspondingly, to the Class A-WAC Certificates), further, by any losses on or 
in respect of the Mortgage Loans, other than the portion thereof payable as fees
and expenses and certain additional Trust Fund expenses allocated to such class 
on such Distribution Date.                                                      

  Neither the Class IO Certificates nor any class of Residual Certificates
will have a Certificate Balance or entitle the holders thereof to receive       
distributions of principal or Arrearage.                                        

   The "Notional Amount" of the Class IO Certificates and of the Class A-WAC
Certificates will in each case be equal at all times to the aggregate           
Certificate Balance of the P&I Certificates. The Notional Amount of the Class IO
Certificates and Class A-WAC Certificates is solely intended to be used for     
purposes of calculating the accrual of interest in respect of such class. The   
Notional Amount of the Class A-WAC Certificates will not represent the right to 
receive distributions of principal or Arrearage.                                

 The Senior P&I Certificates, the Class A-WAC Certificates and the Class
B-1, Class B-2 and Class B-3 Certificates (collectively, the "Book-Entry        
Certificates") will be issued, maintained and transferred on the book-entry     
records of DTC and its Participants in minimum denominations of $10,000 initial 
Certificate Balance and integral multiples of $1.00 in excess thereof. Each     
Class A-WAC Certificate will also have an initial Notional Amount equal to the  
percentage interest of such Certificate in such class times the aggregate       
initial Notional Amount of the Class A-WAC Certificates. The Class IO           
Certificates will be issued in registered, certificated form, in minimum        
percentage interests corresponding to initial Notional Amounts of $10,000 and   
integral multiples of $1,000 in excess thereof, except that one Certificate of  
such class may be issued evidencing an amount equal to either (i) the sum of an 
otherwise authorized denomination thereof plus the remainder of the aggregate   
initial Notional Amount for such class or (ii) such remainder.                  

  The Book-Entry Certificates will initially be represented by one or more
global certificates registered in the name of the nominee of DTC (together with 
any successor clearing agency selected by the Depositor, the "Clearing Agency"),
except as provided below. The Depositor has been informed by DTC that DTC's     
nominee will be CEDE & Co. ("CEDE"). No Certificate Owner will be entitled to   
receive a certificate representing such person's interest, except as set forth  
below under "--Definitive Certificates". Unless and until Definitive            
Certificates are issued under the limited circumstances described herein, all   
references to actions by Certificateholders with respect to the Book-Entry      
Certificates shall refer to actions taken by DTC upon instructions from its     
Participants (as defined below), and all references herein to distributions,    
notices, reports and statements to Certificateholders with respect to the       
Book-Entry Certificates shall refer to distributions, notices, reports and      
statements to DTC or CEDE, as the registered holder of the Book-Entry           
Certificates, for distribution to Certificate Owners in accordance with DTC     
procedures. See "--Registration of the Book-Entry Certificates" and             
"--Definitive Certificates" herein.                                             

    Class IO Certificates and Definitive Certificates will be transferable and
exchangeable at the offices of the Trustee. Any person purchasing the Offered   
Certificates (other than the Class IO Certificates)                             

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by, on behalf of or with the assets of a Plan (as defined herein) will be deemed
to have made certain representations in connection with such purchase, as       
provided herein. The Class IO Certificates may not be purchased by, on behalf of
or with the assets of a Plan except upon the delivery of an opinion of counsel  
or a certification of facts, as provided herein. See "--Restrictions on Transfer
of the Offered Certificates" and "ERISA Considerations" herein. No service      
charge will be imposed for any registration of transfer or exchange, but the    
Trustee may require payment of a sum sufficient to cover any tax or other       
governmental charge imposed in connection therewith.                            

All distributions to holders of the Certificates, other than the final
distribution on any class of Certificates, will be made on each Distribution    
Date by or on behalf of the Trustee to the persons in whose names such          
Certificates are registered at the close of business on the related Record Date,
which will be the last business day of the month preceding the month in which   
such Distribution Date occurs. Such distributions will be made either (a) by    
check mailed to the address of each such Certificateholder as it appears in the 
Certificate Register or (b) upon written request to the Trustee at least five   
business days prior to the relevant Record Date by any holder of Certificates   
having an aggregate initial Certificate Balance that is in excess of the lesser 
of (i) $5,000,000 or (ii) two-thirds of the initial aggregate Certificate       
Balance of such class of Certificates, by wire transfer in immediately available
funds to the account of such Certificateholder specified in the request. The    
final distribution on any class of Certificates will be made in like manner, but
only upon presentment and surrender of such Certificates at the corporate trust 
office of the Trustee or such other location specified in the notice to         
Certificateholders of such final distribution.                                  

REGISTRATION OF THE BOOK-ENTRY CERTIFICATES                                     

DTC is a limited-purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing          
corporation" within the meaning of the New York Uniform Commercial Code, and a  
"clearing agency" registered pursuant to the provisions of Section 17A of the   
Securities Exchange Act of 1934, as amended. DTC was created to hold securities 
for its participating organizations ("Participants") and to facilitate the      
clearance and settlement of securities transactions between Participants through
electronic book entries, thereby eliminating the need for physical movement of  
certificates. Participants include securities brokers and dealers (including the
Underwriter), banks, trust companies and clearing corporations. Indirect access 
to the DTC system is also available to others such as banks, brokers, dealers,  
and trust companies that clear through or maintain a custodial relationship with
a Participant, either directly or indirectly ("Indirect Participants").         

   Certificate Owners that are not Participants or Indirect Participants but
desire to purchase, sell or otherwise transfer ownership of, or other interests 
in, the Book-Entry Certificates may do so only through Participants and Indirect
Participants. In addition, Certificate Owners will receive all distributions of 
principal of and interest on the Book-Entry Certificates from the Trustee       
through DTC and DTC Participants. The Trustee will forward payments to DTC in   
same day funds and DTC will forward such payments to Participants in next day   
funds settled through the New York Clearing House. Each Participant will be     
responsible for disbursing such payments to Indirect Participants or to         
Certificate Owners. Unless and until Definitive Certificates are issued, it is  
anticipated that the only Certificateholder of the Book-Entry Certificates will 
be CEDE, as nominee of DTC. Certificate Owners will not be recognized by the    
Trustee as Certificateholders, as such term is used in the Agreements and       
Certificate Owners will be permitted to exercise the rights of                  
Certificateholders only indirectly through DTC and its Participants.            

    Under the rules, regulations and procedures creating and affecting DTC and
its operations (the "Rules"), DTC is required to make book-entry transfers of   
Book-Entry Certificates among Participants and to receive and transmit          
distributions of principal of, and interest on, the Book-Entry Certificates.    
Participants and Indirect Participants with which Certificate Owners have       
accounts with respect to the Book-Entry Certificates similarly are required to  
make book-entry transfers and receive and transmit such payments on behalf of   
their respective Certificate Owners. Accordingly, although Certificate Owners   
will not possess Definitive Certificates, the Rules provide a mechanism by which
Certificate                                                                     

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Owners through their Participants and Indirect Participants will receive        
payments and will be able to transfer their interest.                           

Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and on behalf of certain banks, the ability of a
Certificate Owner to pledge Book-Entry Certificates to persons or entities that 
do not participate in the DTC system, or to otherwise act with respect to such  
Certificates, may be limited due to the absence of physical certificates for the
BookEntry Certificates. In addition, under a book-entry format, Certificate     
Owners may experience delays in their receipt of payments since distribution    
will be made by the Trustee to CEDE, as nominee for DTC.                        

Under the Rules, DTC will take action permitted to be taken by a      
Certificateholder under the Agreement only at the direction of one or more      
Participants to whose DTC account the Book-Entry Certificates are credited.     
Additionally, under the Rules, DTC will take such actions with respect to       
specified Voting Rights only at the direction of and on behalf of Participants  
whose holdings of BookEntry Certificates evidenced such specified Voting Rights.
DTC may take conflicting actions with respect to Voting Rights, to the extent   
that Participants whose holdings of Book-Entry Certificates evidenced such      
Voting Rights, authorize divergent action.                                      

   The Depositor, the Master Servicer, the Trustee and the Fiscal Agent will
have no liability for any aspect of the records relating to or payments made on 
account of beneficial ownership interests in the Book-Entry Certificates held by
CEDE, as nominee for DTC, or for maintaining, supervising or reviewing any      
records relating to such beneficial ownership interests.                        

DEFINITIVE CERTIFICATES                                                         

Definitive Certificates will be issued to Certificate Owners or their 
nominees, respectively, rather than to DTC or its nominee, only if (i) the      
Depositor advises the Trustee in writing that DTC is no longer willing or able  
to discharge properly its responsibilities as Clearing Agency with respect to   
the Book-Entry Certificates and the Depositor is unable to locate a qualified   
successor, (ii) the Depositor, at its option, elects to terminate the book-entry
system through DTC, or (iii) after the occurrence of a Master Servicer event of 
default, Certificate Owners representing in the aggregate not less than 51% of  
the Voting Rights of the Book-Entry Certificates advise the Trustee and DTC     
through Participants, in writing, that the continuation of a book-entry system  
through DTC (or a successor thereto) is no longer in the Certificate Owners'    
best interest.                                                                  

 Upon the occurrence of any event described in the immediately preceding
paragraph, the Trustee is required to notify all Certificate Owners through     
Participants of the availability of Definitive Certificates. Upon surrender by  
DTC of the Definitive Certificates representing the Book-Entry Certificates and 
receipt of instructions for re-registration, the Trustee will reissue the       
Book-Entry Certificates as Definitive Certificates issued in the respective     
principal amounts owned by individual Certificate Owners, and thereafter the    
Trustee will recognize the holders of such Definitive Certificates as           
Certificateholders under the Agreement. Such Definitive Certificates will be    
issued in minimum denominations of $10,000, except that any beneficial ownership
represented by a Book-Entry Certificate in an amount less than $10,000          
immediately prior to the issuance of a Definitive Certificate shall be issued in
a minimum denomination equal to the amount of such beneficial ownership.        

DISTRIBUTIONS ON THE CERTIFICATES                                               

    Distributions on the Certificates will be made, to the extent of available
funds, on the 25th day of each month (or, if any such 25th day is not a business
day, then on the next succeeding business day), beginning in May 1997 (each, a  
"Distribution Date"). The total of all payments and other collections (or       
advances in lieu thereof) on or in respect of the Mortgage Loans that are       
available for distribution to holders of the Certificates ("Certificateholders")
on any Distribution Date is the "Available Distribution Amount" for such date.  

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  In general, on each Distribution Date, the Available Distribution Amount
for such date will be distributed among the respective Classes of Certificates  
for the following purposes and in the following order of priority:              

       (1) to pay interest to the holders of the Senior Certificates of each
     class, PRO RATA based on entitlement, up to an amount equal to the Interest
    Distribution Amount in respect of each such class of Certificates for such
Distribution Date;                                                    

         (2) to pay interest to the holders of the Class B-1 Certificates, up to
an amount equal to the Interest Distribution Amount in respect of such
class of Certificates for such Distribution Date;                     

         (3) to pay interest to the holders of the Class B-2 Certificates, up to
an amount equal to the Interest Distribution Amount in respect of such
class of Certificates for such Distribution Date;                     

         (4) to pay interest to the holders of the Class B-3 Certificates, up to
an amount equal to the Interest Distribution Amount in respect of such
class of Certificates for such Distribution Date;                     

         (5) to pay interest to the holders of the Class B-4 Certificates, up to
an amount equal to the Interest Distribution Amount in respect of such
class of Certificates for such Distribution Date;                     

         (6) to pay interest to the holders of the Class B-5 Certificates, up to
an amount equal to the Interest Distribution Amount in respect of such
class of Certificates for such Distribution Date;                     

         (7) to pay interest to the holders of the Class B-6 Certificates, up to
an amount equal to the Interest Distribution Amount in respect of such
class of Certificates for such Distribution Date;                     

    (8) to pay principal sequentially to the holders of the Senior P&I
   Certificates from Class A-1 to Class A-4, in the order of their numerical
  class designation, in each case until the related Certificate Balance is
     reduced to zero, up to an amount equal to the Senior Principal Distribution
Amount, and to pay principal to the holders of the Class A-WAC        
Certificates, up to an amount equal to the Basic Class A-WAC Principal
Distribution Amount, provided that if the then remaining Available    
Distribution Amount is less than the aggregate of the Senior Principal
 Distribution Amount and the Basic Class A-WAC Distribution Amount, then
  distributions of principal pursuant to this clause (8) will be allocated
   between the holders of the Senior P&I Certificates and the holders of the
Class A-WAC Certificates on a PRO RATA basis in accordance with their 
respective entitlements;                                              

     (9) to pay to the holders of the Class A-WAC Certificates, up to an
amount equal to the Additional Class A-WAC Distribution Amount;       

         (10) to pay principal to the holders of the Class B Certificates, up to
   an amount equal to their portion, as described herein, of the Subordinate
Principal Distribution Amount for such Distribution Date; and         

 (11) to pay any remaining amount to the holders of the Residual
Certificates.                                                         

The "Interest Distribution Amount" with respect to any class of P&I   
Certificates, the Class IO Certificates or the Class A-WAC Certificates for any 
Distribution Date will equal: (i) interest accrued during the related Interest  
Accrual Period at the applicable Pass-Through Rate accrued on the Certificate   
Balance of such class, in the case of any class of P&I Certificates, or the     
Notional Amount of such class in the case of the Class IO Certificates and Class
A-WAC Certificates, in each case outstanding immediately prior to such          
Distribution Date; increased by (ii) the excess, if any, of the Interest        
Distribution Amount for such class for the immediately preceding Distribution   
Date, if any, over the aggregate distributions of interest made with respect to 
such class on such immediately preceding Distribution Date; and (iii) in the    
case of each such class, reduced (to not less than zero) by the allocable share 
for such class of Prepayment Interest Shortfalls (to the extent not covered by  
Compensating Interest paid by the Master Servicer) and certain other interest   
shortfalls described below. Any Prepayment Interest Shortfalls for any          
Distribution Date (to the extent not covered by Compensating Interest paid by   
the Master Servicer) and any shortfalls resulting from the application          

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of the Relief Act will be allocated among the holders of the Certificates on a  
PRO RATA basis, based on the respective amounts of interest accrued on such     
Certificates for such Distribution Date.                                        

The Pass-Through Rates for the Senior P&I Certificates (other than the
Class A-4 Certificates) and for the Class IO Certificates will, in each case, be
fixed at the rate per annum specified on the cover hereof. The Pass-Through Rate
for the Class A-4, Class B-1, Class B-2 and Class B-3 Certificates will, in each
case and for any Distribution Date, be equal to the lesser of (i) the rate per  
annum specified on the cover hereof and (ii) the Weighted Average Stripped Net  
Mortgage Rate for such Distribution Date. The Pass-Through Rate for the Class   
A-WAC Certificates will also be variable and, with respect to each Distribution 
Date, will equal the weighted average of ten variable rates: the Component A-1  
Rate, the Component A-2 Rate, the Component A-3 Rate, the Component A-4 Rate,   
the Component B-1 Rate, the Component B-2 Rate, the Component B-3 Rate, the     
Component B-4 Rate, the Component B-5 Rate and the Component B-6 Rate, each     
weighted according to the proportion the Certificate Balance of the related     
class of P&I Certificates (that is, the P&I Certificate with the same           
alphabetical and numerical class designation) outstanding immediately prior to  
such Distribution Date bears to the sum of the Certificate Balances of the P&I  
Certificates (and, therefore, the Notional Amount of the Class A-WAC            
Certificates) outstanding immediately prior to such Distribution Date. Each     
Component Rate is, as stated above, a variable rate and, with respect to each   
such Distribution Date, will equal (but will not be less than zero) the Weighted
Average Stripped Net Mortgage Rate for such Distribution Date minus (i) the     
Pass-Through Rate for the Class A-1 Certificates, in the case of the Component  
A-1 Rate, (ii) the Pass-Through Rate for the Class A-2 Certificates, in the case
of the Component A-2 Rate, (iii) the Pass-Through Rate for the Class A-3        
Certificates, in the case of the Component A-3 Rate, (iv) the Pass-Through Rate 
for the Class A-4 Certificates, in the case of the Component A-4 Rate, (v) the  
Pass-Through Rate for the Class B-1 Certificates, in the case of the Component  
B-1 Rate, (vi) the Pass-Through Rate for the Class B-2 Certificates, in the case
of the Component B-2 Rate, (vii) the Pass-Through Rate for the Class B-3        
Certificates, in the case of the Component B-3 Rate, (viii) the Pass-Through    
Rate for the Class B-4 Certificates, in the case of the Component B-4 Rate, (ix)
the Pass-Through Rate for the Class B-5 Certificates, in the case of the        
Component B-5 Rate and (x) the Pass-Through Rate for the Class B-6 Certificates,
in the case of the Component B-6 Rate. The Weighted Average Stripped Net        
Mortgage Rate for any Distribution Date is equal to (x) the weighted average of 
Net Mortgage Rates in effect for the Mortgage Loans as of the commencement of   
the related Due Period minus (y) 0.68055% per annum. The Net Mortgage Rate for  
each Mortgage Loan is generally equal to the Mortgage Rate minus the sum of the 
per annum rates at which the Master Servicer's fee and the Trustee's fee accrue.

The Interest Accrual Period for any Distribution Date is the one-month
period preceding the month in which such Distribution Date occurs. All          
distributions of interest will be based on a 360-day year consisting of twelve  
30-day months. Except as otherwise described herein, on any Distribution Date,  
distributions of the Interest Distribution Amount for a class of Certificates   
will be made in respect of such class of Certificates, to the extent provided   
herein, on a PARI PASSU basis, based on the Certificate Balance or Notional     
Amount, as applicable, of the Certificates of each such class.                  

    With respect to each Distribution Date, the "Senior Principal Distribution
Amount" will equal the lesser of (1) the aggregate Certificate Balance of the   
Senior P&I Certificates outstanding immediately prior to such Distribution Date 
and (2) the sum of (x) the Senior Percentage of all scheduled payments of       
principal due on the Mortgage Loans during the related Due Period, whether or   
not received, and of the aggregate principal portion of any unscheduled net     
collections (other than amounts described in clauses (y) or (z) hereof and other
than payments allocable to Arrearage) received on or in respect of the Mortgage 
Loans during the related Prepayment Period, including proceeds from repurchases 
of Mortgage Loans, insurance proceeds, condemnation proceeds and liquidation    
proceeds, (y) the Senior Prepayment Percentage of all voluntary prepayments of  
principal received on the Mortgage Loans during the related Prepayment Period   
(other than the amount thereof allocable to Arrearage) and (z) with respect to  
the principal portion of any net liquidation proceeds received during the       
related Prepayment Period in connection with the final liquidation of a Mortgage
Loan during such Prepayment                                                     

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Period, the lesser of the Senior Percentage of the then scheduled principal     
balance of such Mortgage Loan and the Senior Prepayment Percentage of the       
principal portion of such net liquidation proceeds (other than the amount       
thereof allocable to Arrearage).                                                

     With respect to each Distribution Date, the "Basic Class A-WAC Distribution
Amount" will equal the lesser of (1) the Certificate Balance of the Class A-WAC 
Certificates outstanding immediately prior to such Distribution Date, and (2)   
the aggregate portion of (a) all Modified Scheduled Payments due on the Mortgage
Loans during the related Due Period, received and to the extent allocable to    
Arrearage, other than the portion thereof payable as fees and expenses, and (b) 
any unscheduled net collections received on the Mortgage Loans during the       
related Prepayment Period allocable to Arrearage, including voluntary           
prepayments, proceeds from repurchases of Mortgage Loans, insurance proceeds,   
condemnation proceeds and liquidation proceeds, other than the portion thereof  
payable as fees and expenses. With respect to each Distribution Date, the       
"Additional Class A-WAC Distribution Amount" will equal the lesser of (1) the   
Certificate Balance of the Class A-WAC Certificates outstanding immediately     
prior to such Distribution Date (net of the Basic Class A-WAC Distribution      
Amount for such Distribution Date) and (2) with respect to the final liquidation
of a Mortgage Loan during the related Prepayment Period, the amount of any      
Arrearage remaining unpaid with respect to such Mortgage Loan following the     
receipt of all related liquidation proceeds, other than the portion thereof     
payable as fees and expenses.                                                   

   As further provided herein, all payments and recoveries in respect of the
Mortgage Loans (exclusive of escrow payments and "pay-aheads") will be applied  
by the Master Servicer first, to pay accrued interest on such Mortgage Loan;    
second, to pay scheduled principal on such Mortgage Loan; third, to pay any     
unpaid Arrearage of such Mortgage Loan; and fourth, to prepay Unpaid Principal  
Balance of such Mortgage Loan. This may result in an accelerated amortization of
the Certificate Balance of the Class A-WAC Certificates relative to the Senior  
P&I Certificates.                                                               

   Holders of each class of Class B Certificates will be entitled to receive
on each Distribution Date, to the extent of the portion of the Available        
Distribution Amount remaining after distribution on such date of the amounts    
described in clauses (1) through (9) above, distributions allocable to principal
in reduction of the Certificate Balances thereof equal to the sum of the        
following: (i) the related Class B Percentage (as defined below) of all         
scheduled payments of principal due on the Mortgage Loans during the related Due
Period, whether or not received, and of the aggregate principal portion of any  
unscheduled net collections (other than amounts described in clauses (ii) or    
(iii) hereof and other than payments allocable to Arrearage) received on or in  
respect of the Mortgage Loans during the related Prepayment Period, including   
proceeds from repurchases of Mortgage Loans, insurance proceeds, condemnation   
proceeds and liquidation proceeds, (ii) such class's PRO RATA share (if any), as
described below, of the Subordinate Prepayment Percentage of all voluntary      
prepayments of principal received on the Mortgage Loans during the related      
Prepayment Period (other than the amount thereof allocable to Arrearage), (iii) 
with respect to the principal portion of any net liquidation proceeds received  
during the related Prepayment Period in connection with the final liquidation of
a Mortgage Loan during such Prepayment Period, such class's PRO RATA share (if  
any), as described herein, of the principal portion of such net liquidation     
proceeds (other than the amount thereof allocable to Arrearage) to the extent   
not included in the Senior Principal Distribution Amount and (iv) any amounts   
allocable to principal for any previous Distribution Date (calculated pursuant  
to the three preceding clauses) that remain undistributed, to the extent that   
any such amounts are not attributable to Realized Losses that were allocated to 
Classes of Class B Certificates bearing a higher numerical class designation.   

     With respect to any Distribution Date, the lesser of (a) the balance of the
amount available after distributions pursuant to clauses (1) through (9) above  
and (b) the aggregate of the sum for each class of Class B Certificates of the  
amounts described in the preceding paragraph is hereinafter referred to as the  
"Subordinate Principal Distribution Amount".                                    

   On any Distribution Date, the portion of (a) all principal prepayments on
the Mortgage Loans and (b) net liquidation proceeds allocable to principal of   
any Mortgage Loan that was finally liquidated                                   

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during the related Prepayment Period in each case not included in the Senior    
Principal Distribution Amount will be allocated on a PRO RATA basis among the   
following classes of Class B Certificates in proportion to the respective       
outstanding Certificate Balances thereof: (i) the Class B-1 Certificates, (ii)  
the Class B-2 Certificates, if on such Distribution Date the aggregate          
percentage interest in the Trust Fund evidenced by the Class B-2, Class B-3,    
Class B-4, Class B-5 and Class B-6 Certificates equals or exceeds 19.25% before 
giving effect to distributions on such Distribution Date, (iii) the Class B-3   
Certificates, if on such Distribution Date the aggregate percentage interest in 
the Trust Fund evidenced by the Class B-3, Class B-4, Class B-5 and Class B-6   
Certificates equals or exceeds 16.50% before giving effect to distributions on  
such Distribution Date, (iv) the Class B-4 Certificates, if on such Distribution
Date the aggregate percentage interest in the Trust Fund evidenced by the Class 
B-4, Class B-5 and Class B-6 Certificates equals or exceeds 11.75% before giving
effect to distributions on such Distribution Date, (v) the Class B-5            
Certificates, if on such Distribution Date the aggregate percentage interest in 
the Trust Fund evidenced by the Class B-5 and Class B-6 Certificates equals or  
exceeds 8.25% before giving effect to distributions on such Distribution Date   
and (vi) the Class B-6 Certificates, if on such Distribution Date the aggregate 
percentage interest in the Trust Fund evidenced by the Class B-6 Certificates   
equals or exceeds 5.25% before giving effect to distributions on such           
Distribution Date.                                                              

    The "Senior Percentage" initially will be approximately 72.48%. The "Class
B-1 Percentage", the "Class B-2 Percentage", the "Class B-3 Percentage", the    
"Class B-4 Percentage", the "Class B-5 Percentage" and the "Class B-6           
Percentage" (with respect to each such class, the related "Class B Percentage") 
initially will be approximately 4.49%, approximately 3.29%, approximately 5.68%,
approximately 4.19%, approximately 3.59% and approximately 6.28%, respectively. 
Each such percentage will be recalculated for each Distribution Date to be a    
percentage (not to exceed 100%) equal to the aggregate Certificate Balance of   
the Senior P&I Certificates, in the case of the Senior Percentage, or of the    
applicable class of Class B Certificates, in the case of the Class B            
Percentages, in each case immediately prior to such Distribution Date divided by
the aggregate scheduled principal balance of the Mortgage Loans as of the end of
the Prepayment Period for the immediately preceding Distribution Date. Except as
described below, the Senior Prepayment Percentage for any Distribution Date     
occurring prior to the Distribution Date in May 2002 will equal 100%. Except as 
described below, the Senior Prepayment Percentage for any Distribution Date     
occurring after April 2002 will be as follows: for any Distribution Date from   
May 2002 through April 2003, the Senior Percentage for such Distribution Date   
plus 70% of the sum of the Class B-1, Class B-2, Class B-3, Class B-4, Class B-5
and Class B-6 Percentages (such sum, the "Subordinate Percentage") for such     
Distribution Date; for any Distribution Date during the period from May 2003    
through April 2004, the Senior Percentage for such Distribution Date plus 60% of
the Subordinate Percentage for such Distribution Date; for any Distribution Date
during the period from May 2004 through April 2005, the Senior Percentage for   
such Distribution Date plus 40% of the Subordinate Percentage for such          
Distribution Date; for any Distribution Date during the period from May 2005    
through April 2006, the Senior Percentage for such Distribution Date plus 20% of
the Subordinate Percentage for such Distribution Date; and for any Distribution 
Date thereafter, the Senior Percentage for such Distribution Date (unless on any
such Distribution Date the Senior Percentage exceeds the initial Senior         
Percentage, in which case the Senior Prepayment Percentage for such Distribution
Date will equal 100%). Any scheduled reduction to the Senior Prepayment         
Percentage described above shall not be made as of any Distribution Date unless 
(i) the outstanding Unpaid Principal Balance of Mortgage Loans delinquent 60    
days or more (including real estate owned and Mortgage Loans in foreclosure)    
averaged over the last six months does not exceed 50% of the sum of the then    
current Certificate Balance of the Class B Certificates and (ii) Realized Losses
on the Mortgage Loans to date are less than the then applicable Trigger Amount. 
The "Trigger Amount" for any Distribution Date occurring after the first five   
years will be as follows: for any Distribution Date from May 2002 through April 
2003, 30% of the initial Certificate Balance of the Class B Certificates; for   
any Distribution Date during the period from May 2003 through April 2004, 40% of
the initial Certificate Balance of the Class B Certificates; for any            
Distribution Date during the period from May 2004 through April 2005, 45% of the
initial Certificate Balance of the Class                                        

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B Certificates; and for any Distribution Date during the period from May 2005   
through April 2006, 50% of the initial Certificate Balance of the Class B       
Certificates. Notwithstanding the foregoing, upon reduction of the Certificate  
Balances of the Senior P&I Certificates to zero, the Senior Prepayment          
Percentage will equal 0%. The "Subordinate Prepayment Percentage" for any       
Distribution Date will equal 100% minus the Senior Prepayment Percentage.       

The allocation of all prepayments on a Mortgage Loan to the Arrearage 
thereof prior to the Unpaid Principal Balance thereof will have the effect of   
accelerating the amortization of the Class A-WAC Certificates relative to the   
P&I Certificates. In addition, the disproportionate allocation of certain       
unscheduled payments in respect of principal (to the extent not paid in respect 
of Arrearage) will have the effect of accelerating the amortization of the      
Senior P&I Certificates while, in the absence of losses, increasing the         
respective percentage interest in the principal balance of the Mortgage Loans   
evidenced by the Class B Certificates. Increasing the respective percentage     
interest of the Class B Certificates relative to that of the Senior P&I         
Certificates is intended to preserve the availability of the subordination      
provided by the Class B Certificates.                                           

   If on any Distribution Date the allocation to the Senior P&I Certificates
of full and partial principal prepayments and other amounts in the percentage   
required above would reduce the aggregate outstanding Certificate Balance of the
Senior P&I Certificates below zero, the Senior Prepayment Percentage for such   
Distribution Date will be limited to the percentage necessary to reduce the     
aggregate Certificate Balance of the Senior P&I Certificates to zero.           

Distributions of the Subordinate Principal Distribution Amount on each
Distribution Date will be made as follows: first, to the holders of the Class   
B-1 Certificates; second, to the holders of the Class B-2 Certificates; third,  
to the holders of the Class B-3 Certificates; fourth, to the holders of the     
Class B-4 Certificates; fifth, to the holders of the Class B-5 Certificates; and
sixth, to the holders of the Class B-6 Certificates, in each case to the extent 
of available funds and in each case to the extent of the portion of the         
Subordinate Principal Distribution Amount payable in respect of each such class 
of Class B Certificates for such Distribution Date.                             

    Holders of the Class IO Certificates and the Residual Certificates are not
entitled to receive any distributions allocable to principal or Arrearage.      

P&I ADVANCES                                                                    

     Subject to the following limitations, the Master Servicer will be obligated
to advance or cause to be advanced on or before each Distribution Date its own  
funds, or funds in the Certificate Account that are not included in the         
Available Distribution Amount for such Distribution Date, in an amount equal to 
the aggregate of payments in respect of scheduled principal and interest, but   
not in respect of Modified Scheduled Payments or Arrearage (except as described 
in the following sentence), net of the Servicing Fee Rate, that were due during 
the related Due Period and that were delinquent on the related Determination    
Date (any such advance, a "P&I Advance"). Subject to the recoverability         
determination described herein, advances in respect of Arrearage will be made by
the Master Servicer only if the Unpaid Principal Balance of the related Mortgage
Loan has been reduced to zero, in an amount equal to the Modified Scheduled     
Payment existing prior to when the Unpaid Principal Balance was reduced to zero.

    P&I Advances are required to be made only to the extent they are deemed by
the Master Servicer to be recoverable from related late collections, insurance  
proceeds or liquidation proceeds. The purpose of making such P&I Advances is to 
maintain a regular cash flow to the Certificateholders, rather than to guarantee
or insure against losses. The Master Servicer will not be required to make any  
P&I Advances with respect to reductions in the amount of the monthly payments on
the Mortgage Loans due to bankruptcy proceedings or the application of the      
Relief Act.                                                                     

All P&I Advances will be reimbursable to the Master Servicer from late
collections, insurance proceeds and liquidation proceeds from the Mortgage Loan 
as to which such unreimbursed P&I                                               

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Advance was made. In addition, any P&I Advances previously made in respect of   
any Mortgage Loan that are deemed by the Master Servicer to be nonrecoverable   
from related late collections, insurance proceeds or liquidation proceeds may be
reimbursed to the Master Servicer out of any funds in the Certificate Account   
prior to the distributions on the Certificates. In the event the Master Servicer
fails in its obligation to make any such advance, the Trustee (and in the event 
of the Trustee's failure, the Fiscal Agent) will be obligated to make any such  
advance, to the extent required in the Agreement.                               

ALLOCATION OF LOSSES; SUBORDINATION                                             

    Any Realized Losses and Extraordinary Trust Fund Expenses (each as defined
herein) will be allocated on any Distribution Date as follows: first, to the    
Class B-6 Certificates; second, to the Class B-5 Certificates; third, to the    
Class B-4 Certificates; fourth, to the Class B-3 Certificates; fifth, to the    
Class B-2 Certificates; and sixth, to the Class B-1 Certificates, in each case  
until the Certificate Balance of such class has been reduced to zero.           
Thereafter, such Realized Losses and Extraordinary Trust Fund Expenses will be  
allocated on any Distribution Date to the Senior Certificates (other than the   
Class IO Certificates) on a PRO RATA basis. Any allocation of a Realized Loss or
Extraordinary Trust Fund Expense to a Certificate will be made by reducing the  
Certificate Balance thereof by the amount so allocated as of the Distribution   
Date in the month following the calendar month in which such Realized Loss or   
Extraordinary Trust Fund Expense was incurred.                                  

   An allocation of a Realized Loss or Extraordinary Trust Fund Expense on a
PRO RATA basis among two or more Classes of Certificates means an allocation to 
each such class of Certificates on the basis of its then outstanding Certificate
Balance prior to giving effect to distributions to be made on such Distribution 
Date.                                                                           

With respect to any defaulted Mortgage Loan that is finally liquidated
through foreclosure sale, disposition of the related Mortgaged Property if      
acquired on behalf of the Certificateholders by deed-inlieu of foreclosure or   
otherwise, the amount of loss realized, if any, will equal the portion of the   
unpaid principal balance remaining, if any, plus interest thereon through the   
last day of the month in which such Mortgage Loan was finally liquidated, after 
application of all amounts recovered (net of amounts reimbursable to the Master 
Servicer for P&I Advances and expenses, including attorneys' fees) towards      
interest and principal owing on the Mortgage Loan (such amount of loss realized,
"Realized Losses").                                                             

  In order to maximize the likelihood of distribution in full of interest,
principal and Arrearage, on each Distribution Date, (i) holders of Senior       
Certificates have a right to distributions of the Available Distribution Amount 
that is prior to the rights of the holders of the Class B Certificates, (ii)    
holders of Class B Certificates of any class have a right to distributions of   
the Available Distribution Amount that is prior to the rights of the holders of 
Class B Certificates with a higher numerical class designation, in each case to 
the extent of amounts then due thereon.                                         

  The application of the Senior Prepayment Percentage (when it exceeds the
Senior Percentage) to determine the Senior Principal Distribution Amount will   
accelerate the amortization of the Senior P&I Certificates relative to the      
actual amortization of the Mortgage Loans. To the extent that the Senior P&I    
Certificates are amortized faster than the Mortgage Loans, in the absence of    
offsetting Realized Losses allocated to the Class B Certificates, the percentage
interest evidenced by the Senior P&I Certificates in the Trust Fund will be     
decreased (with a corresponding increase in the percentage interest in the Trust
Fund evidenced by the Class B Certificates), thereby increasing, relative to    
their respective Certificate Balances, the subordination afforded the Senior    
Certificates by the Class B Certificates.                                       

 An "Extraordinary Trust Fund Expense" is an unanticipated, non-Mortgage
Loan specific Trust Fund expense, including certain reimbursements to the Master
Servicer or Depositor as described under "Description of the                    
Certificates--Certain Matters Regarding the Master Servicer and the Depositor"  
in the Prospectus, certain reimbursements to the Trustee described under        
"Pooling and                                                                    

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Servicing Agreement--The Trustee" herein and certain taxes that may be payable  
by the Trust Fund as described under "Certain Federal Income Tax Consequences"  
herein and in the Prospectus.                                                   

RESTRICTIONS ON TRANSFER OF THE OFFERED CERTIFICATES                            

Any person acquiring the Offered Certificates (other than the Class IO
Certificates) by, on behalf of or with the assets of a Plan will be deemed to   
have made certain representations in connection with such purchase, as provided 
herein. The Class IO Certificates may not be purchased by, on behalf of or with 
the assets of a Plan except upon the delivery of an opinion of counsel or a     
certification of facts, as provided herein. See "ERISA Considerations" herein.  

 POOLING AND SERVICING AGREEMENT

GENERAL                                                                         

    The Certificates will be issued pursuant to the Agreement, a form of which
is filed as an exhibit to the Registration Statement. A Current Report on Form  
8-K relating to the Certificates containing a copy of the Agreement as executed 
will be filed by the Depositor with the Securities and Exchange Commission      
within fifteen days of initial issuance of the Certificates. The Trust Fund     
created under the Agreement will consist of (i) all of the Depositor's right,   
title and interest in the Mortgage Loans, the related Mortgage Notes, Mortgages 
and other related documents, (ii) all payments on or collections in respect of  
the Mortgage Loans due after the Cut-off Date, together with any proceeds       
thereof, (iii) any Mortgaged Properties acquired on behalf of Certificateholders
by foreclosure or by deed in lieu of foreclosure, and any revenues received     
thereon and (iv) the rights of the Trustee under all insurance policies required
to be maintained pursuant to the Agreement. Reference is made to the Prospectus 
for important information in addition to that set forth herein regarding the    
Trust Fund, the terms and conditions of the Agreement and the Offered           
Certificates. The Offered Certificates will be transferable and exchangeable at 
the corporate trust offices of the Trustee, located in Chicago, Illinois. The   
Depositor will provide to a prospective or actual Certificateholder without     
charge, on written request, a copy (without exhibits) of the Agreement. Requests
should be addressed to the Secretary, Salomon Brothers Mortgage Securities VII, 
Inc., Seven World Trade Center, New York, New York 10048.                       

ASSIGNMENT OF THE MORTGAGE LOANS                                                

   At the time of issuance of the Certificates, the Depositor will cause the
Mortgage Loans to be assigned to the Trustee, together with all principal,      
interest and Arrearage received by or on behalf of the Depositor on or with     
respect to such Mortgage Loans after the Cut-off Date, other than principal and 
interest due on or before the Cut-off Date. The Trustee will, concurrently with 
such assignment, deliver the Certificates to the Depositor in exchange for the  
Trust Fund. Each Mortgage Loan will be identified in a schedule appearing as an 
exhibit to the Agreement. Such schedule will include information as to the      
outstanding principal balance of each Mortgage Loan after application of the    
principal portion of all Modified Scheduled Payments due on or before such date,
whether or not received, as well as information regarding the Mortgage Rate, the
Original Scheduled Payment, the Modified Scheduled Payment, the maturity of the 
Mortgage Note, the value of the Mortgaged Property, the Loan-to-Value Ratios    
based on a recent broker's price opinion and certain other information with     
respect to the Mortgage Loans.                                                  

In addition, the Depositor will, with respect to each Mortgage Loan,  
deliver or cause to be delivered to the Trustee (i) the Mortgage Note endorsed, 
without recourse, to the order of the Trustee (or the original assignment and   
lost note affidavit in those cases where HUD did not deliver an original        
Mortgage Note to the Mortgage Loan Seller), (ii) the Mortgage with evidence of  
recording indicated thereon (or a copy of such Mortgage certified by the related
recording office) and (iii) an assignment of the Mortgage to the Trustee in     
recordable form. The Master Servicer will promptly cause the                    

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assignment of each related Mortgage Loan to be recorded in the appropriate      
public office for real property records.                                        

The Trustee, will hold such documents in trust for the benefit of the 
Certificateholders. The Trustee will review the Mortgage Note described in      
clause (i) above prior to the Closing Date. If such document is found to be     
missing or defective in any material respect, the Trustee shall immediately     
notify the Master Servicer and the Depositor and the Master Servicer shall      
immediately notify the Mortgage Loan Seller. If the Mortgage Loan Seller cannot 
cure the omission or defect, the Mortgage Loan Seller will be obligated to      
repurchase the related Mortgage Loan from the Trust Fund at the Purchase Price  
or substitute for such Mortgage Loan; provided that (i) the Mortgage Loan       
Seller's obligation shall only arise in the event of a material adverse effect  
and (ii) any substitution shall be to the same extent permitted with respect to 
a breach of a representation and warranty as provided under "The Mortgage       
Pool--Representations and Warranties". There can be no assurance that the       
Mortgage Loan Seller will fulfill this repurchase or substitution obligation.   
This repurchase or substitution obligation constitutes the sole remedy available
to the Certificateholders or the Trustee for omission of, or a material defect  
in, a Mortgage Note.                                                            

THE MASTER SERVICER                                                             

    The information set forth in the following paragraphs has been provided by
the Master Servicer. None of the Depositor, the Trustee, the Fiscal Agent or any
of their respective affiliates have made or will make any representation as to  
the accuracy or completeness of such information.                               

   Ocwen Federal Bank FSB, a federally-chartered savings bank, headquartered
in Fort Lee, New Jersey will serve as the Master Servicer for the Mortgage Loans
pursuant to the Agreement (in such capacity, the "Master Servicer"). The Master 
Servicer is a wholly-owned subsidiary of Ocwen Financial Corporation, a public  
financial services holding company. At December 31, 1996, the Master Servicer   
had approximately $2.402 billion in assets, approximately $2.174 billion in     
liabilities and approximately $228 million in equity. At December 31, 1996, the 
Master Servicer's tangible and leveraged capital ratio was approximately 9.33%  
and its risk-based capital ratio was approximately 12.85%. For the year ended   
December 31, 1996, the Master Servicer's income from continuing operations was  
approximately $49 million.                                                      

The major business of the Master Servicer has been the resolution of  
nonperforming single-family, multi-family and commercial mortgage loan          
portfolios acquired from the Resolution Trust Corporation, from private         
investors, and most recently, from HUD through HUD's auction of defaulted FHA   
Loans. The Master Servicer is a market leader in the nonperforming mortgage loan
acquisition business, having acquired in excess of $3.7 billion of such mortgage
loans over the past five years.                                                 

     The following table sets forth, for the non-conforming credit mortgage loan
(the "BCD Mortgage Loan") servicing portfolio serviced by the Master Servicer as
of December 31, 1995, and as of December 31, 1996, certain information relating 
to the delinquency experience (including loans in foreclosure included in the   
Master Servicer's servicing portfolio (which portfolio does not include mortgage
loans that are subserviced by others)) at the end of the indicated periods. The 
indicated periods of delinquency are based on the number of days past due on a  
contractual basis. No mortgage loan is considered delinquent for these purposes 
until it is one month past due on a contractual basis. The information contained
in the monthly remittance reports which will be sent to investors will be       
compiled using the same methodology as that used to compile the information     
contained in the table below.                                                   

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                                                               DELINQUENCIES AND FORECLOSURES                                  
                                                                    (DOLLARS IN THOUSANDS)                                     

                                                    As of                                             As of                    
                                              December 31, 1995                                 December 31, 1996              
                                -------------------------------------------     -----------------------------------------------

                                                       Percent     Percent                               Percent       Percent 
                                By No.        By        By No.        By         By No.       By          By No.          By   
                                  of        Dollar       of         Dollar         of       Dollar          of          Dollar 
                                Loans       Amount      Loans       Amount       Loans      Amount        Loans         Amount 
                                -----       ------      -----       ------       -----      ------        -----         ------ 

                                                                                                                               
Total Portfolio................  1,694   $  194,717      N/A         N/A         2,834   $  305,085       N/A           N/A    
Period of Delinquency:                                                                                                         
     30-59 Days................     35        3,201       2.07        1.64         107       10,554         3.78          3.46 
     60-89 Days................     18        2,157       1.06        1.11          38        4,321         1.34          1.42 
     90 days or more...........     37        5,676       2.18        2.91         138       17,969         4.87          5.89 
                                    --   ----------      -----       -----         ---   ----------        -----        ------ 
Total Delinquent Loans.........     90   $   11,034       5.31%       5.67%        283   $   32,844         9.99%        10.77%
                                    ==   ==========      =====       =====         ===   ==========        =====        ====== 
Loans in Foreclosure(1)........     29   $    4,292       1.71%       2.20%        136   $   17,805         4.80%         5.84%

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

(1)  Loans in foreclosure are also included under the heading "Total Delinquent 
Loans."                                                               

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

The following tables set forth, for the BCD Mortgage Loan servicing   
portfolio serviced by the Master Servicer as of December 31, 1995, and as of    
December 31, 1996, certain information relating to the foreclosure experience of
BCD Mortgage Loans included in the Master Servicer's servicing portfolio (which 
portfolio does not include mortgage loans that are subserviced by others) at the
end of the indicated periods.                                                   

 REAL ESTATE OWNED
(DOLLARS IN THOUSANDS)

                           As of                       As of
                           December 31, 1995           December 31, 1996
                           -----------------------     -----------------------

                         By No.       By             By No.       By
                             of       Dollar             of       Dollar
                           Loans      Amount           Loans      Amount
                           ----------  -----------     ----------  -----------

Total Portfolio ..........     1,694     $194,717          2,834     $305,085   
Foreclosed Loans(1) ......         0            0             34        3,329   
Foreclosure Ratio(2) .....      0.00%        0.00%          1.20%        1.09%  

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

(1)  For the purposes of these tables, Foreclosed Loans means the principal     
balance of mortgage loans secured by mortgaged properties the title to
which has been acquired by the Master Servicer.                       

(2)  The Foreclosure Ratio is equal to the aggregate principal balance or number
    of Foreclosed Loans divided by the aggregate principal balance, or number,
   as applicable, of mortgage loans in the Total Portfolio at the end of the
indicated period.                                                     

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

 LOAN GAIN/(LOSS) EXPERIENCE
(DOLLARS IN THOUSANDS)

                                           Year Ended           Year Ended
                                          December 31, 1995    December 31, 1996
                                          -----------------    -----------------

                                          By Dollar            By Dollar
                                           Amount               Amount
                                          -----------------    -----------------

Total Portfolio(1) .......................     $194,717            $305,085     
Net Gain/(Losses)(2) .....................     $      0                  16     
Net Gain/(Losses) as a Percentage of Total                                      
Portfolio .............................         0.00%               0.01% 

----------                                                                      
(1)  "Total Portfolio" on the date stated above is the principal balances of the
Mortgage Loans outstanding on the last day of the period.             

(2)  "Net Gain/(Losses)" are actual gains (losses) incurred on liquidated       
     properties and shortfall payoffs for each respective period. Gains (losses)
are calculated after repayment of all principal, prepayment penalties,
 foreclosure costs and accrued interest to date of liquidation. However,
    premiums paid to purchase the loans and other direct origination costs are
not included in the calculation.                                      

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It is unlikely that the delinquency experience of the Mortgage Loans  
comprising the Mortgage Pool will correspond to the delinquency experience of   
the Master Servicer's mortgage portfolio set forth in the foregoing tables. The 
Mortgage Loans comprising the Mortgage Pool are not BCD Mortgage Loans but are  
Mortgage Loans that were the subject of the HUD Assignment Program as described 
herein. The Master Servicer does not have significant historical delinquency,   
bankruptcy, foreclosure or default experience that may be referred to for       
purposes of estimating the future delinquency and loss experience on mortgage   
loans subject to the HUD Assignment Program and the actual performance may      
differ substantially from the performance of the BCD Mortgage Loan servicing    
portfolio shown above. It should be noted that if the residential real estate   
market should experience an overall decline in property values, the actual rates
of delinquencies and foreclosures could be higher than those previously         
experienced by the Master Servicer. In addition, adverse economic conditions may
affect the timely payment by Mortgagors of scheduled payments of principal and  
interest and payments of Arrearage on the Mortgage Loans and, accordingly, the  
actual rates of delinquencies and foreclosures with respect to the Mortgage     
Pool.                                                                           

THE TRUSTEE                                                                     

     LaSalle National Bank, a nationally chartered bank, will act as Trustee for
the Certificates pursuant to the Agreement. The Trustee's offices for notices   
under the Agreement are located at 135 South LaSalle Street, Suite 1740,        
Chicago, Illinois 60674-4107, Attention: ABS Trust Services Group SBMS VII      
1997-HUD1.                                                                      

The principal compensation to be paid to the Trustee in respect of its
obligations under the Agreement will be equal to accrued interest at the Trustee
Fee Rate of 0.00375% per annum on the Legal Balance of each Mortgage Loan. Since
the Trustee's primary compensation is a percentage of the Legal Balance of each 
Mortgage Loan, such amounts will decrease in accordance with the amortization   
schedule of the Mortgage Loans. The Agreement will provide that the Trustee and 
any director, officer, employee or agent of the Trustee will be indemnified by  
the Trust Fund and will be held harmless against any loss, liability or expense 
(not including expenses, disbursements and advances incurred or made by the     
Trustee, including the compensation and the expenses and disbursements of its   
agents and counsel, in the ordinary course of the Trustee's performance in      
accordance with the provisions of the Agreement) incurred by the Trustee arising
out of or in connection with the acceptance or administration of its obligations
and duties under the Agreement, other than any loss, liability or expense (i)   
resulting from the Master Servicer's actions or omissions in connection with the
Agreement and the Mortgage Loans, (ii) that constitutes a specific liability of 
the Trustee under the Agreement or (iii) incurred by reason of willful          
misfeasance, bad faith or negligence in the performance of the Trustee's duties 
under the Agreement or as a result of a breach, or by reason of reckless        
disregard, of the Trustee's obligations and duties under the Agreement.         

   The Trustee makes no representations as to the validity or sufficiency of
the Agreement, the Certificates or any Mortgage Loan or related document and is 
not accountable for the use or application by or on behalf of the Master        
Servicer of any funds paid to the Master Servicer or its designee in respect of 
the Certificates or the Mortgage Loans, or deposited into or withdrawn from the 
Certificate Account held by the Master Servicer or any other account by or on   
behalf of the Master Servicer. If no Master Servicer event of default has       
occurred and is continuing, the Trustee is required to perform only those duties
specifically required under the Agreement. However, upon receipt of the various 
certificates, reports or other instruments required to be furnished to it, the  
Trustee is required to examine such documents and to determine whether they     
conform to the requirements of the Agreement. If the Master Servicer defaults in
its obligation to make any P&I Advance, the Trustee will be obligated to        
terminate the Master Servicer and make any such P&I Advance required to be but  
not made by the Master Servicer under the Agreement, provided that the Trustee  
will not be obligated to make any P&I Advance that it deems to be               
nonrecoverable. The Trustee will be entitled to reimbursement for each P&I      
Advance made by it in the same manner and to the same extent, but prior to, the 
Master Servicer.                                                                

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THE FISCAL AGENT                                                                

 ABN AMRO Bank N.V., a Netherlands banking corporation and the corporate
parent of the Trustee, will act as Fiscal Agent for the Trust Fund and will be  
obligated to make any P&I Advance required to be but not made by the Trustee    
under the Agreement, provided that the Fiscal Agent will not be obligated to    
make any P&I Advance that it deems to be nonrecoverable. The Fiscal Agent will  
be entitled to reimbursement for each P&I Advance made by it in the same manner 
and to the same extent, but prior to, the Master Servicer and the Trustee. The  
Fiscal Agent will be entitled to various rights, protections and indemnities    
similar to those afforded the Trustee. See "--The Trustee" above.               

The Trustee will be responsible for payment of the compensation of the
Fiscal Agent. As of June 30, 1996, the Fiscal Agent reported assets of          
approximately $385 billion.                                                     

SERVICING AND OTHER COMPENSATION AND PAYMENT OF EXPENSES                        

    The principal compensation to be paid to the Master Servicer in respect of
its servicing activities for the Certificates will be equal to accrued interest 
at the Servicing Fee Rate of 0.50% per annum with respect to each Mortgage Loan 
on the Unpaid Principal Balance of such Mortgage Loan and 0.40% pre annum with  
respect to each Mortgage Loan on the Arrearage of such Mortgage Loan. Since the 
Master Servicer's primary compensation is a function of the Unpaid Principal    
Balance and Arrearage of each Mortgage Loan, such amounts will decrease in      
accordance with the amortization schedule of the Mortgage Loans. As additional  
servicing compensation, the Master Servicer is entitled to retain all assumption
fees, prepayment penalties and late payment charges, to the extent collected    
from mortgagors, together with any interest earned on funds held in the         
Certificate Account and any escrow accounts. The Master Servicer is obligated to
offset any Prepayment Interest Shortfall on any Distribution Date (payments made
by the Master Servicer in satisfaction of such obligation, "Compensating        
Interest") to the extent of its aggregate servicing compensation for such       
Distribution Date described in the preceding two sentences. The Master Servicer 
is obligated to pay certain insurance premiums and certain ongoing expenses     
associated with the Mortgage Pool and incurred by the Master Servicer in        
connection with its responsibilities under the Agreement, including without     
limitation, payment of the fees and disbursements of the Trustee, any           
Sub-Servicer and independent accountants and, is entitled to reimbursement      
therefor as provided in the Agreement. With respect to any expense incurred by  
the Master Servicer for the protection of a Mortgage Loan or mortgaged property 
for which the Master Servicer is entitled to reimbursement as provided under the
Agreement, if the Master Servicer determines that such reimbursement will be    
nonrecoverable from related Liquidation Proceeds, then the Master Servicer may  
reimburse itself from amounts on deposit in the Certificate Account, such right 
being prior to the rights of Certificateholders to receive distributions of     
amounts on deposit in the Certificate Account. See "Description of the          
Certificates--Retained Interest; Servicing or Administration Compensation and   
Payment of Expenses" in the Prospectus for information regarding expenses       
payable by the Master Servicer and "Certain Federal Income Tax Consequences"    
herein regarding certain taxes payable by the Master Servicer.                  

SALE OF DEFAULTED MORTGAGE LOANS                                                

  If consent to the operation of the provisions described below shall have
been given by the Master Servicer, then with respect to any Mortgage Loan that  
is delinquent in excess of the number of days provided in the Agreement, (i) the
holder of a majority in Percentage Interest of the Class B-6 Certificates, or if
the Certificate Balance of the Class B-6 Certificates has been reduced to zero, 
the holder of a majority in Percentage Interest of the Class B-5 Certificates   
(the "Directing Holder"), may direct the Master Servicer to commence foreclosure
and (ii) prior to commencement of foreclosure of any Mortgage Loan, the Master  
Servicer will notify the Directing Holder of such proposed foreclosure in order 
to permit the Directing Holder the right to instruct the Master Servicer to     
delay the proposed foreclosure. In the case of the exercise by the Directing    
Holder of the right to direct the Master Servicer pursuant to clause (ii) above,
the Directing Holder will provide to the Master Servicer an                     

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appraisal of the related Mortgaged Property (the "Loan Appraisal"). Within two  
business days of instructing the Master Servicer to commence or delay           
foreclosure, the Directing Holder will deposit in a segregated account          
maintained with the Master Servicer (the "Collateral Account") for the benefit  
of the Certificateholders an amount equal to 125% of the Valuation (as defined  
below) of the related Mortgage Loan plus three months' interest at the related  
Mortgage Rate. While foreclosure is delayed pursuant to the direction of the    
Directing Holder, the Directing Holder may direct the Master Servicer to proceed
with foreclosure at anytime.                                                    

    With respect to any election by the Directing Holder to delay foreclosure,
the "Valuation" of any Mortgage Loan shall be the greater of the outstanding    
principal balance thereof and the fair market value thereof as provided in the  
related Loan Appraisal. With respect to any election by the Directing Holder to 
commence foreclosure, the "Valuation" of any Mortgage Loan shall equal the      
outstanding principal balance thereof.                                          

     Upon the liquidation of the related Mortgage Loan or the disposition of the
related Mortgaged Property in accordance with the requirements set forth in the 
Agreement, the Master Servicer will calculate the amount, if any, by which the  
Valuation exceeds the actual sales price obtained for the related Mortgage Loan 
or the Mortgaged Property, as the case may be, and the Master Servicer will     
withdraw the amount of such excess from the Collateral Account and deposit such 
amount into the Certificate Account. If the amount realized pursuant to the     
above-described procedures exceeds the Valuation, the Master Servicer will      
deposit immediately upon realization from such proceeds such excess into the    
Certificate Account. The Master Servicer shall apply all such amounts as        
additional liquidation proceeds pursuant to the Agreement. If any election to   
delay foreclosure is to be extended for a period in excess of three months from 
the Directing Holder's direction to the Master Servicer to delay foreclosure,   
the Directing Holder will be required to deposit in the Collateral Account in   
advance the amount of each additional month's interest at the related Mortgage  
Rate. If the above-described procedures do not result in the Mortgage Loan being
brought current within six months of the Directing Holder's direction to the    
Master Servicer to delay foreclosure, the Directing Holder will be required to  
either (i) purchase the Mortgage Loan for a purchase price equal to the fair    
market value thereof as shown on the Loan Appraisal or (ii) allow the Master    
Servicer to proceed with the commencement of foreclosure. Should the Directing  
Holder elect to purchase the Mortgage Loan, the Master Servicer will first apply
funds on deposit in the Collateral Account towards such purchase price; any     
shortage will be paid by the Directing Holder and any excess will be returned to
it.                                                                             

With respect to any Mortgage Loan as to which the Directing Holder has
directed the Master Servicer to commence foreclosure or to delay foreclosure,   
the Master Servicer may withdraw from the Collateral Account from time to time  
amounts necessary to reimburse the Master Servicer for all P&I Advances and     
servicing advances in accordance with the Agreement. In the event that the      
related Mortgage Loan is brought current, the amounts so withdrawn from the     
Collateral Account by the Master Servicer as reimbursement for P&I Advances or  
servicing advances shall be redeposited therein by the Master Servicer and the  
Master Servicer shall be reimbursed as otherwise provided in the Agreement.     
Following foreclosure, liquidation, disposition or the bringing current of the  
related Mortgage Loan, as applicable, all amounts remaining in the Collateral   
Account will be released to the Directing Holder. In the event that amounts on  
deposit in the Collateral Account are insufficient to cover the withdrawals that
the Master Servicer is entitled to make for P&I Advances, servicing advances or 
for deposit into the Certificate Account, the Directing Holder will be obligated
to pay such amounts to the Master Servicer for deposit into the Collateral      
Account. The Directing Holder may direct that amounts on deposit in the         
Collateral Account be invested in Permitted Investments. Interest or other      
income earned on funds in the Collateral Account will be paid to the Directing  
Holder and the amount of any loss on such funds will be immediately deposited   
into the Collateral Account by the Directing Holder when realized. The Directing
Holder will grant to the Master Servicer for the benefit of the                 
Certificateholders a security interest in the Collateral Account, all amounts   
deposited therein or invested in Permitted Investments, and all proceeds of the 
foregoing.                                                                      

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VOTING RIGHTS                                                                   

     With respect to any date of determination, (i) 98% of all the Voting Rights
shall be allocated among the holders of the P&I Certificates and the Class A-WAC
Certificates on a PRO RATA basis based on the then-current Certificate Balances 
of their respective Certificates (provided, however, that if the Certificate    
Balance of the Class A-WAC Certificates is reduced to zero before the Notional  
Amount of such class is reduced to zero, then 97% of all the Voting Rights shall
be allocated among holders of the P&I Certificates on a PRO RATA basis based on 
the then-current Certificate Balances of their respective Certificates and 1% of
all the Voting Rights shall be allocated to the holders of the Class A-WAC      
Certificates), (ii) 1% of all the Voting Rights shall be allocated to the       
holders of the Class IO Certificates and (iii) 1% of all the Voting Rights shall
be allocated among the holders of the Residual Certificates. The Voting Rights  
allocated to each class of REMIC Regular Certificates shall be allocated among  
all holders of each such class in proportion to the outstanding Certificate     
Balance (or, in the case of the Class IO Certificates and, if the Certificate   
Balance of the Class A-WAC Certificates has been reduced to zero, the Class     
A-WAC Certificates, the outstanding Notional Amount) of such Certificates.      

TERMINATION                                                                     

     The obligations created by the Agreement will terminate upon the payment to
Certificateholders of all amounts held in the Certificate Account or by the     
Master Servicer and required to be paid to them pursuant to the Agreement       
following the final payment or other liquidation of the last Mortgage Loan      
subject thereto or the disposition of all property acquired upon foreclosure of 
any such Mortgage Loan. In addition, the Master Servicer will have the right to 
purchase all remaining Mortgage Loans and any properties acquired in respect    
thereof and thereby effect early retirement of the Certificates on any          
Distribution Date following the Due Period during which the aggregate Legal     
Balance of the Mortgage Loans and such properties, after taking into account all
payments made in respect thereof through the last day of the month preceding    
such date, is less than 5% of the aggregate Legal Balance of the Mortgage Loans 
as of the Cut-off Date. In the event the Master Servicer exercises such option, 
the purchase price payable in connection therewith generally will be equal to   
par (including any Arrearages) plus accrued interest on the Unpaid Principal    
Balance for each Mortgage Loan at the related Mortgage Rate to but not including
the first day of the month in which such repurchase price is distributed, and   
the portion of the purchase price allocable to the Offered Certificates will be,
to the extent of available funds (i) in the case of the Certificates of any     
class, other than the Class IO Certificates, 100% of the then outstanding       
Certificate Balance thereof, plus (ii) in the case of the Certificates of any   
class, one month's interest on the then outstanding Certificate Balance or      
Notional Amount thereof, as applicable, at the then applicable Pass-Through Rate
for such class plus any previously accrued but unpaid interest thereon. In no   
event will the trust created by the Agreement continue beyond the expiration of 
21 years from the death of the survivor of the persons named in the Agreement.  
See "Description of the Certificates--Termination" in the Prospectus.           

 CERTAIN FEDERAL INCOME TAX CONSEQUENCES

   Three separate elections will be made to treat designated portions of the
Trust Fund as real estate mortgage investment conduits ("REMIC I", "REMIC II"   
and "REMIC III", respectively, and each a "REMIC") for federal income tax       
purposes. Upon the issuance of the Offered Certificates, Thacher Proffitt &     
Wood, counsel to the Depositor, will deliver its opinion generally to the effect
that, assuming compliance with all provisions of the Agreement, for federal     
income tax purposes, REMIC I and REMIC II will each qualify as a REMIC under    
Sections 860A through 860G of the Internal Revenue Code of 1986 (the "Code").   

  The assets of REMIC I will consist of the Mortgage Loans, any properties
acquired on behalf of the Certificateholders and the Certificate Account. For   
federal income tax purposes, (a) the separate                                   

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non-certificated regular interests in REMIC I will be the "regular interests" in
REMIC I and will constitute the assets of REMIC II, (b) the Class R-I           
Certificates will evidence the sole class of "residual interests" in REMIC I,   
(c) the separate non-certificated regular interests in REMIC II will be the     
"regular interests" in REMIC II and will constitute the assets of REMIC III, (d)
the Class R-II Certificates will evidence the sole class of "residual interests"
in REMIC II, (e) the REMIC Regular Certificates will evidence the "regular      
interests" in REMIC III and will be generally treated as representing ownership 
of debt instruments of REMIC III and (f) the Class R-III Certificates will      
evidence the sole class of "residual interests" in REMIC III. See "Certain      
Federal Income Tax Consequences--REMIC-Classification of REMICs" in the         
Prospectus.                                                                     

  For federal income tax reporting purposes, the Class IO Certificates and
Class A-WAC will, but the other Classes of Offered Certificates will not, be    
issued with "original issue discount". The prepayment assumption that will be   
used in determining the rate of accrual of original issue discount, premium and 
market discount, if any, for federal income tax purposes will be based on the   
assumption that subsequent to the date of any determination the Mortgage Loans  
will prepay at a constant rate of 8% CPR. No representation is made that the    
Mortgage Loans will prepay at such rate or at any other rate. See "Certain      
Federal Income Tax Consequences--REMICs--Taxation of Owners of REMIC Regular    
Certificates--Original Issue Discount" in the Prospectus.                       

   The Internal Revenue Service (the "IRS") has issued regulations (the "OID
Regulations") under Sections 1271 to 1275 of the Code generally addressing the  
treatment of debt instruments issued with original issue discount. Purchasers of
the Class IO Certificates and the Class A-WAC Certificates should be aware that 
the OID Regulations do not adequately address certain issues relevant to, or are
not applicable to, securities such as the Class IO Certificates and the Class   
A-WAC Certificates. In addition, there is considerable uncertainty concerning   
the application of the OID Regulations to REMIC Regular Certificates that       
provide for payments based on a variable rate such as the Class IO Certificates 
and the Class A-WAC Certificates. Because of the uncertainty concerning the     
application of Section 1272(a)(6) of the Code to such Certificates and because  
the rules of the OID Regulations relating to debt instruments having a variable 
rate of interest are limited in their application in ways that could preclude   
their application to such Certificates even in the absence of Section 1272(a)(6)
of the Code, the IRS could assert that the Class IO Certificates and the Class  
A-WAC Certificates should be treated as issued with original issue discount or  
should be governed by the rules applicable to debt instruments having contingent
payments or by some other method not yet set forth in regulations. Prospective  
purchasers of the Class IO Certificates and the Class A-WAC Certificates are    
advised to consult their tax advisors concerning the tax treatment of such      
Certificates.                                                                   

  The OID Regulations suggest that original issue discount with respect to
securities such as the Class A-WAC Certificates that represent multiple         
uncertificated REMIC regular interests, in which ownership interests will be    
issued simultaneously to the same buyer and which are required under the Pooling
Agreement to be transferred together, should be computed on an aggregate method.
In the absence of further guidance from the IRS, original issue discount with   
respect to the uncertificated regular interests represented by the Class A-WAC  
Certificates will be reported to the IRS and the Certificateholders on an       
aggregate method based on a single overall constant yield and the prepayment    
assumption stated above, treating all such uncertificated regular interests as a
single debt instrument as set forth in the OID Regulations.                     

If the method of computing original issue discount described in the   
Prospectus results in a negative amount for any period with respect to any a    
REMIC Regular Certificate issued with original issue discount (in particular, a 
Class IO Certificate or a Class A-WAC Certificate), the amount of original issue
discount allocable to such period would be zero, and such Certificateholder will
be permitted to offset such amounts only against the respective future income   
(if any) from such Certificate. Although uncertain, a Certificateholder may be  
permitted to deduct a loss to the extent that his or her respective remaining   
basis in such Certificate exceeds the maximum amount of future payments to which
such Certificateholder is entitled, assuming no further prepayments of the      
Mortgage Loans. Although the matter is not free from doubt, any such loss might 
be treated as a capital loss.                                                   

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The OID Regulations in some circumstances permit the holder of a debt 
instrument to recognize original issue discount under a method that differs from
that of the issuer. Accordingly, it is possible that holders of Offered         
Certificates issued with original issue discount may be able to select a method 
for recognizing original issue discount that differs from that used in preparing
reports to Certificateholders and the IRS. Prospective purchasers of Offered    
Certificates issued with original issue discount are advised to consult their   
tax advisors concerning the tax treatment of such Certificates in this regard.  

Certain classes of Certificates may be treated for federal income tax 
purposes as having been issued with a premium. Certificateholders may elect to  
amortize such premium under a constant yield method in which case such          
amortizable premium will generally be allocated among the interest payments on  
such Certificates and will be applied as an offset against such interest        
payments. See "Certain Federal Income Tax Consequences--REMICs--Taxation of     
Owners of REMIC Regular Certificates--Premium" in the Prospectus.               

 The Offered Certificates will be treated as assets described in Section
7701(a)(19)(C) of the Code and "real estate assets" under Section 856(c)(5)(A)  
of the Code, generally in the same proportion that the assets of the REMIC      
underlying such Certificates would be so treated. In addition, interest on the  
Offered Certificates will be treated as "interest on obligations secured by     
mortgages on real property" under Section 856(c)(3)(B) of the Code, generally to
the extent that the Offered Certificates are treated as "real estate assets"    
under Section 856(c)(5)(A) of the Code. The Offered Certificates also will be   
treated as "qualified mortgages" under Section 860G(a)(3) of the Code. See      
"Certain Federal Income Tax Consequences-REMICs-Characterization of Investments 
in REMIC Certificates" in the Prospectus.                                       

  It is not anticipated that REMIC I, REMIC II or REMIC III will engage in
any transactions that would subject it to the prohibited transactions tax as    
defined in Section 860F(a)(2) of the Code, the contributions tax as defined in  
Section 860G(d) of the Code or the tax on net income from foreclosure property  
as defined in Section 860G(c) of the Code. However, in the event that any such  
tax is imposed on REMIC I, REMIC II or REMIC III, such tax will be borne (i) by 
the Trustee, if the Trustee has breached its obligations with respect to REMIC  
compliance under the Agreement, (ii) by the Master Servicer, if the Master      
Servicer has breached its obligations with respect to REMIC compliance under the
Agreement and (iii) otherwise by the Trust Fund, with a resulting reduction in  
amounts otherwise distributable to holders of the related Certificates. See     
"Description of the Certificates-General" and "Certain Federal Income Tax       
Consequences--REMICs--Prohibited Transactions and Other Possible REMIC Taxes" in
the Prospectus.                                                                 

    The responsibility for filing annual federal information returns and other
reports will be borne by the Trustee. See "Certain Federal Income Tax           
Consequences--REMICs--Reporting and Other Administrative Matters" in the        
Prospectus.                                                                     

  For further information regarding the federal income tax consequences of
investing in the Offered Certificates, see "Certain Federal Income Tax          
Consequences--REMICs" in the Prospectus.                                        

METHOD OF DISTRIBUTION

Subject to the terms and conditions set forth in the Underwriting     
Agreement, dated April 29, 1997 (the "Underwriting Agreement"), the Depositor   
has agreed to sell, and Salomon Brothers Inc (the "Underwriter") has agreed to  
purchase the Offered Certificates. The Underwriter is obligated to purchase all 
Offered Certificates of the respective classes offered hereby if they purchase  
any. The Underwriter is an affiliate of the Depositor.                          

    Distribution on the Offered Certificates will be made from time to time in
negotiated transactions or otherwise at varying prices to be determined at the  
time of sale. Proceeds to the Depositor from the sale of the Offered            
Certificates, before deducting expenses payable by the Depositor, will be       

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102.6895% of the aggregate initial Certificate Balance of the Offered           
Certificates (other than the Class IO Certificates), plus accrued interest from 
April 1, 1997 on the Offered Certificates. In connection with the purchase and  
sale of the Offered Certificates, the Underwriter may be deemed to have received
compensation from the Depositor in the form of underwriting discounts.          

   The Underwriting Agreement provides that the Depositor will indemnify the
Underwriter against certain civil liabilities, including liabilities under the  
Securities Act of 1933, as amended, or will contribute to payments the          
Underwriter may be required to make in respect thereof.                         

SECONDARY MARKET

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

LEGAL OPINIONS

   Certain legal matters relating to the Offered Certificates will be passed
upon for the Depositor and the Underwriter by Thacher Proffitt & Wood, New York,
New York.                                                                       

 RATINGS

  It is a condition to the issuance of the Certificates that each class of
Senior Certificates be rated not lower than "AAA" by Duff & Phelps Credit Rating
Co. ("DCR") and "Aaa" by Moody's Investors Service, Inc. ("Moody's"), the Class 
B-1 Certificates be rated not lower than "AA" by DCR and "Aa2" by Moody's, the  
Class B-2 Certificates be rated not lower than "A" by DCR and "A2" by Moody's   
and the Class B-3 Certificates be rated not lower than "BBB" by DCR and "Baa2"  
by Moody's.                                                                     

The ratings of DCR and Moody's assigned to mortgage pass-through      
certificates address the likelihood of the receipt by Certificateholders of all 
distributions to which such Certificateholders are entitled. The rating process 
addresses structural and legal aspects associated with the Certificates,        
including the nature of the underlying mortgage loans. The ratings assigned to  
mortgage pass-through certificates do not represent any assessment of the       
likelihood that principal prepayments will be made by the mortgagors or the     
degree to which such prepayments will differ from that originally anticipated.  

   A security rating is not a recommendation to buy, sell or hold securities
and may be subject to revision or withdrawal at any time by the assigning rating
organization. Each security rating should be evaluated independently of any     
other security rating. In the event that the ratings initially assigned to the  
Offered Certificates are subsequently lowered for any reason, no person or      
entity is obligated to provide any additional credit support or credit          
enhancement with respect to the Offered Certificates.                           

  The Depositor has not requested that any rating agency rate any class of
the Offered Certificates other than as stated above. However, there can be no   
assurance as to whether any other rating agency will rate any class of the      
Offered Certificates, or, if it does, what rating would be assigned by          

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any such other rating agency. A rating on any class of the Offered Certificates 
by another rating agency, if assigned at all, may be lower than the ratings     
assigned to such classes of the Offered Certificates as stated above.           

LEGAL INVESTMENT

The Class A and B-1 Certificates will constitute "mortgage related    
securities" for purposes of the Secondary Mortgage Market Enhancement Act of    
1984 ("SMMEA") for so long as they are rated not lower than the second highest  
rating category by a Rating Agency (as defined in the Prospectus), and, as such,
will be legal investments for certain entities to the extent provided in SMMEA. 
SMMEA, however, provides for state limitation on the authority of such entities 
to invest in "mortgage related securities" provided that such restrictive       
legislation was enacted prior to October 3, 1991. Certain states have enacted   
legislation which overrides the preemption provisions of SMMEA. Institutions    
whose investment activities are subject to legal investment laws and regulations
or to review by certain regulatory authorities may be subject to restrictions on
investment in the Offered Certificates. The Federal Financial Institutions      
Examination Council, which includes the Board of Governors of the Federal       
Reserve System (the "FRB"), the Federal Deposit Insurance Corporation (the      
"FDIC"), the National Credit Union Administration (the "NCUA"), the Comptroller 
of the Currency (the "OCC") and the Office of Thrift Supervision (the "OTS"),   
has issued a supervisory policy statement (the "Policy Statement") that is      
applicable to all depository institutions (to the extent adopted by their       
respective federal regulators), setting forth guidelines for and imposing       
significant restrictions on investments in "high-risk mortgage securities". The 
Policy Statement generally indicates that a mortgage derivative product will be 
deemed to be high-risk if (i) it has a weighted average life greater than 10    
years given a reasonable prepayment assumption or (ii) it exhibits greater      
average life volatility or greater price volatility than a benchmark fixed-rate 
thirty-year mortgage backed pass-through security. According to the Policy      
Statement, prior to purchase, a depository institution would be required to     
determine whether a mortgage derivative product that it is considering acquiring
is high-risk, and if so that the proposed acquisition would reduce the          
institution's overall interest rate risk. Reliance on analysis and documentation
obtained from a securities dealer or other outside party without internal       
analysis by the institution would be unacceptable, and a failure to adhere to   
the monitoring, reporting and diligence requirements would be considered an     
unsafe and unsound practice. There can be no assurance as to whether the Offered
Certificates would be treated as high-risk under the Policy Statement. The      
Policy Statement has been adopted by the FRB, the FDIC, the OCC, the OTS and the
NCUA. In addition, the NCUA has issued regulations governing federal credit     
union investments which prohibit investment in certain specified types of       
securities, which may include the Offered Certificates. The NCUA has indicated  
that its regulations will take precedence over the Policy Statement. Similar    
policy statements and regulations have been issued by other regulators having   
jurisdiction over other types of depository institutions. Any such institution  
should consult its own legal advisors in determining whether and to what extent 
there may be restrictions on its ability to invest in the Offered Certificates. 
See "Legal Investment" in the Prospectus.                                       

ERISA CONSIDERATIONS

    The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and the Code impose certain requirements on employee benefit plans and on       
certain other retirement plans and arrangements, including individual retirement
accounts and annuities, Keogh plans and bank collective investment funds and    
insurance company general and separate accounts in which such plans, accounts or
arrangements are invested ("Plans") subject to ERISA and the Code and on persons
who are fiduciaries with respect to such Plans. A fiduciary of a Plan or any    
person investing Plan Assets of any Plan, as defined under "ERISA               
Considerations" in the Prospectus, should carefully review with                 

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its legal advisors whether the purchase, sale or holding of the Offered         
Certificates could give rise to or result in a transaction prohibited or not    
otherwise permissible under ERISA or Section 4975 of the Code.                  

   Because the purchase, sale and holding of the Offered Certificates by, on
behalf of or with Plan Assets of any Plan may not qualify for exemptive relief  
under the Exemption (as described in the Prospectus), a Plan, a trustee or other
person acting on behalf of any Plan or any person using Plan Assets to purchase 
the Offered Certificates (other than the Class IO Certificates) will be deemed  
to have represented that the purchase of such Offered Certificates is           
permissible under applicable law, will not constitute or result in any          
non-exempt prohibited transaction under ERISA or Section 4975 of the Code, will 
not subject the Depositor, the Master Servicer, the Trustee, the Fiscal Agent or
the Trust Fund to any obligation in addition to those undertaken in the         
Agreement and at least one of the following has been met: (a) the source of     
funds used to purchase such Offered Certificates is an "insurance company       
general account" (as such term is defined in Prohibited Transaction Class       
Exemption ("PTCE") 95-60), the conditions set forth in Sections I and III of    
PTCE 95-60 have been satisfied and will continue to be satisfied and there is no
Plan with respect to which the amount of such general account's reserves and    
liabilities for contracts held by or on behalf of such Plan and all other Plans 
maintained by the same employer (or any "affiliate" thereof, as defined in PTCE 
95-60) or by the same employee organization exceed 10% of the total of all      
reserves and liabilities of such general account (as determined under PTCE      
95-60) as of the date of the acquisition of such Offered Certificates; (b) the  
purchaser is an "investment fund" described in PTCE 84-14, the conditions set   
forth in PTCE 84-14 have been satisfied and will continue to be satisfied and   
the purchase and holding of Offered Certificates by or on behalf of the         
purchaser are exempt under PTCE 84-14; or (c) the investment is being made by an
insurance company, insurance service or insurance organization (an "Insurer")   
qualified to do business in the applicable state and the Insurer has issued to  
the Plan a "guaranteed benefit policy" within the meaning of Section 401(b)(2)  
of ERISA such that the assets of the Plan are deemed to include such policy but 
are not deemed to include any assets of such Insurer pursuant to Section        
401(b)(2) of ERISA.                                                             

 The transfer of any Class IO Certificates to a Plan, a trustee or other
person acting on behalf of any Plan or any person using Plan Assets to purchase 
such Class IO Certificates will not be registered by the Trustee unless the     
purchaser thereof provides the Depositor, the Trustee, the Fiscal Agent, the    
Master Servicer and the Trust Fund with either: (i) an opinion of counsel       
satisfactory to the Depositor, the Trustee, the Fiscal Agent, the Master        
Servicer and the Trust Fund, which opinion will not be at the expense of the    
Depositor, the Trustee, the Fiscal Agent, the Master Servicer and the Trust     
Fund, to the effect that the purchase of such Class IO Certificates is          
permissible under applicable law, will not constitute or result in any          
non-exempt prohibited transaction under ERISA or Section 4975 of the Code and   
will not subject the Depositor, the Master Servicer, the Trustee, the Fiscal    
Agent or the Trust Fund to any obligation in addition to those undertaken in the
Agreement; or (ii) a certification of facts substantially to the effect that the
purchase of such Class IO Certificates is permissible under applicable law, will
not constitute or result in a non-exempt prohibited transaction under ERISA or  
Section 4975 of the Code, will not subject the Depositor, the Trustee, the      
Fiscal Agent, the Master Servicer or the Trust Fund to any obligation in        
addition to those undertaken in the Agreement and at least one of the following 
has been met: (a) the source of funds used to purchase such Class IO            
Certificates is an "insurance company general account" (as such term is defined 
in Prohibited Transaction Class Exemption ("PTCE") 95-60), the conditions set   
forth in Sections I and III of PTCE 95-60 have been satisfied and will continue 
to be satisfied and there is no Plan with respect to which the amount of such   
general account's reserves and liabilities for contracts held by or on behalf of
such Plan and all other Plans maintained by the same employer (or any           
"affiliate" thereof, as defined in PTCE 95-60) or by the same employee          
organization exceed 10% of the total of all reserves and liabilities of such    
general account (as determined under PTCE 95-60) as of the date of the          
acquisition of such Offered Certificates; (b) the purchaser is an "investment   
fund" described in PTCE 84-14, the conditions set forth in PTCE 84-14 have been 
satisfied and will continue to be satisfied and the purchase and holding of     
Offered Certificates by or on behalf of the purchaser are exempt under PTCE     

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84-14; or (c) the investment is being made by an insurance company, insurance   
service or insurance organization (an "Insurer") qualified to do business in the
applicable state and the Insurer has issued to the Plan a "guaranteed benefit   
policy" within the meaning of Section 401(b)(2) of ERISA such that the assets of
the Plan are deemed to include such policy but are not deemed to include any    
assets of such Insurer pursuant to Section 401(b)(2) of ERISA.                  

 Any Plan fiduciary that proposes to cause a Plan to purchase an Offered
Certificate should consult with its counsel with respect to the potential       
applicability to such investment of the fiduciary responsibility and prohibited 
transaction provisions of ERISA and the Code to the proposed investment. For    
further information regarding the ERISA considerations of investing in the      
Offered Certificates, see "ERISA Considerations" in the Prospectus.             

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                                              PRINCIPAL BALANCES OF THE MORTGAGE LOANS AT ORIGINATION

                                                                       % of Aggregate                
                                 Number    Aggregate Original             Original                   
Range $                         Of Loans    Principal Balance         Principal Balance              
-------                         --------    -----------------         -----------------              

                                                                                                     
       1.00 to 19,999.99          1,304             $20,076,246                        6.59%         
  20,000.00 to 29,999.99          1,001              24,540,126                        8.06          
  30,000.00 to 39,999.99            869              30,413,667                        9.99          
  40,000.00 to 49,999.99            891              40,101,412                       13.17          
  50,000.00 to 59,999.99            781              42,905,348                       14.09          
  60,000.00 to 69,999.99            727              47,127,134                       15.48          
  70,000.00 to 79,000.00            489              36,475,108                       11.98          
  80,000.00 to 89,999.99            335              28,300,864                        9.30          
  90,000.00 to 99,999.99            206              19,253,717                        6.32          
100,000.00 to 109,999.99             76               7,931,595                        2.61          
110,000.00 to 119,999.99             25               2,883,125                        0.95          
120,000.00 to 129,999.99             29               3,633,691                        1.19          
130,000.00 to 139,999.99              1                 131,929                        0.04          
140,000.00 to 222,080.00              4                 642,989                        0.21          
                          -------------   ---------------------       ---------------------          
    Total                         6,738            $304,416,950                      100.00%         
                          =============   =====================       =====================          

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                                           UNPAID PRINCIPAL BALANCES OF THE MORTGAGE LOANS AS OF THE CUT-OFF DATE   


                                                                                                      Cut-off Date  
                                                                                                     Pool Arrearage 
                                                          % of Cut-off                                  as a % of   
                                          Cut-off Date      Date Pool                    % of         Cut-off Date  
                                          Pool Unpaid       Unpaid      Cut-off Date  Cut-off Date     Pool Unpaid  
                              Number       Principal       Principal         Pool         Pool          Principal   
Range $                     of Loans        Balance         Balance       Arrearage     Arrearage        Balance    
-------                   ----------   ---------------   -----------   -------------   -----------    ------------- 

                                                                                                                    
       1.00 to 19,999.99        1986       $19,257,904           7.1%     $1,911,456           3.6%             9.9%
  20,000.00 to 29,999.99         655        16,497,798           6.1       2,607,874           4.9             15.8 
  30,000.00 to 39,999.99         817        28,756,767          10.6       5,253,852           9.8             18.3 
  40,000.00 to 49,999.99         834        37,609,005          13.8       7,587,334          14.2             20.2 
  50,000.00 to 59,999.99         788        43,346,807          15.9       8,662,735          16.2             20.0 
  60,000.00 to 69,999.99         666        43,202,674          15.8       9,016,769          16.8             20.9 
  70,000.00 to 79,999.99         438        32,729,700          12.0       7,055,217          13.2             21.6 
  80,000.00 to 89,999.99         338        28,708,258          10.5       6,426,025          12.0             22.4 
  90,000.00 to 99,999.99         101         9,567,617           3.5       2,233,356           4.2             23.3 
100,000.00 to 109,999.99          61         6,323,667           2.3       1,372,692           2.6             21.7 
110,000.00 to 119,999.99          26         2,969,607           1.1         737,395           1.4             24.8 
120,000.00 to 129,999.99          25         3,116,263           1.1         675,561           1.3             21.7 
130,000.00 to 139,999.99           1           138,317           0.1          44,923           0.1             32.5 
140,000.00 to 209,000.00           2           350,386           0.1               0           0.0              0.0 
                          ----------   ---------------   -----------   -------------   -----------    ------------- 
   Total                       6,738      $272,574,770         100.0%    $53,585,190         100.0%            19.7%
                          ===========  ================  ===========   =============   ===========    ============= 


                           Cut-off Date     % of Cut-off        Weighted           Weighted                         
                            Pool Legal        Date Pool         Average          Average LTV                        
Range $                       Balance        Legal Balance      LTV (UPB)       (Legal Balance)                     
-------                   --------------    --------------     ----------       --------------                      

                                                                                                                    
       1.00 to 19,999.99     $21,169,360               6.5%        28.976%              33.870%                     
  20,000.00 to 29,999.99      19,105,672               5.9         54.986               65.687                      
  30,000.00 to 39,999.99      34,010,619              10.4         72.189               87.367                      
  40,000.00 to 49,999.99      45,196,339              13.9         78.446               95.484                      
  50,000.00 to 59,999.99      52,009,542              15.9         82.646              100.110                      
  60,000.00 to 69,999.99      52,219,442              16.0         85.142              104.489                      
  70,000.00 to 79,999.99      39,784,918              12.2         88.457              108.786                      
  80,000.00 to 89,999.99      35,134,284              10.8         91.806              113.941                      
  90,000.00 to 99,999.99      11,800,973               3.6         95.849              119.690                      
100,000.00 to 109,999.99       7,696,359               2.4        100.878              124.851                      
110,000.00 to 119,999.99       3,707,001               1.1        132.955              167.948                      
120,000.00 to 129,999.99       3,791,824               1.2        103.215              128.897                      
130,000.00 to 139,999.99         183,240               0.1        131.730              174.510                      
140,000.00 to 209,000.00         350,386               0.1        133.214              133.213                      
                          --------------    --------------     ----------       --------------                      
   Total                    $326,159,960             100.0%        79.315%              97.549%                     
                          ==============    ==============     ==========       ==============                      

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                       ARREARAGE AS A % OF UNPAID PRINCIPAL BALANCE OF THE MORTGAGE LOANS AS OF THE CUT-OFF DATE                


                                                                                                    Cut-off Date                
                                                                                                   Pool Arrearage               
                                                    % of Cut-off                                      as a % of                 
                                     Cut-off Date     Date Pool                       % of           Cut-off Date               
                                     Pool Unpaid       Unpaid       Cut-off Date   Cut-off Date      Pool Unpaid    Cut-off Date
                          Number      Principal       Principal         Pool           Pool           Principal       Pool Legal
Arrearage Range (%)     Of Loans       Balance         Balance        Arrearage     Arrearage          Balance         Balance  
-------------------   ------------   ------------   ------------    ------------   ------------    --------------   ------------

                                                                                                                                
            0.00            2,018   $ 43,437,458           15.9%   $          0            0.0%              0.0%  $ 43,437,458 
    0.01 to 5.00              632     20,937,932            7.7         491,986            0.9               2.3     21,429,917 
   5.01 to 10.00              450     21,108,367            7.7       1,586,160            3.0               7.5     22,694,527 
  10.01 to 15.00              506     25,134,554            9.2       3,136,227            5.9              12.5     28,270,781 
  15.01 to 20.00              582     30,640,953           11.2       5,322,909            9.9              17.4     35,963,861 
  20.01 to 25.00              564     29,540,958           10.8       6,665,050           12.4              22.6     36,206,008 
  25.01 to 30.00              565     30,590,125           11.2       8,377,703           15.6              27.4     38,967,828 
  30.01 to 35.00              514     28,192,553           10.3       9,118,970           17.0              32.3     37,311,523 
  35.01 to 40.00              367     20,024,563            7.3       7,462,986           13.9              37.3     27,487,549 
  40.01 to 45.00              218     11,256,178            4.1       4,741,453            8.8              42.1     15,997,631 
  45.01 to 50.00              117      5,010,709            1.8       2,358,447            4.4              47.1      7,369,155 
  50.01 to 60.00              106      4,166,025            1.5       2,217,371            4.1              53.2      6,383,396 
  60.01 to 70.00               34      1,070,878            0.4         689,203            1.3              64.4      1,760,081 
  70.01 to 80.00               23        621,880            0.2         465,597            0.9              74.9      1,087,477 
  80.01 to 90.00               12        338,336            0.1         285,695            0.5              84.4        624,032 
 90.01 to 100.00                9        171,751            0.1         159,434            0.3              92.8        331,185 
100.01 to 110.00                3         52,563            0.0          55,867            0.1             106.3        108,431 
110.01 to 130.00                7         98,192            0.0         119,386            0.2             121.6        217,578 
130.01 to 150.00                5         62,155            0.0          86,809            0.2             139.7        148,964 
150.01 to 200.00                3         58,943            0.0         105,534            0.2             179.0        164,477 
200.01 to 315.00                3         59,696            0.0         138,404            0.3             231.8        198,101 
                     ------------   ------------   ------------    ------------   ------------    --------------   ------------ 
           Total            6,738   $272,574,770          100.0%   $ 53,585,190          100.0%             19.7%  $326,159,960 
                     ============   ============   ============    ============   ============    ==============   ============ 


                      % of Cut-off     Weighted        Weighted                                                                 
                        Date Pool      Average       Average LTV                                                                
Arrearage Range (%)   Legal Balance    LTV(UPB)     (Legal Balance)                                                             
-------------------   ------------    ----------    --------------                                                              

                                                                                                                                
            0.00             13.3%       59.466%           59.466%                                                              
    0.01 to 5.00              6.6        73.365            75.269                                                               
   5.01 to 10.00              7.0        80.546            86.559                                                               
  10.01 to 15.00              8.7        84.655            94.967                                                               
  15.01 to 20.00             11.0        82.838            97.073                                                               
  20.01 to 25.00             11.1        86.326           105.645                                                               
  25.01 to 30.00             11.9        86.400           109.708                                                               
  30.01 to 35.00             11.4        84.796           111.753                                                               
  35.01 to 40.00              8.4        87.425           119.519                                                               
  40.01 to 45.00              4.9        85.928           121.554                                                               
  45.01 to 50.00              2.3        79.132           115.549                                                               
  50.01 to 60.00              2.0        74.229           112.558                                                               
  60.01 to 70.00              0.5        54.876            89.985                                                               
  70.01 to 80.00              0.3        54.578            95.151                                                               
  80.01 to 90.00              0.2        56.759           104.399                                                               
 90.01 to 100.00              0.1        32.107            61.691                                                               
100.01 to 110.00              0.0        27.490            56.632                                                               
110.01 to 130.00              0.1        23.381            52.134                                                               
130.01 to 150.00              0.0        19.333            46.274                                                               
150.01 to 200.00              0.1        27.111            74.328                                                               
200.01 to 315.00              0.1        43.935           134.107                                                               
                     ------------    ----------    --------------                                                               
           Total            100.0%       79.315%           97.549                                                               
                     ============    ==========    ==============                                                               

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                                                 MORTGAGE RATES OF THE MORTGAGE LOANS AS OF THE CUT-OFF DATE              


                                                                                             Cut-off Date                 
                                                                                            Pool Arrearage                
                                             % of Cut-off                                     as a % of                   
                               Cut-off Date    Date Pool                       % of          Cut-off Date                 
                                Pool Unpaid     Unpaid       Cut-off Date   Cut-off Date      Pool Unpaid     Cut-off Date
                   Number        Principal     Principal         Pool           Pool           Principal       Pool Legal 
Range %           of Loan         Balance       Balance        Arrearage      Arrearage         Balance          Balance  
-------         ------------   ------------  ------------    ------------   ------------    --------------    ------------

                                                                                                                          
  0.01 to 7.00           844   $ 10,567,614           3.9%   $  1,209,993            2.3%             11.5%   $ 11,777,607
  7.01 to 8.00           527     15,837,008           5.8       1,963,054            3.7              12.4      17,800,061
  8.01 to 9.00         1,573     52,065,269          19.1       8,359,284           15.6              16.1      60,424,553
 9.01 to 10.00         2,042    107,172,514          39.3      20,806,751           38.8              19.4     127,979,264
10.01 to 11.00         1,048     58,135,947          21.3      13,560,569           25.3              23.3      71,696,515
11.01 to 12.00           410     17,844,028           6.5       4,486,836            8.4              25.1      22,330,864
12.01 to 13.00           181      6,944,979           2.5       1,876,549            3.5              27.0       8,821,528
13.01 to 14.00            74      2,841,213           1.0         917,297            1.7              32.3       3,758,510
14.01 to 15.00            13        449,106           0.2         149,486            0.3              33.3         598,592
15.01 to 16.00            22        630,677           0.2         226,561            0.4              35.9         857,238
16.01 to 17.00             1         17,731           0.0           7,569            0.0              42.7          25,299
17.01 to 18.00             3         68,685           0.0          21,243            0.0              30.9          89,928
                ------------   ------------  ------------    ------------   ------------    --------------    ------------
         Total         6,738   $272,574,770         100.0%   $ 53,585,190          100.0%             19.7%   $326,159,960
                ============   ============  ============    ============   ============    ==============    ============


                 % of Cut-off     Weighted       Weighted                                                                 
                  Date Pool       Average      Average LTV                                                                
Range %         Legal Balance    LTV (UPB)   (Legal Balance)                                                              
-------         -------------    ---------   ---------------                                                              

                                                                                                                          
  0.01 to 7.00            3.6%      48.487%           57.303%                                                             
  7.01 to 8.00            5.5       71.726            82.455                                                              
  8.01 to 9.00           18.5       73.374            88.436                                                              
 9.01 to 10.00           39.2       83.276           101.663                                                              
10.01 to 11.00           22.0       87.195           109.222                                                              
11.01 to 12.00            6.8       75.188            94.815                                                              
12.01 to 13.00            2.7       76.735            97.377                                                              
13.01 to 14.00            1.2       73.603            99.829                                                              
14.01 to 15.00            0.2       65.262            85.713                                                              
15.01 to 16.00            0.3       62.369            91.475                                                              
16.01 to 17.00            0.0       36.939            52.710                                                              
17.01 to 18.00            0.0       54.029            66.997                                                              
                -------------    ---------   ---------------                                                              
         Total          100.0%      79.315%           97.549%                                                             
                =============    =========   ===============                                                              

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                                       LOAN-TO-VALUE RATIOS AS OF THE CUT-OFF DATE  (BASED UPON LEGAL BALANCE)              


                                                                                                Cut-off Date                
                                                                                               Pool Arrearage               
                                                % of Cut-off                                     as a % of                  
                                 Cut-off Date     Date Pool                       % of          Cut-off Date                
                                  Pool Unpaid      Unpaid       Cut-off Date   Cut-off Date      Pool Unpaid    Cut-off Date
                     Number        Principal      Principal        Pool            Pool           Principal      Pool Legal 
Range %             of Loans       Balance         Balance       Arrearage      Arrearage          Balance        Balance   
-------           ------------   ------------   ------------    ------------   ------------    --------------   ------------

                                                                                                                            
   0.01 to 20.00         1,048   $  7,450,209            2.7%   $    206,471            0.4%              2.8%  $  7,656,680
  20.01 to 30.00           492      6,799,827            2.5         382,998            0.7               5.6      7,182,825
  30.01 to 40.00           355      7,006,094            2.6         747,493            1.4              10.7      7,753,587
  40.01 to 50.00           341      9,421,039            3.5         923,640            1.7               9.8     10,344,679
  50.01 to 60.00           372     13,258,814            4.9       1,686,336            3.1              12.7     14,945,150
  60.01 to 70.00           418     17,934,495            6.6       2,695,459            5.0              15.0     20,629,954
  70.01 to 80.00           539     26,640,737            9.8       4,030,493            7.5              15.1     30,671,230
  80.01 to 90.00           568     30,272,482           11.1       5,211,020            9.7              17.2     35,483,502
 90.01 to 100.00           676     34,579,564           12.7       6,288,947           11.7              18.2     40,868,510
100.01 to 110.00           504     29,618,579           10.9       6,518,984           12.2              22.0     36,137,563
110.01 to 120.00           472     28,983,762           10.6       6,979,405           13.0              24.1     35,963,166
120.01 to 130.00           340     20,936,198            7.7       5,855,968           10.9              28.0     26,792,166
130.01 to 140.00           207     13,185,042            4.8       3,834,310            7.2              29.1     17,019,352
140.01 to 150.00           136      8,945,309            3.3       2,785,603            5.2              31.1     11,730,912
150.01 to 160.00            81      5,255,212            1.9       1,553,994            2.9              29.6      6,809,206
160.01 to 170.00            65      4,288,287            1.6       1,320,908            2.5              30.8      5,609,195
170.01 to 180.00            27      1,932,003            0.7         628,188            1.2              32.5      2,560,190
180.01 to 190.00            27      1,631,063            0.6         509,986            1.0              31.3      2,141,050
190.01 to 200.00            13        928,021            0.3         353,738            0.7              38.1      1,281,759
 200.01 and over            57      3,508,034            1.3       1,071,250            2.0              30.5      4,579,284
                  ------------   ------------   ------------    ------------   ------------    --------------   ------------
           Total         6,738   $272,574,770          100.0%   $ 53,585,190          100.0%             19.7%  $326,159,960
                  ============   ============   ============    ============   ============    ==============   ============


                  % of Cut-off      Weighted        Weighted                                                                
                    Date Pool        Average       Average LTV                                                              
Range %           Legal Balance    LTV (UPB)     (Legal Balance)                                                            
-------           -------------    ---------    ---------------                                                             

                                                                                                                            
   0.01 to 20.00            2.3%      12.800%            13.133%                                                            
  20.01 to 30.00            2.2       23.999             25.109                                                             
  30.01 to 40.00            2.4       32.298             35.181                                                             
  40.01 to 50.00            3.2       41.761             45.031                                                             
  50.01 to 60.00            4.6       50.111             55.322                                                             
  60.01 to 70.00            6.3       57.722             65.317                                                             
  70.01 to 80.00            9.4       66.044             75.022                                                             
  80.01 to 90.00           10.9       73.446             84.975                                                             
 90.01 to 100.00           12.5       83.680             95.694                                                             
100.01 to 110.00           11.1       87.153            105.215                                                             
110.01 to 120.00           11.0       93.525            115.114                                                             
120.01 to 130.00            8.2       98.186            124.551                                                             
130.01 to 140.00            5.2      105.216            134.702                                                             
140.01 to 150.00            3.6      111.337            144.712                                                             
150.01 to 160.00            2.1      120.310            154.461                                                             
160.01 to 170.00            1.7      128.169            164.582                                                             
170.01 to 180.00            0.8      132.414            174.128                                                             
180.01 to 190.00            0.7      142.217            184.937                                                             
190.01 to 200.00            0.4      141.987            195.124                                                             
 200.01 and over            1.4      180.323            231.409                                                             
                  -------------    ---------    ---------------                                                             
           Total          100.0%      79.315%            97.549%                                                            
                  =============    =========    ===============                                                             

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                                  LOAN-TO-VALUE RATIOS AS OF THE CUT-OFF DATE  (BASED UPON UNPAID PRINCIPAL BALANCE)         


                                                                                               Cut-off Date                  
                                                                                              Pool Arrearage                 
                                                % of Cut-off                                    as a % of                    
                                 Cut-off Date     Date Pool                       % of        Cut-off Date                   
                                 Pool Unpaid        Unpaid      Cut-off Date   Cut-off Date     Pool Unpaid      Cut-off Date
                      Number      Principal       Principal         Pool           Pool          Principal        Pool Legal 
Range %              of Loans      Balance         Balance        Arrearage      Arrearage        Balance          Balance   
-------           ------------   ------------   ------------    ------------   ------------    --------------    ------------

                                                                                                                             
   0.01 to 20.00         1,111   $  8,263,904            3.0%   $    638,144            1.2%              7.7%   $  8,902,048
  20.01 to 30.00           560      8,311,413            3.0         958,961            1.8              11.5       9,270,375
  30.01 to 40.00           382      8,571,953            3.1       1,378,854            2.6              16.1       9,950,807
  40.01 to 50.00           442     14,602,490            5.4       2,483,011            4.6              17.0      17,085,501
  50.01 to 60.00           529     22,049,689            8.1       4,260,642            8.0              19.3      26,310,332
  60.01 to 70.00           675     33,046,156           12.1       6,458,124           12.1              19.5      39,504,280
  70.01 to 80.00           718     38,572,357           14.2       7,437,404           13.9              19.3      46,009,761
  80.01 to 90.00           731     42,197,262           15.5       8,857,961           16.5              21.0      51,055,223
 90.01 to 100.00           783     44,861,495           16.5       9,349,473           17.4              20.8      54,210,968
100.01 to 110.00           371     24,665,786            9.0       5,373,354           10.0              21.8      30,039,140
110.01 to 120.00           176     11,119,942            4.1       2,576,215            4.8              23.2      13,696,157
120.01 to 130.00            97      5,818,723            2.1       1,353,058            2.5              23.3       7,171,781
130.01 to 140.00            63      4,229,663            1.6         977,875            1.8              23.1       5,207,539
140.01 to 150.00            36      2,258,485            0.8         596,626            1.1              26.4       2,855,111
150.01 to 160.00            19      1,134,321            0.4         282,469            0.5              24.9       1,416,790
160.01 to 170.00            13        920,041            0.3         186,742            0.3              20.3       1,106,782
170.01 to 180.00             9        572,194            0.2         155,170            0.3              27.1         727,364
180.01 to 190.00             7        420,275            0.2          61,237            0.1              14.6         481,513
190.01 to 200.00             4        286,606            0.1          76,810            0.1              26.8         363,416
 200.01 and over            12        672,013            0.2         123,059            0.2              18.3         795,072
                  ------------   ------------   ------------    ------------   ------------    --------------    ------------
           Total         6,738   $272,574,770          100.0%   $ 53,585,190          100.0%             19.7%   $326,159,960
                  ============   ============   ============    ============   ============    ==============    ============


                  % of Cut-off      Weighted        Weighted                                                                 
                    Date Pool       Average       Average LTV                                                                
Range %           Legal Balance    LTV (UPB)    (Legal Balance)                                                              
-------           -------------    ---------    ---------------                                                              

                                                                                                                             
   0.01 to 20.00            2.7%      13.262%            15.336%                                                             
  20.01 to 30.00            2.8       25.265             29.186                                                              
  30.01 to 40.00            3.1       35.151             42.372                                                              
  40.01 to 50.00            5.2       45.324             54.552                                                              
  50.01 to 60.00            8.1       55.293             67.409                                                              
  60.01 to 70.00           12.1       65.296             79.298                                                              
  70.01 to 80.00           14.1       75.332             91.156                                                              
  80.01 to 90.00           15.7       84.976            104.216                                                              
 90.01 to 100.00           16.6       95.259            114.704                                                              
100.01 to 110.00            9.2      104.417            128.551                                                              
110.01 to 120.00            4.2      114.499            142.607                                                              
120.01 to 130.00            2.2      124.409            155.384                                                              
130.01 to 140.00            1.6      134.647            167.410                                                              
140.01 to 150.00            0.9      144.894            185.322                                                              
150.01 to 160.00            0.4      156.113            197.547                                                              
160.01 to 170.00            0.3      164.139            200.306                                                              
170.01 to 180.00            0.2      175.454            224.647                                                              
180.01 to 190.00            0.1      186.441            215.070                                                              
190.01 to 200.00            0.1      195.662            250.309                                                              
 200.01 and over            0.2      241.435            285.591                                                              
                  -------------    ---------    ---------------                                                              
           Total          100.0%      79.315%            97.549%                                                             
                  =============    =========    ===============                                                              

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                                                GEOGRAPHIC DISTRIBUTION OF THE MORTGAGED PROPERTIES                             


                                                                                                    Cut-off Date                
                                                                                                   Pool Arrearage               
                                                    % of Cut-off                                     as a % of                  
                                     Cut-off Date     Date Pool                        % of         Cut-off Date                
                                     Pool Unpaid       Unpaid       Cut-off Date   Cut-off Date      Pool Unpaid    Cut-off Date
                         Number        Principal      Principal         Pool            Pool          Principal      Pool Legal 
State                   of Loans       Balance         Balance        Arrearage      Arrearage         Balance        Balance   
-----                 ------------   ------------   ------------    ------------   ------------    --------------   ------------

                                                                                                                                
Texas                          736   $ 30,006,807           11.0%   $  5,629,306           10.5%             18.8%  $ 35,636,113
Arizona                        569     32,043,794           11.8       7,129,009           13.3              22.2     39,172,803
Florida                        413     19,168,859            7.0       3,871,588            7.2              20.2     23,040,447
Pennsylvania                   361     10,051,556            3.7       3,302,189            6.2              32.9     13,353,744
California                     330     18,713,577            6.9       3,699,891            6.9              19.8     22,413,469
Michigan                       325      6,570,973            2.4       1,330,421            2.5              20.2      7,901,394
New York                       321     11,312,700            4.2       2,535,199            4.7              22.4     13,847,899
Ohio                           286      7,532,577            2.8       1,649,165            3.1              21.9      9,181,742
Oklahoma                       214      7,983,469            2.9       1,256,553            2.3              15.7      9,240,023
Tennessee                      170      6,979,576            2.6       1,284,447            2.4              18.4      8,264,024
Colorado                       160     10,166,885            3.7       1,985,422            3.7              19.5     12,152,307
New Mexico                     155      7,103,062            2.6       1,389,260            2.6              19.6      8,492,322
Wisconsin                      155      4,348,827            1.6         699,861            1.3              16.1      5,048,687
Illinois                       154      5,717,832            2.1       1,055,066            2.0              18.5      6,772,898
Missouri                       152      5,489,442            2.0         862,953            1.6              15.7      6,352,396
Minnesota                      151      7,188,189            2.6         929,238            1.7              12.9      8,117,427
Indiana                        150      4,188,370            1.5         666,217            1.2              15.9      4,854,587
Utah                           146      6,906,963            2.5       1,103,841            2.1              16.0      8,010,804
Maryland                       143      9,068,160            3.3       2,885,244            5.4              31.8     11,953,405
North carolina                 136      6,666,179            2.4         929,486            1.7              13.9      7,595,665
Kentucy                        134      3,342,530            1.2         393,307            0.7              11.8      3,735,837
Louisiana                      132      4,918,457            1.8       1,015,330            1.9              20.6      5,933,786
Massachusetts                  120      4,822,535            1.8       1,194,823            2.2              24.8      6,017,357
Arkansas                       116      3,568,017            1.3         305,659            0.6               8.6      3,873,676
New Jersey                      81      3,053,532            1.1         774,191            1.4              25.4      3,827,723
Alabama                         80      1,971,303            0.7         270,570            0.5              13.7      2,241,874
Georgia                         73      2,181,900            0.8         309,601            0.6              14.2      2,491,501
Washington                      71      2,213,921            0.8         292,764            0.5              13.2      2,506,685
Mississippi                     70      2,506,306            0.9         257,622            0.5              10.3      2,763,928
Montana                         63      2,348,369            0.9         123,966            0.2               5.3      2,472,335
South Carolina                  62      1,585,340            0.6         211,596            0.4              13.3      1,796,935
Iowa                            60      1,822,423            0.7         251,632            0.5              13.8      2,074,055
Nebraska                        56      1,287,855            0.5         139,269            0.3              10.8      1,427,124
Rhode Island                    51      3,430,096            1.3       1,114,991            2.1              32.5      4,545,087
Kansas                          35      1,466,537            0.5         224,418            0.4              15.3      1,690,955
Oregon                          34        995,297            0.4          73,571            0.1               7.4      1,068,867
Maine                           33      2,141,293            0.8         507,981            0.9              23.7      2,649,274
West Virginia                   33      1,063,589            0.4         212,866            0.4              20.0      1,276,455
Alaska                          32      2,447,378            0.9          43,678            0.1               1.8      2,491,057
Idaho                           29      1,261,083            0.5           3,369            0.0               0.3      1,264,452
Delaware                        27        909,572            0.3         226,054            0.4              24.9      1,135,626
Puerto Rico                     27        734,212            0.3          71,459            0.1               9.7        805,671
Nevada                          19        924,703            0.3         166,940            0.3              18.1      1,091,643
New Hampshire                   18      1,522,767            0.6         539,156            1.0              35.4      2,061,924
Connecticut                      9        730,293            0.3         223,487            0.4              30.6        953,780
Wyoming                          9        423,269            0.2          85,370            0.2              20.2        508,639
North Dakota                     7        291,207            0.1          50,788            0.1              17.4        341,996
District of Columbia             6        232,070            0.1          43,062            0.1              18.6        275,132
Hawaii                           6        138,065            0.1              85            0.0               0.1        138,150
Vermont                          6        326,122            0.1          85,779            0.2              26.3        411,901
South Dakota                     5        239,806            0.1          44,607            0.1              18.6        284,413
Virginia                         5        434,954            0.2         132,840            0.2              30.5        567,793
Guam                             2         32,175            0.0               0            0.0               0.0         32,175
                      ------------   ------------   ------------    ------------   ------------    --------------   ------------
Total                        6,738   $272,574,770          100.0%   $ 53,585,190          100.0%             19.7%  $326,159,960
                      ============   ============   ============    ============   ============    ==============   ============


                       % of Cut-off     Weighted        Weighted                                                                
                         Date Pool       Average      Average LTV                                                               
State                  Legal Balance    LTV (UPB)    (Legal Balance)                                                            
-----                  -------------    ---------    ---------------                                                            

                                                                                                                                
Texas                           10.9%      89.542%           107.957%                                                           
Arizona                         12.0       95.203            118.359                                                            
Florida                          7.1       80.726             99.488                                                            
Pennsylvania                     4.1       74.159             98.776                                                            
California                       6.9       85.681            107.085                                                            
Michigan                         2.4       60.559             76.030                                                            
New York                         4.2       74.078             92.736                                                            
Ohio                             2.8       71.412             91.135                                                            
Oklahoma                         2.8       87.681            103.289                                                            
Tennessee                        2.5       72.888             87.501                                                            
Colorado                         3.7       62.564             75.620                                                            
New Mexico                       2.6       62.462             75.801                                                            
Wisconsin                        1.5       79.241             95.524                                                            
Illinois                         2.1       69.874             85.313                                                            
Missouri                         1.9       87.390            104.107                                                            
Minnesota                        2.5       69.552             80.552                                                            
Indiana                          1.5       72.184             87.433                                                            
Utah                             2.5       48.064             57.775                                                            
Maryland                         3.7       82.202            110.416                                                            
North carolina                   2.3       77.746             89.964                                                            
Kentucy                          1.1       59.001             69.695                                                            
Louisiana                        1.8       86.178            106.459                                                            
Massachusetts                    1.8       93.871            114.856                                                            
Arkansas                         1.2       82.626             90.706                                                            
New Jersey                       1.2       69.536             87.133                                                            
Alabama                          0.7       69.293             81.620                                                            
Georgia                          0.8       66.335             79.378                                                            
Washington                       0.8       47.356             56.207                                                            
Mississippi                      0.8       77.522             85.548                                                            
Montana                          0.8       70.024             74.933                                                            
South Carolina                   0.6       65.631             76.405                                                            
Iowa                             0.6       62.850             73.642                                                            
Nebraska                         0.4       66.324             76.813                                                            
Rhode Island                     1.4      101.192            135.462                                                            
Kansas                           0.5       87.166            101.945                                                            
Oregon                           0.3       44.145             47.740                                                            
Maine                            0.8      102.230            126.102                                                            
West Virginia                    0.4       76.343             92.642                                                            
Alaska                           0.8       81.944             83.565                                                            
Idaho                            0.4       64.485             64.665                                                            
Delaware                         0.3       72.292             96.409                                                            
Puerto Rico                      0.2       67.444             72.208                                                            
Nevada                           0.3       70.203             86.444                                                            
New Hampshire                    0.6      105.215            138.134                                                            
Connecticut                      0.3       97.470            127.410                                                            
Wyoming                          0.2       77.670             90.438                                                            
North Dakota                     0.1       69.825             82.295                                                            
District of Columbia             0.1       62.265             75.093                                                            
Hawaii                           0.0       40.174             40.152                                                            
Vermont                          0.1       76.754             90.162                                                            
South Dakota                     0.1       77.328             87.438                                                            
Virginia                         0.2       89.944            118.839                                                            
Guam                             0.0      100.000            100.000                                                            
                       -------------    ---------    ---------------                                                            
Total                          100.0%      79.315%            97.549%                                                           
                       =============    =========    ===============                                                            

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                                                                LOAN TYPE                                           


                                                                                        Cut-off Date                
                                                                                       Pool Arrearage               
                                         % of Cut-off                                    as a % of                  
                           Cut-off Date    Date Pool                        % of       Cut-off Date                 
                           Pool Unpaid       Unpaid      Cut-off Date   Cut-off Date     Pool Unpaid    Cut-off Date
               Number       Principal      Principal        Pool            Pool          Principal      Pool Legal 
Loan Type     of Loans       Balance        Balance       Arrearage      Arrearage         Balance         Balance  
---------   ------------   ------------  ------------    ------------   ------------   --------------   ------------

                                                                                                                    
Adjustable           129   $  8,497,873           3.1%   $  1,086,944            2.0%            12.8%  $  9,584,817
Fixed              6,609    264,076,897          96.9      52,498,246           98.0             19.9    316,575,143
            ------------   ------------  ------------    ------------   ------------   --------------   ------------
Total              6,738   $272,574,770         100.0%   $ 53,585,190          100.0%            19.7%  $326,159,960
            ============   ============  ============    ============   ============   ==============   ============


            % of Cut-off     Weighted        Weighted                                                               
              Date Pool       Average      Average LTV                                                              
Loan Type   Legal Balance    LTV (UPB)   (Legal Balance)                                                            
---------   -------------    ---------   ---------------                                                            

                                                                                                                    
Adjustable            2.9%      85.357%           97.420%                                                           
Fixed                97.1       79.121            97.553                                                            
            -------------    ---------   ---------------                                                            
Total               100.0%      79.315%           97.549%                                                           
            =============    =========   ===============                                                            

                                                        [Enlarge/Download Table]
                                                              OCCUPANCY STATUS                                              


                                                                                                Cut-off Date                
                                                                                               Pool Arrearage               
                                                 % of Cut-off                                    as a % of                  
                                   Cut-off Date    Date Pool                        % of       Cut-off Date                 
                                   Pool Unpaid       Unpaid      Cut-off Date   Cut-off Date     Pool Unpaid    Cut-off Date
                       Number       Principal      Principal        Pool            Pool          Principal      Pool Legal 
Status                of Loans       Balance        Balance       Arrearage      Arrearage         Balance         Balance  
------              ------------   ------------  ------------    ------------   ------------   --------------   ------------

                                                                                                                            
Owner Occupied             6,215   $254,317,088          93.3%   $ 50,621,980           94.5%            19.9%  $304,939,068
Non-Owner Occupied           265      8,340,443           3.1       1,490,151            2.8             17.9      9,830,594
Unknown                      258      9,917,239           3.6       1,473,058            2.7             14.9     11,390,297
                    ------------   ------------  ------------    ------------   ------------   --------------   ------------
Total                      6,738   $272,574,770         100.0%   $ 53,585,190          100.0%            19.7%  $326,159,960
                    ============   ============  ============    ============   ============   ==============   ============


                    % of Cut-off     Weighted        Weighted                                                               
                      Date Pool       Average      Average LTV                                                              
Status              Legal Balance    LTV (UPB)   (Legal Balance)                                                            
------              -------------    ---------   ---------------                                                            

                                                                                                                            
Owner Occupied             93.5 %       79.063%           97.755%                                                           
Non-Owner Occupied            3.0       73.075            89.992                                                            
Unknown                       3.5       91.033            98.558                                                            
                    -------------    ---------   ---------------                                                            
Total                       100.0%      79.315%           97.549%                                                           
                    =============    =========   ===============                                                            

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                                                                   YEAR OF ORIGINATION                                         


                                                                                   Cut-off Date                                
                                                                                  Pool Arrearage                               
                                     % of Cut-off                                   as a % of                                  
                      Cut-off Date     Date Pool                      % of        Cut-off Date                                 
                      Pool Unpaid        Unpaid     Cut-off Date  Cut-off Date      Pool Unpaid    Cut-off Date  % of Cut-off  
          Number       Principal       Principal       Pool           Pool           Principal      Pool Legal     Date Pool   
Year     of Loans       Balance         Balance      Arrearage     Arrearage          Balance         Balance    Legal Balance 
----   ------------   ------------   ------------   ------------  ------------    --------------   ------------  ------------- 

                                                                                                                               
 1960             2   $     10,888            0.0%  $      1,234           0.0%             11.3%  $     12,122            0.0%
 1961             3         15,245            0.0          7,223           0.0              47.4         22,467            0.0 
 1962             2          6,556            0.0             35           0.0               0.5          6,590            0.0 
 1963             4         18,396            0.0             31           0.0               0.2         18,426            0.0 
 1964             2          9,528            0.0              0           0.0               0.0          9,528            0.0 
 1965             7         27,269            0.0          7,678           0.0              28.2         34,947            0.0 
 1966             8         89,862            0.0         38,077           0.1              42.4        127,938            0.0 
 1967            15         86,639            0.0          5,405           0.0               6.2         92,043            0.0 
 1968            48        225,610            0.1         36,926           0.1              16.4        262,535            0.1 
 1969           104        593,210            0.2        142,740           0.3              24.1        735,950            0.2 
 1970           246      1,749,559            0.6        254,027           0.5              14.5      2,003,586            0.6 
 1971           313      2,636,933            1.0        242,168           0.5               9.2      2,879,101            0.9 
 1972           299      2,561,984            0.9        221,543           0.4               8.6      2,783,526            0.9 
 1973           176      1,610,598            0.6        107,270           0.2               6.7      1,717,868            0.5 
 1974           131      1,481,810            0.5        235,436           0.4              15.9      1,717,246            0.5 
 1975           127      1,741,743            0.6        190,359           0.4              10.9      1,932,102            0.6 
 1976           155      2,208,906            0.8        173,281           0.3               7.8      2,382,187            0.7 
 1977           208      3,500,090            1.3        315,104           0.6               9.0      3,815,195            1.2 
 1978           281      6,764,409            2.5        711,759           1.3              10.5      7,476,168            2.3 
 1979           295      8,831,310            3.2      1,475,576           2.8              16.7     10,306,886            3.2 
 1980           179      6,000,770            2.2      1,386,532           2.6              23.1      7,387,302            2.3 
 1981            52      1,771,268            0.6        491,900           0.9              27.8      2,263,168            0.7 
 1982            57      2,275,097            0.8        581,392           1.1              25.6      2,856,489            0.9 
 1983           170      7,071,022            2.6      1,851,688           3.5              26.2      8,922,711            2.7 
 1984            94      4,058,957            1.5        947,523           1.8              23.3      5,006,480            1.5 
 1985           228     11,378,497            4.2      2,595,189           4.8              22.8     13,973,686            4.3 
 1986           833     48,062,819           17.6      8,985,415          16.8              18.7     57,048,234           17.5 
 1987           675     37,385,987           13.7      6,543,880          12.2              17.5     43,929,867           13.5 
 1988           561     31,077,802           11.4      6,424,188          12.0              20.7     37,501,990           11.5 
 1989           591     34,664,010           12.7      7,783,985          14.5              22.5     42,447,995           13.0 
 1990           510     31,452,770           11.5      6,921,489          12.9              22.0     38,374,259           11.8 
 1991           302     19,364,506            7.1      4,133,034           7.7              21.3     23,497,540            7.2 
 1992            56      3,662,005            1.3        720,655           1.3              19.7      4,382,660            1.3 
 1993             4        178,715            0.1         52,451           0.1              29.3        231,166            0.1 
       ------------   ------------   ------------   ------------  ------------    --------------   ------------  ------------- 
Total         6,738   $272,574,770          100.0%  $ 53,585,190         100.0%             19.7%  $326,159,960          100.0%
       ============   ============   ============   ============  ============    ==============   ============  ============= 


          Weighted         Weighted                                                                                            
           Average       Average LTV                                                                                           
Year      LTV (UPB)    (Legal Balance)                                                                                         
----      ---------    ---------------                                                                                         

                                                                                                                               
 1960         6.729%             8.087%                                                                                        
 1961         6.241             11.476                                                                                         
 1962         4.863              4.890                                                                                         
 1963         6.597              6.610                                                                                         
 1964        14.024             14.021                                                                                         
 1965         6.261             10.368                                                                                         
 1966        51.624             62.913                                                                                         
 1967         8.359              9.318                                                                                         
 1968        13.686             16.580                                                                                         
 1969        14.383             21.285                                                                                         
 1970        21.208             26.103                                                                                         
 1971        22.067             26.378                                                                                         
 1972        22.094             24.949                                                                                         
 1973        23.641             26.989                                                                                         
 1974        26.129             32.391                                                                                         
 1975        29.126             35.108                                                                                         
 1976        29.937             33.344                                                                                         
 1977        33.763             38.390                                                                                         
 1978        42.876             48.980                                                                                         
 1979        52.988             63.624                                                                                         
 1980        65.752             82.834                                                                                         
 1981        66.337             88.254                                                                                         
 1982        69.861             89.097                                                                                         
 1983        72.176             93.511                                                                                         
 1984        84.979            104.506                                                                                         
 1985        80.457             99.606                                                                                         
 1986        81.739             98.050                                                                                         
 1987        82.798             99.082                                                                                         
 1988        86.057            105.574                                                                                         
 1989        90.314            112.701                                                                                         
 1990        92.873            114.906                                                                                         
 1991        94.950            116.851                                                                                         
 1992        91.573            111.294                                                                                         
 1993        77.455            101.118                                                                                         
          ---------    ---------------                                                                                         
Total        79.315%            97.549%                                                                                        
          =========    ===============                                                                                         

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                                                          STATED MATURITY OF ORIGINATION                                        


                                                                                    Cut-off Date                                
                                                                                   Pool Arrearage                               
                                     % of Cut-off                                    as a % of                                  
                      Cut-off Date     Date Pool                       % of        Cut-off Date                                 
                      Pool Unpaid        Unpaid     Cut-off Date   Cut-off Date      Pool Unpaid    Cut-off Date  % of Cut-off  
          Number       Principal       Principal       Pool            Pool           Principal      Pool Legal     Date Pool   
Year     of Loans       Balance         Balance      Arrearage      Arrearage          Balance         Balance    Legal Balance 
----   ------------   ------------   ------------   ------------   ------------    --------------   ------------  ------------- 

                                                                                                                                
 1985             1   $      1,219            0.0%  $        428            0.0%             35.1%  $      1,647            0.0%
 1988             3         14,868            0.0          8,033            0.0              54.0         22,900            0.0 
 1990             9         37,229            0.0         14,767            0.0              39.7         51,997            0.0 
 1991             8         29,698            0.0          7,223            0.0              24.3         36,920            0.0 
 1992             7         62,980            0.0         18,016            0.0              28.6         80,995            0.0 
 1993             7         39,887            0.0            498            0.0               1.2         40,385            0.0 
 1994            12        108,588            0.0         28,486            0.1              26.2        137,074            0.0 
 1995            27        177,093            0.1         50,172            0.1              28.3        227,265            0.1 
 1996            28        153,738            0.1         63,688            0.1              41.4        217,426            0.1 
 1997            31        250,287            0.1         40,782            0.1              16.3        291,069            0.1 
 1998            55        319,063            0.1         35,852            0.1              11.2        354,915            0.1 
 1999           119        838,054            0.3        171,445            0.3              20.5      1,009,499            0.3 
 2000           234      2,028,010            0.7        299,467            0.6              14.8      2,327,476            0.7 
 2001           338      3,548,018            1.3        290,762            0.5               8.2      3,838,780            1.2 
 2002           318      3,153,887            1.2        265,046            0.5               8.4      3,418,934            1.0 
 2003           218      2,402,767            0.9        201,197            0.4               8.4      2,603,964            0.8 
 2004           129      1,912,879            0.7        290,199            0.5              15.2      2,203,078            0.7 
 2005           125      2,023,866            0.7        188,168            0.4               9.3      2,212,034            0.7 
 2006           145      2,610,259            1.0        328,094            0.6              12.6      2,938,353            0.9 
 2007           187      3,280,309            1.2        269,484            0.5               8.2      3,549,793            1.1 
 2008           268      6,467,904            2.4        746,433            1.4              11.5      7,214,337            2.2 
 2009           295      8,951,469            3.3      1,375,659            2.6              15.4     10,327,128            3.2 
 2010           181      6,196,838            2.3      1,385,336            2.6              22.4      7,582,174            2.3 
 2011            73      2,711,471            1.0        688,011            1.3              25.4      3,399,482            1.0 
 2012            61      2,972,326            1.1        688,584            1.3              23.2      3,660,911            1.1 
 2013           154      6,567,878            2.4      1,793,218            3.3              27.3      8,361,096            2.6 
 2014            91      4,117,349            1.5      1,032,373            1.9              25.1      5,149,722            1.6 
 2015           192      9,695,614            3.6      2,386,140            4.5              24.6     12,081,753            3.7 
 2016           730     42,839,973           15.7      8,321,491           15.5              19.4     51,161,464           15.7 
 2017           701     39,468,129           14.5      6,862,438           12.8              17.4     46,330,567           14.2 
 2018           524     29,289,884           10.7      6,064,264           11.3              20.7     35,354,148           10.8 
 2019           554     32,621,336           12.0      7,388,695           13.8              22.6     40,010,031           12.3 
 2020           513     32,104,200           11.8      7,154,735           13.4              22.3     39,258,935           12.0 
 2021           312     19,957,811            7.3      4,176,761            7.8              20.9     24,134,572            7.4 
 2022            66      4,346,448            1.6        863,920            1.6              19.9      5,210,369            1.6 
 2023             4        168,212            0.1         21,056            0.0              12.5        189,268            0.1 
 2024             5        284,466            0.1         10,731            0.0               3.8        295,197            0.1 
 2025             3        196,299            0.1         15,921            0.0               8.1        212,220            0.1 
 2026             1         58,840            0.0              0            0.0               0.0         58,840            0.0 
 2027             2        128,748            0.0          2,339            0.0               1.8        131,087            0.0 
 2028             3        149,055            0.1         16,470            0.0              11.0        165,525            0.1 
 2029             2        130,266            0.0          8,858            0.0               6.8        139,123            0.0 
 2030             2        157,554            0.1          9,949            0.0               6.3        167,503            0.1 
       ------------   ------------   ------------   ------------   ------------    --------------   ------------  ------------- 
Total         6,738   $272,574,770          100.0   $ 53,585,190          100.0%             19.7%  $326,159,960          100.0%
       ============   ============   ============   ============   ============    ==============   ============  ============= 


          Weighted         Weighted                                                                                             
           Average       Average LTV                                                                                            
Year      LTV (UPB)    (Legal Balance)                                                                                          
----      ---------    ---------------                                                                                          

                                                                                                                                
 1985         3.386%             4.580%                                                                                         
 1988        17.550             28.532                                                                                          
 1990        10.827             18.565                                                                                          
 1991         7.875             10.740                                                                                          
 1992        12.315             20.062                                                                                          
 1993        20.969             20.968                                                                                          
 1994        12.310             16.432                                                                                          
 1995        22.539             33.099                                                                                          
 1996        18.356             36.807                                                                                          
 1997        22.465             27.913                                                                                          
 1998        19.711             21.013                                                                                          
 1999        22.023             28.629                                                                                          
 2000        29.400             35.995                                                                                          
 2001        29.785             33.431                                                                                          
 2002        27.556             30.599                                                                                          
 2003        32.010             37.622                                                                                          
 2004        35.955             42.797                                                                                          
 2005        44.852             49.404                                                                                          
 2006        45.514             57.100                                                                                          
 2007        35.909             40.582                                                                                          
 2008        43.093             49.688                                                                                          
 2009        53.190             63.174                                                                                          
 2010        66.417             83.060                                                                                          
 2011        68.418             88.213                                                                                          
 2012        81.229            100.407                                                                                          
 2013        72.963             94.744                                                                                          
 2014        84.802            105.939                                                                                          
 2015        80.488            100.461                                                                                          
 2016        82.624             99.603                                                                                          
 2017        81.823             97.988                                                                                          
 2018        87.749            107.514                                                                                          
 2019        89.884            112.165                                                                                          
 2020        92.919            115.355                                                                                          
 2021        95.553            117.067                                                                                          
 2022        89.641            109.005                                                                                          
 2023        69.307             75.406                                                                                          
 2024        74.551             77.387                                                                                          
 2025        84.237             91.510                                                                                          
 2026        66.864             66.860                                                                                          
 2027        79.645             81.185                                                                                          
 2028        81.697             92.366                                                                                          
 2029        88.636             94.695                                                                                          
 2030        79.242             84.191                                                                                          
          ---------    ---------------                                                                                          
Total        79.315%            97.549%                                                                                         
          =========    ===============                                                                                          

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                                           ORIGINAL TERMS TO STATED MATURITY (AT ORIGINATION)                      


                                                                                                     Cut-off Date  
                                                                                                    Pool Arrearage 
                                                      % of Cut-off                                    as a % of    
                                       Cut-off Date     Date Pool                        % of       Cut-off Date   
                                       Pool Unpaid        Unpaid      Cut-off Date   Cut-off Date     Pool Unpaid  
                            Number      Principal       Principal        Pool            Pool          Principal   
Range (Months)             of Loans      Balance         Balance       Arrearage      Arrearage         Balance    
--------------           ------------  ------------   ------------    ------------   ------------   -------------- 

                                                                                                                   
180 to 239 months                 104  $  3,502,746            1.3%   $    410,164            0.8%            11.7%
240 to 299 months                  92     2,225,707            0.8         390,832            0.7             17.6 
300 to 359 months                 303     6,936,742            2.5       1,256,736            2.3             18.1 
360 Months                      6,219   259,131,409           95.1      51,451,121           96.0             19.9 
Greater than 360 months            17       741,264            0.3          75,926            0.1             10.2 
Less than 180 months                3        36,901            0.0             412            0.0              1.1 
                         ------------  ------------   ------------    ------------   ------------   -------------- 
Total                           6,738  $272,574,770          100.0%   $ 53,585,190          100.0%            19.7%
                         ============  ============   ============    ============   ============   ============== 


                         Cut-off Date  % of Cut-off     Weighted         Weighted                                  
                          Pool Legal     Date Pool       Average       Average LTV                                 
Range (Months)              Balance    Legal Balance    LTV (UPB)    (Legal Balance)                               
--------------           ------------  -------------    ---------    ---------------                               

                                                                                                                   
180 to 239 months        $  3,912,909            1.2%      66.848%            76.416%                              
240 to 299 months           2,616,539            0.8       62.942             73.325                               
300 to 359 months           8,193,478            2.5       67.551             82.144                               
360 Months                310,582,530           95.2       79.948             98.458                               
Greater than 360 months       817,190            0.3       78.548             88.483                               
Less than 180 months           37,313            0.0       28.573             28.930                               
                         ------------  -------------    ---------    ---------------                               
Total                    $326,159,960          100.0%      79.315%            97.549%                              
                         ============  =============    =========    ===============                               

                                                        [Enlarge/Download Table]
                                          REMAINING TERMS TO STATED MATURITY AS OF THE CUT-OFF DATE           


                                                                                                Cut-off Date  
                                                                                               Pool Arrearage 
                                                % of Cut-off                                     as a % of    
                                 Cut-off Date     Date Pool                        % of        Cut-off Date   
                                 Pool Unpaid        Unpaid      Cut-off Date   Cut-off Date      Pool Unpaid  
                      Number      Principal       Principal        Pool            Pool           Principal   
Range (Months)       of Loans      Balance         Balance       Arrearage      Arrearage          Balance    
--------------     ------------  ------------   ------------    ------------   ------------    -------------- 

                                                                                                              
1 to 59 Months              569  $  4,600,831            1.7%   $    632,510            1.2%             13.7%
120 to 179 months         1,050    27,489,147           10.1       4,226,952            7.9              15.4 
180 to 239 monhs            611    29,014,402           10.6       6,982,394           13.0              24.1 
240 to 299 months         2,961   173,050,056           63.5      35,089,641           65.5              20.3 
300 to 359 months           346    22,412,262            8.2       4,627,926            8.6              20.6 
60 to 119 months          1,037    12,519,620            4.6       1,238,776            2.3               9.9 
Matured                     164     3,488,452            1.3         786,989            1.5              22.6 
                   ------------  ------------   ------------    ------------   ------------    -------------- 
Total                     6,738  $272,574,770          100.0%   $ 53,585,190          100.0%             19.7%
                   ============  ============   ============    ============   ============    ============== 


                   Cut-off Date  % of Cut-off     Weighted         Weighted                                   
                    Pool Legal     Date Pool       Average       Average LTV                                  
Range (Months)        Balance    Legal Balance    LTV (UPB)    (Legal Balance)                                
--------------     ------------  -------------    ---------    ---------------                                

                                                                                                              
1 to 59 Months     $  5,233,341            1.6%      27.486%            32.921%                               
120 to 179 months    31,716,099            9.7       51.645             62.754                                
180 to 239 monhs     35,996,796           11.0       79.662             99.475                                
240 to 299 months   208,139,697           63.8       86.517            105.880                                
300 to 359 months    27,040,189            8.3       94.292            115.391                                
60 to 119 months     13,758,397            4.2       33.866             38.669                                
Matured               4,275,442            1.3       72.450             89.636                                
                   ------------  -------------    ---------    ---------------                                
Total              $326,159,960          100.0%      79.315%            97.549%                               
                   ============  =============    =========    ===============                                

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                                                               SCHEDULED PRINCIPAL AND INTEREST PAYMENT AT ORIGINATION         


                                                                                                  Cut-off Date                 
                                                                                                 Pool Arrearage                
                                                  % of Cut-off                                     as a % of                   
                                    Cut-off Date    Date Pool                        % of        Cut-off Date                  
                                    Pool Unpaid       Unpaid      Cut-off Date   Cut-off Date      Pool Unpaid     Cut-off Date
                        Number       Principal      Principal        Pool            Pool           Principal       Pool Legal 
Range ($)              of Loans       Balance        Balance       Arrearage      Arrearage          Balance          Balance  
---------            ------------   ------------  ------------    ------------   ------------    --------------    ------------

                                                                                                                               
0.00 to 199.99              1,800   $ 17,261,221           6.3%   $  1,908,709            3.6%             11.1%   $ 19,169,930
200.00 to 399.99            1,779     56,511,225          20.7       9,542,344           17.8              16.9      66,053,569
400.00 to 599.99            1,812     98,125,467          36.0      19,603,703           36.6              20.0     117,729,170
600.00 to 799.99              941     70,113,795          25.7      15,441,571           28.8              22.0      85,555,366
800.00 to 999.99              218     20,226,568           7.4       4,717,330            8.8              23.3      24,943,898
1000.00 to 1199.99             39      4,625,847           1.7       1,105,783            2.1              23.9       5,731,630
1200.00 to 1399.99              4        515,004           0.2          83,857            0.2              16.3         598,861
1400.00 and greater             2        286,075           0.1          22,729            0.0               7.9         308,804
N/A                           143      4,909,568           1.8       1,159,164            2.2              23.6       6,068,732
                     ------------   ------------  ------------    ------------   ------------    --------------    ------------
Total                       6,738   $272,574,770         100.0%   $ 53,585,190          100.0%             19.7%   $326,159,960
                     ============   ============  ============    ============   ============    ==============    ============


                     % of Cut-off     Weighted        Weighted                                                                 
                       Date Pool       Average      Average LTV                                                                
Range ($)            Legal Balance    LTV (UPB)   (Legal Balance)                                                              
---------            -------------    ---------   ---------------                                                              

                                                                                                                               
0.00 to 199.99                 5.9%      29.801%           35.061%                                                             
200.00 to 399.99              20.3       68.429            82.421                                                              
400.00 to 599.99              36.1       82.518           100.132                                                              
600.00 to 799.99              26.2       88.555           109.761                                                              
800.00 to 999.99               7.6       95.141           119.451                                                              
1000.00 to 1199.99             1.8      115.711           144.508                                                              
1200.00 to 1399.99             0.2      100.696           124.850                                                              
1400.00 and greater            0.1       99.050           104.597                                                              
N/A                            1.9       79.848            99.893                                                              
                     -------------    ---------   ---------------                                                              
Total                        100.0%      79.315%           97.549%                                                             
                     =============    =========   ===============                                                              

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                                                                       PAYMENT PLAN STATUS                               


                                                                                             Cut-off Date                
                                                                                            Pool Arrearage               
                                              % of Cut-off                                    as a % of                  
                                Cut-off Date    Date Pool                        % of       Cut-off Date                 
                                Pool Unpaid       Unpaid      Cut-off Date   Cut-off Date     Pool Unpaid    Cut-off Date
                    Number       Principal      Principal        Pool            Pool          Principal      Pool Legal 
Status             of Loans       Balance        Balance       Arrearage      Arrearage         Balance         Balance  
------           ------------   ------------  ------------    ------------   ------------   --------------   ------------

                                                                                                                         
Payment Plan            4,387   $217,978,716          80.0%   $ 51,796,056           96.7%            23.8%  $269,774,771
No Payment Plan         2,351     54,596,055          20.0       1,789,134            3.3              3.3     56,385,188
------           ------------   ------------  ------------    ------------   ------------   --------------   ------------
Total                   6,738   $272,574,770         100.0%   $ 53,585,190          100.0%            19.7%  $326,159,960
                 ============   ============  ============    ============   ============   ==============   ============


                 % of Cut-off     Weighted        Weighted                                                               
                   Date Pool       Average      Average LTV                                                              
Status           Legal Balance    LTV (UPB)   (Legal Balance)                                                            
------           -------------    ---------   ---------------                                                            

                                                                                                                         
Payment Plan              82.7%      83.609%          104.189%                                                           
No Payment Plan           17.3       62.171            65.778                                                            
------           -------------    ---------   ---------------                                                            
Total                    100.0%      79.315%           97.549%                                                           
                 =============    =========   ===============                                                            

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                HISTORICAL COLLECTION EXPERIENCE OF P&I BY TOTAL LEGAL BALANCE DURING HUD SERVICING 12 MONTHS ENDING 6/30/96


                                                                                                        Cut-off Date        
                                                                                                        Pool Arrearage      
                                                         % of Cut-off                                    as a % of          
                                          Cut-off Date     Date Pool                       % of         Cut-off Date        
                                           Pool Unpaid      Unpaid       Cut-off Date   Cut-off Date     Pool Unpaid        
                              Number        Principal      Principal         Pool          Pool           Principal         
Range (Legal Balance $)      of Loans        Balance        Balance        Arrearage     Arrearage         Balance          
-----------------------    ------------   ------------   ------------    ------------   ------------    --------------      
                                                                                                                            
       1.00 to 19,999.99          1,839   $ 16,686,811            6.1%   $    854,496            1.6%              5.1%     
  20,000.00 to 29,999.99            554     12,492,850            4.6       1,278,894            2.4              10.2      
  30,000.00 to 39,999.99            602     18,924,474            6.9       2,333,854            4.4              12.3      
  40,000.00 to 49,999.99            630     24,461,933            9.0       3,855,232            7.2              15.8      
  50,000.00 to 59,999.99            682     32,020,656           11.7       5,503,063           10.3              17.2      
  60,000.00 to 69,999.99            645     34,993,398           12.8       6,828,180           12.7              19.5      
  70,000.00 to 79,999.99            530     32,743,644           12.0       6,964,470           13.0              21.3      
  80,000.00 to 89,999.99            437     30,318,288           11.1       6,682,436           12.5              22.0      
  90,000.00 to 99,999.99            307     23,267,584            8.5       5,725,411           10.7              24.6      
100,000.00 to 109,999.99            202     16,640,787            6.1       4,531,577            8.5              27.2      
110,000.00 to 119,999.99            150     13,243,449            4.9       3,951,652            7.4              29.8      
120,000.00 to 129,999.99             68      6,575,281            2.4       1,873,049            3.5              28.5      
130,000.00 to 139,999.99             40      4,204,408            1.5       1,153,957            2.2              27.4      
140,000.00 to 209,000.00             52      6,001,207            2.2       2,048,918            3.8              34.1      
                           ------------   ------------   ------------    ------------   ------------    --------------      
                   Total          6,738   $272,574,770          100.0%   $ 53,585,190          100.0%             19.7%     
                           ============   ============   ============    ============   ============    ==============      


                           Cut-off Date                                                                                     
                            Pool Legal      12 months       % of 12 mo's    Weighted Avg                                    
Range (Legal Balance $)      Balance      P&I Collections   Collections      Collections                                    
-----------------------    ------------   ---------------   ------------    ------------                                    
                                                                                                                            
       1.00 to 19,999.99   $ 17,541,307   $     3,012,002            9.6%            117%                                   
  20,000.00 to 29,999.99     13,771,744         1,615,905            5.1             111                                    
  30,000.00 to 39,999.99     21,258,328         2,298,972            7.3             101                                    
  40,000.00 to 49,999.99     28,317,164         2,835,182            9.0              93                                    
  50,000.00 to 59,999.99     37,523,719         3,580,002           11.4              85                                    
  60,000.00 to 69,999.99     41,821,578         3,838,005           12.2              80                                    
  70,000.00 to 79,999.99     39,708,115         3,567,958           11.3              79                                    
  80,000.00 to 89,999.99     37,000,724         3,268,248           10.4              72                                    
  90,000.00 to 99,999.99     28,992,996         2,516,592            8.0              68                                    
100,000.00 to 109,999.99     21,172,364         1,776,041            5.6              56                                    
110,000.00 to 119,999.99     17,195,101         1,432,820            4.5              54                                    
120,000.00 to 129,999.99      8,448,330           709,906            2.3              61                                    
130,000.00 to 139,999.99      5,358,365           442,896            1.4              55                                    
140,000.00 to 209,000.00      8,050,126           640,998            2.0              42                                    
                           ------------   ---------------   ------------    ------------                                    
                   Total   $326,159,960   $    31,535,527          100.0%             79%                                   
                           ============   ===============   ============    ============                                    

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                                  COLLECTION HISTORY FOR 4 MONTHS AFTER TRANSFER OF SERVICING FROM HUD                       


                                                                                                              Cut-off Date   
                                                                                                             Pool Arrearage  
                                                                                                               as a % of     
                                                                                Cut-off Date                  Cut-off Date   
                                                 Cut-off Date   % of Cut-off    Pool Unpaid    Cut-off Date    Pool Unpaid   
Collections as a % of Scheduled      Number       Pool Legal     Date Pool       Principal         Pool         Principal    
Principal And Interest Range (%)    of Loans        Balance     Legal Balance     Balance        Arrearage       Balance     
--------------------------------  ------------   ------------   ------------    ------------   ------------   -------------- 

                                                                                                                             
                        50 to 60             1   $     23,409            0.0%   $     23,409   $          0              0.0%
                        70 to 80           326     19,190,139            5.9      15,104,416      4,085,723             27.0 
                        81 to 90            13        656,855            0.2         532,485        124,369             23.4 
                       91 to 100         1,334     80,948,028           24.8      65,265,051     15,682,977             24.0 
                      101 to 110           336      8,488,528            2.6       7,782,228        706,300              9.1 
                      110 to 120            46      1,853,092            0.6       1,748,730        104,362              6.0 
                      120 to 130         2,796    149,285,123           45.8     123,918,303     25,366,820             20.5 
                      130 to 140           293      6,540,696            2.0       6,358,762        181,934              2.9 
                      140 to 150           692     32,971,663           10.1      28,057,846      4,913,817             17.5 
                 150 and greater           901     26,202,427            8.0      23,783,540      2,418,887             10.2 
                                  ------------   ------------   ------------    ------------   ------------   -------------- 
                           Total         6,738   $326,159,960          100.0%   $272,574,770   $ 53,585,190             19.7%
                                  ============   ============   ============    ============   ============   ============== 


                                   Four Months                                                                               
Collections as a % of Scheduled   Collections as                                                                             
Principal And Interest Range (%)    A % of P&I                                                                               
--------------------------------  --------------                                                                             

                                                                                                                             
                        50 to 60            51.2%                                                                            
                        70 to 80            75.1                                                                             
                        81 to 90            86.5                                                                             
                       91 to 100            99.9                                                                             
                      101 to 110           102.0                                                                             
                      110 to 120           114.2                                                                             
                      120 to 130           125.5                                                                             
                      130 to 140           133.5                                                                             
                      140 to 150           149.2                                                                             
                 150 and greater           207.5                                                                             
                                  --------------                                                                             
                           Total           130.4%                                                                            
                                  ==============                                                                             

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                                                   PAYMENT VELOCITY AS A % OF P&I DURING FOUR MONTHS SINCE TRANSFER OF SERVICING


                                                                                                Cut-off Date                    
                                                                                               Pool Arrearage                   
                                                % of Cut-off                                     as a % of                      
                                 Cut-off Date     Date Pool                        % of        Cut-off Date                     
                                 Pool Unpaid        Unpaid      Cut-off Date   Cut-off Date      Pool Unpaid     Cut-off Date   
                     Number       Principal       Principal        Pool            Pool           Principal       Pool Legal    
Range %             of Loans       Balance         Balance       Arrearage      Arrearage          Balance          Balance     
-------           ------------   ------------   ------------    ------------   ------------    --------------    ------------   

                                                                                                                                
3.00 to 3.19               325   $ 15,057,282            5.5%   $  4,078,078            7.6%             27.1%   $ 19,135,360   
3.20 to 3.89                21      1,028,876            0.4         155,259            0.3              15.1       1,184,135   
3.90 and greater         6,392    256,488,612           94.1      49,351,853           92.1              19.2     305,840,465   
                  ------------   ------------   ------------    ------------   ------------    --------------    ------------   
Total                    6,738   $272,574,770          100.0%   $ 53,585,190          100.0%             19.7%   $326,159,960   
                  ============   ============   ============    ============   ============    ==============    ============   


                  % of Cut-off     Weighted         Weighted                                                                    
                    Date Pool       Average       Average LTV                                                                   
Range %           Legal Balance    LTV (UPB)    (Legal Balance)                                                                 
-------           -------------    ---------    ---------------                                                                 

                                                                                                                                
3.00 to 3.19              5.9 %      85.795%           110.860%                                                                 
3.20 to 3.89                0.4      78.904             93.810                                                                  
3.90 and greater           93.8      78.936             96.731                                                                  
                  -------------    ---------    ---------------                                                                 
Total                   100.0 %      79.315%            97.549%                                                                 
                  =============   =========    ===============                                                                  

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MORTGAGE PASS-THROUGH CERTIFICATES (ISSUABLE IN SERIES)                         

Principal and interest with respect to Certificates will be payable each month  
on the date specified in the related Prospectus Supplement, commencing with the 
month following the month in which the applicable Cut-off Date (as defined      
herein) occurs.                                                                 

SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.                                  
DEPOSITOR                                                                       

The Certificates offered hereby and by Supplements to this Prospectus will be   
offered from time to time in series.                                            

Each series of Certificates will represent in the aggregate the entire          
beneficial ownership interest in a segregated pool of (a) various types of one- 
to four-family residential first and junior lien mortgage loans, multifamily    
residential mortgage loans, cooperative apartment loans or manufactured housing 
conditional sales contracts and installment loan agreements (collectively, the  
"Mortgage Loans"), or beneficial interests therein, (b) pass-through or         
participation certificates issued or guaranteed by the Government National      
Mortgage Association ("GNMA"), the Federal National Mortgage Association        
("FNMA") or the Federal Home Loan Mortgage Corporation ("FHLMC") (any such      
certificates, "Agency Securities"), (c) pass-through or participation           
certificates or other mortgage-backed securities issued or guaranteed by private
entities ("Private Mortgage-Backed Securities") or (d) funding agreements       
secured by Mortgage Loans, Agency Securities or Private Mortgage-Backed         
Securities (each, a "Funding Agreement"), or any combination thereof, together  
with other assets described herein (collectively, a "Trust Fund" or the "Trust  
Fund Assets").                                                                  

Each series of Certificates will include one or more classes. Each class of     
Certificates of any series will represent the right, which right may be senior  
to the rights of one or more of the other classes of the Certificates, to       
receive a specified portion of payments of principal and interest on the        
Mortgage Loans, Agency Securities, Private Mortgage-Backed Securities or Funding
Agreements in the related Trust Fund in the manner described herein and in the  
related Prospectus Supplement. A series may include one or more classes of      
Certificates entitled to principal distributions, with disproportionate, nominal
or no interest distributions, or to interest distributions, with                
disproportionate, nominal or no principal distributions. A series may include   
two or more classes of Certificates that differ as to the timing, sequential    
order or amount of distributions of principal or interest or both. If so        
specified in the related Prospectus Supplement, the Trust Fund for a series of  
Certificates may include pool insurance policies, letters of credit, reserve    
funds or other types of credit support, or any combination thereof, and currency
or interest rate exchange agreements and other financial assets, or any         
combination thereof (with respect to any series, collectively, "Cash Flow       
Agreements"). See "Description of the Certificates" and "Description of Credit  
Support".                                                                       

The only obligations of the Depositor with respect to a series of Certificates  
will be pursuant to its representations and warranties. The Master Servicer with
respect to a series of Certificates evidencing interests in a Trust Fund        
including Mortgage Loans will be named in the related Prospectus Supplement. The
principal obligations of a Master Servicer will be limited to its contractual   
servicing obligations, and, to the extent provided in the related Prospectus    
Supplement, its obligation to make certain cash advances in the event of payment
delinquencies on the Mortgage Loans. The Certificates of each series will not   
represent an obligation of or interest in the Depositor, the Master Servicer or 
any of their respective affiliates, except to the limited extent described      
herein and in the related Prospectus Supplement. The Certificates will not be   
guaranteed or insured by any governmental agency or instrumentality. Although   
payment of principal and interest on Agency Securities will be guaranteed as    
described herein and in the related prospectus supplement by GNMA, FNMA or      
FHLMC, the Certificates of any series evidencing interests in a Trust Fund      
including Agency Securities will not be so guaranteed. Each Trust Fund will be  
held in trust for the benefit of the holders of the related series of           
Certificates pursuant to a Pooling and Servicing Agreement or a Trust Agreement 
as more fully described herein. If so provided in the related Prospectus        
Supplement, one or more elections may be made to treat the related Trust Fund or
a designated portion thereof as a "real estate mortgage investment conduit" for 
federal income tax purposes. See "Certain Federal Income Tax Consequences".     

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND    
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES  
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE      
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.                                                               

Offers of the Certificates may be made through one or more different methods,   
including offerings through underwriters, as more fully described under "Methods
of Distribution" and in the related Prospectus Supplement.                      

With respect to each series, all of the Certificates of each class offered      
hereby will be rated in one of the four highest rating categories by one or more
nationally recognized statistical rating organizations. There will have been no 
public market for any series of Certificates prior to the offering thereof. No  
assurance can be given that such a market will develop as a result of such an   
offering. All securities will be distributed by, or sold by underwriters managed
by:                                                                             

--------------------                                                            
SALOMON BROTHERS INC                                                            
--------------------------------------------------------------------------------

RETAIN THIS PROSPECTUS FOR FUTURE REFERENCE. THIS PROSPECTUS MAY NOT BE USED TO 
CONSUMMATE SALES OF SECURITIES OFFERED HEREBY UNLESS ACCOMPANIED BY A PROSPECTUS
SUPPLEMENT.                                                                     

The date of this Prospectus is March 6, 1997.                                   

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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY  
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND ANY PROSPECTUS
SUPPLEMENT WITH RESPECT HERETO AND, IF GIVEN OR MADE, SUCH INFORMATION OR       
REPRESENTATIONS MUST NOT BE RELIED UPON. THIS PROSPECTUS AND ANY PROSPECTUS     
SUPPLEMENT WITH RESPECT HERETO DO NOT CONSTITUTE AN OFFER TO SELL OR A          
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE CERTIFICATES      
OFFERED HEREBY AND THEREBY OR AN OFFER OF THE CERTIFICATES TO ANY PERSON IN ANY 
STATE OR OTHER JURISDICTION IN WHICH SUCH OFFER WOULD BE UNLAWFUL. THE DELIVERY 
OF THIS PROSPECTUS AT ANY TIME DOES NOT IMPLY THAT INFORMATION HEREIN IS CORRECT
AS OF ANY TIME SUBSEQUENT TO ITS DATE; HOWEVER, IF ANY MATERIAL CHANGE OCCURS   
WHILE THIS PROSPECTUS IS REQUIRED BY LAW TO BE DELIVERED, THIS PROSPECTUS WILL  
BE AMENDED OR SUPPLEMENTED ACCORDINGLY.                                         

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

 TABLE OF CONTENTS

CAPTION                                                                     PAGE
-------                                                                     ----

Available Information.......................................................   4
Reports to Certificateholders...............................................   4
Incorporation of Certain Information by Reference...........................   4
Summary of Prospectus.......................................................   5
The Trust Funds.............................................................  15
     The Mortgage Loans.....................................................  15
     Agency Securities......................................................  20
     Private Mortgage-Backed Securities.....................................  25
     Funding Agreements.....................................................  27
Use of Proceeds.............................................................  28
Yield Considerations........................................................  28
Maturity and Prepayment Considerations......................................  29
The Depositor                                                                 31
Mortgage Loan Program.......................................................  31
     Underwriting Standards.................................................  31
     Qualifications of Originators and Mortgage Loan Sellers................  33
     Representations by or on behalf of Mortgage Loan Sellers; Repurchases..  33
Description of the Certificates.............................................  35
     General                                                                  35
     Assignment of Trust Fund Assets........................................  37
     Deposits to Certificate Account........................................  40
     Payments Mortgage Loans................................................  41
     Payments on Agency Securities and Private Mortgage-Backed Securities.....43
     Distributions..........................................................  43
     Available Distribution Amount..........................................  44
     Interest on the Certificates...........................................  44
     Principal of the Certificates..........................................  45
     Pre-Funding Account....................................................  45
     Allocation of Losses...................................................  46
     Advances in Respect of Delinquencies...................................  46
     Reports to Certificateholders..........................................  47
     Collection and Other Servicing Procedures..............................  48
     Sub-Servicing..........................................................  49
     Realization Upon Defaulted Mortgage Loans..............................  50
Retained Interest; Servicing or Administration Compensation and       
       Payment of Expenses..................................................  51
     Evidence as to Compliance..............................................  52
     Certain Matters Regarding the Master Servicer and the Depositor........  53
     Events of Default......................................................  54
     Rights Upon Event of Default...........................................  54
     Amendment..............................................................  55
     Termination............................................................  55
     Duties of the Trustee..................................................  56
     The Trustee............................................................  56

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CAPTION                                                                     PAGE
-------                                                                     ----

Description of Credit Support...............................................  56
     Subordination..........................................................  57
     Letter of Credit.......................................................  58
     Mortgage Pool Insurance Policy.........................................  59
     Special Hazard Insurance Policy........................................  61
     Bankruptcy Bond........................................................  63
     Certificate Guarantee Insurance........................................  63
     Reserve Fund...........................................................  63
     Cash Flow Agreements...................................................  64
Description of Primary Insurance Policies...................................  64
     Primary Mortgage Insurance Policies....................................  64
     Primary Hazard Insurance Policies......................................  64
     FHA Insurance..........................................................  66
     VA Guarantees............................................................66
Certain Legal Aspects of Mortgage Loans.....................................  67
     General                                                                  67
     Single-Family Loans and Multifamily Loans..............................  67
     Leases and Rents.......................................................  68
     Cooperative Loans......................................................  68
     Contracts..............................................................  69
     Foreclosure on Mortgages...............................................  71
     Foreclosure on Cooperative Shares......................................  73
     Repossession with respect to Contracts.................................  74
     Louisiana Law..........................................................  75
Rights of Redemption with respect to Single-Family Properties and     
         Multifamily Properties.............................................  75
     Notice of Sale; Redemption Rights with respect to Manufactured Homes...  75
     Anti-Deficiency Legislation and Other Limitations on Lenders...........  75
     Junior Mortgages.......................................................  77
     Consumer Protection Laws with respect to Contracts.....................  77
     Other Limitations......................................................  78
     Enforceability of Certain Provisions...................................  78
     Subordinate Financing..................................................  80
     Applicability of Usury Laws............................................  80
     Alternative Mortgage Instruments.......................................  81
     Formaldehyde Litigation with respect to Contracts......................  82
     Soldiers' and Sailors' Civil Relief Act of 1940........................  82
     Environmental Legislation..............................................  83
     Forfeitures in Drug and RICO Proceedings...............................  84
     Negative Amortization Loans............................................  84
Certain Federal Income Tax Consequences.....................................  84
     General                                                                  84
     REMICs                                                                   85
     Grantor Trust Funds.................................................... 102
     Partnership Trust Funds.................................................113
State and Other Tax Consequences............................................ 119
ERISA Considerations........................................................ 119
Legal Investment............................................................ 125
Methods of Distribution..................................................... 125
Legal Matters                                                                126
Financial Information....................................................... 126
Index of Principal Definitions.............................................. 127

 UNTIL 90 DAYS AFTER THE DATE OF EACH PROSPECTUS SUPPLEMENT, ALL DEALERS
EFFECTING TRANSACTIONS IN THE CERTIFICATES COVERED BY SUCH SUPPLEMENT, WHETHER  
OR NOT PARTICIPATING IN THE DISTRIBUTION THEREOF, MAY BE REQUIRED TO DELIVER    
SUCH SUPPLEMENT AND THIS PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF   
DEALERS TO DELIVER A PROSPECTUS SUPPLEMENT AND PROSPECTUS WHEN ACTING AS        
UNDERWRITERS OF THE CERTIFICATES COVERED BY SUCH SUPPLEMENT AND WITH RESPECT TO 
THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.                                       

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 AVAILABLE INFORMATION

The Depositor is subject to the informational requirements of the     
Securities Exchange Act of 1934 and in accordance therewith files reports and   
other information with the Securities and Exchange Commission (the              
"Commission"). Such reports and other information filed by the Depositor can be 
inspected and copied at the public reference facilities maintained by the       
Commission at its Public Reference Section, 450 Fifth Street, N.W., Washington, 
D.C. 20549, and its Regional Offices located as follows: Chicago Regional       
Office, 500 West Madison, 14th Floor, Chicago, Illinois 60661; New York Regional
Office, Seven World Trade Center, New York, New York 10048. Copies of such      
material can also be obtained from the Public Reference Section of the          
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates 
and electronically through the Commission's Electronic Data Gathering, Analysis 
and Retrieval System at the Commission's Web site (http:\\www.sec.gov). The     
Depositor does not intend to send any financial reports to Certificateholders.  

  This Prospectus does not contain all of the information set forth in the
Registration Statement (of which this Prospectus forms a part) and exhibits     
thereto which the Depositor has filed with the Commission under the Securities  
Act of 1933 and to which reference is hereby made.                              

 Copies of FHLMC's most recent Offering Circular for FHLMC Certificates,
FHLMC's most recent Information Statement and any subsequent information        
statement, any supplement to any information statement relating to FHLMC and any
quarterly report made available by FHLMC after December 31, 1983 can be obtained
by writing or calling the FHLMC Investor Inquiry Department at 8200 Jones Branch
Drive, Mail Stop 319, McLean, Virginia 22102 (800-336-3672). The Depositor did  
not participate in the preparation of FHLMC's Offering Circular, Information    
Statement or any supplement and, accordingly, makes no representation as to the 
accuracy or completeness of the information set forth therein.                  

     Copies of FNMA's most recent Prospectus for FNMA Certificates are available
from FNMA's Mortgage Backed Securities Office, 3900 Wisconsin Avenue, N.W.,     
Washington, D.C. 20016 (202-752- 6547). FNMA's annual report and quarterly      
financial statements, as well as other financial information, are available from
FNMA's Office of the Treasurer, 3900 Wisconsin Avenue, N.W., Washington, D.C.   
20016 (202-752-7000) or the Office of the Vice President of Investor Relations, 
3900 Wisconsin Avenue, N.W., Washington, D.C. 20016 (202-752-7000). The         
Depositor did not participate in the preparation of FNMA's Prospectus and,      
accordingly, makes no representations as to the accuracy or completeness of the 
information set forth therein.                                                  

 REPORTS TO CERTIFICATEHOLDERS

 The Trustee will mail monthly reports concerning each Trust Fund to all
registered holders of Certificates of the related series. See "Description of   
the Certificates-Reports to Certificateholders".                                

 INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

    There are incorporated herein by reference all documents and reports filed
or caused to be filed by the Depositor with respect to a Trust Fund pursuant to 
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to the termination 
of the offering of Offered Certificates evidencing interest therein. The        
Depositor will provide or cause to be provided without charge to each person to 
whom this Prospectus is delivered in connection with the offering of one or more
classes of Offered Certificates, a copy of any or all documents or reports      
incorporated herein by reference, in each case to the extent such documents or  
reports relate to one or more of such classes of such Offered Certificates,     
other than the exhibits to such documents (unless such exhibits are specifically
incorporated by reference in such documents). Requests to the Depositor should  
be directed in writing to its principal executive office at Seven World Trade   
Center, New York, New York 10048, Attention: Secretary, or by telephone at (212)
783-5635. The Depositor has determined that its financial statements are not    
material to the offering of any Offered Certificates.                           

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 SUMMARY OF PROSPECTUS

    The following summary of certain pertinent information is qualified in its
entirety by reference to the more detailed information appearing elsewhere in   
this Prospectus and by reference to the information with respect to each series 
of Certificates contained in the Prospectus Supplement to be prepared and       
delivered in connection with the offering of such series. An Index of Principal 
Definitions is included at the end of this Prospectus.                          

Title of Certificates................Mortgage Pass-Through Certificates,        
                                  issuable in series (the "Certificates").

Depositor............................Salomon Brothers Mortgage Securities VII,  
                                   Inc., an indirect wholly-owned subsidiary
                                    of Salomon Inc and an affiliate of Salomon
                            Brothers Inc. See "The Depositor".

Master Servicer......................The Master Servicer (the "Master Servicer")
                                    for each series of Certificates evidencing
                             interests in a Trust Fund including
                                     Mortgage Loans will be named in the related
                                 Prospectus Supplement, which may be the
                                     Depositor or an affiliate of the Depositor.
                 See "Description of the
                                    Certificates-Certain Matters Regarding the
                             Master Servicer and the Depositor".

Trustee..............................The Trustee (the "Trustee") for each series
                              of Certificates will be named in the
                        related Prospectus Supplement.

Description of Certificates..........Each series of Certificates will include   
                             one or more classes. Each series of
                              Certificates (including any class or
                                    classes of Certificates of such series not
                               offered hereby) will represent in the
                                   aggregate the entire beneficial ownership
                                   interest in a segregated pool of Mortgage
                                 Loans, or beneficial interests therein,
                                    Agency Securities, Private Mortgage-Backed
                                  Securities or Funding Agreements, or any
                                  combination thereof (each, a "Trust Fund
                              Asset"), and certain other assets as
                                  described below (a "Trust Fund"). Unless
                           otherwise provided in the related
                              Prospectus Supplement, each class of
                                Certificates (other than certain Strip
                                    Certificates as defined below) will have a
                                 stated principal amount (a "Certificate
                                     Principal Balance") and will be entitled to
                                 payments of interest thereon based on a
                                     fixed, variable or adjustable interest rate
                              (a "Pass-Through Rate"). The related
                                Prospectus Supplement will specify the
                                     Pass-Through Rate for each class or, in the
                          case of a variable or adjustable
                           Pass-Through Rate, the method for
                            determining the Pass-Through Rate.

                                     A series of Certificates may include one or
                                     more classes of Certificates (collectively,
                                    the "Senior Certificates") that are senior
                                to one or more classes of Certificates
                         (collectively, the "Subordinate
                              Certificates") in respect of certain
                                     distributions of principal and interest and
                                     allocation of losses on the Mortgage Loans.
                                 Credit enhancement also may be provided
                             with respect to any series by means

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                                     of various pool insurance policies, letters
                                    of credit, reserve funds or other types of
                                   credit support, or any combination of the
                                   foregoing, as described herein and in the
                            related Prospectus Supplement. See
                          "Description of Credit Support".

                                     A series may include one or more classes of
                                Certificates entitled (i) to principal
                               distributions, with disproportionate,
                                  nominal or no interest distributions, or
                              (ii) to interest distributions, with
                                   disproportionate, nominal or no principal
                                  distributions ("Strip Certificates"). In
                                    addition, a series may include two or more
                                    classes of Certificates which differ as to
                               timing, sequential order, priority of
                                 payment, pass-through rate or amount of
                                   distributions of principal or interest or
                               both, or as to which distributions of
                                    principal or interest or both on any class
                            may be made upon the occurrence of
                                specified events, in accordance with a
                                 schedule or formula, or on the basis of
                                     collections from designated portions of the
                                     Mortgage Pool, which series may include one
                                   or more classes of Certificates ("Accrual
                                     Certificates"), as to which certain accrued
                                     interest will not be distributed but rather
                                will be added to the principal balance
                               thereof on each Distribution Date, as
                            hereinafter defined, in the manner
                             described in the related Prospectus
     Supplement.

                                  If so provided in the related Prospectus
                                  Supplement, a series of Certificates may
                                     include one or more classes of Certificates
                                   (collectively, the "Senior Certificates")
                                    which are senior to one or more classes of
                         Certificates (collectively, the
                                   "Subordinate Certificates") in respect of
                                certain distributions of principal and
                                    interest allocations of losses on Mortgage
                                Loans. In addition, certain classes of
                                     Senior (or Subordinate) Certificates may be
                               senior to other classes of Senior (or
                                 Subordinate) Certificates in respect of
                      such distribution or losses.

                                  With respect to each series, one or more
                                    elections may be made to treat the related
                                    Trust Fund or a designated portion thereof
                               as a "real estate mortgage investment
                               conduit" or "REMIC" as defined in the
                                     Internal Revenue Code of 1986 (the "Code").
                                   If any such election is made with respect
                            to a series, one of the classes of
                                     Certificates comprising such series will be
                                designated as evidencing all "residual
                                    interests" in the related REMIC as defined
      in the Code.

                                The Certificates will not represent an
                                    interest in or obligation of the Depositor
                                or any affiliate thereof except as set
                                    forth herein, nor will the Certificates or
                                     any Mortgage Loans be insured or guaranteed
                       by any governmental agency or
                              instrumentality. Although payment of
                                     principal and interest on Agency Securities
 will be

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                                   guaranteed as described herein and in the
                                     related Prospectus Supplement by GNMA, FNMA
                                  or FHLMC, the Certificates of any series
                                    including Agency Securities will not be so
     guaranteed.

The Trust Funds......................Each Trust Fund will consist primarily of  
                                   (a) a pool (a "Mortgage Pool") of one- to
                                 four-family residential mortgage loans,
                                 multifamily residential mortgage loans,
                                     cooperative apartment loans or manufactured
                                 housing conditional sales contracts and
                                    installment loan agreements (collectively,
                              the "Mortgage Loans"), or beneficial
                             interests therein, or real property
                                 acquired upon foreclosure or comparable
                                conversion of such Mortgage Loans, (b)
                        Agency Securities, (c) Private
                                   Mortgage-Backed Securities or (d) Funding
                                 Agreements, or any combination thereof.

 A. The Mortgage Loans..............As more specifically described herein, the
                                    Mortgage Loans will be secured by first or
                                    junior liens on, or security interests in,
                             (i) one- to four-family residential
                                     properties, (ii) rental apartment buildings
                             or projects containing five or more
                                residential units (including apartment
                                buildings owned by cooperative housing
                                     corporations), (iii) cooperative loans (the
                                   "Cooperative Loans") secured primarily by
                                 shares in a private cooperative housing
                                     corporation (a "Cooperative") that give the
                             owner thereof the right to occupy a
                                     particular dwelling unit in the Cooperative
                                or (iv) new or used manufactured homes
                                     (collectively, the "Mortgaged Properties").
                                    The Mortgaged Properties may be located in
                                     any one of the fifty states or the District
                                   of Columbia. Unless otherwise provided in
                                the related Prospectus Supplement, all
                             Mortgage Loans will have individual
                                  principal balances at origination of not
                                   less than $25,000 or more than $5,000,000
                                    and original terms to maturity of not more
                                     than 40 years. All Mortgage Loans will have
                                 been originated by persons unaffiliated
                               with the Depositor and will have been
                                   purchased, either directly or indirectly,
                                   by the Depositor on or before the date of
                                   initial issuance of the related series of
                                    Certificates. Unless otherwise provided in
                                 the related Prospectus Supplement, each
                            Trust Fund will contain one of the
                            following types of Mortgage Loans:

                                    (1) Fully amortizing Mortgage Loans with a
                                     fixed rate of interest (an "Interest Rate")
                                 and level monthly payments to maturity;

                                     (2) Fully amortizing Mortgage Loans with an
                                   Interest Rate adjusted periodically (with
                                    corresponding adjustments in the amount of
                                   monthly payments) to equal the sum (which
                               may be rounded) of a fixed percentage
                               amount and an index ("ARM Loans"), as
                             described in the related Prospectus
     Supplement;

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                                     (3) ARM Loans that provide for an election,
                                  at the borrower's option, to convert the
                             adjustable Interest Rate to a fixed
                                    interest rate, as described in the related
                Prospectus Supplement;

                                 (4) ARM Loans that provide for negative
                                  amortization or accelerated amortization
                                    resulting from delays in or limitations on
                              the payment adjustments necessary to
                                  amortize fully the outstanding principal
                                    balance of the loan at its then applicable
                                Interest Rate over its remaining term;

                                    (5) Fully amortizing Mortgage Loans with a
                               fixed Interest Rate and level monthly
                                 payments, or payments of interest only,
                             during the early years of the term,
                                     followed by periodically increasing monthly
                                    payments of principal and interest for the
                                 duration of the term or for a specified
                              number of years, as described in the
                        related Prospectus Supplement;

                                (6) Fixed Interest Rate Mortgage Loans
                                   providing for level payments of principal
                                 and interest on the basis of an assumed
                                     amortization schedule and a balloon payment
                             at the end of a specified term; and

                                     (7) Another type of Mortgage Loan described
                               in the related Prospectus Supplement.

                                   All of the Mortgage Loans will be covered
                               by standard hazard insurance policies
                                 insuring against losses due to fire and
                              various other causes. Certain of the
                                   Mortgage Loans will be covered by primary
                                   mortgage insurance policies to the extent
                            provided herein and in the related
                                     Prospectus Supplement and if so provided in
                                    the related Prospectus Supplement, certain
                                  of the Mortgage Loans will be insured or
                           guaranteed by the Federal Housing
                                  Administration (the "FHA") or the United
                                    States Department of Veterans Affairs (the
                            "VA"). See "Description of Primary
              Insurance Policies".

  B. Agency Securities...............The Agency Securities evidenced by a series
                             of Certificates will consist of (i)
                                    Mortgage Participation Certificates issued
                                and guaranteed as to timely payment of
                                     interest and, unless otherwise specified in
                                     the related Prospectus Supplement, ultimate
                                  payment of principal by the Federal Home
                           Loan Mortgage Corporation ("FHLMC
                                  Certificates"), (ii) Guaranteed Mortgage
                              Pass-Through Certificates issued and
                            guaranteed as to timely payment of
                               principal and interest by the Federal
                              National Mortgage Association ("FNMA
                              Certificates"), (iii) fully modified
                                   pass-through mortgage-backed certificates
                            guaranteed as to timely payment of
                                  principal and interest by the Government
                              National Mortgage Association ("GNMA
                       Certificates"), (iv) stripped
                                    mortgage-backed securities representing an
                                undivided interest in all or a part of
either

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                                  the principal distributions (but not the
                                 interest distributions) or the interest
                              distributions (but not the principal
                                     distributions) or in some specified portion
                                     of the principal and interest distributions
                                (but not all of such distributions) on
                                  certain FHLMC, FNMA or GNMA Certificates
                                and, unless otherwise specified in the
                                  Prospectus Supplement, guaranteed to the
                                   same extent as the underlying securities,
                                     (v) another type of guaranteed pass-through
                                   certificate issued or guaranteed by GNMA,
                                    FNMA or FHLMC and described in the related
                                     Prospectus Supplement or (vi) a combination
                             of such Agency Securities. All GNMA
                                 Certificates will be backed by the full
                                   faith and credit of the United States. No
                                    FHLMC or FNMA Certificates will be backed,
                                   directly or indirectly, by the full faith
                          and credit of the United States.

                              The Agency Securities may consist of
                              pass-through securities issued under
                                     FHLMC's Cash or Guarantor Program, the GNMA
                                   I Program, the GNMA II Program or another
                             program specified in the Prospectus
                                    Supplement. The payment characteristics of
                                  the Mortgage Loans underlying the Agency
                                     Securities will be described in the related
                Prospectus Supplement.

C. Private Mortgage-Backed                                                  
   Securities...................Private Mortgage-Backed Securities may
                                include (a) mortgage participations or
                                pass-through certificates representing
                                  beneficial interests in certain mortgage
                              loans or (b) collateralized mortgage
                                     obligations secured by such mortgage loans.
                            Although individual mortgage loans
                              underlying a Private Mortgage-Backed
                                  Security may be insured or guaranteed by
                           the United States or an agency or
                                    instrumentality thereof, they need not be,
                                    and the Private Mortgage-Backed Securities
                              themselves will not be so insured or
                                  guaranteed. See "The Trust Funds-Private
                             Mortgage-Backed Securities" herein.

D. Funding Agreements..............Funding Agreements are obligations of a  
                                   Finance Company (as defined herein) which
                               are secured by Mortgage Loans, Agency
                               Securities or Private Mortgage-Backed
                                  Securities. See "The Trust Funds-Funding
             Agreements" herein.

Pre-Funding Account..................If so specified in the related Prospectus  
                                  Supplement, a portion of the proceeds of
                            the sale of one or more Classes of
                                   Certificates of a series may be deposited
                                  in a segregated account to be applied to
                                    acquire additional Mortgage Loans from the
                              Mortgage Loan Seller, subject to the
                            limitations set forth herein under
                                     "Description of the Certificates-PreFunding
                            Account." Monies on deposit in the
                                Pre-Funding Account and not applied to
                                acquire such additional Mortgage Loans
                                  within the time set forth in the related
                              Agreement (as defined herein) may be
    treated as

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                             principal and applied in the manner
                             described in the related Prospectus
     Supplement.

Certificate Account..................Each Trust Fund will include one or more   
                                  accounts (collectively, the "Certificate
                                 Account") established and maintained on
                                     behalf of the Certificateholders into which
                                 the Master Servicer will, to the extent
                             described herein and in the related
                                     Prospectus Supplement, deposit all payments
                                   and collections received or advanced with
                                     respect to the related Trust Fund Assets. A
                                     Certificate Account may be maintained as an
                                    interest bearing or a non-interest bearing
                               account, or funds held therein may be
                                     invested in certain short-term high-quality
                              obligations. See "Description of the
                              Certificates-Deposits to Certificate
   Account".

Credit Support.......................If so specified in the related Prospectus  
                            Supplement, one or more classes of
                             Certificates of a series evidencing
                                 interests in a Trust Fund that includes
                                   Mortgage Loans or Private Mortgage-Backed
                                    Securities may be provided partial or full
                                 protection against certain defaults and
                              losses on such assets in the form of
                                    subordination of one or more other classes
                                     of Certificates in such series or by one or
                                     more other types of credit support, such as
                                     a letter of credit, reserve fund, insurance
                                   policy or a combination thereof (any such
                                   coverage, "Credit Support"), and currency
                                  or interest rate exchange agreements and
                                    other financial assets, or any combination
                              thereof (with respect to any series,
                                    collectively, "Cash Flow Agreements"). The
                           amount and types of coverage, the
                                    identification of the entity providing the
                              coverage (if applicable) and related
                                  information with respect to each type of
                                   Credit Support, if any, will be described
                                   in the Prospectus Supplement for a series
                                     of Certificates. See "Description of Credit
   Support".

Interest on Certificates.............Interest on each class of Certificates     
                              (other than certain classes of Strip
                                     Certificates) of each series will accrue at
                                 the applicable Pass-Through Rate on the
                                   outstanding Certificate Principal Balance
                            thereof and will be distributed to
                               Certificateholders as provided in the
                                    related Prospectus Supplement (each of the
                                    specified dates on which distributions are
                             to be made, a "Distribution Date").
                                   Distributions with respect to interest on
                                   Strip Certificates with no or, in certain
                                cases, a nominal Certificate Principal
                                   Balance will be made on each Distribution
                                   Date on the basis of a notional amount as
                             described herein and in the related
                                 Prospectus Supplement. Distributions of
                              interest with respect to one or more
                                   classes of Certificates may be reduced to
                                 the extent of certain delinquencies and
                                     other contingencies described herein and in
                                the related Prospectus Supplement. See
                    "Yield Considerations" and

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                                   "Description of the Certificates-Interest
               on the Certificates".

Principal of Certificates............The Certificates of each series (other than
                                    certain Strip Certificates) initially will
                                 have an aggregate Certificate Principal
                                    Balance equal to the outstanding principal
                                 balance of the Trust Fund Assets as of,
                                  unless the related Prospectus Supplement
                                   provides otherwise, the close of business
                                    on the first day of the month of formation
                                 of the related Trust Fund (the "Cut-off
                                Date"), after application of scheduled
                              payments due on or before such date,
                                  whether or not received. The Certificate
                            Principal Balance of a Certificate
                                represents the maximum amount that the
                                  holder thereof is entitled to receive in
                                    respect of principal from future cash flow
                                  on the assets in the related Trust Fund.
                                    The Prospectus Supplement will include the
                                  initial Certificate Principal Balance of
                                     each class of Certificates offered thereby.
                                  Unless otherwise provided in the related
                                 Prospectus Supplement, distributions of
                                     principal will be made on each Distribution
                         Date to the class or classes of
                                 Certificates entitled thereto until the
                                     Certificate Principal Balance of such class
                                    has been reduced to zero. Distributions of
                                     principal of any class of Certificates will
                                  be made on a pro rata basis among all of
                               the Certificates of such class. Strip
                                    Certificates with no Certificate Principal
                                   Balance will not receive distributions in
                                   respect of principal. See "Description of
                           the Certificates-Principal of the
        Certificates".

Advances.............................The Master Servicer, directly or through   
                                    sub-servicers, will service and administer
                                     the Mortgage Loans included in a Trust Fund
                            and, unless the related Prospectus
                           Supplement provides otherwise, in
                                   connection therewith will be obligated to
                               make certain advances with respect to
                              delinquent scheduled payments on the
                                     Mortgage Loans. Advances made by the Master
                                 Servicer are reimbursable to the extent
                             described herein and in the related
                               Prospectus Supplement. The Prospectus
                                   Supplement with respect to any series may
                               provide that the Master Servicer will
                               obtain a cash advance surety bond, or
                                  maintain a cash advance reserve fund, to
                                     cover any obligation of the Master Servicer
                                   to make advances. The obligor on any such
                                  surety bond will be named, and the terms
                                     applicable to any such cash advance reserve
                               fund will be described in the related
                                    Prospectus Supplement. See "Description of
                                 the Certificates-Advances in respect of
         Delinquencies".

Optional Termination.................If so specified in the related Prospectus  
                                     Supplement, a series of Certificates may be
                               subject to optional early termination
                                     through the repurchase of the assets in the
                                   related Trust Fund by the party specified
        therein, under

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                                 the circumstances and in the manner set
                                forth herein under "Description of the
                    Certificates-Termination".

Tax Status of the Certificates.......The Certificates of each series offered    
                                    hereby will constitute either (i) "regular
                                   interests" ("REMIC Regular Certificates")
                                   and "residual interests" ("REMIC Residual
                                     Certificates") in a Trust Fund treated as a
                                   REMIC under Sections 860A through 860G of
                                  the Code, (ii) interests ("Grantor Trust
                                     Certificates") in a Trust Fund treated as a
                                   grantor trust under applicable provisions
                                    of the Code, (iii) interests ("Partnership
                                     Certificates") in a Trust Fund treated as a
                                    partnership under applicable provisions of
                                    the Code or (iv) evidences of indebtedness
                               ("Debt Certificates") of a Trust Fund
                                 treated as debt instruments for federal
              income tax purposes.

                                  In general, to the extent the assets and
                                 income of the Trust Fund are treated as
                                qualifying assets and income under the
                               following sections of the Code, REMIC
                                 Regular Certificates and REMIC Residual
                               Certificates (i) owned by a "domestic
                                building and loan association" will be
                                     treated as "loans secured by an interest in
                                   real property" within the meaning of Code
                                    Section 7701(a)(19)(C) and (ii) owned by a
                              real estate investment trust will be
                             treated as "real estate assets" for
                                 purposes of Section 856(c)(5)(A) of the
                                    Code and interest income therefrom will be
                                     treated as "interest on obligations secured
                                     by mortgages on real property" for purposes
                                 of Section 856(c)(3)(B) of the Code. In
                                   addition, REMIC Regular Certificates will
                               be "obligation[s]. . .which. . .[are]
                                    principally secured by an interest in real
                                 property" within the meaning of Section
                                     860G(a)(3)(C) of the Code. Moreover, if 95%
                                     or more of the assets and the income of the
                                     Trust Fund qualify for any of the foregoing
                                    treatments, the REMIC Regular Certificates
                            and (with the exception of Section
                                   860G(a)(3)(C) of the Code) REMIC Residual
                                     Certificates will qualify for the foregoing
                       treatments in their entirety.

                                    REMIC Residual Certificates generally will
                                   be treated as representing an interest in
                                  qualifying assets and income to the same
                                 extent described above for institutions
                             subject to Sections 7701(a)(19)(C),
                                    856(c)(5)(A) and 856(c)(3)(B) of the Code.
                                  A portion (or, in certain cases, all) of
                                     the income from REMIC Residual Certificates
                                  (i) may not be offset by any losses from
                                other activities of the holder of such
                                  REMIC Residual Certificates, (ii) may be
                               treated as unrelated business taxable
                               income, for holders of REMIC Residual
                                 Certificates that are subject to tax on
                               unrelated business taxable income (as
                                  defined in Section 511 of the Code), and
                                     (iii) may be subject to foreign withholding
                                  rules. In addition, transfers of certain
                            REMIC Residual Certificates may be
                disregarded under some

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                                  circumstances for all federal income tax
                                   purposes. See "Certain Federal Income Tax
                                   Consequences-REMICs-Taxation of Owners of
                            REMIC Residual Certificates-Excess
                              Inclusions," and "-Noneconomic REMIC
                        Residual Certificates" herein.

                                  Unless otherwise provided in the related
                              Prospectus Supplement, Grantor Trust
                                 Certificates may be either Certificates
                                    having a Certificate Principal Balance and
                             a Pass-Through Rate ("Grantor Trust
                                     Fractional Interest Certificates") or Strip
                            Certificates ("Grantor Trust Strip
                                  Certificates"). Holders of Grantor Trust
                                    Fractional Interest Certificates generally
                                  will be treated as owning an interest in
                                     qualifying assets and income under Sections
                                    7701(a)(19)(C), 856(c)(5)(A), 856(c)(3)(B)
                              and 860G(a)(3)(A) of the Code. It is
                             unclear whether Grantor Trust Strip
                         Certificates will be treated as
                               representing an ownership interest in
                                     qualifying assets and income under Sections
                          7701(a)(19)(C), 856(c)(5)(A) and
                                856(c)(3)(B) of the Code, although the
                                policy considerations underlying those
                                     Sections suggest that such treatment should
                                     be available. Partnership Certificates will
                                 be treated as partnership interests for
                                  purposes of federal income taxation, and
                                     accordingly, will not represent an interest
                              in qualifying assets for purposes of
                                 Section 7701(a)(19)(C) of the Code, but
                                     will represent qualifying assets and income
                         under Sections 856(c)(5)(A) and
                                856(c)(3)(B) of the Code to the extent
                                    their proportionate share of the assets of
                                 the related Trust Fund so qualify. Debt
                                    Certificates will not represent qualifying
                                     assets or income for purposes of any of the
             preceding Sections.

                                    Investors are advised to consult their tax
                                 advisors and to review "Certain Federal
                                    Income Tax Consequences" herein and in the
                        related Prospectus Supplement.

Rating...............................At the date of issuance, as to each series,
                                   each class of Certificates offered hereby
                                  will be rated in one of the four highest
                                     rating categories by one or more nationally
                                     recognized statistical rating agencies. See
                            "Rating" in the related Prospectus
     Supplement.

Legal Investment.....................The Prospectus Supplement for each series  
                                    of Certificates will specify which classes
                                 of Certificates of such series, if any,
                           will constitute "mortgage related
                                   securities" for purposes of the Secondary
                                 Mortgage Market Enhancement Act of 1984
                                   ("SMMEA"). Any class of Certificates that
                                is not rated in one of the two highest
                                     rating categories by one or more nationally
                                   recognized statistical rating agencies or
                                     that represents an interest in a Trust Fund
                                  that includes junior mortgage loans will
                          not constitute "mortgage related
                                securities" for purposes of SMMEA. See
             "Legal Investment".

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ERISA Considerations.................A fiduciary of an employee benefit plan and
                            certain other retirement plans and
                            arrangements, including individual
                               retirement accounts, annuities, Keogh
                                     plans, and bank collective investment funds
                                    and insurance company general and separate
                                 accounts in which such plans, accounts,
                                 annuities or arrangements are invested,
                                     that are subject to the Employee Retirement
                                 Income Security Act of 1974, as amended
                                ("ERISA"), or Section 4975 of the Code
                                  (each, a "Plan") should carefully review
                             with its legal advisors whether the
                                   purchase or holding of Certificates could
                            give rise to a transaction that is
                                    prohibited or is not otherwise permissible
                                   either under ERISA or Section 4975 of the
                                Code. The U.S. Department of Labor has
                                    issued an individual exemption, Prohibited
                           Transaction Exemption 89- 89 (the
                               "Exemption"), to Salomon Brothers Inc
                                     ("Salomon") that generally exempts from the
                                  application of certain of the prohibited
                                  transaction provisions of Section 406 of
                                    ERISA and the excise taxes imposed on such
                                    prohibited transactions by Section 4975(a)
                                    and (b) of the Code, transactions relating
                              to the purchase, sale and holding of
                                   pass-through certificates underwritten by
                                    Salomon and the servicing and operation of
                                  asset pools such as certain of the Trust
                                     Funds, provided that certain conditions are
                             satisfied. If the conditions of the
                              Exemption will not be satisfied, the
                                   Certificates may not be acquired by or on
                                  behalf of, or with the assets of, a Plan
                         unless the party acquiring such
                                  Certificates provides the Depositor, the
                                 Trustee and the Master Servicer with an
                                   opinion of counsel, or a certification in
                                   lieu of such opinion of counsel, that the
                          purchase of such Certificates is
                                    permissible under applicable law, will not
                                constitute or result in any non-exempt
                               prohibited transaction under ERISA or
                               Section 4975 of the Code and will not
                                   subject the Depositor, the Trustee or the
                              Master Servicer to any obligation in
                             addition to those undertaken in the
                       related Agreement. See "ERISA
                 Considerations" herein.

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 THE TRUST FUNDS

THE MORTGAGE LOANS                                                              

GENERAL                                                               

     The Mortgage Loans may consist of mortgage loans secured by first or junior
liens on by oneto four-family residential properties ("Single Family Properties"
and the related loans, "Single Family Loans"), mortgage loans secured by rental 
apartments or projects (including apartment buildings owned by cooperative      
housing corporations) containing five or more dwelling units ("Multifamily      
Properties" and the related loans, "Multifamily Loans"), mortgage loans secured 
by shares in a private cooperative housing corporation (a "Cooperative" and the 
related loans, "Cooperative Loans") that give the owner thereof the right to    
occupy a particular dwelling unit (each, a "Cooperative Unit") in the           
Cooperative or conditional sales contracts and installment loan agreements with 
respect to new or used Manufactured Homes (as defined herein, and the related   
contracts or agreements, the "Contracts"), or beneficial interests therein, or  
real property acquired upon foreclosure or comparable conversion of such        
Mortgage Loans. The Single-Family Properties, Cooperative shares (together with 
the right to occupy a particular Cooperative Unit evidenced thereby) and        
Manufactured Homes (collectively, the "Mortgaged Properties") may be located in 
any one of the fifty states or the District of Columbia. The Mortgaged          
Properties may include leasehold interests in residential properties, the title 
to which is held by third party lessors. The term of any such leasehold will    
exceed the term of the Mortgage Note by at least five years. Each Mortgage Loan 
will have been originated by a person (the "Originator") not affiliated with    
Salomon Brothers Mortgage Securities VII, Inc. (the "Depositor"). Each Mortgage 
Loan will be selected by the Depositor for inclusion in a Mortgage Pool from    
among those purchased, either directly or indirectly, from a prior holder       
thereof (a "Mortgage Loan Seller"), which prior holder may not be the Originator
thereof and may be an affiliate of the Depositor. See "Mortgage Loan            
Program-Underwriting Standards".                                                

   Unless otherwise specified below or in the related Prospectus Supplement,
all of the Mortgage Loans in a Mortgage Pool will (i) have individual principal 
balances at origination of not less than $25,000 or more than $5,000,000, (ii)  
have monthly payments due on the first day of each month, (iii) have original   
terms to maturity of not more than 40 years and (iv) be one of the following    
types of mortgage loans:                                                        

       (1) Fully amortizing Mortgage Loans with a fixed rate of interest (an
"Interest Rate") and level monthly payments to maturity;              

    (2) Fully amortizing Mortgage Loans with an Interest Rate adjusted
periodically (with corresponding adjustments in the amount of monthly 
 payments) to equal the sum (which may be rounded) of a fixed percentage
   amount and an index ("ARM Loans"), as described in the related Prospectus
Supplement;                                                           

       (3) ARM Loans that provide for an election, at the borrower's option,
to convert the adjustable Interest Rate to a fixed interest rate, as  
described in the related Prospectus Supplement;                       

     (4) ARM Loans that provide for negative amortization or accelerated
amortization resulting from delays in or limitations on the payment   
   adjustments necessary to amortize fully the outstanding principal balance
   of the loan at its then applicable Interest Rate over its remaining term;

    (5) Fully amortizing Mortgage Loans with a fixed Interest Rate and
level monthly payments, or payments of interest only, during the early
    years of the term, followed by periodically increasing monthly payments of
principal and interest for the duration of the term or for a specified
number of years, as described in the related Prospectus Supplement;   

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       (6) Fixed Interest Rate Mortgage Loans providing for level payment of
     principal and interest on the basis of an assumed amortization schedule and
a balloon payment at the end of a specified term; and                 

       (7) Another type of Mortgage Loan described in the related Prospectus
Supplement.                                                           

   If provided in the related Prospectus Supplement, certain of the Mortgage
Pools may contain Mortgage Loans secured by junior liens, and the related senior
liens ("Senior Liens") may not be included in the Mortgage Pool. The primary    
risk to holders of Mortgage Loans secured by junior liens is the possibility    
that adequate funds will not be received in connection with a foreclosure of the
related Senior Liens to satisfy fully both the Senior Liens and the Mortgage    
Loan. In the event that a holder of a Senior Lien forecloses on a Mortgaged     
Property, the proceeds of the foreclosure or similar sale will be applied first 
to the payment of court costs and fees in connection with the foreclosure,      
second to real estate taxes, third in satisfaction of all principal, interest,  
prepayment or acceleration penalties, if any, and any other sums due and owing  
to the holder of the Senior Liens. The claims of the holders of the Senior Liens
will be satisfied in full out of proceeds of the liquidation of the Mortgage    
Loan, if such proceeds are sufficient, before the Trust Fund as holder of the   
junior lien receives any payments in respect of the Mortgage Loan. If the Master
Servicer were to foreclose on any Mortgage Loan, it would do so subject to any  
related Senior Liens. In order for the debt related to the Mortgage Loan to be  
paid in full at such sale, a bidder at the foreclosure sale of such Mortgage    
Loan would have to bid an amount sufficient to pay off all sums due under the   
Mortgage Loan and the Senior Liens or purchase the Mortgaged Property subject to
the Senior Liens. In the event that such proceeds from a foreclosure or similar 
sale of the related Mortgaged Property are insufficient to satisfy all Senior   
Liens and the Mortgage Loan in the aggregate, the Trust Fund, as the holder of  
the junior lien, and, accordingly, holders of one or more classes of the        
Certificates bear (i) the risk of delay in distributions while a deficiency     
judgment against the borrower is obtained and (ii) the risk of loss if the      
deficiency judgment is not realized upon. Moreover, deficiency judgments may not
be available in certain jurisdictions. In addition, a junior mortgagee may not  
foreclose on the property securing a junior mortgage unless it forecloses       
subject to the senior mortgages.                                                

     Liquidation expenses with respect to defaulted junior mortgage loans do not
vary directly with the outstanding principal balance of the loan at the time of 
default. Therefore, assuming that the Master Servicer took the same steps in    
realizing upon a defaulted junior mortgage loan having a small remaining        
principal balance as it would in the case of a defaulted junior mortgage loan   
having a large remaining principal balance, the amount realized after expenses  
of liquidation would be smaller as a percentage of the outstanding principal    
balance of the small junior mortgage loan than would be the case with the       
defaulted junior mortgage loan having a large remaining principal balance.      
Because the average outstanding principal balance of the Mortgage Loans is      
smaller relative to the size of the average outstanding principal balance of the
loans in a typical pool of first priority mortgage loans, liquidation proceeds  
may also be smaller as a percentage of the principal balance of a Mortgage Loan 
than would be the case in a typical pool of first priority mortgage loans.      

Unless otherwise specified in the related Prospectus Supplement, the  
following requirements as to the Loan-to-Value Ratio of each Mortgage Loan of   
the type described above shall apply. The "Loan-to-Value Ratio" of a Mortgage   
Loan at any given time is the ratio (expressed as a percentage) of the then     
outstanding principal balance of the Mortgage Loan, plus, in the case of a      
Mortgage Loan secured by a junior lien, the outstanding principal balance of the
related Senior Liens, to the Value of the related Mortgaged Property. The Value 
of a Single-Family Property, Multifamily Property or Cooperative Unit, other    
than with respect to Refinance Loans, is the lesser of (a) the appraised value  
determined in an appraisal obtained by the originator at origination of such    
loan and (b) the sales price for such property. Refinance Loans are loans made  
to refinance existing loans. The Value of the Mortgaged Property securing a     
Refinance Loan is the appraised value thereof determined in an appraisal        
obtained at the time of origination of the Refinance Loan.                      

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Unless otherwise specified in the related Prospectus Supplement, for purposes of
calculating the Loan-to-Value Ratio of a Contract relating to a new Manufactured
Home, the Value is no greater than the sum of a fixed percentage of the list    
price of the unit actually billed by the manufacturer to the dealer (exclusive  
of freight to the dealer site) including "accessories" identified in the invoice
(the "Manufacturer's Invoice Price"), plus the actual cost of any accessories   
purchased from the dealer, a delivery and set-up allowance, depending on the    
size of the unit, and the cost of state and local taxes, filing fees and up to  
three years prepaid hazard insurance premiums. Unless otherwise specified in the
related Prospectus Supplement, with respect to a used Manufactured Home, the    
Value is the least of the sale price, the appraised value, and the National     
Automobile Dealer's Association book value plus prepaid taxes and hazard        
insurance premiums. The appraised value of a Manufactured Home is based upon the
age and condition of the manufactured housing unit and the quality and condition
of the mobile home park in which it is situated, if applicable.                 

A Mortgaged Property may have been subject to secondary financing at  
origination of the Mortgage Loan, but, unless otherwise specified in the related
Prospectus Supplement, the total amount of primary and secondary financing at   
the time of origination of the Mortgage Loan did not produce a combined         
Loan-to-Value Ratio in excess of (i) 90% in the case of a Mortgage Loan secured 
by an owner-occupied primary residence or (ii) 80% in the case of a Mortgage    
Loan secured by a vacation or second home.                                      

   With respect to each Mortgaged Property, unless otherwise provided in the
related Prospectus Supplement, the borrower will have represented that the      
dwelling is either (a) an owner-occupied primary residence or (b) a vacation or 
second home that (i) is not part of a mandatory rental pool and (ii) is suitable
for year-round occupancy. With respect to a vacation or second home, no income  
derived from the property will be considered for underwriting purposes.         

Unless otherwise specified in the related Prospectus Supplement, the  
aggregate principal balance on the Cut-off Date of Mortgage Loans secured by    
condominium units will not exceed 30% of the aggregate principal balance of the 
Mortgage Loans in the related Mortgage Pool. A Mortgage Loan secured by a       
condominium unit will not be included in a Mortgage Pool unless, at the time of 
sale of such Mortgage Loan by the Mortgage Loan Seller, certain representations 
and warranties as to the condominium project are made by the Mortgage Loan      
Seller or an affiliate thereof or by such other person acceptable to the        
Depositor having knowledge regarding the subject matter of such representations 
and warranties. Unless otherwise specified in the related Prospectus Supplement,
such Mortgage Loan Seller, or another party on its behalf, will have made the   
following representations and warranties. If a condominium project is subject to
developer control or to incomplete phasing or add-ons, at least 70% of the units
have been sold to bona fide purchasers and are occupied as primary residences or
vacation or second homes. If a condominium project has been controlled by the   
unit owners (other than the developer) for less than two years and is not       
subject to incomplete phasing or add-ons, at least 70% of the units have been   
sold to bona fide purchasers and at least 60% of the units are occupied as      
primary residences or vacation or second homes. The foregoing percentages may be
modified in the case of a particular project upon proof of demonstrated market  
acceptance but in no event will any such percentage be reduced below 51%. If a  
condominium project has been controlled by the unit owners (other than the      
developer) for at least two years, has all common elements completed and is not 
subject to phasing or add-ons, the Mortgage Loan Seller, or another party on its
behalf, must represent and warrant, unless otherwise specified in the related   
Prospectus Supplement, that the marketability of the project has been proven and
that at least 90% of the units have been sold to bona fide purchasers. See      
"Mortgage Loan Program-Representations by or on behalf of Mortgage Loan Sellers;
Repurchases" herein for a description of certain other representations made by  
or on behalf of Mortgage Loan Sellers at the time Mortgage Loans are sold.      

   If provided in the related Prospectus Supplement, certain of the Mortgage
Pools may contain Mortgage Loans subject to temporary buydown plans ("Buydown   
Mortgage Loans"), pursuant to                                                   

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which the monthly payments made by the borrower in the early years of the       
Mortgage Loan (the "Buydown Period") will be less than the scheduled monthly    
payments on the Mortgage Loan, the resulting difference to be made up from (i)  
an amount contributed by the borrower, the seller of the Mortgaged Property, or 
another source (such amount, exclusive of investment earnings thereon, being    
hereinafter referred to as "Buydown Funds") and placed in a custodial account   
and (ii) unless otherwise specified in the Prospectus Supplement, investment    
earnings on the Buydown Funds. See "Description of the Certificates-Payments on 
Mortgage Loans. Generally, the borrower under each Buydown Mortgage Loan will be
qualified at the applicable Buydown Mortgage Rate. Accordingly, the repayment of
a Buydown Mortgage Loan is dependent on the ability of the borrower to make     
larger level monthly payments after the Buydown Funds have been depleted and,   
for certain Buydown Mortgage Loans, during the Buydown Period. See "Mortgage    
Loan Program-Underwriting Standards" for a discussion of loss and delinquency   
considerations relating to Buydown Mortgage Loans.                              

Unless otherwise specified in the related Prospectus Supplement, each 
Mortgage Loan having a Loan-to-Value Ratio at origination in excess of 80%, is  
required to be covered by a primary mortgage guaranty insurance policy insuring 
against default on such Mortgage Loan as to at least the principal amount       
thereof exceeding 75% of the Value of the Mortgaged Property at origination of  
the Mortgage Loan. Such insurance must remain in force at least until the       
Mortgage Loan amortizes to a level that would produce a Loan-to-Value Ratio     
lower than 80%. See "Description of Primary Insurance Policies-Primary Mortgage 
Insurance Policies".                                                            

     Each Prospectus Supplement will contain information, as of the date of such
Prospectus Supplement and to the extent then specifically known to the          
Depositor, with respect to the Mortgage Loans, Agency Securities, Private       
Mortgage-Backed Securities or Funding Agreements contained in the related Trust 
Fund, including (i) the aggregate outstanding principal balance, the largest,   
smallest and average outstanding principal balance of the Trust Fund Assets as  
of the applicable Cut-off Date, and, with respect to Mortgage Loans secured by a
junior lien, the amount of the related Senior Liens, (ii) the type of property  
securing the Mortgage Loans (e.g., one- to four-family houses, multifamily      
residential dwellings, shares in Cooperatives and the related proprietary leases
or occupancy agreements, condominium units and other attached units, new or used
Manufactured Homes and vacation and second homes), (iii) the original terms to  
maturity of the Mortgage Loans, (iv) the earliest origination date and latest   
maturity date, (v) the aggregate principal balance of Mortgage Loans having     
Loan-to-Value Ratios at origination exceeding 80%, or, with respect to Mortgage 
Loans secured by a junior lien, the aggregate principal balance of Mortgage     
Loans having combined Loan-to-Value Ratios exceeding 80%, (vi) the Interest     
Rates or range of Interest Rates borne by the Mortgage Loans or mortgage loans  
underlying the Agency Securities, Private Mortgage-Backed Securities or Funding 
Agreements, (vii) the geographical distribution of the Mortgage Loans on a      
state-by-state basis, (viii) the number and aggregate principal balance of      
Buydown Mortgage Loans, if any, (ix) the weighted average Retained Interest, if 
any, (x) with respect to ARM Loans, the adjustment dates, the highest, lowest   
and weighted average margin, and the maximum Interest Rate variation at the time
of any adjustment and over the life of the ARM Loan, and (xi) with respect to   
Mortgage Loans of the type described in (5) above, whether such loans provide   
for payments of interest only for any period and the frequency and amount by    
which, and the term during which, monthly payments adjust. If specific          
information respecting the Trust Fund Assets is not known to the Depositor at   
the time Certificates are initially offered, more general information of the    
nature described above will be provided in the Prospectus Supplement, and       
specific information will be set forth in a report which will be available to   
purchasers of the related Certificates at or before the initial issuance thereof
and will be filed as part of a report on Form 8-K with the Securities and       
Exchange Commission within fifteen days after such initial issuance.            

No assurance can be given that values of the Mortgaged Properties have
remained or will remain at their levels on the respective dates of origination  
of the related Mortgage Loans. If the                                           

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residential real estate market should experience an overall decline in property 
values such that the outstanding principal balances of the Mortgage Loans, and  
any secondary financing on the Mortgaged Properties, in a particular Mortgage   
Pool become equal to or greater than the value of the Mortgaged Properties, the 
rates of delinquencies, foreclosures or repossessions and losses could be higher
than those now generally experienced by institutional lenders. Manufactured     
Homes are less likely to experience appreciation in value and more likely to    
experience depreciation in value over time than other types of housing          
properties. In addition, adverse economic conditions (which may or may not      
affect real property values) may affect the timely payment by borrowers of      
scheduled payments of principal and interest on the Mortgage Loans and,         
accordingly, the rates of delinquencies, foreclosures or repossessions and      
losses with respect to any Mortgage Pool. To the extent that such losses are not
covered by Credit Support, such losses will be borne, at least in part, by the  
holders of one or more classes of the Certificates of the related series offered
hereby.                                                                         

   The Depositor will cause the Mortgage Loans comprising each Trust Fund to
be assigned to the Trustee named in the related Prospectus Supplement for the   
benefit of the holders of the Certificates of the related series. The Master    
Servicer named in the related Prospectus Supplement will service the Mortgage   
Loans, either directly or through other loan servicing institutions pursuant to 
a Pooling and Servicing Agreement among the Depositor, itself and the Trustee,  
and will receive a fee for such services. See "Mortgage Loan Program" and       
"Description of the Certificates". With respect to Mortgage Loans serviced by   
the Master Servicer through a Sub-Servicer, the Master Servicer will remain     
liable for its servicing obligations under the related Pooling and Servicing    
Agreement as if the Master Servicer alone were servicing such Mortgage Loans.   

  The Depositor will make certain representations and warranties regarding
the Mortgage Loans, but its assignment of the Mortgage Loans to the Trustee will
be without recourse. See "Description of the Certificates-Assignment of Trust   
Fund Assets". The obligations of the Master Servicer with respect to the        
Mortgage Loans will consist principally of its contractual servicing obligations
under the related Pooling and Servicing Agreement (including its obligation to  
enforce certain purchase and other obligations of Sub-Servicers or Mortgage Loan
Sellers, or both, as more fully described herein under "Mortgage Loan           
Program-Representations by or on behalf of Mortgage Loan Sellers; Repurchases"  
and "Description of the Certificates-Sub-Servicing" and "-Assignment of Trust   
Fund Assets") and, unless otherwise provided in the related Prospectus          
Supplement, its obligation to make certain cash advances in the event of        
delinquencies in payments on or with respect to the Mortgage Loans in amounts   
described herein under "Description of the Certificates-Advances in respect of  
Delinquencies". Any obligation of the Master Servicer to make advances may be   
subject to limitations, to the extent provided herein and in the related        
Prospectus Supplement.                                                          

SINGLE-FAMILY LOANS                                                   

The Single-Family Loans will be evidenced by promissory notes (the    
"Mortgage Notes") secured by first mortgages or first deeds of trust (the       
"Mortgages") creating a first lien on the Single-Family Properties. The         
Single-Family Properties will consist of one- to four-family residences,        
including detached and attached dwellings, townhouses, rowhouses, individual    
condominium units, individual units in planned-unit developments and individual 
units in de minimis planned-unit developments. Single-Family loans may be       
conventional loans, FHA-insured loans or VA-guaranteed loans as specified in the
related Prospectus Supplement.                                                  

MULTIFAMILY LOANS                                                     

The Multifamily Loans will be evidenced by Mortgage Notes secured by  
Mortgages creating a first lien on the Multifamily Properties. The Multifamily  
Properties will consist of rental                                               

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apartments or projects (including apartment buildings owned by cooperative      
housing cooperatives) containing five or more dwelling units. Multifamily       
Properties may include high-rise, mid-rise and garden apartments. Multifamily   
Loans may be conventional loans or FHA insured loans as specified in the related
Prospectus Supplement.                                                          

COOPERATIVE LOANS                                                     

The Cooperative Loans will be evidenced by promissory notes (the      
"Cooperative Notes") secured by security interests in shares issued by          
Cooperatives and in the related proprietary leases or occupancy agreements      
granting exclusive rights to occupy specific Cooperative Units in the related   
buildings.                                                                      

CONTRACTS                                                             

The Contracts will consist of manufactured housing conditional sales  
contracts and installment loan agreements each secured by a Manufactured Home.  
The Manufactured Homes securing the Contracts will consist of manufactured homes
within the meaning of 42 United States Code, Section 5402(6), which defines a   
"manufactured home" as "a structure, transportable in one or more sections,     
which in the traveling mode, is eight body feet or more in width or forty body  
feet or more in length, or, when erected on site, is three hundred twenty or    
more square feet, and which is built on a permanent chassis and designed to be  
used as a dwelling with or without a permanent foundation when connected to the 
required utilities, and includes the plumbing, heating, air conditioning, and   
electrical systems contained therein; except that such term shall include any   
structure which meets all the requirements of this paragraph except the size    
requirements and with respect to which the manufacturer voluntarily files a     
certification required by the Secretary of Housing and Urban Development and    
complies with the standards established under this chapter."                    

AGENCY SECURITIES                                                               

GOVERNMENT NATIONAL MORTGAGE ASSOCIATION                              

    GNMA is a wholly-owned corporate instrumentality of the United States with
the United States Department of Housing and Urban Development. Section 306(g) of
Title II of the National Housing Act of 1934, as amended (the "Housing Act"),   
authorizes GNMA to guarantee the timely payment of the principal of and interest
on certificates which represent an interest in a pool of mortgage loans insured 
by FHA under the Housing Act, or Title V of the Housing Act of 1949 ("FHA       
Loans"), or partially guaranteed by the VA under the Servicemen's Readjustment  
Act of 1944, as amended, or Chapter 37 of Title 38, United States Code ("VA     
Loans").                                                                        

    Section 306(g) of the Housing Act provides that "the full faith and credit
of the United States is pledged to the payment of all amounts which may be      
required to be paid under any guarantee under this subsection." In order to meet
its obligations under any such guarantee, GNMA may, under Section 306(d) of the 
Housing Act, borrow from the United States Treasury in an amount which is at    
anytime sufficient to enable GNMA, with no limitations as to amount, to perform 
its obligations under its guarantee.                                            

GNMA CERTIFICATES                                                     

Each GNMA Certificate held in a Trust Fund (which may be issued under 
either the GNMA I program or the GNMA II program) will be a "fully modified     
pass-through" mortgaged-backed certificate issued and serviced by a mortgage    
banking company or other financial concern ("GNMA Issuer") approved by GNMA or  
approved by FNMA as a seller-servicer of FHA Loans and/or VA Loans. The mortgage
loans underlying the GNMA Certificates will consist of FHA Loans and/or VA      
Loans. Each such mortgage loan is secured by a one- to four-family residential  

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property. GNMA will approve the issuance of each such GNMA Certificate in       
accordance with a guaranty agreement (a "Guaranty Agreement") between GNMA and  
the GNMA Issuer. Pursuant to its Guaranty Agreement, a GNMA Issuer will be      
required to advance its own funds in order to make timely payments of all       
amounts due on each such GNMA Certificate, even if the payments received by the 
GNMA Issuer on the FHA Loans or VA Loans underlying each such GNMA Certificate  
are less than the amounts due on each such GNMA Certificate.                    

The full and timely payment of principal of and interest on each GNMA 
Certificate will be guaranteed by GNMA, which obligation is backed by the full  
faith and credit of the United States. Each such GNMA Certificate will have an  
original maturity of not more than 30 years (but may have original maturities of
substantially less than 30 years). Each such GNMA Certificate will be based on  
and backed by a pool of FHA Loans or VA Loans secured by one- to four-family    
residential properties and will provide for the payment by or on behalf of the  
GNMA Issuer to the registered holder of such GNMA Certificate of scheduled      
monthly payments of principal and interest equal to the registered holder's     
proportionate interest in the aggregate amount of the monthly principal and     
interest payment on each FHA Loan or VA Loan underlying such GNMA Certificate,  
less the applicable servicing and guarantee fee which together equal the        
difference between the interest on the FHA Loan or VA Loan and the pass-through 
rate on the GNMA Certificate. In addition, each payment will include            
proportionate pass-through payments of any prepayments of principal on the FHA  
Loans or VA Loans underlying such GNMA Certificate and liquidation proceeds in  
the event of a foreclosure or other disposition of any such FHA Loans or VA     
Loans.                                                                          

     If a GNMA Issuer is unable to make the payments on a GNMA Certificate as it
becomes due, it must promptly notify GNMA and request GNMA to make such payment.
Upon notification and request, GNMA will make such payments directly to the     
registered holder of such GNMA Certificate. In the event no payment is made by a
GNMA Issuer and the GNMA Issuer fails to notify and request GNMA to make such   
payment, the holder of such GNMA Certificate will have recourse only against    
GNMA to obtain such payment. The Trustee or its nominee, as registered holder of
the GNMA Certificates held in a Trust Fund, will have the right to proceed      
directly against GNMA under the terms of the Guaranty Agreements relating to    
such GNMA Certificates for any amounts that are not paid when due.              

     All mortgage loans underlying a particular GNMA I Certificate must have the
same interest rate (except for pools of mortgage loans secured by manufactured  
homes) over the term of the loan. The interest rate on such GNMA I Certificate  
will equal the interest rate on the mortgage loans included in the pool of      
mortgage loans underlying such GNMA I Certificate, less one-half percentage     
point per annum of the unpaid principal balance of the mortgage loans.          

 Mortgage loans underlying a particular GNMA II Certificate may have per
annum interest rates that vary from each other by up to one percentage point.   
The interest rate on each GNMA II Certificate will be between one-half          
percentage point and one and one-half percentage points lower than the highest  
interest rate on the mortgage loans included in the pool of mortgage loans      
underlying such GNMA II Certificate (except for pools of mortgage loans secured 
by manufactured homes).                                                         

 Regular monthly installment payments on each GNMA Certificate held in a
Trust Fund will be comprised of interest due as specified on such GNMA          
Certificate plus the scheduled principal payments on the FHA Loans or VA Loans  
underlying such GNMA Certificate due on the first day of the month in which the 
scheduled monthly installments on such GNMA Certificate is due. Such regular    
monthly installments on each such GNMA Certificate are required to be paid to   
the Trustee as registered holder by the 15th day of each month in the case of a 
GNMA I Certificate and are required to be mailed to the Trustee by the 20th day 
of each month in the case of a GNMA II Certificate. Any principal prepayments on
any FHA Loans or VA Loans underlying a                                          

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GNMA Certificate held in a Trust Fund or any other early recovery of principal  
on such loan will be passed through to the Trustee as the registered holder of  
such GNMA Certificate.                                                          

   GNMA Certificates may be backed by graduated payment mortgage loans or by
"buydown" mortgage loans for which funds will have been provided (and deposited 
into escrow accounts) for application to the payment of a portion of the        
borrowers' monthly payments during the early years of such mortgage loan.       
Payments due the registered holders of GNMA Certificates backed by pools        
containing "buydown" mortgage loans will be computed in the same manner as      
payments derived from other GNMA Certificates and will include amounts to be    
collected from both the borrower and the related escrow account. The graduated  
payment mortgage loans will provide for graduated interest payments that, during
the early years of such mortgage loans, will be less than the amount of stated  
interest on such mortgage loans. The interest not so paid will be added to the  
principal of such graduated payment mortgage loans and, together with interest  
thereon, will be paid in subsequent years. The obligations of GNMA and of a GNMA
Issuer will be the same irrespective of whether the GNMA Certificates are backed
by graduated payment mortgage loans or "buydown" mortgage loans. No statistics  
comparable to the FHA's prepayment experience on level payment, non-"buydown"   
mortgage loans are available in respect of graduated payment or "buydown"       
mortgages. GNMA Certificates related to a series of Certificates may be held in 
book-entry form.                                                                

     If specified in a Prospectus Supplement, GNMA Certificates may be backed by
multifamily mortgage loans having the characteristics specified in such         
Prospectus Supplement.                                                          

FEDERAL HOME LOAN MORTGAGE CORPORATION                                

    FHLMC is a corporate instrumentality of the United States created pursuant
to Title III of the Emergency Home Finance Act of 1970, as amended (the "FHLMC  
Act"). The common stock of FHLMC is owned by the Federal Home Loan Banks. FHLMC 
was established primarily for the purpose of increasing the availability of     
mortgage credit for the financing of urgently needed housing. It seeks to       
provide an enhanced degree of liquidity for residential mortgage investments    
primarily by assisting in the development of secondary markets for conventional 
mortgages. The principal activity of FHLMC currently consists of the purchase of
first lien conventional mortgage loans or participation interests in such       
mortgage loans and the sale of the mortgage loans or participations so purchased
in the form of mortgage securities, primarily FHLMC Certificates. FHLMC is      
confined to purchasing, so far as practicable, mortgage loans that it deems to  
be of such quality, type and class as to meet generally the purchase standards  
imposed by private institutional mortgage investors.                            

FHLMC CERTIFICATES                                                    

Each FHLMC Certificate represents an undivided interest in a pool of  
mortgage loans that may consist of first lien conventional loans, FHA Loans or  
VA Loans (a "FHLMC Certificate group"). FHLMC Certificates are sold under the   
terms of a Mortgage Participation Certificate Agreement. A FHLMC Certificate may
be issued under either FHLMC's Cash Program or Guarantor Program.               

    Mortgage loans underlying the FHLMC Certificates held in a Trust Fund will
consist of mortgage loans with original terms to maturity of between 10 and 30  
years. Each such mortgage loan must meet the applicable standards set forth in  
the FHLMC Act. A FHLMC Certificate group may include whole loans, participation 
interests in whole loans and undivided interests in whole loans and/or          
participations comprising another FHLMC Certificate group. Under the Guarantor  
Program, any such FHLMC Certificate group may include only whole loans or       
participation interests in whole loans.                                         

FHLMC guarantees to each registered holder of a FHLMC Certificate the 
timely payment of interest on the underlying mortgage loans to the extent of the
applicable Certificate rate on the                                              

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registered holder's pro rata share of the unpaid principal balance outstanding  
on the underlying mortgage loans in the FHLMC Certificate group represented by  
such FHLMC Certificate, whether or not received. FHLMC also guarantees to each  
registered holder of a FHLMC Certificate collection by such holder of all       
principal on the underlying mortgage loans, without any offset or deduction, to 
the extent of such holder's pro rata share thereof, but does not, except if and 
to the extent specified in the Prospectus Supplement for a series of            
Certificates, guarantee the timely payment of scheduled principal. Under FHLMC's
Gold PC Program, FHLMC guarantees the timely payment of principal based on the  
difference between the pool factor, published in the month preceding the month  
of distribution and the pool factor published in such month of distribution.    
Pursuant to its guarantees, FHLMC indemnifies holders of FHLMC Certificates     
against any diminution in principal by reason of charges for property repairs,  
maintenance and foreclosure. FHLMC may remit the amount due on account of its   
guarantee of collection of principal at any time after default on an underlying 
mortgage loan, but not later than (i) 30 days following foreclosure sale, (ii)  
30 days following payment of the claim by any mortgage insurer, or (iii) 30 days
following the expiration of any right of redemption, whichever occurs later, but
in any event no later than one year after demand has been made upon the         
mortgagor for accelerated payment of principal. In taking actions regarding the 
collection of principal after default on the mortgage loans underlying FHLMC    
Certificates, including the timing of demand for acceleration, FHLMC reserves   
the right to exercise its judgment with respect to the mortgage loans in the    
same manner as for mortgage loans which it has purchased but not sold. The      
length of time necessary for FHLMC to determine that a mortgage loan should be  
accelerated varies with the particular circumstances of each mortgagor, and     
FHLMC has not adopted standards which require that the demand be made within any
specified period.                                                               

FHLMC Certificates are not guaranteed by the United States or by any  
Federal Home Loan Bank and do not constitute debts or obligations of the United 
States or any Federal Home Loan Bank. The obligations of FHLMC under its        
guarantee are obligations solely of FHLMC and are not backed by, nor entitled   
to, the full faith and credit of the United States. If FHLMC were unable to     
satisfy such obligations, distributions to holders of FHLMC Certificates would  
consist solely of payments and other recoveries on the underlying mortgage loans
and, accordingly, monthly distributions to holders of FHLMC Certificates would  
be affected by delinquent payments and defaults on such mortgage loans.         

Registered holders of FHLMC Certificates are entitled to receive their
monthly pro rata share of all principal payments on the underlying mortgage     
loans received by FHLMC, including any scheduled principal payments, full and   
partial repayments of principal and principal received by FHLMC by virtue of    
condemnation, insurance, liquidation or foreclosure, and repurchases of the     
mortgage loans by FHLMC or the seller thereof. FHLMC is required to remit each  
registered FHLMC Certificateholder's pro rata share of principal payments on the
underlying mortgage loans, interest at the FHLMC pass-through rate and any other
sums such as prepayment fees, within 60 days of the date on which such payments 
are deemed to have been received by FHLMC.                                      

   Under FHLMC's Cash Program, there is no limitation on the amount by which
interest rates on the mortgage loans underlying a FHLMC Certificate may exceed  
the pass-through rate on the FHLMC Certificate. Under such program, FHLMC       
purchases groups of whole mortgage loans from sellers at specified percentages  
of their unpaid principal balances, adjusted for accrued or prepaid interest,   
which when applied to the interest rate of the mortgage loans and participations
purchased, results in the yield (expressed as a percentage) required by FHLMC.  
The required yield, which includes a minimum servicing fee retained by the      
servicer, is calculated using the outstanding principal balance. The range of   
interest rates on the mortgage loans and participations in a FHLMC Certificate  
group under the Cash Program will vary since mortgage loans and participations  
are purchased and assigned to a FHLMC Certificate group based upon their yield  
to FHLMC rather than on the interest rate on the underlying mortgage loans.     
Under FHLMC's Guarantor Program, the pass-through rate on a FHLMC Certificate is
established based                                                               

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upon the lowest interest rate on the underlying mortgage loans, minus a minimum 
servicing fee and the amount of FHLMC's management and guaranty income as agreed
upon between the seller and FHLMC.                                              

FHLMC Certificates duly presented for registration of ownership on or 
before the last business day of a month are registered effective as of the first
day of the month. The first remittance to a registered holder of a FHLMC        
Certificate will be distributed so as to be received normally by the 15th day of
the second month following the month in which the purchaser became a registered 
holder of the FHLMC Certificates. Thereafter, such remittance will be           
distributed monthly to the registered holder so as to be received normally by   
the 15th day of each month. The Federal Reserve Bank of New York maintains      
book-entry accounts with respect to FHLMC Certificates sold by FHLMC on or after
January 2, 1985, and makes payments of principal and interest each month to the 
registered holders thereof in accordance with such holders' instructions.       

FEDERAL NATIONAL MORTGAGE ASSOCIATION                                 

     FNMA is a federally chartered and privately owned corporation organized and
existing under the Federal National Mortgage Association Charter Act (the       
"Charter Act"). FNMA was originally established in 1938 as a United States      
government agency to provide supplemental liquidity to the mortgage market and  
was transformed into a stockholder-owned and privately-managed corporation by   
legislation enacted in 1968.                                                    

     FNMA provides funds to the mortgage market primarily by purchasing mortgage
loans from lenders, thereby replenishing their funds for additional lending.    
FNMA acquires funds to purchase mortgage loans from many capital market         
investors that may not ordinarily invest in mortgages, thereby expanding the    
total amount of funds available for housing. Operating nationwide, FNMA helps to
redistribute mortgage funds from capital-surplus to capital-short areas.        

FNMA CERTIFICATES                                                     

FNMA Certificates are Guaranteed Mortgage Pass-Through Certificates   
representing fractional undivided interests in a pool of mortgage loans formed  
by FNMA. Each mortgage loan must meet the applicable standards of the FNMA      
purchase program. Mortgage loans comprising a pool are either provided by FNMA  
from its own portfolio or purchased pursuant to the criteria of the FNMA        
purchase program.                                                               

Mortgage loans underlying FNMA Certificates held in a Trust Fund will 
consist of conventional mortgage loans, FHA Loans or VA Loans. Original         
maturities of substantially all of the conventional, level payment mortgage     
loans underlying a FNMA Certificate are expected to be between either 8 to 15   
years or 20 to 30 years. The original maturities of substantially all of the    
fixed rate level payment FHA Loans or VA Loans are expected to be 30 years.     

     Mortgage loans underlying a FNMA Certificate may have annual interest rates
that vary by as much as two percentage points from each other. The rate of      
interest payable on a FNMA Certificate is equal to the lowest interest rate of  
any mortgage loan in the related pool, less a specified minimum annual          
percentage representing servicing compensation and FNMA's guaranty fee. Under a 
regular servicing option (pursuant to which the mortgagee or other servicers    
assumes the entire risk of foreclosure losses), the annual interest rates on the
mortgage loans underlying a FNMA Certificate will be between 50 basis points and
250 basis points greater than in its annual pass-through rate and under a       
special servicing option (pursuant to which FNMA assumes the entire risk for    
foreclosure losses), the annual interest rates on the mortgage loans underlying 
a FNMA Certificate will generally be between 55 basis points and 255 basis      
points greater than the annual FNMA Certificate pass-through rate. If specified 
in the Prospectus Supplement, FNMA Certificates may be backed by adjustable rate
mortgages.                                                                      

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 FNMA guarantees to each registered holder of a FNMA Certificate that it
will distribute amounts representing such holder's proportionate share of       
scheduled principal and interest payments at the applicable pass-through rate   
provided for by such FNMA Certificate on the underlying mortgage loans, whether 
or not received, and such holder's proportionate share of the full principal    
amount of any foreclosed or other finally liquidated mortgage loan, whether or  
not such principal amount is actually recovered. The obligations of FNMA under  
its guarantees are obligations solely of FNMA and are not backed by, nor        
entitled to, the full faith and credit of the United States. Although the       
Secretary of the Treasury of the United States has discretionary authority to   
lend FNMA up to $2.25 billion outstanding at any time, neither the United States
nor any agency thereof is obligated to finance FNMA's operations or to assist   
FNMA in any other manner. If FNMA were unable to satisfy its obligations,       
distributions to holders of FNMA Certificates would consist solely of payments  
and other recoveries on the underlying mortgage loans and, accordingly, monthly 
distributions to holders of FNMA Certificates would be affected by delinquent   
payments and defaults on such mortgage loans.                                   

     FNMA Certificates evidencing interests in pools of mortgage loans formed on
or after May 1, 1985 (other than FNMA Certificates backed by pools containing   
graduated payment mortgage loans or mortgage loans secured by multifamily       
projects) are available in book-entry form only. Distributions of principal and 
interest on each FNMA Certificate will be made by FNMA on the 25th day of each  
month to the persons in whose name the FNMA Certificate is entered in the books 
of the Federal Reserve Banks (or registered on the FNMA Certificate register in 
the case of fully registered FNMA Certificates) as of the close of business on  
the last day of the preceding month. With respect to FNMA Certificates issued in
book-entry form, distributions thereon will be made by wire, and with respect to
fully registered FNMA Certificates, distributions thereon will be made by check.

STRIPPED MORTGAGE-BACKED SECURITIES                                   

Agency Securities may consist of one or more stripped mortgage-backed 
securities, each as described herein and in the related Prospectus Supplement.  
Each such Agency Security will represent an undivided interest in all or part of
either the principal distributions (but not the interest distributions) or the  
interest distributions (but not the principal distributions), or in some        
specified portion of the principal and interest distributions (but not all of   
such distributions) on certain FHLMC, FNMA or GNMA Certificates. The underlying 
securities will be held under a trust agreement by FHLMC, FNMA or GNMA, each as 
trustee, or by another trustee named in the related Prospectus Supplement.      
FHLMC, FNMA or GNMA will guarantee each stripped Agency Security to the same    
extent as such entity guarantees the underlying securities backing such stripped
Agency Security, unless otherwise specified in the related Prospectus           
Supplement.                                                                     

OTHER AGENCY SECURITIES                                               

     If specified in the related Prospectus Supplement, a Trust Fund may include
other mortgage pass-through certificates issued or guaranteed by GNMA, FNMA or  
FHLMC. The characteristics of any such mortgage pass-through certificates will  
be described in such Prospectus Supplement. If so specified, a combination of   
different types of Agency Securities may be held in a Trust Fund.               

PRIVATE MORTGAGE-BACKED SECURITIES                                              

GENERAL                                                               

     Private Mortgage-Backed Securities may consist of (a) mortgage pass-through
certificates evidencing an undivided interest in a pool of mortgage loans or (b)
collateralized mortgage obligations secured by mortgage loans. Private          
Mortgage-Backed Securities will have been issued pursuant to a pooling and      
servicing agreement, an indenture or similar agreement (a "PMBS Agreement"). The
seller/servicer of the underlying mortgage loans will have entered into the     

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PMBS Agreement with the trustee under such PMBS Agreement (the "PMBS Trustee"). 
The PMBS Trustee or its agent, or a custodian, will possess the mortgage loans  
underlying such Private Mortgage-Backed Security. Mortgage loans underlying a   
Private Mortgage-Backed Security will be serviced by a servicer (the "PMBS      
Servicer") directly or by one or more subservicers who may be subject to the    
supervision of the PMBS Servicer. The PMBS Servicer will be a FNMA or FHLMC     
approved servicer and, if FHA Loans underlie the Private Mortgage-Backed        
Securities, approved by HUD as an FHA mortgagee.                                

  The issuer of the Private Mortgage-Backed Securities (the "PMBS Issuer")
will be a financial institution or other entity engaged generally in the        
business of mortgage lending, a public agency or instrumentality of a state,    
local or federal government, or a limited purpose corporation organized for the 
purpose of among other things, establishing trusts and acquiring and selling    
housing loans to such trusts and selling beneficial interests in such trusts. If
so specified in the Prospectus Supplement, the PMBS Issuer may be an affiliate  
of the Depositor. The obligations of the PMBS Issuer will generally be limited  
to certain representations and warranties with respect to the assets conveyed by
it to the related trust. Unless otherwise specified in the related Prospectus   
Supplement, the PMBS Issuer will not have guaranteed any of the assets conveyed 
to the related trust or any of the Private Mortgage-Backed Securities issued    
under the PMBS Agreement. Additionally, although the mortgage loans underlying  
the Private Mortgage-Backed Securities may be guaranteed by an agency or        
instrumentality of the United States, the Private Mortgage-Backed Securities    
themselves will not be so guaranteed.                                           

Distributions of principal and interest will be made on the Private   
Mortgage-Backed Securities on the dates specified in the related Prospectus     
Supplement. The Private Mortgage-Backed Securities may be entitled to receive   
nominal or no principal distributions or nominal or no interest distributions.  
Principal and interest distributions will be made on the Private Mortgage-Backed
Securities by the PMBS Trustee or the PMBS Servicer. The PMBS Issuer or the PMBS
Servicer may have the right to repurchase assets underlying the Private         
Mortgage-Backed Securities after a certain date or under other circumstances    
specified in the related Prospectus Supplement.                                 

UNDERLYING LOANS                                                      

  The mortgage loans underlying the Private Mortgage-Backed Securities may
consist of fixed rate, level payment, fully amortizing loans or graduated       
payment mortgage loans, buy-down loans, adjustable rate mortgage loans, or loans
having balloon or other special payment features. Such Mortgage Loans may be    
secured by single family property, multifamily property, manufactured homes or  
by an assignment of the proprietary lease or occupancy agreement relating to a  
specific dwelling within a Cooperative and the related shares issued by such    
Cooperative. Except as otherwise specified in the related Prospectus Supplement,
(i) no mortgage loan will have had a Loan-to-Value Ratio at origination in      
excess of 95%, (ii) each single family loan secured by a mortgaged property     
having a loan-to-value ratio in excess of 80% at origination will be covered by 
a primary mortgage insurance policy, (iii) each mortgage loan will have had an  
original term to stated maturity of not less than 5 years and not more than 40  
years, (iv) no mortgage loan that was more than 30 days delinquent as to the    
payment of principal or interest will have been eligible for inclusion in the   
assets under the related PMBS Agreement, (v) each mortgage loan (other than a   
cooperative loan) will be required to be covered by a standard hazard insurance 
policy (which may be a blanket policy) and (vi) each mortgage loan (other than a
cooperative loan or a Contract secured by a manufactured home) will be covered  
by a title insurance policy.                                                    

CREDIT SUPPORT RELATING TO PRIVATE MORTGAGE-BACKED SECURITIES         

     Credit support in the form of reserve funds, subordination of other private
mortgage-backed securities issued under the PMBS Agreement, letters of credit,  
insurance policies or other types of credit support may be provided with respect
to the mortgage loans underlying the Private                                    

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Mortgage-Backed Securities or with respect to the Private Mortgage-Backed       
Securities themselves.                                                          

ADDITIONAL INFORMATION                                                

  The Prospectus Supplement for a series for which the Trust Fund includes
Private MortgageBacked Securities will specify (i) the aggregate approximate    
principal amount and type of the Private Mortgage-Backed Securities to be       
included in the Trust Fund, (ii) certain characteristics of the mortgage loans  
which comprise the underlying assets for the Private Mortgage-Backed Securities 
including (A) the payment features of such mortgage loans, (B) the approximate  
aggregate principal balance, if known, of underlying mortgage loans insured or  
guaranteed by a governmental entity, (C) the servicing fee or range of servicing
fees with respect to the mortgage loans and (D) the minimum and maximum stated  
maturities of the underlying mortgage loans at origination, (iii) the maximum   
original term-to-stated maturity of the Private Mortgage-Backed Securities, (iv)
the weighted average term-to-stated maturity of the Private Mortgage-Backed     
Securities, (v) the pass-through or certificate rate of the Private             
Mortgage-Backed Securities, (vi) the weighted average pass-through or           
certificate rate of the Private Mortgage-Backed Securities, (vii) the PMBS      
Issuer, the PMBS Servicer (if other than the PMBS Issuer) and the PMBS Trustee  
for such Private Mortgage-Backed Securities, (viii) certain characteristics of  
credit support, if any, such as reserve funds, insurance policies, letters of   
credit or guarantees relating to the mortgage loans underlying the Private      
Mortgage-Backed Securities or to such Private Mortgage-Backed Securities        
themselves, (ix) the term on which the underlying mortgage loans for such       
Private Mortgage-Backed Securities may, or are required to, be purchased prior  
to their stated maturity or the stated maturity of the Private Mortgage-Backed  
Securities and (x) the terms on which mortgage loans may be substituted for     
those originally underlying the Private Mortgage-Backed Securities.             

FUNDING AGREEMENTS                                                              

   If specified in the Prospectus Supplement for a series, the Depositor may
enter into a funding agreement with a limited-purpose subsidiary or affiliate of
a Mortgage Loan Seller (a "Finance Company") pursuant to which (i) the Depositor
will lend the net proceeds of the sale of the Certificates to such Finance      
Company, (ii) the Finance Company will pledge Trust Fund Assets owned by it to  
secure the loan from the Depositor, and (iii) the Depositor will assign the     
Funding Agreement, as so secured, to the Trust Fund for a series (a "Funding    
Agreement"). No Finance Company will be authorized to engage in any business    
activities other than the financing and sale of Trust Fund Assets.              

Pursuant to a Funding Agreement (i) the Depositor will lend a Finance 
Company the proceeds from the sale of a series of Certificates and such Finance 
Company will pledge to the Depositor as security therefor Trust Fund Assets     
having an aggregate unpaid principal balance as of any date of determination    
equal to at least the amount of the loan, and (ii) the Finance Company will     
agree to repay such loan by causing payments on the Trust Fund Assets to be made
to the Trustee as assignee of the Depositor in such amounts as are necessary    
(together with payments from the related Reserve Fund or other funds or         
accounts) to pay accrued interest on such loan and to amortize the entire       
principal amount of such loan. A Finance Company is not obligated to provide    
additional collateral to secure the loan pursuant to a Funding Agreement        
subsequent to the issuance of the Certificates of the series by the Trust Fund. 

     Unless the Depositor, the Master Servicer or other entity designated in the
Prospectus Supplement exercises its option to terminate the Trust Fund and      
retire the Certificates of a series, or a Finance Company defaults under its    
Funding Agreement, such Finance Company's loan may not be prepaid other than as 
a result of prepayments on the pledged Trust Fund Assets. If the Finance        
Company, nevertheless, were to attempt to prepay its loan, the loan would not be

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deemed prepaid in full unless the Finance Company paid the Depositor an amount  
sufficient to enable the Depositor to purchase other Trust Fund Assets          
comparable in yield and maturity to the Finance Company's Trust Fund Assets     
pledged under the Funding Agreement. The Trustee then could either (i) purchase 
such other Trust Fund Assets and substitute them for the Trust Fund Assets      
pledged by the Finance Company, to the extent that such purchase and            
substitution did not adversely affect the tax treatment of the related series,  
or (ii) deposit the amount of the Finance Company's prepayment in the           
Certificate Account.                                                            

    In the event of a default under a Funding Agreement, the Trustee will have
recourse to the related Finance Company for the benefit of the holders of the   
Certificates, including the right to foreclose upon the Trust Fund Assets       
securing that Funding Agreement. The participating Finance Companies will be    
limited-purpose finance entities and, therefore, it is unlikely that a          
defaulting Finance Company will have any significant assets except those pledged
to the Trust Fund for the series and those that secure other mortgage-backed    
securities and collateralized mortgage obligations. The Trustee has no recourse 
to assets pledged to secure other securities except to the limited extent that  
funds generated by such assets exceed the amount required to pay those          
securities and are released from the lien securing such other securities and    
returned to a Finance Company. For that reason, prospective purchasers of       
Certificates should make their investment decisions on the basis that the       
Certificates of a series have rights solely with respect to the assets          
transferred to the Trust Fund for that series of Certificates.                  

 In the event of a default under a Funding Agreement and the sale by the
Trustee of the Trust Fund Assets securing the obligations of the Finance Company
under the Funding Agreement, the Trustee may distribute principal in an amount  
equal to the unpaid principal balance of the Trust Fund Assets so liquidated    
ratably among all classes of Certificates within the series, or in such other   
manner as may be specified in the related Prospectus Supplement.                

 USE OF PROCEEDS

   The net proceeds to be received from the sale of the Certificates will be
applied by the Depositor to the purchase of Trust Fund Assets or will be used by
the Depositor for general corporate purposes. The Depositor expects that it will
make additional sales of securities similar to the Certificates from time to    
time, but the timing and amount of offerings of Certificates will depend on a   
number of factors, including the volume of Trust Fund Assets acquired by the    
Depositor, prevailing interest rates, availability of funds and general market  
conditions.                                                                     

YIELD CONSIDERATIONS

Unless otherwise provided in the related Prospectus Supplement, each  
monthly interest payment on a Trust Fund Asset is calculated as one-twelfth of  
the applicable Interest Rate multiplied by the unpaid principal balance thereof.
Interest to be distributed on each Distribution Date to the holders of the      
various classes of Certificates (other than certain classes of Strip            
Certificates) of each series will be similarly calculated for the applicable    
period, as one-twelfth of the applicable Pass-Through Rate multiplied by the    
outstanding Certificate Principal Balance thereof, except as provided below with
respect to prepayments. In the case of Strip Certificates with no or, in certain
cases, a nominal Certificate Principal Balance, such distributions of interest  
will be in an amount (as to any Distribution Date, "Stripped Interest")         
described in the related Prospectus Supplement.                                 

The effective yield to Certificateholders will be lower than the yield
otherwise produced by the applicable Pass-Through Rate (or, as to a Strip       
Certificate, the distributions of Stripped Interest thereon) and purchase price,
because although interest accrued on each Trust Fund Asset during each month is 
due and payable on the first day of the following month (unless otherwise       
provided                                                                        

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in the related Prospectus Supplement), the distribution of interest on the      
Certificates will not be made until the Distribution Date occurring in the month
following the month of accrual of interest in the case of Mortgage Loans, and in
later months in the case of Agency Securities, Private Mortgage-Backed          
Securities or Funding Agreements and in the case of a series of Certificates    
having Distribution Dates occurring at intervals less frequently than monthly.  

 Unless otherwise specified in the related Prospectus Supplement, when a
principal prepayment in full is made on a Mortgage Loan or a mortgage loan      
underlying a Private Mortgage-Backed Security, the borrower is charged interest 
only for the period from the due date of the preceding monthly payment up to the
date of such prepayment, instead of for a full month. Accordingly, the effect of
principal prepayments in full during any month will be to reduce the aggregate  
amount of interest collected that is available for distribution to              
Certificateholders. If so provided in the related Prospectus Supplement, certain
of the Mortgage Loans or the mortgage loans underlying a Private Mortgage-Backed
Security may contain provisions limiting prepayments hereof or requiring the    
payment of a prepayment penalty upon prepayment in full or in part. Unless      
otherwise provided in the related Prospectus Supplement, any such penalty will  
be applied to offset the above-described shortfalls in interest collections on  
the related Distribution Date. Unless otherwise specified in the related        
Prospectus Supplement, partial principal prepayments are applied on the first   
day of the month following receipt, with no resulting reduction in interest     
payable for the period in which the partial principal prepayment is made. Unless
specified otherwise in the related Prospectus Supplement, neither the Trustee,  
the Master Servicer nor the Depositor will be obligated to fund shortfalls in   
interest collections resulting from prepayments. Holders of Agency Securities   
are entitled to a full month's interest in connection with prepayments in full  
of the underlying mortgage loans. Full and partial principal prepayments        
collected during the applicable Prepayment Period will be available for         
distribution to Certificateholders on the related Distribution Date. Unless     
otherwise provided in the related Prospectus Supplement, a "Prepayment Period"  
in respect of any Distribution Date will commence on the first day of the month 
in which the preceding Distribution Date occurs (or, as to the first Prepayment 
Period, the day after the Cut-off Date) and will end on the last day of the     
month prior to the month in which the related Distribution Date occurs. See     
"Maturity and Prepayment Considerations" and "Description of the                
Certificates-General".                                                          

 The Prospectus Supplement for each series of Certificates may set forth
additional information regarding yield considerations.                          

MATURITY AND PREPAYMENT CONSIDERATIONS

 The original terms to maturity of the Trust Fund Assets in a particular
Trust Fund will vary depending upon the type of mortgage loans underlying or    
comprising the Trust Fund Assets in such Trust Fund. Each Prospectus Supplement 
will contain information with respect to the type and maturities of the Trust   
Fund Assets in the related Trust Fund. Unless otherwise specified in the related
Prospectus Supplement, all of the Single-Family Loans, Cooperative Loans and    
Contracts and all of the mortgage loans underlying the Agency Securities,       
Private Mortgage-Backed Securities and Funding Agreements may be prepaid without
penalty in full or in part at any time. If so provided in the related Prospectus
Supplement, certain of the Mortgage Loans may contain provisions prohibiting    
prepayment for a specified period after the origination date (a "Lockout        
Period"), prohibiting partial prepayments entirely or prohibiting prepayment in 
full or in part without a prepayment penalty.                                   

  The prepayment experience on the mortgage loans underlying or comprising
the Trust Fund Assets in a Trust Fund will affect the weighted average life of  
the related series of Certificates. Weighted average life refers to the average 
amount of time that will elapse from the date of issuance of a security until   
each dollar of principal of such security will be repaid to the investor.       

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The weighted average life of the Certificates of a series will be influenced by 
the rate at which principal on the mortgage loans underlying or comprising the  
Trust Fund Assets included in the related Trust Fund is paid, which payments may
be in the form of scheduled amortization or prepayments (for this purpose, the  
term "prepayment" includes prepayments, in whole or in part, and liquidations   
due to default and hazard or condemnation losses). The rate of prepayment with  
respect to fixed rate mortgage loans has fluctuated significantly in recent     
years. In general, if interest rates fall below the Interest Rates on the       
mortgage loans underlying or comprising the Trust Fund Assets, the rate of      
prepayment would be expected to increase. There can be no assurance as to the   
rate of prepayment of the mortgage loans underlying or comprising the Trust Fund
Assets in any Trust Fund. The Depositor is not aware of any publicly available  
statistics relating to the principal prepayment experience of diverse portfolios
of mortgage loans over an extended period of time. All statistics known to the  
Depositor that have been compiled with respect to prepayment experience on      
mortgage loans indicates that while some mortgage loans may remain outstanding  
until their stated maturities, a substantial number will be paid prior to their 
respective stated maturities.                                                   

 A number of factors, including homeowner mobility, economic conditions,
enforceability of due-on-sale clauses, mortgage market interest rates, the terms
of the mortgage loans (as affected by the existence of lockout provisions,      
due-on-sale and due-on-encumbrance clauses and prepayment fees), the quality of 
management of the mortgaged properties, possible changes in tax laws and the    
availability of mortgage funds, may affect prepayment experience. Unless        
otherwise provided in the related Prospectus Supplement, all Mortgage Loans,    
mortgage loans underlying Private Mortgage-Backed Securities or mortgage loans  
secured by Funding Agreements will contain due-on-sale provisions permitting the
lender to accelerate the maturity of such mortgage loan upon sale or certain    
transfers by the borrower of the underlying Mortgaged Property. The Multifamily 
Loans may contain due-on-encumbrance provisions (permitting the lender to       
accelerate the maturity of the Multifamily Loan upon further encumbrance by the 
borrower of the underlying Multifamily Property). Conventional mortgage loans   
that underlie FHLMC Certificates and FNMA Certificates may contain, and in      
certain instances must contain, such due-on-sale provisions. FHA Loans, VA Loans
and other mortgage loans underlying GNMA Certificates contain no such clause and
may be assumed by the purchaser of the mortgaged property. Thus, the rate of    
prepayments on FHA Loans, VA Loans and other mortgage loans underlying GNMA     
Certificates may be lower than that of conventional Mortgage Loans bearing      
comparable interest rates.                                                      

    With respect to a series of Certificates evidencing interests in the Trust
Fund including Mortgage Loans, unless otherwise provided in the related         
Prospectus Supplement, the Master Servicer generally will enforce any           
due-on-sale clause or due-on-encumbrance clause, to the extent it has knowledge 
of the conveyance or encumbrance or the proposed conveyance or encumbrance of   
the underlying Mortgaged Property and reasonably believes that it is entitled to
do so under applicable law; provided, however, that the Master Servicer will not
take any enforcement action that would impair or threaten to impair any recovery
under any related insurance policy. See "Description of the                     
Certificates-Collection and Other Servicing Procedures" and "Certain Legal      
Aspects of Mortgage Loans-Enforceability of Certain Provisions" and "-Prepayment
Charges and Prepayments" for a description of certain provisions of each        
Agreement and certain legal developments that may affect the prepayment         
experience on the Mortgage Loans. See "Description of the                       
Certificates-Termination" for a description of the possible early termination of
any series of Certificates. See also "Mortgage Loan Program-Representations by  
or on behalf of Mortgage Loan Sellers; Repurchases" and "Description of the     
Certificates-Assignment of Trust Fund Assets" for a description of the          
obligation of the Mortgage Loan Sellers, the Master Servicer and the Depositor  
to repurchase Mortgage Loans under certain circumstances. In addition, if the   
applicable Agreement for a series of Certificates provides for a Pre-Funding    
Account or other means of funding the transfer of additional Mortgage Loans to  
the related Trust Fund, as described under "Description of the                  

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Certificates-Pre-Funding Account" herein, and the Trust Fund is unable to       
acquire such additional Mortgage Loans within any applicable time limit, the    
amounts set aside for such purpose may be applied as principal payments on one  
or more classes of Certificates of such series.                                 

 THE DEPOSITOR

     The Depositor was incorporated in the State of Delaware on January 27, 1987
as an indirect wholly-owned subsidiary of Salomon Inc. The Depositor was        
organized for the purpose of serving as a private secondary mortgage market     
conduit. The Depositor maintains its principal office at Seven World Trade      
Center, New York, New York 10048. Its telephone number is (212) 783-7228.       

    The Depositor does not have, nor is it expected in the future to have, any
significant assets.                                                             

 MORTGAGE LOAN PROGRAM

   The Mortgage Loans will be purchased by the Depositor, either directly or
indirectly, from the Mortgage Loan Sellers. The Mortgage Loans so acquired by   
the Depositor will have been originated by the Originators in accordance with   
the underwriting criteria specified below under "Underwriting Standards".       

UNDERWRITING STANDARDS                                                          

All Mortgage Loans will have been subject to underwriting standards   
acceptable to the Depositor and applied as described below. Each Mortgage Loan  
Seller, or another party on its behalf, will represent and warrant that Mortgage
Loans purchased by or on behalf of the Depositor from it have been originated by
the related Originators in accordance with such underwriting standards.         

Unless otherwise specified in the related Prospectus Supplement, the  
underwriting standards are applied by the Originators to evaluate the borrower's
credit standing and repayment ability, and the value and adequacy of the        
Mortgaged Property as collateral. Initially, a prospective borrower is required 
to fill out a detailed application regarding pertinent credit information. As   
part of the description of the borrower's financial condition, the borrower is  
required to provide a current balance sheet describing assets and liabilities   
and a statement of income and expenses, as well as an authorization to apply for
a credit report that summarizes the borrower's credit history with local        
merchants and lenders and any record of bankruptcy. In addition, an employment  
verification is obtained that reports the borrower's current salary and may     
contain information regarding length of employment and whether it is expected   
that the borrower will continue such employment in the future. If a prospective 
borrower is self-employed, the borrower is required to submit copies of signed  
tax returns. The borrower may also be required to authorize verification of     
deposits at financial institutions where the borrower has demand or savings     
accounts. In the case of a Multifamily Loan, the borrower is also required to   
provide certain information regarding the related Multifamily Property,         
including a current rent schedule, the type and length of leases and pro forma  
operating income statements. In addition, the Depositor will consider the       
location of the Multifamily Property, the availability of competitive lease     
space and rental income of comparable properties in the relevant market area,   
the overall economy and demographic features of the geographic area and the     
mortgagor's prior experience in owning and operating properties similar to the  
Multifamily Properties.                                                         

    In determining the adequacy of the property as collateral, an appraisal is
made of each property considered for financing, except in the case of new       
Manufactured Homes, as described under "The Trust Funds". Each appraiser is     
selected in accordance with predetermined guidelines established for appraisers.
The appraiser is required to inspect the property and verify that it is         

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in good condition and that construction, if new, has been completed. With       
respect to properties other than Multifamily Properties, the appraisal is based 
on the market value of comparable homes, the estimated rental income (if        
considered applicable by the appraiser) and the cost of replacing the home. With
respect to Multifamily Properties, the appraisal must specify whether an income 
analysis, a market analysis or a cost analysis was used. An appraisal employing 
the income approach to value analyzes a property's cash flow, expenses,         
capitalization and other operational information in determining the property's  
value. The market approach to value analyzes the prices paid for the purchase of
similar properties in the property's area, with adjustments made for variations 
between these other properties and the property being appraised. The cost       
approach requires the appraiser to make an estimate of land value and then      
determine the current cost of reproducing the building less any accrued         
depreciation. In any case, the value of the property being financed, as         
indicated by the appraisal, must be such that it currently supports, and is     
anticipated to support in the future, the outstanding loan balance.             

In the case of Single Family Loans and Contracts, once all applicable 
employment, credit and property information is received, a determination is made
as to whether the prospective borrower has sufficient monthly income available  
(i) to meet the borrower's monthly obligations on the proposed mortgage loan    
(determined on the basis of the monthly payments due in the year of origination)
and other expenses related to the home (such as property taxes and hazard       
insurance) and (ii) to meet monthly housing expenses and other financial        
obligations and monthly living expenses. Unless otherwise provided in the       
related Prospectus Supplement, the underwriting standards to be applied to the  
Single Family Loans will be generally similar to the traditional underwriting   
guidelines used by FNMA and FHLMC which are in effect at the time of origination
of each Single Family Loan, except that the ratios at origination of the amounts
described in (i) and (ii) above to the applicant's stable monthly gross income  
may exceed in certain cases the then applicable FNMA and FHLMC guidelines, but  
such ratios in general may not exceed 33% and 38%, respectively, of the         
applicant's stable monthly gross income. Such underwriting standards may be     
varied in appropriate cases.                                                    

In the case of a Single Family Loan or Multifamily Loan secured by a  
leasehold interest in a residential property, the title to which is held by a   
third party lessor, the Mortgage Loan Seller, or another party on its behalf, is
required to warrant, among other things, that the remaining term of the lease   
and any sublease be at least five years longer than the remaining term of the   
Mortgage Loan.                                                                  

The Mortgaged Properties may be located in states where, in general, a
lender providing credit on a residential property may not seek a deficiency     
judgment against the mortgagor but rather must look solely to the property for  
repayment in the event of foreclosure. The underwriting standards to be applied 
to the Mortgage Loans in all states (including anti-deficiency states) require  
that the value of the property being financed, as indicated by the appraisal,   
currently supports and is anticipated to support in the future the outstanding  
principal balance of the Mortgage Loan.                                         

With respect to any FHA Loan the Mortgage Loan Seller is required to  
represent that the FHA Loan complies with the applicable underwriting policies  
of the FHA. See "Description of Primary Insurance Policies-FHA Insurance". With 
respect to any VA Loan, the Mortgage Loan Seller is required to represent that  
the VA Loan complies with the applicable underwriting policies of the VA. See   
"Description of Primary Insurance Policies-VA Guarantee".                       

The recent foreclosure or repossession and delinquency experience with
respect to loans serviced by the Master Servicer or, if applicable, a           
significant Sub-Servicer will be provided in the related Prospectus Supplement. 

  Certain of the types of loans that may be included in the Mortgage Pools
are recently developed and may involve additional uncertainties not present in  
traditional types of loans. For example, certain of such Mortgage Loans may     
provide for escalating or variable payments by the                              

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borrower. These types of Mortgage Loans are underwritten on the basis of a      
judgment that borrowers will have the ability to make larger monthly payments in
subsequent years. In some instances, however, a borrower's income may not be    
sufficient to make loan payments as such payments increase. Unless otherwise    
specified in the related Prospectus Supplement, the Multifamily Loans will be   
nonrecourse loans, as to which, in the event of mortgagor default, recourse may 
only be had against the specific Multifamily Property pledged to secure that    
Multifamily Loan, and not against the mortgagor's assets.                       

QUALIFICATIONS OF ORIGINATORS AND MORTGAGE LOAN SELLERS                         

Unless otherwise specified in the related Prospectus Supplement, each 
Originator and Mortgage Loan Seller will be required to satisfy the             
qualifications set forth herein. Each Originator must be an institution         
experienced in originating and servicing conventional mortgage loans in         
accordance with accepted practices and prudent guidelines, and must maintain    
satisfactory facilities to originate and service those loans. Each Originator   
and Mortgage Loan Seller must be a seller/servicer approved by either FNMA or   
FHLMC. Each Originator and Mortgage Loan Seller must be a HUD-approved mortgagee
or an institution the deposit accounts in which are insured by the Bank         
Insurance Fund ("BIF") or Savings Association Insurance Fund ("SAIF") of the    
Federal Deposit Insurance Corporation (the "FDIC"). In addition, with respect to
FHA Loans or VA Loans, each Originator must be approved to originate such       
Mortgage Loans by the FHA or VA, as applicable. In addition, each Originator and
Mortgage Loan Seller must satisfy certain criteria as to financial stability    
evaluated on a case by case basis by the Depositor.                             

REPRESENTATIONS BY OR ON BEHALF OF MORTGAGE LOAN SELLERS; REPURCHASES           

Each Mortgage Loan Seller, or a party on its behalf, will have made   
representations and warranties in respect of the Mortgage Loans sold by such    
Mortgage Loan Seller. Such representations and warranties include, among other  
things: (i) that any required hazard insurance was effective at the origination 
of each Mortgage Loan, and that each such policy remained in effect on the date 
of purchase of the Mortgage Loan from the Mortgage Loan Seller by or on behalf  
of the Depositor; (ii) that, in the case of Single-Family Loans and Multifamily 
Loans, either (A) title insurance insuring (subject only to permissible title   
insurance exceptions) the lien status of the Mortgage was effective at the      
origination of each Mortgage Loan and such policy remained in effect on the date
of purchase of the Mortgage Loan from the Mortgage Loan Seller by or on behalf  
of the Depositor or (B) if the Mortgaged Property securing any Mortgage Loan is 
located in an area where such policies are generally not available, there is in 
the related mortgage file an attorney's certificate of title indicating (subject
to such permissible exceptions set forth therein) the first lien status of the  
mortgage; (iii) that the Mortgage Loan Seller had good title to each Mortgage   
Loan and each Mortgage Loan was subject to no offsets, defenses, counterclaims  
or rights of rescission except to the extent that any buydown agreement         
described herein may forgive certain indebtedness of a borrower; (iv) that each 
Mortgage constituted a valid first lien on, or security interest in, the        
Mortgaged Property (subject only to permissible title insurance exceptions and  
Senior Liens, if any) and that the Mortgaged Property was free from damage and  
was in good repair; (v) that there were no delinquent tax or assessment liens   
against the Mortgaged Property; (vi) that each Mortgage Loan was current as to  
all required payments; and (vii) that each Mortgage Loan was made in compliance 
with, and is enforceable under, all applicable local, state and federal laws and
regulations in all material respects. If a person other than a Mortgage Loan    
Seller makes any of the foregoing representations and warranties on behalf of   
such Mortgage Loan Seller, the identity of such person will be specified in the 
related Prospectus Supplement. Any person making representations and warranties 
on behalf of a Mortgage Loan Seller shall be an affiliate thereof or such other 
person acceptable to the Depositor having knowledge regarding the subject matter
of such representations and warranties.                                         

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All of the representations and warranties made by or on behalf of a   
Mortgage Loan Seller in respect of a Mortgage Loan will have been made as of the
date on which such Mortgage Loan Seller sold the Mortgage Loan to or on behalf  
of the Depositor. A substantial period of time may have elapsed between such    
date and the date of initial issuance of the series of Certificates evidencing  
an interest in such Mortgage Loan. Unless otherwise specified in the related    
Prospectus Supplement, in the event of a breach of any such representation or   
warranty, the Mortgage Loan Seller will be obligated to cure such breach or     
repurchase or replace the affected Mortgage Loan as described below. Since the  
representations and warranties made by or on behalf of such Mortgage Loan Seller
do not address events that may occur following the sale of a Mortgage Loan by   
such Mortgage Loan Seller, it will have a cure, repurchase or substitution      
obligation in connection with a breach of such a representation and warranty    
only if the relevant event that causes such breach occurs prior to the date of  
such sale. A Mortgage Loan Seller would have no such obligations if the relevant
event that causes such breach occurs after the date of such sale. However, the  
Depositor will not include any Mortgage Loan in the Trust Fund for any series of
Certificates if anything has come to the Depositor's attention that would cause 
it to believe that the representations and warranties made in respect of such   
Mortgage Loan will not be accurate and complete in all material respects as of  
the date of initial issuance of the related series of Certificates.             

The only representations and warranties to be made for the benefit of 
holders of Certificates in respect of any Mortgage Loan relating to the period  
commencing on the date of sale of such Mortgage Loan by the Mortgage Loan Seller
to or on behalf of the Depositor will be certain limited representations of the 
Depositor and of the Master Servicer described below under "Description of the  
Certificates-Assignment of Trust Fund Assets". If the Master Servicer is also a 
Mortgage Loan Seller with respect to a particular series, such representations  
will be in addition to the representations and warranties made by the Master    
Servicer in its capacity as a Mortgage Loan Seller.                             

The Master Servicer and/or Trustee will promptly notify the relevant  
Mortgage Loan Seller of any breach of any representation or warranty made by or 
on behalf of it in respect of a Mortgage Loan that materially and adversely     
affects the value of such Mortgage Loan or the interests therein of the         
Certificateholders. If such Mortgage Loan Seller cannot cure such breach within 
60 days from the date on which the Mortgage Loan Seller was notified of such    
breach, then such Mortgage Loan Seller will be obligated to repurchase such     
Mortgage Loan from the Trustee within 90 days from the date on which the        
Mortgage Loan Seller was notified of such breach, at the Purchase Price         
therefor. As to any Mortgage Loan, unless otherwise specified in the related    
Prospectus Supplement, the "Purchase Price" is equal to the sum of (i) the      
unpaid principal balance thereof, (ii) unpaid accrued interest on the Stated    
Principal Balance (as defined below) at the Net Interest Rate from the date as  
to which interest was last paid to the end of the calendar month in which the   
relevant purchase is to occur, (iii) any unpaid servicing fees and certain      
unreimbursed servicing expenses payable or reimbursable to the Master Servicer  
with respect to such Mortgage Loan, (iv) any unpaid Retained Interest with      
respect to such Mortgage Loan, (v) any Realized Losses, as described below under
"Description of the Certificates-Allocation of Losses", incurred with respect to
such Mortgage Loan, and (vi) if applicable, any expenses reasonably incurred or 
to be incurred by the Master Servicer or the Trustee in respect of the breach or
defect giving rise to a purchase obligation. Unless otherwise provided in the   
related Prospectus Supplement, a Mortgage Loan Seller, rather than repurchase a 
Mortgage Loan as to which a breach has occurred, will have the option, within a 
specified period after initial issuance of the related series of Certificates,  
to cause the removal of such Mortgage Loan from the Trust Fund and substitute in
its place one or more other Mortgage Loans, in accordance with the standards    
described below under "Description of the Certificates-Assignment of the        
Mortgage Loans". The Master Servicer will be required under the applicable      
Pooling and Servicing Agreement to use its best efforts to enforce such         
obligations of the Mortgage Loan Seller for the benefit of the Trustee and the  
holders of the Certificates, following the practices it would employ            

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in its good faith business judgment were it the owner of such Mortgage Loan.    
This repurchase or substitution obligation will constitute the sole remedy      
available to holders of Certificates or the Trustee for a breach of             
representation by a Mortgage Loan Seller. See "Description of the               
Certificates-General".                                                          

The "Stated Principal Balance" of any Mortgage Loan as of any date of 
determination is equal to the principal balance thereof as of the Cut-off Date, 
after application of all scheduled principal payments due on or before the      
Cut-off Date, whether or not received, reduced by all amounts, including        
advances by the Master Servicer, allocable to principal that are distributed to 
Certificateholders on or before the date of determination, and as further       
reduced to the extent that any Realized Loss (as defined below) thereon has been
(or, if it had not been covered by any form of Credit Support, would have been) 
allocated to one or more classes of Certificates on or before the date of       
determination.                                                                  

     Neither the Depositor nor the Master Servicer will be obligated to purchase
or substitute for a Mortgage Loan if a Mortgage Loan Seller defaults on its     
obligation to do so, and no assurance can be given that Mortgage Loan Sellers   
will carry out such obligations with respect to Mortgage Loans. To the extent   
that a breach of the representations and warranties of a Mortgage Loan Seller   
may also constitute a breach of a representation made by the Depositor, the     
Depositor may have a repurchase or substitution obligation as described below   
under "Description of the Certificates-Assignment of Trust Fund Assets".        

 DESCRIPTION OF THE CERTIFICATES

The Certificates of each series evidencing interests in a Trust Fund  
consisting of Mortgage Loans will be issued pursuant to a Pooling and Servicing 
Agreement among the Depositor, the Master Servicer (if the Depositor is not     
acting as Master Servicer) and the Trustee named in the Prospectus Supplement.  
The Certificates of each series evidencing interests in a Trust Fund consisting 
exclusively of Agency Securities or Private Mortgage-Backed Securities will be  
issued pursuant to a Trust Agreement between the Depositor and the Trustee (each
Trust Agreement or Pooling and Servicing Agreement, an "Agreement"). The        
provisions of each Agreement will vary depending upon the nature of the         
Certificates to be issued thereunder and the nature of the related Trust Fund.  
Various forms of Pooling and Servicing Agreement have been filed as exhibits to 
the Registration Statement of which this Prospectus is a part. The following    
summaries describe certain provisions which may appear in each Agreement. The   
Prospectus Supplement for a series of Certificates will describe any provision  
of the Agreement relating to such series that materially differs from the       
description thereof contained in this Prospectus. The summaries do not purport  
to be complete and are subject to, and are qualified in their entirety by       
reference to, all of the provisions of the Agreement for each Trust Fund and the
related Prospectus Supplement. Whenever particular sections or defined terms of 
the Agreement are referred to, such sections or defined terms are incorporated  
herein by reference. Article and section numbers cited herein refer to articles 
and sections common to each Pooling and Servicing Agreement. As used herein with
respect to any series, the term "Certificate" refers to all of the Certificates 
of that series, whether or not offered hereby and by the related Prospectus     
Supplement, unless the context otherwise requires.                              

GENERAL                                                                         

  The Certificates of each series (including any class of Certificates not
offered hereby) will be issued in fully registered form only and will represent 
the entire beneficial ownership interest in the Trust Fund created pursuant to  
the related Agreement. (Section 5.01) If so provided in the Prospectus          
Supplement, any class of Certificates of any series may be represented by a     

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certificate registered in the name of a nominee of The Depository Trust Company 
("DTC"). The interests of beneficial owners of such Certificates will be        
represented by such entries on the records of participating members of DTC.     
Definitive certificates will be available for such Certificates only under      
limited circumstances as provided in the related Prospectus Supplement. Unless  
otherwise provided in the related Prospectus Supplement, each Trust Fund will   
consist of (i) such Trust Fund Assets, or interests therein, exclusive of any   
portion of interest payments (the "Retained Interest") on a Trust Fund Asset    
retained by the Depositor or any previous owner thereof, as from time to time   
are subject to the Agreement; (ii) such assets as from time to time are         
identified as deposited in the Certificate Account or any other account         
maintained for the benefit of the Certificateholders; (iii) with respect to     
Trust Funds that include Mortgage Loans, (a) property acquired on behalf of     
Certificateholders by foreclosure, deed in lieu of foreclosure or repossession  
and any revenues received thereon; (b) the rights of the Depositor under any    
hazard insurance policies, FHA insurance policies, VA guarantees and primary    
mortgage insurance policies, as described under "Description of Primary         
Insurance Policies"; (c) the rights of the Depositor under the agreement or     
agreements pursuant to which it acquired the Mortgage Loans in such Trust Fund; 
and (d) the rights of the Trustee in any cash advance reserve fund or surety    
bond as described under "Advances in respect of Delinquencies" and (iv) any     
letter of credit, mortgage pool insurance policy, special hazard insurance      
policy, bankruptcy bond, reserve fund or other type of credit support provided  
with respect to the related series, as described under "Description of Credit   
Support". Subject to any limitations described in the related Prospectus        
Supplement, the Certificates will be transferable and exchangeable for like     
Certificates of the same class and series in authorized denominations at the    
corporate trust office of the Trustee specified in the related Prospectus       
Supplement. No service charge will be made for any registration of exchange or  
transfer of Certificates, but the Depositor or the Trustee or any agent thereof 
may require payment of a sum sufficient to cover any tax or other governmental  
charge. (Section 5.02)                                                          

 Each series of Certificates may consist of either (i) a single class of
Certificates evidencing the entire beneficial ownership of the related Trust    
Fund; (ii) two or more classes of Certificates evidencing the entire beneficial 
ownership of the related Trust Fund, one or more classes of which ("Senior      
Certificates") will be senior in right of payment to one or more of the other   
classes ("Subordinate Certificates") to the extent described in the related     
Prospectus Supplement (any such series, a "Senior/Subordinate Series"); or (iii)
other types of classes of Certificates, as described in the related Prospectus  
Supplement. A series may include one or more classes of Certificates entitled to
(i) principal distributions, with disproportionate, nominal or no interest      
distributions or (ii) interest distributions, with disproportionate, nominal or 
no principal distributions ("Strip Certificates"). If so specified in the       
related Prospectus Supplement, partial or full protection against certain       
Mortgage Loan defaults and losses may be provided to a series of Certificates or
to one or more classes of Certificates in such series in the form of            
subordination of one or more other classes of Certificates in such series or by 
one or more other types of credit support, such as a letter of credit, reserve  
fund, insurance policy or a combination thereof (any such coverage, "Credit     
Support"). See "Description of Credit Support".                                 

 Each class of Certificates (other than certain Strip Certificates) will
have a Certificate Principal Balance and, unless otherwise provided in the      
related Prospectus Supplement, will be entitled to payments of interest thereon 
based on a specified Pass-Through Rate. See "Interest on the Certificates" and  
"Principal of the Certificates" below. The specific percentage ownership        
interest of each class of Certificates and the minimum denomination for each    
Certificate will be set forth in the related Prospectus Supplement.             

   As to each series, one or more elections may be made to treat the related
Trust Fund or designated portions thereof as a "real estate mortgage investment 
conduit" or "REMIC" as defined in the Internal Revenue Code of 1986 (the        
"Code"). The related Prospectus Supplement will specify whether a REMIC election
is to be made and the terms and conditions applicable to the                    

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making of a REMIC election, as well as any material federal income tax          
consequences to Certificateholders not otherwise described herein. If such an   
election is made with respect to a series, one of the classes of Certificates   
comprising such series will be designated as evidencing all "residual interests"
in the related REMIC as defined under the Code. All other classes of            
Certificates in such a series will constitute "regular interests" in the related
REMIC as defined in the Code. As to each series, all of the Certificates of each
class offered hereby will be rated in one of the four highest rating categories 
by one or more nationally recognized statistical rating organizations (each, a  
"Rating Agency"). As to each series with respect to which a REMIC election is to
be made, the Master Servicer or the Trustee will be obligated to take all       
actions required in order to comply with applicable laws and regulations and,   
unless otherwise provided in the related Prospectus Supplement, will be         
obligated to pay any Prohibited Transaction Taxes or Contribution Taxes arising 
out of a breach of its obligations with respect to such compliance without any  
right of reimbursement therefor from the Trust Fund or from any                 
Certificateholder. Unless otherwise provided in the related Prospectus          
Supplement, a Prohibited Transaction Tax or Contribution Tax resulting from any 
other cause will be charged against the related Trust Fund, resulting in a      
reduction in amounts otherwise distributable to Certificateholders. See "Certain
Federal Income Tax Consequences-REMICs-Prohibited Transactions Tax and Other    
Taxes".                                                                         

ASSIGNMENT OF TRUST FUND ASSETS                                                 

ASSIGNMENT OF MORTGAGE LOANS                                          

   At the time of issuance of any series of Certificates, the Depositor will
cause the Mortgage Loans comprising the Mortgage Pool included in the related   
Trust Fund to be assigned to the Trustee, together with all principal and       
interest received by or on behalf of the Depositor on or with respect to such   
Mortgage Loans after the Cut-off Date, other than principal and interest due on 
or before the Cut-off Date and other than any Retained Interest. (Section 2.01) 
The Trustee will, concurrently with such assignment, deliver the Certificates to
the Depositor in exchange for the Trust Fund. (Section 2.06) Each Mortgage Loan 
will be identified in a schedule appearing as an exhibit to the related         
Agreement. Such schedule will include information as to the outstanding         
principal balance of each Mortgage Loan after application of payments due on the
Cut-off Date, as well as information regarding the Interest Rate, the Net       
Interest Rate, the Retained Interest, if any, the current scheduled monthly     
payment of principal and interest, the maturity of the Mortgage Note, the Value 
of the Mortgaged Property, the Loan-to-Value Ratio at origination and certain   
other information with respect to the Mortgage Loans. As to any Mortgage Loan,  
the "Net Interest Rate" is equal to the Interest Rate minus the sum of the rates
at which the servicing fees and the Retained Interest, if any, are calculated.  
(Article I)                                                                     

In addition, the Depositor will, with respect to each Mortgage Loan,  
deliver or cause to be delivered to the Trustee (or to the custodian hereinafter
referred to):                                                                   

       (1) With respect to each Single-Family Loan and Multifamily Loan, the
    Mortgage Note endorsed, without recourse, to the order of the Trustee, the
Mortgage with evidence of recording indicated thereon (except for any 
   Mortgage not returned from the public recording office, in which case the
 Depositor will deliver or cause to be delivered a copy of such Mortgage
together with its certificate that the original of such Mortgage was  
  delivered to such recording office) and an assignment of the Mortgage to
  the Trustee in recordable form. Unless otherwise provided in the related
    Prospectus Supplement, the Depositor will promptly cause the assignment of
    each related Mortgage Loan to be recorded in the appropriate public office
  for real property records, except in the State of California or in other
 states where, in the opinion of counsel acceptable to the Trustee, such
     recording is not required to protect the Trustee's interest in the Mortgage
    Loan against the claim of any subsequent transferee or any successor to or
    creditor of the Depositor, the Master Servicer, the relevant Mortgage Loan
Seller or any other prior holder of the Mortgage Loan. (Section 2.01) 

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      (2) With respect to each Cooperative Loan, the Cooperative Note, the
    original security agreement, the proprietary lease or occupancy agreement,
   the related stock certificate and related stock powers endorsed in blank,
and a copy of the original filed financing statement together with an 
   assignment thereof to the Trustee in a form sufficient for filing. Unless
     otherwise provided in the related Prospectus Supplement, the Depositor will
promptly cause the assignment and financing statement of each related 
  Cooperative Loan to be filed in the appropriate public office, except in
states where in the opinion of counsel acceptable to the Trustee, such
     filing is not required to protect the Trustee's interest in the Cooperative
    Loan against the claim of any subsequent transferee or any successor to or
    creditor of the Depositor, the Master Servicer, the relevant Mortgage Loan
Seller or any prior holder of the Cooperative Loan (Section 2.01).    

    (3) With respect to each Contract, the original Contract endorsed,
   without recourse, to the order of the Trustee and copies of documents and
instruments related to the Contract and the security interest in the  
     Manufactured Home securing the Contract, together with a blanket assignment
to the Trustee of all Contracts in the related Trust Fund and such    
    documents and instruments. In order to give notice of the right, title and
 interest of the Certificateholders to the Contracts, the Depositor will
cause to be executed and delivered to the Trustee a UCC-1 financing   
    statement identifying the Trustee as the secured party and identifying all
Contracts as collateral. (Section 2.01)                               

 The Trustee (or the custodian hereinafter referred to) will review such
Mortgage Loan documents within 45 days after receipt thereof, and the Trustee   
(or such custodian) will hold such documents in trust for the benefit of the    
Certificateholders. Unless otherwise specified in the related Prospectus        
Supplement, if any such document is found to be missing or defective in any     
material respect, the Trustee (or such custodian) shall immediately notify the  
Master Servicer and the Depositor, and the Master Servicer shall immediately    
notify the relevant Mortgage Loan Seller. If the Mortgage Loan Seller cannot    
cure the omission or defect within 60 days after receipt of such notice, the    
Mortgage Loan Seller will be obligated, within 90 days of receipt of such       
notice, to repurchase the related Mortgage Loan from the Trustee at the Purchase
Price or substitute for such Mortgage Loan. There can be no assurance that a    
Mortgage Loan Seller will fulfill this repurchase or substitution obligation.   
Although the Master Servicer is obligated to use its best efforts to enforce    
such obligation to the extent described above under "Mortgage Loan              
Program-Representations by or on behalf of Mortgage Loan Sellers; Repurchases", 
neither the Master Servicer nor the Depositor will be obligated to repurchase or
substitute for such Mortgage Loan if the Mortgage Loan Seller defaults on its   
obligation. Unless otherwise specified in the related Prospectus Supplement,    
this repurchase or substitution obligation constitutes the sole remedy available
to the Certificateholders or the Trustee for omission of, or a material defect  
in, a constituent document. (Section 2.03)                                      

   With respect to the Mortgage Loans in a Mortgage Pool, the Depositor will
make representations and warranties as to the types and geographical            
concentration of such Mortgage Loans and as to the accuracy in all material     
respects of certain identifying information furnished to the Trustee in respect 
of each such Mortgage Loan (e.g., original Loan-to-Value Ratio, principal       
balance as of the Cut-off Date, Interest Rate, Net Interest Rate and maturity). 
In addition, unless otherwise specified in the related Prospectus Supplement,   
the Depositor will represent and warrant that, as of the Cut-off Date for the   
related series of Certificates, no Mortgage Loan was currently more than 30 days
delinquent as to payment of principal and interest and no Mortgage Loan was more
than 30 days delinquent more than once during the previous 12 months. Upon a    
breach of any such representation of the Depositor that materially and adversely
affects the value of a Mortgage Loan or the interests of the Certificateholders 
therein, the Depositor will be obligated either to cure the breach in all       
material respects, repurchase the Mortgage Loan at the Purchase Price or        
substitute for such Mortgage Loan as described below.                           

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Unless otherwise provided in the related Prospectus Supplement, if the
Depositor discovers or receives notice of any breach of its representations or  
warranties with respect to a Mortgage Loan, the Depositor may, rather than      
repurchase the Mortgage Loan as provided above, remove such Mortgage Loan from  
the Trust Fund (a "Deleted Mortgage Loan") and substitute in its place one or   
more Mortgage Loans (each, a "Substitute Mortgage Loan"), but only if (i) with  
respect to a Trust Fund for which a REMIC election is to be made, such          
substitution is effected within two years of the date of initial issuance of the
Certificates (plus permissible extensions) or (ii) with respect to a Trust Fund 
for which no REMIC election is to be made, such substitution is effected within 
120 days of the date of initial issuance of the Certificates. Except as         
otherwise provided in the related Prospectus Supplement, any Substitute Mortgage
Loan will, on the date of substitution, (i) have an outstanding principal       
balance, after deduction of all scheduled payments due in the month of          
substitution, not in excess of (and not more than $10,000 less than) the        
outstanding principal balance, after deduction of all unpaid scheduled payments 
due as of the date of substitution, of the Deleted Mortgage Loan, (ii) have an  
Interest Rate not less than (and not more than 1% greater than) the Interest    
Rate of the Deleted Mortgage Loan, (iii) have a Net Interest Rate equal to the  
Net Interest Rate of the Deleted Mortgage Loan, (iv) have a remaining term to   
maturity not greater than (and not more than one year less than) that of the    
Deleted Mortgage Loan (v) have a Lockout Date, if applicable, not earlier than  
the Lockout Date on the Deleted Mortgage Loan and (vi) comply with all of the   
representations and warranties set forth in the Agreement as of the date of     
substitution. In connection with any substitution, an amount equal to the       
difference between the Purchase Price of the Deleted Mortgage Loan and the      
outstanding principal balance of the Substitute Mortgage Loan (after deduction  
of all scheduled payments due in the month of substitution), together with one  
month's interest at the applicable Net Mortgage Rate on such balance, will be   
deposited in the Certificate Account and distributed to Certificateholders on   
the first Distribution Date following the Prepayment Period in which the        
substitution occurred. In the event that one mortgage loan is substituted for   
more than one Deleted Mortgage Loan, or more than one mortgage loan is          
substituted for one or more Deleted Mortgage Loans, then the amount described in
clause (i) will be determined on the basis of aggregate principal balances, the 
rates described in clauses (ii) and (iii) with respect to Deleted Mortgage Loans
will be determined on the basis of weighted average Interest Rates and Net      
Interest Rates, as the case may be, and the terms described in clause (iv) will 
be determined on the basis of weighted average remaining terms to maturity and  
the Lockout Dates described in clause (v) will be determined on the basis of    
weighted average Lockout Dates.                                                 

    With respect to any series as to which credit support is provided by means
of a mortgage pool insurance policy, in addition to making the representations  
and warranties described above, the Depositor or the related Mortgage Loan      
Seller (or another party on behalf of the related Mortgage Loan Seller), as     
specified in the related Prospectus Supplement, will represent and warrant to   
the Trustee that no action has been taken or failed to be taken, no event has   
occurred and no state of facts exists or has existed on or prior to the date of 
the initial issuance of the Certificates which has resulted or will result in   
the exclusion from, denial of or defense to coverage under any applicable       
primary mortgage insurance policy, FHA insurance policy, mortgage pool insurance
policy, special hazard insurance policy or bankruptcy bond, irrespective of the 
cause of such failure of coverage but excluding any failure of an insurer to pay
by reason of the insurer's own breach of its insurance policy or its financial  
inability to pay (such representation being referred to herein as the           
"insurability representation"). See "Description of Primary Insurance Policies" 
and "Description of Credit Support" herein and in the related Prospectus        
Supplement for information regarding the extent of coverage under the           
aforementioned insurance policies. Upon a breach of the insurability            
representation which materially and adversely affects the interests of the      
Certificateholders in a Mortgage Loan, the Depositor or the Mortgage Loan       
Seller, as the case may be, will be obligated either to cure the breach in all  
material respects or to purchase such Mortgage Loan at the Purchase Price,      
subject to the limitations specified in the related Prospectus Supplement. The  
related Prospectus Supplement may provide that the performance of an            

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obligation to repurchase Mortgage Loans following a breach of an insurability   
representation will be ensured in the manner specified therein.                 

The obligation to repurchase or, other than with respect to the       
insurability representation if applicable, to substitute Mortgage Loans as      
described above constitutes the sole remedy available to the Certificateholders 
or the Trustee for any breach of the above described representations.           
(Section 2.03)                                                                  

The Master Servicer will make certain representations and warranties  
regarding its authority to enter into, and its ability to perform its           
obligations under, the Agreement. Upon a breach of any such representation of   
the Master Servicer which materially and adversely affects the interests of the 
Certificateholders, the Master Servicer will be obligated to cure the breach in 
all material respects. (Section 2.05)                                           

ASSIGNMENT OF AGENCY SECURITIES                                       

     The Depositor will cause the Agency Securities to be registered in the name
of the Trustee or its nominee, and the Trustee concurrently will execute,       
countersign and deliver the Certificates. Each Agency Security will be          
identified in a schedule appearing as an exhibit to the Agreement, which will   
specify as to each Agency Security the original principal amount and outstanding
principal balance as of the Cut-off Date, the annual pass-through rate (if any) 
and the maturity date.                                                          

ASSIGNMENT OF PRIVATE MORTGAGE-BACKED SECURITIES                      

The Depositor will cause Private Mortgage-Backed Securities to be     
registered in the name of the Trustee. The Trustee (or the custodian) will have 
possession of any certificated Private Mortgage-Backed Securities. Unless       
otherwise specified in the related Prospectus Supplement, the Trustee will not  
be in possession of or be assignee of record of any underlying assets for a     
Private Mortgage-Backed Security. See "The Trust Funds-Private Mortgage-Backed  
Securities" herein. Each Private Mortgage-Backed Security will be identified in 
a schedule appearing as an exhibit to the related Agreement which will specify  
the original principal amount, outstanding principal balance as of the Cut-off  
Date, annual pass-through rate or interest rate and maturity date for each      
Private Mortgage-Backed Security conveyed to the Trustee.                       

ASSIGNMENT OF FUNDING AGREEMENTS                                      

     The Depositor will cause Funding Agreements to be registered in the name of
the Trustee. The Trustee (or the custodian) will have possession of any Funding 
Agreement. Unless otherwise specified in the related Prospectus Supplement, the 
Trustee will be in possession of or be assignee of record of any underlying     
assets for Funding Agreements. See "The Trust Funds-Funding Agreements" herein. 
Each Funding Agreement will be identified in a schedule appearing as an exhibit 
to the related Agreement which will specify the original principal amount,      
outstanding principal balance as of the Cut-off Date, annual pass-through rate  
or interest rate and maturity date for each underlying asset secured by the     
Funding Agreements.                                                             

DEPOSITS TO CERTIFICATE ACCOUNT                                                 

The Master Servicer and/or the Trustee will, as to each Trust Fund,   
establish and maintain or cause to be established and maintained one or more    
separate accounts for the collection of payments on the related Trust Fund      
Assets (collectively, the "Certificate Account"), which must be either (i)      
maintained with a bank or trust company, and in a manner, satisfactory to the   
Rating Agency or Agencies rating any class of Certificates of such series or    
(ii) an account or accounts the deposits in which are insured by the BIF or the 
SAIF (to the limits established by the FDIC) and the uninsured deposits in which
are otherwise secured such that the Certificateholders have                     

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a claim with respect to the funds in the Certificate Account or a perfected     
first priority security interest against any collateral securing such funds that
is superior to the claims of any other depositors or general creditors of the   
institution with which the Certificate Account is maintained. The collateral    
eligible to secure amounts in the Certificate Account is limited to United      
States government securities and other high-quality investments specified in the
Agreement ("Permitted Investments"). (Section 3.12) A Certificate Account may be
maintained as an interest bearing or a non-interest bearing account, or the     
funds held therein may be invested pending each succeeding Distribution Date in 
Permitted Investments. Unless otherwise provided in the related Prospectus      
Supplement, any interest or other income earned on funds in the Certificate     
Account will be paid to the Master Servicer or the Trustee or their designee as 
additional compensation. The Certificate Account may be maintained with an      
institution that is an affiliate of the Master Servicer or the Trustee, provided
that such institution meets the standards set forth above. If permitted by the  
Rating Agency or Agencies and so specified in the related Prospectus Supplement,
a Certificate Account may contain funds relating to more than one series of     
pass-through certificates and may, if applicable, contain other funds respecting
payments on mortgage loans belonging to the Master Servicer or serviced or      
master serviced by it on behalf of others. (Article I; Section 3.10)            

 Each Sub-Servicer servicing a Mortgage Loan pursuant to a Sub-Servicing
Agreement will establish and maintain one or more separate accounts which may be
interest bearing and which will comply with the standards with respect to       
Certificate Accounts set forth above or such other standards as may be          
acceptable to the Master Servicer (collectively, the "Sub-Servicing Account").  
The Sub-Servicer is required to credit to the related Sub-Servicing Account on a
daily basis the amount of all proceeds of Mortgage Loans received by the        
Sub-Servicer, less its servicing compensation. The Sub-Servicer shall remit to  
the Master Servicer by wire transfer of immediately available funds all funds   
held in the Sub-Servicing Account with respect to each Mortgage Loan on the     
monthly remittance date or dates specified in the related Agreement. (Section   
3.08)                                                                           

PAYMENTS ON MORTGAGE LOANS                                                      

The Master Servicer will deposit or cause to be deposited in the      
Certificate Account for each Trust Fund including Mortgage Loans on a daily     
basis, unless otherwise provided in the Agreement and described in the related  
Prospectus Supplement, the following payments and collections received, or      
advances made, by the Master Servicer or on its behalf subsequent to the Cut-off
Date (other than payments due on or before the Cut-off Date, and exclusive of   
any amounts representing a Retained Interest):                                  

     (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, net
     of any portion thereof retained by the Master Servicer or by a Sub-Servicer
as its servicing compensation and net of any Retained Interest;       

       (iii) all proceeds of the hazard insurance policies and any special
     hazard insurance policy (to the extent such proceeds are not applied to the
     restoration of the property or released to the mortgagor in accordance with
the normal servicing procedures of the Master Servicer or the related 
   Sub-Servicer, subject to the terms and conditions of the related Mortgage
and Mortgage Note), any primary mortgage insurance policy, any FHA    
  insurance policy, any VA guarantee, any bankruptcy bond and any mortgage
  pool insurance policy (collectively, "Insurance Proceeds") and all other
amounts received and retained in connection with the liquidation of   
defaulted Mortgage Loans, by foreclosure or otherwise ("Liquidation   
    Proceeds"), together with the net proceeds on a monthly basis with respect
to any Mortgaged                                                      

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     Properties acquired for the benefit of Certificateholders by foreclosure or
by deed in lieu of foreclosure or otherwise;                          

         (iv) any amounts required to be paid under any letter of credit, as
 described below under "Description of Credit Support-Letter of Credit";

           (v) any advances made as described below under "Advances in respect
of Delinquencies";                                                    

       (vi) if applicable, all amounts required to be transferred to the
Certificate Account from a reserve fund, as described below under     
"Description of Credit Support-Reserve Funds";                        

    (vii) any Buydown Funds (and, if applicable, investment earnings
   thereon) required to be deposited in the Certificate Account as described
below;                                                                

         (viii) all proceeds of any Mortgage Loan or property in respect thereof
  purchased by the Master Servicer, the Depositor, any Sub-Servicer or any
Mortgage Loan Seller as described under "Mortgage Loan                
Program-Representations by or on behalf of Mortgage Loan Sellers;     
    Repurchases" or "-Assignment of Trust Fund Assets" above, exclusive of the
Retained Interest, if any, in respect of such Mortgage Loan, and all  
    proceeds of any Mortgage Loan repurchased as described under "Termination"
below;                                                                

           (ix) all payments required to be deposited in the Certificate Account
with respect to any deductible clause in any blanket insurance policy 
   described under "Description of Primary Insurance Policies-Primary Hazard
Insurance Policies"; and                                              

         (x) any amount required to be deposited by the Master Servicer in
connection with losses realized on investments for the benefit of the 
  Master Servicer of funds held in the Certificate Account. (Section 3.10)

With respect to each Buydown Mortgage Loan, the Master Servicer, or a 
Sub-Servicer, will deposit related Buydown Funds in a custodial account, which  
may be interest bearing, and that otherwise meets the standards for Certificate 
Accounts set forth above (a "Buydown Account"). Unless otherwise specified in   
the related Prospectus Supplement, the terms of all Buydown Mortgage Loans      
provide for the contribution of Buydown Funds in an amount not less than either 
(i) the total payments to be made from such funds pursuant to the related       
buydown plan or (ii) if such Buydown Funds are present valued, that amount that,
together with investment earnings thereon at a specified rate, compounded       
monthly, will support the scheduled level of payments due under the Buydown     
Mortgage Loan. Neither the Master Servicer, the Sub-Servicer nor the Depositor  
will be obligated to add to such Buydown Funds any of its own funds should      
investment earnings prove insufficient to maintain the scheduled level of       
payments. To the extent that any such insufficiency is not recoverable from the 
borrower, distributions to Certificateholders will be affected. With respect to 
each Buydown Mortgage Loan, the Master Servicer will deposit in the Certificate 
Account the amount, if any, of the Buydown Funds (and, if applicable, investment
earnings thereon) for each Buydown Mortgage Loan that, when added to the amount 
due from the borrower on such Buydown Mortgage Loan, equals the full monthly    
payment which would be due on the Buydown Mortgage Loan if it were not subject  
to the buydown plan.                                                            

 Unless otherwise specified in the related Prospectus Supplement, in the
event a Buydown Mortgage Loan is prepaid in full or liquidated, the related     
Buydown Funds will be applied as follows. If the mortgagor on a Buydown Mortgage
Loan prepays such loan in its entirety during the Buydown Period, the Master    
Servicer will withdraw from the Buydown Account and remit to the mortgagor in   
accordance with the related buydown plan any Buydown Funds remaining in the     
Buydown Account. If a prepayment by a mortgagor during the Buydown Period       
together with Buydown Funds will result in a prepayment in full, the Master     
Servicer will withdraw from the Buydown Account for deposit in the Certificate  
Account the Buydown Funds and investment earnings thereon, if any, which        
together with such prepayment will result in a prepayment in full. If the       
mortgagor defaults during the Buydown Period with respect to a Buydown Mortgage 
Loan                                                                            

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and the Mortgaged Property is sold in liquidation (either by the Master Servicer
or the insurer under any related insurance policy), the Master Servicer will    
withdraw from the Buydown Account the Buydown Funds and all investment earnings 
thereon, if any, for deposit in the Certificate Account or remit the same to the
insurer if the Mortgaged Property is transferred to such insurer and such       
insurer pays all of the loss incurred in respect of such default. In the case of
any such prepaid or defaulted Buydown Mortgage Loan the Buydown Funds in respect
of which were supplemented by investment earnings, the Master Servicer will     
withdraw from the Buydown Account and either deposit in the Certificate Account 
or remit to the borrower, depending upon the terms of the buydown plan, any     
investment earnings remaining in the related Buydown Account.                   

  Any Buydown Funds, and any investment earnings thereon, deposited in the
Certificate Account in connection with a full prepayment of the related Mortgage
Loan will be deemed to reduce the amount that would be required to be paid by   
the borrower to repay fully the related Mortgage Loan if the Mortgage Loan were 
not subject to the buydown plan. (Section 3.25)                                 

PAYMENTS ON AGENCY SECURITIES AND PRIVATE MORTGAGE-BACKED SECURITIES            

    The Agency Securities and Private Mortgage-Backed Securities included in a
Trust Fund will be registered in the name of the Trustee so that all            
distributions thereon will be made directly to the Trustee. The Trustee will    
deposit or cause to be deposited into the Certificate Account for each Trust    
Fund including Agency Securities and Private Mortgage-Backed Securities as and  
when received, unless otherwise provided in the Agreement, all distributions    
received by the Trustee with respect to the related Agency Securities and       
Private Mortgage-Backed Securities (other than payments due on or before the    
Cut-off Date and exclusive of any trust administration fee and amounts          
representing the Retained Interest, if any).                                    

DISTRIBUTIONS                                                                   

  Distributions allocable to principal and interest on the Certificates of
each series will be made by or on behalf of the Trustee on each Distribution    
Date as specified in the related Prospectus Supplement. Except as otherwise     
specified in the related Prospectus Supplement, distributions will be made to   
the persons in whose names the Certificates are registered at the close of      
business on the last business day of the month preceding the month in which the 
Distribution Date occurs (the "Record Date"), and the amount of each            
distribution will be determined as of the close of business on the date         
specified in the related Prospectus Supplement (the "Determination Date"). All  
distributions with respect to each class of Certificates on each Distribution   
Date will be allocated pro rata among the outstanding Certificates in such      
class. Payments to the holders of Certificates of any class on each Distribution
Date will be made to the Certificateholders of the respective class of record on
the next preceding Record Date (other than in respect of the final              
distribution), based on the aggregate fractional undivided interests in that    
class represented by their respective Certificates. Payments will be made either
by wire transfer in immediately available funds to the account of a             
Certificateholder at a bank or other entity having appropriate facilities       
therefor, if such Certificateholder has so notified the Depositor or its        
designee no later than the date specified in the related Prospectus Supplement  
(and, if so provided in the related Prospectus Supplement, holds Certificates in
the requisite amount specified therein), or by check mailed to the address of   
the person entitled thereto as it appears on the Certificate Register; provided,
however, that the final distribution in retirement of the Certificates will be  
made only upon presentation and surrender of the Certificates at the office or  
agency of the Depositor or its agent specified in the notice to                 
Certificateholders of such final distribution. (Sections 4.01 and 9.01)         

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AVAILABLE DISTRIBUTION AMOUNT                                                   

   All distributions on the Certificates of each series on each Distribution
Date will be made from the Available Distribution Amount described below, in    
accordance with the terms described in the related Prospectus Supplement. Unless
provided otherwise in the related Prospectus Supplement, the "Available         
Distribution Amount" for each Distribution Date equals the sum of the following 
amounts:                                                                        

  (i) the total amount of all cash on deposit in the related
   Certificate Account as of the corresponding Determination Date, exclusive
of:                                                                   

              (a) all scheduled payments of principal and interest collected
    but due on a date subsequent to the related Due Period (unless the
       related Prospectus Supplement provides otherwise, a "Due Period" with
         respect to any Distribution Date will commence on the second day of the
       month in which the immediately preceding Distribution Date occurs, or
         the day after the Cut-off Date in the case of the first Due Period, and
    will end on the first day of the month of the related Distribution
Date),                                                        

          (b) all prepayments, together with related payments of the
      interest thereon, Liquidation Proceeds, Insurance Proceeds and other
      unscheduled recoveries received subsequent to the related Prepayment
Period, and                                                   

          (c) all amounts in the Certificate Account that are due or
       reimbursable to the Depositor, the Trustee, a Mortgage Loan Seller, a
       Sub-Servicer or the Master Servicer or that are payable in respect of
certain expenses of the related Trust Fund;                   

        (ii) if the related Prospectus Supplement so provides, interest or
investment income on amounts on deposit in the Certificate Account;   

(iii)   all advances with respect to such Distribution Date;

    (iv) if and to the extent the related Prospectus Supplement so
   provides, amounts paid with respect to interest shortfalls resulting from
prepayments during the related Prepayment Period; and                 

           (v) to the extent not on deposit in the related Certificate Account
  as of the corresponding Determination Date, any amounts collected under,
    from or in respect of any Credit Support with respect to such Distribution
Date.                                                                 

As described below, the entire Available Distribution Amount will be  
distributed among the related Certificates (including any Certificates not      
offered hereby) on each Distribution Date, and accordingly will be released from
the Trust Fund and will not be available for any future distributions.          

INTEREST ON THE CERTIFICATES                                                    

Each class of Certificates (other than certain classes of Strip       
Certificates) may have a different Pass-Through Rate, which may be a fixed,     
variable or adjustable Pass-Through Rate. The related Prospectus Supplement will
specify the Pass-Through Rate for each class, or, in the case of a variable or  
adjustable Pass-Through Rate, the method for determining the Pass-Through Rate. 
Unless otherwise specified in the related Prospectus Supplement, interest on the
Certificates will be calculated on the basis of a 360-day year consisting of    
twelve 30-day months.                                                           

     With respect to each series of Certificates and each Distribution Date, the
"Accrued Certificate Interest" distributable on each Certificate, other than    
certain classes of Strip Certificates, will be equal to one month's interest on 
the outstanding Certificate Principal Balance thereof immediately prior to the  
Distribution Date, at the applicable Pass-Through Rate, subject to the          
following. As to each Strip Certificate with no or, in certain cases, a nominal 
Certificate Principal Balance, the                                              

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Accrued Certificate Interest with respect to any Distribution Date will equal   
one month's Stripped Interest. Unless otherwise specified in the related        
Prospectus Supplement, the Accrued Certificate Interest on each Certificate of a
series will be reduced in the event of shortfalls in collections of interest    
resulting from prepayments on Mortgage Loans, with that shortfall allocated     
among all of the Certificates of that series in the manner specified in the     
related Prospectus Supplement. See "Yield Considerations".                      

PRINCIPAL OF THE CERTIFICATES                                                   

Unless the related Prospectus Supplement provides otherwise, each     
Certificate will have a "Certificate Principal Balance" which, at any time, will
equal the maximum amount that the holder will be entitled to receive in respect 
of principal out of the future cash flow on the Trust Fund Assets and other     
assets included in the related Trust Fund. With respect to each such            
Certificate, distributions generally will be applied to undistributed accrued   
interest thereon, and thereafter to principal. The outstanding Certificate      
Principal Balance of a Certificate will be reduced to the extent of             
distributions of principal thereon, and in the case of Certificates evidencing  
an interest in Mortgage Loans, by the amount of any Realized Losses, as defined 
below, allocated thereto. Unless the related Prospectus Supplement provides     
otherwise, the initial aggregate Certificate Principal Balance of all classes of
Certificates of a series will equal the outstanding aggregate principal balance 
of the related Trust Fund Assets as of the applicable Cut-off Date. The initial 
aggregate Certificate Principal Balance of a series and each class thereof will 
be specified in the related Prospectus Supplement. Unless otherwise provided in 
the related Prospectus Supplement, distributions of principal will be made on   
each Distribution Date to the class or classes of Certificates entitled thereto 
until the Certificate Principal Balance of such class has been reduced to zero. 
With respect to a Senior/Subordinate Series, unless otherwise provided in the   
related Prospectus Supplement, distributions allocable to principal of a class  
of Certificates will be based on the percentage interest in the related Trust   
Fund evidenced by such class (with respect to the Senior Certificates, the      
"Senior Percentage"), which in turn will be based on the Certificate Principal  
Balance of such class as compared to the Certificate Principal Balance of all   
classes of Certificates of such series. Distributions of principal of any class 
of Certificates will be made on a pro rata basis among all of the Certificates  
of such class. Strip Certificates with no Certificate Principal Balance will not
receive distributions of principal.                                             

PRE-FUNDING ACCOUNT                                                             

     If so specified in the related Prospectus Supplement, the related Agreement
may provide for the transfer by the Mortgage Loan Seller of additional Mortgage 
Loans to the related Trust Fund after the Closing Date. Such additional Mortgage
Loans will be required to conform to the requirements set forth in the related  
Agreement or other agreement providing for such transfer, and will generally be 
underwritten to the same standards as the Mortgage Loans initially included in  
the Trust Fund. As specified in the related Prospectus Supplement, such transfer
may be funded by the establishment of a Pre-Funding Account (a "Pre-Funding     
Account"). If a Pre-Funding Account is established, all or a portion of the     
proceeds of the sale of one or more classes of Certificates of the related      
series will be deposited in such account to be released as additional Mortgage  
Loans are transferred. A Pre-Funding Account will be required to be maintained  
as an eligible account under the related agreement, all amounts therein will be 
required to be invested in Permitted Investments and the amount held therein    
shall at no time exceed 25% of the aggregate outstanding principal balance of   
the Certificates. The related Agreement or other agreement providing for the    
transfer of additional Mortgage Loans will generally provide that all such      
transfers must be made within 3 months after the Closing Date, and that amounts 
set aside to fund such transfers (whether in a Pre-Funding Account or otherwise)
and not so applied within the required period of time will be deemed to be      
principal prepayments and applied in the manner set forth in such Prospectus    
Supplement.                                                                     

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 The Depositor will be required to provide data regarding the additional
Mortgage Loans to the Rating Agencies and the certificate insurer, if any,      
sufficiently in advance of the scheduled transfer to permit review by such      
parties. Transfer of the additional Mortgage Loans will be further conditioned  
upon confirmation by the Rating Agencies that the addition of such Mortgage     
Loans to the Trust Fund will not result in the downgrading of the Certificates  
or, in the case of a series guaranteed or supported by a certificate insurer,   
will not adversely affect the capital requirements of such certificate insurer. 
Finally, a legal opinion to the effect that the conditions to the transfer of   
the additional Mortgage Loans have been satisfied.                              

ALLOCATION OF LOSSES                                                            

 With respect to any defaulted Mortgage Loan that is finally liquidated,
through foreclosure sale or otherwise (a "Liquidated Loan"), the amount of the  
Realized Loss incurred in connection with such liquidation will equal the       
excess, if any, of the unpaid principal balance of the Liquidated Loan          
immediately prior to liquidation, over the aggregate amount of Liquidation      
Proceeds derived from such liquidation remaining after application of such      
proceeds to unpaid accrued interest on the Liquidated Loan and to reimburse the 
Master Servicer or any Sub-Servicer for related unreimbursed servicing expenses.
With respect to certain Mortgage Loans the principal balances of which have been
reduced in connection with bankruptcy proceedings, the amount of such reduction 
(a "Deficient Valuation") also will be treated as a Realized Loss. As to any    
series of Certificates other than a Senior/Subordinate Series, unless specified 
otherwise in the related Prospectus Supplement, any Realized Loss not covered as
described under "Description of Credit Support" will be allocated among all of  
the Certificates on a pro rata basis.                                           

ADVANCES IN RESPECT OF DELINQUENCIES                                            

    With respect to any series of Certificates evidencing interests in a Trust
Fund consisting of Mortgage Loans, other than a Senior/Subordinate Series,      
unless otherwise provided in the related Prospectus Supplement, the Master      
Servicer will advance on or before each Distribution Date its own funds or funds
held in the Certificate Account that are not included in the Available          
Distribution Amount for such Distribution Date, in an amount equal to the       
aggregate of payments of principal and interest (net of related servicing fees  
and Retained Interest) that were due during the related Due Period and were     
delinquent on the related Determination Date, subject to the Master Servicer's  
good faith determination that such advances will be reimbursable from Related   
Proceeds (as defined below). See "Description of Primary Insurance Policies" and
"Description of Credit Support".                                                

     With respect to any Senior/Subordinate Series, unless otherwise provided in
the related Prospectus Supplement, the Master Servicer will advance on each     
Distribution Date its own funds or funds held in the Certificate Account which  
are not included in the Available Distribution Amount for such Distribution     
Date, in an aggregate amount equal to the lesser of (a) the total of all amounts
required to be distributed on each class of Senior Certificates and Strip       
Certificates, if any, on such Distribution Date which remain after applying     
towards such payment the entire Available Distribution Amount, including funds  
otherwise payable to the Subordinate Certificateholders but excluding such      
advance, and (b) the aggregate of payments of principal and interest (net of    
related servicing fees and Retained Interest) that were due during the related  
Due Period and were delinquent on the related Determination Date. Alternatively,
for a Senior/Subordinate Series, the Master Servicer may be obligated to make   
advances in the manner provided in the preceding paragraph. In either case, the 
Master Servicer will, unless the related Prospectus Supplement provides         
otherwise, be obligated to make such advances regardless of recoverability from 
the related Mortgage Loans to the extent that the Certificate Principal Balance 
of the Subordinate Certificates is greater than zero. Thereafter, such advances 
are required to be made only to the extent they are deemed by the Master        
Servicer to be                                                                  

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recoverable from Related Proceeds, unless otherwise specified in the related    
Prospectus Supplement. See "Description of Primary Insurance Policies" and      
"Description of Credit Support".                                                

    Advances are intended to maintain a regular flow of scheduled interest and
principal payments to holders of the class or classes of Certificates entitled  
thereto, rather than to guarantee or insure against losses. Unless otherwise    
provided in the related Prospectus Supplement, advances of the Master Servicer's
funds will be reimbursable only out of related recoveries on the Mortgage Loans 
(including amounts received under any form of Credit Support) respecting which  
such advances were made (as to any Mortgage Loan, "Related Proceeds") and, in   
the case of a Senior/Subordinate Series, out of any amounts otherwise           
distributable on the Subordinate Certificates of such series; provided, however,
that any such advance will be reimbursable from any amounts in the Certificate  
Account to the extent that the Master Servicer shall determine that such advance
(a "Nonrecoverable Advance") is not ultimately recoverable from Related Proceeds
and, in the case of a Senior/Subordinate Series, the Certificate Principal      
Balance of the Subordinate Certificates has been reduced to zero. If advances   
have been made by the Master Servicer from excess funds in the Certificate      
Account, the Master Servicer will replace such funds in the Certificate Account 
on any future Distribution Date to the extent that funds in the Certificate     
Account on such Distribution Date are less than payments required to be made to 
Certificateholders on such date. (Section 4.03) If so specified in the related  
Prospectus Supplement, the obligations of the Master Servicer to make advances  
may be secured by a cash advance reserve fund or a surety bond. If applicable,  
information regarding the characteristics of, and the identity of any obligor   
on, any such surety bond, will be set forth in the related Prospectus           
Supplement.                                                                     

REPORTS TO CERTIFICATEHOLDERS                                                   

     With each distribution to holders of any class of Certificates of a series,
the Master Servicer or the Trustee, will forward or cause to be forwarded to    
each such holder, to the Depositor and to such other parties as may be specified
in the related Agreement, a statement setting forth:                            

              (i) the amount of such distribution to holders of Certificates
    of such class applied to reduce the Certificate Principal Balance thereof;

             (ii) the amount of such distribution to holders of Certificates
of such class allocable to Accrued Certificate Interest;              

   (iii) the amount of related administration or servicing
compensation received by the Trustee or the Master Servicer and any   
  Sub-Servicer and such other customary information as the Master Servicer
deems necessary or desirable, or that a Certificateholder reasonably  
requests, to enable Certificateholders to prepare their tax returns;  

              (iv) if applicable, the aggregate amount of advances included in
     such distribution, and the aggregate amount of unreimbursed advances at the
close of business on such Distribution Date;                          

                (v) the aggregate Stated Principal Balance of the Mortgage Loans
at the close of business on such Distribution Date;                   

       (vi) the number and aggregate Stated Principal Balance of
     Mortgage Loans (a) delinquent one month, (b) delinquent two or more months,
and (c) as to which foreclosure proceedings have been commenced;      

              (vii) with respect to any Mortgaged Property acquired on behalf of
Certificateholders through foreclosure or deed in lieu of foreclosure 
  during the preceding calendar month, the Stated Principal Balance of the
    related Mortgage Loan as of the close of business on the Distribution Date
in such month;                                                        

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              (viii) the book value of any Mortgaged Property acquired on behalf
     of Certificateholders through foreclosure or deed in lieu of foreclosure as
 of the close of business on the last business day of the calendar month
preceding the Distribution Date;                                      

               (ix) the aggregate Certificate Principal Balance of each class of
  Certificates (including any class of Certificates not offered hereby) at
     the close of business on such Distribution Date, separately identifying any
  reduction in such Certificate Principal Balance due to the allocation of
any Realized Loss;                                                    

           (x) the Special Hazard Subordination Amount, if any, at the
close of business on such Distribution Date;                          

         (xi) the aggregate amount of principal prepayments made and
Realized Losses incurred during the related Prepayment Period;        

           (xii) the amount deposited in the Reserve Fund, if any, on such
Distribution Date;                                                    

        (xiii) the amount remaining in the Reserve Fund, if any, as of
the close of business on such Distribution Date;                      

            (xiv) the aggregate unpaid Accrued Certificate Interest, if any,
     on each class of Certificates at the close of business on such Distribution
Date;                                                                 

           (xv) in the case of Certificates with a variable Pass-Through
Rate, the Pass-Through Rate applicable to such Distribution Date, as  
calculated in accordance with the method specified in the related     
Prospectus Supplement;                                                

             (xvi) in the case of Certificates with an adjustable Pass-Through
    Rate, for statements to be distributed in any month in which an adjustment
date occurs, the adjustable PassThrough Rate applicable to the next   
  succeeding Distribution Date as calculated in accordance with the method
specified in the related Prospectus Supplement; and                   

             (xvii) as to any series which includes Credit Support, the amount
     of coverage of each instrument of Credit Support included therein as of the
close of business on such Distribution Date.                          

In the case of information furnished pursuant to subclauses (i)-(iii) 
above, the amounts shall be expressed as a dollar amount per minimum            
denomination of Certificates or for such other specified portion thereof.       

     Within a reasonable period of time after the end of each calendar year, the
Master Servicer or the Trustee, as provided in the related Prospectus           
Supplement, shall furnish to each person who at any time during the calendar    
year was a holder of a Certificate a statement containing the information set   
forth in subclauses (i)-(iii) above, aggregated for such calendar year or the   
applicable portion thereof during which such person was a Certificateholder.    
Such obligation of the Master Servicer or the Trustee shall be deemed to have   
been satisfied to the extent that substantially comparable information shall be 
provided by the Master Servicer or the Trustee pursuant to any requirements of  
the Code as are from time to time in force. (Section 4.02)                      

COLLECTION AND OTHER SERVICING PROCEDURES                                       

The Master Servicer, directly or through Sub-Servicers, will make     
reasonable efforts to collect all scheduled payments under the Mortgage Loans   
and will follow or cause to be followed such collection procedures as it would  
follow with respect to mortgage loans that are comparable to the Mortgage Loans 
and held for its own account, provided such procedures are consistent with the  
Agreement and any related insurance policy, bankruptcy bond, letter of credit or
other instrument described under "Description of Primary Insurance Policies" or 
"Description of Credit Support" (any such instrument providing coverage as to   
losses resulting from physical damage, a "Hazard Insurance Instrument", any such
instrument providing coverage as to credit or other risks, a                    

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"Credit Insurance Instrument", and collectively, the "Insurance Instruments").  
Consistent with the above, the Master Servicer may, in its discretion, waive any
late payment charge in respect of a late Mortgage Loan payment and, only upon   
determining that the coverage under any related Insurance Instrument will not be
affected, extend or cause to be extended the due dates for payments due on a    
Mortgage Note for a period not greater than 125 days. (Section 3.07)            

In any case in which property securing a Mortgage Loan, other than a  
Multifamily Loan, has been, or is about to be, conveyed by the borrower, or in  
any case in which property securing a Multifamily Loan has been, or is about to 
be encumbered by the borrower, the Master Servicer will, to the extent it has   
knowledge of such conveyance, encumbrance, proposed conveyance or encumbrance,  
exercise or cause to be exercised on behalf of the related Trust Fund the       
lender's rights to accelerate the maturity of such Mortgage Loan under any      
due-on-sale or due-on-encumbrance clause applicable thereto, but only if the    
exercise of any such rights is permitted by applicable law and will not impair  
or threaten to impair any recovery under any related Insurance Instrument. If   
these conditions are not met or if the Master Servicer reasonably believes it is
unable under applicable law to enforce such due-on-sale or due-on-encumbrance   
clause, the Master Servicer will enter into or cause to be entered into an      
assumption and modification agreement with the person to whom such property has 
been or is about to be conveyed or encumbered, pursuant to which such person    
becomes liable under the Mortgage Note, Cooperative Note or Contract and, to the
extent permitted by applicable law, the borrower remains liable thereon. Any fee
collected by or on behalf of the Master Servicer for entering into an assumption
agreement will be retained by or on behalf of the Master Servicer as additional 
servicing compensation. See "Certain Legal Aspects of Mortgage                  
Loans-Enforceability of Certain Provisions". In connection with any such        
assumption, the terms of the related Mortgage Loan may not be changed. (Section 
3.15)                                                                           

    With respect to Multifamily Loans, the related mortgagor's failure to make
required payments may reflect inadequate operating income or the diversion of   
that income from the service of payments due under the Multifamily Loan, and may
call into question such mortgagor's ability to make timely payment of taxes and 
to pay for necessary maintenance of the related Mortgaged Property. The Master  
Servicer will monitor any Multifamily Loan which is in default, contact the     
mortgagor concerning the default, evaluate whether the causes of the default can
be cured over a reasonable period without significant impairment of the value of
the Mortgaged Property, initiate corrective action in cooperation with the      
mortgagor if cure is likely, inspect the Mortgaged Property and take such other 
actions as it would normally take with respect to similar loans serviced for its
own portfolio. A significant period of time may elapse before the Master        
Servicer is able to assess the success of such corrective action or the need for
additional initiatives. Alternatively, the Master Servicer may determine to     
institute foreclosure proceedings with respect to a Multifamily Loan soon after 
default.                                                                        

SUB-SERVICING                                                                   

  Any Master Servicer may delegate its servicing obligations in respect of
the Mortgage Loans to third-party servicers (each, a "Sub-Servicer"), but such  
Master Servicer will remain obligated under the related Agreement. Each         
Sub-Servicer will be required to perform the customary functions of a servicer  
of comparable loans, including collecting payments from borrowers and remitting 
such collections to the Master Servicer; maintaining primary hazard insurance as
described herein and in any related Prospectus Supplement, and filing and       
settling claims thereunder, subject in certain cases to the right of the Master 
Servicer to approve in advance any such settlement; maintaining escrow or       
impoundment accounts of borrowers for payment of taxes, insurance and other     
items required to be paid by any borrower pursuant to the Mortgage Loan;        
processing assumptions or substitutions, although, unless otherwise specified in
the related Prospectus Supplement, the Master Servicer is generally required to 
exercise due-on-sale clauses to the extent such exercise is permitted by law and
would not adversely affect insurance                                            

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coverage; attempting to cure delinquencies; supervising foreclosures or         
repossessions; inspecting and managing Mortgaged Properties under certain       
circumstances; and maintaining accounting records relating to the Mortgage      
Loans. Unless otherwise specified in the related Prospectus Supplement, the     
Master Servicer will be responsible for filing and settling claims in respect of
Mortgage Loans in a particular Mortgage Pool under any applicable mortgage pool 
insurance policy, bankruptcy bond, special hazard insurance policy or letter of 
credit. See "Description of Credit Support".                                    

    The sub-servicing agreement between any Master Servicer and a Sub-Servicer
(a "SubServicing Agreement") will be consistent with the terms of the related   
Pooling and Servicing Agreement and will not result in a withdrawal or          
downgrading of any class of Certificates issued pursuant to such Pooling and    
Servicing Agreement. Although each Sub-Servicing Agreement will be a contract   
solely between the Master Servicer and the Sub-Servicer, the Agreement pursuant 
to which a series of Certificates is issued will provide that, if for any reason
the Master Servicer for such series of Certificates is no longer acting in such 
capacity, the Trustee or any successor Master Servicer must recognize the       
Sub-Servicer's rights and obligations under such Sub-Servicing Agreement.       

  The Master Servicer will be solely liable for all fees owed by it to any
Sub-Servicer, irrespective of whether the Master Servicer's compensation        
pursuant to the related Agreement is sufficient to pay such fees. However, a    
Sub-Servicer may be entitled to a Retained Interest in certain Mortgage Loans.  
Each Sub-Servicer will be reimbursed by the Master Servicer for certain         
expenditures which it makes, generally to the same extent the Master Servicer   
would be reimbursed under a Pooling and Servicing Agreement. See "Description of
the Certificates-Retained Interest, Servicing Compensation and Payment of       
Expenses".                                                                      

    The Master Servicer may require any Sub-Servicer to agree to indemnify the
Master Servicer for any liability or obligation sustained by the Master Servicer
in connection with any act or failure to act by the Sub-Servicer in its         
servicing capacity. Unless otherwise provided in the related Prospectus         
Supplement, each Sub-Servicer is required to maintain a fidelity bond and an    
errors and omissions policy with respect to its officers, employees and other   
persons acting on its behalf or on behalf of the Master Servicer.               

REALIZATION UPON DEFAULTED MORTGAGE LOANS                                       

As servicer of the Mortgage Loans, the Master Servicer, on behalf of  
itself, the Trustee and the Certificateholders, will present claims to the      
insurer under each Insurance Instrument, and will take such reasonable steps as 
are necessary to receive payment or to permit recovery thereunder with respect  
to defaulted Mortgage Loans. As set forth above, all collections by or on behalf
of the Master Servicer under any Insurance Instrument, other than amounts to be 
applied to the restoration of a Mortgaged Property or released to the mortgagor,
are to be deposited in the Certificate Account for the related Trust Fund,      
subject to withdrawal as heretofore described. Unless otherwise provided in the 
Prospectus Supplement relating to a series of Certificates, the Master Servicer 
or its designee will not receive payment under any letter of credit included as 
an Insurance Instrument with respect to a defaulted Mortgage Loan unless all    
Liquidation Proceeds and Insurance Proceeds which it deems to be finally        
recoverable have been realized; however, the Master Servicer will be entitled to
reimbursement for any unreimbursed advances and reimbursable expenses           
thereunder. (Section 3.16)                                                      

     If any property securing a defaulted Mortgage Loan is damaged and proceeds,
if any, from the related Hazard Insurance Instrument are insufficient to restore
the damaged property to a condition sufficient to permit recovery under the     
related Credit Insurance Instrument, if any, the Master Servicer is not required
to expend its own funds to restore the damaged property unless it determines (i)
that such restoration will increase the proceeds to Certificateholders on       
liquidation of the Mortgage Loan after reimbursement of the Master Servicer for 
its expenses and (ii) that                                                      

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such expenses will be recoverable by it from related Insurance Proceeds or      
Liquidation Proceeds. (Section 3.16)                                            

     If recovery on a defaulted Mortgage Loan under any related Credit Insurance
Instrument is not available for the reasons set forth in the preceding          
paragraph, the Master Servicer nevertheless will be obligated to follow or cause
to be followed such normal practices and procedures as it deems necessary or    
advisable to realize upon the defaulted Mortgage Loan. (Section 3.16) If the    
proceeds of any liquidation of the property securing the defaulted Mortgage Loan
are less than the outstanding principal balance of the defaulted Mortgage Loan  
plus interest accrued thereon at the Interest Rate plus the aggregate amount of 
expenses incurred by the Master Servicer in connection with such proceedings and
which are reimbursable under the Agreement, the Trust Fund will realize a loss  
in the amount of such difference. The Master Servicer will be entitled to       
withdraw or cause to be withdrawn from the Certificate Account out of the       
Liquidation Proceeds recovered on any defaulted Mortgage Loan, prior to the     
distribution of such Liquidation Proceeds to Certificateholders, amounts        
representing its normal servicing compensation on the Mortgage Loan,            
unreimbursed servicing expenses incurred with respect to the Mortgage Loan and  
any unreimbursed advances of delinquent monthly payments made with respect to   
the Mortgage Loan.                                                              
(Section 3.11)                                                                  

 If the Master Servicer or its designee recovers Insurance Proceeds with
respect to any defaulted Mortgage Loan, the Master Servicer will be entitled to 
withdraw or cause to be withdrawn from the Certificate Account out of such      
proceeds, prior to distribution thereof to Certificateholders, amounts          
representing its normal servicing compensation on such Mortgage Loan,           
unreimbursed servicing expenses incurred with respect to the Mortgage Loan and  
any unreimbursed advances of delinquent monthly payments made with respect to   
the Mortgage Loan. (Section 3.11) In the event that the Master Servicer has     
expended its own funds to restore damaged property and such funds have not been 
reimbursed under any Insurance Instrument, it will be entitled to withdraw from 
the Certificate Account out of related Liquidation Proceeds or Insurance        
Proceeds an amount equal to such expenses incurred by it, in which event the    
Trust Fund may realize a loss up to the amount so charged. (Section 3.11)       
Because Insurance Proceeds cannot exceed deficiency claims and certain expenses 
incurred by the Master Servicer, no such payment or recovery will result in a   
recovery to the Trust Fund which exceeds the principal balance of the defaulted 
Mortgage Loan together with accrued interest thereon at the Net Interest Rate.  
In addition, when property securing a defaulted Mortgage Loan can be resold for 
an amount exceeding the outstanding principal balance of the related Mortgage   
Loan together with accrued interest and expenses, it may be expected that, if   
retention of any such amount is legally permissible, the insurer will exercise  
its right under any related mortgage pool insurance policy to purchase such     
property and realize for itself any excess proceeds. See "Description of Primary
Insurance Policies" and "Description of Credit Support".                        

 With respect to collateral securing a Cooperative Loan, any prospective
purchaser will generally have to obtain the approval of the board of directors  
of the relevant Cooperative before purchasing the shares and acquiring rights   
under the proprietary lease or occupancy agreement securing the Cooperative     
Loan. See "Certain Legal Aspects of Mortgage Loans-Foreclosure on Cooperatives".
This approval is usually based on the purchaser's income and net worth and      
numerous other factors. The necessity of acquiring such approval could limit the
number of potential purchasers for those shares and otherwise limit the Master  
Servicer's ability to sell, and realize the value of, those shares.             

RETAINED INTEREST; SERVICING OR ADMINISTRATION COMPENSATION AND PAYMENT OF      
EXPENSES                                                                        

     The Prospectus Supplement for a series of Certificates will specify whether
there will be any Retained Interest in the Trust Fund Assets, and, if so, the   
owner thereof. If so, the Retained Interest will be established on a            
loan-by-loan basis and will be specified on an exhibit to the related Agreement.
A Retained Interest in a Trust Fund Asset represents a specified portion of     

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the interest payable thereon. The Retained Interest will be deducted from       
borrower payments as received and will not be part of the related Trust Fund.   
Any partial recovery of interest on a Mortgage Loan, after deduction of all     
applicable servicing fees, will be allocated between Retained Interest (if any) 
and interest at the Net Interest Rate on a pari passu basis.                    

    The Master Servicer's (or in the case of a Trust Fund consisting of Agency
Securities or Private Mortgage-Backed Securities if specified in the related    
Prospectus Supplement, the Trustee's) primary compensation with respect to a    
series of Certificates will come from the monthly payment to it, with respect to
each interest payment on a Trust Fund Asset, of an amount equal to one-twelfth  
of the difference between the Interest Rate (minus the rate at which the        
Retained Interest, if any, is calculated) and the Net Interest Rate times the   
scheduled principal balance of such Trust Fund Asset. Since any Retained        
Interest and the Master Servicer's (or the Trustee's) primary compensation are  
percentages of the scheduled principal balance of each Trust Fund Asset, such   
amounts will decrease in accordance with the amortization schedule of the Trust 
Fund Assets. As additional compensation in connection with a series of          
Certificates relating to Mortgage Loans, the Master Servicer or the             
Sub-Servicers will retain all assumption fees, prepayment penalties and late    
payment charges, to the extent collected from mortgagors. Unless otherwise      
specified in the related Prospectus Supplement, any interest or other income    
which may be earned on funds held in the Certificate Account or any             
Sub-Servicing Account may be paid as additional compensation to the Trustee, the
Master Servicer or the Sub-Servicers, as the case may be. Any Sub-Servicer will 
receive a portion of the Master Servicer's primary compensation as its          
sub-servicing compensation. (Section 3.18)                                      

   With respect to a series of Certificates consisting of Mortgage Loans, in
addition to amounts payable to any Sub-Servicer, the Master Servicer will pay   
from its servicing compensation certain expenses incurred in connection with its
servicing of the Mortgage Loans, including, without limitation, payment of the  
fees and disbursements of the Trustee and independent accountants, payment of   
expenses incurred in connection with distributions and reports to               
Certificateholders, and payment of any other expenses described in the related  
Prospectus Supplement. (Section 3.18)                                           

The Master Servicer is entitled to reimbursement for certain expenses 
incurred by it in connection with the liquidation of defaulted Mortgage Loans,  
including under certain circumstances reimbursement of expenditures incurred by 
it in connection with the restoration of Mortgaged Properties, such right of    
reimbursement being prior to the rights of Certificateholders to receive any    
related Liquidation Proceeds. The Master Servicer is also entitled to           
reimbursement from the Certificate Account for Advances. With respect to a      
series of Certificates relating to Agency Securities, the Trustee shall pay all 
expenses incurred in administration thereof, subject to the limitations         
described in the related Prospectus Supplement.                                 

EVIDENCE AS TO COMPLIANCE                                                       

Each Agreement with respect to a series of Certificates consisting of 
Mortgage Loans, will provide that on or before a specified date in each year,   
beginning with the first such date at least six months after the related Cut-off
Date, a firm of independent public accountants will furnish a statement to the  
Trustee to the effect that, on the basis of the examination by such firm        
conducted substantially in compliance with either the Uniform Single Program for
Mortgage Bankers or the Audit Program for Mortgages serviced for FHLMC, the     
servicing by or on behalf of the Master Servicer of mortgage loans under pooling
and servicing agreements substantially similar to each other (including the     
related Agreement) was conducted in compliance with the terms of such agreements
except for any significant exceptions or errors in records that, in the opinion 
of the firm, either the Audit Program for Mortgages serviced for FHLMC, or      
paragraph 4 of the Uniform Single Program for Mortgage Bankers, requires it to  
report. In rendering its statement such firm may rely, as to matters relating to
the direct servicing of mortgage loans by Sub-Servicers, upon comparable        
statements for examinations conducted substantially in compliance with the      
Uniform                                                                         

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Single Attestation Program for Mortgage Bankers or the Audit Program for        
Mortgages serviced for FHLMC (rendered within one year of such statement) of    
firms of independent public accountants with respect to the related             
Sub-Servicer. (Section 3.21)                                                    

    Each Agreement will also provide for delivery to the Trustee, on or before
a specified date in each year, of an annual statement signed by two officers of 
the Master Servicer to the effect that the Master Servicer has fulfilled its    
obligations under the Agreement throughout the preceding year.                  
(Section 3.20)                                                                  

   Copies of the annual accountants' statement and the statement of officers
of the Master Servicer may be obtained by Certificateholders without charge upon
written request to the Master Servicer at the address set forth in the related  
Prospectus Supplement.                                                          

CERTAIN MATTERS REGARDING THE MASTER SERVICER AND THE DEPOSITOR                 

The Master Servicer under each Agreement will be named in the related 
Prospectus Supplement. The entity serving as Master Servicer may be an affiliate
of the Depositor and may have other normal business relationships with the      
Depositor or the Depositor's affiliates.                                        

  Each Agreement will provide that the Master Servicer may resign from its
obligations and duties under the Agreement only if such resignation, and the    
appointment of a successor, will not result in a downgrading of any class of    
Certificates or upon a determination that its duties under the Agreement are no 
longer permissible under applicable law. No such resignation will become        
effective until the Trustee or a successor servicer has assumed the Master      
Servicer's obligations and duties under the Agreement. (Section 6.04)           

   Each Agreement will further provide that neither the Master Servicer, the
Depositor nor any director, officer, employee, or agent of the Master Servicer  
or the Depositor will be under any liability to the related Trust Fund or       
Certificateholders for any action taken, or for refraining from the taking of   
any action, in good faith pursuant to the Agreement, or for errors in judgment; 
provided, however, that neither the Master Servicer, the Depositor nor any such 
person will be protected against any liability which would otherwise be imposed 
by reason of willful misfeasance, bad faith or gross negligence in the          
performance of duties thereunder or by reason of reckless disregard of          
obligations and duties thereunder. Each Agreement will further provide that the 
Master Servicer, the Depositor and any director, officer, employee or agent of  
the Master Servicer or the Depositor will be entitled to indemnification by the 
related Trust Fund and will be held harmless against any loss, liability or     
expense incurred in connection with any legal action relating to the Agreement  
or the Certificates, other than any loss, liability or expense is related to any
specific Mortgage Loan or Mortgage Loans (unless any such loss, liability or    
expense otherwise reimbursable pursuant to the Agreement) and any loss,         
liability or expense incurred by reason of willful misfeasance, bad faith or    
gross negligence in the performance of duties thereunder or by reason of        
reckless disregard of obligations and duties thereunder. In addition, each      
Agreement will provide that neither the Master Servicer nor the Depositor will  
be under any obligation to appear in, prosecute or defend any legal action which
is not incidental to its respective responsibilities under the Agreement and    
which in its opinion may involve it in any expense or liability. The Master     
Servicer or the Depositor may, however, in its discretion undertake any such    
action which it may deem necessary or desirable with respect to the Agreement   
and the rights and duties of the parties thereto and the interests of the       
Certificateholders thereunder. In such event, the legal expenses and costs of   
such action and any liability resulting therefrom will be expenses, costs and   
liabilities of the Certificateholders, and the Master Servicer or the Depositor,
as the case may be, will be entitled to be reimbursed therefor and to charge the
Certificate Account. Except in the case of a series of Senior/Subordinate       
Certificates, any such obligation of the Certificateholders will be borne among 
them on a pro rata basis in proportion to the Accrued Certificate Interest      
payable thereto, and, notwithstanding any other provision, their respective     
distributions will be reduced accordingly.                                      
(Section 6.03)                                                                  

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     Any person into which the Master Servicer may be merged or consolidated, or
any person resulting from any merger or consolidation to which the Master       
Servicer is a party, or any person succeeding to the business of the Master     
Servicer, will be the successor of the Master Servicer under each Agreement,    
provided that such person is qualified to sell mortgage loans to, and service   
mortgage loans on behalf of, FNMA or FHLMC. (Section 6.02)                      

EVENTS OF DEFAULT                                                               

     Unless otherwise provided in the related Prospectus Supplement for a series
of Certificates that includes Mortgage Loans, Events of Default under each      
Agreement will consist of (i) any failure by the Master Servicer to distribute  
or cause to be distributed to Certificateholders, or to remit to the Trustee for
distribution to Certificateholders, any required payment that continues         
unremedied for five days after the giving of written notice of such failure to  
the Master Servicer by the Trustee or the Depositor, or to the Master Servicer, 
the Depositor and the Trustee by the holders of Certificates evidencing not less
than 25% of the Voting Rights; (ii) any failure by the Master Servicer duly to  
observe or perform in any material respect any of its other covenants or        
obligations under the Agreement which continues unremedied for thirty days      
(fifteen days in the case of a failure to pay the premium for any insurance     
instrument required to be maintained pursuant to the Agreement) after the giving
of written notice of such failure to the Master Servicer by the Trustee or the  
Depositor, or to the Master Servicer, the Depositor and the Trustee by the      
holders of Certificates evidencing not less than 25% of the Voting Rights; and  
(iii) certain events of insolvency, readjustment of debt, marshalling of assets 
and liabilities or similar proceedings and certain actions by or on behalf of   
the Master Servicer indicating its insolvency or inability to pay its           
obligations. (Section 7.01)                                                     

RIGHTS UPON EVENT OF DEFAULT                                                    

   So long as an Event of Default under an Agreement remains unremedied, the
Depositor or the Trustee may, and at the direction of holders of Certificates   
evidencing not less than 51% of the Voting Rights, the Trustee shall, terminate 
all of the rights and obligations of the Master Servicer under the Agreement    
relating to such Trust Fund and in and to the Mortgage Loans (other than any    
Retained Interest of the Master Servicer), whereupon the Trustee will succeed to
all of the responsibilities, duties and liabilities of the Master Servicer under
the Agreement (except that if the Trustee is prohibited by law from obligating  
itself to make advances regarding delinquent mortgage loans, then the Trustee   
will not be so obligated) and will be entitled to similar compensation          
arrangements. In the event that the Trustee is unwilling or unable so to act, it
may or, at the written request of the holders of Certificates entitled to at    
least 51% of the Voting Rights, it shall appoint, or petition a court of        
competent jurisdiction for the appointment of, a housing loan servicing         
institution acceptable to the Rating Agency with a net worth at the time of such
appointment of at least $15,000,000 to act as successor to the Master Servicer  
under the Agreement. Pending such appointment, the Trustee is obligated to act  
in such capacity. The Trustee and any such successor may agree upon the         
servicing compensation to be paid, which in no event may be greater than the    
compensation payable to the Master Servicer under the Agreement. (Sections 7.01 
and 7.02)                                                                       

   No Certificateholder will have the right under any Agreement to institute
any proceeding with respect thereto unless such holder previously has given to  
the Trustee written notice of default and unless the holders of Certificates    
evidencing not less than 25% of the Voting Rights have made written request upon
the Trustee to institute such proceeding in its own name as Trustee thereunder  
and have offered to the Trustee reasonable indemnity, and the Trustee for       
fifteen days has neglected or refused to institute any such proceeding. (Section
10.03) The Trustee, however, is under no obligation to exercise any of the      
trusts or powers vested in it by any Agreement or to make any investigation of  
matters arising thereunder or to institute, conduct or defend any litigation    
thereunder or in relation thereto at the request, order or direction of any of  
the holders                                                                     

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of Certificates covered by such Agreement, unless such Certificateholders have  
offered to the Trustee reasonable security or indemnity against the costs,      
expenses and liabilities which may be incurred therein or thereby. (Section     
8.02)                                                                           

AMENDMENT                                                                       

 Each Agreement may be amended by the Depositor, the Master Servicer, if
any, and the Trustee, without the consent of any of the holders of Certificates 
covered by the Agreement, to cure any ambiguity, to correct, modify or          
supplement any provision therein, or to make any other provisions with respect  
to matters or questions arising under the Agreement which are not inconsistent  
with the provisions thereof, provided that such action will not adversely affect
in any material respect the interests of any holder of Certificates covered by  
the Agreement. Each Agreement may also be amended by the Depositor, the Master  
Servicer, if any, and the Trustee, with the consent of the holders of           
Certificates evidencing not less than 66% of the Voting Rights, for any purpose;
provided, however, that no such amendment may (i) reduce in any manner the      
amount of or delay the timing of, payments received on Trust Fund Assets which  
are required to be distributed on any Certificate without the consent of the    
holder of such Certificate, (ii) adversely affect in any material respect the   
interests of the holders of any class of Certificates in a manner other than as 
described in (i), without the consent of the holders of Certificates of such    
class evidencing not less than 66% of the aggregate Voting Rights of such class 
or (iii) reduce the aforesaid percentage of Voting Rights required for the      
consent to any such amendment without the consent of the holders of all         
Certificates covered by such Agreement then outstanding. However, with respect  
to any series of Certificates as to which a REMIC election is to be made, the   
Trustee will not consent to any amendment of the Agreement unless it shall first
have received an opinion of counsel to the effect that such amendment will not  
cause the Trust Fund to fail to qualify as a REMIC at any time that the related 
Certificates are outstanding. (Section 10.01) The Voting Rights evidenced by any
Certificate will be the portion of the voting rights of all of the Certificates 
in the related series allocated in the manner described in the related          
Prospectus Supplement. (Article I)                                              

TERMINATION                                                                     

  The obligations created by the Agreement for each series of Certificates
will terminate upon the payment to Certificateholders of that series of all     
amounts held in the Certificate Account or by the Master Servicer and required  
to be paid to them pursuant to such Agreement following the earlier of (i) the  
final payment or other liquidation of the last Trust Fund Asset subject thereto 
or the disposition of all property acquired upon foreclosure of any such Trust  
Fund Asset and (ii) the purchase of all of the assets of the Trust Fund by the  
party entitled to effect such termination, under the circumstances and in the   
manner set forth in the related Prospectus Supplement. In no event, however,    
will the trust created by the Agreement continue beyond the date specified in   
the related Prospectus Supplement. Written notice of termination of the         
Agreement will be given to each Certificateholder, and the final distribution   
will be made only upon surrender and cancellation of the Certificates at an     
office or agency appointed by the Trustee which will be specified in the notice 
of termination. (Section 9.01)                                                  

Any such purchase of assets of the Trust Fund shall be made at a price
approximately equal to (A) in the case of a series of Certificates evidencing   
interests in a Trust Fund that includes Mortgage Loans, the greater of (i) the  
sum of (a) 100% of the Stated Principal Balance of each Mortgage Loan as of the 
day of such purchase plus accrued interest thereon at the applicable Net        
Interest Rate to the first day of the month following such purchase plus (b) the
appraised value of any property acquired for the benefit of Certificateholders  
in respect of such loans, and (ii) the aggregate fair market value of all of the
assets in the Trust Fund (as determined by the Trustee, the Servicer, and, if   
different than both such persons, the person entitled to effect such            
termination), in each case taking into account accrued interest at the          
applicable Net Interest Rate                                                    

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to the first day of the month following such purchase and (B) in the case of a  
series of Certificates evidencing interests in a Trust Fund that includes Agency
Securities or Private Mortgage-Backed Securities, the sum of 100% of the unpaid 
principal balance of each outstanding Trust Fund Asset as of the day of such    
purchase plus accrued interest thereon at the Net Interest Rate to the first day
of the month of such purchase, or at such other price as may be specified in the
related Prospectus Supplement. The exercise of such right will effect early     
retirement of the Certificates of that series, but the right of the person      
entitled to effect such termination is subject to the aggregate principal       
balance of the outstanding Trust Fund Assets for such series at the time of     
purchase being less than the percentage of the aggregate principal balance of   
the Mortgage Loans at the Cut-off Date for that series specified in the related 
Prospectus Supplement. (Section 9.01)                                           

DUTIES OF THE TRUSTEE                                                           

   The Trustee makes no representations as to the validity or sufficiency of
any Agreement, the Certificates or any Mortgage Loan or related document and is 
not accountable for the use or application by or on behalf of the Master        
Servicer of any funds paid to the Master Servicer or its designee in respect of 
the Certificates or the Mortgage Loans, or deposited into or withdrawn from the 
Certificate Account or any other account by or on behalf of the Master Servicer.
(Section 8.03) If no Event of Default has occurred and is continuing, the       
Trustee is required to perform only those duties specifically required under the
related Agreement. However, upon receipt of the various certificates, reports or
other instruments required to be furnished to it, the Trustee is required to    
examine such documents and to determine whether they conform to the requirements
of the Agreement. (Section 8.01)                                                

THE TRUSTEE                                                                     

  The Trustee under each Agreement will be named in the related Prospectus
Supplement. The commercial bank, national banking association or trust company  
serving as Trustee may have normal banking relationships with the Depositor and 
its affiliates and with the Master Servicer and its affiliates.                 

 DESCRIPTION OF CREDIT SUPPORT

   If so provided in the related Prospectus Supplement, the Trust Fund for a
series of Certificates may include Credit Support for such series or for one or 
more classes of Certificates comprising such Series, which Credit Support may   
consist of any combination of the following separate components, any of which   
may be limited to a specified percentage of the aggregate principal balance of  
the Mortgage Loans covered thereby or a specified dollar amount: (i) coverage   
with respect to Realized Losses incurred on Liquidated Loans (the "Defaulted    
Mortgage Amount"); (ii) coverage with respect to Special Hazard Realized Losses,
as defined below (the "Special Hazard Amount"); and (iii) coverage with respect 
to certain actions that may be taken by a bankruptcy court in connection with a 
Mortgage Loan, including a Deficient Valuation or a reduction by a bankruptcy   
court of the Interest Rate on a Mortgage Loan or an extension of its maturity   
(collectively, the "Bankruptcy Amount"). As set forth below and in the related  
Prospectus Supplement, such coverage may be provided by subordination of one or 
more other classes of Certificates, one or more insurance policies, a bankruptcy
bond, a letter of credit, a reserve fund or any combination of the foregoing.   
The amount and type of any Credit Support with respect to a series of           
Certificates or with respect to one or more classes of Certificates comprising  
such series, and the obligors on such Credit Support, will be set forth in the  
related Prospectus Supplement. See "Description of the Certificates".           

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SUBORDINATION                                                                   

     With respect to any Senior/Subordinate Series, in the event of any Realized
Losses on Mortgage Loans not in excess of the limitations described below, the  
rights of the Subordinate Certificateholders to receive distributions with      
respect to the Mortgage Loans will be subordinate to the rights of the Senior   
Certificateholders to the extent described in the related Prospectus Supplement.

  All Realized Losses will be allocated to the Subordinate Certificates of
the related series (or, if such series includes more than one class of          
Subordinated Certificates, to the outstanding class of Subordinate Certificates 
having the first priority for allocation of Realized Losses and then to         
additional outstanding classes of Subordinate Certificates, if any), until the  
Certificate Principal Balance thereof has been reduced to zero. Any additional  
Realized Losses will be allocated to the Senior Certificates (or, if such series
includes more than one class of Senior Certificates, either on a pro rata basis 
among all of the Senior Certificates in proportion to their respective          
outstanding Certificate Principal Balances or as otherwise provided in the      
related Prospectus Supplement). However, with respect to Realized Losses that   
are attributable to physical damage to Mortgaged Properties of a type that is   
not covered by standard hazard insurance policies ("Special Hazard Realized     
Losses"), the amount thereof that may be allocated to the Subordinate           
Certificates of the related series may be limited to an amount (the "Special    
Hazard Subordination Amount") specified in the related Prospectus Supplement. If
so, any Special Hazard Realized Losses in excess of the Special Hazard          
Subordination Amount will be allocated among all outstanding classes of         
Certificates of the related series, on a pro rata basis in proportion to their  
respective outstanding Certificate Principal Balances, regardless of whether any
Subordinate Certificates remain outstanding, or as otherwise provided in the    
related Prospectus Supplement.                                                  

     Any allocation of a Realized Loss to a Certificate will be made by reducing
the Certificate Principal Balance thereof as of the Distribution Date following 
the Prepayment Period in which such Realized Loss was incurred. If so provided  
in the related Prospectus Supplement, in the event of a Realized Loss incurred  
in connection with the liquidation of a defaulted Mortgage Loan, the Senior     
Certificateholders may be entitled to receive a distribution of principal, to be
paid from and to the extent of funds otherwise distributable to the Subordinate 
Certificateholders, equal to the amount, if any (the "Unrecovered Senior        
Portion"), by which (i) the then applicable Senior Percentage times the         
Scheduled Principal Balance of the Liquidated Loan immediately prior to         
liquidation exceeds (ii) the portion of the related unscheduled recovery that is
allocable to principal, reduced by the principal portion of all monthly payments
due but unpaid as of the date of liquidation. Payments to the Senior            
Certificateholders in respect of any Unrecovered Senior Portion on any          
Distribution Date will only be made with respect to Realized Losses incurred in 
connection with Mortgage Loans that became Liquidated Loans during the preceding
Prepayment Period and will not be made as to any Special Hazard Realized Losses 
in excess of the Special Hazard Subordination Amount, if applicable. As with any
other distribution of principal, any payment to the holders of Senior           
Certificates attributable to an Unrecovered Senior Portion will be applied to   
reduce the Certificate Principal Balance thereof. Unless otherwise provided in  
the related Prospectus Supplement, the "Scheduled Principal Balance" of any     
Mortgage Loan as of any date of determination is equal to the unpaid principal  
balance thereof as of the date of determination, reduced by the principal       
portion of all monthly payments due but unpaid as of the date of determination. 

As set forth under "Description of the Certificates-Principal of the  
Certificates", the rights of holders of the various classes of Certificates of  
any series to receive distributions of principal and interest is determined by  
the aggregate Certificate Principal Balance of each such class. The Certificate 
Principal Balance of any Certificate will be reduced by all amounts previously  
distributed on such Certificate in respect of principal, and by any Realized    
Losses allocated thereto. If there were no Realized Losses or prepayments of    
principal on any of the Mortgage Loans, the respective rights of the holders of 
Certificates of any series to future distributions would                        

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not change. However, to the extent so provided in the related Prospectus        
Supplement, holders of Senior Certificates may be entitled to receive a         
disproportionately larger amount of prepayments received, which will have the   
effect of accelerating the amortization of the Senior Certificates and          
increasing the respective percentage interest in future distributions evidenced 
by the Subordinate Certificates in the related Trust Fund (with a corresponding 
decrease in the Senior Percentage), as well as preserving the availability of   
the subordination provided by the Subordinate Certificates. In addition, as set 
forth above, Realized Losses will be first allocated to Subordinate Certificates
by reduction of the Certificate Principal Balance thereof, which will have the  
effect of increasing the respective interest in future distributions evidenced  
by the Senior Certificates in the related Trust Fund.                           

If so provided in the related Prospectus Supplement, certain amounts  
otherwise payable on any Distribution Date to holders of Subordinate            
Certificates may be deposited into a reserve fund. Amounts held in any reserve  
fund may be applied as described below under "Reserve Funds" and in the related 
Prospectus Supplement.                                                          

    With respect to any Senior/Subordinate Series, the terms and provisions of
the subordination may vary from those described above; any such variation will  
be described in the related Prospectus Supplement.                              

     If so provided in the related Prospectus Supplement, the Credit Support for
the Senior Certificates of a Senior/Subordinate Series may include, in addition 
to the subordination of the Subordinate Certificates of such series and the     
establishment of a reserve fund, any of the other forms of Credit Support       
described below. If any of such other forms of Credit Support described below is
maintained solely for the benefit of the Senior Certificates of a               
Senior/Subordinate Series, then the coverage described below as being provided  
by such Credit Support with respect to a series of Certificates may be limited  
to the extent necessary to make required distributions on such Senior           
Certificates or as otherwise specified in the related Prospectus Supplement. If 
so provided in the related Prospectus Supplement, the obligor on any such other 
forms of Credit Support maintained for the benefit of the Senior Certificates of
a Senior/Subordinate Series may be reimbursed for amounts paid thereunder out of
amounts otherwise payable on the Subordinate Certificates.                      

LETTER OF CREDIT                                                                

 As to any series of Certificates to be covered by a Letter of Credit, a
bank (the "Letter of Credit Bank") will deliver to the Trustee an irrevocable   
Letter of Credit. The Master Servicer or Trustee will exercise its best         
reasonable efforts to keep or cause to be kept the Letter of Credit in full     
force and effect, unless coverage thereunder has been exhausted through payment 
of claims. The Master Servicer will agree to pay the fees for the Letter of     
Credit on a timely basis unless, as described in the related Prospectus         
Supplement, the payment of such fees is otherwise provided for.                 

   The Master Servicer or the Trustee will make or cause to be made draws on
the Letter of Credit Bank under each Letter of Credit. Subject to such          
differences as will be described in the related Prospectus Supplement, Letters  
of Credit may cover all or any of the following amounts:                        

           (i) to the extent of any Defaulted Mortgage Amount, for any
   Mortgage Loan that became a Liquidated Loan during the related Prepayment
     Period (other than Mortgage Loans as to which amounts paid or payable under
    any related Hazard Insurance Instrument, including the Letter of Credit as
     described in (ii) below, are not sufficient either to restore the Mortgaged
   Property or to pay the outstanding principal balance of the Mortgage Loan
plus accrued interest), an amount which, together with all Liquidation
     Proceeds, Insurance Proceeds, and other collections on such Liquidated Loan
  (net of amounts payable or reimbursable therefrom to the Master Servicer
 for related unpaid servicing fees and unreimbursed servicing expenses),
will equal the sum of (A) the unpaid principal balance of             

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    such Liquidated Loan (plus accrued interest at the applicable Net Interest
Rate) plus (B) the amount of related servicing expenses, if any, not  
reimbursed to the Master Servicer from Liquidation Proceeds, Insurance
 Proceeds and other collections on such Liquidation Loan (which shall be
paid to the Master Servicer);                                         

         (ii) to the extent of any Special Hazard Amount, as to each
     Mortgage Loan that is delinquent and as to which the Mortgaged Property has
  suffered damage (other than physical damage caused by hostile or warlike
    action in time of war or peace, by any weapons of war, by any insurrection
  or rebellion, or by any nuclear reaction or nuclear radiation or nuclear
     contamination whether controlled or uncontrolled, or by any action taken by
 any governmental authority in response to any of the foregoing) and for
which any amounts paid or payable under the related primary hazard    
    insurance policy or any Special Hazard Insurance Policy are not sufficient
    to pay either of the following amounts, an amount which, together with all
Insurance Proceeds paid or payable under the related primary hazard   
insurance policy or any Special Hazard Insurance Policy (net, if such 
   proceeds are not to be applied to restore such Mortgaged Property, of all
amounts payable or reimbursable therefrom to the Master Servicer for  
     related unpaid servicing fees and unreimbursed servicing expenses), will be
  equal to the lesser of (A) the amount required to restore such Mortgaged
Property and (B) the sum of (1) the unpaid principal balance of such  
   Mortgage Loan (plus accrued interest at the applicable Net Interest Rate)
   plus (2) the amount of related servicing expenses, if any, not reimbursed
to the Master Servicer from Insurance Proceeds paid under the related 
     primary hazard insurance policy or any Special Hazard Insurance Policy; and

             (iii) to the extent of any Bankruptcy Amount, with respect to any
    Mortgage Loan that has been subject to bankruptcy proceedings as described
 above, the amount of any debt service reduction or Deficient Valuation.

If the related Prospectus Supplement so provides, at such time as the 
Letter of Credit Bank makes a payment as described above with respect to a      
Liquidated Loan, or a payment of the full amount owing on a Mortgage Loan as to 
which the Mortgaged Property has been damaged (as described in (ii)(B) above),  
the Liquidated Loan will be removed from the related Trust Fund in accordance   
with the terms set forth in the related Prospectus Supplement and will no longer
be subject to the Agreement. Unless otherwise provided in the related Prospectus
Supplement, Mortgage Loans that have been subject to bankruptcy proceedings as  
described above, or as to which payment under the Letter of Credit has been made
for the purpose of restoring the related Mortgaged Property (as described in    
(ii)(A) above), will remain part of the related Trust Fund. Any Defaulted       
Mortgage Amount, Special Hazard Amount and Bankruptcy Amount covered by any     
Letter of Credit will each be reduced to the extent of related unreimbursed     
draws thereunder.                                                               

   In the event that the Letter of Credit Bank ceases to be a duly organized
commercial bank, or its debt obligations are rated lower than the highest rating
on any class of the Certificates on the date of issuance by the Rating Agency or
Agencies, the Master Servicer or Trustee will use its best reasonable efforts to
obtain or cause to be obtained, as to each Letter of Credit, a substitute Letter
of Credit issued by a commercial bank that meets such requirements and providing
the same coverage; provided, however, that, unless otherwise provided in the    
related Prospectus Supplement, if the fees charged or collateral required by    
such successor Letter of Credit Bank shall be more than the fees charged or     
collateral required by such predecessor Letter of Credit Bank, each component of
coverage thereunder may be reduced proportionately to such a level as results in
such fees and collateral being not more than the fees then charged and          
collateral then required by such predecessor Letter of Credit Bank.             

MORTGAGE POOL INSURANCE POLICY                                                  

     As to any series of Certificates to be covered by a Mortgage Pool Insurance
Policy with respect to any Defaulted Mortgage Amount, the Master Servicer will  
exercise its best reasonable                                                    

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efforts to maintain or cause to be maintained the Mortgage Pool Insurance Policy
in full force and effect, unless coverage thereunder has been exhausted through 
payment of claims. The Master Servicer will agree to pay the premiums for each  
Mortgage Pool Insurance Policy on a timely basis unless, as described in the    
related Prospectus Supplement, the payment of such fees is otherwise provided.  

 The Master Servicer will present or cause to be presented claims to the
insurer under each Mortgage Pool Insurance Policy. Mortgage Pool Insurance      
Policies, however, are not blanket policies against loss, since claims          
thereunder may be made only upon satisfaction of certain conditions, as         
described below and, if applicable, in the related Prospectus Supplement.       

 Mortgage Pool Insurance Policies do not cover losses arising out of the
matters excluded from coverage under the primary mortgage insurance policy, or  
losses due to a failure to pay or denial of a claim under a primary mortgage    
insurance policy, irrespective of the reason therefor.                          

Mortgage Pool Insurance Policies in general provide that no claim may 
validly be presented thereunder with respect to a Mortgage Loan unless (i) an   
acceptable primary mortgage insurance policy, if the initial Loan-to-Value Ratio
of the Mortgage Loan exceeded 80%, has been kept in force until such            
Loan-to-Value Ratio is reduced to 80%; (ii) premiums on the primary hazard      
insurance policy have been paid by the insured and real estate taxes and        
foreclosure, protection and preservation expenses have been advanced by or on   
behalf of the insured, as approved by the insurer; (iii) if there has been      
physical loss or damage to the Mortgaged Property, it has been restored to its  
physical condition at the time the Mortgage Loan became insured under the       
Mortgage Pool Insurance Policy, subject to reasonable wear and tear; and (iv)   
the insured has acquired good and merchantable title to the Mortgaged Property, 
free and clear of all liens and encumbrances, except permitted encumbrances,    
including any right of redemption by or on behalf of the mortgagor, and if      
required by the insurer, has sold the property with the approval of the insurer.

   Assuming the satisfaction of these conditions, the insurer has the option
to either (i) acquire the property securing the defaulted Mortgage Loan for a   
payment equal to the principal balance thereof plus accrued and unpaid interest 
at the Interest Rate to the date of acquisition and certain expenses described  
above advanced by or on behalf of the insured, on condition that the insurer    
must be provided with good and merchantable title to the Mortgaged Property     
(unless the property has been conveyed pursuant to the terms of the applicable  
primary mortgage insurance policy) or (ii) pay the amount by which the sum of   
the principal balance of the defaulted Mortgage Loan and accrued and unpaid     
interest at the Interest Rate to the date of the payment of the claim and such  
expenses exceed the proceeds received from a sale of the Mortgaged Property     
which the insurer has approved. In both (i) and (ii), the amount of payment     
under a Mortgage Pool Insurance Policy will be reduced by the amount of such    
loss paid under the primary mortgage insurance policy.                          

Unless earlier directed by the insurer, a claim under a Mortgage Pool 
Insurance Policy must be filed (i) in the case when a primary mortgage insurance
policy is in force, within a specified number of days (typically, 60 days) after
the claim for loss has been settled or paid thereunder, or after acquisition by 
the insured or a sale of the property approved by the insurer, whichever is     
later, or (ii) in the case when a primary mortgage insurance policy is not in   
force, within a specified number of days (typically, 60 days) after acquisition 
by the insured or a sale of the property approved by the insurer. A claim must  
be paid within a specified period (typically, 30 days) after the claim is made  
by the insured.                                                                 

Unless otherwise specified in the Prospectus Supplement relating to a 
series of Certificates, the amount of coverage under each Mortgage Pool         
Insurance Policy will be reduced over the life of the Certificates of any series
by the aggregate dollar amount of claims paid less the aggregate of the net     
amounts realized by the insurer upon disposition of all acquired properties. The
amount of claims paid includes certain expenses incurred by the Master Servicer 
as well as accrued                                                              

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interest on delinquent Mortgage Loans to the date of payment of the claim. See  
"Certain Legal Aspects of Mortgage Loans-Foreclosure on Mortgages" and          
"-Repossession with respect to Contracts". Accordingly, if aggregate net claims 
paid under a Mortgage Pool Insurance Policy reach the applicable policy limit,  
coverage thereunder will be exhausted and any further losses will be borne by   
Certificateholders of the related series.                                       

    In the event that an insurer under a Mortgage Pool Insurance Policy ceases
to be a Qualified Insurer (such term being defined to mean a private mortgage   
guaranty insurance company duly qualified as such under applicable laws and     
approved as an insurer by FHLMC, FNMA, or any successor entity, and having a    
claims-paying ability acceptable to the Rating Agency or Agencies), the Master  
Servicer will use its best reasonable efforts to obtain or cause to be obtained 
from another Qualified Insurer a replacement insurance policy comparable to the 
Mortgage Pool Insurance Policy with a total coverage equal to the then          
outstanding coverage of such Mortgage Pool Insurance Policy; provided, however, 
that, unless otherwise provided in the related Prospectus Supplement, if the    
cost of the replacement policy is greater than the cost of such Mortgage Pool   
Insurance Policy, the coverage of the replacement policy may be reduced to the  
level such that its premium rate does not exceed the premium rate on such       
Mortgage Pool Insurance Policy. However, in the event that the insurer ceases to
be a Qualified Insurer solely because it ceases to be approved as an insurer by 
FHLMC, FNMA, or any successor entity, the Master Servicer will review, or cause 
to be reviewed, the financial condition of the insurer with a view towards      
determining whether recoveries under the Mortgage Pool Insurance Policy are     
jeopardized for reasons related to the financial condition of the insurer. If   
the Master Servicer determines that recoveries are so jeopardized, it will      
exercise its best reasonable efforts to obtain from another Qualified Insurer a 
replacement policy as described above, subject to the same cost limitation.     

    Because each Mortgage Pool Insurance Policy will require that the property
subject to a defaulted Mortgage Loan be restored to its original condition prior
to claiming against the insurer, such policy will not provide coverage against  
hazard losses. As set forth below, the primary hazard insurance policies        
covering the Mortgage Loans typically exclude from coverage physical damage     
resulting from a number of causes and, even when the damage is covered, may     
afford recoveries that are significantly less than the full replacement cost of 
such losses. Further, a special hazard insurance policy (or a Letter of Credit  
to the extent of the Special Hazard Amount) will not cover all risks, and the   
coverage thereunder will be limited in amount. Certain hazard risks will, as a  
result, be uninsured and will therefore be borne by Certificateholders. (Section
3.13)                                                                           

SPECIAL HAZARD INSURANCE POLICY                                                 

   As to any series of Certificates to be covered by an Insurance Instrument
that does not cover any Special Hazard Amount, unless otherwise provided in the 
related Prospectus Supplement, the Master Servicer will exercise its best       
reasonable efforts to maintain or cause to be maintained a Special Hazard       
Insurance Policy in full force and effect covering the Special Hazard Amount,   
unless coverage thereunder has been exhausted through payment of claims;        
provided, however, that the Master Servicer is under no obligation to maintain  
such policy in the event that any Insurance Instrument covering such series as  
to any Defaulted Mortgage Amount is no longer in effect. The Master Servicer    
will agree to pay the premiums on each Special Hazard Insurance Policy on a     
timely basis unless, as described in the related Prospectus Supplement, payment 
of such premiums is otherwise provided for.                                     

Each Special Hazard Insurance Policy will, subject to the limitations 
described below, protect holders of Certificates of the related series from (i) 
loss by reason of damage to Mortgaged Properties caused by certain hazards      
(including earthquakes and mudflows) not insured against under the primary      
hazard insurance policies or a flood insurance policy if the property is in a   
designated flood area and (ii) loss from partial damage caused by reason of the 
application of the co-insurance clause contained in the primary hazard insurance
policies. Special Hazard Insurance                                              

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Policies will not cover losses occasioned by normal wear and tear, war, civil   
insurrection, certain governmental actions, errors in design, nuclear or        
chemical reaction or contamination, faulty workmanship or materials (except     
under certain circumstances), flood (if the property is located in a designated 
flood area) and certain other risks.                                            

    Subject to the foregoing limitations, each Special Hazard Insurance Policy
will provide that, when there has been damage to property securing a defaulted  
Mortgage Loan acquired by the insured and to the extent the damage is not       
covered by the related primary hazard insurance policy or flood insurance       
policy, the insurer will pay the lesser of (i) the cost of repair to the        
property and (ii) upon transfer of the property to the insurer, the unpaid      
principal balance of such Mortgage Loan at the time of acquisition of the       
property by foreclosure, deed in lieu of foreclosure or repossession, plus      
accrued interest to the date of claim settlement and certain expenses incurred  
by or on behalf of the Master Servicer with respect to the property. The amount 
of coverage under the Special Hazard Insurance Policy will be reduced by the sum
of (a) the unpaid principal balance plus accrued interest and certain expenses  
paid by the insurer, less any net proceeds realized by the insurer from the sale
of the property, plus (b) any amount paid as the cost of repair of the property.

     Restoration of the property with the proceeds described under clause (i) of
the immediately preceding paragraph will satisfy the condition under a Credit   
Insurance Instrument that the property be restored before a claim thereunder may
be validly presented with respect to the defaulted Mortgage Loan secured by such
property. The payment described under clause (ii) of the immediately preceding  
paragraph will render unnecessary presentation of a claim in respect of such    
Mortgage Loan under a Credit Insurance Instrument as to any Defaulted Mortgage  
Amount. Therefore, so long as the Credit Insurance Instrument remains in effect,
the payment by the insurer of either of the above alternative amounts will not  
affect the total insurance proceeds paid to Certificateholders, but will affect 
the relative amounts of coverage remaining under any Special Hazard Insurance   
Policy and any Credit Insurance Instrument.                                     

    The sale of a Mortgaged Property must be approved by the insurer under any
Special Hazard Insurance Policy and funds received by the insured in excess of  
the unpaid principal balance of the Mortgage Loan plus interest thereon to the  
date of sale plus certain expenses incurred by or on behalf of the Master       
Servicer with respect to the property (not to exceed the amount actually paid by
the insurer) must be refunded to such insurer and, to that extent, coverage     
under the Special Hazard Insurance Policy will be restored. If aggregate claim  
payments under a Special Hazard Insurance Policy reach the policy limit,        
coverage thereunder will be exhausted and any further losses will be borne by   
Certificateholders.                                                             

 A claim under a Special Hazard Insurance Policy generally must be filed
within a specified number of days (typically, 60 days) after the insured has    
acquired good and merchantable title to the property, and a claim payment is    
payable within a specified number of days (typically, 30 days) after a claim is 
accepted by the insurer. Special Hazard Insurance Policies provide that no claim
may be paid unless primary hazard insurance policy premiums, flood insurance    
premiums (if the property is located in a federally designated flood area) and, 
as approved by the insurer, real estate property taxes, property protection and 
preservation expenses and foreclosure or repossession costs have been paid by or
on behalf of the insured, and unless the insured has maintained the primary     
hazard insurance policy and, if the property is located in a federally          
designated flood area, flood insurance, as required by the Special Hazard       
Insurance Policy.                                                               

 If a Special Hazard Insurance Policy is cancelled or terminated for any
reason (other than the exhaustion of total policy coverage), the Master Servicer
will use its best reasonable efforts to obtain or cause to be obtained from     
another Insurer a replacement policy comparable to such Special Hazard Insurance
Policy with a total coverage that is equal to the then existing coverage of such
Special Hazard Insurance Policy; provided, however, that, unless otherwise      
provided in the related Prospectus Supplement, if the cost of the replacement   
policy is greater than the cost                                                 

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of such Special Hazard Insurance Policy, the coverage of the replacement policy 
may be reduced to a level such that its premium rate does not exceed the premium
rate on such Special Hazard Insurance Policy.                                   

Since each Special Hazard Insurance Policy is designed to permit full 
recoveries as to any Defaulted Mortgage Amount under a Credit Insurance         
Instrument in circumstances in which such recoveries would otherwise be         
unavailable because property has been damaged by a cause not insured against by 
a primary hazard insurance policy and thus would not be restored, each Agreement
provides that, if the related Credit Insurance Instrument shall have lapsed or  
terminated or been exhausted through payment of claims, the Master Servicer will
be under no further obligation to maintain the Special Hazard Insurance Policy. 

BANKRUPTCY BOND                                                                 

  As to any series of Certificates to be covered by a Bankruptcy Bond with
respect to any Bankruptcy Amount, the Master Servicer will exercise its best    
reasonable efforts to maintain or cause to be maintained the Bankruptcy Bond in 
full force and effect, unless coverage thereunder has been exhausted through    
payment of claims. The Master Servicer will pay or cause to be paid the premiums
for each Bankruptcy Bond on a timely basis, unless, as described in the related 
Prospectus Supplement, payment of such premiums is otherwise provided for.      
Subject to the limit of the dollar amount of coverage provided, each Bankruptcy 
Bond will cover certain losses resulting from an extension of the maturity of a 
Mortgage Loan, or a reduction by the bankruptcy court of the principal balance  
of or the Interest Rate on a Mortgage Loan, and the unpaid interest on the      
amount of a principal reduction during the pendency of a proceeding under the   
Bankruptcy Code. See "Certain Legal Aspects of Mortgage Loans-Foreclosure on    
Mortgages" and "-Repossession with respect to Contracts".                       

CERTIFICATE GUARANTEE INSURANCE                                                 

 Certificate guarantee insurance ("Certificate Guarantee Insurance"), if
any, with respect to a series of Certificates will be provided by one or more   
insurance companies. Such Certificate Guarantee Insurance will guarantee, with  
respect to one or more classes of Certificates of the related series, timely    
distributions of interest and full distributions of principal on the basis of a 
schedule of principal distributions set forth in or determined in the manner    
specified in the related Prospectus Supplement. If so specified in the related  
Prospectus Supplement, the Certificate Guarantee Insurance will also guarantee  
against any payment made to a Certificateholder that is subsequently recovered  
as a "voidable preference" payment under federal bankruptcy law. A copy of the  
Certificate Guarantee Insurance policy for a series, if any, will be filed with 
the Commission as an exhibit to a Current Report on Form 8-K to be filed with   
the Commission within 15 days of issuance of the Certificates of the related    
series.                                                                         

RESERVE FUND                                                                    

 If so provided in the related Prospectus Supplement, the Depositor will
deposit or cause to be deposited in an account (a "Reserve Fund") any           
combination of cash, one or more irrevocable letters of credit or one or more   
Permitted Investments in specified amounts, or any other instrument satisfactory
to the Rating Agency or Agencies, which will be applied and maintained in the   
manner and under the conditions specified in such Prospectus Supplement. In the 
alternative or in addition to such deposit, to the extent described in the      
Prospectus Supplement for a Senior/Subordinate Series, a Reserve Fund may be    
funded through application of all or a portion of amounts otherwise payable on  
the Subordinate Certificates. Amounts in a Reserve Fund may be distributed to   
Certificateholders, or applied to reimburse the Master Servicer for outstanding 
advances, or may be used for other purposes, in the manner and to the extent    
specified in the related Prospectus Supplement. Unless otherwise provided in the
related                                                                         

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Prospectus Supplement, any such Reserve Fund will not be deemed to be part of   
the related Trust Fund.                                                         

Amounts deposited in any Reserve Fund for a series will be invested in
Permitted Investments by, or at the direction of, the Master Servicer or any    
other person named in the related Prospectus Supplement.                        

CASH FLOW AGREEMENTS                                                            

 If so provided in the related Prospectus Supplement, the Trust Fund may
include guaranteed investment contracts pursuant to which moneys held in the    
funds and accounts established for the related series will be invested at a     
specified rate. The Trust Fund may also include certain other agreements, such  
as interest rate exchange agreements, interest rate cap or floor agreements,    
currency exchange agreements or similar agreements designed to reduce the       
effects of interest rate or currency exchange rate fluctuations on the Trust    
Fund Assets on one or more classes of Certificates. The principal terms of any  
such guaranteed investment contract or other agreement (any such agreement a    
"Cash Flow Agreement"), and the identity of the Cash Flow Agreement obligor,    
will be described in the Prospectus Supplement for a series of Offered          
Certificates.                                                                   

 DESCRIPTION OF PRIMARY INSURANCE POLICIES

 Each Mortgage Loan will be covered by a primary hazard insurance policy
and, if required as described below, a primary mortgage insurance policy.       

PRIMARY MORTGAGE INSURANCE POLICIES                                             

As set forth under "Description of the Certificates-Realization Upon  
Defaulted Mortgage Loans", the Master Servicer will maintain or cause to be     
maintained with respect to each Mortgage Loan, other than a Multifamily Loan, a 
primary mortgage insurance policy in accordance with the underwriting standards 
described herein and in the related Prospectus Supplement. Although the terms   
and conditions of primary mortgage insurance policies differ, each primary      
mortgage insurance policy will generally cover losses up to an amount equal to  
the excess of the unpaid principal amount of a defaulted Mortgage Loan (plus    
accrued and unpaid interest thereon and certain approved expenses) over a       
specified percentage of the Value of the related Mortgaged Property.            

     As conditions precedent to the filing or payment of a claim under a primary
mortgage insurance policy, the insured will typically be required, in the event 
of default by the borrower, among other things, to: (i) advance or discharge (a)
hazard insurance premiums and (b) as necessary and approved in advance by the   
insurer, real estate taxes, protection and preservation expenses and foreclosure
and related costs; (ii) in the event of any physical loss or damage to the      
Mortgaged Property, have the Mortgaged Property restored to at least its        
condition at the effective date of the primary mortgage insurance policy        
(ordinary wear and tear excepted); and (iii) tender to the insurer good and     
merchantable title to, and possession of, the Mortgaged Property.               

PRIMARY HAZARD INSURANCE POLICIES                                               

  Each Agreement will require the Master Servicer to cause the borrower on
each Mortgage Loan to maintain a primary hazard insurance policy providing for  
coverage of the standard form of fire insurance policy with extended coverage   
customary in the state in which the Mortgaged Property is located. Unless       
otherwise specified in the related Prospectus Supplement, such coverage will be 
in general in an amount equal to the lesser of the principal balance owing on   

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such Mortgage Loan and the amount necessary to fully compensate for any damage  
or loss to the improvements on the Mortgaged Property on a replacement cost     
basis, but in either case not less than the amount necessary to avoid the       
application of any co-insurance clause contained in the hazard insurance policy.
The ability of the Master Servicer to assure that hazard insurance proceeds are 
appropriately applied may be dependent upon its being named as an additional    
insured under any primary hazard insurance policy and under any flood insurance 
policy referred to below, or upon the extent to which information in this regard
is furnished by borrowers. All amounts collected by the Master Servicer under   
any such policy (except for amounts to be applied to the restoration or repair  
of the Mortgaged Property or released to the borrower in accordance with the    
Master Servicer's normal servicing procedures, subject to the terms and         
conditions of the related Mortgage and Mortgage Note) will be deposited in the  
Certificate Account. The Agreement provides that the Master Servicer may satisfy
its obligation to cause each borrower to maintain such a hazard insurance policy
by the Master Servicer's maintaining a blanket policy insuring against hazard   
losses on the Mortgage Loans. If such blanket policy contains a deductible      
clause, the Master Servicer will deposit in the Certificate Account all sums    
that would have been deposited therein but for such clause. The Master Servicer 
also is required to maintain a fidelity bond and errors and omissions policy    
with respect to its officers and employees that provides coverage against losses
that may be sustained as a result of an officer's or employee's misappropriation
of funds or errors and omissions in failing to maintain insurance, subject to   
certain limitations as to amount of coverage, deductible amounts, conditions,   
exclusions and exceptions.                                                      

   In general, the standard form of fire and extended coverage policy covers
physical damage to or destruction of the improvements of the property by fire,  
lightning, explosion, smoke, windstorm and hail, and riot, strike and civil     
commotion, subject to the conditions and exclusions specified in each policy.   
Although the policies relating to the Mortgage Loans will be underwritten by    
different insurers under different state laws in accordance with different      
applicable state forms, and therefore will not contain identical terms and      
conditions, the basic terms thereof are dictated by respective state laws, and  
most such policies typically do not cover any physical damage resulting from the
following: war, revolution, governmental actions, floods and other water-related
causes, earth movement (including earthquakes, landslides and mudflows), nuclear
reactions, wet or dry rot, vermin, rodents, insects or domestic animals, theft  
and, in certain cases, vandalism. The foregoing list is merely indicative of    
certain kinds of uninsured risks and is not intended to be all-inclusive. When a
Mortgaged Property is located at origination in a federally designated flood    
area, each Agreement requires the Master Servicer to cause the borrower to      
acquire and maintain flood insurance in an amount equal in general to the lesser
of (i) the amount necessary to fully compensate for any damage or loss to the   
improvements which are part of the Mortgaged Property on a replacement cost     
basis and (ii) the maximum amount of insurance available under the federal flood
insurance program, whether or not the area is participating in the program.     

   The hazard insurance policies covering the Mortgaged Properties typically
contain a co-insurance clause that in effect requires the insured at all times  
to carry insurance of a specified percentage (generally 80% to 90%) of the full 
replacement value of the improvements on the property in order to recover the   
full amount of any partial loss. If the insured's coverage falls below this     
specified percentage, such clause generally provides that the insurer's         
liability in the event of partial loss does not exceed the lesser of (i) the    
replacement cost of the improvements less physical depreciation and (ii) such   
proportion of the loss as the amount of insurance carried bears to the specified
percentage of the full replacement cost of such improvements.                   

The Master Servicer will not require that a hazard or flood insurance 
policy be maintained for any Cooperative Loan. Generally, the Cooperative is    
responsible for maintenance of hazard insurance for the property owned by the   
Cooperative, and the tenant-stockholders of that Cooperative do not maintain    
individual hazard insurance policies. To the extent, however, that a Cooperative
and the related borrower on a Cooperative Note do not maintain such insurance or

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do not maintain adequate coverage or any insurance proceeds are not applied to  
the restoration of the damaged property, damage to such borrower's Cooperative  
apartment or such Cooperative's building could significantly reduce the value of
the collateral securing such Cooperative Note.                                  

   Since the amount of hazard insurance the Master Servicer will cause to be
maintained on the improvements securing the Mortgage Loans declines as the      
principal balances owing thereon decrease, and since residential properties have
historically appreciated in value over time, in the event of partial loss hazard
insurance proceeds may be insufficient to restore fully the damaged property.   
Under the terms of the Mortgage Loans, borrowers are required to present claims 
to insurers under hazard insurance policies maintained on the Mortgaged         
Properties. The Master Servicer, on behalf of the Trustee and                   
Certificateholders, is obligated to present or cause to be presented claims     
under any blanket insurance policy insuring against hazard losses on Mortgaged  
Properties. However, the ability of the Master Servicer to present or cause to  
be presented such claims is dependent upon the extent to which information in   
this regard is furnished to the Master Servicer by borrowers. (Section 3.14)    

FHA INSURANCE                                                                   

The FHA is responsible for administering various federal programs,    
including mortgage insurance, authorized under The Housing Act and the United   
States Housing Act of 1937, as amended.                                         

There are two primary FHA insurance programs that are available for   
multifamily mortgage loans. Sections 221(d)(3) and (d)(4) of the Housing Act    
allow the Department of Housing and Urban Development ("HUD") to insure mortgage
loans that are secured by newly constructed and substantially rehabilitated     
multifamily rental projects. Section 244 of the Housing Act provides for        
co-insurance of such mortgage loans made under Sections 221(d)(3) and (d)(4) by 
HUD/FHA and a HUD-approved co-insurer. Generally the term of such a mortgage    
loan may be up to 40 years and the ratio of the loan amount to property         
replacement cost can be up to 90%.                                              

    Section 223(f) of the Housing Act allows HUD to insure mortgage loans made
for the purchase or refinancing of existing apartment projects which are at     
least three years old. Section 244 also provides for co-insurance of mortgage   
loans made under Section 223(f). Under Section 223(f), the loan proceeds cannot 
be used for substantial rehabilitation work, but repairs may be made for up to, 
in general, the greater of 15% of the value of the project or a dollar amount   
per apartment unit established from time to time by HUD. In general the loan    
term may not exceed 35 years and a loan to value ratio of no more than 85% is   
required for the purchase of a project and 70% for the refinancing of a project.

  HUD has the option, in most cases, to pay insurance claims in cash or in
debentures issued by HUD. Presently, claims are being paid in cash, and claims  
have not been paid in debentures since 1965. HUD debentures issued in           
satisfaction of FHA insurance claims bear interest at the applicable HUD        
debenture interest rate. Unless otherwise provided in the related Prospectus    
Supplement, the Master Servicer will be obligated to purchase any such debenture
issued in satisfaction of a defaulted FHA insured Mortgage Loan serviced by it  
for an amount equal to the principal amount of any such debenture.              

   The Master Servicer will be required to take such steps as are reasonably
necessary to keep FHA insurance in full force and effect.                       

VA GUARANTEES                                                                   

  The VA is an Executive Branch Department of the United States, headed by
the Secretary of Veterans Affairs. VA currently administers a variety of federal
assistance programs on behalf                                                   

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of eligible veterans and their dependents and beneficiaries. VA administers a   
loan guaranty program pursuant to which VA guarantees a portion of loans made to
eligible veterans.                                                              

   Under the VA loan guaranty program, a VA Loan may be made to any eligible
veteran by an approved private sector mortgage lender. VA guarantees payment to 
the holder of that loan of a fixed percentage of the loan indebtedness, up to a 
maximum dollar amount, in the event of default by the veteran borrower. When a  
delinquency is reported to VA and no realistic alternative to foreclosure is    
developed by the loan holder or through VA's supplemental servicing of the loan,
VA determines, through an economic analysis, whether VA will (a) authorize the  
holder to convey the property securing the VA Loan to the Secretary of Veterans 
Affairs following termination or (b) pay the loan guaranty amount to the holder.
The decision as to disposition of properties securing defaulted VA Loans is made
on a case-by-case basis using the procedures set forth in 38 U.S.C. Section     
3732(c), as amended.                                                            

   The Master Servicer will be required to take such steps as are reasonably
necessary to keep the VA guarantees in full force and effect.                   

 CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS

The following discussion contains general summaries of certain legal  
aspects of loans secured by residential properties. Because such legal aspects  
are governed in part by applicable state law (which laws may differ             
substantially), the summaries do not purport to be complete nor to reflect the  
laws of any particular state, nor to encompass the laws of all states in which  
the security for the Mortgage Loans is situated. The summaries are qualified in 
their entirety by reference to the applicable federal and state laws governing  
the Mortgage Loans. See "The Trust Funds-The Mortgage Loans".                   

GENERAL                                                                         

All of the Mortgage Loans, except as described below, are loans to    
homeowners and all of the Single-Family Loans and Multifamily Loans are         
evidenced by notes or bonds and secured by instruments which may be mortgages,  
deeds of trust, security deeds or deeds to secure debt, depending upon the type 
of security instrument customary to grant a security interest in real property  
in the state in which the Single-Family Property or Multifamily Property, as the
case may be, is located. If specified in the Prospectus Supplement relating to a
series of Certificates, a Trust Fund may also contain (i) Cooperative Loans     
evidenced by promissory notes secured by security interests in shares issued by 
private cooperative housing corporations and in the related proprietary leases  
or occupancy agreements granting exclusive rights to occupy specific dwelling   
units in the related buildings or (ii) Contracts evidencing both (a) the        
obligation of the obligor to repay the loan evidenced thereby and (b) the grant 
of a security interest in the related Manufactured Home to secure repayment of  
such loan. Any of the foregoing types of encumbrance will create a lien upon, or
grant a title interest in, the subject property, the priority of which will     
depend on the terms of the particular security instrument as well as the order  
of recordation or filing of the instrument in the appropriate public office.    
Such a lien is not prior to the lien for real estate taxes and assessments.     

SINGLE-FAMILY LOANS AND MULTIFAMILY LOANS                                       

 The Single-Family Loans and Multifamily Loans will be secured by either
mortgages, deeds of trust, security deeds or deeds to secure debt depending upon
the type of security instrument customary to grant a security interest according
to the prevailing practice in the state in which the property subject to a      
Single-Family Loan or Multifamily Loan is located. The filing of a mortgage or a
deed of trust creates a lien upon or conveys title to the real property         
encumbered by such                                                              

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instrument and represents the security for the repayment of an obligation that  
is customarily evidenced by a promissory note. It is not prior to the lien for  
real estate taxes and assessments. Priority with respect to mortgages and deeds 
of trust depends on their terms and generally on the order of recording with the
applicable state, county or municipal office. There are two parties to a        
mortgage, the mortgagor, who is the borrower/homeowner or the land trustee (as  
described below), and the mortgagee, who is the lender. Under the mortgage      
instrument, the mortgagor delivers to the mortgagee a note or bond and the      
mortgage. (In the case of a land trust, title to the property is held by a land 
trustee under a land trust agreement, while the borrower/homeowner is the       
beneficiary of the land trust; at origination of a mortgage loan, the borrower  
executes a separate undertaking to make payments on the mortgage note.) Although
a deed of trust is similar to a mortgage, a deed of trust normally has three    
parties, the trustor (similar to a mortgagor), who may or may not be the        
borrower, the beneficiary (similar to a mortgagee), who is the lender, and the  
trustee, a third-party grantee. Under a deed of trust, the trustor grants the   
property, irrevocably until the debt is paid, in trust, generally with a power  
of sale, to the trustee to secure payment of the obligation. A security deed and
a deed to secure debt are special types of deeds which indicate on their face   
that they are granted to secure an underlying debt. By executing a security deed
or deed to secure debt, the grantor conveys title to, as opposed to merely      
creating a lien upon, the subject property to the grantee until such time as the
underlying debt is repaid. The mortgagee's authority under a mortgage and the   
trustee's authority under a deed of trust, security deed or deed to secure debt 
are governed by the law of the state in which the real property is located, the 
express provisions of the mortgage, deed of trust, security deed or deed to     
secure debt and, in some cases, the directions of the beneficiary.              

LEASES AND RENTS                                                                

Mortgages and deeds of trust which encumber Multifamily Property often
contain an assignment of rents and leases, pursuant to which the borrower       
assigns its right, title and interest as landlord under each lease and the      
income derived therefrom to the lender, while retaining a license to collect the
rents for so long as there is no default. If the borrower defaults, the license 
terminates and the lender is entitled to collect the rents. Local law may       
require that the lender take possession of the property and appoint a receiver  
before becoming entitled to collect the rents.                                  

   Even after a foreclosure or the enforcement of an assignment of rents and
leases, the potential rent payments from the property may not be sufficient to  
service the mortgage debt. For instance, the net income that would otherwise be 
generated from the property may be insufficient to service the mortgage debt if 
the leases on the property are at below-market rents, or as the result of       
excessive maintenance, repair or other obligations inherited by the lender as   
landlord. In the event of a borrower's default, the amount of rent the lender is
able to collect from the tenants can significantly affect the value of the      
lender's security interest.                                                     

COOPERATIVE LOANS                                                               

   The Cooperative owns or has a leasehold interest in all the real property
and owns in fee or leases the building and all separate dwelling units therein. 
The Cooperative is directly responsible for project management and, in most     
cases, payment of real estate taxes, other governmental impositions and hazard  
and liability insurance. If there is a blanket mortgage on the cooperative      
apartment building and/or underlying land, as is generally the case, or an      
underlying lease of the land, as is the case in some instances, the Cooperative,
as project mortgagor, or lessee, as the case may be, is also responsible for    
meeting these blanket mortgage or rental obligations. A blanket mortgage is     
ordinarily incurred by the Cooperative in connection with either the            
construction or purchase of the Cooperative's apartment building or the         
obtaining of capital by the Cooperative. The interests of the occupants under   
proprietary leases or occupancy agreements as to which the Cooperative is the   
landlord are generally subordinate to the interests of the holder               

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of the blanket mortgage and to the interest of the holder of a land lease. If   
the Cooperative is unable to meet the payment obligations (i) arising under its 
blanket mortgage, the mortgagee holding the blanket mortgage could foreclose on 
that mortgage and terminate all subordinate proprietary leases and occupancy    
agreements or (ii) arising under its land lease, the holder of the landlord's   
interest under the land lease could terminate it and all subordinate proprietary
leases and occupancy agreements. Also, the blanket mortgage on a Cooperative may
provide financing in the form of a mortgage that does not fully amortize, with a
significant portion of principal being due in one final payment at final        
maturity. The inability of the Cooperative to refinance this mortgage and its   
consequent inability to make such final payment could lead to foreclosure by the
mortgagee. Similarly, a land lease has an expiration date and the inability of  
the Cooperative to extend its term or, in the alternative, to purchase the land 
could lead to termination of the Cooperative's interest in the property and     
termination of all proprietary leases and occupancy agreements. In either event,
foreclosure by the holder of the blanket mortgage or the termination of the     
underlying lease could eliminate or significantly diminish the value of any     
collateral held by the lender that financed the purchase by an individual       
tenant-stockholder of Cooperative shares or, in the case of the Trust Fund, the 
collateral securing the Cooperative Loans.                                      

   The Cooperative is owned by tenant-stockholders who, through ownership of
stock, shares or membership certificates in the corporation, receive proprietary
leases or occupancy agreements which confer exclusive rights to occupy specific 
units. Generally, a tenant-stockholder of a Cooperative must make a monthly     
payment to the Cooperative representing such tenantstockholder's pro rata share 
of the Cooperative's payments for its blanket mortgage, real property taxes,    
maintenance expenses and other capital or ordinary expenses. An ownership       
interest in a Cooperative and accompanying occupancy rights is financed through 
a Cooperative share loan evidenced by a promissory note and secured by an       
assignment of and a security interest in the occupancy agreement or proprietary 
lease and a security interest in the related Cooperative shares. The lender     
generally takes possession of the share certificate and a counterpart of the    
proprietary lease or occupancy agreement and a financing statement covering the 
proprietary lease or occupancy agreement and the Cooperative shares is filed in 
the appropriate state and local offices to perfect the lender's interest in its 
collateral. Subject to the limitations discussed below, upon default of the     
tenant-stockholder, the lender may sue for judgment on the promissory note,     
dispose of the collateral at a public or private sale or otherwise proceed      
against the collateral or tenantstockholder as an individual as provided in the 
security agreement covering the assignment of the proprietary lease or occupancy
agreement and the pledge of Cooperative shares. See "Foreclosure on Cooperative 
Shares" below.                                                                  

CONTRACTS                                                                       

  Under the laws of most states, manufactured housing constitutes personal
property and is subject to the motor vehicle registration laws of the state or  
other jurisdiction in which the unit is located. In a few states, where         
certificates of title are not required for manufactured homes, security         
interests are perfected by the filing of a financing statement under Article 9  
of the UCC which has been adopted by all states. Such financing statements are  
effective for five years and must be renewed at the end of each five years. The 
certificate of title laws adopted by the majority of states provide that        
ownership of motor vehicles and manufactured housing shall be evidenced by a    
certificate of title issued by the motor vehicles department (or a similar      
entity) of such state. In the states that have enacted certificate of title     
laws, a security interest in a unit of manufactured housing, so long as it is   
not attached to land in so permanent a fashion as to become a fixture, is       
generally perfected by the recording of such interest on the certificate of     
title to the unit in the appropriate motor vehicle registration office or by    
delivery of the required documents and payment of a fee to such office,         
depending on state law.                                                         

    The Master Servicer will be required under the related Agreement to effect
such notation or delivery of the required documents and fees, and to obtain     
possession of the certificate of title,                                         

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as appropriate under the laws of the state in which any Manufactured Home is    
registered. In the event the Master Servicer fails, due to clerical errors or   
otherwise, to effect such notation or delivery, or files the security interest  
under the wrong law (for example, under a motor vehicle title statute rather    
than under the UCC, in a few states), the Trustee may not have a first priority 
security interest in the Manufactured Home securing a Contract. As manufactured 
homes have become larger and often have been attached to their sites without any
apparent intention by the borrowers to move them, courts in many states have    
held that manufactured homes may, under certain circumstances, become subject to
real estate title and recording laws. As a result, a security interest in a     
manufactured home could be rendered subordinate to the interests of other       
parties claiming an interest in the home under applicable state real estate law.
In order to perfect a security interest in a manufactured home under real estate
laws, the holder of the security interest must file either a "fixture filing"   
under the provisions of the UCC or a real estate mortgage under the real estate 
laws of the state where the home is located. These filings must be made in the  
real estate records office of the county where the home is located. Generally,  
Contracts will contain provisions prohibiting the obligor from permanently      
attaching the Manufactured Home to its site. So long as the obligor does not    
violate this agreement, a security interest in the Manufactured Home will be    
governed by the certificate of title laws or the UCC, and the notation of the   
security interest on the certificate of title or the filing of a UCC financing  
statement will be effective to maintain the priority of the security interest in
the Manufactured Home. If, however, a Manufactured Home is permanently attached 
to its site, other parties could obtain an interest in the Manufactured Home    
that is prior to the security interest originally retained by the seller and    
transferred to the Depositor.                                                   

  The Depositor will assign or cause to be assigned a security interest in
the Manufactured Homes to the Trustee, on behalf of the Certificateholders.     
Unless otherwise specified in the related Prospectus Supplement, neither the    
Depositor, the Master Servicer nor the Trustee will amend the certificates of   
title to identify the Trustee, on behalf of the Certificateholders, as the new  
secured party and, accordingly, the Depositor or the Mortgage Loan Seller will  
continue to be named as the secured party on the certificates of title relating 
to the Manufactured Homes. In most states, such assignment is an effective      
conveyance of such security interest without amendment of any lien noted on the 
related certificate of title and the new secured party succeeds to the          
Depositor's rights as the secured party. However, in some states there exists a 
risk that, in the absence of an amendment to the certificate of title, such     
assignment of the security interest might not be held effective against         
creditors of the Depositor or Mortgage Loan Seller.                             

In the absence of fraud, forgery or permanent affixation of the       
Manufactured Home to its site by the Manufactured Home owner, or administrative 
error by state recording officials, the notation of the lien of the Depositor on
the certificate of title or delivery of the required documents and fees will be 
sufficient to protect the Trustee against the rights of subsequent purchasers of
a Manufactured Home or subsequent lenders who take a security interest in the   
Manufactured Home. If there are any Manufactured Homes as to which the Depositor
has failed to perfect or cause to be perfected the security interest assigned to
the Trust Fund, such security interest would be subordinate to, among others,   
subsequent purchasers for value of Manufactured Homes and holders of perfected  
security interests. There also exists a risk in not identifying the Trustee, on 
behalf of the Certificateholders, as the new secured party on the certificate of
title that, through fraud or negligence, the security interest of the Trustee   
could be released.                                                              

In the event that the owner of a Manufactured Home moves it to a state
other than the state in which such Manufactured Home initially is registered,   
under the laws of most states the perfected security interest in the            
Manufactured Home would continue for four months after such relocation and      
thereafter until the owner re-registers the Manufactured Home in such state. If 
the owner were to relocate a Manufactured Home to another state and re-register 
the Manufactured Home in such state, and if the Depositor did not take steps to 
re-perfect its security interest in                                             

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such state, the security interest in the Manufactured Home would cease to be    
perfected. A majority of states generally require surrender of a certificate of 
title to re-register a Manufactured Home; accordingly, the Depositor must       
surrender possession if it holds the certificate of title to such Manufactured  
Home or, in the case of Manufactured Homes registered in states that provide for
notation of lien, the Depositor would receive notice of surrender if the        
security interest in the Manufactured Home is noted on the certificate of title.
Accordingly, the Depositor would have the opportunity to re-perfect its security
interest in the Manufactured Home in the state of relocation. In states that do 
not require a certificate of title for registration of a manufactured home,     
reregistration could defeat perfection. Similarly, when an obligor under a      
manufactured housing conditional sales contract sells a manufactured home, the  
obligee must surrender possession of the certificate of title or it will receive
notice as a result of its lien noted thereon and accordingly will have an       
opportunity to require satisfaction of the related manufactured housing         
conditional sales contract before release of the lien. Under each related       
Agreement, the Master Servicer will be obligated to take such steps, at the     
Master Servicer's expense, as are necessary to maintain perfection of security  
interests in the Manufactured Homes.                                            

Under the laws of most states, liens for repairs performed on a       
Manufactured Home take priority even over a perfected security interest. The    
Depositor will obtain the representation of the Mortgage Loan Seller that it has
no knowledge of any such liens with respect to any Manufactured Home securing a 
Contract. However, such liens could arise at any time during the term of a      
Contract. No notice will be given to the Trustee or Certificateholders in the   
event such a lien arises.                                                       

FORECLOSURE ON MORTGAGES                                                        

    Foreclosure of a deed of trust is generally accomplished by a non-judicial
trustee's sale under a specific provision in the deed of trust, which authorizes
the trustee to sell the property upon any default by the borrower under the     
terms of the note or deed of trust. In some states, the trustee must record a   
notice of default and send a copy to the borrower-trustor and to any person who 
has recorded a request for a copy of a notice of default and notice of sale. In 
addition, the trustee in some states must provide notice to any other individual
having an interest in the real property, including any junior lienholder. The   
trustor, borrower, or any person having a junior encumbrance on the real estate,
may, during a reinstatement period, cure the default by paying the entire amount
in arrears plus the costs and expenses incurred in enforcing the obligation.    
Generally, state law controls the amount of foreclosure expenses and costs,     
including attorneys' fees, that may be recovered by a lender. If the deed of    
trust is not reinstated, a notice of sale must be posted in a public place and, 
in most states, published for a specific period of time in one or more          
newspapers. In addition, some state laws require that a copy of the notice of   
sale be posted on the property, recorded and sent to all parties having an      
interest in the real property.                                                  

     An action to foreclose a mortgage is an action to recover the mortgage debt
by enforcing the mortgagee's rights under the mortgage and in the mortgaged     
property. It is regulated by statutes and rules and subject throughout to the   
court's equitable powers. Generally, a mortgagor is bound by the terms of the   
mortgage note and the mortgage as made and cannot be relieved from its own      
default. However, since a foreclosure action is equitable in nature and is      
addressed to a court of equity, the court may relieve a mortgagor of a default  
and deny the mortgagee foreclosure on proof that the mortgagor's default was    
neither willful nor in bad faith and that the mortgagee's action was such as to 
establish a waiver, or fraud, bad faith, oppressive or unconscionable conduct as
to warrant a court of equity to refuse affirmative relief to the mortgagee.     
Under certain circumstances a court of equity may relieve the mortgagor from an 
entirely technical default where such default was not willful.                  

     A foreclosure action or sale pursuant to a power of sale is subject to most
of the delays and expenses of other lawsuits if defenses or counterclaims are   
interposed, sometimes requiring up to several years to complete. Moreover,      
recent judicial decisions suggest that a non-collusive,                         

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regularly conducted foreclosure sale or sale pursuant to a power of sale may be 
challenged as a fraudulent conveyance, regardless of the parties' intent, if a  
court determines that the sale was for less than fair consideration and such    
sale occurred while the mortgagor was insolvent and within one year (or within  
the state statute of limitations if the trustee in bankruptcy elects to proceed 
under state fraudulent conveyance law) of the filing of bankruptcy. Similarly, a
suit against the debtor on the mortgage note may take several years.            

     In case of foreclosure under either a mortgage or a deed of trust, the sale
by the referee or other designated officer or by the trustee is a public sale.  
However, because of the difficulty potential third party purchasers at the sale 
have in determining the exact status of title and because the physical condition
of the property may have deteriorated during the foreclosure proceedings, it is 
uncommon for a third party to purchase the property at the foreclosure sale.    
Rather, it is common for the lender to purchase the property from the trustee or
referee for an amount equal to the principal amount of the mortgage or deed of  
trust plus accrued and unpaid interest and the expenses of foreclosure.         
Thereafter, the lender will assume the burdens of ownership, including obtaining
casualty insurance, paying taxes and making such repairs at its own expense as  
are necessary to render the property suitable for sale. Depending upon market   
conditions, the ultimate proceeds of the sale of the property may not equal the 
lender's investment in the property. Any loss may be reduced by the receipt of  
any mortgage insurance proceeds.                                                

A junior mortgagee may not foreclose on the property securing a junior
mortgage unless it forecloses subject to the senior mortgages, in which case it 
must either pay the entire amount due on the senior mortgages to the senior     
mortgagees prior to or at the time of the foreclosure sale or undertake the     
obligation to make payments on the senior mortgages in the event the mortgagor  
is in default thereunder, in either event adding the amounts expended to the    
balance due on the junior loan, and may be subrogated to the rights of the      
senior mortgagees. In addition, in the event that the foreclosure of a junior   
mortgage triggers the enforcement of a "due-on-sale" clause in a senior         
mortgage, the junior mortgagee may be required to pay the full amount of the    
senior mortgages to the senior mortgagees. Accordingly, with respect to those   
Mortgage Loans which are junior mortgage loans, if the lender purchases the     
property, the lender's title will be subject to all senior liens and claims and 
certain governmental liens. The proceeds received by the referee or trustee from
the sale are applied first to the costs, fees and expenses of sale and then in  
satisfaction of the indebtedness secured by the mortgage or deed of trust under 
which the sale was conducted. Any remaining proceeds are generally payable to   
the holders of junior mortgages or deeds of trust and other liens and claims in 
order of their priority, whether or not the borrower is in default. Any         
additional proceeds are generally payable to the mortgagor or trustor. The      
payment of the proceeds to the holders of junior mortgages may occur in the     
foreclosure action of the senior mortgagee or may require the institution of    
separate legal proceeds.                                                        

In foreclosure, courts have imposed general equitable principles. The 
equitable principles are generally designed to relieve the borrower from the    
legal effect of its defaults under the loan documents. Examples of judicial     
remedies that have been fashioned include judicial requirements that the lender 
undertake affirmative and expensive actions to determine the causes for the     
borrower's default and the likelihood that the borrower will be able to         
reinstate the loan. In some cases, courts have substituted their judgment for   
the lender's judgment and have required that lenders reinstate loans or recast  
payment schedules in order to accommodate borrowers who are suffering from      
temporary financial disability. In other cases, courts have limited the right of
a lender to foreclose if the default under the mortgage instrument is not       
monetary, such as the borrower's failure to adequately maintain the property or 
the borrower's execution of a second mortgage or deed of trust affecting the    
property. Finally, some courts have been faced with the issue of whether or not 
federal or state constitutional provisions reflecting due process concerns for  
adequate notice require that borrowers under deeds of trust or mortgages receive
notices in addition to the statutorily-prescribed minimums. For the most part,  
these cases have upheld the notice provisions as being reasonable or have found 
that the sale by a trustee under a deed of                                      

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trust, or under a mortgage having a power of sale, does not involve sufficient  
state action to afford constitutional protection to the borrower.               

FORECLOSURE ON COOPERATIVE SHARES                                               

   The Cooperative shares and proprietary lease or occupancy agreement owned
by the tenantstockholder and pledged to the lender are, in almost all cases,    
subject to restrictions on transfer as set forth in the Cooperative's           
certificate of incorporation and by-laws, as well as in the proprietary lease or
occupancy agreement, and may be cancelled by the Cooperative for failure by the 
tenant-stockholder to pay rent or other obligations or charges owed by such     
tenantstockholder, including mechanics' liens against the Cooperative apartment 
building incurred by such tenant-stockholder. Typically, rent and other         
obligations and charges arising under a proprietary lease or occupancy agreement
that are owed to the Cooperative are made liens upon the shares to which the    
proprietary lease or occupancy agreement relates. In addition, the proprietary  
lease or occupancy agreement generally permits the Cooperative to terminate such
lease or agreement in the event the tenant-stockholder fails to make payments or
defaults in the performance of covenants required thereunder. Typically, the    
lender and the Cooperative enter into a recognition agreement that, together    
with any lender protection provisions contained in the proprietary lease,       
establishes the rights and obligations of both parties in the event of a default
by the tenant-stockholder on its obligations under the proprietary lease or     
occupancy agreement. A default by the tenant-stockholder under the proprietary  
lease or occupancy agreement will usually constitute a default under the        
security agreement between the lender and the tenant-stockholder.               

  The recognition agreement generally provides that, in the event that the
tenant-stockholder has defaulted under the proprietary lease or occupancy       
agreement, the Cooperative will take no action to terminate such lease or       
agreement until the lender has been provided with notice of and an opportunity  
to cure the default. The recognition agreement typically provides that if the   
proprietary lease or occupancy agreement is terminated, the Cooperative will    
recognize the lender's lien against proceeds from a sale of the Cooperative     
apartment, subject, however, to the Cooperative's right to sums due under such  
proprietary lease or occupancy agreement or that have become liens on the shares
relating to the proprietary lease or occupancy agreement. The total amount owed 
to the Cooperative by the tenant-stockholder, which the lender generally cannot 
restrict and does not monitor, could reduce the value of the collateral below   
the outstanding principal balance of the Cooperative Loan and accrued and unpaid
interest thereon.                                                               

     Recognition agreements also provide that in the event of a foreclosure on a
Cooperative Loan, the lender must obtain the approval or consent of the         
Cooperative as required by the proprietary lease before transferring the        
Cooperative shares or assigning the proprietary lease. Generally, the lender is 
not limited in any rights it may have to dispossess the tenant-stockholders.    

  Under the laws applicable in most states, foreclosure on the Cooperative
shares is accomplished by a sale in accordance with the provisions of Article 9 
of the UCC and the security agreement relating to those shares. Article 9 of the
UCC requires that a sale be conducted in a "commercially reasonable" manner.    
Whether a foreclosure sale has been conducted in a "commercially reasonable"    
manner will depend on the facts in each case. In determining commercial         
reasonableness, a court will look to the notice given the debtor and the method,
manner, time, place and terms of the foreclosure. Generally, a sale conducted   
according to the usual practice of banks selling similar collateral will be     
considered reasonably conducted.                                                

     Article 9 of the UCC provides that the proceeds of the sale will be applied
first to pay the costs and expenses of the sale and then to satisfy the         
indebtedness secured by the lender's security interest. The recognition         
agreement, however, generally provides that the lender's right to reimbursement 
is subject to the right of the Cooperative corporation to receive sums due under
the proprietary lease or occupancy agreement. If there are proceeds remaining,  
the lender must                                                                 

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account to the tenant-stockholder for the surplus. Conversely, if a portion of  
the indebtedness remains unpaid, the tenant-stockholder is generally responsible
for the deficiency. See "Anti- Deficiency Legislation and Other Limitations on  
Lenders" below.                                                                 

REPOSSESSION WITH RESPECT TO CONTRACTS                                          

     Repossession of manufactured housing is governed by state law. A few states
have enacted legislation that requires that the debtor be given an opportunity  
to cure its default (typically 30 days to bring the account current) before     
repossession can commence. So long as a manufactured home has not become so     
attached to real estate that it would be treated as a part of the real estate   
under the law of the state where it is located, repossession of such home in the
event of a default by the obligor will generally be governed by the UCC (except 
in Louisiana). Article 9 of the UCC provides the statutory framework for the    
repossession of manufactured housing. While the UCC as adopted by the various   
states may vary in certain small particulars, the general repossession procedure
established by the UCC is as follows:                                           

          (i) Except in those states where the debtor must receive notice of
 the right to cure a default, repossession can commence immediately upon
   default without prior notice. Repossession may be effected either through
    self-help (peaceable retaking without court order), voluntary repossession
   or through judicial process (repossession pursuant to courtissued writ of
 replevin). The self-help and/or voluntary repossession methods are more
  commonly employed, and are accomplished simply by retaking possession of
 the manufactured home. In cases in which the debtor objects or raises a
defense to repossession, a court order must be obtained from the      
     appropriate state court, and the manufactured home must then be repossessed
  in accordance with that order. Whether the method employed is self-help,
  voluntary repossession or judicial repossession, the repossession can be
    accomplished either by an actual physical removal of the manufactured home
to a secure location for refurbishment and resale or by removing the  
   occupants and their belongings from the manufactured home and maintaining
 possession of the manufactured home on the location where the occupants
    were residing. Various factors may affect whether the manufactured home is
    physically removed or left on location, such as the nature and term of the
    lease of the site on which it is located and the condition of the unit. In
     many cases, leaving the manufactured home on location is preferable, in the
     event that the home is already set up, because the expenses of retaking and
     redelivery will be saved. However, in those cases where the home is left on
location, expenses for site rentals will usually be incurred.         

   (ii) Once repossession has been achieved, preparation for the
subsequent disposition of the manufactured home can commence. The     
   disposition may be by public or private sale provided the method, manner,
time, place and terms of the sale are commercially reasonable.        

        (iii) Sale proceeds are to be applied first to repossession expenses
(expenses incurred in retaking, storage, preparing for sale to include
refurbishing costs and selling) and then to satisfaction of the       
indebtedness. While some states impose prohibitions or limitations on 
    deficiency judgments if the net proceeds from resale do not cover the full
    amount of the indebtedness, the remainder may be sought from the debtor in
   the form of a deficiency judgment in those states that do not prohibit or
limit such judgments. The deficiency judgment is a personal judgment  
against the debtor for the shortfall. Occasionally, after resale of a 
    manufactured home and payment of all expenses and indebtedness, there is a
  surplus of funds. In that case, the UCC requires the party suing for the
deficiency judgment to remit the surplus to the debtor. Because the   
   defaulting owner of a manufactured home generally has very little capital
   or income available following repossession, a deficiency judgment may not
   be sought in many cases or, if obtained, will be settled at a significant
   discount in light of the defaulting owner's strained financial condition.

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LOUISIANA LAW                                                                   

  Any contract secured by a manufactured home located in Louisiana will be
governed by Louisiana law rather than Article 9 of the UCC. Louisiana laws      
provide similar mechanisms for perfection and enforcement of security interests 
in manufactured housing used as collateral for an installment sale contract or  
installment loan agreement.                                                     

    Under Louisiana law, a manufactured home that has been permanently affixed
to real estate will nevertheless remain subject to the motor vehicle            
registration laws unless the obligor and any holder of a security interest in   
the property execute and file in the real estate records for the parish in which
the property is located a document converting the unit into real property. A    
manufactured home that is converted into real property but is then removed from 
its site can be converted back to personal property governed by the motor       
vehicle registration laws if the obligor executes and files various documents in
the appropriate real estate records and all mortgagees under real estate        
mortgages on the property and the land to which it was affixed file releases    
with the motor vehicle commission.                                              

So long as a manufactured home remains subject to the Louisiana motor 
vehicle laws, liens are recorded on the certificate of title by the motor       
vehicle commissioner and repossession can be accomplished by voluntary consent  
of the obligor, executory process (repossession proceedings which must be       
initiated through the courts but which involve minimal court supervision) or a  
civil suit for possession. In connection with a voluntary surrender, the obligor
must be given a full release from liability for all amounts due under the       
contract. In executory process repossessions, a sheriff's sale (without court   
supervision) is permitted, unless the obligor brings suit to enjoin the sale,   
and the lender is prohibited from seeking a deficiency judgment against the     
obligor unless the lender obtained an appraisal of the manufactured home prior  
to the sale and the property was sold for at least two-thirds of its appraised  
value.                                                                          

RIGHTS OF REDEMPTION WITH RESPECT TO SINGLE-FAMILY PROPERTIES AND MULTIFAMILY   
PROPERTIES                                                                      

    In some states, after sale pursuant to a deed of trust or foreclosure of a
mortgage, the trustor or mortgagor and certain foreclosed junior lienors are    
given a statutory period in which to redeem the property from the foreclosure   
sale. The right of redemption should be distinguished from the equity of        
redemption, which is a nonstatutory right that must be exercised prior to the   
foreclosure sale. In some states, redemption may occur only upon payment of the 
entire principal balance of the loan, accrued interest and expenses of          
foreclosure. In other states, redemption may be authorized if the former        
borrower pays only a portion of the sums due. The effect of a statutory right of
redemption is to diminish the ability of the lender to sell the foreclosed      
property. The right of redemption would defeat the title of any purchaser       
acquired at a public sale. Consequently, the practical effect of a right of     
redemption is to force the lender to retain the property and pay the expenses of
ownership and maintenance of the property until the redemption period has       
expired. In some states, there is no right to redeem property after a trustee's 
sale under a deed of trust.                                                     

NOTICE OF SALE; REDEMPTION RIGHTS WITH RESPECT TO MANUFACTURED HOMES            

     While state laws do not usually require notice to be given to debtors prior
to repossession, many states do require delivery of a notice of default and of  
the debtor's right to cure defaults before repossession. The law in most states 
also requires that the debtor be given notice of sale prior to the resale of the
home so that the owner may redeem at or before resale. In addition, the sale    
must comply with the requirements of the UCC.                                   

ANTI-DEFICIENCY LEGISLATION AND OTHER LIMITATIONS ON LENDERS                    

    Certain states have imposed statutory prohibitions that limit the remedies
of a beneficiary under a deed of trust or a mortgagee under a mortgage. In some 
states, statutes limit the right                                                

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of the beneficiary or mortgagee to obtain a deficiency judgment against the     
borrower following foreclosure or sale under a deed of trust. A deficiency      
judgment is a personal judgment against the former borrower equal in most cases 
to the difference between the net amount realized upon the public sale of the   
real property and the amount due to the lender. Other statutes require the      
beneficiary or mortgagee to exhaust the security afforded under a deed of trust 
or mortgage by foreclosure in an attempt to satisfy the full debt before        
bringing a personal action against the borrower. Finally, other statutory       
provisions limit any deficiency judgment against the former borrower following a
judicial sale to the excess of the outstanding debt over the fair market value  
of the property at the time of the public sale. The purpose of these statutes is
generally to prevent a beneficiary or a mortgagee from obtaining a large        
deficiency judgment against the former borrower as a result of low or no bids at
the judicial sale.                                                              

    In addition to laws limiting or prohibiting deficiency judgments, numerous
other statutory provisions, including the federal bankruptcy laws and state laws
affording relief to debtors, may interfere with or affect the ability of the    
secured mortgage lender to realize upon collateral and/or enforce a deficiency  
judgment. For example, with respect to federal bankruptcy law, the filing of a  
petition acts as a stay against the enforcement of remedies of collection of a  
debt. Moreover, a court with federal bankruptcy jurisdiction may permit a debtor
through his or her Chapter 13 rehabilitative plan to cure a monetary default    
with respect to a mortgage loan on a debtor's residence by paying arrearages    
within a reasonable time period and reinstating the original mortgage loan      
payment schedule even though the lender accelerated the mortgage loan and final 
judgment of a foreclosure had been entered in state court (provided no sale of  
the property had yet occurred) prior to the filing of the debtor's Chapter 13   
petition. Some courts with federal bankruptcy jurisdiction have approved plans, 
based on the particular facts of the reorganization case, that effected the     
curing of a mortgage loan default by paying arrearages over a number of years.  

  Courts with federal bankruptcy jurisdiction have also indicated that the
terms of a mortgage loan secured by property of the debtor may be modified if   
the borrower has filed a petition under Chapter 13. These courts have suggested 
that such modifications may include reducing the amount of each monthly payment,
changing the rate of interest, altering the repayment schedule and reducing the 
lender's security interest to the value of the residence, thus leaving the      
lender a general unsecured creditor for the difference between the value of the 
residence and the outstanding balance of the loan. Federal bankruptcy law and   
limited case law indicate that the foregoing modifications could not be applied 
to the terms of a loan secured by property that is the principal residence of   
the debtor. In all cases, the secured creditor is entitled to the value of its  
security plus post-petition interest, attorneys' fees and costs to the extent   
the value of the security exceeds the debt.                                     

The Code provides priority to certain tax liens over the lien of the  
mortgage. This may have the effect of delaying or interfering with the          
enforcement of rights in respect of a defaulted Mortgage Loan. In addition,     
substantive requirements are imposed upon mortgage lenders in connection with   
the origination and the servicing of mortgage loans by numerous federal and some
state consumer protection laws. The laws include the federal Truth-in-Lending   
Act, Real Estate Settlement Procedures Act, Equal Credit Opportunity Act, Fair  
Credit Billing Act, Fair Credit Reporting Act, and related statutes. These      
federal laws impose specific statutory liabilities upon lenders who originate   
mortgage loans and who fail to comply with the provisions of the law. In some   
cases, this liability may affect assignees of the mortgage loans.               

FOR COOPERATIVE LOANS                                                 

   Generally, Article 9 of the UCC governs foreclosure on Cooperative shares
and the related proprietary lease or occupancy agreement. Some courts have      
interpreted Section 9-504 of the UCC to prohibit a deficiency award unless the  
creditor establishes that the sale of the collateral                            

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(which, in the case of a Cooperative Loan, would be the shares of the           
Cooperative and the related proprietary lease or occupancy agreement) was       
conducted in a commercially reasonable manner.                                  

JUNIOR MORTGAGES                                                                

   Some of the Mortgage Loans may be secured by junior mortgages or deeds of
trust, which are junior to senior mortgages or deeds of trust which are not part
of the Trust Fund. The rights of the Certificateholders as the holders of a     
junior deed of trust or a junior mortgage are subordinate in lien priority and  
in payment priority to those of the holder of the senior mortgage or deed of    
trust, including the prior rights of the senior mortgagee or beneficiary to     
receive and apply hazard insurance and condemnation proceeds and, upon default  
of the mortgagor, to cause a foreclosure on the property. Upon completion of the
foreclosure proceedings by the holder of the senior mortgage or the sale        
pursuant to the deed of trust, the junior mortgagee's or junior beneficiary's   
lien will be extinguished unless the junior lienholder satisfies the defaulted  
senior loan or asserts its subordinate interest in a property in foreclosure    
proceedings. See "-Foreclosure on Mortgages" herein.                            

Furthermore, the terms of the junior mortgage or deed of trust are    
subordinate to the terms of the senior mortgage or deed of trust. In the event  
of a conflict between the terms of the senior mortgage or deed of trust and the 
junior mortgage or deed of trust, the terms of the senior mortgage or deed of   
trust will govern generally. Upon a failure of the mortgagor or trustor to      
perform any of its obligations, the senior mortgagee or beneficiary, subject to 
the terms of the senior mortgage or deed of trust, may have the right to perform
the obligation itself. Generally, all sums so expended by the mortgagee or      
beneficiary become part of the indebtedness secured by the mortgage or deed of  
trust. To the extent a senior mortgagee expends such sums, such sums will       
generally have priority over all sums due under the junior mortgage.            

CONSUMER PROTECTION LAWS WITH RESPECT TO CONTRACTS                              

Numerous federal and state consumer protection laws impose substantial
requirements upon creditors involved in consumer finance. These laws include the
federal Truth-in-Lending Act, Regulation "Z", the Equal Credit Opportunity Act, 
Regulation "B", the Fair Credit Reporting Act, and related statutes. These laws 
can impose specific statutory liabilities upon creditors who fail to comply with
their provisions. In some cases, this liability may affect an assignee's ability
to enforce a contract. In addition, certain of the Mortgage Loans may be subject
to special rules, disclosure requirements and other provisions that were added  
to the federal Truth-in-Lending Act by the Homeownership and Equity Protection  
Act of 1994 (such Mortgage Loans, "High Cost Loans"), if such Mortgage Loans    
were originated on or after October 1, 1995, are not mortgage loans made to     
finance the purchase of the mortgaged property and have interest rates or       
origination costs in excess of certain prescribed levels. Purchasers or         
assignees of any High Cost Loan could be liable for all claims and subject to   
all defenses arising under such provisions that the mortgagor could assert      
against the originator thereof. Remedies available to the mortgagor include     
monetary penalties, as well as rescission rights if the appropriate disclosures 
were not given as required. See "Mortgage Loan Program-Representations by or on 
Behalf of Mortgage Loan Sellers; Repurchases."                                  

Manufactured housing contracts often contain provisions obligating the
obligor to pay late charges if payments are not timely made. In certain cases,  
federal and state law may specifically limit the amount of late charges that may
be collected. Unless otherwise provided in the related Prospectus Supplement,   
under the Agreement, late charges will be retained by the Master Servicer as    
additional servicing compensation, and any inability to collect these amounts   
will not affect payments to Certificateholders.                                 

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Courts have imposed general equitable principles upon repossession and
litigation involving deficiency balances. These equitable principles are        
generally designed to relieve a consumer from the legal consequences of a       
default.                                                                        

 In several cases, consumers have asserted that the remedies provided to
secured parties under the UCC and related laws violate the due process          
protections provided under the 14th Amendment to the Constitution of the United 
States. For the most part, courts have upheld the notice provisions of the UCC  
and related laws as reasonable or have found that the repossession and resale by
the creditor does not involve sufficient state action to afford constitutional  
protection to consumers.                                                        

   The so-called "Holder-in-Due-Course" Rule of the Federal Trade Commission
(the "FTC Rule") has the effect of subjecting a seller (and certain related     
creditors and their assignees) in a consumer credit transaction and any assignee
of the creditor to all claims and defenses which the debtor in the transaction  
could assert against the seller of the goods. Liability under the FTC Rule is   
limited to the amounts paid by a debtor on the contract, and the holder of the  
contract may also be unable to collect amounts still due thereunder.            

   Most of the Contracts in a Trust Fund will be subject to the requirements
of the FTC Rule. Accordingly, the Trustee, as holder of the Contracts, will be  
subject to any claims or defenses that the purchaser of the related manufactured
home may assert against the seller of the manufactured home, subject to a       
maximum liability equal to the amounts paid by the obligor on the Contract. If  
an obligor is successful in asserting any such claim or defense, and if the     
Mortgage Loan Seller had or should have had knowledge of such claim or defense, 
the Master Servicer will have the right to require the Mortgage Loan Seller to  
repurchase the Contract because of a breach of its Mortgage Loan Seller's       
representation and warranty that no claims or defenses exist that would affect  
the obligor's obligation to make the required payments under the Contract. The  
Mortgage Loan Seller would then have the right to require the originating dealer
to repurchase the Contract from it and might also have the right to recover from
the dealer for any losses suffered by the Mortgage Loan Seller with respect to  
which the dealer would have been primarily liable to the obligor.               

OTHER LIMITATIONS                                                               

In addition to the laws limiting or prohibiting deficiency judgments, 
numerous other statutory provisions, including federal bankruptcy laws and      
related state laws, may interfere with or affect the ability of a lender to     
realize upon collateral and/or enforce a deficiency judgment. For example, in a 
Chapter 13 proceeding under the federal bankruptcy law, a court may prevent a   
lender from repossessing a home, and, as part of the rehabilitation plan, reduce
the amount of the secured indebtedness to the market value of the home at the   
time of bankruptcy (as determined by the court), leaving the party providing    
financing as a general unsecured creditor for the remainder of the indebtedness.
A bankruptcy court may also reduce the monthly payments due under a contract or 
change the rate of interest and time of repayment of the indebtedness.          

ENFORCEABILITY OF CERTAIN PROVISIONS                                            

Unless the Prospectus Supplement indicates otherwise, all the related 
Mortgage Loans will contain due-on-sale clauses. These clauses permit the lender
to accelerate the maturity of the loan if the borrower sells, transfers, or     
conveys the property without the prior consent of the lender. The enforceability
of these clauses has been impaired in various ways in certain states by statute 
or decisional law. The ability of lenders and their assignees and transferees to
enforce due-on-sale clauses was addressed by the Garn-St Germain Depository     
Institutions Act of 1982 (the "Garn-St Germain Act"), which was enacted on      
October 15, 1982. This legislation, subject to certain exceptions, preempts     
state constitutional, statutory and case law that prohibits the enforcement of  
due-on-sale clauses. The Garn-St Germain Act does "encourage" lenders to        

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permit assumptions of loans at the original rate of interest or at some other   
rate less than the average of the original rate and the market rate.            

SINGLE-FAMILY LOANS AND MULTIFAMILY LOANS                             

Exempted from this preemption pursuant to the Garn-St Germain Act are 
mortgage loans (originated other than by federal savings and loan associations  
and federal savings banks) that were made or assumed during the period beginning
on the date a state, by statute or final appellate court decision having        
statewide effect, prohibited the exercise of due-on-sale clauses and ending on  
October 15, 1982 ("Window Period Loans"). However, this exception applies only  
to transfers of property underlying Window Period Loans occurring between       
October 15, 1982 and October 15, 1985 and does not restrict enforcement of a    
due-on-sale clause in connection with current transfers of property underlying  
Window Period Loans unless the property underlying such Window Period Loan is   
located in one of the five "window period states" identified below. Due-on-sale 
clauses contained in mortgage loans originated by federal savings and loan      
associations or federal savings banks are fully enforceable pursuant to         
regulations of the Federal Home Loan Bank Board, predecessor to the Office of   
Thrift Supervision, which preempt state law restrictions on the enforcement of  
due-on-sale clauses. Mortgage Loans originated by such institutions are         
therefore not deemed to be Window Period Loans.                                 

     With the expiration of the exemption for Window Period Loans on October 15,
1985, due-on-sale clauses have become generally enforceable except in those     
states whose legislatures exercised their authority to regulate the             
enforceability of such clauses with respect to mortgage loans that were (i)     
originated or assumed during the "window period", which ended in all cases not  
later than October 15, 1982, and (ii) originated by lenders other than national 
banks, federal savings institutions and federal credit unions. FHLMC has taken  
the position in its published mortgage servicing standards that, out of a total 
of eleven "window period states", five states (Arizona, Michigan, Minnesota, New
Mexico and Utah) have enacted statutes extending, on various terms and for      
varying periods, the prohibition on enforcement of due-on-sale clauses with     
respect to certain categories of Window Period Loans. The Garn-St Germain Act   
also sets forth nine specific instances in which a mortgage lender covered by   
the Garn-St Germain Act (including federal savings and loan associations and    
federal savings banks) may not exercise a due-on-sale clause, notwithstanding   
the fact that a transfer of the property may have occurred. These include       
intra-family transfers, certain transfers by operation of law, leases of fewer  
than three years and the creation of a junior encumbrance. Regulations          
promulgated under the Garn-St Germain Act also prohibit the imposition of a     
prepayment penalty upon the acceleration of a loan pursuant to a due-on-sale    
clause.                                                                         

     The inability to enforce a due-on-sale clause may result in a Mortgage Loan
bearing an interest rate below the current market rate being assumed by a new   
home buyer rather than being paid off, which may have an impact upon the average
life of the Mortgage Loans related to a series and the number of such Mortgage  
Loans which may be outstanding until maturity.                                  

TRANSFER OF MANUFACTURED HOMES                                        

  Generally, manufactured housing contracts contain provisions prohibiting
the sale or transfer of the related manufactured homes without the consent of   
the obligee on the contract and permitting the acceleration of the maturity of  
such contracts by the obligee on the contract upon any such sale or transfer    
that is not consented to. Unless otherwise provided in the related Prospectus   
Supplement, the Master Servicer will, to the extent it has knowledge of such    
conveyance or proposed conveyance, exercise or cause to be exercised its rights 
to accelerate the maturity of the related Contracts through enforcement of      
due-on-sale clauses, subject to applicable state law. In certain cases, the     
transfer may be made by a delinquent obligor in order to avoid a repossession   
proceeding with respect to a Manufactured Home.                                 

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 In the case of a transfer of a Manufactured Home as to which the Master
Servicer desires to accelerate the maturity of the related Contract, the Master 
Servicer's ability to do so will depend on the enforceability under state law of
the due-on-sale clause. The Garn-St Germain Act preempts, subject to certain    
exceptions and conditions, state laws prohibiting enforcement of due-on-sale    
clauses applicable to the Manufactured Homes. Consequently, in some cases the   
Master Servicer may be prohibited from enforcing a due-on-sale clause in respect
of certain Manufactured Homes.                                                  

PREPAYMENT CHARGES AND PREPAYMENTS                                    

Generally, Mortgage Loans may be prepaid in full or in part without   
penalty. Generally, Multifamily Loans may contain provisions limiting           
prepayments on such loans, including prohibiting prepayment for a specified     
period after origination, prohibiting partial prepayments entirely or requiring 
the payment of a prepayment penalty upon prepayment in full or in part. The     
regulations of the Federal Home Loan Bank Board, predecessor to the Office of   
Thrift Supervision, prohibit the imposition of a prepayment penalty or          
equivalent fee for or in connection with the acceleration of a loan by exercise 
of a due-on-sale clause. A mortgagee to whom a prepayment in full has been      
tendered may be compelled to give either a release of the mortgage or an        
instrument assigning the existing mortgage to a refinancing lender.             

SUBORDINATE FINANCING                                                           

 When the mortgagor encumbers mortgaged property with one or more junior
liens, the senior lender is subjected to additional risk. First, the mortgagor  
may have difficulty servicing and repaying multiple loans. In addition, if the  
junior loan permits recourse to the mortgagor (as junior loans often do) and the
senior loan does not, a mortgagor may be more likely to repay sums due on the   
junior loan than those on the senior loan. Second, acts of the senior lender    
that prejudice the junior lender or impair the junior lender's security may     
create a superior equity in favor of the junior lender. For example, if the     
mortgagor and the senior lender agree to an increase in the principal amount of 
or the interest rate payable on the senior loan, the senior lender may lose its 
priority to the extent an existing junior lender is harmed or the mortgagor is  
additionally burdened. Third, if the mortgagor defaults on the senior loan      
and/or any junior loan or loans, the existence of junior loans and actions taken
by junior lenders can impair the security available to the senior lender and can
interfere with or delay the taking of action by the senior lender. Moreover, the
bankruptcy of a junior lender may operate to stay foreclosure or similar        
proceeds by the senior lender.                                                  

APPLICABILITY OF USURY LAWS                                                     

  Title V of the Depository Institutions Deregulation and Monetary Control
Act of 1980, enacted in March 1980 ("Title V"), provides that state usury       
limitations shall not apply to certain types of residential first mortgage loans
originated by certain lenders after March 31, 1980. A similar federal statute   
was in effect with respect to mortgage loans made during the first three months 
of 1980. The statute authorized any state to reimpose interest rate limits by   
adopting, before April 1, 1983, a law or constitutional provision that expressly
rejects application of the federal law. In addition, even where Title V is not  
so rejected, any state is authorized by the law to adopt a provision limiting   
discount points or other charges on mortgage loans covered by Title V. Certain  
states have taken action to reimpose interest rate limits and/or to limit       
discount points or other charges.                                               

     The Depositor has been advised by counsel that a court interpreting Title V
would hold that mortgage loans originated on or after January 1, 1980 are       
subject to federal preemption. Therefore, in a state that has not taken the     
requisite action to reject application of Title V or to                         

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adopt a provision limiting discount points or other charges prior to origination
of such mortgage loans, any such limitation under such state's usury law would  
not apply to such mortgage loans.                                               

     In any state in which application of Title V has been expressly rejected or
a provision limiting discount points or other charges is adopted, no Mortgage   
Loans originated after the date of such state action will be eligible for       
inclusion in a Trust Fund if such Mortgage Loans bear interest or provide for   
discount points or charges in excess of permitted levels. No Mortgage Loan      
originated prior to January 1, 1980 will bear interest or provide for discount  
points or charges in excess of permitted levels.                                

Title V also provides that, subject to the following conditions, state
usury limitations shall not apply to any loan that is secured by a first lien on
certain kinds of manufactured housing. The Contracts would be covered if they   
satisfy certain conditions, among other things, governing the terms of any      
prepayments, late charges and deferral fees and requiring a 30-day notice period
prior to instituting any action leading to repossession of or foreclosure with  
respect to the related unit. Title V authorized any state to reimpose           
limitations on interest rates and finance charges by adopting before April 1,   
1983 a law or constitutional provision which expressly rejects application of   
the federal law. Fifteen states adopted such a law prior to the April 1, 1983   
deadline. In addition, even where Title V was not so rejected, any state is     
authorized by the law to adopt a provision limiting discount points or other    
charges on loans covered by Title V. In any state in which application of Title 
V was expressly rejected or a provision limiting discount points or other       
charges has been adopted, no Contract which imposes finance charges or provides 
for discount points or charges in excess of permitted levels has been included  
in the Trust Fund.                                                              

ALTERNATIVE MORTGAGE INSTRUMENTS                                                

   ARM Loans originated by non-federally chartered lenders have historically
been subject to a variety of restrictions. Such restrictions differed from state
to state, resulting in difficulties in determining whether a particular         
alternative mortgage instrument originated by a state-chartered lender complied 
with applicable law. These difficulties were simplified substantially as a      
result of the enactment of Title VIII of the Garn-St Germain Act ("Title VIII").
Title VIII provides that, notwithstanding any state law to the contrary, (i)    
state-chartered banks may originate "alternative mortgage instruments"          
(including ARM Loans) in accordance with regulations promulgated by the         
Comptroller of the Currency with respect to origination of alternative mortgage 
instruments by national banks, (ii) state-chartered credit unions may originate 
alternative mortgage instruments in accordance with regulations promulgated by  
the National Credit Union Administration with respect to origination of         
alternative mortgage instruments by federal credit unions and (iii) all other   
non-federally chartered housing creditors, including, without limitation,       
state-chartered savings and loan associations, savings banks and mutual savings 
banks and mortgage banking companies may originate alternative mortgage         
instruments in accordance with the regulations promulgated by the Federal Home  
Loan Bank Board, predecessor to the Office of Thrift Supervision with respect to
origination of alternative mortgage instruments by federal savings and loan     
associations. Title VIII further provides that any state may reject             
applicability of the provisions of Title VIII by adopting, prior to October 15, 
1985, a law or constitutional provision expressly rejecting the applicability of
such provisions. Certain states have taken such action.                         

     The Depositor has been advised by its counsel that it is their opinion that
a court interpreting Title VIII would hold that ARM Loans that were originated  
by state-chartered lenders before the date of enactment of any state law or     
constitutional provision rejecting applicability of Title VIII would not be     
subject to state laws imposing restrictions or prohibitions on the ability of   
state-chartered lenders to originate alternative mortgage instruments.          

     All of the ARM Loans that were originated by a state-chartered lender after
the enactment of a state law or constitutional provision rejecting the          
applicability of Title VIII complied with applicable state law. All of the ARM  
Loans that were originated by federally chartered lenders or                    

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that were originated by state-chartered lenders prior to enactment of a state   
law or constitutional provision rejecting the applicability of Title VIII were  
originated in compliance with all applicable federal regulations.               

FORMALDEHYDE LITIGATION WITH RESPECT TO CONTRACTS                               

 A number of lawsuits are pending in the United States alleging personal
injury from exposure to the chemical formaldehyde, which is present in many     
building materials, including such components of manufactured housing as plywood
flooring and wall paneling. Some of these lawsuits are pending against          
manufacturers of manufactured housing, suppliers of component parts, and related
persons in the distribution process. The Depositor is aware of a limited number 
of cases in which plaintiffs have won judgments in these lawsuits.              

 Under the FTC Rule, which is described above under "Consumer Protection
Laws", the holder of any Contract secured by a Manufactured Home with respect to
which a formaldehyde claim has been successfully asserted may be liable to the  
obligor for the amount paid by the obligor on the related Contract and may be   
unable to collect amounts still due under the Contract. The successful assertion
of such claim constitutes a breach of a representation or warranty of the       
Mortgage Loan Seller, and the Certificateholders would suffer a loss only to the
extent that (i) the Mortgage Loan Seller breached its obligation to repurchase  
the Contract in the event an obligor is successful in asserting such a claim,   
and (ii) the Mortgage Loan Seller, the Depositor or the Trustee were            
unsuccessful in asserting any claim of contribution or subrogation on behalf of 
the Certificateholders against the manufacturer or other persons who were       
directly liable to the plaintiff for the damages. Typical products liability    
insurance policies held by manufacturers and component suppliers of manufactured
homes may not cover liabilities arising from formaldehyde in manufactured       
housing, with the result that recoveries from such manufacturers, suppliers or  
other persons may be limited to their corporate assets without the benefit of   
insurance.                                                                      

SOLDIERS' AND SAILORS' CIVIL RELIEF ACT OF 1940                                 

    Under the terms of the Soldiers' and Sailors' Civil Relief Act of 1940, as
amended (the "Relief Act"), a borrower who enters military service after the    
origination of such borrower's Mortgage Loan (including a borrower who was in   
reserve status and is called to active duty after origination of the Mortgage   
Loan), may not be charged interest (including fees and charges) above an annual 
rate of 6% during the period of such borrower's active duty status, unless a    
court orders otherwise upon application of the lender. The Relief Act applies to
borrowers who are members of the Army, Navy, Air Force, Marines, National Guard,
Reserves, Coast Guard, and officers of the U.S. Public Health Service assigned  
to duty with the military. Because the Relief Act applies to borrowers who enter
military service (including reservists who are called to active duty) after     
origination of the related Mortgage Loan, no information can be provided as to  
the number of loans that may be affected by the Relief Act. Application of the  
Relief Act would adversely affect, for an indeterminate period of time, the     
ability of the Master Servicer to collect full amounts of interest on certain of
the Mortgage Loans. Any shortfalls in interest collections resulting from the   
application of the Relief Act would result in a reduction of the amounts        
distributable to the holders of the related series of Certificates, and would   
not be covered by advances or, unless otherwise specified in the related        
Prospectus Supplement, any form of Credit Support provided in connection with   
such Certificates. In addition, the Relief Act imposes limitations that would   
impair the ability of the Master Servicer to foreclose on an affected           
Single-Family Loan or enforce rights under a Contract during the borrower's     
period of active duty status, and, under certain circumstances, during an       
additional three month period thereafter. Thus, in the event that such a        
Mortgage Loan goes into default, there may be delays and losses occasioned      
thereby.                                                                        

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ENVIRONMENTAL LEGISLATION                                                       

  Under the federal Comprehensive Environmental Response, Compensation and
Liability Act, as amended ("CERCLA"), and under state law in certain states, a  
secured party which takes a deed-in-lieu of foreclosure, purchases a mortgaged  
property at a foreclosure sale, or operates a mortgaged property may become     
liable in certain circumstances for the costs of cleaning up hazardous          
substances regardless of whether they have contaminated the property. CERCLA    
imposes strict, as well as joint and several, liability on several classes of   
potentially responsible parties, including current owners and operators of the  
property who did not cause or contribute to the contamination. Furthermore,     
liability under CERCLA is not limited to the original or unamortized principal  
balance of a loan or to the value of the property securing a loan. Lenders may  
be held liable under CERCLA as owners or operators unless they qualify for the  
secured creditor exemption to CERCLA. This exemption exempts from the definition
of owners and operators those who, without participating in the management of a 
facility, hold indicia of ownership primarily to protect a security interest in 
the facility. What constitutes sufficient participation in the management of a  
property securing a loan or the business of a borrower to render the exemption  
unavailable to a lender has been a matter of interpretation by the courts.      
CERCLA has been interpreted to impose liability on a secured party, even absent 
foreclosure, where the party participated in the financial management of the    
borrower's business to a degree indicating a capacity to influence waste        
disposal decisions. However, court interpretations of the secured creditor      
exemption have been inconsistent. In addition, when lenders foreclose and       
thereupon become owners of collateral property, courts are inconsistent as to   
whether such ownership renders the secured creditor exemption unavailable. Other
federal and state laws in certain circumstances may impose liability on a       
secured party which takes a deed-in-lieu of foreclosure, purchases a mortgaged  
property at a foreclosure sale, or operates a mortgaged property on which       
contaminants other than CERCLA hazardous substances are present, including      
petroleum, agricultural chemicals, hazardous wastes, asbestos, radon, and       
lead-based paint. Such cleanup costs may be substantial. It is possible that    
such cleanup costs could become a liability of a Trust Fund and reduce the      
amounts otherwise distributable to the holders of the related series of         
Certificates. Moreover, certain federal statutes and certain states by statute  
impose a lien for any cleanup costs incurred by such state on the property that 
is the subject of such cleanup costs (an "environmental lien"). All subsequent  
liens on such property generally are subordinated to such an environmental lien 
and, in some states, even prior recorded liens are subordinated to environmental
liens. In the latter states, the security interest of the Trust in a related    
parcel of real property that is subject to such an environmental lien could be  
adversely affected.                                                             

  Traditionally, many residential mortgage lenders have not taken steps to
evaluate whether contaminants are present with respect to any mortgaged property
prior to the origination of the mortgage loan or prior to foreclosure or        
accepting a deed-in-lieu of foreclosure. Accordingly, the Master Servicer has   
not made and will not make such evaluations prior to the origination of the     
Mortgage Loans. Neither the Master Servicer nor any replacement Servicer will be
required by any Agreement to undertake any such evaluations prior to foreclosure
or accepting a deed-in-lieu of foreclosure. The Master Servicer does not make   
any representations or warranties or assume any liability with respect to the   
absence or effect of contaminants on any related real property or any casualty  
resulting from the presence or effect of contaminants. However, the Master      
Servicer will not be obligated to foreclose on related real property or accept a
deed-in-lieu of foreclosure if it knows or reasonably believes that there are   
material contaminated conditions on such property. A failure so to foreclose may
reduce the amounts otherwise available to Certificateholders of the related     
Series.                                                                         

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FORFEITURES IN DRUG AND RICO PROCEEDINGS                                        

Federal law provides that property owned by persons convicted of      
drug-related crimes or of criminal violations of the Racketeer Influenced and   
Corrupt Organizations ("RICO") statute can be seized by the government if the   
property was used in, or purchased with the proceeds of, such crimes. Under     
procedures contained in the Comprehensive Crime Control Act of 1984 (the "Crime 
Control Act"), the government may seize the property even before conviction. The
government must publish notice of the forfeiture proceeding and may give notice 
to all parties "known to have an alleged interest in the property", including   
the holders of mortgage loans.                                                  

A lender may avoid forfeiture of its interest in the property if it   
establishes that: (i) its mortgage was executed and recorded before commission  
of the crime upon which the forfeiture is based, or (ii) the lender was, at the 
time of execution of the mortgage, "reasonably without cause to believe" that   
the property was used in, or purchase with the proceeds of, illegal drug or RICO
activities.                                                                     

NEGATIVE AMORTIZATION LOANS                                                     

     A recent case decided by the United States Court of Appeals, First Circuit,
held that state restrictions on the compounding of interest are not preempted by
the provisions of the Depository Institutions Deregulation and Monetary Control 
Act of 1980 ("DIDMC") and as a result, a mortgage loan that provided for        
negative amortization violated New Hampshire's requirement that first mortgage  
loans provide for computation of interest on a simple interest basis. The       
holding was limited to the effect of DIDMC on state laws regarding the          
compounding of interest and the court did not address the applicability of the  
Alternative Mortgage Transaction Parity Act of 1982, which authorizes lender to 
make residential mortgage loans that provide for negative amortization. The     
First Circuit's decision is binding authority only on Federal District Courts in
Maine, New Hampshire, Massachusetts, Rhode Island and Puerto Rico.              

 CERTAIN FEDERAL INCOME TAX CONSEQUENCES

GENERAL                                                                         

   The following is a general discussion of the anticipated material federal
income tax consequences of the purchase, ownership and disposition of the       
Certificates offered hereunder. This discussion is directed solely to           
Certificateholders that hold the Certificates as capital assets within the      
meaning of Section 1221 of the Internal Revenue Code of 1986 (the "Code") and   
does not purport to discuss all federal income tax consequences that may be     
applicable to particular categories of investors, some of which (such as banks, 
insurance companies and foreign investors) may be subject to special rules.     
Further, the authorities on which this discussion, and the opinion referred to  
below, are based are subject to change or differing interpretations, which could
apply retroactively. Taxpayers and preparers of tax returns (including those    
filed by any REMIC or other issuer) should be aware that under applicable       
Treasury regulations a provider of advice on specific issues of law is not      
considered an income tax return preparer unless the advice (i) is given with    
respect to events that have occurred at the time the advice is rendered and is  
not given with respect to the consequences of contemplated actions, and (ii) is 
directly relevant to the determination of an entry on a tax return. Accordingly,
taxpayers should consult their own tax advisors and tax return preparers        
regarding the preparation of any item on a tax return, even where the           
anticipated tax treatment has been discussed herein. In addition to the federal 
income tax consequences described herein, potential investors should consider   
the state and local tax consequences, if any, of the purchase, ownership and    
disposition of the Certificates. See "State and Other Tax Consequences."        
Certificateholders are advised to consult their own tax advisors concerning the 
federal, state, local or other tax consequences to them of the purchase,        
ownership and disposition of the Certificates offered hereunder.                

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  The following discussion addresses securities of four general types: (i)
certificates ("REMIC Certificates") representing interests in a Trust Fund, or a
portion thereof, that the Trustee will elect to have treated as a real estate   
mortgage investment conduit ("REMIC") under Sections 860A through 860G (the     
"REMIC Provisions") of the Code, (ii) certificates ("Grantor Trust              
Certificates") representing interests in a Trust Fund ("Grantor Trust Fund") as 
to which no such election will be made, (iii) certificates ("Partnership        
Certificates") representing interests in a Trust Fund ("Partnership Trust Fund")
which is treated as a partnership for federal income tax purposes, and (iv)     
certificates ("Debt Certificates") representing indebtedness of a Partnership   
Trust Fund for federal income tax purposes. The Prospectus Supplement for each  
series of Certificates will indicate which of the foregoing treatments will     
apply to such series and, if a REMIC election (or elections) will be made for   
the related Trust Fund, will identify all "regular interests" and "residual     
interests" in the REMIC. For purposes of this tax discussion, (i) references to 
a "Certificateholder" or a "holder" are to the beneficial owner of a Certificate
and (ii) unless indicated otherwise in the applicable Prospectus Supplement,    
references to "Mortgage Loans" include Agency Securities, Private               
Mortgage-Backed Securities and Funding Agreements.                              

     The following discussion is based in part upon the rules governing original
issue discount that are set forth in Sections 1271-1273 and 1275 of the Code and
in the Treasury regulations issued thereunder (the "OID Regulations"), and in   
part upon the REMIC Provisions and the Treasury regulations issued thereunder   
(the "REMIC Regulations"). The OID Regulations do not adequately address certain
issues relevant to, and in some instances provide that they are not applicable  
to, securities such as the Certificates.                                        

REMICS                                                                          

CLASSIFICATION OF REMICS                                                    

    Upon the issuance of each series of REMIC Certificates, Thacher Proffitt &
Wood, counsel to the Depositor, will deliver its opinion generally to the effect
that, assuming compliance with all provisions of the related Pooling and        
Servicing Agreement, the related Trust Fund (or each applicable portion thereof)
will qualify as a REMIC and the REMIC Certificates offered with respect thereto 
will be considered to evidence ownership of "regular interests" ("REMIC Regular 
Certificates") or "residual interests" ("REMIC Residual Certificates") in that  
REMIC within the meaning of the REMIC Provisions.                               

    If an entity electing to be treated as a REMIC fails to comply with one or
more of the ongoing requirements of the Code for such status during any taxable 
year, the Code provides that the entity will not be treated as a REMIC for such 
year and thereafter. In that event, such entity may be taxable as a corporation 
under Treasury regulations, and the related REMIC Certificates may not be       
accorded the status or given the tax treatment described below. Although the    
Code authorizes the Treasury Department to issue regulations providing relief in
the event of an inadvertent termination of REMIC status, no such regulations    
have been issued. Any such relief, moreover, may be accompanied by sanctions,   
such as the imposition of a corporate tax on all or a portion of the Trust      
Fund's income for the period in which the requirements for such status are not  
satisfied. The Pooling and Servicing Agreement with respect to each REMIC will  
include provisions designed to maintain the Trust Fund's status as a REMIC under
the REMIC Provisions. It is not anticipated that the status of any Trust Fund as
a REMIC will be terminated.                                                     

CHARACTERIZATION OF INVESTMENTS IN REMIC CERTIFICATES                       

    In general, the REMIC Certificates will be "real estate assets" within the
meaning of Section 856(c)(5)(A) of the Code and assets described in Section     
7701(a)(19)(C) of the Code in the same proportion that the assets of the REMIC  
underlying such Certificates would be so treated. Moreover, if 95% or more of   
the assets of the REMIC qualify for any of the foregoing treatments at all times
during a calendar year, the REMIC Certificates will qualify for the             
corresponding status                                                            

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in their entirety for that calendar year. Interest (including original issue    
discount) on the REMIC Regular Certificates and income allocated to the class of
REMIC Residual Certificates will be interest described in Section 856(c)(3)(B)  
of the Code to the extent that such Certificates are treated as "real estate    
assets" within the meaning of Section 856(c)(5)(A) of the Code. In addition, the
REMIC Regular Certificates will be "qualified mortgages" within the meaning of  
Section 860G(a)(3) of the Code. The determination as to the percentage of the   
REMIC's assets that constitute assets described in the foregoing sections of the
Code will be made with respect to each calendar quarter based on the average    
adjusted basis of each category of the assets held by the REMIC during such     
calendar quarter. The REMIC will report those determinations to                 
Certificateholders in the manner and at the times required by applicable        
Treasury regulations.                                                           

The assets of the REMIC will include, in addition to Mortgage Loans,  
payments on Mortgage Loans held pending distribution on the REMIC Certificates  
and property acquired by foreclosure held pending sale, and may include amounts 
in reserve accounts. It is unclear whether property acquired by foreclosure held
pending sale and amounts in reserve accounts would be considered to be part of  
the Mortgage Loans, or whether such assets (to the extent not invested in assets
described in the foregoing sections) otherwise would receive the same treatment 
as the Mortgage Loans for purposes of all of the foregoing sections. In         
addition, in some instances Mortgage Loans may not be treated entirely as assets
described in the foregoing sections. If so, the related Prospectus Supplement   
will describe the Mortgage Loans that may not be so treated. The REMIC          
Regulations do provide, however, that payments on Mortgage Loans held pending   
distribution are considered part of the Mortgage Loans for purposes of Section  
856(c)(5)(A) of the Code. Furthermore, foreclosure property will qualify as     
"real estate assets" under Section 856(c)(5)(A) of the Code.                    

TIERED REMIC STRUCTURES                                                     

  For certain series of REMIC Certificates, two or more separate elections
may be made to treat designated portions of the related Trust Fund as REMICs    
("Tiered REMICs") for federal income tax purposes. Upon the issuance of any such
series of REMIC Certificates, Thacher Proffitt & Wood, counsel to the Depositor,
will deliver its opinion generally to the effect that, assuming compliance with 
all provisions of the related Pooling and Servicing Agreement, the Tiered REMICs
will each qualify as a REMIC and the REMIC Certificates issued by the Tiered    
REMICs, respectively, will be considered to evidence ownership of REMIC Regular 
Certificates or REMIC Residual Certificates in the related REMIC within the     
meaning of the REMIC Provisions.                                                

   Solely for purposes of determining whether the REMIC Certificates will be
"real estate assets" within the meaning of Section 856(c)(5)(A) of the Code, and
"loans secured by an interest in real property" under Section 7701(a)(19)(C) of 
the Code, and whether the income on such Certificates is interest described in  
Section 856(c)(3)(B) of the Code, the Tiered REMICs will be treated as one      
REMIC.                                                                          

TAXATION OF OWNERS OF REMIC REGULAR CERTIFICATES                            

GENERAL                                                               

   Except as otherwise stated in this discussion, REMIC Regular Certificates
will be treated for federal income tax purposes as debt instruments issued by   
the REMIC and not as ownership interests in the REMIC or its assets. Moreover,  
holders of REMIC Regular Certificates that otherwise report income under a cash 
method of accounting will be required to report income with respect to REMIC    
Regular Certificates under an accrual method.                                   

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ORIGINAL ISSUE DISCOUNT                                               

Certain REMIC Regular Certificates may be issued with "original issue 
discount" within the meaning of Section 1273(a) of the Code. Any holders of     
REMIC Regular Certificates issued with original issue discount generally will be
required to include original issue discount in income as it accrues, in         
accordance with the method described below, in advance of the receipt of the    
cash attributable to such income. In addition, Section 1272(a)(6) of the Code   
provides special rules applicable to REMIC Regular Certificates and certain     
other debt instruments issued with original issue discount. Regulations have not
been issued under that section.                                                 

The Code requires that a prepayment assumption be used with respect to
Mortgage Loans held by a REMIC in computing the accrual of original issue       
discount on REMIC Regular Certificates issued by that REMIC, and that           
adjustments be made in the amount and rate of accrual of such discount to       
reflect differences between the actual prepayment rate and the prepayment       
assumption. The prepayment assumption is to be determined in a manner prescribed
in Treasury regulations; as noted above, those regulations have not been issued.
The Conference Committee Report accompanying the Tax Reform Act of 1986 (the    
"Committee Report") indicates that the regulations will provide that the        
prepayment assumption used with respect to a REMIC Regular Certificate must be  
the same as that used in pricing the initial offering of such REMIC Regular     
Certificate. The prepayment assumption (the "Prepayment Assumption") used in    
reporting original issue discount for each series of REMIC Regular Certificates 
will be consistent with this standard and will be disclosed in the related      
Prospectus Supplement. However, neither the Depositor, nor the Master Servicer  
will make any representation that the Mortgage Loans will in fact prepay at a   
rate conforming to the Prepayment Assumption or at any other rate.              

     The original issue discount, if any, on a REMIC Regular Certificate will be
the excess of its stated redemption price at maturity over its issue price. The 
issue price of a particular class of REMIC Regular Certificates will be the     
first cash price at which a substantial amount of REMIC Regular Certificates of 
that class is sold (excluding sales to bond houses, brokers and underwriters).  
If less than a substantial amount of a particular class of REMIC Regular        
Certificates is sold for cash on or prior to the date of their initial issuance 
(the "Closing Date"), the issue price for such class will be the fair market    
value of such class on the Closing Date. Under the OID Regulations, the stated  
redemption price of a REMIC Regular Certificate is equal to the total of all    
payments to be made on such Certificate other than "qualified stated interest." 
"Qualified stated interest" includes interest that is unconditionally payable at
least annually at a single fixed rate, or at a "qualified floating rate," an    
"objective rate," a combination of a single fixed rate and one or more          
"qualified floating rates" or one "qualified inverse floating rate," or a       
combination of "qualified floating rates" that does not operate in a manner that
accelerates or defers interest payments on such REMIC Regular Certificate.      

In the case of REMIC Regular Certificates bearing adjustable interest 
rates, the determination of the total amount of original issue discount and the 
timing of the inclusion thereof will vary according to the characteristics of   
such REMIC Regular Certificates. If the original issue discount rules apply to  
such Certificates, the related Prospectus Supplement will describe the manner in
which such rules will be applied with respect to those Certificates in preparing
information returns to the Certificateholders and the Internal Revenue Service  
(the "IRS").                                                                    

     Certain classes of the REMIC Regular Certificates may provide for the first
interest payment with respect to such Certificates to be made more than one     
month after the date of issuance, a period which is longer than the subsequent  
monthly intervals between interest payments. Assuming the "accrual period" (as  
defined below) for original issue discount is each monthly period that ends on  
the day prior to each Distribution Date, in some cases, as a consequence of this
"long first accrual period," some or all interest payments may be required to be
included in the stated redemption price of the REMIC Regular Certificate and    
accounted for as original issue discount. Because interest on REMIC Regular     
Certificates must in any event be accounted for                                 

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under an accrual method, applying this analysis would result in only a slight   
difference in the timing of the inclusion in income of the yield on the REMIC   
Regular Certificates.                                                           

   In addition, if the accrued interest to be paid on the first Distribution
Date is computed with respect to a period that begins prior to the Closing Date,
a portion of the purchase price paid for a REMIC Regular Certificate will       
reflect such accrued interest. In such cases, information returns to the        
Certificateholders and the IRS will be based on the position that the portion of
the purchase price paid for the interest accrued with respect to periods prior  
to the Closing Date is treated as part of the overall cost of such REMIC Regular
Certificate (and not as a separate asset the cost of which is recovered entirely
out of interest received on the next Distribution Date) and that portion of the 
interest paid on the first Distribution Date in excess of interest accrued for a
number of days corresponding to the number of days from the Closing Date to the 
first Distribution Date should be included in the stated redemption price of    
such REMIC Regular Certificate. However, the OID Regulations state that all or  
some portion of such accrued interest may be treated as a separate asset the    
cost of which is recovered entirely out of interest paid on the first           
Distribution Date. It is unclear how an election to do so would be made under   
the OID Regulations and whether such an election could be made unilaterally by a
Certificateholder.                                                              

     Notwithstanding the general definition of original issue discount, original
issue discount on a REMIC Regular Certificate will be considered to be de       
minimis if it is less than 0.25% of the stated redemption price of the REMIC    
Regular Certificate multiplied by its weighted average life. For this purpose,  
the weighted average life of the REMIC Regular Certificate is computed as the   
sum of the amounts determined, as to each payment included in the stated        
redemption price of such REMIC Regular Certificate, by multiplying (i) the      
number of complete years (rounding down for partial years) from the issue date  
until such payment is expected to be made (presumably taking into account the   
Prepayment Assumption) by (ii) a fraction, the numerator of which is the amount 
of the payment, and the denominator of which is the stated redemption price at  
maturity of such REMIC Regular Certificate. Under the OID Regulations, original 
issue discount of only a de minimis amount (other than de minimis original issue
discount attributable to a so-called "teaser" interest rate or an initial       
interest holiday) will be included in income as each payment of stated principal
is made, based on the product of the total amount of such de minimis original   
issue discount and a fraction, the numerator of which is the amount of such     
principal payment and the denominator of which is the outstanding stated        
principal amount of the REMIC Regular Certificate. The OID Regulations also     
would permit a Certificateholder to elect to accrue de minimis original issue   
discount into income currently based on a constant yield method. See "Taxation  
of Owners of REMIC Regular Certificates-Market Discount" for a description of   
such election under the OID Regulations.                                        

     If original issue discount on a REMIC Regular Certificate is in excess of a
de minimis amount, the holder of such Certificate must include in ordinary gross
income the sum of the "daily portions" of original issue discount for each day  
during its taxable year on which it held such REMIC Regular Certificate,        
including the purchase date but excluding the disposition date. In the case of  
an original holder of a REMIC Regular Certificate, the daily portions of        
original issue discount will be determined as follows.                          

As to each "accrual period," that is, unless otherwise stated in the  
related Prospectus Supplement, each period that ends on a date that corresponds 
to the day prior to each Distribution Date and begins on the first day following
the immediately preceding accrual period (or in the case of the first such      
period, begins on the Closing Date), a calculation will be made of the portion  
of the original issue discount that accrued during such accrual period. The     
portion of original issue discount that accrues in any accrual period will equal
the excess, if any, of (i) the sum of (A) the present value, as of the end of   
the accrual period, of all of the distributions remaining to be made on the     
REMIC Regular Certificate, if any, in future periods and (B) the distributions  
made on such REMIC Regular Certificate during the accrual period of amounts     
included in the stated redemption price, over (ii) the adjusted issue price of  
such REMIC Regular                                                              

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Certificate at the beginning of the accrual period. The present value of the    
remaining distributions referred to in the preceding sentence will be calculated
(i) assuming that distributions on the REMIC Regular Certificate will be        
received in future periods based on the Mortgage Loans being prepaid at a rate  
equal to the Prepayment Assumption and (ii) using a discount rate equal to the  
original yield to maturity of the Certificate. For these purposes, the original 
yield to maturity of the Certificate will be calculated based on its issue price
and assuming that distributions on the Certificate will be made in all accrual  
periods based on the Mortgage Loans being prepaid at a rate equal to the        
Prepayment Assumption. The adjusted issue price of a REMIC Regular Certificate  
at the beginning of any accrual period will equal the issue price of such       
Certificate, increased by the aggregate amount of original issue discount that  
accrued with respect to such Certificate in prior accrual periods, and reduced  
by the amount of any distributions made on such REMIC Regular Certificate in    
prior accrual periods of amounts included in the stated redemption price. The   
original issue discount accruing during any accrual period, computed as         
described above, will be allocated ratably to each day during the accrual period
to determine the daily portion of original issue discount for such day.         

   A subsequent purchaser of a REMIC Regular Certificate that purchases such
Certificate at a cost (excluding any portion of such cost attributable to       
accrued qualified stated interest) less than its remaining stated redemption    
price will also be required to include in gross income the daily portions of any
original issue discount with respect to such Certificate. However, each such    
daily portion will be reduced, if such cost is in excess of its "adjusted issue 
price," in proportion to the ratio such excess bears to the aggregate original  
issue discount remaining to be accrued on such REMIC Regular Certificate. The   
adjusted issue price of a REMIC Regular Certificate on any given day equals the 
sum of (i) the adjusted issue price (or, in the case of the first accrual       
period, the issue price) of such Certificate at the beginning of the accrual    
period which includes such day and (ii) the daily portions of original issue    
discount for all days during such accrual period prior to such day.             

MARKET DISCOUNT                                                       

    A Certificateholder that purchases a REMIC Regular Certificate at a market
discount, that is, in the case of a REMIC Regular Certificate issued without    
original issue discount, at a purchase price less than its remaining stated     
principal amount, or in the case of a REMIC Regular Certificate issued with     
original issue discount, at a purchase price less than its adjusted issue price 
will recognize gain upon receipt of each distribution representing stated       
redemption price. In particular, under Section 1276 of the Code such a          
Certificateholder generally will be required to allocate the portion of each    
such distribution representing stated redemption price first to accrued market  
discount not previously included in income, and to recognize ordinary income to 
that extent. A Certificateholder may elect to include market discount in income 
currently as it accrues rather than including it on a deferred basis in         
accordance with the foregoing. If made, such election will apply to all market  
discount bonds acquired by such Certificateholder on or after the first day of  
the first taxable year to which such election applies. In addition, the OID     
Regulations permit a Certificateholder to elect to accrue all interest, discount
(including de minimis market or original issue discount) and premium in income  
as interest, based on a constant yield method. If such an election were made    
with respect to a REMIC Regular Certificate with market discount, the           
Certificateholder would be deemed to have made an election to include currently 
market discount in income with respect to all other debt instruments having     
market discount that such Certificateholder acquires during the taxable year of 
the election or thereafter, and possibly previously acquired instruments.       
Similarly, a Certificateholder that made this election for a Certificate that is
acquired at a premium would be deemed to have made an election to amortize bond 
premium with respect to all debt instruments having amortizable bond premium    
that such Certificateholder owns or acquires. See "Taxation of Owners of REMIC  
Regular                                                                         

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Certificates-Premium" below. Each of these elections to accrue interest,        
discount and premium with respect to a Certificate on a constant yield method or
as interest would be irrevocable.                                               

   However, market discount with respect to a REMIC Regular Certificate will
be considered to be de minimis for purposes of Section 1276 of the Code if such 
market discount is less than 0.25% of the remaining stated redemption price of  
such REMIC Regular Certificate multiplied by the number of complete years to    
maturity remaining after the date of its purchase. In interpreting a similar    
rule with respect to original issue discount on obligations payable in          
installments, the OID Regulations refer to the weighted average maturity of     
obligations, and it is likely that the same rule will be applied with respect to
market discount, presumably taking into account the Prepayment Assumption. If   
market discount is treated as de minimis under this rule, it appears that the   
actual discount would be treated in a manner similar to original issue discount 
of a de minimis amount. See "Taxation of Owners of REMIC Regular                
Certificates-Original Issue Discount" above. Such treatment would result in     
discount being included in income at a slower rate than discount would be       
required to be included in income using the method described above.             

Section 1276(b)(3) of the Code specifically authorizes the Treasury   
Department to issue regulations providing for the method for accruing market    
discount on debt instruments, the principal of which is payable in more than one
installment. Until regulations are issued by the Treasury Department, certain   
rules described in the Committee Report apply. The Committee Report indicates   
that in each accrual period market discount on REMIC Regular Certificates should
accrue, at the Certificateholder's option: (i) on the basis of a constant yield 
method, (ii) in the case of a REMIC Regular Certificate issued without original 
issue discount, in an amount that bears the same ratio to the total remaining   
market discount as the stated interest paid in the accrual period bears to the  
total amount of stated interest remaining to be paid on the REMIC Regular       
Certificate as of the beginning of the accrual period, or (iii) in the case of a
REMIC Regular Certificate issued with original issue discount, in an amount that
bears the same ratio to the total remaining market discount as the original     
issue discount accrued in the accrual period bears to the total original issue  
discount remaining on the REMIC Regular Certificate at the beginning of the     
accrual period. Moreover, the Prepayment Assumption used in calculating the     
accrual of original issue discount is also used in calculating the accrual of   
market discount. Because the regulations referred to in this paragraph have not 
been issued, it is not possible to predict what effect such regulations might   
have on the tax treatment of a REMIC Regular Certificate purchased at a discount
in the secondary market.                                                        

    To the extent that REMIC Regular Certificates provide for monthly or other
periodic distributions throughout their term, the effect of these rules may be  
to require market discount to be includible in income at a rate that is not     
significantly slower than the rate at which such discount would accrue if it    
were original issue discount. Moreover, in any event a holder of a REMIC Regular
Certificate generally will be required to treat a portion of any gain on the    
sale or exchange of such Certificate as ordinary income to the extent of the    
market discount accrued to the date of disposition under one of the foregoing   
methods, less any accrued market discount previously reported as ordinary       
income.                                                                         

Further, under Section 1277 of the Code a holder of a REMIC Regular   
Certificate may be required to defer a portion of its interest deductions for   
the taxable year attributable to any indebtedness incurred or continued to      
purchase or carry a REMIC Regular Certificate purchased with market discount.   
For these purposes, the de minimis rule referred to above applies. Any such     
deferred interest expense would not exceed the market discount that accrues     
during such taxable year and is, in general, allowed as a deduction not later   
than the year in which such market discount is includible in income. If such    
holder elects to include market discount in income currently as it accrues on   
all market discount instruments acquired by such holder in that taxable year or 
thereafter, the interest deferral rule described above will not apply.          

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PREMIUM                                                               

   A REMIC Regular Certificate purchased at a cost (excluding any portion of
such cost attributable to accrued qualified stated interest) greater than its   
remaining stated redemption price will be considered to be purchased at a       
premium. The holder of such a REMIC Regular Certificate may elect under Section 
171 of the Code to amortize such premium under the constant yield method over   
the life of the Certificate. If made, such an election will apply to all debt   
instruments having amortizable bond premium that the holder owns or subsequently
acquires. Amortizable premium will be treated as an offset to interest income on
the related debt instrument, rather than as a separate interest deduction. The  
OID Regulations also permit Certificateholders to elect to include all interest,
discount and premium in income based on a constant yield method, further        
treating the Certificateholder as having made the election to amortize premium  
generally. See "Taxation of Owners of REMIC Regular Certificates-Market         
Discount" above. The Committee Report states that the same rules that apply to  
accrual of market discount (which rules will require use of a Prepayment        
Assumption in accruing market discount with respect to REMIC Regular            
Certificates without regard to whether such Certificates have original issue    
discount) will also apply in amortizing bond premium under Section 171 of the   
Code.                                                                           

REALIZED LOSSES                                                       

    Under Section 166 of the Code, both corporate holders of the REMIC Regular
Certificates and noncorporate holders of the REMIC Regular Certificates that    
acquire such Certificates in connection with a trade or business should be      
allowed to deduct, as ordinary losses, any losses sustained during a taxable    
year in which their Certificates become wholly or partially worthless as the    
result of one or more realized losses on the Mortgage Loans. However, it appears
that a noncorporate holder that does not acquire a REMIC Regular Certificate in 
connection with a trade or business will not be entitled to deduct a loss under 
Section 166 of the Code until such holder's Certificate becomes wholly worthless
(i.e., until its outstanding principal balance has been reduced to zero) and    
that the loss will be characterized as a short-term capital loss.               

Each holder of a REMIC Regular Certificate will be required to accrue 
interest and original issue discount with respect to such Certificate, without  
giving effect to any reductions in distributions attributable to defaults or    
delinquencies on the Mortgage Loans or the Underlying Certificates until it can 
be established that any such reduction ultimately will not be recoverable. As a 
result, the amount of taxable income reported in any period by the holder of a  
REMIC Regular Certificate could exceed the amount of economic income actually   
realized by the holder in such period. Although the holder of a REMIC Regular   
Certificate eventually will recognize a loss or reduction in income attributable
to previously accrued and included income that as the result of a realized loss 
ultimately will not be realized, the law is unclear with respect to the timing  
and character of such loss or reduction in income.                              

TAXATION OF OWNERS OF REMIC RESIDUAL CERTIFICATES                           

GENERAL                                                               

   As residual interests, the REMIC Residual Certificates will be subject to
tax rules that differ significantly from those that would apply if the REMIC    
Residual Certificates were treated for federal income tax purposes as direct    
ownership interests in the Mortgage Loans or as debt instruments issued by the  
REMIC.                                                                          

A holder of a REMIC Residual Certificate generally will be required to
report its daily portion of the taxable income or, subject to the limitations   
noted in this discussion, the net loss of the REMIC for each day during a       
calendar quarter that such holder owned such REMIC Residual Certificate. For    
this purpose, the taxable income or net loss of the REMIC will be allocated to  
each day in the calendar quarter ratably using a "30 days per month/90 days per 
quarter/360 days per year" convention unless otherwise disclosed in the related 
Prospectus Supplement. The daily                                                

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amounts so allocated will then be allocated among the REMIC Residual            
Certificateholders in proportion to their respective ownership interests on such
day. Any amount included in the gross income or allowed as a loss of any REMIC  
Residual Certificateholder by virtue of this paragraph will be treated as       
ordinary income or loss. The taxable income of the REMIC will be determined     
under the rules described below in "Taxable Income of the REMIC" and will be    
taxable to the REMIC Residual Certificateholders without regard to the timing or
amount of cash distributions by the REMIC. Ordinary income derived from REMIC   
Residual Certificates will be "portfolio income" for purposes of the taxation of
taxpayers subject to limitations under Section 469 of the Code on the           
deductibility of "passive losses."                                              

  A holder of a REMIC Residual Certificate that purchased such Certificate
from a prior holder of such Certificate also will be required to report on its  
federal income tax return amounts representing its daily share of the taxable   
income (or net loss) of the REMIC for each day that it holds such REMIC Residual
Certificate. Those daily amounts generally will equal the amounts of taxable    
income or net loss determined as described above. The Committee Report indicates
that certain modifications of the general rules may be made, by regulations,    
legislation or otherwise to reduce (or increase) the income of a REMIC Residual 
Certificateholder that purchased such REMIC Residual Certificate from a prior   
holder of such Certificate at a price greater than (or less than) the adjusted  
basis (as defined below) such REMIC Residual Certificate would have had in the  
hands of an original holder of such Certificate. The REMIC Regulations, however,
do not provide for any such modifications.                                      

Any payments received by a holder of a REMIC Residual Certificate in  
connection with the acquisition of such REMIC Residual Certificate will be taken
into account in determining the income of such holder for federal income tax    
purposes. Although it appears likely that any such payment would be includible  
in income immediately upon its receipt, the IRS might assert that such payment  
should be included in income over time according to an amortization schedule or 
according to some other method. Because of the uncertainty concerning the       
treatment of such payments, holders of REMIC Residual Certificates should       
consult their tax advisors concerning the treatment of such payments for income 
tax purposes.                                                                   

    The amount of income REMIC Residual Certificateholders will be required to
report (or the tax liability associated with such income) may exceed the amount 
of cash distributions received from the REMIC for the corresponding period.     
Consequently, REMIC Residual Certificateholders should have other sources of    
funds sufficient to pay any federal income taxes due as a result of their       
ownership of REMIC Residual Certificates or unrelated deductions against which  
income may be offset, subject to the rules relating to "excess inclusions,"     
residual interests without "significant value" and "noneconomic" residual       
interests discussed below. The fact that the tax liability associated with the  
income allocated to REMIC Residual Certificateholders may exceed the cash       
distributions received by such REMIC Residual Certificateholders for the        
corresponding period may significantly adversely affect such REMIC Residual     
Certificateholders' after-tax rate of return.                                   

TAXABLE INCOME OF THE REMIC                                           

 The taxable income of the REMIC will equal the income from the Mortgage
Loans and other assets of the REMIC plus any cancellation of indebtedness income
due to the allocation of realized losses to REMIC Regular Certificates, less the
deductions allowed to the REMIC for interest (including original issue discount 
and reduced by any premium on issuance) on the REMIC Regular Certificates (and  
any other class of REMIC Certificates constituting "regular interests" in the   
REMIC not offered hereby), amortization of any premium on the Mortgage Loans,   
bad debt losses with respect to the Mortgage Loans and, except as described     
below, for servicing, administrative and other expenses.                        

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For purposes of determining its taxable income, the REMIC will have an
initial aggregate basis in its assets equal to the sum of the issue prices of   
all REMIC Certificates (or, if a class of REMIC Certificates is not sold        
initially, their fair market values). Such aggregate basis will be allocated    
among the Mortgage Loans and the other assets of the REMIC in proportion to     
their respective fair market values. The issue price of any REMIC Certificates  
offered hereby will be determined in the manner described above under "-Taxation
of Owners of REMIC Regular Certificates-Original Issue Discount." The issue     
price of a REMIC Certificate received in exchange for an interest in the        
Mortgage Loans or other property will equal the fair market value of such       
interests in the Mortgage Loans or other property. Accordingly, if one or more  
classes of REMIC Certificates are retained initially rather than sold, the      
Trustee may be required to estimate the fair market value of such interests in  
order to determine the basis of the REMIC in the Mortgage Loans and other       
property held by the REMIC.                                                     

Subject to possible application of the de minimis rules, the method of
accrual by the REMIC of original issue discount income and market discount      
income with respect to Mortgage Loans that it holds will be equivalent to the   
method for accruing original issue discount income for holders of REMIC Regular 
Certificates (that is, under the constant yield method taking into account the  
Prepayment Assumption). However, a REMIC that acquires loans at a market        
discount must include such market discount in income currently, as it accrues,  
on a constant yield basis. See "-Taxation of Owners of REMIC Regular            
Certificates" above, which describes a method for accruing such discount income 
that is analogous to that required to be used by a REMIC as to Mortgage Loans   
with market discount that it holds.                                             

A Mortgage Loan will be deemed to have been acquired with discount (or
premium) to the extent that the REMIC's basis therein, determined as described  
in the preceding paragraph, is less than (or greater than) its stated redemption
price. Any such discount will be includible in the income of the REMIC as it    
accrues, in advance of receipt of the cash attributable to such income, under a 
method similar to the method described above for accruing original issue        
discount on the REMIC Regular Certificates. It is anticipated that each REMIC   
will elect under Section 171 of the Code to amortize any premium on the Mortgage
Loans. Premium on any Mortgage Loan to which such election applies may be       
amortized under a constant yield method, presumably taking into account a       
Prepayment Assumption. Further, such an election would not apply to any Mortgage
Loan originated on or before September 27, 1985. Instead, premium on such a     
Mortgage Loan should be allocated among the principal payments thereon and be   
deductible by the REMIC as those payments become due or upon the prepayment of  
such Mortgage Loan.                                                             

   A REMIC will be allowed deductions for interest (including original issue
discount) on the REMIC Regular Certificates (including any other class of REMIC 
Certificates constituting "regular interests" in the REMIC not offered hereby)  
equal to the deductions that would be allowed if the REMIC Regular Certificates 
(including any other class of REMIC Certificates constituting "regular          
interests" in the REMIC not offered hereby) were indebtedness of the REMIC.     
Original issue discount will be considered to accrue for this purpose as        
described above under "-Taxation of Owners of REMIC Regular                     
Certificates-Original Issue Discount," except that the de minimis rule and the  
adjustments for subsequent holders of REMIC Regular Certificates (including any 
other class of REMIC Certificates constituting "regular interests" in the REMIC 
not offered hereby) described therein will not apply.                           

    If a class of REMIC Regular Certificates is issued at a price in excess of
the stated redemption price of such class (such excess "Issue Premium"), the net
amount of interest deductions that are allowed the REMIC in each taxable year   
with respect to the REMIC Regular Certificates of such class will be reduced by 
an amount equal to the portion of the Issue Premium that is considered to be    
amortized or repaid in that year. Although the matter is not entirely certain,  
it is likely that Issue Premium would be amortized under a constant yield method
in a manner analogous to the method of accruing original issue discount         
described above under "-Taxation of Owners of REMIC Regular                     
Certificates-Original Issue Discount."                                          

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    As a general rule, the taxable income of a REMIC will be determined in the
same manner as if the REMIC were an individual having the calendar year as its  
taxable year and using the accrual method of accounting. However, no item of    
income, gain, loss or deduction allocable to a prohibited transaction will be   
taken into account. See "-Prohibited Transactions Tax and Other Taxes" below.   
Further, the limitation on miscellaneous itemized deductions imposed on         
individuals by Section 67 of the Code (which allows such deductions only to the 
extent they exceed in the aggregate two percent of the taxpayer's adjusted gross
income) will not be applied at the REMIC level so that the REMIC will be allowed
deductions for servicing, administrative and other non-interest expenses in     
determining its taxable income. All such expenses will be allocated as a        
separate item to the holders of REMIC Certificates, subject to the limitation of
Section 67 of the Code. See "-Possible Pass-Through of Miscellaneous Itemized   
Deductions" below. If the deductions allowed to the REMIC exceed its gross      
income for a calendar quarter, such excess will be the net loss for the REMIC   
for that calendar quarter.                                                      

BASIS RULES, NET LOSSES AND DISTRIBUTIONS                             

 The adjusted basis of a REMIC Residual Certificate will be equal to the
amount paid for such REMIC Residual Certificate, increased by amounts included  
in the income of the REMIC Residual Certificateholder and decreased (but not    
below zero) by distributions made, and by net losses allocated, to such REMIC   
Residual Certificateholder.                                                     

    A REMIC Residual Certificateholder is not allowed to take into account any
net loss for any calendar quarter to the extent such net loss exceeds such REMIC
Residual Certificateholder's adjusted basis in its REMIC Residual Certificate as
of the close of such calendar quarter (determined without regard to such net    
loss). Any loss that is not currently deductible by reason of this limitation   
may be carried forward indefinitely to future calendar quarters and, subject to 
the same limitation, may be used only to offset income from the REMIC Residual  
Certificate. The ability of REMIC Residual Certificateholders to deduct net     
losses may be subject to additional limitations under the Code, as to which     
REMIC Residual Certificateholders should consult their tax advisors.            

Any distribution on a REMIC Residual Certificate will be treated as a 
non-taxable return of capital to the extent it does not exceed the holder's     
adjusted basis in such REMIC Residual Certificate. To the extent a distribution 
on a REMIC Residual Certificate exceeds such adjusted basis, it will be treated 
as gain from the sale of such REMIC Residual Certificate. Holders of certain    
REMIC Residual Certificates may be entitled to distributions early in the term  
of the related REMIC under circumstances in which their bases in such REMIC     
Residual Certificates will not be sufficiently large that such distributions    
will be treated as nontaxable returns of capital. Their bases in such REMIC     
Residual Certificates will initially equal the amount paid for such REMIC       
Residual Certificates and will be increased by their allocable shares of taxable
income of the REMIC. However, such bases increases may not occur until the end  
of the calendar quarter, or perhaps the end of the calendar year, with respect  
to which such REMIC taxable income is allocated to the REMIC Residual           
Certificateholders. To the extent such REMIC Residual Certificateholders'       
initial bases are less than the distributions to such REMIC Residual            
Certificateholders, and increases in such initial bases either occur after such 
distributions or (together with their initial bases) are less than the amount of
such distributions, gain will be recognized to such REMIC Residual              
Certificateholders on such distributions and will be treated as gain from the   
sale of their REMIC Residual Certificates.                                      

  The effect of these rules is that a REMIC Residual Certificateholder may
not amortize its basis in a REMIC Residual Certificate, but may only recover its
basis through distributions, through the deduction of any net losses of the     
REMIC or upon the sale of its REMIC Residual Certificate. See "-Sales of REMIC  
Certificates" below. For a discussion of possible modifications of these rules  
that may require adjustments to income of a holder of a REMIC Residual          
Certificate other than an original holder in order to reflect any difference    
between the cost of such REMIC Residual                                         

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Certificate to such REMIC Residual Certificateholder and the adjusted basis such
REMIC Residual Certificate would have in the hands of an original holder, see   
"-Taxation of Owners of REMIC Residual Certificates-General" above.             

EXCESS INCLUSIONS                                                     

   Any "excess inclusions" with respect to a REMIC Residual Certificate will
be subject to federal income tax in all events.                                 

In general, the "excess inclusions" with respect to a REMIC Residual  
Certificate for any calendar quarter will be the excess, if any, of (i) the     
daily portions of REMIC taxable income allocable to such REMIC Residual         
Certificate over (ii) the sum of the "daily accruals" (as defined below) for    
each day during such quarter that such REMIC Residual Certificate was held by   
such REMIC Residual Certificateholder. The daily accruals of a REMIC Residual   
Certificateholder will be determined by allocating to each day during a calendar
quarter its ratable portion of the product of the "adjusted issue price" of the 
REMIC Residual Certificate at the beginning of the calendar quarter and 120% of 
the "long-term Federal rate" in effect on the Closing Date. For this purpose,   
the adjusted issue price of a REMIC Residual Certificate as of the beginning of 
any calendar quarter will be equal to the issue price of the REMIC Residual     
Certificate, increased by the sum of the daily accruals for all prior quarters  
and decreased (but not below zero) by any distributions made with respect to    
such REMIC Residual Certificate before the beginning of such quarter. The issue 
price of a REMIC Residual Certificate is the initial offering price to the      
public (excluding bond houses and brokers) at which a substantial amount of the 
REMIC Residual Certificates were sold. The "long-term Federal rate" is an       
average of current yields on Treasury securities with a remaining term of       
greater than nine years, computed and published monthly by the IRS. Although it 
has not done so, the Treasury has authority to issue regulations that would     
treat the entire amount of income accruing on a REMIC Residual Certificate as an
excess inclusion if the REMIC Residual Certificates are considered not to have  
"significant value."                                                            

  For REMIC Residual Certificateholders, excess inclusions (i) will not be
permitted to be offset by deductions, losses or loss carryovers from other      
activities, (ii) will be treated as "unrelated business taxable income" to an   
otherwise tax-exempt organization and (iii) will not be eligible for any rate   
reduction or exemption under any applicable tax treaty with respect to the 30%  
United States withholding tax imposed on distributions to REMIC Residual        
Certificateholders that are foreign investors. See, however, "-Foreign Investors
in REMIC Certificates," below. Furthermore, for purposes of the alternative     
minimum tax, (i) excess inclusions will not be permitted to be offset by the    
alternative tax net operating loss deduction and (ii) alternative minimum       
taxable income may not be less than the taxpayer's excess inclusions. The latter
rule has the effect of preventing nonrefundable tax credits from reducing the   
taxpayer's income tax to an amount lower than the alternative minimum tax on    
excess inclusions.                                                              

In the case of any REMIC Residual Certificates held by a real estate  
investment trust, the aggregate excess inclusions with respect to such REMIC    
Residual Certificates, reduced (but not below zero) by the real estate          
investment trust taxable income (within the meaning of Section 857(b)(2) of the 
Code, excluding any net capital gain), will be allocated among the shareholders 
of such trust in proportion to the dividends received by such shareholders from 
such trust, and any amount so allocated will be treated as an excess inclusion  
with respect to a REMIC Residual Certificate as if held directly by such        
shareholder. Treasury regulations yet to be issued could apply a similar rule to
regulated investment companies, common trust funds and certain cooperatives; the
REMIC Regulations currently do not address this subject.                        

NONECONOMIC REMIC RESIDUAL CERTIFICATES                               

Under the REMIC Regulations, transfers of "noneconomic" REMIC Residual
Certificates will be disregarded for all federal income tax purposes if "a      
significant purpose of the transfer was to                                      

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enable the transferor to impede the assessment or collection of tax." If such   
transfer is disregarded, the purported transferor will continue to remain liable
for any taxes due with respect to the income on such "noneconomic" REMIC        
Residual Certificate. The REMIC Regulations provide that a REMIC Residual       
Certificate is noneconomic unless, based on the Prepayment Assumption and on any
required or permitted clean up calls, or required liquidation provided for in   
the REMIC's organizational documents, (1) the present value of the expected     
future distributions (discounted using the "applicable Federal rate" for        
obligations whose term ends on the close of the last quarter in which excess    
inclusions are expected to accrue with respect to the REMIC Residual            
Certificate, which rate is computed and published monthly by the IRS) on the    
REMIC Residual Certificate equals at least the present value of the expected tax
on the anticipated excess inclusions, and (2) the transferor reasonably expects 
that the transferee will receive distributions with respect to the REMIC        
Residual Certificate at or after the time the taxes accrue on the anticipated   
excess inclusions in an amount sufficient to satisfy the accrued taxes.         
Accordingly, all transfers of REMIC Residual Certificates that may constitute   
noneconomic residual interests will be subject to certain restrictions under the
terms of the related Pooling and Servicing Agreement that are intended to reduce
the possibility of any such transfer being disregarded. Such restrictions will  
require each party to a transfer to provide an affidavit that no purpose of such
transfer is to impede the assessment or collection of tax, including certain    
representations as to the financial condition of the prospective transferee, as 
to which the transferor is also required to make a reasonable investigation to  
determine such transferee's historic payment of its debts and ability to        
continue to pay its debts as they come due in the future. Prior to purchasing a 
REMIC Residual Certificate, prospective purchasers should consider the          
possibility that a purported transfer of such REMIC Residual Certificate by such
a purchaser to another purchaser at some future date may be disregarded in      
accordance with the above-described rules which would result in the retention of
tax liability by such purchaser.                                                

The related Prospectus Supplement will disclose whether offered REMIC 
Residual Certificates may be considered "noneconomic" residual interests under  
the REMIC Regulations; provided, however, that any disclosure that a REMIC      
Residual Certificate will not be considered "noneconomic" will be based upon    
certain assumptions, and the Depositor will make no representation that a REMIC 
Residual Certificate will not be considered "noneconomic" for purposes of the   
above-described rules. See "-Foreign Investors in REMIC Certificates-REMIC      
Residual Certificates" below for additional restrictions applicable to transfers
of certain REMIC Residual Certificates to foreign persons.                      

MARK-TO-MARKET RULES                                                  

On December 24, 1996, the IRS released final regulations (the         
"Mark-to-Market Regulations") relating to the requirement that a securities     
dealer mark to market securities held for sale to customers. This mark-to-market
requirement applies to all securities owned by a dealer, except to the extent   
that the dealer has specifically identified a security as held for investment.  
The Mark-to-Market Regulations provide that for purposes of this mark-to-market 
requirement, a REMIC Residual Certificate issued after January 4, 1995 is not   
treated as a security and thus may not be marked to market. Prospective         
purchasers of a REMIC Residual Certificate should consult their tax advisors    
regarding the possible application of the mark-to-market requirement to REMIC   
Residual Certificates.                                                          

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POSSIBLE PASS-THROUGH OF MISCELLANEOUS ITEMIZED DEDUCTIONS            

    Fees and expenses of a REMIC generally will be allocated to the holders of
the related REMIC Residual Certificates. The applicable Treasury regulations    
indicate, however, that in the case of a REMIC that is similar to a single class
grantor trust, all or a portion of such fees and expenses should be allocated to
the holders of the related REMIC Regular Certificates. Unless otherwise stated  
in the related Prospectus Supplement, such fees and expenses will be allocated  
to holders of the related REMIC Residual Certificates in their entirety and not 
to the holders of the related REMIC Regular Certificates.                       

   With respect to REMIC Residual Certificates or REMIC Regular Certificates
the holders of which receive an allocation of fees and expenses in accordance   
with the preceding discussion, if any holder thereof is an individual, estate or
trust, or a "pass-through entity" beneficially owned by one or more individuals,
estates or trusts, (i) an amount equal to such individual's, estate's or trust's
share of such fees and expenses will be added to the gross income of such holder
and (ii) such individual's, estate's or trust's share of such fees and expenses 
will be treated as a miscellaneous itemized deduction allowable subject to the  
limitation of Section 67 of the Code, which permits such deductions only to the 
extent they exceed in the aggregate two percent of a taxpayer's adjusted gross  
income. In addition, Section 68 of the Code provides that the amount of itemized
deductions otherwise allowable for an individual whose adjusted gross income    
exceeds a specified amount will be reduced by the lesser of (i) 3% of the excess
of the individual's adjusted gross income over such amount or (ii) 80% of the   
amount of itemized deductions otherwise allowable for the taxable year. The     
amount of additional taxable income reportable by REMIC Certificateholders that 
are subject to the limitations of either Section 67 or Section 68 of the Code   
may be substantial. Furthermore, in determining the alternative minimum taxable 
income of such a holder of a REMIC Certificate that is an individual, estate or 
trust, or a "pass-through entity" beneficially owned by one or more individuals,
estates or trusts, no deduction will be allowed for such holder's allocable     
portion of servicing fees and other miscellaneous itemized deductions of the    
REMIC, even though an amount equal to the amount of such fees and other         
deductions will be included in such holder's gross income. Accordingly, such    
REMIC Certificates may not be appropriate investments for individuals, estates, 
or trusts, or pass-through entities beneficially owned by one or more           
individuals, estates or trusts. Such prospective investors should carefully     
consult with their own tax advisors prior to making an investment in such       
Certificates.                                                                   

SALES OF REMIC CERTIFICATES                                                 

If a REMIC Certificate is sold, the selling Certificateholder will    
recognize gain or loss equal to the difference between the amount realized on   
the sale and its adjusted basis in the REMIC Certificate. The adjusted basis of 
a REMIC Regular Certificate generally will equal the cost of such REMIC Regular 
Certificate to such Certificateholder, increased by income reported by such     
Certificateholder with respect to such REMIC Regular Certificate (including     
original issue discount and market discount income) and reduced (but not below  
zero) by distributions on such REMIC Regular Certificate received by such       
Certificateholder and by any amortized premium. The adjusted basis of a REMIC   
Residual Certificate will be determined as described under "-Taxation of Owners 
of REMIC Residual Certificates-Basis Rules, Net Losses and Distributions."      
Except as provided in the following four paragraphs, any such gain or loss will 
be capital gain or loss, provided such REMIC Certificate is held as a capital   
asset (generally, property held for investment) within the meaning of Section   
1221 of the Code. The Code as of the date of this Prospectus provides for a top 
marginal tax rate of 39.6% for individuals and a maximum marginal rate for      
long-term capital gains of individuals of 28%. No such rate differential exists 
for corporations. In addition, the distinction between a capital gain or loss   
and ordinary income or loss remains relevant for other purposes.                

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   Gain from the sale of a REMIC Regular Certificate that might otherwise be
capital gain will be treated as ordinary income to the extent such gain does not
exceed the excess, if any, of (i) the amount that would have been includible in 
the seller's income with respect to such REMIC Regular Certificate assuming that
income had accrued thereon at a rate equal to 110% of the "applicable Federal   
rate" (generally, a rate based on an average of current yields on Treasury      
securities having a maturity comparable to that of the Certificate based on the 
application of the Prepayment Assumption to such Certificate, which rate is     
computed and published monthly by the IRS), determined as of the date of        
purchase of such REMIC Regular Certificate, over (ii) the amount of ordinary    
income actually includible in the seller's income prior to such sale. In        
addition, gain recognized on the sale of a REMIC Regular Certificate by a seller
who purchased such REMIC Regular Certificate at a market discount will be       
taxable as ordinary income in an amount not exceeding the portion of such       
discount that accrued during the period such REMIC Certificate was held by such 
holder, reduced by any market discount included in income under the rules       
described above under "-Taxation of Owners of REMIC Regular Certificates-Market 
Discount" and "-Premium."                                                       

   REMIC Certificates will be "evidences of indebtedness" within the meaning
of Section 582(c)(1) of the Code, so that gain or loss recognized from the sale 
of a REMIC Certificate by a bank or thrift institution to which such section    
applies will be ordinary income or loss.                                        

 A portion of any gain from the sale of a REMIC Regular Certificate that
might otherwise be capital gain may be treated as ordinary income to the extent 
that such Certificate is held as part of a "conversion transaction" within the  
meaning of Section 1258 of the Code. A conversion transaction generally is one  
in which the taxpayer has taken two or more positions in the same or similar    
property that reduce or eliminate market risk, if substantially all of the      
taxpayer's return is attributable to the time value of the taxpayer's net       
investment in such transaction. The amount of gain so realized in a conversion  
transaction that is recharacterized as ordinary income generally will not exceed
the amount of interest that would have accrued on the taxpayer's net investment 
at 120% of the appropriate "applicable Federal rate" (which rate is computed and
published monthly by the IRS) at the time the taxpayer enters into the          
conversion transaction, subject to appropriate reduction for prior inclusion of 
interest and other ordinary income items from the transaction.                  

  Finally, a taxpayer may elect to have net capital gain taxed at ordinary
income rates rather than capital gains rates in order to include such net       
capital gain in total net investment income for the taxable year, for purposes  
of the rule that limits the deduction of interest on indebtedness incurred to   
purchase or carry property held for investment to a taxpayer's net investment   
income.                                                                         

    Except as may be provided in Treasury regulations yet to be issued, if the
seller of a REMIC Residual Certificate reacquires such REMIC Residual           
Certificate, or acquires any other residual interest in a REMIC or any similar  
interest in a "taxable mortgage pool" (as defined in Section 7701(i) of the     
Code) during the period beginning six months before, and ending six months      
after, the date of such sale, such sale will be subject to the "wash sale" rules
of Section 1091 of the Code. In that event, any loss realized by the REMIC      
Residual Certificateholder on the sale will not be deductible, but instead will 
be added to such REMIC Residual Certificateholder's adjusted basis in the       
newly-acquired asset.                                                           

PROHIBITED TRANSACTIONS AND OTHER POSSIBLE REMIC TAXES                      

  The Code imposes a tax on REMICs equal to 100% of the net income derived
from "prohibited transactions" (a "Prohibited Transactions Tax"). In general,   
subject to certain specified exceptions a prohibited transaction means the      
disposition of a Mortgage Loan, the receipt of income from a source other than a
Mortgage Loan or certain other permitted investments, the receipt of            
compensation for services, or gain from the disposition of an asset purchased   
with the payments on the Mortgage Loans for temporary investment pending        
distribution on the REMIC                                                       

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Certificates. It is not anticipated that any REMIC will engage in any prohibited
transactions in which it would recognize a material amount of net income.       

   In addition, certain contributions to a REMIC made after the day on which
the REMIC issues all of its interests could result in the imposition of a tax on
the REMIC equal to 100% of the value of the contributed property (a             
"Contributions Tax"). Each Pooling and Servicing Agreement will include         
provisions designed to prevent the acceptance of any contributions that would be
subject to such tax.                                                            

     REMICs also are subject to federal income tax at the highest corporate rate
on "net income from foreclosure property," determined by reference to the rules 
applicable to real estate investment trusts. "Net income from foreclosure       
property" generally means gain from the sale of a foreclosure property that is  
inventory property and gross income from foreclosure property other than        
qualifying rents and other qualifying income for a real estate investment trust.
Unless otherwise disclosed in the related Prospectus Supplement, it is not      
anticipated that any REMIC will recognize "net income from foreclosure property"
subject to federal income tax.                                                  

    Unless otherwise disclosed in the related Prospectus Supplement, it is not
anticipated that any material state or local income or franchise tax will be    
imposed on any REMIC.                                                           

  Unless otherwise stated in the related Prospectus Supplement, and to the
extent permitted by then applicable laws, any Prohibited Transactions Tax,      
Contributions Tax, tax on "net income from foreclosure property" or state or    
local income or franchise tax that may be imposed on the REMIC will be borne by 
the related Master Servicer or Trustee in either case out of its own funds,     
provided that the Master Servicer or the Trustee, as the case may be, has       
sufficient assets to do so, and provided further that such tax arises out of a  
breach of the Master Servicer's or the Trustee's obligations, as the case may   
be, under the related Pooling and Servicing Agreement and in respect of         
compliance with applicable laws and regulations. Any such tax not borne by the  
Master Servicer or the Trustee will be charged against the related Trust Fund   
resulting in a reduction in amounts payable to holders of the related REMIC     
Certificates.                                                                   

TAX AND RESTRICTIONS ON TRANSFERS OF REMIC RESIDUAL CERTIFICATES TO CERTAIN 
ORGANIZATIONS                                                               

If a REMIC Residual Certificate is transferred to a "disqualified     
organization" (as defined below), a tax would be imposed in an amount           
(determined under the REMIC Regulations) equal to the product of (i) the present
value (discounted using the "applicable Federal rate" for obligations whose term
ends on the close of the last quarter in which excess inclusions are expected to
accrue with respect to the REMIC Residual Certificate, which rate is computed   
and published monthly by the IRS) of the total anticipated excess inclusions    
with respect to such REMIC Residual Certificate for periods after the transfer  
and (ii) the highest marginal federal income tax rate applicable to             
corporations. The anticipated excess inclusions must be determined as of the    
date that the REMIC Residual Certificate is transferred and must be based on    
events that have occurred up to the time of such transfer, the Prepayment       
Assumption and any required or permitted clean up calls or required liquidation 
provided for in the REMIC's organizational documents. Such a tax generally would
be imposed on the transferor of the REMIC Residual Certificate, except that     
where such transfer is through an agent for a disqualified organization, the tax
would instead be imposed on such agent. However, a transferor of a REMIC        
Residual Certificate would in no event be liable for such tax with respect to a 
transfer if the transferee furnishes to the transferor an affidavit that the    
transferee is not a disqualified organization and, as of the time of the        
transfer, the transferor does not have actual knowledge that such affidavit is  
false. Moreover, an entity will not qualify as a REMIC unless there are         
reasonable arrangements designed to ensure that (i) residual interests in such  
entity are not held by disqualified organizations and (ii) information necessary
for the application of the tax described herein will be made available.         
Restrictions on the transfer of REMIC Residual Certificates and certain other   
provisions that are intended to meet this requirement will be included in the   
Pooling                                                                         

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and Servicing Agreement, and will be discussed more fully in any Prospectus     
Supplement relating to the offering of any REMIC Residual Certificate.          

In addition, if a "pass-through entity" (as defined below) includes in
income excess inclusions with respect to a REMIC Residual Certificate, and a    
disqualified organization is the record holder of an interest in such entity,   
then a tax will be imposed on such entity equal to the product of (i) the amount
of excess inclusions on the REMIC Residual Certificate that are allocable to the
interest in the pass-through entity held by such disqualified organization and  
(ii) the highest marginal federal income tax rate imposed on corporations. A    
pass-through entity will not be subject to this tax for any period, however, if 
each record holder of an interest in such pass-through entity furnishes to such 
pass-through entity (i) such holder's social security number and a statement    
under penalties of perjury that such social security number is that of the      
record holder or (ii) a statement under penalties of perjury that such record   
holder is not a disqualified organization.                                      

For these purposes, a "disqualified organization" means (i) the United
States, any State or political subdivision thereof, any foreign government, any 
international organization, or any agency or instrumentality of the foregoing   
(but would not include instrumentalities described in Section 168(h)(2)(D) of   
the Code or the Federal Home Loan Mortgage Corporation), (ii) any organization  
(other than a cooperative described in Section 521 of the Code) that is exempt  
from federal income tax, unless it is subject to the tax imposed by Section 511 
of the Code or (iii) any organization described in Section 1381(a)(2)(C) of the 
Code. For these purposes, a "pass-through entity" means any regulated investment
company, real estate investment trust, trust, partnership or certain other      
entities described in Section 860E(e)(6) of the Code. In addition, a person     
holding an interest in a pass-through entity as a nominee for another person    
will, with respect to such interest, be treated as a pass-through entity.       

TERMINATION                                                                 

  A REMIC will terminate immediately after the Distribution Date following
receipt by the REMIC of the final payment in respect of the Mortgage Loans or   
upon a sale of the REMIC's assets following the adoption by the REMIC of a plan 
of complete liquidation. The last distribution on a REMIC Regular Certificate   
will be treated as a payment in retirement of a debt instrument. In the case of 
a REMIC Residual Certificate, if the last distribution on such REMIC Residual   
Certificate is less than the REMIC Residual Certificateholder's adjusted basis  
in such Certificate, such REMIC Residual Certificateholder should (but may not) 
be treated as realizing a loss equal to the amount of such difference, and such 
loss may be treated as a capital loss.                                          

REPORTING AND OTHER ADMINISTRATIVE MATTERS                                  

     Solely for purposes of the administrative provisions of the Code, the REMIC
will be treated as a partnership and REMIC Residual Certificateholders will be  
treated as partners. Unless otherwise stated in the related Prospectus          
Supplement, the Trustee will file REMIC federal income tax returns on behalf of 
the related REMIC, and under the terms of the related Agreement, will be        
irrevocably appointed by the holders of the largest percentage interest in the  
related REMIC Residual Certificates as their agent to perform all of the duties 
of the "tax matters person" with respect to the REMIC in all respects.          

     As agent for the tax matters person, the Trustee, subject to certain notice
requirements and various restrictions and limitations, generally will have the  
authority to act on behalf of the REMIC and the REMIC Residual                  
Certificateholders in connection with the administrative and judicial review of 
items of income, deduction, gain or loss of the REMIC, as well as the REMIC's   
classification. REMIC Residual Certificateholders generally will be required to 
report such REMIC items consistently with their treatment on the REMIC's tax    
return and may in some circumstances be bound by a settlement agreement between 
the Trustee, as agent for the tax matters person,                               

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and the IRS concerning any such REMIC item. Adjustments made to the REMIC tax   
return may require a REMIC Residual Certificateholder to make corresponding     
adjustments on its return, and an audit of the REMIC's tax return, or the       
adjustments resulting from such an audit, could result in an audit of a REMIC   
Residual Certificateholder's return. No REMIC will be registered as a tax       
shelter pursuant to Section 6111 of the Code because it is not anticipated that 
any REMIC will have a net loss for any of the first five taxable years of its   
existence. Any person that holds a REMIC Residual Certificate as a nominee for  
another person may be required to furnish the REMIC, in a manner to be provided 
in Treasury regulations, with the name and address of such person and other     
information.                                                                    

   Reporting of interest income, including any original issue discount, with
respect to REMIC Regular Certificates is required annually, and may be required 
more frequently under Treasury regulations. These information reports generally 
are required to be sent to individual holders of REMIC Regular Interests and the
IRS; holders of REMIC Regular Certificates that are corporations, trusts,       
securities dealers and certain other non-individuals will be provided interest  
and original issue discount income information and the information set forth in 
the following paragraph upon request in accordance with the requirements of the 
applicable regulations. The information must be provided by the later of 30 days
after the end of the quarter for which the information was requested, or two    
weeks after the receipt of the request. The REMIC must also comply with rules   
requiring a REMIC Regular Certificate issued with original issue discount to    
disclose on its face the amount of original issue discount and the issue date,  
and requiring such information to be reported to the IRS. Reporting with respect
to the REMIC Residual Certificates, including income, excess inclusions,        
investment expenses and relevant information regarding qualification of the     
REMIC's assets will be made as required under the Treasury regulations,         
generally on a quarterly basis.                                                 

As applicable, the REMIC Regular Certificate information reports will 
include a statement of the adjusted issue price of the REMIC Regular Certificate
at the beginning of each accrual period. In addition, the reports will include  
information required by regulations with respect to computing the accrual of any
market discount. Because exact computation of the accrual of market discount on 
a constant yield method would require information relating to the holder's      
purchase price that the REMIC may not have, such regulations only require that  
information pertaining to the appropriate proportionate method of accruing      
market discount be provided. See "-Taxation of Owners of REMIC Regular          
Certificates-Market Discount."                                                  

Unless otherwise specified in the related Prospectus Supplement, the  
responsibility for complying with the foregoing reporting rules will be borne by
the Trustee.                                                                    

BACKUP WITHHOLDING WITH RESPECT TO REMIC CERTIFICATES                       

  Payments of interest and principal, as well as payments of proceeds from
the sale of REMIC Certificates, may be subject to the "backup withholding tax"  
under Section 3406 of the Code at a rate of 31% if recipients of such payments  
fail to furnish to the payor certain information, including their taxpayer      
identification numbers, or otherwise fail to establish an exemption from such   
tax. Any amounts deducted and withheld from a distribution to a recipient would 
be allowed as a credit against such recipient's federal income tax. Furthermore,
certain penalties may be imposed by the IRS on a recipient of payments that is  
required to supply information but that does not do so in the proper manner.    

FOREIGN INVESTORS IN REMIC CERTIFICATES                                     

    A REMIC Regular Certificateholder that is not a "United States person" (as
defined below) and is not subject to federal income tax as a result of any      
direct or indirect connection to the United States in addition to its ownership 
of a REMIC Regular Certificate will not, unless otherwise disclosed in the      
related Prospectus Supplement, be subject to United States federal income or    

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withholding tax in respect of a distribution on a REMIC Regular Certificate,    
provided that the holder complies to the extent necessary with certain          
identification requirements (including delivery of a statement, signed by the   
Certificateholder under penalties of perjury, certifying that such              
Certificateholder is not a United States person and providing the name and      
address of such Certificateholder). For these purposes, "United States person"  
means a citizen or resident of the United States, a corporation, partnership or 
other entity created or organized in, or under the laws of, the United States or
any political subdivision thereof, or an estate whose income is subject to      
United States federal income tax regardless of its source, or a trust if a court
within the United States is able to exercise primary supervision over the       
administration of the trust and one or more United States fiduciaries have the  
authority to control all substantial decisions of the trust. It is possible that
the IRS may assert that the foregoing tax exemption should not apply with       
respect to a REMIC Regular Certificate held by a REMIC Residual                 
Certificateholder that owns directly or indirectly a 10% or greater interest in 
the REMIC Residual Certificates. If the holder does not qualify for exemption,  
distributions of interest, including distributions in respect of accrued        
original issue discount, to such holder may be subject to a tax rate of 30%,    
subject to reduction under any applicable tax treaty.                           

   In addition, the foregoing rules will not apply to exempt a United States
shareholder of a controlled foreign corporation from taxation on such United    
States shareholder's allocable portion of the interest income received by such  
controlled foreign corporation.                                                 

    Further, it appears that a REMIC Regular Certificate would not be included
in the estate of a non-resident alien individual and would not be subject to    
United States estate taxes. However, Certificateholders who are non-resident    
alien individuals should consult their tax advisors concerning this question.   

    Unless otherwise stated in the related Prospectus Supplement, transfers of
REMIC Residual Certificates to investors that are not United States persons will
be prohibited under the related Pooling and Servicing Agreement.                

GRANTOR TRUST FUNDS                                                             

CLASSIFICATION OF GRANTOR TRUST FUNDS                                       

     With respect to each series of Grantor Trust Certificates, Thacher Proffitt
& Wood, counsel to the Depositor, will deliver its opinion to the effect that,  
assuming compliance with all provisions of the related Pooling and Servicing    
Agreement, the related Grantor Trust Fund will be classified as a grantor trust 
under subpart E, part I of subchapter J of the Code and not as a partnership or 
an association taxable as a corporation. Accordingly, each holder of a Grantor  
Trust Certificate generally will be treated as the owner of an interest in the  
Mortgage Loans included in the Grantor Trust Fund.                              

For purposes of the following discussion, a Grantor Trust Certificate 
representing an undivided equitable ownership interest in the principal of the  
Mortgage Loans constituting the related Grantor Trust Fund, together with       
interest thereon at a pass-through rate, will be referred to as a "Grantor Trust
Fractional Interest Certificate." A Grantor Trust Certificate representing      
ownership of all or a portion of the difference between interest paid on the    
Mortgage Loans constituting the related Grantor Trust Fund (net of normal       
administration fees and any Spread) and interest paid to the holders of Grantor 
Trust Fractional Interest Certificates issued with respect to such Grantor Trust
Fund will be referred to as a "Grantor Trust Strip Certificate." A Grantor Trust
Strip Certificate may also evidence a nominal ownership interest in the         
principal of the Mortgage Loans constituting the related Grantor Trust Fund.    

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CHARACTERIZATION OF INVESTMENTS IN GRANTOR TRUST CERTIFICATES               

GRANTOR TRUST FRACTIONAL INTEREST CERTIFICATES                        

In the case of Grantor Trust Fractional Interest Certificates, unless 
otherwise disclosed in the related Prospectus Supplement and subject to the     
discussion below with respect to Buydown Mortgage Loans, counsel to the         
Depositor will deliver an opinion that, in general, Grantor Trust Fractional    
Interest Certificates will represent interests in (i) "loans . . . secured by an
interest in real property" within the meaning of Section 7701(a)(19)(C)(v) of   
the Code; (ii) "obligation[s] (including any participation or Certificate of    
beneficial ownership therein) which . . .[are] principally secured by an        
interest in real property" within the meaning of Section 860G(a)(3) of the Code;
and (iii) "real estate assets" within the meaning of Section 856(c)(5)(A) of the
Code, in each case to the extent the Mortgage Loans qualify for such treatment. 
In addition, counsel to the Depositor will deliver an opinion that interest on  
Grantor Trust Fractional Interest Certificates will to the same extent be       
considered "interest on obligations secured by mortgages on real property or on 
interests in real property" within the meaning of Section 856(c)(3)(B) of the   
Code.                                                                           

 The assets constituting certain Grantor Trust Funds may include Buydown
Mortgage Loans. The characterization of an investment in Buydown Mortgage Loans 
will depend upon the precise terms of the related Buydown Agreement, but to the 
extent that such Buydown Mortgage Loans are secured by a bank account or other  
personal property, they may not be treated in their entirety as assets described
in the foregoing sections of the Code. No directly applicable precedents exist  
with respect to the federal income tax treatment or the characterization of     
investments in Buydown Mortgage Loans. Accordingly, holders of Grantor Trust    
Certificates should consult their own tax advisors with respect to the          
characterization of investments in Grantor Trust Certificates representing an   
interest in a Grantor Trust Fund that includes Buydown Mortgage Loans.          

GRANTOR TRUST STRIP CERTIFICATES                                      

    Even if Grantor Trust Strip Certificates evidence an interest in a Grantor
Trust Fund consisting of Mortgage Loans that are "loans . . . secured by an     
interest in real property" within the meaning of Section 7701(a)(19)(C)(v) of   
the Code, and "real estate assets" within the meaning of Section 856(c)(5)(A) of
the Code, and the interest on which is "interest on obligations secured by      
mortgages on real property" within the meaning of Section 856(c)(3)(B) of the   
Code, it is unclear whether the Grantor Trust Strip Certificates, and the income
therefrom, will be so characterized. However, the policies underlying such      
sections (namely, to encourage or require investments in mortgage loans by      
thrift institutions and real estate investment trusts) may suggest that such    
characterization is appropriate. Counsel to the Depositor will not deliver any  
opinion on these questions. Prospective purchasers to which such                
characterization of an investment in Grantor Trust Strip Certificates is        
material should consult their tax advisors regarding whether the Grantor Trust  
Strip Certificates, and the income therefrom, will be so characterized.         

    The Grantor Trust Strip Certificates will be "obligation[s] (including any
participation or Certificate of beneficial ownership therein) which . . .[are]  
principally secured by an interest in real property" within the meaning of      
Section 860G(a)(3)(A) of the Code.                                              

TAXATION OF OWNERS OF GRANTOR TRUST FRACTIONAL INTEREST CERTIFICATES        

Holders of a particular series of Grantor Trust Fractional Interest   
Certificates generally will be required to report on their federal income tax   
returns their shares of the entire income from the Mortgage Loans (including    
amounts used to pay reasonable servicing fees and other expenses) and will be   
entitled to deduct their shares of any such reasonable servicing fees and other 
expenses. Because of stripped interests, market or original issue discount, or  
premium, the amount includible in income on account of a Grantor Trust          
Fractional Interest Certificate may differ significantly from the amount        
distributable thereon representing interest on the Mortgage Loans.              

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Under Section 67 of the Code, an individual, estate or trust holding a Grantor  
Trust Fractional Interest Certificate directly or through certain pass-through  
entities will be allowed a deduction for such reasonable servicing fees and     
expenses only to the extent that the aggregate of such holder's miscellaneous   
itemized deductions exceeds two percent of such holder's adjusted gross income. 
In addition, Section 68 of the Code provides that the amount of itemized        
deductions otherwise allowable for an individual whose adjusted gross income    
exceeds a specified amount will be reduced by the lesser of (i) 3% of the excess
of the individual's adjusted gross income over such amount or (ii) 80% of the   
amount of itemized deductions otherwise allowable for the taxable year. The     
amount of additional taxable income reportable by holders of Grantor Trust      
Fractional Interest Certificates who are subject to the limitations of either   
Section 67 or Section 68 of the Code may be substantial. Further,               
Certificateholders (other than corporations) subject to the alternative minimum 
tax may not deduct miscellaneous itemized deductions in determining such        
holder's alternative minimum taxable income. Although it is not entirely clear, 
it appears that in transactions in which multiple classes of Grantor Trust      
Certificates (including Grantor Trust Strip Certificates) are issued, such fees 
and expenses should be allocated among the classes of Grantor Trust Certificates
using a method that recognizes that each such class benefits from the related   
services. In the absence of statutory or administrative clarification as to the 
method to be used, it currently is intended to base information returns or      
reports to the IRS and Certificateholders on a method that allocates such       
expenses among classes of Grantor Trust Certificates with respect to each period
based on the distributions made to each such class during that period.          

The federal income tax treatment of Grantor Trust Fractional Interest 
Certificates of any series will depend on whether they are subject to the       
"stripped bond" rules of Section 1286 of the Code. Grantor Trust Fractional     
Interest Certificates may be subject to those rules if (i) a class of Grantor   
Trust Strip Certificates is issued as part of the same series of Certificates or
(ii) the Depositor or any of its affiliates retains (for its own account or for 
purposes of resale) a right to receive a specified portion of the interest      
payable on the Mortgage Loans. Further, the IRS has ruled that an unreasonably  
high servicing fee retained by a seller or servicer will be treated as a        
retained ownership interest in mortgages that constitutes a stripped coupon. For
purposes of determining what constitutes reasonable servicing fees for various  
types of mortgages the IRS has established certain "safe harbors." The servicing
fees paid with respect to the Mortgage Loans for certain series of Grantor Trust
Certificates may be higher than the "safe harbors" and, accordingly, may not    
constitute reasonable servicing compensation. The related Prospectus Supplement 
will include information regarding servicing fees paid to the Master Servicer,  
any subservicer or their respective affiliates necessary to determine whether   
the preceding "safe harbor" rules apply.                                        

IF STRIPPED BOND RULES APPLY                                          

  If the stripped bond rules apply, each Grantor Trust Fractional Interest
Certificate will be treated as having been issued with "original issue discount"
within the meaning of Section 1273(a) of the Code, subject, however, to the     
discussion below regarding the treatment of certain stripped bonds as market    
discount bonds and the discussion regarding de minimis market discount. See     
"-Taxation of Owners of Grantor Trust Fractional Interest Certificates-Market   
Discount" below. Under the stripped bond rules, the holder of a Grantor Trust   
Fractional Interest Certificate (whether a cash or accrual method taxpayer) will
be required to report interest income from its Grantor Trust Fractional Interest
Certificate for each month in an amount equal to the income that accrues on such
Certificate in that month calculated under a constant yield method, in          
accordance with the rules of the Code relating to original issue discount.      

The original issue discount on a Grantor Trust Fractional Interest    
Certificate will be the excess of such Certificate's stated redemption price    
over its issue price. The issue price of a Grantor Trust Fractional Interest    
Certificate as to any purchaser will be equal to the price paid by such         
purchaser for the Grantor Trust Fractional Interest Certificate. The stated     
redemption price of a                                                           

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Grantor Trust Fractional Interest Certificate will be the sum of all payments to
be made on such Certificate, other than "qualified stated interest," if any, as 
well as such Certificate's share of reasonable servicing fees and other         
expenses. See "-Taxation of Owners of Grantor Trust Fractional Interest         
Certificates-If Stripped Bond Rules Do Not Apply" for a definition of "qualified
stated interest." In general, the amount of such income that accrues in any     
month would equal the product of such holder's adjusted basis in such Grantor   
Trust Fractional Interest Certificate at the beginning of such month (see "Sales
of Grantor Trust Certificates") and the yield of such Grantor Trust Fractional  
Interest Certificate to such holder. Such yield would be computed at the rate   
(compounded based on the regular interval between payment dates) that, if used  
to discount the holder's share of future payments on the Mortgage Loans, would  
cause the present value of those future payments to equal the price at which the
holder purchased such Certificate. In computing yield under the stripped bond   
rules, a Certificateholder's share of future payments on the Mortgage Loans will
not include any payments made in respect of any ownership interest in the       
Mortgage Loans retained by the Depositor, the Master Servicer, any subservicer  
or their respective affiliates, but will include such Certificateholder's share 
of any reasonable servicing fees and other expenses.                            

Section 1272(a)(6) of the Code requires (i) the use of a reasonable   
prepayment assumption in accruing original issue discount and (ii) adjustments  
in the accrual of original issue discount when prepayments do not conform to the
prepayment assumption, with respect to certain categories of debt instruments,  
and regulations could be adopted applying those provisions to the Grantor Trust 
Fractional Interest Certificates. It is unclear whether those provisions would  
be applicable to the Grantor Trust Fractional Interest Certificates or whether  
use of a reasonable prepayment assumption may be required or permitted without  
reliance on these rules. It is also uncertain, if a prepayment assumption is    
used, whether the assumed prepayment rate would be determined based on          
conditions at the time of the first sale of the Grantor Trust Fractional        
Interest Certificate or, with respect to any holder, at the time of purchase of 
the Grantor Trust Fractional Interest Certificate by that holder.               
Certificateholders are advised to consult their own tax advisors concerning     
reporting original issue discount in general and, in particular, whether a      
prepayment assumption should be used in reporting original issue discount with  
respect to Grantor Trust Fractional Interest Certificates.                      

    In the case of a Grantor Trust Fractional Interest Certificate acquired at
a price equal to the principal amount of the Mortgage Loans allocable to such   
Certificate, the use of a prepayment assumption generally would not have any    
significant effect on the yield used in calculating accruals of interest income.
In the case, however, of a Grantor Trust Fractional Interest Certificate        
acquired at a discount or premium (that is, at a price less than or greater than
such principal amount, respectively), the use of a reasonable prepayment        
assumption would increase or decrease such yield, and thus accelerate or        
decelerate, respectively, the reporting of income.                              

   If a prepayment assumption is not used, then when a Mortgage Loan prepays
in full, the holder of a Grantor Trust Fractional Interest Certificate acquired 
at a discount or a premium generally will recognize ordinary income or loss     
equal to the difference between the portion of the prepaid principal amount of  
the Mortgage Loan that is allocable to such Certificate and the portion of the  
adjusted basis of such Certificate that is allocable to such Certificateholder's
interest in the Mortgage Loan. If a prepayment assumption is used, it appears   
that no separate item of income or loss should be recognized upon a prepayment. 
Instead, a prepayment should be treated as a partial payment of the stated      
redemption price of the Grantor Trust Fractional Interest Certificate and       
accounted for under a method similar to that described for taking account of    
original issue discount on REMIC Regular Certificates. See "-REMICs-Taxation of 
Owners of REMIC Regular Certificates-Original Issue Discount." It is unclear    
whether any other adjustments would be required to reflect differences between  
an assumed prepayment rate and the actual rate of prepayments.                  

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In the absence of statutory or administrative clarification, it is    
currently intended to base information reports or returns to the IRS and        
Certificateholders in transactions subject to the stripped bond rules on a      
prepayment assumption (the "Prepayment Assumption") that will be disclosed in   
the related Prospectus Supplement and on a constant yield computed using a      
representative initial offering price for each class of Certificates. However,  
neither the Depositor nor the Trustee will make any representation that the     
Mortgage Loans will in fact prepay at a rate conforming to such Prepayment      
Assumption or any other rate and Certificateholders should bear in mind that the
use of a representative initial offering price will mean that such information  
returns or reports, even if otherwise accepted as accurate by the IRS, will in  
any event be accurate only as to the initial Certificateholders of each series  
who bought at that price.                                                       

   Under Treasury regulation Section 1.1286-1, certain stripped bonds are to
be treated as market discount bonds and, accordingly, any purchaser of such a   
bond is to account for any discount on the bond as market discount rather than  
original issue discount. This treatment only applies, however, if immediately   
after the most recent disposition of the bond by a person stripping one or more 
coupons from the bond and disposing of the bond or coupon (i) there is no       
original issue discount (or only a de minimis amount of original issue discount)
or (ii) the annual stated rate of interest payable on the original bond is no   
more than one percentage point lower than the gross interest rate payable on the
original mortgage loan (before subtracting any servicing fee or any stripped    
coupon). If interest payable on a Grantor Trust Fractional Interest Certificate 
is more than one percentage point lower than the gross interest rate payable on 
the Mortgage Loans, the related Prospectus Supplement will disclose that fact.  
If the original issue discount or market discount on a Grantor Trust Fractional 
Interest Certificate determined under the stripped bond rules is less than 0.25%
of the stated redemption price multiplied by the weighted average maturity of   
the Mortgage Loans, then such original issue discount or market discount will be
considered to be de minimis. Original issue discount or market discount of only 
a de minimis amount will be included in income in the same manner as de minimis 
original issue and market discount described in "-Taxation of Owners of Grantor 
Trust Fractional Interest Certificates-If Stripped Bond Rules Do Not Apply" and 
"-Market Discount" below.                                                       

IF STRIPPED BOND RULES DO NOT APPLY                                   

     Subject to the discussion below on original issue discount, if the stripped
bond rules do not apply to a Grantor Trust Fractional Interest Certificate, the 
Certificateholder will be required to report its share of the interest income on
the Mortgage Loans in accordance with such Certificateholder's normal method of 
accounting. The original issue discount rules will apply to a Grantor Trust     
Fractional Interest Certificate to the extent it evidences an interest in       
Mortgage Loans issued with original issue discount.                             

   The original issue discount, if any, on the Mortgage Loans will equal the
difference between the stated redemption price of such Mortgage Loans and their 
issue price. Under the OID Regulations, the stated redemption price is equal to 
the total of all payments to be made on such Mortgage Loan other than "qualified
stated interest." "Qualified stated interest" includes interest that is         
unconditionally payable at least annually at a single fixed rate, or at a       
"qualified floating rate," an "objective rate," a combination of a single fixed 
rate and one or more "qualified floating rates" or one "qualified inverse       
floating rate," or a combination of "qualified floating rates" that does not    
operate in a manner that accelerates or defers interest payments on such        
Mortgage Loan. In general, the issue price of a Mortgage Loan will be the amount
received by the borrower from the lender under the terms of the Mortgage Loan,  
less any "points" paid by the borrower, and the stated redemption price of a    
Mortgage Loan will equal its principal amount, unless the Mortgage Loan provides
for an initial below-market rate of interest or the acceleration or the deferral
of interest payments.                                                           

In the case of Mortgage Loans bearing adjustable or variable interest 
rates, the related Prospectus Supplement will describe the manner in which such 
rules will be applied with respect                                              

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to those Mortgage Loans by the Trustee in preparing information returns to the  
Certificateholders and the IRS.                                                 

     Notwithstanding the general definition of original issue discount, original
issue discount will be considered to be de minimis if such original issue       
discount is less than 0.25% of the stated redemption price multiplied by the    
weighted average maturity of the Mortgage Loan. For this purpose, the weighted  
average maturity of the Mortgage Loan will be computed as the sum of the amounts
determined, as to each payment included in the stated redemption price of such  
Mortgage Loan, by multiplying (i) the number of complete years (rounding down   
for partial years) from the issue date until such payment is expected to be made
by (ii) a fraction, the numerator of which is the amount of the payment and the 
denominator of which is the stated redemption price of the Mortgage Loan. Under 
the OID Regulations, original issue discount of only a de minimis amount (other 
than de minimis original issue discount attributable to a so-called "teaser"    
rate or initial interest holiday) will be included in income as each payment of 
stated principal is made, based on the product of the total amount of such de   
minimis original issue discount and a fraction, the numerator of which is the   
amount of each such payment and the denominator of which is the outstanding     
stated principal amount of the Mortgage Loan. The OID Regulations also permit a 
Certificateholder to elect to accrue de minimis original issue discount into    
income currently based on a constant yield method. See "-Taxation of Owners of  
Grantor Trust Fractional Interest Certificates-Market Discount" below.          

If original issue discount is in excess of a de minimis amount, all   
original issue discount with respect to a Mortgage Loan will be required to be  
accrued and reported in income each month, based on a constant yield. The OID   
Regulations suggest that no prepayment assumption is appropriate in computing   
the yield on prepayable obligations issued with original issue discount. In the 
absence of statutory or administrative clarification, it currently is not       
intended to base information reports or returns to the IRS and                  
Certificateholders on the use of a prepayment assumption for certificates backed
by whole mortgage loans and not subject to the stripped bond rules. However,    
Section 1272(a)(6) of the Code may require that a prepayment assumption be made 
in computing yield with respect to all mortgage-backed securities.              
Certificateholders are advised to consult their own tax advisors concerning     
whether a prepayment assumption should be used in reporting original issue      
discount with respect to Grantor Trust Fractional Interest Certificates.        
Certificateholders should refer to the related Prospectus Supplement with       
respect to each series to determine whether and in what manner the original     
issue discount rules will apply to Mortgage Loans in such series.               

A purchaser of a Grantor Trust Fractional Interest Certificate that   
purchases such Grantor Trust Fractional Interest Certificate at a cost less than
such Certificate's allocable portion of the aggregate remaining stated          
redemption price of the Mortgage Loans held in the related Trust Fund will also 
be required to include in gross income such Certificate's daily portions of any 
original issue discount with respect to such Mortgage Loans. However, each such 
daily portion will be reduced, if the cost of such Grantor Trust Fractional     
Interest Certificate to such purchaser is in excess of such Certificate's       
allocable portion of the aggregate "adjusted issue prices" of the Mortgage Loans
held in the related Trust Fund, approximately in proportion to the ratio such   
excess bears to such Certificate's allocable portion of the aggregate original  
issue discount remaining to be accrued on such Mortgage Loans. The adjusted     
issue price of a Mortgage Loan on any given day equals the sum of (i) the       
adjusted issue price (or, in the case of the first accrual period, the issue    
price) of such Mortgage Loan at the beginning of the accrual period that        
includes such day and (ii) the daily portions of original issue discount for all
days during such accrual period prior to such day. The adjusted issue price of a
Mortgage Loan at the beginning of any accrual period will equal the issue price 
of such Mortgage Loan, increased by the aggregate amount of original issue      
discount with respect to such Mortgage Loan that accrued in prior accrual       
periods, and reduced by the amount of any payments made on such Mortgage Loan in
prior accrual periods of amounts included in its stated redemption price.       

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    In addition to its regular reports, the Trustee, unless otherwise provided
in the related Prospectus Supplement, will provide to any holder of a Grantor   
Trust Fractional Interest Certificate such information as such holder may       
reasonably request from time to time with respect to original issue discount    
accruing on Grantor Trust Fractional Interest Certificates. See "Grantor Trust  
Reporting" below.                                                               

MARKET DISCOUNT                                                       

 If the stripped bond rules do not apply to the Grantor Trust Fractional
Interest Certificate, a Certificateholder may be subject to the market discount 
rules of Sections 1276 through 1278 of the Code to the extent an interest in a  
Mortgage Loan is considered to have been purchased at a "market discount," that 
is, in the case of a Mortgage Loan issued without original issue discount, at a 
purchase price less than its remaining stated redemption price (as defined      
above, or in the case of a Mortgage Loan issued with original issue discount, at
a purchase price less than its adjusted issue price (as defined above). If      
market discount is in excess of a de minimis amount (as described below), the   
holder generally will be required to include in income in each month the amount 
of such discount that has accrued (under the rules described in the next        
paragraph) through such month that has not previously been included in income,  
but limited, in the case of the portion of such discount that is allocable to   
any Mortgage Loan, to the payment of stated redemption price on such Mortgage   
Loan that is received by (or, in the case of accrual basis Certificateholders,  
due to) the Trust Fund in that month. A Certificateholder may elect to include  
market discount in income currently as it accrues (under a constant yield method
based on the yield of the Certificate to such holder) rather than including it  
on a deferred basis in accordance with the foregoing. If made, such election    
will apply to all market discount bonds acquired by such Certificateholder      
during or after the first taxable year to which such election applies. In       
addition, the OID Regulations would permit a Certificateholder to elect to      
accrue all interest, discount (including de minimis market or original issue    
discount) and premium in income as interest, based on a constant yield method.  
If such an election were made with respect to a Mortgage Loan with market       
discount, the Certificateholder would be deemed to have made an election to     
include currently market discount in income with respect to all other debt      
instruments having market discount that such Certificateholder acquires during  
the taxable year of the election and thereafter, and possibly previously        
acquired instruments. Similarly, a Certificateholder that made this election for
a Certificate acquired at a premium would be deemed to have made an election to 
amortize bond premium with respect to all debt instruments having amortizable   
bond premium that such Certificateholder owns or acquires. See "-REMICs-Taxation
of Owners of REMIC Regular Certificates-Premium" below. Each of these elections 
to accrue interest, discount and premium with respect to a Certificate on a     
constant yield method or as interest is irrevocable.                            

    Section 1276(b)(3) of the Code authorized the Treasury Department to issue
regulations providing for the method for accruing market discount on debt       
instruments, the principal of which is payable in more than one installment.    
Until such time as regulations are issued by the Treasury Department, certain   
rules described in the Committee Report will apply. Under those rules, in each  
accrual period market discount on the Mortgage Loans should accrue, at the      
Certificateholder's option: (i) on the basis of a constant yield method, (ii) in
the case of a Mortgage Loan issued without original issue discount, in an amount
that bears the same ratio to the total remaining market discount as the stated  
interest paid in the accrual period bears to the total stated interest remaining
to be paid on the Mortgage Loan as of the beginning of the accrual period, or   
(iii) in the case of a Mortgage Loan issued with original issue discount, in an 
amount that bears the same ratio to the total remaining market discount as the  
original issue discount accrued in the accrual period bears to the total        
original issue discount remaining at the beginning of the accrual period. The   
prepayment assumption, if any, used in calculating the accrual of original issue
discount is to be used in calculating the accrual of market discount. The effect
of using a prepayment assumption could be to accelerate the reporting of such   
discount income.                                                                

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Because the regulations referred to in this paragraph have not been issued, it  
is not possible to predict what effect such regulations might have on the tax   
treatment of a Mortgage Loan purchased at a discount in the secondary market.   

 Because the Mortgage Loans will provide for periodic payments of stated
redemption price, such discount may be required to be included in income at a   
rate that is not significantly slower than the rate at which such discount would
be included in income if it were original issue discount.                       

     Market discount with respect to Mortgage Loans generally will be considered
to be de minimis if it is less than 0.25% of the stated redemption price of the 
Mortgage Loans multiplied by the number of complete years to maturity remaining 
after the date of its purchase. In interpreting a similar rule with respect to  
original issue discount on obligations payable in installments, the OID         
Regulations refer to the weighted average maturity of obligations, and it is    
likely that the same rule will be applied with respect to market discount,      
presumably taking into account the prepayment assumption used, if any. The      
effect of using a prepayment assumption could be to accelerate the reporting of 
such discount income. If market discount is treated as de minimis under the     
foregoing rule, it appears that actual discount would be treated in a manner    
similar to original issue discount of a de minimis amount. See "-Taxation of    
Owners of Grantor Trust Fractional Interest Certificates-If Stripped Bond Rules 
Do Not Apply."                                                                  

    Further, under the rules described in "-REMICs-Taxation of Owners of REMIC
Regular Certificates-Market Discount," above, any discount that is not original 
issue discount and exceeds a de minimis amount may require the deferral of      
interest expense deductions attributable to accrued market discount not yet     
includible in income, unless an election has been made to report market discount
currently as it accrues.                                                        

PREMIUM                                                                     

If a Certificateholder is treated as acquiring the underlying Mortgage
Loans at a premium, that is, at a price in excess of their remaining stated     
redemption price, such Certificateholder may elect under Section 171 of the Code
to amortize using a constant yield method the portion of such premium allocable 
to Mortgage Loans originated after September 27, 1985. Amortizable premium is   
treated as an offset to interest income on the related debt instrument, rather  
than as a separate interest deduction. However, premium allocable to Mortgage   
Loans originated before September 28, 1985 or to Mortgage Loans for which an    
amortization election is not made, should be allocated among the payments of    
stated redemption price on the Mortgage Loan and be allowed as a deduction as   
such payments are made (or, for a Certificateholder using the accrual method of 
accounting, when such payments of stated redemption price are due).             

   It is unclear whether a prepayment assumption should be used in computing
amortization of premium allowable under Section 171 of the Code. If premium is  
not subject to amortization using a prepayment assumption and a Mortgage Loan   
prepays in full, the holder of a Grantor Trust Fractional Interest Certificate  
acquired at a premium should recognize a loss, equal to the difference between  
the portion of the prepaid principal amount of the Mortgage Loan that is        
allocable to the Certificate and the portion of the adjusted basis of the       
Certificate that is allocable to the Mortgage Loan. If a prepayment assumption  
is used to amortize such premium, it appears that such a loss would be          
unavailable. Instead, if a prepayment assumption is used, a prepayment should be
treated as a partial payment of the stated redemption price of the Grantor Trust
Fractional Interest Certificate and accounted for under a method similar to that
described for taking account of original issue discount on REMIC Regular        
Certificates. See "REMICs-Taxation of Owners of REMIC Regular Certificates      
--Original Issue Discount." It is unclear whether any other adjustments would be
required to reflect differences between the prepayment assumption used, and the 
actual rate of prepayments.                                                     

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TAXATION OF OWNERS OF GRANTOR TRUST STRIP CERTIFICATES                      

   The "stripped coupon" rules of Section 1286 of the Code will apply to the
Grantor Trust Strip Certificates. Except as described above in "-Taxation of    
Owners of Grantor Trust Fractional Interest Certificates-If Stripped Bond Rules 
Apply," no regulations or published rulings under Section 1286 of the Code have 
been issued and some uncertainty exists as to how it will be applied to         
securities such as the Grantor Trust Strip Certificates. Accordingly, holders of
Grantor Trust Strip Certificates should consult their own tax advisors          
concerning the method to be used in reporting income or loss with respect to    
such Certificates.                                                              

The OID Regulations do not apply to "stripped coupons," although they 
provide general guidance as to how the original issue discount sections of the  
Code will be applied. In addition, the discussion below is subject to the       
discussion under "Possible Application of Contingent Payment Rules" and assumes 
that the holder of a Grantor Trust Strip Certificate will not own any Grantor   
Trust Fractional Interest Certificates.                                         

  Under the stripped coupon rules, it appears that original issue discount
will be required to be accrued in each month on the Grantor Trust Strip         
Certificates based on a constant yield method. In effect, each holder of Grantor
Trust Strip Certificates would include as interest income in each month an      
amount equal to the product of such holder's adjusted basis in such Grantor     
Trust Strip Certificate at the beginning of such month and the yield of such    
Grantor Trust Strip Certificate to such holder. Such yield would be calculated  
based on the price paid for that Grantor Trust Strip Certificate by its holder  
and the payments remaining to be made thereon at the time of the purchase, plus 
an allocable portion of the servicing fees and expenses to be paid with respect 
to the Mortgage Loans. See "-Taxation of Owners of Grantor Trust Fractional     
Interest Certificates-If Stripped Bond Rules Apply" above.                      

   As noted above, Section 1272(a)(6) of the Code requires that a prepayment
assumption be used in computing the accrual of original issue discount with     
respect to certain categories of debt instruments, and that adjustments be made 
in the amount and rate of accrual of such discount when prepayments do not      
conform to such prepayment assumption. Regulations could be adopted applying    
those provisions to the Grantor Trust Strip Certificates. It is unclear whether 
those provisions would be applicable to the Grantor Trust Strip Certificates or 
whether use of a prepayment assumption may be required or permitted in the      
absence of such regulations. It is also uncertain, if a prepayment assumption is
used, whether the assumed prepayment rate would be determined based on          
conditions at the time of the first sale of the Grantor Trust Strip Certificate 
or, with respect to any subsequent holder, at the time of purchase of the       
Grantor Trust Strip Certificate by that holder.                                 

The accrual of income on the Grantor Trust Strip Certificates will be 
significantly slower if a prepayment assumption is permitted to be made than if 
yield is computed assuming no prepayments. In the absence of statutory or       
administrative clarification, it currently is intended to base information      
returns or reports to the IRS and Certificateholders on the Prepayment          
Assumption disclosed in the related Prospectus Supplement and on a constant     
yield computed using a representative initial offering price for each class of  
Certificates. However, neither the Depositor nor the Trustee will make any      
representation that the Mortgage Loans will in fact prepay at a rate conforming 
to the Prepayment Assumption or at any other rate and Certificateholders should 
bear in mind that the use of a representative initial offering price will mean  
that such information returns or reports, even if otherwise accepted as accurate
by the IRS, will in any event be accurate only as to the initial                
Certificateholders of each series who bought at that price. Prospective         
purchasers of the Grantor Trust Strip Certificates should consult their own tax 
advisors regarding the use of the Prepayment Assumption.                        

It is unclear under what circumstances, if any, the prepayment of a   
Mortgage Loan will give rise to a loss to the holder of a Grantor Trust Strip   
Certificate. If a Grantor Trust Strip Certificate is treated as a single        
instrument (rather than an interest in discrete mortgage loans) and the effect  

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of prepayments is taken into account in computing yield with respect to such    
Grantor Trust Strip Certificate, it appears that no loss may be available as a  
result of any particular prepayment unless prepayments occur at a rate faster   
than the Prepayment Assumption. However, if a Grantor Trust Strip Certificate is
treated as an interest in discrete Mortgage Loans, or if the Prepayment         
Assumption is not used, then when a Mortgage Loan is prepaid, the holder of a   
Grantor Trust Strip Certificate should be able to recognize a loss equal to the 
portion of the adjusted issue price of the Grantor Trust Strip Certificate that 
is allocable to such Mortgage Loan.                                             

POSSIBLE APPLICATION OF CONTINGENT PAYMENT RULES                            

 The coupon stripping rules' general treatment of stripped coupons is to
regard them as newly issued debt instruments in the hands of each purchaser. To 
the extent that payments on the Grantor Trust Strip Certificates would cease if 
the Mortgage Loans were prepaid in full, the Grantor Trust Strip Certificates   
could be considered to be debt instruments providing for contingent payments.   
Under the OID Regulations, debt instruments providing for contingent payments   
are not subject to the same rules as debt instruments providing for             
noncontingent payments. Regulations were promulgated on June 14, 1996, regarding
contingent payment debt instruments (the "Contingent Payment Regulations"), but 
it appears that Grantor Trust Strip Certificates, due to their similarity to    
other mortgage-backed securities (such as REMIC regular interests and debt      
instruments subject to Section 1272(a)(6) of the Code) that are expressly       
excepted from the application of the Contingent Payment Regulations, may be     
excepted from such regulations. Like the OID Regulations, the Contingent Payment
Regulations do not specifically address securities, such as the Grantor Trust   
Strip Certificates, that are subject to the stripped bond rules of Section 1286 
of the Code.                                                                    

  If the contingent payment rules under the Contingent Payment Regulations
were to apply, the holder of a Grantor Trust Strip Certificate would be required
to apply the "noncontingent bond method". Under the "noncontingent bond method",
the issuer of a Grantor Trust Strip Certificate determines a projected payment  
schedule on which interest will accrue. Holders of Grantor Trust Strip          
Certificates are bound by the issuer's projected payment schedule. The projected
payment schedule consists of all noncontingent payments and a projected amount  
for each contingent payment based on the projected yield (as described below) of
the Grantor Trust Strip Certificate.                                            

  The projected amount of each payment is determined so that the projected
payment schedule reflects the projected yield. The projected amount of each     
payment must reasonably reflect the relative expected values of the payments to 
be received by the holders of a Grantor Trust Strip Certificate. The projected  
yield referred to above is a reasonable rate, not less than the "applicable     
Federal rate" that, as of the issue date, reflects general market conditions,   
the credit quality of the issuer, and the terms and conditions of the Mortgage  
Loans. The holder of a Grantor Trust Strip Certificate would be required to     
include as interest income in each month the adjusted issue price of the Grantor
Trust Strip Certificate at the beginning of the period multiplied by the        
projected yield.                                                                

    Assuming that a prepayment assumption were used, if the Contingent Payment
Regulations or their principles were applied to Grantor Trust Strip             
Certificates, the amount of income reported with respect thereto would be       
substantially similar to that described under "Taxation of Owners of Grantor    
Trust Strip Certificates". Certificateholders should consult their tax advisors 
concerning the possible application of the contingent payment rules to the      
Grantor Trust Strip Certificates.                                               

SALES OF GRANTOR TRUST CERTIFICATES                                         

     Any gain or loss equal to the difference between the amount realized on the
sale of a Grantor Trust Certificate and its adjusted basis, recognized on the   
sale of a Grantor Trust Certificate by an investor who holds such Grantor Trust 
Certificate as a capital asset, will be capital gain or loss, except to the     
extent of accrued and unrecognized market discount, which will be treated as    
ordinary income, and (in the case of banks and other financial institutions)    
except as provided                                                              

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under Section 582(c) of the Code. The adjusted basis of a Grantor Trust         
Certificate generally will equal its cost, increased by any income reported by  
the seller (including original issue discount and market discount income) and   
reduced (but not below zero) by any previously reported losses, any amortized   
premium and by any distributions with respect to such Grantor Trust Certificate.
The Code as of the date of this Prospectus provides a top marginal tax rate of  
39.6% for individuals and a maximum marginal rate for long-term capital gains of
individuals of 28%. No such rate differential exists for corporations. In       
addition, the distinction between a capital gain or loss and ordinary income or 
loss remains relevant for other purposes.                                       

    Gain or loss from the sale of a Grantor Trust Certificate may be partially
or wholly ordinary and not capital in certain circumstances. Gain attributable  
to accrued and unrecognized market discount will be treated as ordinary income, 
as will gain or loss recognized by banks and other financial institutions       
subject to Section 582(c) of the Code. Furthermore, a portion of any gain that  
might otherwise be capital gain may be treated as ordinary income to the extent 
that the Grantor Trust Certificate is held as part of a "conversion transaction"
within the meaning of Section 1258 of the Code. A conversion transaction        
generally is one in which the taxpayer has taken two or more positions in the   
same or similar property that reduce or eliminate market risk, if substantially 
all of the taxpayer's return is attributable to the time value of the taxpayer's
net investment in such transaction. The amount of gain realized in a conversion 
transaction that is recharacterized as ordinary income generally will not exceed
the amount of interest that would have accrued on the taxpayer's net investment 
at 120% of the appropriate "applicable Federal rate" (which rate is computed and
published monthly by the IRS) at the time the taxpayer enters into the          
conversion transaction, subject to appropriate reduction for prior inclusion of 
interest and other ordinary income items from the transaction. Finally, a       
taxpayer may elect to have net capital gain taxed at ordinary income rates      
rather than capital gains rates in order to include such net capital gain in    
total net investment income for that taxable year, for purposes of the rule that
limits the deduction of interest on indebtedness incurred to purchase or carry  
property held for investment to a taxpayer's net investment income.             

GRANTOR TRUST REPORTING                                                     

     Unless otherwise provided in the related Prospectus Supplement, the Trustee
will furnish to each holder of a Grantor Trust Fractional Interest Certificate  
with each distribution a statement setting forth the amount of such distribution
allocable to principal on the underlying Mortgage Loans and to interest thereon 
at the related Pass-Through Rate. In addition, the Trustee will furnish, within 
a reasonable time after the end of each calendar year, to each holder of a      
Grantor Trust Certificate who was such a holder at any time during such year,   
information regarding the amount of servicing compensation received by the      
Master Servicer and sub-servicer (if any) and such other customary factual      
information as the Trustee deems necessary or desirable to enable holders of    
Grantor Trust Certificates to prepare their tax returns and will furnish        
comparable information to the Service as and when required by law to do so.     
Because the rules for accruing discount and amortizing premium with respect to  
the Grantor Trust Certificates are uncertain in various respects, there is no   
assurance the Service will agree with the Trustee's information reports of such 
items of income and expense. Moreover, such information reports, even if        
otherwise accepted as accurate by the Service, will in any event be accurate    
only as to the initial Certificateholders that bought their Certificates at the 
representative initial offering price used in preparing such reports.           

BACKUP WITHHOLDING                                                          

     In general, the rules described in "-REMICS-Backup Withholding with Respect
to REMIC Certificates" will also apply to Grantor Trust Certificates.           

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FOREIGN INVESTORS                                                           

  In general, the discussion with respect to REMIC Regular Certificates in
"REMICS-Foreign Investors in REMIC Certificates-REMIC Regular Certificates"     
applies to Grantor Trust Certificates except that Grantor Trust Certificates    
will, unless otherwise disclosed in the related Prospectus Supplement, be       
eligible for exemption from U.S. withholding tax, subject to the conditions     
described in such discussion, only to the extent the related Mortgage Loans were
originated after July 18, 1984.                                                 

    To the extent that interest on a Grantor Trust Certificate would be exempt
under Sections 871(h)(1) and 881(c) of the Code from United States withholding  
tax, and the Grantor Trust Certificate is not held in connection with a         
Certificateholder's trade or business in the United States, such Grantor Trust  
Certificate will not be subject to United States estate taxes in the estate of a
non-resident alien individual.                                                  

PARTNERSHIP TRUST FUNDS                                                         

CLASSIFICATION OF PARTNERSHIP TRUST FUNDS                             

With respect to each series of Partnership Certificates or Debt       
Certificates, Thacher, Proffitt & Wood, counsel to the Depositor, will deliver  
its opinion that the Trust Fund will not be a taxable mortgage pool or an       
association (or publicly traded partnership) taxable as a corporation for       
federal income tax purposes. This opinion will be based on the assumption that  
the terms of the related Pooling and Servicing Agreement and related documents  
will be complied with, and on counsel's conclusions that (1) the Trust Fund will
not have certain characteristics necessary for a business trust to be classified
as an association taxable as a corporation and (2) the nature of the income of  
the Trust Fund will exempt it from the rule that certain publicly traded        
partnerships are taxable as corporations.                                       

If the Trust Fund were taxable as a corporation for federal income tax
purposes, the Trust Fund would be subject to corporate income tax on its taxable
income. The Trust Fund's taxable income would include all its income on the     
related Mortgage Loans, possibly reduced by its interest expense on the Debt    
Certificates. Any such corporate income tax could materially reduce cash        
available to make payments on the Debt Certificates and distributions on the    
Partnership Certificates and Certificateholders could be liable for any such tax
that is unpaid by the Trust Fund.                                               

CHARACTERIZATION OF INVESTMENTS IN PARTNERSHIP CERTIFICATES AND DEBT        
CERTIFICATES.                                                               

For federal income tax purposes, (i) Partnership Certificates and Debt
Certificates held by a thrift institution taxed as a domestic building and loan 
association will not constitute "loans ... secured by an interest in real       
property" within the meaning of Code Section 7701(a)(19)(C)(v); (ii) interest on
Debt Certificates held by a real estate investment trust will not be treated as 
"interest on obligations secured by mortgages on real property or on interests  
in real property" within the meaning of Code Section 856(c)(3)(B), and Debt     
Certificates held by a real estate investment trust will not constitute "real   
estate assets" or "Government securities" within the meaning of Code Section    
856(c)(5)(A), but Partnership Certificates held by a real estate investment     
trust will qualify under those sections based on the real estate investments    
trust's proportionate interest in the assets of the Partnership Trust Fund based
on capital accounts; and (iii) Partnership Certificates and Debt Certificates   
held by a regulated investment company will not constitute "Government          
securities" within the meaning of Code Section 851(b)(4)(A)(i).                 

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TAXATION OF DEBT CERTIFICATEHOLDERS                                   

TREATMENT OF THE DEBT CERTIFICATES AS INDEBTEDNESS.                   

  The Depositor will agree, and the Certificateholders will agree by their
purchase of Debt Certificates, to treat the Debt Certificates as debt for       
federal income tax purposes. No regulations, published rulings, or judicial     
decisions exist that discuss the characterization for federal income tax        
purposes of securities with terms substantially the same as the Debt            
Certificates. However, with respect to each series of Debt Certificates,        
Thacher, Proffitt & Wood, counsel to the Depositor, will deliver its opinion    
that the Debt Certificates will be classified as indebtedness for federal income
tax purposes. The discussion below assumes this characterization of the Debt    
Certificates is correct.                                                        

    If, contrary to the opinion of counsel, the IRS successfully asserted that
the Debt Certificates were not debt for federal income tax purposes, the Debt   
Certificates might be treated as equity interests in the Partnership Trust. If  
so, the Partnership Trust Fund might be taxable as a corporation with the       
adverse consequences described above (and the taxable corporation would not be  
able to deduct interest on the Debt Certificates).                              

   Debt Certificates generally will be subject to the same rules of taxation
as REMIC Regular Certificates issued by a REMIC, as described above, except that
(i) income reportable on Debt Certificates is not required to be reported under 
the accrual method unless the holder otherwise uses the accrual method and (ii) 
the special rule treating a portion of the gain on sale or exchange of a REMIC  
Regular Certificate as ordinary income is inapplicable to Debt Certificates. See
"-REMICs -- Taxation of Owners of REMIC Regular Certificates" and "-- Sales of  
REMIC Certificates."                                                            

TAXATION OF OWNERS OF PARTNERSHIP CERTIFICATES                        

TREATMENT OF THE PARTNERSHIP TRUST FUND AS A PARTNERSHIP.             

     If so specified in the applicable Prospectus Supplement, the Depositor will
agree, and the Certificateholders will agree by their purchase of Certificates, 
to treat the Partnership Trust Fund as a partnership for purposes of federal and
state income tax, franchise tax and any other tax measured in whole or in part  
by income, with the assets of the partnership being the assets held by the      
Partnership Trust Fund, the partners of the partnership being the               
Certificateholders (including the Depositor), and the Debt Certificates (if any)
being debt of the partnership. However, the proper characterization of the      
arrangement involving the Partnership Trust Fund, the Partnership Certificates, 
the Debt Certificates, and the Depositor is not clear, because there is no      
authority on transactions closely comparable to that contemplated herein.       

A variety of alternative characterizations are possible. For example, 
because one or more of the classes of Partnership Certificates have certain     
features characteristic of debt, the Partnership Certificates might be          
considered debt of the Depositor or the Partnership Trust Fund. Any such        
characterization would not result in materially adverse tax consequences to     
Certificateholders as compared to the consequences from treatment of the        
Partnership Certificates as equity in a partnership, described below. The       
following discussion assumes that the Partnership Certificates represent equity 
interests in a partnership.                                                     

PARTNERSHIP TAXATION.                                                 

     As a partnership, the Partnership Trust Fund will not be subject to federal
income tax. Rather, each Certificateholder will be required to separately take  
into account such holder's allocated share of income, gains, losses, deductions 
and credits of the Partnership Trust Fund. It is anticipated that the           
Partnership Trust Fund's income will consist primarily of interest earned on the
Mortgage Loans (including appropriate adjustments for market discount, original 
issue discount and bond premium) as described above under "-- Grantor Trust     
Funds -- Taxation of                                                            

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Owners of Grantor Trust Fractional Interest Certificates -- If Stripped Bond    
Ruled Do Not Apply -", "-- Market Discount" and "--Premium") and any gain upon  
collection or disposition of Mortgage Loans. The Partnership Trust Fund's       
deductions will consist primarily of interest accruing with respect to the Debt 
Certificates, servicing and other fees, and losses or deductions upon collection
or disposition of Debt Certificates.                                            

    The tax items of a partnership are allocable to the partners in accordance
with the Code, Treasury regulations and the partnership agreement (here, the    
Pooling and Servicing Agreement and related documents). The Pooling and         
Servicing Agreement will provide, in general, that the Certificateholders will  
be allocated taxable income of the Partnership Trust Fund for each Due Period   
equal to the sum of (i) the interest that accrues on the Partnership            
Certificates in accordance with their terms for such Due Period, including      
interest accruing at the applicable pass-through rate for such Due Period and   
interest on amounts previously due on the Partnership Certificates but not yet  
distributed; (ii) any Partnership Trust Fund income attributable to discount on 
the Mortgage Loans that corresponds to any excess of the principal amount of the
Partnership Certificates over their initial issue price; and (iii) any other    
amounts of income payable to the Certificateholders for such Due Period. Such   
allocation will be reduced by any amortization by the Partnership Trust Fund of 
premium on Mortgage Loans that corresponds to any excess of the issue price of  
Partnership Certificates over their principal amount. All remaining taxable     
income of the Partnership Trust Fund will be allocated to the Depositor. Based  
on the economic arrangement of the parties, this approach for allocating        
Partnership Trust Fund income should be permissible under applicable Treasury   
regulations, although no assurance can be given that the IRS would not require a
greater amount of income to be allocated to Certificateholders. Moreover, even  
under the foregoing method of allocation, Certificateholders may be allocated   
income equal to the entire pass-through rate plus the other items described     
above even though the Trust Fund might not have sufficient cash to make current 
cash distributions of such amount. Thus, cash basis holders will in effect be   
required to report income from the Partnership Certificates on the accrual basis
and Certificateholders may become liable for taxes on Partnership Trust Fund    
income even if they have not received cash from the Partnership Trust Fund to   
pay such taxes.                                                                 

All of the taxable income allocated to a Certificateholder that is a  
pension, profit sharing or employee benefit plan or other tax-exempt entity     
(including an individual retirement account) will constitute "unrelated business
taxable income" generally taxable to such a holder under the Code.              

  A share of expenses of the Partnership Trust Fund (including fees of the
Master Servicer but not interest expense) allocable to an individual, estate or 
trust Certificateholder would be miscellaneous itemized deductions subject to   
the limitations described above under "-- Grantor Trust Funds -- Taxation of    
Owners of Grantor Trust Fractional Interest Certificates." Accordingly, such    
deductions might be disallowed to the individual in whole or in part and might  
result in such holder being taxed on an amount of income that exceeds the amount
of cash actually distributed to such holder over the life of the Partnership    
Trust Fund.                                                                     

    Discount income or premium amortization with respect to each Mortgage Loan
would be calculated in a manner similar to the description above under "--      
Grantor Trust Funds -- Taxation of Owners of Grantor Trust Fractional Interest  
Certificates -- If Stripped Bond Rules Do Not Apply." Notwithstanding such      
description, it is intended that the Partnership Trust Fund will make all tax   
calculations relating to income and allocations to Certificateholders on an     
aggregate basis with respect to all Mortgage Loans held by the Partnership Trust
Fund rather than on a Mortgage Loan-by-Mortgage Loan basis. If the IRS were to  
require that such calculations be made separately for each Mortgage Loan, the   
Partnership Trust Fund might be required to incur additional expense, but it is 
believed that there would not be a material adverse effect on                   
Certificateholders.                                                             

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DISCOUNT AND PREMIUM.                                                 

   Unless indicated otherwise in the applicable Prospectus Supplement, it is
not anticipated that the Mortgage Loans will have been issued with original     
issue discount and, therefore, the Partnership Trust Fund should not have       
original issue discount income. However, the purchase price paid by the         
Partnership Trust Fund for the Mortgage Loans may be greater or less than the   
remaining principal balance of the Mortgage Loans at the time of purchase. If   
so, the Mortgage Loans will have been acquired at a premium or discount, as the 
case may be. See "-- Grantor Trust Funds -- Taxation of Owners of Grantor Trust 
Fractional Interest Certificates -- Market Discount" and "Premium." (As         
indicated above, the Partnership Trust Fund will make this calculation on an    
aggregate basis, but might be required to recompute it on a Mortgage            
Loan-by-Mortgage Loan basis).                                                   

If the Partnership Trust Fund acquires the Mortgage Loans at a market 
discount or premium, the Partnership Trust Fund will elect to include any such  
discount in income currently as it accrues over the life of the Mortgage Loans  
or to offset any such premium against interest income on the Mortgage Loans. As 
indicated above, a portion of such market discount income or premium deduction  
may be allocated to Certificateholders.                                         

SECTION 708 TERMINATION.                                              

     Under Section 708 of the Code, the Partnership Trust Fund will be deemed to
terminate for federal income tax purposes if 50% or more of the capital and     
profits interests in the Partnership Trust Fund are sold or exchanged within a  
12-month period. If such a termination occurs, the Partnership Trust Fund will  
be considered to distribute its assets to the partners, who would then be       
treated as recontributing those assets to the Partnership Trust Fund, as a new  
partnership. The Partnership Trust Fund will not comply with certain technical  
requirements that might apply when such a constructive termination occurs. As a 
result, the Partnership Trust Fund may be subject to certain tax penalties and  
may incur additional expenses if it is required to comply with those            
requirements. Furthermore, the Partnership Trust Fund might not be able to      
comply due to lack of data. Under proposed Treasury regulations, the foregoing  
treatment would be replaced by a new regime under which a 50% or greater        
transfer, as described above, would cause a deemed contribution of the assets of
a Partnership Trust Fund (the "old partnership") to a new Partnership Trust Fund
(the "new partnership") in exchange for interests in the new partnership. Such  
interests would be deemed distributed to the partners of the old partnership in 
liquidation thereof, which would not constitute a sale or exchange. It is not   
known when or whether such proposed Treasury regulations will be adopted in     
final (or temporary) form.                                                      

DISPOSITION OF CERTIFICATES.                                          

     Generally, capital gain or loss will be recognized on a sale of Partnership
Certificates in an amount equal to the difference between the amount realized   
and the seller's tax basis in the Partnership Certificates sold. A              
Certificateholder's tax basis in an Partnership Certificate will generally equal
the holder's cost increased by the holder's share of Partnership Trust Fund     
income (includible in income) and decreased by any distributions received with  
respect to such Partnership Certificate. In addition, both the tax basis in the 
Partnership Certificates and the amount realized on a sale of an Partnership    
Certificate would include the holder's share of the Debt Certificates and other 
liabilities of the Partnership Trust Fund. A holder acquiring Partnership       
Certificates at different prices may be required to maintain a single aggregate 
adjusted tax basis in such Partnership Certificates, and, upon sale or other    
disposition of some of the Partnership Certificates, allocate a portion of such 
aggregate tax basis to the Partnership Certificates sold (rather than           
maintaining a separate tax basis in each Partnership Certificate for purposes of
computing gain or loss on a sale of that Partnership Certificate).              

Any gain on the sale of an Partnership Certificate attributable to the
holder's share of unrecognized accrued market discount on the Mortgage Loans    
would generally be treated as                                                   

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ordinary income to the holder and would give rise to special tax reporting      
requirements. The Partnership Trust Fund does not expect to have any other      
assets that would give rise to such special reporting considerations. Thus, to  
avoid those special reporting requirements, the Partnership Trust Fund will     
elect to include market discount in income as it accrues.                       

If a Certificateholder is required to recognize an aggregate amount of
income (not including income attributable to disallowed itemized deductions     
described above) over the life of the Partnership Certificates that exceeds the 
aggregate cash distributions with respect thereto, such excess will generally   
give rise to a capital loss upon the retirement of the Partnership Certificates.

ALLOCATIONS BETWEEN TRANSFERORS AND TRANSFEREES.                      

    In general, the Partnership Trust Fund's taxable income and losses will be
determined each Due Period and the tax items for a particular Due Period will be
apportioned among the Certificateholders in proportion to the principal amount  
of Partnership Certificates owned by them as of the close of the last day of    
such Due Period. As a result, a holder purchasing Partnership Certificates may  
be allocated tax items (which will affect its tax liability and tax basis)      
attributable to periods before the actual transaction.                          

  The use of such a Due Period convention may not be permitted by existing
regulations. If a Due Period convention is not allowed (or only applies to      
transfers of less than all of the partner's interest), taxable income or losses 
of the Partnership Trust Fund might be reallocated among the Certificateholders.
The Depositor will be authorized to revise the Partnership Trust Fund's method  
of allocation between transferors and transferees to conform to a method        
permitted by future regulations.                                                

SECTION 731 DISTRIBUTIONS.                                            

 In the case of any distribution to a Certificateholder, no gain will be
recognized to that Certificateholder to the extent that the amount of any money 
distributed with respect to such Certificate exceeds the adjusted basis of such 
Certificateholder's interest in the Certificate. To the extent that the amount  
of money distributed exceeds such Certificateholder's adjusted basis, gain will 
be currently recognized. In the case of any distribution to a Certificateholder,
no loss will be recognized except upon a distribution in liquidation of a       
Certificateholder's interest. Any gain or loss recognized by a Certificateholder
will be capital gain or loss.                                                   

SECTION 754 ELECTION.                                                 

     In the event that a Certificateholder sells its Partnership Certificates at
a profit (loss), the purchasing Certificateholder will have a higher (lower)    
basis in the Partnership Certificates than the selling Certificateholder had.   
The tax basis of the Partnership Trust Fund's assets would not be adjusted to   
reflect that higher (or lower) basis unless the Partnership Trust Fund were to  
file an election under Section 754 of the Code. In order to avoid the           
administrative complexities that would be involved in keeping accurate          
accounting records, as well as potentially onerous information reporting        
requirements, the Partnership Trust Fund will not make such election. As a      
result, Certificateholder might be allocated a greater or lesser amount of      
Partnership Trust Fund income than would be appropriate based on their own      
purchase price for Partnership Certificates.                                    

ADMINISTRATIVE MATTERS.                                               

     The Trustee is required to keep or have kept complete and accurate books of
the Partnership Trust Fund. Such books will be maintained for financial         
reporting and tax purposes on an accrual basis and the fiscal year of the       
Partnership Trust Fund will be the calendar year. The Trustee will file a       
partnership information return (IRS Form 1065) with the IRS for each taxable    
year of the Partnership Trust Fund and will report each Certificateholder's     
allocable share of items of Partnership Trust Fund income and expense to holders
and the IRS on Schedule K-1. The Trustee will provide the Schedule K-1          
information to nominees that fail to provide the Partnership Trust Fund with the
information statement described below and such nominees will be required        

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to forward such information to the beneficial owners of the Partnership         
Certificates. Generally, holders must file tax returns that are consistent with 
the information return filed by the Partnership Trust Fund or be subject to     
penalties unless the holder notifies the IRS of all such inconsistencies.       

Under Section 6031 of the Code, any person that holds Partnership     
Certificates as a nominee at any time during a calendar year is required to     
furnish the Partnership Trust Fund with a statement containing certain          
information on the nominee, the beneficial owners and the Partnership           
Certificates so held. Such information includes (i) the name, address and       
taxpayer identification number of the nominee and (ii) as to each beneficial    
owner (x) the name, address and identification number of such person, (y)       
whether such person is a United States person, a tax-exempt entity or a foreign 
government, an international organization, or any wholly-owned agency or        
instrumentality of either of the foregoing, and (z) certain information on      
Partnership Certificates that were held, bought or sold on behalf of such person
throughout the year. In addition, brokers and financial institutions that hold  
Partnership Certificates through a nominee are required to furnish directly to  
the Trustee information as to themselves and their ownership of Partnership     
Certificates. A clearing agency registered under Section 17A of the Exchange Act
is not required to furnish any such information statement to the Partnership    
Trust Fund. The information referred to above for any calendar year must be     
furnished to the Partnership Trust Fund on or before the following January 31.  
Nominees, brokers and financial institutions that fail to provide the           
Partnership Trust Fund with the information described above may be subject to   
penalties.                                                                      

    The Depositor will be designated as the tax matters partner in the Pooling
and Servicing Agreement and, as such, will be responsible for representing the  
Certificateholders in any dispute with the IRS. The Code provides for           
administrative examination of a partnership as if the partnership were a        
separate and distinct taxpayer. Generally, the statute of limitations for       
partnership items does not expire until three years after the date on which the 
partnership information return is filed. Any adverse determination following an 
audit of the return of the Partnership Trust Fund by the appropriate taxing     
authorities could result in an adjustment of the returns of the                 
Certificateholders, and, under certain circumstances, a Certificateholder may be
precluded from separately litigating a proposed adjustment to the items of the  
Partnership Trust Fund. An adjustment could also result in an audit of a        
Certificateholder's returns and adjustments of items not related to the income  
and losses of the Partnership Trust Fund.                                       

TAX CONSEQUENCES TO FOREIGN CERTIFICATEHOLDERS.                       

   It is not clear whether the Partnership Trust Fund would be considered to
be engaged in a trade or business in the United States for purposes of federal  
withholding taxes with respect to non-U.S. persons, because there is no clear   
authority dealing with that issue under facts substantially similar to those    
described herein. Although it is not expected that the Partnership Trust Fund   
would be engaged in a trade or business in the United States for such purposes, 
the Partnership Trust Fund will withhold as if it were so engaged in order to   
protect the Partnership Trust Fund from possible adverse consequences of a      
failure to withhold. The Partnership Trust Fund expects to withhold on the      
portion of its taxable income that is allocable to foreign Certificateholders   
pursuant to Section 1446 of the Code, as if such income were effectively        
connected to a U.S. trade or business, at a rate of 35% for foreign holders that
are taxable as corporations and 39.6% for all other foreign holders. Amounts    
withheld will be deemed distributed to the foreign certificateholders.          
Subsequent adoption of Treasury regulations or the issuance of other            
administrative pronouncements may require the Partnership Trust Fund to change  
its withholding procedures. In determining a holder's withholding status, the   
Partnership Trust Fund may rely on IRS Form W-8, IRS Form W-9 or the holder's   
certification of nonforeign status signed under penalties of perjury.           

Each foreign holder might be required to file a U.S. individual or    
corporate income tax return (including, in the case of a corporation, the branch
profits tax) on its share of the Partnership                                    

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Trust Fund's income. Each foreign holder must obtain a taxpayer identification  
number from the IRS and submit that number to the Partnership Trust Fund on Form
W-8 in order to assure appropriate crediting of the taxes withheld. A foreign   
holder generally would be entitled to file with the IRS a claim for refund with 
respect to taxes withheld by the Partnership Trust Fund, taking the position    
that no taxes were due because the Partnership Trust Fund was not engaged in a  
U.S. trade or business. However, interest payment made (or accrued) to a        
Certificateholder who is a foreign person generally will be considered          
guaranteed payments to the extent such payments are determined without regard to
the income of the Partnership Trust Fund. If these interest payments are        
properly characterized as guaranteed payments, then the interest will not be    
considered "portfolio interest." As a result, Certificateholders who are foreign
persons will be subject to United States federal income tax and withholding tax 
at a rate of 30 percent, unless reduced or eliminated pursuant to an applicable 
treaty. In such case, a foreign holder would only be entitled to claim a refund 
for that portion of the taxes in excess of the taxes that should be withheld    
with respect to the guaranteed payments.                                        

BACKUP WITHHOLDING.                                                   

  Distributions made on the Partnership Certificates and proceeds from the
sale of the Partnership Certificates will be subject to a "backup" withholding  
tax of 31% if, in general, the Certificateholder fails to comply with certain   
identification procedures, unless the holder is an exempt recipient under       
applicable provisions of the Code.                                              

THE FEDERAL TAX DISCUSSIONS SET FORTH ABOVE ARE INCLUDED FOR GENERAL  
INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A CERTIFICATEHOLDER'S 
PARTICULAR TAX SITUATION. PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR TAX       
ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP
AND DISPOSITION OF REMIC CERTIFICATES, GRANTOR TRUST CERTIFICATES, PARTNERSHIP  
CERTIFICATES AND DEBT CERTIFICATES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, 
LOCAL, FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL
OR OTHER TAX LAWS.                                                              

STATE AND OTHER TAX CONSEQUENCES

  In addition to the federal income tax consequences described in "Certain
Federal Income Tax Consequences", potential investors should consider the state 
and local tax consequences of the acquisition, ownership, and disposition of the
Certificates offered hereunder. State tax law may differ substantially from the 
corresponding federal tax law, and the discussion above does not purport to     
describe any aspect of the tax laws of any state or other jurisdiction.         
Therefore, prospective investors should consult their own tax advisors with     
respect to the various tax consequences of investments in the certificates      
offered hereunder.                                                              

ERISA CONSIDERATIONS

Sections 404 and 406 of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), impose certain fiduciary and prohibited transaction 
restrictions on employee pension and welfare benefit plans subject to ERISA     
("ERISA Plans") and on certain other retirement plans and arrangements,         
including individual retirement accounts and annuities, Keogh plans and bank    
collective investment funds and insurance company general and separate accounts 
in which such ERISA Plans are invested. Section 4975 of the Code imposes        
essentially the same prohibited transaction restrictions on tax-qualified       
retirement plans described in Section 401(a) of the Code and on Individual      
Retirement Accounts described in Section 408 of the Code (collectively, "Tax    
Favored Plans"). ERISA and the Code prohibit a broad range of transactions      
involving assets of ERISA Plans and Tax Favored Plans (collectively, "Plans")   
and persons who have                                                            

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certain specified relationships to such Plans ("Parties in Interest" within the 
meaning of ERISA or "Disqualified Persons" within the meaning of the Code,      
collectively "Parties in Interest"), unless a statutory or administrative       
exemption is available with respect to any such transaction.                    

   Certain employee benefit plans, such as governmental plans (as defined in
Section 3(32) of ERISA), and, if no election has been made under Section 410(d) 
of the Code, church plans (as defined in Section 3(33) of ERISA) are not subject
to ERISA requirements. Accordingly, assets of such plans may be invested in the 
Certificates without regard to the ERISA considerations described below, subject
to the provisions of other applicable federal, state and local law. Any such    
plan which is qualified and exempt from taxation under Sections 401(a) and      
501(a) of the Code, however, is subject to the prohibited transaction rules set 
forth in Section 503 of the Code.                                               

     Certain transactions involving the Trust Fund might be deemed to constitute
prohibited transactions under ERISA and the Code with respect to a Plan that    
purchases a Certificate, if the Mortgage Loans, Agency Securities, Private      
Mortgage-Backed Securities, Funding Agreements and other assets included in a   
Trust Fund are deemed to be assets of the Plan. The U.S. Department of Labor    
(the "DOL") has promulgated regulations at 29 C.F.R. ss.2510.3-101 (the "DOL    
Regulations") defining the term "Plan Assets" for purposes of applying the      
general fiduciary responsibility provisions of ERISA and the prohibited         
transaction provisions of ERISA and the Code. Under the DOL Regulations,        
generally, when a Plan acquires an "equity interest" in another entity (such as 
the Trust Fund), the underlying assets of that entity may be considered to be   
Plan Assets unless certain exceptions apply. Exceptions contained in the DOL    
Regulations provide that a Plan's assets will not include an undivided interest 
in each asset of an entity in which such Plan makes an equity investment if: (1)
the entity is an operating company; (2) the equity investment made by the Plan  
is either a "publicly-offered security" that is "widely held," both as defined  
in the DOL Regulations, or a security issued by an investment company registered
under the Investment Company Act of 1940, as amended; or (3) Benefit Plan       
Investors do not own 25% or more in value of any class of equity securities     
issued by the entity. For this purpose, "Benefit Plan Investors" include Plans, 
as well as any "employee benefit plan" (as defined in Section 3(3) or ERISA)    
which is not subject to Title I of ERISA, such as governmental plans (as defined
in Section 3(32) of ERISA) and church plans (as defined in Section 3(33) of     
ERISA) which have not made an election under Section 410(d) of the Code, and any
entity whose underlying assets include Plan Assets by reason of a Plan's        
investment in the entity. Because of the factual nature of certain of the rules 
set forth in the DOL Regulations, Plan Assets either may be deemed to include an
interest in the assets of an entity (such as the Trust Fund) or may be deemed   
merely to include an interest in the instrument evidencing such equity interest 
(such as a Certificate). Neither Plans nor such entities should acquire or hold 
Certificates in reliance upon the availability of any exception under the DOL   
Regulations.                                                                    

ERISA generally imposes on Plan fiduciaries certain general fiduciary 
requirements, including those of investment prudence and diversification and the
requirement that a Plan's investments be made in accordance with the documents  
governing the Plan. Any person who has discretionary authority or control with  
respect to the management or disposition of Plan Assets and any person who      
provides investment advice with respect to such Plan Assets for a fee is a      
fiduciary of the investing Plan. If the Mortgage Loans, Agency Securities,      
Private Mortgage-Backed Securities, Funding Agreements and other assets included
in a Trust Fund were to constitute Plan Assets, then any party exercising       
management or discretionary control with respect to those Plan Assets may be    
deemed to be a Plan "fiduciary," and thus subject to the fiduciary              
responsibility provisions of ERISA and the prohibited transaction provisions of 
ERISA and Section 4975 of the Code with respect to any investing Plan. In       
addition, the acquisition or holding of Certificates by or on behalf of a Plan  
or with Plan Assets, as well as the operation of the Trust Fund, may constitute 
or involve a prohibited transaction under ERISA and the Code unless a statutory 
or administrative exemption is available.                                       

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  The DOL issued an individual exemption, Prohibited Transaction Exemption
89-89 (54 Fed. Reg. 42581, Oct. 17, 1989) (the "Exemption"), to Salomon Brothers
Inc, which generally exempts from the application of the prohibited transaction 
provisions of Section 406 of ERISA, and the excise taxes imposed on such        
prohibited transactions pursuant to Section 4975(a) and (b) of the Code, certain
transactions, among others, relating to the servicing and operation of mortgage 
pools and the initial purchase, holding and subsequent resale of mortgage       
pass-through certificates underwritten by an Underwriter (as hereinafter        
defined), provided that certain conditions set forth in the Exemption are       
satisfied. For purposes of this Section "ERISA Considerations", the term        
"Underwriter" shall include (a) Salomon Brothers Inc, (b) any person directly or
indirectly, through one or more intermediaries, controlling, controlled by or   
under common control with Salomon Brothers Inc and (c) any member of the        
underwriting syndicate or selling group of which a person described in (a) or   
(b) is a manager or co-manager with respect to a class of Certificates.         

     The Exemption sets forth six general conditions which must be satisfied for
the Exemption to apply. First, the acquisition of Certificates by a Plan or with
Plan Assets must be on terms that are at least as favorable to the Plan as they 
would be in an arm's-length transaction with an unrelated party. Second, the    
Exemption only applies to Certificates evidencing rights and interests that are 
not subordinated to the rights and interests evidenced by other Certificates of 
the same trust. Third, the Certificates at the time of acquisition by a Plan or 
with Plan Assets must be rated in one of the three highest generic rating       
categories by Standard & Poor's Ratings Services, a division of McGraw-Hill     
Companies, Inc., Moody's Investors Service, Inc., Duff & Phelps Credit Rating   
Co. or Fitch Investors Service, L.P. (collectively, the "Exemption Rating       
Agencies"). Fourth, the Trustee cannot be an affiliate of any member of the     
"Restricted Group" which consists of any Underwriter, the Depositor, the        
Trustee, the Master Servicer, any Sub-Servicer and any obligor with respect to  
assets included in the Trust Fund constituting more than 5% of the aggregate    
unamortized principal balance of the assets in the Trust Fund as of the date of 
initial issuance of the Certificates. Fifth, the sum of all payments made to and
retained by the Underwriter(s) must represent not more than reasonable          
compensation for underwriting the Certificates; the sum of all payments made to 
and retained by the Depositor pursuant to the assignment of the assets to the   
related Trust Fund must represent not more than the fair market value of such   
obligations; and the sum of all payments made to and retained by the Master     
Servicer and any Sub-Servicer must represent not more than reasonable           
compensation for such person's services under the related Agreement and         
reimbursement of such person's reasonable expenses in connection therewith.     
Sixth, the Exemption states that the investing Plan or Plan Asset investor must 
be an accredited investor as defined in Rule 501(a)(1) of Regulation D of the   
Commission under the Securities Act of 1933, as amended.                        

The Exemption also requires that the Trust Fund meet the following    
requirements: (i) the Trust Fund must consist solely of assets of the type that 
have been included in other investment pools; (ii) Certificates evidencing      
interests in such other investment pools must have been rated in one of the     
three highest categories of one of the Exemption Rating Agencies for at least   
one year prior to the acquisition of Certificates by or on behalf of a Plan or  
with Plan Assets; and (iii) Certificates evidencing interests in such other     
investment pools must have been purchased by investors other than Plans for at  
least one year prior to any acquisition of Certificates by or on behalf of a    
Plan or with Plan Assets.                                                       

 A fiduciary of a Plan or any person investing Plan Assets to purchase a
Certificate must make its own determination that the conditions set forth above 
will be satisfied with respect to such Certificate.                             

     If the general conditions of the Exemption are satisfied, the Exemption may
provide an exemption from the restrictions imposed by Sections 406(a) and 407(a)
of ERISA, and the excise taxes imposed by Sections 4975(a) and (b) of the Code  
by reason of Sections 4975(c)(1)(A) through (D) of the Code, in connection with 
the direct or indirect sale, exchange, transfer, holding                        

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or the direct or indirect acquisition or disposition in the secondary market of 
Certificates by a Plan or with Plan Assets. However, no exemption is provided   
from the restrictions of Sections 406(a)(1)(E), 406(a)(2) and 407 of ERISA for  
the acquisition or holding of a Certificate on behalf of an "Excluded Plan" by  
any person who has discretionary authority or renders investment advice with    
respect to the assets of such Excluded Plan. For purposes of the Certificates,  
an Excluded Plan is a Plan sponsored by any member of the Restricted Group.     

 If certain specific conditions of the Exemption are also satisfied, the
Exemption may provide an exemption from the restrictions imposed by Sections    
406(b)(1) and (b)(2) of ERISA, and the excise taxes imposed by Sections 4975(a) 
and (b) of the Code by reason of Section 4975(c)(1)(E) of the Code, in          
connection with (1) the direct or indirect sale, exchange or transfer of        
Certificates in the initial issuance of Certificates between the Depositor or an
Underwriter and a Plan when the person who has discretionary authority or       
renders investment advice with respect to the investment of Plan Assets in the  
Certificates is (a) a mortgagor with respect to 5% or less of the fair market   
value of the Trust Fund Assets or (b) an affiliate of such a person, (2) the    
direct or indirect acquisition or disposition in the secondary market of        
Certificates by a Plan and (3) the holding of Certificates by a Plan or with    
Plan Assets.                                                                    

     Further, if certain specific conditions of the Exemption are satisfied, the
Exemption may provide an exemption from the restrictions imposed by Sections    
406(a), 406(b) and 407 of ERISA, and the excise taxes imposed by Sections       
4975(a) and (b) of the Code by reason of Section 4975(c) of the Code for        
transactions in connection with the servicing, management and operation of the  
Trust Fund. The Depositor expects that the specific conditions of the Exemption 
required for this purpose will be satisfied with respect to the Certificates so 
that the Exemption would provide an exemption from the restrictions imposed by  
Sections 406(a) and (b) of ERISA (as well as the excise taxes imposed by        
Sections 4975(a) and (b) of the Code by reason of Section 4975(c) of the Code)  
for transactions in connection with the servicing, management and operation of  
the Trust Fund, provided that the general conditions of the Exemption are       
satisfied.                                                                      

   The Exemption also may provide an exemption from the restrictions imposed
by Sections 406(a) and 407(a) of ERISA, and the excise taxes imposed by Section 
4975(a) and (b) of the Code by reason of Sections 4975(c)(1)(A) through (D) of  
the Code if such restrictions are deemed to otherwise apply merely because a    
person is deemed to be a Party in Interest with respect to an investing Plan by 
virtue of providing services to the Plan (or by virtue of having certain        
specified relationships to such a person) solely as a result of the Plan's      
ownership of Certificates.                                                      

In addition to the Exemption, a fiduciary or other Plan Asset investor
should consider the availability of certain class exemptions granted by the DOL 
("Class Exemptions"), which may provide relief from certain of the prohibited   
transaction provisions of ERISA and the related excise tax provisions of the    
Code, including Prohibited Transaction Class Exemption ("PTCE") 83-1, regarding 
transactions involving mortgage pool investment trusts; PTCE 84-14, regarding   
transactions effected by a "qualified professional asset manager"; PTCE 90-1,   
regarding transactions by insurance company pooled separate accounts; PTCE      
91-38, regarding investments by bank collective investment funds; PTCE 95-60,   
regarding transactions by insurance company general accounts; and PTCE 96-23,   
regarding transactions effected by an "in-house asset manager."                 

     In addition to any exemption that may be available under PTCE 95-60 for the
purchase and holding of the Certificates by an insurance company general        
account, the Small Business Job Protection Act of 1996 added a new Section      
401(c) to ERISA, which provides certain exemptive relief from the provisions of 
Part 4 of Title I of ERISA and Section 4975 of the Code, including the          
prohibited transaction restrictions imposed by ERISA and the related excise     
taxes imposed by the Code, for transactions involving an insurance company      
general account. Pursuant to Section 401(c) of ERISA, the DOL is required to    
issue final regulations ("401(c) Regulations") no later than December 31, 1997  
which are to provide guidance for the purpose of determining, in cases where    

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insurance policies supported by an insurer's general account are issued to or   
for the benefit of a Plan on or before December 31, 1998, which general account 
assets constitute Plan Assets. Section 401(c) of ERISA generally provides that, 
until the date which is 18 months after the 401(c) Regulations become final, no 
person shall be subject to liability under Part 4 of Title I of ERISA and       
Section 4975 of the Code on the basis of a claim that the assets of an insurance
company general account constitute Plan Assets, unless (i) as otherwise provided
by the Secretary of Labor in the 401(c) Regulations to prevent avoidance of the 
regulations or (ii) an action is brought by the Secretary of Labor for certain  
breaches of fiduciary duty which would also constitute a violation of federal or
state criminal law. Any assets of an insurance company general account which    
support insurance policies issued to a Plan after December 31, 1998 or issued to
Plans on or before December 31, 1998 for which the insurance company does not   
comply with the 401(c) Regulations may be treated as Plan Assets. In addition,  
because Section 401(c) does not relate to insurance company separate accounts,  
separate account assets are still treated as Plan Assets of any Plan invested in
such separate account. Insurance companies contemplating the investment of      
general account assets in the Certificates should consult with their legal      
counsel with respect to the applicability of Section 401(c) of ERISA, including 
the general account's ability to continue to hold the Certificates after the    
date which is 18 months after the date the 401(c) Regulations become final.     

Because the exemptive relief afforded by the Exemption (or any similar
exemption that might be available) will not apply to the purchase, sale or      
holding of certain Certificates, such as Subordinate Certificates, Residual     
Certificates or any Certificates which are not rated in one of the three highest
generic rating categories by the Exemption Rating Agencies, and because such    
relief may not apply to any Certificates where the related Trust Fund contains a
Pre-Funding Account, transfers of such Certificates to a Plan, to a trustee or  
other person acting on behalf of any Plan, or to any other person investing Plan
Assets to effect such acquisition will not be registered by the Trustee unless  
the transferee provides the Depositor, the Trustee and the Master Servicer with 
an opinion of counsel satisfactory to the Depositor, the Trustee and the Master 
Servicer, which opinion will not be at the expense of the Depositor, the Trustee
or the Master Servicer, that the purchase of such Certificates by or on behalf  
of such Plan is permissible under applicable law, will not constitute or result 
in any non-exempt prohibited transaction under ERISA or Section 4975 of the Code
and will not subject the Depositor, the Trustee or the Master Servicer to any   
obligation in addition to those undertaken in the related Agreement.            

In lieu of such opinion of counsel, the transferee may provide a      
certification substantially to the effect that the purchase of Certificates by  
or on behalf of such Plan is permissible under applicable law, will not         
constitute or result in any non-exempt prohibited transaction under ERISA or    
Section 4975 of the Code and will not subject the Depositor, the Trustee or the 
Master Servicer to any obligation in addition to those undertaken in the        
Agreement, and the following statements in at least one of (i), (ii), (iii),    
(iv), (v), (vi) or (vii) is correct: (i) the Certificates evidence an interest  
in a mortgage pool (as defined in PTCE 83-1) and the conditions set forth in    
PTCE 83-1 have been satisfied; (ii) the transferee is an insurance company and  
(a) the source of funds used to purchase such Certificates is an "insurance     
company general account" (as such term is defined in PTCE 95- 60), (b) the      
conditions set forth in PTCE 95-60 have been satisfied and (c) there is no Plan 
with respect to which the amount of such general account's reserves and         
liabilities for contracts held by or on behalf of such Plan and all other Plans 
maintained by the same employer (or any "affiliate" thereof, as defined in PTCE 
95-60) or by the same employee organization exceed 10% of the total of all      
reserves and liabilities of such general account (as determined under PTCE      
95-60) as of the date of the acquisition of such Certificates; (iii) the        
transferee is an insurance company and (a) the source of funds used to purchase 
such Certificates is an insurance company general account, (b) the requirements 
of Sections 401(c) of ERISA and the DOL Regulations to be promulgated thereunder
have been satisfied and will continue to be satisfied and (c) the insurance     
company represents that it understands that the operation of the general account
after December 31, 1998 may affect its ability to continue to hold the          
Certificates                                                                    

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after the date which is 18 months after the 401(c) Regulations become final and 
unless the Exemption, a class exemption issued by the DOL or an exception under 
401(c) of ERISA is then available for the continued holding of Certificates, if 
the assets of the general account constitute Plan Assets, it will dispose of the
Certificates prior to the date which is 18 months after the 401(c) Regulations  
become final; (iv) the transferee is an insurance company and (a) the source of 
funds used to purchase such Certificates is an "insurance company pooled        
separate account" (as such term is defined in PTCE 90-1), (b) the conditions set
forth in PTCE 90-1 have been satisfied and (c) there is no Plan, together with  
all other Plans maintained by the same employer (or any "affiliate" thereof, as 
defined in PTCE 90-1) or by the same employee organization, with assets which   
exceed 10% of the total of all assets in such pooled separate account (as       
determined under PTCE 90-1) as of the date of the acquisition of such           
Certificates; (v) the transferee is a bank and (a) the source of funds used to  
purchase such Certificates is a "collective investment fund" (as defined in PTCE
91-38), (b) the conditions set forth in PTCE 91-38 have been satisfied and (c)  
there is no Plan, the interests of which together with the interests of any     
other Plans maintained by the same employer or employee organization in the     
collective investment fund do not exceed 10% of the total of all assets in the  
collective investment fund (as determined under PTCE 91-38) as of the date of   
acquisition of such Certificates; (vi) the transferee is a "qualified           
professional asset manager" described in PTCE 84-14 and the conditions set forth
in PTCE 84-14 have been satisfied and will continue to be satisfied; or (vii)   
the transferee is an "in-house asset manager" described in PTCE 96-23 and the   
conditions set forth in PTCE 96-23 have been satisfied and will continue to be  
satisfied.                                                                      

     An opinion of counsel or certification will not be required with respect to
the purchase of DTC registered Certificates. Any purchaser of a DTC registered  
Certificate will be deemed to have represented by such purchase that either (a) 
such purchaser is not a Plan and is not purchasing such Certificates on behalf  
of, or with Plan Assets of, any Plan or (b) the purchase of any such Certificate
by or on behalf of, or with Plan Assets of, any Plan is permissible under       
applicable law, will not result in any non-exempt prohibited transaction under  
ERISA or Section 4975 of the Code and will not subject the Depositor, the       
Trustee or the Master Servicer to any obligation in addition to those undertaken
in the related Agreement.                                                       

     There can be no assurance that any DOL exemption will apply with respect to
any particular Plan that acquires the Certificates or, even if all the          
conditions specified therein were satisfied, that any such exemption would apply
to transactions involving the Trust Fund. Prospective Plan investors should     
consult with their legal counsel concerning the impact of ERISA and the Code and
the potential consequences to their specific circumstances prior to making an   
investment in the Certificates. Neither the Depositor, the Trustee, the Master  
Servicer nor any of their respective affiliates will make any representation to 
the effect that the Certificates satisfy all legal requirements with respect to 
the investment therein by Plans generally or any particular Plan or to the      
effect that the Certificates are an appropriate investment for Plans generally  
or any particular Plan.                                                         

    BEFORE PURCHASING A CERTIFICATE, A FIDUCIARY OF A PLAN OR OTHER PLAN ASSET
INVESTOR SHOULD ITSELF CONFIRM THAT (A) ALL THE SPECIFIC AND GENERAL CONDITIONS 
SET FORTH IN THE EXEMPTION, ONE OF THE CLASS EXEMPTIONS OR SECTION 401(C) OF    
ERISA WOULD BE SATISFIED AND (B) IN THE CASE OF A CERTIFICATE PURCHASED UNDER   
THE EXEMPTION, THE CERTIFICATE CONSTITUTES A "CERTIFICATE" FOR PURPOSES OF THE  
EXEMPTION. IN ADDITION TO MAKING ITS OWN DETERMINATION AS TO THE AVAILABILITY OF
THE EXEMPTIVE RELIEF PROVIDED IN THE EXEMPTION, ONE OF THE CLASS EXEMPTIONS OR  
SECTION 410(C) OF ERISA, THE PLAN FIDUCIARY SHOULD CONSIDER ITS GENERAL         
FIDUCIARY OBLIGATIONS UNDER ERISA IN DETERMINING WHETHER TO PURCHASE A          
CERTIFICATE ON BEHALF OF A PLAN.                                                

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LEGAL INVESTMENT

The Prospectus Supplement for each series of Certificates will specify
which classes of Certificates of such series, if any, will constitute "mortgage 
related securities" for purposes of the Secondary Mortgage Market Enhancement   
Act of 1984 ("SMMEA"). Any class of Certificates that is not rated in one of the
two highest rating categories by one or more nationally recognized statistical  
rating agencies or that represents an interest in a Trust Fund that includes    
junior Mortgage Loans will not constitute "mortgage related securities" for     
purposes of SMMEA "Mortgage related securities" are legal investments to the    
same extent that, under applicable law, obligations issued by or guaranteed as  
to principal and interest by the United States or any agency or instrumentality 
thereof constitute legal investments for persons, trusts, corporations,         
partnerships, associations, business trusts and business entities (including    
depository institutions, insurance companies and pension funds created pursuant 
to or existing under the laws of the United States or of any state, the         
authorized investments of which are subject to state regulation). Under SMMEA,  
if a state enacted legislation prior to October 3, 1991 specifically limiting   
the legal investment authority of any such entities with respect to "mortgage   
related securities", the Certificates would constitute legal investments for    
entities subject to such legislation only to the extent provided in such        
legislation. SMMEA provides, however, that in no event will the enactment of any
such legislation affect the validity of any contractual commitment to purchase, 
hold or invest in "mortgage related securities", or require the sale or other   
disposition of such securities, so long as such contractual commitment was made 
or such securities acquired prior to the enactment of such legislation.         

  SMMEA also amended the legal investment authority of federally chartered
depository institutions as follows: federal savings and loan associations and   
federal savings banks may invest in, sell or otherwise deal with "mortgage      
related securities" without limitation as to the percentage of their assets     
represented thereby, federal credit unions may invest in such securities, and   
national banks may purchase such securities for their own account without regard
to the limitations generally applicable to investment securities set forth in 12
U.S.C. 24 (Seventh), subject in each case to such regulations as the applicable 
federal regulatory authority may prescribe.                                     

There may be other restrictions on the ability of certain investors,  
including depository institutions, either to purchase Certificates or to        
purchase Certificates representing more than a specified percentage of the      
investor's assets. INVESTORS SHOULD CONSULT THEIR OWN LEGAL ADVISORS IN         
DETERMINING WHETHER AND TO WHAT EXTENT THE CERTIFICATES CONSTITUTE LEGAL        
INVESTMENTS FOR SUCH INVESTORS OR ARE SUBJECT TO INVESTMENT, CAPITAL OR OTHER   
RESTRICTIONS, AND, IF APPLICABLE, WHETHER SMMEA HAS BEEN OVERRIDDEN IN ANY      
JURISDICTION RELEVANT TO SUCH INVESTOR.                                         

 METHODS OF DISTRIBUTION

   The Certificates offered hereby and by the Supplements to this Prospectus
will be offered in series. The distribution of the Certificates may be effected 
from time to time in one or more transactions, including negotiated             
transactions, at a fixed public offering price or at varying prices to be       
determined at the time of sale or at the time of commitment therefor. If so     
specified in the related Prospectus Supplement, the Certificates will be        
distributed in a firm commitment underwriting, subject to the terms and         
conditions of the underwriting agreement, by Salomon Brothers Inc ("Salomon")   
acting as underwriter with other underwriters, if any, named therein. In such   
event, the Prospectus Supplement may also specify that the underwriters will not
be obligated to pay for any Certificates agreed to be purchased by purchasers   
pursuant to purchase agreements acceptable to the Depositor. In connection with 
the sale of the Certificates, underwriters may receive compensation from the    
Depositor or from purchasers of the Certificates in the form of discounts,      
concessions or commissions. The Prospectus Supplement will describe any such    
compensation paid by the Depositor.                                             

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    Alternatively, the Prospectus Supplement may specify that the Certificates
will be distributed by Salomon acting as agent or in some cases as principal    
with respect to Certificates which it has previously purchased or agreed to     
purchase. If Salomon acts as agent in the sale of Certificates, Salomon will    
receive a selling commission with respect to each series of Certificates,       
depending on market conditions, expressed as a percentage of the aggregate      
principal balance of the related Mortgage Loans as of the Cut-off Date. The     
exact percentage for each series of Certificates will be disclosed in the       
related Prospectus Supplement. To the extent that Salomon elects to purchase    
Certificates as principal, Salomon may realize losses or profits based upon the 
difference between its purchase price and the sales price. The Prospectus       
Supplement with respect to any series offered other than through underwriters   
will contain information regarding the nature of such offering and any          
agreements to be entered into between the Depositor and purchasers of           
Certificates of such series.                                                    

   The Depositor will indemnify Salomon and any underwriters against certain
civil liabilities, including liabilities under the Securities Act of 1933, or   
will contribute to payments Salomon and any underwriters may be required to make
in respect thereof.                                                             

     In the ordinary course of business, Salomon and the Depositor may engage in
various securities and financing transactions, including repurchase agreements  
to provide interim financing of the Depositor's mortgage loans pending the sale 
of such mortgage loans or interests therein, including the Certificates.        

   The Depositor anticipates that the Certificates will be sold primarily to
institutional investors. Purchasers of Certificates, including dealers, may,    
depending on the facts and circumstances of such purchases, be deemed to be     
"underwriters" within the meaning of the Securities Act of 1933 in connection   
with reoffers and sales by them of Certificates. Certificateholders should      
consult with their legal advisors in this regard prior to any such reoffer or   
sale.                                                                           

   As to each series of Certificates, only those classes rated in one of the
four highest rating categories by any Rating Agency will be offered hereby. Any 
unrated class may be initially retained by the Depositor, and may be sold by the
Depositor at any time to one or more institutional investors.                   

 LEGAL MATTERS

  Certain legal matters in connection with the Certificates will be passed
upon for the Depositor by Thacher Proffitt & Wood, New York, New York.          

 FINANCIAL INFORMATION

     The Depositor has determined that its financial statements are not material
to the offering made hereby. Any prospective purchaser that desires to review   
financial information concerning the Depositor will be provided by the Depositor
on request with a copy of the most recent financial statements of the Depositor.

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INDEX OF PRINCIPAL DEFINITIONS

                                                                PAGE(S) ON WHICH
                                                                 TERM IS DEFINED
                                                                IN THE
TERM                                                               PROSPECTUS   
----                                                            ----------------

401(c) Regulations...........................................................122
Accrual Certificates...........................................................6
Accrued Certificate Interest..................................................44
Agency Securities..............................................................1
Agreement.....................................................................35
ARM Loans..................................................................7, 15
Available Distribution Amount.................................................44
Bankruptcy Amount.............................................................56
BIF...........................................................................33
Buydown Account...............................................................42
Buydown Funds.................................................................18
Buydown Mortgage Loans........................................................17
Buydown Period............................................................... 18
Cash Flow Agreement....................................................1, 10, 64
Certificate...................................................................35
Certificate Account.......................................................10, 40
Certificate Guarantee Insurance...............................................63
Certificate Principal Balance..............................................5, 45
Certificates...................................................................5
Charter Act...................................................................24
Class Exemptions.............................................................122
Closing Date..................................................................87
Code...................................................................6, 36, 84
Commission.....................................................................4
Committee Report..............................................................87
Contingent Payment Regulations...............................................111
Contracts.....................................................................15
Contributions Tax.............................................................99
Cooperative................................................................7, 15
Cooperative Loans..........................................................7, 15
Cooperative Notes.............................................................20
Cooperative Unit..............................................................15
Credit Support............................................................10, 36
Cut-off Date..................................................................11
Defaulted Mortgage Amount.....................................................56
Deficient Valuation...........................................................46
Deleted Mortgage Loan.........................................................39
Depositor.....................................................................15
Determination Date............................................................43
Distribution Date.............................................................10
DOL..........................................................................120
DOL Regulations..............................................................120
DTC...........................................................................36
Due Period....................................................................44
ERISA....................................................................14, 119
ERISA Plans................................................................. 119
Excluded Plan................................................................122
Exemption................................................................14, 121
Exemption Rating Agencies....................................................121
FDIC..........................................................................33
FHA............................................................................8
FHA Loans.....................................................................20
FHLMC..........................................................................1
FHLMC Act.....................................................................22
FHLMC Certificates.............................................................8
Finance Company...............................................................27

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                                                                PAGE(S) ON WHICH
                                                                 TERM IS DEFINED
                                                                IN THE
TERM                                                               PROSPECTUS   
----                                                            ----------------

FNMA...........................................................................1
FNMA Certificates..............................................................8
FTC Rule......................................................................78
Funding Agreement..........................................................1, 27
Garn-St Germain Act...........................................................78
GNMA ..........................................................................1
GNMA Certificates .............................................................8
GNMA Issuer ..................................................................20
Grantor Trust Certificates ...............................................12, 85
Grantor Trust Fractional Interest Certificate ...............................102
Grantor Trust Fractional Interest Certificates ...............................13
Grantor Trust Fund ...........................................................85
Grantor Trust Strip Certificate .............................................102
Grantor Trust Strip Certificates .............................................13
Guaranty Agreement ...........................................................21
High Cost Loans ..............................................................77
Holder-in-Due-Course .........................................................78
Housing Act ..................................................................20
HUD ..........................................................................66
Insurance Instruments ........................................................49
Insurance Proceeds ...........................................................41
Interest Rate .............................................................7, 15
IRS ..........................................................................87
Issue Premium ................................................................93
Letter of Credit Bank ........................................................58
Liquidated Loan ..............................................................46
Liquidation Proceeds .........................................................41
Loan-to-Value Ratio ..........................................................16
Lockout Period ...............................................................29
Manufacturer's Invoice Price .................................................17
Mark-to-Market Regulations ...................................................96
Master Servicer ...............................................................5
Mortgage Loan Seller .........................................................15
Mortgage Loans .............................................................1, 7
Mortgage Notes ...............................................................19
Mortgage Pool .................................................................7
Mortgaged Properties ......................................................7, 15
Mortgages ....................................................................19
Multifamily Loans ............................................................15
Multifamily Properties .......................................................15
Net Interest Rate ............................................................37
Nonrecoverable Advance .......................................................47
OID Regulations ..............................................................85
Originator ...................................................................15
Parties in Interest .........................................................120
Pass-Through Rate .............................................................5
Permitted Investments ........................................................41
Plan .........................................................................14
Plan Assets .................................................................120
Plans .......................................................................119
PMBS Agreement ...............................................................25
PMBS Issuer ..................................................................26
PMBS Servicer ................................................................26
PMBS Trustee .................................................................26
Pre-Funding Account ..........................................................45
Prepayment Assumption ...................................................87, 106
Prepayment Period ............................................................29

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                                                                PAGE(S) ON WHICH
                                                                 TERM IS DEFINED
                                                                IN THE
TERM                                                               PROSPECTUS   
----                                                            ----------------

Private Mortgage-Backed Securities ............................................1
Prohibited Transactions Tax ..................................................98
PTCE ........................................................................122
PTCE 83-1 ...................................................................122
Purchase Price ...............................................................34
Rating Agency ................................................................37
Record Date ..................................................................43
Related Proceeds .............................................................47
Relief Act ...................................................................82
REMIC ........................................................................85
REMIC Certificates ...........................................................85
REMIC Provisions .............................................................85
REMIC Regular Certificates ...............................................12, 85
REMIC Regulations ............................................................85
REMIC Residual Certificates ..............................................12, 85
Reserve Fund .................................................................63
Reserve Funds ................................................................58
Retained Interest ............................................................36
SAIF .........................................................................33
Sales of Grantor Trust Certificates .........................................105
Salomon .................................................................14, 125
Scheduled Principal Balance ..................................................57
Senior Certificates ....................................................5, 6, 36
Senior Liens .................................................................16
Senior Percentage ............................................................45
Senior/Subordinate Series ....................................................36
Single Family Loans ..........................................................15
Single Family Properties .....................................................15
SMMEA ...................................................................13, 125
Special Hazard Amount ........................................................56
Special Hazard Realized Losses ...............................................57
Special Hazard Subordination Amount ..........................................57
Stated Principal Balance .....................................................35
Strip Certificates ........................................................6, 36
Stripped Interest ............................................................28
Sub-Servicer .................................................................49
Sub-Servicing Account ........................................................41
Sub-Servicing Agreement ......................................................50
Subordinate Certificates ...............................................5, 6, 36
Substitute Mortgage Loan .....................................................39
Tax Favored Plans ...........................................................119
Tiered REMICs ................................................................86
Title V ......................................................................80
Title VIII ...................................................................81
Trust Fund .................................................................1, 5
Trust Fund Asset ..............................................................5
Trustee .......................................................................5
Underwriter .................................................................121
Unrecovered Senior Portion ...................................................57
VA Loans .....................................................................20
Window Period Loans ..........................................................79

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No dealer, salesman or other person has been authorized to give any information 
or to make any representations other than those contained in this prospectus    
supplement or the prospectus in connection with the offer made by this          
prospectus supplement and the prospectus and, if given or made, such information
or representations must not be relied upon as having been authorized by the     
underwriter. Neither the delivery of this prospectus nor any sale made hereunder
shall, under any circumstances, create any implication that there has been no   
change since the date hereof. This prospectus supplement and the prospectus do  
not constitute an offer or solicitation by anyone in any jurisdiction in which  
such offer or solicitation is not authorized or in which the person making such 
offer or solicitation is not qualified to do so or to anyone to whom it is      
unlawful to make such solicitation.                                             

----------

 TABLE OF CONTENTS
                                                                            PAGE
                                                                            ----
 PROSPECTUS SUPPLEMENT
Summary of Prospectus Supplement.............................................S-4
Risk Factors................................................................S-25
The Mortgage Pool...........................................................S-28
Yield on the Certificates...................................................S-33
Description of the Certificates.............................................S-45
Pooling and Servicing Agreement.............................................S-55
Certain Federal Income Tax                                                      
  Consequences..............................................................S-61
Method of Distribution......................................................S-63
Secondary Market............................................................S-64
Legal Opinions..............................................................S-64
Ratings.....................................................................S-64
Legal Investment............................................................S-65
ERISA Considerations........................................................S-65
Appendix A...................................................................A-1

PROSPECTUS
Summary of Prospectus..........................................................5
The Trust Funds...............................................................15
Use of Proceeds...............................................................28
Yield Considerations..........................................................28
Maturity and Prepayment Considerations........................................29
The Depositor.................................................................31
Mortgage Loan Program.........................................................31
Description of the Certificates...............................................35
Description of Credit Support.................................................56
Description of Primary Insurance Policies.....................................64
Certain Legal Aspects of Mortgage Loans.......................................67
Certain Federal Income Tax Consequences.......................................84
State and Other Tax Consequences.............................................119
Erisa Considerations.........................................................119
Legal Investment.............................................................125
Methods of Distribution......................................................125
Legal Matters................................................................126
Financial Information........................................................126
Index of Principal Definitions...............................................127

----------

UNTIL JULY 28, 1997, ALL DEALERS EFFECTING TRANSACTIONS IN THE OFFERED          
CERTIFICATES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED
TO DELIVER A PROSPECTUS SUPPLEMENT AND THE PROSPECTUS IN WHICH IT RELATES. THIS 
DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO             
DELIVER A PROSPECTUS SUPPLEMENT AND PROSPECTUS WHEN ACTING AS UNDERWRITERS AND  
WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTION.                        

$286,956,878 (APPROXIMATE)

 MORTGAGE PASS-THROUGH
CERTIFICATES, SERIES 1997-HUD1

 SALOMON BROTHERS MORTGAGE
SECURITIES VII, INC.
DEPOSITOR 

OCWEN FEDERAL BANK FSB
 MASTER SERVICER

--------------------                                                            
SALOMON BROTHERS INC                                                  
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PROSPECTUS SUPPLEMENT 
DATED APRIL 29, 1997