Firstplus Investment Corp · 8-K · For 12/20/96 · EX-10.2

Filed On 1/9/97   ·   SEC File 33-65373   ·   Accession Number 950134-97-115

Current Report   ·   Form 8-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 8-K         Form 8-K Dated December 20, 1996                       9     37K 
 2: EX-1.1      Copy of Underwriting Agreement                        38    129K 
 3: EX-4.1      Copy of Indenture                                     83    419K 
 4: EX-4.2      Copy of Trust Agreement                               67    272K 
 5: EX-10.1     Copy of Loan Sale Agreement                           10     44K 
 6: EX-10.2     Copy of Sale & Servicing Agreement                    99    515K 

EX-10.2   ·   Copy of Sale & Servicing Agreement
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                                                                    EXHIBIT 10.2

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

SALE AND SERVICING AGREEMENT
Dated as of September 1, 1996 

among 

FIRSTPLUS HOME LOAN OWNER TRUST 1996-3
(Issuer)

FIRSTPLUS INVESTMENT CORPORATION
(Seller)

FIRSTPLUS FINANCIAL, INC. 
(Transferor and Servicer) 

and 

FIRST BANK NATIONAL ASSOCIATION 
(Indenture Trustee and Co-Owner Trustee)

FIRSTPLUS HOME LOAN OWNER TRUST 1996-3
ASSET BACKED SECURITIES 
SERIES 1996-3 

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                           ARTICLE I                                     

                          DEFINITIONS                                    
                                                                         
Section 1.01  Definitions  . . . . . . . . . . . . . . . . . . . . . .  1
Addition Notice  . . . . . . . . . . . . . . . . . . . . . . . . . . .  1
Affiliated Holder  . . . . . . . . . . . . . . . . . . . . . . . . . .  1
Agreement  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  1
Assignment of Mortgage   . . . . . . . . . . . . . . . . . . . . . . .  1
Assumed Pool Principal Balance   . . . . . . . . . . . . . . . . . . .  2
Available Collection Amount  . . . . . . . . . . . . . . . . . . . . .  2
Available Distribution Amount  . . . . . . . . . . . . . . . . . . . .  2
Business Day   . . . . . . . . . . . . . . . . . . . . . . . . . . . .  2
Capitalized Interest Account   . . . . . . . . . . . . . . . . . . . .  2
Capitalized Interest Account Deposit   . . . . . . . . . . . . . . . .  2
Capitalized Interest Account Requirement   . . . . . . . . . . . . . .  2
Capitalized Interest Amount  . . . . . . . . . . . . . . . . . . . . .  2
Capitalized Interest Excess  . . . . . . . . . . . . . . . . . . . . .  2
Certificate(s)   . . . . . . . . . . . . . . . . . . . . . . . . . . .  3
Certificate Distribution Account   . . . . . . . . . . . . . . . . . .  3
Certificateholder  . . . . . . . . . . . . . . . . . . . . . . . . . .  3
Certificateholders' Distributable Amount   . . . . . . . . . . . . . .  3
Certificateholders' Interest Carry-Forward Amount  . . . . . . . . . .  3
Certificateholders' Interest Distributable Amount  . . . . . . . . . .  3
Certificateholders' Monthly Interest Distributable Amount  . . . . . .  3
Certificateholders' Monthly Principal Distributable Amount   . . . . .  3
Certificateholders' Principal Distributable Amount   . . . . . . . . .  3
Certificateholders' Principal Carry-Forward Amount   . . . . . . . . .  4
Certificate Principal Balance  . . . . . . . . . . . . . . . . . . . .  4
Class  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  4
Class A-1 Note   . . . . . . . . . . . . . . . . . . . . . . . . . . .  4
Class A-2 Note   . . . . . . . . . . . . . . . . . . . . . . . . . . .  4
Class A-3 Note   . . . . . . . . . . . . . . . . . . . . . . . . . . .  4
Class A-4 Note   . . . . . . . . . . . . . . . . . . . . . . . . . . .  4
Class A-5 Note   . . . . . . . . . . . . . . . . . . . . . . . . . . .  4
Class A-6 Note   . . . . . . . . . . . . . . . . . . . . . . . . . . .  4
Class A-7 Note   . . . . . . . . . . . . . . . . . . . . . . . . . . .  4
Class A-8 Note   . . . . . . . . . . . . . . . . . . . . . . . . . . .  4
Class Pool Factor  . . . . . . . . . . . . . . . . . . . . . . . . . .  4
Class Principal Balance  . . . . . . . . . . . . . . . . . . . . . . .  4
Closing Date   . . . . . . . . . . . . . . . . . . . . . . . . . . . .  4
Code   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  5
Collection Account   . . . . . . . . . . . . . . . . . . . . . . . . .  5
Completion Certificate   . . . . . . . . . . . . . . . . . . . . . . .  5
Combination Loan   . . . . . . . . . . . . . . . . . . . . . . . . . .  5

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Credit Support Reduction Date  . . . . . . . . . . . . . . . . . . . .  5
Custodial Agreement  . . . . . . . . . . . . . . . . . . . . . . . . .  5
Custodian  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  5
Custodian Fee  . . . . . . . . . . . . . . . . . . . . . . . . . . . .  5
Cut-Off Date   . . . . . . . . . . . . . . . . . . . . . . . . . . . .  5
Debt Consolidation Loan  . . . . . . . . . . . . . . . . . . . . . . .  5
Debt Instrument  . . . . . . . . . . . . . . . . . . . . . . . . . . .  6
Defaulted Home Loan  . . . . . . . . . . . . . . . . . . . . . . . . .  6
Defective Home Loan  . . . . . . . . . . . . . . . . . . . . . . . . .  6
Deficiency Amount  . . . . . . . . . . . . . . . . . . . . . . . . . .  6
Deleted Home Loan  . . . . . . . . . . . . . . . . . . . . . . . . . .  7
Determination Date   . . . . . . . . . . . . . . . . . . . . . . . . .  7
Distribution Date  . . . . . . . . . . . . . . . . . . . . . . . . . .  7
DTC  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  7
Due Date   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  8
Due Period   . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  8
Eligible Account   . . . . . . . . . . . . . . . . . . . . . . . . . .  8
Eligible Servicer  . . . . . . . . . . . . . . . . . . . . . . . . . .  8
Event of Default   . . . . . . . . . . . . . . . . . . . . . . . . . .  8
Excess Overcollateralization Amount  . . . . . . . . . . . . . . . . .  8
Excess Reserve Account Amount  . . . . . . . . . . . . . . . . . . . .  8
Excess Spread  . . . . . . . . . . . . . . . . . . . . . . . . . . . .  8
Expected Loan Losses   . . . . . . . . . . . . . . . . . . . . . . . .  8
FDIC   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  8
FHLMC  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  8
FICO Score   . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  9
Fidelity Bond  . . . . . . . . . . . . . . . . . . . . . . . . . . . .  9
FNMA   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  9
Foreclosure Property   . . . . . . . . . . . . . . . . . . . . . . . .  9
Funding Period   . . . . . . . . . . . . . . . . . . . . . . . . . . .  9
Guaranteed Payment   . . . . . . . . . . . . . . . . . . . . . . . . .  9
Guaranty Insurance Premium   . . . . . . . . . . . . . . . . . . . . .  9
Guaranty Policy  . . . . . . . . . . . . . . . . . . . . . . . . . . .  9
HUD  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  9
Home Improvement Loan  . . . . . . . . . . . . . . . . . . . . . . . .  9
Home Loan  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  9
Home Loan File   . . . . . . . . . . . . . . . . . . . . . . . . . . .  9
Home Loan Interest Rate  . . . . . . . . . . . . . . . . . . . . . . .  9
Home Loan Pool   . . . . . . . . . . . . . . . . . . . . . . . . . . .  9
Home Loan Schedule   . . . . . . . . . . . . . . . . . . . . . . . . .  9
Indenture  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Indenture Trustee  . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Indenture Trustee Fee  . . . . . . . . . . . . . . . . . . . . . . . . 10
Indenture Trustee's Home Loan File   . . . . . . . . . . . . . . . . . 10

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Initial Overcollateralization Amount   . . . . . . . . . . . . . . . . 10
Initial Home Loan  . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Initial Pool Principal Balance   . . . . . . . . . . . . . . . . . . . 10
Insurance Agreement  . . . . . . . . . . . . . . . . . . . . . . . . . 10
Insurance Proceeds   . . . . . . . . . . . . . . . . . . . . . . . . . 10
Insured Securities   . . . . . . . . . . . . . . . . . . . . . . . . . 11
Interest Distribution Amount   . . . . . . . . . . . . . . . . . . . . 11
Interest Shortfall   . . . . . . . . . . . . . . . . . . . . . . . . . 11
Interest Shortfall Rate  . . . . . . . . . . . . . . . . . . . . . . . 11
Liquidated Home Loan   . . . . . . . . . . . . . . . . . . . . . . . . 11
Liquidation Proceeds   . . . . . . . . . . . . . . . . . . . . . . . . 11
Loan Sale Agreement  . . . . . . . . . . . . . . . . . . . . . . . . . 11
Majority Securityholders   . . . . . . . . . . . . . . . . . . . . . . 12
Monthly Payment  . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Moody's  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Mortgage   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Mortgaged Property   . . . . . . . . . . . . . . . . . . . . . . . . . 12
Mortgaged Property States  . . . . . . . . . . . . . . . . . . . . . . 12
Net Liquidation Proceeds   . . . . . . . . . . . . . . . . . . . . . . 12
Net Loan Losses  . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Note(s)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Note Distribution Account  . . . . . . . . . . . . . . . . . . . . . . 13
Noteholder   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Noteholders' Distributable Amount  . . . . . . . . . . . . . . . . . . 13
Noteholders' Interest Carry-Forward Amount   . . . . . . . . . . . . . 13
Noteholders' Interest Distributable Amount   . . . . . . . . . . . . . 13
Noteholders' Monthly Interest Distributable Amount   . . . . . . . . . 13
Noteholders' Monthly Principal Distributable Amount  . . . . . . . . . 13
Noteholders' Principal Distributable Amount  . . . . . . . . . . . . . 13
Noteholders' Principal Carry-Forward Amount  . . . . . . . . . . . . . 14
Note Interest Rate   . . . . . . . . . . . . . . . . . . . . . . . . . 14
Obligor  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Officer's Certificate  . . . . . . . . . . . . . . . . . . . . . . . . 15
Original Certificate Principal Balance   . . . . . . . . . . . . . . . 15
Original Class Principal Balance   . . . . . . . . . . . . . . . . . . 15
Overcollateralization Amount   . . . . . . . . . . . . . . . . . . . . 15
Overcollateralization Reduction Amount   . . . . . . . . . . . . . . . 15
Overcollateralization Stepdown Date  . . . . . . . . . . . . . . . . . 15
Ownership Interest   . . . . . . . . . . . . . . . . . . . . . . . . . 15
Owner Trustee  . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Owner Trustee Fee  . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Pass-Through Rate  . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Percentage Interest  . . . . . . . . . . . . . . . . . . . . . . . . . 15

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Permitted Investments  . . . . . . . . . . . . . . . . . . . . . . . . 16
Person   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Pool Principal Balance   . . . . . . . . . . . . . . . . . . . . . . . 17
Post Liquidation Proceeds  . . . . . . . . . . . . . . . . . . . . . . 17
Preference Amount  . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Pre-Funded Amount  . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Pre-Funding Account  . . . . . . . . . . . . . . . . . . . . . . . . . 18
Pre-Funding Account Deposit  . . . . . . . . . . . . . . . . . . . . . 18
Pre-Funding Account Weighted Average Balance   . . . . . . . . . . . . 18
Pre-Funding Termination Distribution Date  . . . . . . . . . . . . . . 18
Principal Balance  . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Principal Prepayment   . . . . . . . . . . . . . . . . . . . . . . . . 18
Projected Interest Shortfall   . . . . . . . . . . . . . . . . . . . . 18
Prospectus   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Purchase Price   . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Qualified Substitute Home Loan   . . . . . . . . . . . . . . . . . . . 18
Rating Agency or Rating Agencies   . . . . . . . . . . . . . . . . . . 19
Ratings  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Record Date  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Regular Principal Distribution Amount  . . . . . . . . . . . . . . . . 19
Released Mortgaged Property Proceeds   . . . . . . . . . . . . . . . . 20
Required Credit Support Multiple   . . . . . . . . . . . . . . . . . . 20
Required Overcollateralization Amount  . . . . . . . . . . . . . . . . 21
Required Distribution Amount . . . . . . . . . . . . . . . . . . . . . 21
Reserve Account  . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Reserve Account Initial Deposit  . . . . . . . . . . . . . . . . . . . 22
Reserve Account Requirement  . . . . . . . . . . . . . . . . . . . . . 22
Residual Interest:   . . . . . . . . . . . . . . . . . . . . . . . . . 22
Reserve Account Withdrawal Amount  . . . . . . . . . . . . . . . . . . 22
Responsible Officer  . . . . . . . . . . . . . . . . . . . . . . . . . 22
Secured Home Loan  . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Securities   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Securities Insurer   . . . . . . . . . . . . . . . . . . . . . . . . . 22
Securities Insurer Commitment  . . . . . . . . . . . . . . . . . . . . 22
Securities Insurer Default   . . . . . . . . . . . . . . . . . . . . . 22
Securities Insurer Reimbursement Amount  . . . . . . . . . . . . . . . 22
Securityholder   . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Seller   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Series or Series 1996-3  . . . . . . . . . . . . . . . . . . . . . . . 23
Servicer   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Servicer's Fiscal Year   . . . . . . . . . . . . . . . . . . . . . . . 23
Servicer's Home Loan Files   . . . . . . . . . . . . . . . . . . . . . 23
Servicer's Monthly Remittance Report   . . . . . . . . . . . . . . . . 23
Servicer's Monthly Statement   . . . . . . . . . . . . . . . . . . . . 23
Servicing Advances   . . . . . . . . . . . . . . . . . . . . . . . . . 23
Servicing Advances Reimbursement Amount. . . . . . . . . . . . . . . . 23

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Servicing Compensation   . . . . . . . . . . . . . . . . . . . . . . . 23
Servicing Fee  . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Servicing Officer  . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Standard & Poor's  . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Subsequent Home Loan   . . . . . . . . . . . . . . . . . . . . . . . . 24
Subsequent Purchase Price  . . . . . . . . . . . . . . . . . . . . . . 24
Subsequent Transfer Agreement  . . . . . . . . . . . . . . . . . . . . 24
Subsequent Transfer Date   . . . . . . . . . . . . . . . . . . . . . . 24
Subservicer  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Subservicing Account   . . . . . . . . . . . . . . . . . . . . . . . . 24
Subservicing Agreement   . . . . . . . . . . . . . . . . . . . . . . . 24
Substitution Adjustment  . . . . . . . . . . . . . . . . . . . . . . . 24
Superior Lien  . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Termination Price  . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Transferor   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Trust  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Trust Account Property   . . . . . . . . . . . . . . . . . . . . . . . 25
Trust Accounts   . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Trust Agreement  . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Trust Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Trust Fees and Expenses  . . . . . . . . . . . . . . . . . . . . . . . 26
Weighted Average Interest Rate   . . . . . . . . . . . . . . . . . . . 26
Section 1.02  Other Definitional Provisions  . . . . . . . . . . . . . 27

                          ARTICLE II                                     

                 CONVEYANCE OF THE HOME LOANS                            

Section 2.01  Conveyance of the Initial Home Loans.  . . . . . . . . . 27
Section 2.02  Conveyance of the Subsequent Home Loans  . . . . . . . . 28
Section 2.03  Ownership and Possession of Home Loan Files  . . . . . . 30
Section 2.04  Books and Records  . . . . . . . . . . . . . . . . . . . 30
Section 2.05  Delivery of Home Loan Documents  . . . . . . . . . . . . 31
Section 2.06  Acceptance by Indenture Trustee of the Home Loans;         
              Certain Substitutions; Initial Certification by            
              Custodian  . . . . . . . . . . . . . . . . . . . . . . . 33

                          ARTICLE III                                    

                REPRESENTATIONS AND WARRANTIES                           

Section 3.01  Representations and Warranties of the Seller   . . . . . 35
Section 3.02  Representations, Warranties and Covenants of               
              the Servicer and Transferor  . . . . . . . . . . . . . . 37
Section 3.03  Individual Home Loans  . . . . . . . . . . . . . . . . . 39

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Section 3.04  Subsequent Home Loans  . . . . . . . . . . . . . . . . . 45
Section 3.05  Purchase and Substitution  . . . . . . . . . . . . . . . 46

                            ARTICLE IV                                   

        ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS               

Section 4.01  Duties of the Servicer   . . . . . . . . . . . . . . . . 48
Section 4.02  Liquidation of Home Loans  . . . . . . . . . . . . . . . 50
Section 4.03  Fidelity Bond; Errors and Omission Insurance   . . . . . 51
Section 4.04  Title, Management and Disposition of Foreclosure           
              Property   . . . . . . . . . . . . . . . . . . . . . . . 51
Section 4.05  Access to Certain Documentation and Information            
              Regarding the Home Loans   . . . . . . . . . . . . . . . 52
Section 4.06  Superior Liens   . . . . . . . . . . . . . . . . . . . . 52
Section 4.07  Subservicing   . . . . . . . . . . . . . . . . . . . . . 52
Section 4.08  Successor Servicers.   . . . . . . . . . . . . . . . . . 54

                             ARTICLE V                                   

                  ESTABLISHMENT OF TRUST ACCOUNTS                        

Section 5.01  Collection Account and Note Distribution Account   . . . 54
Section 5.02  Claims Under Guaranty Policy   . . . . . . . . . . . . . 57
Section 5.03  Pre-Funding Account.   . . . . . . . . . . . . . . . . . 59
Section 5.04  Capitalized Interest Account   . . . . . . . . . . . . . 59
Section 5.05  [Reserved]   . . . . . . . . . . . . . . . . . . . . . . 60
Section 5.06  Certificate Distribution Account   . . . . . . . . . . . 60
Section 5.07  Reserve Account  . . . . . . . . . . . . . . . . . . . . 62
Section 5.08  Trust Accounts; Trust Account Property   . . . . . . . . 63
Section 5.09  Allocation of Losses.  . . . . . . . . . . . . . . . . . 66

                            ARTICLE VI                                   

       STATEMENTS AND REPORTS; SPECIFICATION OF TAX MATTERS              

Section 6.01   . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Statements   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 6.02  Reports of Foreclosure and Abandonment of Mortgaged        
              Property   . . . . . . . . . . . . . . . . . . . . . . . 70
Section 6.03  Specification of Certain Tax Matters   . . . . . . . . . 70


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ARTICLE VII   

GENERAL SERVICING PROCEDURE   

                                                                · Download Table

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Section 7.01  Assumption Agreements  . . . . . . . . . . . . . . . . . 70
Section 7.02  Satisfaction of Mortgages and Release of Home Loan         
              Files  . . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 7.03  Servicing Compensation   . . . . . . . . . . . . . . . . 73
Section 7.04  Quarterly Statements as to Compliance  . . . . . . . . . 73
Section 7.05  Annual Independent Public Accountants' Servicing           
              Report   . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 7.06  Right to Examine Servicer Records  . . . . . . . . . . . 74
Section 7.07  Reports to the Indenture Trustee; Collection Account       
              Statements   . . . . . . . . . . . . . . . . . . . . . . 74

                           ARTICLE VIII                                  

                REPORTS TO BE PROVIDED BY SERVICER                       

Section 8.01  Financial Statements   . . . . . . . . . . . . . . . . . 74

                            ARTICLE IX                                   

                           THE SERVICER                                  

Section 9.01  Indemnification; Third Party Claims  . . . . . . . . . . 75
Section 9.02  Merger or Consolidation of the Servicer  . . . . . . . . 76
Section 9.03  Limitation on Liability of the Servicer and Others   . . 76
Section 9.04  Servicer Not to Resign; Assignment   . . . . . . . . . . 77
Section 9.05  Relationship of Servicer to Issuer and the Indenture       
              Trustee  . . . . . . . . . . . . . . . . . . . . . . . . 77

                             ARTICLE X                                   

                              DEFAULT                                    

Section 10.01 Events of Default  . . . . . . . . . . . . . . . . . . . 77
Section 10.02 Indenture Trustee to Act; Appointment of Successor   . . 79
Section 10.03 Waiver of Defaults . . . . . . . . . . . . . . . . . . . 81
Section 10.04 Accounting Upon Termination of Servicer  . . . . . . . . 81

                           ARTICLE XI                                    

                           TERMINATION                                   

Section 11.01 Termination  . . . . . . . . . . . . . . . . . . . . . . 81
Section 11.02 Optional Termination by Affiliated Holder or the           
              Securities Insurer . . . . . . . . . . . . . . . . . . . 82
Section 11.03 Notice of Termination  . . . . . . . . . . . . . . . . . 83

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                                   ARTICLE XII                                  

                            MISCELLANEOUS PROVISIONS                            
                                                                                

       Section 12.01 Acts of Securityholders  . . . . . . . . . . . . . . . . 83
       Section 12.02 Amendment  . . . . . . . . . . . . . . . . . . . . . . . 83
       Section 12.03 Recordation of Agreement . . . . . . . . . . . . . . . . 84
       Section 12.04 Duration of Agreement  . . . . . . . . . . . . . . . . . 84
       Section 12.05 Governing Law  . . . . . . . . . . . . . . . . . . . . . 84
       Section 12.06 Notices  . . . . . . . . . . . . . . . . . . . . . . . . 84
       Section 12.07 Severability of Provisions . . . . . . . . . . . . . . . 85
       Section 12.08 No Partnership . . . . . . . . . . . . . . . . . . . . . 85
       Section 12.09 Counterparts . . . . . . . . . . . . . . . . . . . . . . 85
       Section 12.10 Successors and Assigns . . . . . . . . . . . . . . . . . 85
       Section 12.11 Headings . . . . . . . . . . . . . . . . . . . . . . . . 85
       Section 12.12 Actions of Securityholders . . . . . . . . . . . . . . . 86
       Section 12.13 Reports to Rating Agencies . . . . . . . . . . . . . . . 86
       Section 12.14 Grant of Securityholder Rights to Securities Insurer . . 87
       Section 12.15 Third Party Beneficiary  . . . . . . . . . . . . . . . . 87
       Section 12.16 Suspension and Termination of Securities Insurer's         
                     Rights . . . . . . . . . . . . . . . . . . . . . . . . . 87

                                    EXHIBITS                                    

EXHIBIT A            Home Loan Schedule                                         
EXHIBIT B            Form of Servicer's Monthly Remittance Report to Trustee    
EXHIBIT C            Contents of Home Loan File                                 
EXHIBIT D            Form of Subsequent Transfer Agreement                      

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This Sale and Servicing Agreement is entered into effective as of 
September 1, 1996, among FIRSTPLUS Home Loan Owner Trust 1996-3, a Delaware     
business trust (the "Issuer" or the "Trust"), FIRSTPLUS INVESTMENT CORPORATION, 
a Nevada corporation, as Seller (the "Seller"), FIRSTPLUS FINANCIAL, INC., a    
Texas corporation ("FFI"), as Transferor (in such capacity, the "Transferor")   
and Servicer (in such capacity, the "Servicer") and First Bank National         
Association, a national banking association, as Indenture Trustee on behalf of  
the Noteholders (in such capacity, the "Indenture Trustee") and as Co-Owner     
Trustee on behalf of the Certificateholders (in such capacity, the "Co-Owner    
Trustee").                                                                      

PRELIMINARY STATEMENT 

     WHEREAS, the Issuer desires to purchase a pool of Home Loans which were
originated or purchased by the Transferor and sold to the Seller in the         
ordinary course of business of the Transferor;                                  

   WHEREAS, the Seller is willing to sell such Home Loans to the Issuer;
and                                                                             

WHEREAS, the Servicer is willing to service such Home Loans in    
accordance with the terms of this Agreement;                                    

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

ARTICLE I 

DEFINITIONS 

Section 1.01  Definitions.  Whenever used in this Agreement, the  
following words and phrases, unless the context otherwise requires, shall have  
the meanings specified in this Article.                                         

     Addition Notice:  With respect to the transfer of Subsequent Home Loans
to the Trust pursuant to Section 2.02 of this Agreement, notice of the Seller's 
designation of Subsequent Home Loans to be sold to the Issuer and the aggregate 
Principal Balance of such Subsequent Home Loans as of the related Cut-Off Date, 
which shall be given to the Indenture Trustee and to the Securities Insurer not 
later than three Business Days prior to the related Subsequent Transfer Date.   

Affiliated Holder:  FIRSTPLUS RESIDUAL HOLDINGS, INC., a Nevada   
corporation, as the holder of approximately 1% of the Percentage Interest of    
the Residual Interest and approximately 1% of the Original Certificate          
Principal Balance of the Certificates.                                          

     Agreement:  This Sale and Servicing Agreement and all amendments hereof
and supplements hereto.                                                         

  Assignment of Mortgage:  With respect to each Home Loan secured by a
Mortgage, an assignment, notice of transfer or equivalent instrument sufficient 
under the laws of the jurisdiction wherein the related Mortgaged Property is    
located to reflect of record the sale of the related Home Loan to the Issuer    
for the benefit of the Securityholders and the Securities Insurer.              

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      Assumed Pool Principal Balance: On the Closing Date, the amount equal to
the sum of the Initial Pool Principal Balance, plus the Pre-Funding Account     
Deposit, which amount is $300,000,000.                                          

   Available Collection Amount:  An amount equal to the sum of:  (i) all
amounts received on the Home Loans or required to be paid by the Servicer, the  
Transferor or the Seller during the related Due Period (exclusive of amounts    
not required to be deposited in the Collection Account and amounts permitted to 
be withdrawn by the Indenture Trustee from the Collection Account pursuant to   
Section 5.01(d) of this Agreement) as reduced by any portion thereof that may   
not be withdrawn therefrom pursuant to an order of a United States bankruptcy   
court of competent jurisdiction imposing a stay pursuant to Section 362 of the  
United States Bankruptcy Code; (ii) in the case of a Distribution Date relating 
to a Due Period that occurs prior to the end of the Funding Period, an amount   
from the Capitalized Interest Account sufficient to fund any shortfall in the   
Interest Distribution Amount attributable to the amounts in the Pre-Funding     
Account; (iii) in the case of the Pre-Funding Termination Distribution Date,    
amounts, if any, remaining in the Pre-Funding Account at the end of the Funding 
Period (net of reinvestment income, which shall be transferred to the           
Capitalized Interest Account); (iv) with respect to the final Distribution Date 
or an early redemption or termination of the Offered Securities pursuant to     
Section 11.02, the Termination Price, and (v) any and all income or gain from   
investments in the Collection Account.                                          

Available Distribution Amount: The amount deposited in the Note   
Distribution Account pursuant to Section 5.01(b)(2).                            

   Business Day:  Any day other than (i) a Saturday or Sunday, or (ii) a
day on which banking institutions in New York City or in the city in which the  
Securities Insurer or the corporate trust office of the Indenture Trustee is    
located are authorized or obligated by law or executive order to be closed.     

 Capitalized Interest Account:   The account established pursuant to
Section 5.04, which account shall contain the Capitalized Interest Amount.      

Capitalized Interest Account Deposit:   An amount equal to        
$1,478,978.66.                                                                  

 Capitalized Interest Account Requirement:  On the Closing Date, the
Capitalized Interest Account Requirement will equal the Capitalized Interest    
Account Deposit.  Thereafter, as determined by the Servicer pursuant to Section 
5.04 on any Business Day prior to December 26, 1996, the Capitalized Interest   
Account Requirement will equal the Projected Interest Shortfall.                

    Capitalized Interest Amount:  The amount on deposit in the Capitalized
Interest Account as of any date of determination, after giving effect to (i)    
amounts to be transferred to the Note Distribution Account for distribution on  
the next Distribution Date pursuant to Section 5.04(a), (ii) amounts released   
to the holders of Residual Interest pursuant to Section 5.04(d),  and (iii) any 
income and gain, if any, on funds held in the Capitalized Interest Account and  
any income and gain, if any, transferred to the Capitalized Interest Account    
from funds held in the Pre-Funding Account pursuant to Section 5.03.            

    Capitalized Interest Excess: As determined by the Servicer pursuant to
Section 5.04, the amount of excess funds on deposit in the Capitalized Interest 
Account; on any Business Day                                                    

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occurring prior to December 27, 1996, the Capitalized Interest Excess shall     
equal the greater of (i) zero and (ii) the Capitalized Interest Amount less the 
Capitalized Interest Account Requirement.                                       

   Certificate(s): Any one or more Certificate(s) issued pursuant to the
Trust Agreement.                                                                

Certificate Distribution Account:  The Account established and    
maintained pursuant to Section 5.06.                                            

Certificateholder:  A holder of any Certificate.                  

Certificateholders' Distributable Amount:  With respect to any    
Distribution Date, the sum of the Certificateholders' Principal Distributable   
Amount and the Certificateholders' Interest Distributable Amount.               

     Certificateholders' Interest Carry-Forward Amount:  With respect to any
Distribution Date, the excess of the Certificateholders' Monthly Interest       
Distributable Amount for the preceding Distribution Date and any outstanding    
Certificateholders' Interest Carry-Forward Amount on such preceding             
Distribution Date, over the amount in respect of interest that is actually      
deposited in the Certificate Distribution Account on such preceding             
Distribution Date.                                                              

     Certificateholders' Interest Distributable Amount:  With respect to any
Distribution Date, the sum of the Certificateholders' Monthly Interest          
Distributable Amount for such Distribution Date and the Certificateholders'     
Interest Carry-Forward Amount for such Distribution Date.                       

      Certificateholders' Monthly Interest Distributable Amount:  With respect
to any Distribution Date and the Certificates, thirty (30) days' accrued        
interest at the Pass Through Rate on the Certificate Principal Balance          
immediately preceding such Distribution Date  (or, in the case of the first     
Distribution Date, on the Closing Date), after giving effect to all payments    
allocable to the reduction of the Certificate Principal Balance made on or      
prior to such immediately preceding Distribution Date.                          

Certificateholders' Monthly Principal Distributable Amount:  With 
respect to any Distribution Date prior to the Distribution Date on which the    
Notes are paid in full, zero; and with respect to any Distribution Date         
commencing on the Distribution Date on which the Notes are paid in full, the    
sum of (i) the Regular Principal Distribution Amount (less, on the Distribution 
Date on which the Notes are paid in full, any portion thereof payable on the    
Notes), plus (ii) for each Distribution Date for which the related Due Period   
occurred during the Funding Period and for each Distribution Date thereafter if 
the Overcollateralization Amount is less than the Required                      
Overcollateralization Amount, the Excess Spread, if any.                        

      Certificateholders' Principal Distributable Amount:  With respect to any
Distribution Date, the sum of the Certificateholders' Monthly Principal         
Distributable Amount for such Distribution Date and the Certificateholders'     
Principal Carry-Forward Amount as of the close of the preceding Distribution    
Date; provided, however, that the Certificateholders' Principal Distributable   
Amount shall not exceed the Certificate Principal Balance.  In addition, on the 
Final Scheduled Distribution Date, the principal required to be distributed to  
Certificateholders shall not be less than the amount that is necessary (after   
giving effect to the other amounts to be deposited in the Certificate           

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Distribution Account on such Distribution Date and allocable to principal) to   
reduce the Certificate Principal Balance to zero.                               

     Certificateholders' Principal Carry-Forward Amount:  As of the close of
any Distribution Date, the excess of the (A) Certificateholders' Monthly        
Principal Distributable Amount and any outstanding Certificateholders'          
Principal Carry-Forward Amount from the preceding Distribution Date, over (B)   
the amount in respect of principal that is actually deposited in the            
Certificate Distribution Account.                                               

   Certificate Principal Balance:   As of any date of determination, the
Original Certificate Principal Balance of the Certificates reduced by all       
amounts previously distributed to the Certificateholders in reduction of the    
Certificate Principal Balance of the Certificates on all previous Distribution  
Dates pursuant  Section 5.06 hereof.                                            

 Class:  With respect to the Notes, all Notes bearing the same class
designation, and with respect to the Certificates, the Certificates.            

Class A-1 Note:  Any Class A-1 Note in the form attached to the   
Indenture as Exhibit A-1.                                                       

Class A-2 Note:  Any Class A-2 Note in the form attached to the   
Indenture as Exhibit A-2.                                                       

Class A-3 Note:  Any Class A-3 Note in the form attached to the   
Indenture as Exhibit A-3.                                                       

Class A-4 Note:  Any Class A-4 Note in the form attached to the   
Indenture as Exhibit A-4.                                                       

Class A-5 Note:  Any Class A-5 Note in the form attached to the   
Indenture as Exhibit A-5.                                                       

Class A-6 Note:  Any Class A-6 Note in the form attached to the   
Indenture as Exhibit A-6.                                                       

Class A-7 Note:  Any Class A-7 Note in the form attached to the   
Indenture as Exhibit A-7.                                                       

Class A-8 Note:  Any Class A-8 Note in the form attached to the   
Indenture as Exhibit A-8.                                                       

   Class Pool Factor:  With respect to each Class of Notes and as of any
date of determination, the then applicable Class Principal Balance of the       
respective Class of Notes divided by the Original Class Principal Balance of    
such Class.  With respect to the Certificates and as of any date of             
determination, the then applicable Certificate Principal Balance of the         
respective Certificates divided by the Original Certificate Principal Balance   
of the Certificates.                                                            

     Class Principal Balance:  With respect to each Class of Notes and as of
any date of determination, the Original Class Principal Balance of each such    
Class reduced by all amounts previously distributed to Noteholders of such      
Class in reduction of the principal balance of such Class on all previous       
Distribution Dates pursuant to the applicable provisions of Section 8.2(c), of  
the Indenture providing for the distribution of principal to the Noteholders.   

Closing Date:  September 27, 1996.                                

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     Code:  The Internal Revenue Code of 1986, as amended from time to time,
and Treasury Regulations promulgated thereunder.                                

Collection Account:  The account established and maintained by the
Servicer in accordance with Section 5.01.                                       

      Completion Certificate:  With respect to certain Home Improvement Loans,
a certificate executed by the related Obligor wherein such Obligor states the   
related contractor or seller of the property improvement has completed to such  
Obligor's satisfaction the improvements for which the related Home Loan was     
obtained.                                                                       

    Combination Loan:  A Home Loan, the proceeds of which were used by the
Obligor in combination to finance property improvements and for debt            
consolidation or other purposes, and which are marketed by the Transferor as    
"BusterPlus(TM) Loans."                                                         

   Co-Owner Trustee: First Bank National Association, a national banking
association, in its capacity as the Co-Owner Trustee under the Trust Agreement  
acting on behalf of the Certificateholders, or any successor co-owner trustee   
under the Trust Agreement.                                                      

   Credit Support Reduction Date: The Distribution Date occurring on the
later of: (i) the thirty-sixth (36th) Distribution Date; or (ii) the            
Distribution Date on which the Pool Principal Balance is equal to or less than  
fifty percent (50%) of the aggregate Principal Balances as of the applicable    
Cut-Off Dates of all the Home Loans.                                            

      Custodial Agreement:  The custodial agreement dated September 1, 1996 by
and between the Seller, FFI, as the Transferor and the Servicer, the Indenture  
Trustee, and Bank One, Texas, National Association, as the Custodian, and any   
subsequent custodial agreement, in similar form and substance, providing for    
the retention of the Home Loan Files by the Custodian on behalf of the          
Indenture Trustee.                                                              

Custodian:  Any custodian acceptable to the Securities Insurer and
appointed by the Indenture Trustee pursuant to the Custodial Agreement, which   
shall not be affiliated with the Servicer, the Transferor, any Subservicer, or  
the Seller.  Bank One, Texas, National Association, shall be the initial        
Custodian pursuant to the terms of the Custodial Agreement.                     

     Custodian Fee:  If applicable, the annual fee payable to the Custodian,
calculated and payable monthly on each Distribution Date equal to the per annum 
percentage (as set forth in the Custodial Agreement) of the Pool Principal      
Balance as of the immediately preceding Determination Date, except with respect 
to the first Distribution Date, when such monthly fee shall be pro rated based  
on four (4) days for the first Due Period.                                      

Cut-Off Date: With respect to the Initial Home Loans, the close of
business on  August 31, 1996 and with respect to each Subsequent Home Loan, the 
close of business on the date specified as such in the applicable Subsequent    
Transfer Agreement.                                                             

Debt Consolidation Loan:  A Home Loan, the proceeds of which were 
primarily used by the related Obligor for debt consolidation purposes or        
purposes other than to finance property improvements and which are marketed by  
the Transferor as "DebtBuster Loans".                                           

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     Debt Instrument:  The note or other evidence of indebtedness evidencing
the indebtedness of an Obligor under a Home Loan.                               

   Defaulted Home Loan:  With respect to the calculation of the Required
Credit Support Multiple, or the waiver or modification of a Home Loan pursuant  
to Section 4.01(c), during a Due Period, any Home Loan, including without       
limitation any Liquidated Home Loan, with respect to which any of the following 
occurs: (a) foreclosure or similar proceedings have been commenced; (b) any     
portion of a Monthly Payment becomes 180 days past due by the related Obligor;  
or (c) the Servicer or any Subservicer has determined in good faith and in      
accordance with customary servicing practices that such Home Loan is            
uncollectible; provided, further, that with respect to a Defaulted Home Loan    
that is repurchased or substituted pursuant to Section 3.05 or a Defaulted Home 
Loan that is modified, waived or varied pursuant to Section 4.01(c), such       
Defaulted Home Loan shall continue to be included in the calculation of the     
Required Credit Support Multiple.                                               

Defective Home Loan:  As defined in Section 3.05 hereof.          

      Deficiency Amount:  As of any Distribution Date, the amount by which the
Interest Distribution Amount for the Notes and the Certificates and the Regular 
Distribution Amount payable on the related Security on such Distribution Date   
exceeds the Available Collection Amount (less the Trust Fees and Expenses),     
plus all amounts on deposit in the Reserve Account in respect of the            
Securities.                                                                     

Delivery:  When used with respect to Trust Account Property means:

          (a)    with respect to bankers' acceptances, commercial paper,
      negotiable certificates of deposit and other obligations that constitute
    "instruments" within the meaning of Section 9-105(1)(i) of the UCC and
     are susceptible of physical delivery, transfer thereof to the Indenture
Trustee or its nominee or custodian by physical delivery to the   
      Indenture Trustee or its nominee or custodian endorsed to, or registered
  in the name of, the Indenture Trustee or its nominee or custodian or
 endorsed in blank, and, with respect to a certificated security (as
      defined in Section 8-102 of the UCC) transfer thereof (i) by delivery of
   such certificated security endorsed to, or registered in the name of,
    the Indenture Trustee or its nominee or custodian or endorsed in blank
      to a financial intermediary (as defined in Section 8-313 of the UCC) and
   the making by such financial intermediary of entries on its books and
  records identifying such certificated securities as belonging to the
   Indenture Trustee or its nominee or custodian and the sending by such
financial intermediary of a confirmation of the purchase of such  
certificated security by the Indenture Trustee or its nominee or  
    custodian, or (ii) by delivery thereof to a "clearing corporation" (as
     defined in Section 8-102(3) of the UCC) and the making by such clearing
      corporation of appropriate entries on its books reducing the appropriate
 securities account of the transferor and increasing the appropriate
  securities account of a financial intermediary by the amount of such
      certificated security, the identification by the clearing corporation of
   the certificated securities for the sole and exclusive account of the
     financial intermediary, the maintenance of such certificated securities
by such clearing corporation or a "custodian bank" (as defined in 
  Section 8-102(4) of the UCC) or the nominee of either subject to the
     clearing corporation's exclusive control, the sending of a confirmation
    by the financial intermediary of the purchase by the Indenture Trustee
   or its nominee or custodian of such securities and the making by such
    financial intermediary of entries on its books and records identifying

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   such certificated securities as belonging to the Indenture Trustee or
   its nominee or custodian (all of the foregoing, "Physical Property"),
    and, in any event, any such Physical Property in registered form shall
      be in the name of the Indenture Trustee or its nominee or custodian; and
such additional or alternative procedures as may hereafter become 
  appropriate to effect the complete transfer of ownership of any such
    Trust Account Property (as defined herein) to the Indenture Trustee or
    its nominee or custodian, consistent with changes in applicable law or
regulations or the interpretation thereof;                        

    (b)    with respect to any securities issued by the U.S.
    Treasury, the Federal Home Loan Mortgage Corporation or by the Federal
      National Mortgage Association that is a book-entry security held through
    the Federal Reserve System pursuant to federal book-entry regulations,
the following procedures, all in accordance with applicable law,  
  including applicable federal regulations and Articles 8 and 9 of the
UCC: book-entry registration of such Trust Account Property to an 
      appropriate book-entry account maintained with a Federal Reserve Bank by
a financial intermediary that is also a "depository" pursuant to  
applicable federal regulations and issuance by such financial     
    intermediary of a deposit advice or other written confirmation of such
book-entry registration to the Indenture Trustee or its nominee or
  custodian of the purchase by the Indenture Trustee or its nominee or
   custodian of such book-entry securities; the making by such financial
intermediary of entries in its books and records identifying such 
     book-entry security held through the Federal Reserve System pursuant to
     federal book-entry regulations as belonging to the Indenture Trustee or
    its nominee or custodian and indicating that such custodian holds such
     Trust Account Property solely as agent for the Indenture Trustee or its
    nominee or custodian; and such additional or alternative procedures as
may hereafter become appropriate to effect complete transfer of   
      ownership of any such Trust Account Property to the Indenture Trustee or
    its nominee or custodian, consistent with changes in applicable law or
regulations or the interpretation thereof; and                    

             (c)    with respect to any item of Trust Account Property that is
   an uncertificated security under Article 8 of the UCC and that is not
    governed by clause (b) above, registration on the books and records of
the issuer thereof in the name of the financial intermediary, the 
     sending of a confirmation by the financial intermediary of the purchase
by the Indenture Trustee or its nominee or custodian of such      
   uncertificated security, the making by such financial intermediary of
entries on its books and records identifying such uncertificated  
  certificates as belonging to the Indenture Trustee or its nominee or
custodian.                                                        

Deleted Home Loan:  A Home Loan replaced by or to be replaced by a
Qualified Substitute Home Loan pursuant to Section 3.05 or 2.06(c) hereof.      

   Determination Date:  The day of each month which is five (5) Business
Days prior to the related Distribution Date.                                    

      Distribution Date:  The 20th day of any month or if such 20th day is not
a Business Day, the first Business Day immediately following such day,          
commencing in October 1996.                                                     

DTC:  The Depository Trust Company.                               

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      Due Date:  The day of the month on which the Monthly Payment is due from
the Obligor on a Home Loan.                                                     

     Due Period:  With respect to each Distribution Date, the calendar month
immediately preceding the month in which such Distribution Date occurs with the 
first Due Period commencing on September 1, 1996.                               

Eligible Account:  At any time, an account which is any of the    
following:  (i) an account maintained with a depository institution (A) the     
long-term debt obligations of which are at such time rated by each Rating       
Agency in one of their two highest long-term rating categories, or (B) the      
short-term debt obligations of which are then rated by each Rating Agency in    
their highest short-term rating category; (ii) an account or accounts the       
deposits in which are fully insured by either the Bank Insurance Fund or the    
Savings Association Insurance Fund of the FDIC; (iii) a trust account (which    
shall be a "segregated trust account") maintained with the corporate trust      
department of a federal or state chartered depository institution or trust      
company with trust powers and acting in its fiduciary capacity for the benefit  
of the Indenture Trustee and the Issuer, which depository institution or trust  
company shall have capital and surplus of not less than $50,000,000; or (iv) an 
account that will not cause any Rating Agency to downgrade or withdraw its      
then-current rating(s) assigned to the Notes or the Certificates, as evidenced  
in writing by such Rating Agency.  (Each reference in this definition of        
"Eligible Account" to the Rating Agency shall be construed as a reference to    
Standard & Poor's and Moody's.)                                                 

     Eligible Servicer:  A Person who is qualified to act as Servicer of the
Home Loans under applicable federal and state laws and regulations.             

Event of Default:  As described in Section 10.01 hereof.          

     Excess Overcollateralization Amount:  As calculated with respect to any
Distribution Date occurring after the Funding Period ends, the excess of, if    
any, (x) the Overcollateralization Amount on such Distribution Date over (y)    
the Required Overcollateralization Amount on such Distribution Date (after all  
distributions for such Distribution Date have been made but excluding any       
distributions of the Overcollateralization Reduction Amounts for such           
Distribution Date).                                                             

Excess Reserve Account Amount:  As defined in Section 5.07(c).    

     Excess Spread:  With respect to any Distribution Date, as determined in
accordance with Section 5.01(c) an amount equal to the portion, if any, of the  
Available Collection Amount for the related Due Period that remains after       
payment of (a) the Trust Fees and Expenses; (b) the Noteholders' Interest       
Distributable Amount; (c) the Regular Principal Distribution Amount; (d) the    
Certificateholders' Interest Distributable Amount; (e) the Securities Insurer   
Reimbursement Amount; and (f) the Servicing Advance Reimbursement Amount.       

Expected Loan Losses: As defined in Section 10.01(a)(vii).        

FDIC:  The Federal Deposit Insurance Corporation and any successor
thereto.                                                                        

  FHLMC:  The Federal Home Loan Mortgage Corporation and any successor
thereto.                                                                        

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 FICO Score:  The credit evaluation scoring methodology developed by
Fair, Issac and Company.                                                        

Fidelity Bond:  As described in Section 4.03 hereof.              

FNMA:  The Federal National Mortgage Association and any successor
thereto.                                                                        

      Foreclosure Property:  Any real property or personal property securing a
Home Loan that has been acquired by the Servicer through foreclosure, deed in   
lieu of foreclosure or similar proceedings in respect of the related Home Loan. 

    Funding Period: The period beginning on the Closing Date and ending on
the earlier of (a) the date on which the amount on deposit in the Pre-Funding   
Account is reduced below $25,000 and the Transferor directs that the Funding    
Period end, (b) the close of business on December 27, 1996; provided, however,  
that the Funding Period shall end upon the occurrence of an Event of Default.   

      Guaranteed Payment:  With respect to the Guaranty Policy, the sum of (i)
as of any Distribution Date, any Deficiency Amount and (ii) any unpaid          
Preference Amount.                                                              

Guaranty Insurance Premium: The premium, payable monthly, that is 
specified in the Commitment Letter issued by the Securities Insurer with        
respect to the Notes and the Certificates.                                      

      Guaranty Policy.  That certain guaranty insurance policy for the Offered
Securities, number 22063 dated September 27, 1996, and issued by the Securities 
Insurer to the Indenture Trustee and guaranteeing payment of any Guaranteed     
Payment.                                                                        

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

    Home Improvement Loan:  A Home Loan, the net proceeds of which were or
will be used by the Obligor to finance property improvements.                   

Home Loan:  A Home Improvement Loan, Debt Consolidation Loan or   
Combination Loan that is included in the Home Loan Pool.  As applicable, Home   
Loan shall be deemed to refer to the related Debt Instrument, Mortgage, and any 
related Foreclosure Property.                                                   

Home Loan File:  As defined in Section 2.05.                      

    Home Loan Interest Rate:  The fixed annual rate of interest borne by a
Debt Instrument, as shown on the related Home Loan Schedule.                    

 Home Loan Pool:  The pool of Initial Home Loans and Subsequent Home
Loans.                                                                          

     Home Loan Schedule:  The schedule of Initial Home Loans attached hereto
as Exhibit A, as amended or supplemented from time to time, including any       
schedules of Subsequent Home Loans attached as exhibits to any Subsequent       
Transfer Agreement, such schedules identifying each Home Loan by address of the 
related Mortgaged Property, if any, and the name(s) of each Obligor and setting 
forth as to each Home Loan the following information:  (i) the Principal        
Balance as of the                                                               

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applicable Cut-Off Date, (ii) the account number, (iii) the original principal  
amount, (iv) the Due Date, (v) the Home Loan Interest Rate, (vi) the first date 
on which a Monthly Payment is due under the related Note, (vii) the Monthly     
Payment, (viii) the maturity date of the related Debt Instrument, and (ix) the  
remaining number of months to maturity as of the applicable Cut-Off Date.       

   Indenture:  The Indenture, dated as of September 1, 1996, between the
Issuer and the Indenture Trustee.                                               

     Indenture Trustee:  First Bank National Association, a national banking
association, as Indenture Trustee under the Indenture and this Agreement acting 
on behalf of the Noteholders, or any successor indenture trustee under the      
Indenture or this Agreement.                                                    

      Indenture Trustee Fee:  The annual fee payable to the Indenture Trustee,
calculated and payable monthly on each Distribution Date, equal to the per      
annum percentage (as set forth in the Indenture Trustee Fee Agreement) the Pool 
Principal Balance as of the immediately preceding Determination Date, except    
with respect to the first Distribution Date such monthly amount shall be pro    
rated based on four (4) days for the first Due Period.                          

 Indenture Trustee's Home Loan File:  As defined in Section 2.05(d).

Initial Overcollateralization Amount:  Zero.                      

 Initial Home Loan:  An individual Home Loan that is conveyed to the
Issuer pursuant to this Agreement on the Closing Date, together with the rights 
and obligations of a holder thereof and payments thereon and proceeds therefrom 
received after the August 31, 1996 Cut-off Date, the Initial Home Loans subject 
to this Agreement being identified on the Home Loan Schedule annexed hereto as  
Exhibit A.                                                                      

Initial Pool Principal Balance: $214,820,812.36, which is the Pool
Principal Balance as of the August 31, 1996 Cut-Off Date.                       

      Insurance Agreement:  The Insurance and Indemnification Agreement, dated
as of September 27, 1996, between the Securities Insurer, as Securities         
Insurer, the Transferor, as Servicer and Transferor, the Seller, as Seller, the 
Issuer, as Trust, the Affiliated Holder, as Affiliated Holder, RAC Financial    
Group, Inc., as Guarantor, and the Indenture Trustee, as Indenture Trustee and  
Co-Owner Trustee.                                                               

     Insurance Proceeds: With respect to any Home Loan, the proceeds paid to
the Servicer by any insurer pursuant to any insurance policy covering a Home    
Loan, Mortgaged Property or Foreclosure Property or any other insurance policy  
that relates to a Home Loan, net of any expenses which are incurred by the      
Servicer in connection with the collection of such proceeds and not otherwise   
reimbursed to the Servicer, other than Guaranteed Payments and proceeds of any  
insurance policy that are to be applied to the restoration or repair of the     
Mortgaged Property or released to the Obligor in accordance with customary      
mortgage loan servicing procedures applicable to the respective loan type,      
including Home Improvement Loans, Debt Consolidation Loans and Combination      
Loans.                                                                          

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   Insured Securities: Each of the Class A-1 Notes, the Class A-2 Notes,
the Class A-3 Notes, the Class A-4 Notes, the Class A-5 Notes, the Class A-6    
Notes, the Class A-7 Notes, the Class A-8 Notes and the Certificates.           

     Interest Distribution Amount:  On any Distribution Date, the sum of the
Noteholders' Interest Distributable Amount for each Class of Notes and the      
Certificateholders' Interest Distributable Amount for such Distribution Date.   

      Interest Shortfall:  As to any Distribution Date prior to the end of the
Funding Period, the amount of the shortfall in interest on the Securities       
arising as a result of the utilization of the Pre-Funding Account for the       
purchase by the Issuer of Subsequent Home Loans after the Closing Date.  With   
respect to the October 1996 Distribution Date, the Interest Shortfall is equal  
to thirty (30) days' interest on the Pre-Funding Account Deposit computed at a  
per annum rate equal to the Weighted Average Interest Rate, based on the        
respective Class Principal Balances on the Closing Date.  With respect to the   
November 1996, December 1996 and January 1997 distribution Dates, the Interest  
Shortfall will be equal to 30 days' interest on the average daily balance in    
the Pre-Funding Account (net of interest and investment earnings) during the    
related Due Period, computed at a per annum rate equal to the Weighted Average  
Interest Rate as of the immediately preceding Distribution Date (after          
distributions).                                                                 

Interest Shortfall Rate:  The per annum rate equal to 4.7655%.    

    Interim Required Overcollateralization:  means an amount equal to 5.0%
of the aggregate Principal Balances as of the applicable Cut-Off Dates of the   
Home Loans.                                                                     

     Liquidated Home Loan:  Any Home Loan or Foreclosure Property in respect
of a Home Loan on which a Monthly Payment is in excess of 30 days past due and  
as to which the Servicer has determined that all amounts which it reasonably    
and in good faith expects to collect have been recovered from or on account of  
such defaulted Home Loan or the related Foreclosure Property; provided that, in 
any event, such defaulted Home Loan or the related Foreclosure Property shall   
be deemed uncollectible and therefore deemed a Liquidated Home Loan upon the    
earlier of:  (a) the liquidation of the related Foreclosure Property, (b) the   
determination by the Servicer in accordance with customary servicing practices  
that no further amounts are collectible from the Home Loan and any related      
Mortgaged Property, or (c) the date on which any portion of a Monthly Payment   
on any Home Loan is in excess of 300 days past due.                             

    Liquidation Proceeds: With respect to a Liquidated Home Loan, any cash
amounts received in connection with the liquidation of such Liquidated Home     
Loan, whether through trustee's sale, foreclosure sale or other disposition,    
and any other amounts required to be deposited in the Collection Account        
pursuant to Section 4.02 or 4.04, in each case other than Insurance Proceeds    
and Released Mortgaged Property Proceeds.                                       

   Loan Sale Agreement:  Individually or collectively, as the context in
which this term is used may require, any or all of the following:  (i) the loan 
sale agreement between the Transferor, as seller, and the Seller, as purchaser, 
pursuant to which the Seller has acquired any of the Home Loans; and (ii) each  
loan sale agreement entered into by the Transferor, as purchaser, pursuant to   
which the Transferor has acquired any of the Home Loans and which shall include 
all of the rights and benefits                                                  

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of the Transferor thereunder with respect to such Home Loans, subject to any    
limitations thereunder regarding assignment by the Transferor.                  

      Majority Securityholders:  Subject to Section 12.14, (i) until such time
as the sum of the Class Principal Balances of all Classes of Notes have been    
reduced to zero, the holder or holders of in excess of 50% of the Class         
Principal Balance of all Classes of Notes (accordingly, the holders of the      
Certificates shall be excluded from any rights or actions of the Majority       
Securityholders during such period); and (ii) thereafter, the holder or holders 
of in excess of 50% of the Certificate Principal Balance of the Certificates.   

 Monthly Payment:  The scheduled monthly payment of principal and/or
interest required to be made by an Obligor on the related Home Loan, as set     
forth in the related Debt Instrument.                                           

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

    Mortgage: If applicable, the mortgage, deed of trust or other security
instrument creating a lien in accordance with applicable law on a Mortgaged     
Property to secure the Debt Instrument which evidences a secured Home Loan.     

Mortgaged Property: If applicable, the property (real, personal or
mixed) encumbered by the Mortgage which secures the Debt Instrument evidencing  
a secured Home Loan.                                                            

   Mortgaged Property States: Each state in which any Mortgaged Property
securing an Initial Home Loan is located as set forth in the Home Loan          
Schedule, any other state wherein a Mortgaged Property securing any Subsequent  
Home Loan may be located as set forth in the applicable Home Loan Schedule, and 
in the case of an unsecured Home Loan the principal residence of the Obligor.   

      Net Liquidation Proceeds: Liquidation Proceeds net of any reimbursements
to the Servicer made therefrom for any unreimbursed Servicing Advances made and 
any other fees and expenses paid in connection with the foreclosure,            
conservation and liquidation of the related Home Loan or Foreclosure Property   
pursuant to Sections 4.02 and 4.04 hereof.                                      

      Net Loan Losses:  On each Distribution Date, the sum of (A) with respect
to the Home Loans that become Liquidated Home Loans during the immediately      
preceding Due Period, an amount (but not less than zero) determined as of the   
related Determination Date equal to:                                            

    (i)    the aggregate uncollected Principal Balances of such Liquidated
            Home Loans as of the last day of such Due Period and without the
           application of any amounts included in clause (ii) below, minus

     (ii)   the aggregate amount of any recoveries attributable to principal
             from whatever source received during any Due Period, with respect
       to such Liquidated Home Loans, including any subsequent Due
        Period, and including without limitation any Net Liquidation
             Proceeds, any Insurance Proceeds, any Released Mortgaged Property
            Proceeds, any payments from the related Obligor and any payments
         made pursuant to Section 3.05 less the amount of any expenses
             incurred in connection with such recoveries; and (B) with respect
to any Defaulted Home Loan that is subject to a     

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           modification by the Servicer, an amount equal to the portion of
           the Principal Balance, if any, released in connection with such
modification                                        

provided, however, that for purposes of determining the Required Credit Support 
Multiple, all of the preceding references to "Liquidated Home Loans" shall be   
replaced with "Defaulted Home Loans".                                           

    Note(s):  One or more of the Class A-1 Notes, the Class A-2 Notes, the
Class A-3 Notes, the Class A-4 Notes, the Class A-5 Notes, the Class A-6 Notes, 
the Class A-7 Notes or the Class A-8 Notes.                                     

Note Distribution Account:  The account established and maintained
pursuant to Section 5.01(a)(2).                                                 

Noteholder:  A holder of a Note.                                  

  Noteholders' Distributable Amount:  With respect to any Distribution
Date, the sum of the Noteholders' Principal Distributable Amount and the        
Noteholders' Interest Distributable Amount.                                     

Noteholders' Interest Carry-Forward Amount:  With respect to any  
Distribution Date, the excess of (A) the Noteholders' Monthly Interest          
Distributable Amount for the preceding Distribution Date and any outstanding    
Noteholders' Interest Carry-Forward Amount on such preceding Distribution Date, 
over (B) the amount in respect of interest that is actually deposited in the    
Note Distribution Account on such preceding Distribution Date.                  

Noteholders' Interest Distributable Amount:  With respect to any  
Distribution Date, the sum of the Noteholders' Monthly Interest Distributable   
Amount for such Distribution Date and the Noteholders' Interest Carry-Forward   
Amount for such Distribution Date.                                              

  Noteholders' Monthly Interest Distributable Amount:  With respect to
each Distribution Date and each Class of Notes, the aggregate amount of thirty  
(30) days' accrued interest at the respective Interest Rate for such Class of   
Notes on the Class Principal Balance of such Class immediately preceding such   
Distribution Date  (or, in the case of the first Distribution Date, on the      
Closing Date) after giving effect to all payments of principal to the           
Noteholders of such Class on or prior to such Distribution Date.                

   Noteholders' Monthly Principal Distributable Amount:  With respect to
each Distribution Date, the sum of (i) the Regular Principal Distribution       
Amount, plus (ii) for each Distribution Date for which the related Due Period   
occurred during the Funding Period and for each Distribution Date thereafter if 
the Overcollateralization Amount is less than the Required                      
Overcollateralization Amount, the Excess Spread, if any, plus (iii) if the      
remaining amount in the Pre-Funding Account at the end of the Funding Period is 
less than or equal to $50,000, then such remaining amount.                      

Noteholders' Principal Distributable Amount:  With respect to any 
Distribution Date, the sum of the Noteholders' Monthly Principal Distributable  
Amount for such Distribution Date and the Noteholders' Principal Carry-Forward  
Amount as of the close of the preceding Distribution Date; provided, however,   
that the Noteholders' Principal Distributable Amount shall not exceed the       
outstanding principal balance of the Notes; and provided, further, that (i) the 
Noteholders' Principal Distributable Amount on the Class A-1 Final Scheduled    
Distribution Date shall not be less than the                                    

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Amount that is necessary (after giving effect to other amounts to be deposited  
in the Note Distribution Account on such Distribution Date and allocable to     
principal) to reduce the outstanding Class Principal Balance of the Class A-1   
Notes to zero; (ii) the Noteholders' Principal Distributable Amount on the      
Class A-2 Final Scheduled Distribution Date shall not be less than the amount   
that is necessary (after giving effect to other amounts to be deposited in the  
Note Distribution Account on such Distribution Date and allocable to principal) 
to reduce the outstanding Class Principal Balance of the Class A-2 Notes to     
zero; (iii) the Noteholders' Principal Distributable Amount on the Class A-3    
Final Scheduled Distribution Date shall not be less than the amount that is     
necessary (after giving effect to other amounts to be deposited in the Note     
Distribution Account on such Distribution Date and allocable to principal) to   
reduce the outstanding Class Principal Balance of the Class A-3 Notes to zero;  
(iv) the Noteholders' Principal Distributable Amount on the Class A-4 Final     
Scheduled Distribution Date shall not be less than the amount that is necessary 
(after giving effect to other amounts to be deposited in the Note Distribution  
Account on such Distribution Date and allocable to principal) to reduce the     
outstanding Class Principal Balance of the Class A-4 Notes to zero; (v) the     
Noteholders' Principal Distributable Amount on the Class A-5 Final Scheduled    
Distribution Date shall not be less than the amount that is necessary (after    
giving effect to other amounts to be deposited in the Note Distribution Account 
on such Distribution Date and allocable to principal) to reduce the outstanding 
Class Principal Balance of the Class A-5 Notes to zero; (vi) the Noteholders'   
Principal Distribution Amount on the Class A-6 Final Scheduled Distribution     
Date shall not be less than the amount that is necessary (after giving effect   
to other amounts to be deposited in the Note Distribution Account on such       
Distribution Date and allocable to principal) to reduce the outstanding Class   
Principal Balance of the Class A-6 Notes to zero; (vii) the Noteholders'        
Principal Distributable Amount on the Class A-7 Final Scheduled Distribution    
Date shall not be less than the amount that is necessary (after giving effect   
to other amounts to be deposited in the Note Distribution Account on such       
Distribution Date and allocable to principal) to reduce the outstanding Class   
Principal Balance of the Class A-7 Notes to zero; and (viii) the Noteholders'   
Principal Distributable Amount on the Class A-8 Final Scheduled Distribution    
Date shall not be less than the amount that is necessary (after giving effect   
to other amounts to be deposited in the Note Distribution Account on such       
Distribution Date and allocable to principal) to reduce the outstanding Class   
Principal Balance of the Class A-8 Notes to zero.                               

  Noteholders' Principal Carry-Forward Amount:  As of the close of any
Distribution Date, the excess of (A) the Noteholders' Monthly Principal         
Distributable Amount and any outstanding Noteholders' Principal Carry-Forward   
Amount from the preceding Distribution Date, over (B) the amount in respect of  
principal that is actually deposited in the Note Distribution Account.          

     Note Interest Rate:  With respect to each Class of Notes, the per annum
rate of interest payable to the holders of such Class of Notes.  The Note       
Interest Rate with respect to the Class A-1 Notes is equal to 6.75%; the Note   
Interest Rate with respect to the Class A-2 Notes is equal to 6.85%; the Note   
Interest Rate with respect to the Class A-3 Notes is equal to 7.05%; the Note   
Interest Rate with respect to the Class A-4 Notes is equal to 7.20%; the Note   
Interest Rate with respect to the Class A-5 Notes is equal to 7.25%; the Note   
Interest Rate with respect to the Class A-6 Notes is equal to 7.60%; the Note   
Interest Rate with respect to the Class A-7 Notes is equal to 7.80%; and the    
Note Interest Rate with respect to the Class A-8 Notes is equal to 8.00%.       

Obligor: Each obligor on a Debt Instrument.                       

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      Officer's Certificate:  A certificate delivered to the Indenture Trustee
or the Issuer signed by the President or a Vice President or an Assistant Vice  
President of the Seller, the Servicer or the Transferor, in each case, as       
required by this Agreement.                                                     

Original Certificate Principal Balance:  $11,250,000.             

    Original Class Principal Balance:  In the case of the Class A-1 Notes,
$65,000,000; in the case of the Class A-2 Notes, $49,000,000; in the case of    
the Class A-3 Notes, $22,000,000; in the case of the Class A-4 Notes,           
$32,000,000; in the case of the Class A-5 Notes, $20,000,000; in the case of    
the Class A-6 Notes, $47,000,000; in the case of the Class A-7 Notes,           
$29,000,000; and in the case of the Class A-8 Notes, $24,750,000.               

   Overcollateralization Amount:  As to any Determination Date after the
Funding Period ends, the amount (exclusive of any distributions of              
Overcollateralization Reduction Amounts) equal to the excess of (A) the Pool    
Principal Balance over (B) the sum of the Class Principal Balances of the Notes 
and the Certificate Principal Balance of the Certificates.                      

Overcollateralization Reduction Amount:  With respect to any      
Distribution Date which is not an Overcollateralization Stepdown Date, zero;    
with respect to any Distribution Date on an Overcollateralization Stepdown      
Date, the lesser of (x) the Excess Overcollateralization Amount on such         
Distribution Date (after giving effect to all other distributions on such       
Distribution Date) and (y) the Regular Principal Distribution Amount (as        
determined without the deduction of the Overcollateralization Reduction Amount  
therefrom) on such Distribution Date.                                           

      Overcollateralization Stepdown Date:  Any Distribution Date with respect
to which the Required Overcollateralization Amount is reduced as a result of a  
reduction in the Required Credit Support Multiple.                              

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

  Owner Trustee:  Wilmington Trust Company, as owner trustee under the
Trust Agreement, and any successor owner trustee under the Trust Agreement.     

  Owner Trustee Fee:  The annual fee of $2,500.00 payable to the Owner
Trustee on the Distribution Date occurring in September each year during the    
term of this Agreement commencing in September 1997; provided that the initial  
Owner Trustee Fee shall be paid on the Closing Date.                            

      Pass-Through Rate:  With respect to the Certificates, the per annum rate
of 8.30%.                                                                       

Percentage Interest:  As defined in the Trust Agreement.          

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Permitted Investments:  Each of  the following:                   

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

      (ii)   a repurchase agreement that satisfies the following
 criteria and is acceptable to the Securities Insurer:   (1) must be
 between the Indenture Trustee and either (a) primary dealers on the
     Federal Reserve reporting dealer list which are rated in one of the two
 highest categories for long-term unsecured debt obligations by each
    Rating Agency, or (b) banks rated in one of the two highest categories
     for long-term unsecured debt obligations by each Rating Agency; and (2)
the written repurchase agreement must include the following:   (a)
 securities which are acceptable for the transfer and are either (I)
   direct U.S. governments obligations, or (II) obligations of a Federal
agency that are backed by the full faith and credit of the U.S.   
      government, or FNMA or FHLMC; (b) a term no greater than 60 days for any
 repurchase transaction; (c) the collateral must be delivered to the
  Indenture Trustee or a third party custodian acting as agent for the
Indenture Trustee by appropriate book entries and confirmation    
   statements, with a copy to the Securities Insurer, and must have been
delivered before or simultaneous with payment (i.e., perfection by
 possession of certificated securities); and (d) the securities sold
  thereunder must be valued weekly, marked-to-market at current market
 price plus accrued interest and the value of the collateral must be
equal to at least 104% of the amount of cash transferred by the   
      Indenture Trustee under the repurchase agreement and if the value of the
   securities held as collateral declines to an amount below 104% of the
     cash transferred by the Indenture Trustee plus accrued interest (i.e. a
     margin call), then additional cash and/or acceptable securities must be
transferred to the Indenture Trustee to satisfy such margin call; 
provided, however, that if the securities used as collateral are  
    obligations of FNMA or FHLMC, then the value of the securities held as
collateral must equal at least 105% of the cash transferred by the
Indenture Trustee under such repurchase agreement;                

     (iii)  certificates of deposit, time deposits and bankers
      acceptances of any United States depository institution or trust company
      incorporated under the laws of the United States or any state, including
the Indenture Trustee; provided that the debt obligations of such 
    depository institution or trust company at the date of the acquisition
     thereof have been rated by each Rating Agency in one of its two highest
long-term rating categories;                                      

           (iv)   deposits, including deposits with the Indenture Trustee,
which are fully insured by the Bank Insurance Fund or the Savings 
Association Insurance Fund of the FDIC, as the case may be;       

             (v)    commercial paper of any corporation incorporated under the
 laws of the United States or any state thereof, including corporate
      affiliates of the Indenture Trustee, which at the date of acquisition is
   rated by each Rating Agency in its highest short-term rating category
and which has an original maturity of not more than 365 days;     

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           (vi)   debt obligations rated by each Rating Agency at the time
      at which the investment is made in its highest long-term rating category
(or those investments specified in (iii) above with depository    
     institutions which have debt obligations rated by each Rating Agency in
one of its two highest long-term rating categories);              

           (vii)  money market funds which are rated by each Rating Agency
  at the time at which the investment is made in its highest long-term
   rating category, any such money market funds which provide for demand
withdrawals being conclusively deemed to satisfy any maturity     
    requirements for Permitted Investments set forth in this Agreement; or

             (viii) any other demand, money market or time deposit obligation,
   security or investment as may be acceptable to each Rating Agency and
 the Securities Insurer at the time at which the investment is made;

provided that no instrument described in the foregoing subparagraphs shall      
evidence either the right to receive (a) only interest with respect to the      
obligations underlying such instrument or (b) both principal and interest       
payments derived from obligations underlying such instrument where the interest 
and principal payments with respect to such instrument provide a yield to       
maturity at par greater than 120% of the yield to maturity at par of the        
underlying obligations; and provided, further, that no instrument described in  
the foregoing subparagraphs may be purchased at a price greater than par if     
such instrument may be prepaid or called at a price less than its purchase      
price prior to stated maturity.                                                 

 Each reference in this definition of "Permitted Investments" to the
Rating Agency shall be construed, in the case of each subparagraph above        
referring to each Rating Agency, as a reference to Standard & Poor's and        
Moody's.                                                                        

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

   Physical Property:  As defined in the definition of "Delivery" above.

   Pool Principal Balance:  The aggregate Principal Balances of the Home
Loans as of any Determination Date.                                             

Post Liquidation Proceeds:  As defined in Section 4.02(b).        

    Preference Amount:  Any amount previously distributed to the holder of
an Insured Security that is recoverable and sought to be recovered as a         
voidable preference by a trustee in bankruptcy pursuant to the United States    
Bankruptcy Code, in accordance with a final, non-appealable order of a court    
having competent jurisdiction.                                                  

   Pre-Funded Amount:  With respect to any Distribution Date, the amount
then on deposit in the Pre-Funding Account as of the end of the related Due     
Period.                                                                         

  Pre-Funding Account: The account established and maintained pursuant
to Section 5.03.                                                                

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Pre-Funding Account Deposit: An amount equal to $84,993,867.      

     Pre-Funding Account Weighted Average Balance: For purposes of computing
the Projected Interest Shortfall, on any date of determination, with respect to 
the calculation of the weighted average balance of the amount on deposit on a   
daily basis in the Pre-Funding Account for the Due Period in which such date of 
determination occurs, (x) the total of (A) the sum of the actual amount on      
deposit in the Pre-Funding Account on each day in such Due Period prior to such 
date of determination plus (B) the product of (i) the amount on deposit in the  
Pre-Funding Account on such date of determination and (ii) the number of days   
remaining in such Due Period including the date of determination (but assuming  
a 30 day month), divided by (y) thirty (30) days or, with respect to the first  
Due Period, four (4) days.                                                      

    Pre-Funding Termination Distribution Date: The first Distribution Date
following the Due Period in which the Funding Period ends.                      

      Principal Balance:  With respect to any Home Loan or related Foreclosure
Property, (i) at the applicable Cut-Off Date, the outstanding unpaid principal  
balance of the Home Loan as of such Cut-Off Date and (ii) with respect to any   
Due Period after such Cut-Off Date, the outstanding unpaid principal balance of 
the Home Loan as of the last day of such Due Period (after giving effect to all 
payments received thereon and the allocation of any Net Loan Losses with        
respect thereto for a Liquidated Home Loan or a Defaulted Home Loan which       
relates to such Due Period), without giving effect to amounts received in       
respect of such Home Loan or related Foreclosure Property after such day.  Any  
Liquidated Home Loan shall have a Principal Balance of zero.                    

      Principal Prepayment:  With respect to any Home Loan and with respect to
any Due Period, any principal amount received on a Home Loan in excess of the   
scheduled principal amount included in the Monthly Payment due on the Due Date  
in such Due Period.                                                             

     Projected Interest Shortfall: In connection with the calculation of the
Capitalized Interest Account Requirement pursuant to Section 5.04 as determined 
by the Servicer on any Business Day prior to December 27, 1996, the Projected   
Interest Shortfall shall be the amount equal to the sum of (A) with respect to  
the Due Period in which such date of determination occurs the Interest          
Shortfall Rate, multiplied by the Pre-Funding Account Weighted Average Balance, 
multiplied by the number of days in such Due Period, and divided by 360 days,   
plus (B) with respect to any Due Period thereafter ending on or before December 
27, 1996, the Interest Shortfall Rate, multiplied by the balance in the Pre-    
Funding Account as of such date of determination, multiplied by the number of   
days in such Due Period thereafter ending on or before December 27, 1996, and   
divided by 360 days; assuming in the case of each Due Period other than the     
first Due Period, a 360-day year consisting of twelve 30-day months.            

   Prospectus:  The final Prospectus, dated as of September 16, 1996, as
supplemented by the related Prospectus Supplement, dated as of September 24,    
1996, prepared by the Transferor and the Seller in connection with the issuance 
and sale of the Securities.                                                     

Purchase Price:  As defined in Section 3.05 herein.               

    Qualified Substitute Home Loan:  A home loan or home loans substituted
for a Deleted Home Loan pursuant to Section 2.06 or 3.05, which (i) has or have 
an interest rate or rates of not less                                           

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than one percentage point and not more than one percentage point than the Home  
Loan Interest Rate for the Deleted Home Loan, (ii) matures or mature not more   
than one year later than and not more than one year earlier than the Deleted    
Home Loan, (iii) has or have a principal balance or principal balances (after   
application of all payments received on or prior to the date of substitution)   
equal to or less than the Principal Balance of the Deleted Home Loan as of such 
date, (iv) with respect to a Secured Home Loan has or have a lien priority no   
lower than the Deleted Home Loan, (v) has a borrower with a comparable credit   
grade classification to the credit grade classification of the borrower with    
respect to the Deleted Mortgage Loans, including a FICO Score that is no more   
than 10 points below that of such Deleted Home Loan; and (vi) complies or       
comply as of the date of substitution with each representation and warranty set 
forth in Section 3.03 and is not more than 29 days delinquent as of the date of 
substitution for such loan.  For purposes of determining whether multiple       
mortgage loans proposed to be substituted for one or more Deleted Home Loans    
pursuant to Section 2.06 or 3.05 are in fact "Qualified Substitute Home Loans"  
as provided above, the criteria specified in clauses (i), (ii) and (iii) above  
may be considered on an aggregate or weighted average basis, rather than on a   
loan-by-loan basis (e.g., so long as the weighted average Home Loan Interest    
Rate of any loans proposed to be substituted is not less than (and not more     
than two percentage points more than) the Home Loan Interest Rate for the       
designated Deleted Home Loan or Home Loans, the requirements of clause (i)      
above would be deemed satisfied).                                               

 Rating Agency or Rating Agencies:  Either or both of (i) Standard &
Poor's, or (ii) Moody's, provided that when the terms Rating Agency or Rating   
Agencies are used in reference to the Insured Securities, such terms shall mean 
one or both of Standard & Poor's or Moody's.  If no such organization or        
successor is any longer in existence, "Rating Agency" shall be a nationally     
recognized statistical rating organization or other comparable person           
designated by the Issuer and approved by the Securities Insurer, notice of      
which designation shall have been given to the Indenture Trustee, the           
Securities Insurer, the Issuer and the Servicer.                                

Ratings:  The ratings initially assigned to the Notes and the     
Certificates by the Rating Agencies, as evidenced by letters from the Rating    
Agencies.                                                                       

 Record Date:  The close of business on the last Business Day of the
month immediately preceding the month in which a Distribution Date occurs.      

   Regular Principal Distribution Amount:  On each Distribution Date, an
amount equal to the lesser of:                                                  

      (A)    the sum of the aggregate Class Principal Balance of the Notes and
the Certificate Principal Balance of the Certificates immediately prior to such 
Distribution Date; and                                                          

(B)    the greater of (1) the sum of (i) each scheduled payment of
principal collected by the Servicer in the related Due Period, (ii) all partial 
and full principal prepayments applied by the Servicer during such related Due  
Period, (iii) the principal portion of all Net Liquidation Proceeds, Insurance  
Proceeds and Released Mortgaged Property Proceeds received during the related   
Due Period, (iv) (a) that portion of the purchase price of any repurchased Home 
Loan which represents principal and (b) the principal portion of any            
Substitution Adjustments required to be deposited in the Collection Account as  
of the related Determination Date, (v) the amount of any Net Loan Losses equal  
to the amount on deposit in the Reserve Account until such amount is reduced to 
zero, and (vi) if the Overcollateralization Amount is zero, the amount of any   
Net Loan Losses minus the sum of                                                

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    (a) the amount included in clause (v) above for such Distribution Date
and (b) the amount of Net Loan Losses allocated to reduce the     
     Overcollateralization Amount to zero on such Distribution Date pursuant
      to Section 5.09, and (2) the amount by which (i) the aggregate principal
     balance of the Offered Securities as of the preceding Distribution Date
 (after giving effect to all payments of principal on such preceding
      Distribution Date) exceeds (ii) the Pool Principal Balance plus funds on
      deposit in the Pre-Funding Account, each as of the immediately preceding
      Determination Date; provided, however, that if such Distribution Date is
an Overcollateralization Stepdown Date, then with respect to the  
     distribution of principal to the Noteholders and Certificateholders the
     foregoing amount in each case, will be reduced (but not less than zero)
by the Overcollateralization Reduction Amount, if any, for such   
Distribution Date.                                                

    Released Mortgaged Property Proceeds: With respect to any secured Home
Loan, proceeds received by the Servicer in connection with (i) a taking of an   
entire Mortgaged Property by exercise of the power of eminent domain or         
condemnation or (ii) any release of part of the Mortgaged Property from the     
lien of the related Mortgage, whether by partial condemnation, sale or          
otherwise; which in either case are not released to the Obligor in accordance   
with applicable law, customary second mortgage servicing procedures and this    
Agreement.                                                                      

    Required Credit Support Multiple: On each Distribution Date, as of the
related Determination Date the amount calculated as follows:  (i) if less than  
8.0% (by Principal Balance) of the Home Loans are more than 30 days delinquent, 
and if less than 5.0% (by Principal Balance) of the Home Loans are more than 60 
days delinquent, and if less than 4.0% (by Principal Balance) of the Home       
Loans have become Defaulted Home Loans, then such amount will be 1.0; (ii) if   
less than 9.0% (by Principal Balance) of the Home Loans are more than 30 days   
delinquent, and if less than 6.0% (by Principal Balance) of the Home Loans are  
more than 60 days delinquent, and if less than 5.0% (by Principal Balance) of   
the Home Loans have become Defaulted Home Loans, then such amount will be 1.25; 
(iii) if less than 12.0% (by Principal Balance) of the Home Loans are more than 
30 days delinquent, and if less than 7.0% (by Principal Balance) of the Home    
Loans are more than 60 days delinquent, and if less than 6.0% (by Principal     
Balance) of the Home Loans have become Defaulted Home Loan, then such amount    
will be 1.5; (iv) if 12.0% or more (by Principal Balance) of the Home Loans     
are more than 30 days delinquent, or if 7.0% or more (by Principal Balance) of  
the Home Loans are more than 60 days delinquent, or if 6.0% or more (by         
Principal Balance) of the Home Loans have become Defaulted Home Loans then such 
amount will be 2.5; or (v) if 3.0% or more (based on Net Loan Losses) of the    
Home Loans have become Defaulted Home Loans on a cumulative basis on or prior   
to the first anniversary of the August 31, 1996 Cut-Off Date, or if 6.5% or     
more (based on Net Loan Losses) of the Home Loans have become Defaulted Home    
Loans on a cumulative basis on or prior to the second anniversary of the August 
31, 1996 Cut-Off Date, or if 8.5% or more (based on Net Loan Losses) of the     
Home Loans have become Defaulted Home Loans on a cumulative basis on or prior   
to the third anniversary of the August 31, 1996 Cut-Off Date, or if 10.5% or    
more (based on Net Loan Losses) of the Home Loans have become Defaulted Home    
Loans on a cumulative basis on or prior to the fourth anniversary of the August 
31, 1996 Cut-Off Date and thereafter, then such amount will be 2.5; provided,   
however, that such 2.5 multiple in clause (v) shall be reduced to an amount     
equal to 1.25, if the Home Loans (based on Net Loan Losses) that have become    
Defaulted Home Loans on a cumulative basis are determined to be less than the   
foregoing percentages of 3.0%, 6.5%, 8.5% and 10.5% during the relevant time    
periods in such clause (v) and if the rolling three month delinquency and       
default multiple in clauses (i) through (iv) results in an amount of either 1.0 
or 1.25.  Except with respect to the calculations on a cumulative basis in      
clause (v) and the proviso clause of the preceding sentence, the above          

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delinquency percentages for clauses (i) through (iv) will be calculated as the  
average of the ratios for the immediately preceding three Due Periods based on  
the outstanding aggregate Principal Balances for all Home Loans which are 30 or 
60 days or more delinquent, respectively, over the outstanding aggregate        
Principal Balance for all Home Loans, and such default percentages will be      
calculated on an annualized basis as the average of the ratios for the          
immediately preceding three Due Periods where such ratio equals the quotient of 
(A) 12 times the aggregate Net Loan Losses for such Home Loans that became      
Defaulted Home Loans, over (B) the aggregate outstanding Principal Balance of   
such Home Loans as of the beginning of the related Due Period.  The cumulative  
default percentages for clause (v) and the proviso clause above shall be        
calculated after giving effect to any recovery of proceeds received by the      
Servicer with respect to such Defaulted Home Loans in accordance with the       
definition of Net Loan Losses, however, the calculations of the Principal       
Balance of the Defaulted Home Loans in clauses (i) through (iv) shall not give  
effect to any recovery of proceeds received by the Servicer with respect to     
such Defaulted Home Loans.  Notwithstanding the preceding, in the event that    
the Subsequent Home Loans violate or fail to conform or comply in all material  
respects with the conditions and requirements for delivery thereof as set forth 
herein and in the Securities Insurer Commitment, then, upon written notice to   
each of the other parties hereto and the Rating Agencies, the Securities        
Insurer, in its sole discretion, may modify the preceding definition, without   
the requirement of an amendment of this Agreement, for a sixty (60) day period  
after the last day of the Due Period in which the Funding Period ends.          

    Required Distribution Amount:  As of any Distribution Date, the sum of
the Interest Distribution Amount, the Regular Principal Distribution Amount,    
the Noteholders' Principal Carry-Forward Amount and Certificateholders'         
Principal Carry-Forward Amount, in each case, for such Distribution Date.       

     Required Overcollateralization Amount:  On each Distribution Date after
the expiration of the Funding Period, as of the related Determination Date the  
amount equal to the greater of (1) 1.0% of the sum of the aggregate Principal   
Balances as of the applicable Cut-Off Dates of the Home Loans (the "Required OC 
Floor"), and (2) the product of (x) the Required Credit Support Multiple and    
(y) 8.75% of the aggregate Principal Balances as of the applicable Cut-Off      
Dates of the Home Loans;  provided, however, that on each Distribution Date on  
or after the Credit Support Reduction Date on which the rolling three month     
delinquency and default multiple set forth in clause (i) of the definition of   
the Required Credit Support Multiple is equal to 1.0, as of the related         
Determination Date, the amount equal to the greater of (1) the Required OC      
Floor, and (2) the product of (x) the Required Credit Support Multiple and (y)  
the lesser of (A) 8.75% of the aggregate Principal Balances as of the           
applicable Cut-Off Dates of the Home Loans and (B) 17.5% of the aggregate       
outstanding Principal Balances of the Home Loans;  provided further, however,   
that the Required OC Level shall not be reduced pursuant to the preceding       
proviso clause if the rolling three month delinquency and default multiple in   
clauses (i) through (iv) of the definition of Required Credit Support Multiple  
results in an amount greater than 1.0 and the cumulative default multiple in    
clause (v) and the proviso of such definition results in an amount greater than 
1.25.  Notwithstanding the preceding, in the event that the Subsequent Home     
Loans violate or fail to conform or comply in all material respects with the    
conditions and requirements for delivery thereof as set forth herein and in the 
Securities Insurer Commitment, then, upon written notice to each of the other   
parties hereto and the Rating Agencies, the Securities Insurer, in its sole     
discretion, may modify the preceding definition, without the requirement of an  
amendment of this Agreement, for a sixty (60) day period after the last day of  
the Due Period in which the Funding Period ends.                                

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Reserve Account:  The account established and maintained by the   
Indenture Trustee pursuant to Section 5.07 hereof.                              

Reserve Account Initial Deposit: $11,250,000.                     

  Reserve Account Requirement: On the Closing Date, an amount equal to
$11,250,000, but on any Distribution Date occurring after the Funding Period    
ends and if the Overcollateralization Amount exceeds the Interim Required       
Overcollateralization such amount shall be reduced pursuant to Section 5.07.    

   Residual Interest: The interest which represents the right to amounts
after all required distributions have been made for the Trust Fees and Expenses 
and on the Notes and the Certificates on each Distribution Date and certain     
other rights to receive amounts hereunder and under the Trust Agreement.        

  Reserve Account Withdrawal Amount:  With respect to any Distribution
Date, an amount equal to the lesser of (i) the total amount on deposit in the   
Reserve Account or (if any) available for call or drawdown under the limited    
guaranty or letter of credit referred to in Section 5.07, and (ii) the excess   
of (A) the sum of the Trust Fees and Expenses and the Required Distribution     
Amount over (B) the Available Collection Amount.                                

    Responsible Officer:  When used with respect to the Indenture Trustee,
any officer within the Corporate Trust Office of the Indenture Trustee,         
including any Vice President, Assistant Vice President, Secretary, Assistant    
Secretary or any other officer of the Indenture Trustee customarily performing  
functions similar to those performed by any of the above designated officers    
and also, with respect to a particular matter, any other officer to whom such   
matter is referred because of such officer's knowledge of and familiarity with  
the particular subject.  When used with respect to the Issuer, any officer in   
the Corporate Trust Administration Department of the Owner Trustee with direct  
responsibility for the administration of the Trust Agreement and this Agreement 
on behalf of the Issuer.  When used with respect to the Seller, the Transferor, 
the Servicer, or  the Custodian, the President or any Vice President, Assistant 
Vice President, or any Secretary or Assistant Secretary.                        

   Secured Home Loan: A Home Loan that is secured by Mortgaged Property.

Securities:  The Notes and/or the Certificates, as applicable.    

Securities Insurer:  MBIA Insurance Corporation, as issuer of the 
Guaranty Policy, and its successors and assigns.                                

   Securities Insurer Commitment:  As defined in Section 3.04(a) hereof.

   Securities Insurer Default:  The failure of the Securities Insurer to
make payments under the Guaranty Policy, if such failure has not been remedied  
with ten (10) days of notice thereof, or the entry of an order or decree with   
respect to the Securities Insurer in any insolvency or bankruptcy proceedings   
which remain unstayed or undischarged for 90 days.                              

      Securities Insurer Reimbursement Amount:  At any time, an amount owed to
the Securities Insurer for any unreimbursed Guaranteed Payments made under the  
Guaranty Policy, together with                                                  

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interest thereon at the rate specified in the Insurance Agreement and any other 
amounts then owing to the Securities Insurer under the Insurance Agreement,     
which have not previously been reimbursed.                                      

Securityholder:  A holder of a Note or Certificate, as applicable;
provided that the exercise of any rights by such holder shall be subject to     
Section 12.14.                                                                  

      Seller:  FIRSTPLUS INVESTMENT CORPORATION, a Nevada corporation, and any
successor thereto.                                                              

      Series or Series 1996-3: FIRSTPLUS Asset Backed Securities, Series 1996-
3.                                                                              

Servicer: FFI, in its capacity as the servicer hereunder, or any  
successor appointed as herein provided.                                         

 Servicer's Fiscal Year:  October 1st through September 30th of each
year.                                                                           

      Servicer's Home Loan Files:  In respect of each Home Loan, all documents
customarily included in the servicer's loan file for the related type of Home   
Loan in accordance with the servicing standard set forth in Section 4.01.       

      Servicer's Monthly Remittance Report:  A report prepared and computed by
the Servicer in substantially the form of Exhibit B attached hereto.            

Servicer's Monthly Statement:  As defined in Section 6.01.        

Servicing Advances: Subject to Section 4.01(b), all reasonable,   
customary and necessary "out of pocket" costs and expenses advanced or paid by  
the Servicer with respect to the Home Loans in accordance with the performance  
by the Servicer of its servicing obligations hereunder, including, but not      
limited to, the costs and expenses for (i) the preservation, restoration and    
protection of the Mortgaged Property, including without limitation advances in  
respect of real estate taxes and assessments, (ii) any collection, enforcement  
or judicial proceedings, including without limitation foreclosures, collections 
and liquidations pursuant to Section 4.02, (iii) the conservation, management   
and sale or other disposition of an Foreclosure Property pursuant to Section    
4.04, (iv) the preservation of the security for a Home Loan if any lienholder   
under a Superior Lien has accelerated or intends to accelerate the obligations  
secured by such Superior Lien pursuant to Section 4.06; provided that such      
Servicing Advances are reimbursable to the Servicer to the extent provided in   
Section 5.06(c)(vi) or deducted or retained in calculating Net Liquidation      
Proceeds hereunder.                                                             

     Servicing Advance Reimbursement Amount:  As defined in Section 5.01(c).

   Servicing Compensation:  The Servicing Fee and other amounts to which
the Servicer is entitled pursuant to Sections 7.01 and 7.03.                    

   Servicing Fee: As to each Home Loan (including any Home Loan that has
been foreclosed and has become a Foreclosure Property, but excluding any        
Liquidated Home Loan), the fee payable monthly to the Servicer on each          
Distribution Date, which shall be the product of 0.75% (75 basis                

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points) times the Principal Balance of such Home Loan as of the beginning of    
the immediately preceding Due Period, divided by 12.  The Servicing Fee         
includes any servicing fees owed or payable to any Subservicer which fees shall 
be paid from the Servicing Fee.                                                 

     Servicing Officer:  Any officer of the Servicer or Subservicer involved
in, or responsible for, the administration and servicing of the Home Loans      
whose name and specimen signature appears on a list of servicing officers       
annexed to an Officer's Certificate furnished by the Servicer or the            
Subservicer, respectively, to the Issuer and the Indenture Trustee, on behalf   
of the Securityholders and the Securities Insurer, as such list may from time   
to time be amended.                                                             

   Standard & Poor's: Standard & Poor's Ratings Group, a division of The
McGraw-Hill Companies, Inc., or any successor thereto.                          

    Subsequent Home Loan:  An individual Home Loan that is conveyed to the
Issuer and pledged to the Indenture Trustee  on a Subsequent Transfer Date,     
pursuant to a Subsequent Transfer Agreement, together with the rights and       
obligations of a holder thereof and payments thereon and proceeds therefrom,    
the Subsequent Home Loans subject to this Agreement will be identified on a     
schedule attached as an exhibit to the related Subsequent Transfer Agreement;   
provided, that such Home Loan shall not be more than 29 days delinquent as of   
the related Cut-Off Date.                                                       

     Subsequent Purchase Price: The Principal Balance of any Subsequent Home
Loans  as of the applicable Cut-Off Date.                                       

 Subsequent Transfer Agreement:  With respect to any Subsequent Home
Loan, the agreement pursuant to which Subsequent Home Loans are transferred to  
the Trust by the Seller, substantially in the form of Exhibit D hereto.         

Subsequent Transfer Date:  The date specified in each Subsequent  
Transfer Agreement, but no later than December 27, 1996.                        

Subservicer:  Any Person with whom the Servicer has entered into a
Subservicing Agreement and who is an Eligible Servicer and who satisfies any    
requirements set forth in Section 4.07(a) in respect of the qualifications of a 
Subservicer.                                                                    

     Subservicing Account:  An account established by a Subservicer pursuant
to a Subservicing Agreement, which account must be an Eligible Account.         

 Subservicing Agreement:  Any agreement between the Servicer and any
Subservicer relating to subservicing and/or administration of any or all Home   
Loans as provided in Section 4.07(a), copies of which shall be made available,  
along with any modifications thereto, to the Issuer, the Indenture Trustee and  
to the Securities Insurer.                                                      

     Substitution Adjustment:  As to any date on which a substitution occurs
pursuant to Sections 2.06 or 3.05, the amount, if any, by which (a) the sum of  
the aggregate principal balance (after application of principal payments        
received on or before the date of substitution) of any Qualified Substitute     
Home Loans as of the date of substitution plus any accrued interest and unpaid  
thereon that is scheduled to be paid after the date of substitution and during  
the Due Period in which such substitution occurs, is less than (b) the sum of   
the aggregate of the Principal Balances, together                               

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with accrued and unpaid interest thereon to the date of substitution, of the    
related Deleted Home Loans.                                                     

    Superior Lien:  With respect to any secured Home Loan which is secured
by other than a first priority lien, the mortgage loan(s) relating to the       
corresponding Mortgaged Property having a superior priority lien.               

    Termination Price:  As of any date of determination, an amount without
duplication equal to the sum of (i) the aggregate Class Principal Balance of    
the Notes as of such date, (ii) the sum of any outstanding Noteholders'         
Interest Carry-Forward Amount and accrued and unpaid interest on the aggregate  
Class Principal Balance of the Notes as of such date, computed at the           
respective Note Interest Rates of the Notes then outstanding; (iii) the         
Certificate Principal Balance of the Certificates as of such date; (iv) the sum 
of any outstanding Certificateholders' Interest Carry-Forward Amount and        
accrued and unpaid interest on the Certificate Principal Balance of the         
Certificates as of such date, computed at the Pass-Through Rate of the          
Certificates; (v) any Securities Insurer Reimbursement Amount and (vi) any      
Trust Fees and Expenses owing as of such date.                                  

Transferor: FFI, in its capacity as the transferor hereunder.     

Trust:  The Issuer.                                               

      Trust Account Property:  The Trust Accounts, all amounts and investments
held from time to time in any Trust Account and all proceeds of the foregoing.  

Trust Accounts:  The Note Distribution Account, the Certificate   
Distribution Account, the Collection Account, the Reserve Account, the Pre-     
Funding Account and the Capitalized Interest Account.                           

  Trust Agreement:  The Trust Agreement dated as of September 1, 1996,
among the Seller, the Affiliated Holder, the Co-Owner Trustee and the Owner     
Trustee.                                                                        

      Trust Estate:  The assets subject to this Agreement, the Trust Agreement
and the Indenture and assigned to the Trust, which assets consist of: (i) such  
Home Loans as from time to time are subject to this Agreement, including both   
the Initial Home Loans and any Subsequent Home Loans conveyed to the Trust      
Estate during the Funding Period as listed in the Home Loan Schedule, as the    
same may be amended or supplemented from time to time including the removal of  
Deleted Home Loans and the addition of Qualified Substitute Home Loans,         
together with the Servicer's Home Loan Files and the Trustee's Home Loan Files  
relating thereto and all proceeds thereof, (ii) all payments received on or     
with respect to the Home Loans after the applicable Cut-off Dates, (iii) such   
assets as from time to time are identified as Foreclosure Property, (iv) such   
assets and funds as are from time to time deposited in the Collection Account,  
the Note Distribution Account, the Certificate Distribution Account, the Pre-   
Funding Account, the Capitalized Interest Account and the Reserve Account,      
including amounts on deposit in such accounts which are invested in Permitted   
Investments, (v) the Issuer's rights under all insurance policies with respect  
to the Home Loans and any Insurance Proceeds, (vi) Net Liquidation Proceeds and 
Released Mortgaged Property Proceeds, (vii) all right, title and interest of    
the Transferor in and to the obligations of any seller pursuant to each Loan    
Sale Agreement in which the Transferor acquired any Home Loans, (viii) all      
right, title and interest of the Seller in and to the obligations of the        
Transferor under that certain Loan Sale                                         

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Agreement in which the Seller acquired any Home Loans from the Transferor, (ix) 
all right, title and interest of the Issuer, as purchaser, under each           
Subsequent Transfer Agreement, and (x) all right, title and interest of the     
Servicer and the Transferor in and to the rights and obligations of any         
Subservicer, pursuant to any Subservicing Agreement.                            

     Trust Fees and Expenses:  As of each Distribution Date, an amount equal
to the Servicing Compensation, Guaranty Insurance Premium, the Indenture        
Trustee Fee, the Owner Trustee Fee and the Custodian Fee.                       

Weighted Average Interest Rate:  As of any particular date of     
determination, the sum (expressed as a percentage) of:                          

        (i)    the product of (A) the Class Principal Balance of the
     Class A-1 Notes divided by the sum of (x) the aggregate Class Principal
     Balances of the Notes plus (y) the Certificate Principal Balance of the
    Certificates, and (B) the Note Interest Rate for such Class A-1 Notes;

        (ii)   the product of (A) the Class Principal Balance of the
     Class A-2 Notes divided by the sum of (x) the aggregate Class Principal
     Balances of the Notes plus (y) the Certificate Principal Balance of the
    Certificates, and (B) the Note Interest Rate for such Class A-2 Notes;

        (iii)  the product of (A) the Class Principal Balance of the
     Class A-3 Notes divided by the sum of (x) the aggregate Class Principal
     Balances of the Notes plus (y) the Certificate Principal Balance of the
    Certificates, and (B) the Note Interest Rate for such Class A-3 Notes;

        (iv)   the product of (A) the Class Principal Balance of the
     Class A-4 Notes divided by the sum of (x) the aggregate Class Principal
     Balances of the Notes plus (y) the Certificate Principal Balance of the
    Certificates, and (B) the Note Interest Rate for such Class A-4 Notes;

        (v)    the product of (A) the Class Principal Balance of the
     Class A-5 Notes divided by the sum of (x) the aggregate Class Principal
     Balances of the Notes plus (y) the Certificate Principal Balance of the
    Certificates, and (B) the Note Interest Rate for such Class A-5 Notes;

        (vi)   the product of (A) the Class Principal Balance of the
     Class A-6 Notes divided by the sum of (x) the aggregate Class Principal
     Balances of the Notes plus (y) the Certificate Principal Balance of the
    Certificates, and (B) the Note Interest Rate for such Class A-6 Notes;

        (vii)  the product of (A) the Class Principal Balance of the
     Class A-7 Notes divided by the sum of (x) the aggregate Class Principal
     Balances of the Notes plus (y) the Certificate Principal Balance of the
    Certificates, and (B) the Note Interest Rate for such Class A-7 Notes.

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        (viii) the product of (A) the Class Principal Balance of the
     Class A-8 Notes divided by the sum of (x) the aggregate Class Principal
     Balances of the Notes plus (y) the Certificate Principal Balance of the
    Certificates, and (B) the Note Interest Rate for such Class A-8 Notes.

          (ix)   the product of (A) the Certificate Principal Balance of
      the Certificates divided by the sum of (x) the aggregate Class Principal
    Balances of the Notes and (y) the Certificate Principal Balance of the
Certificates, and (B) the Pass-Through Rate for the Certificates; 

Section 1.02  Other Definitional Provisions.                      

   (a)    Capitalized terms used herein and not otherwise defined herein
have the meanings assigned to them in the Indenture and the Trust Agreement.    

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

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

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

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

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

ARTICLE II  

CONVEYANCE OF THE HOME LOANS

Section 2.01  Conveyance of the Initial Home Loans.               

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      (a)    As of the Closing Date, in consideration of the Issuer's delivery
of the Notes, Certificates and Residual Interest Instruments to the Seller or   
its designee, upon the order of the Seller, the Seller, as of the Closing Date  
and concurrently with the execution and delivery hereof, does hereby sell,      
transfer, assign, set over and otherwise convey to the Issuer, without          
recourse, but subject to the other terms and provisions of this Agreement, all  
of the right, title and interest of the Seller in and to the Trust Estate.  The 
foregoing sale, transfer, assignment, set over and conveyance does not and is   
not intended to result in a creation or an assumption by the Issuer of any      
obligation of the Seller, the Transferor or any other person in connection with 
the Trust Estate or under any agreement or instrument relating thereto except   
as specifically set forth herein.                                               

      (b)    As of the Closing Date, the Issuer acknowledges the conveyance to
it of the Trust Estate, including from the Seller all right, title and interest 
of the Seller in and to the Trust Estate, receipt of which is hereby            
acknowledged  by the Issuer.  Concurrently with such delivery and in exchange   
therefor, the Issuer has pledged to the Indenture Trustee the Trust Estate and  
the Indenture Trustee, pursuant to the written instructions of the Issuer, has  
executed and caused to be authenticated and delivered the Notes to the Seller   
or its designee, upon the order of the Issuer.  In addition, concurrently with  
such delivery and in exchange therefor, the  Owner Trustee, pursuant to the     
instructions of the Seller, has executed (not in its individual capacity, but   
solely as Owner Trustee on behalf of the Issuer) and caused to be authenticated 
and delivered the Certificates and the Residual Interest to the Seller or its   
designee, upon the order of the Seller.                                         

Section 2.02  Conveyance of the Subsequent Home Loans.            

      (a)    On or before the last day of the Funding Period, the Seller shall
convey to the Issuer, and the Issuer shall purchase pursuant to this Section    
2.02 the lesser of:  (i) Home Loans then in the possession of the Seller that   
satisfy the requirements of this Section 2.02 or (ii) the maximum principal     
balance of Home Loans that satisfies the requirements of this Section 2.02,     
with respect to which the aggregate Subsequent Purchase Price does not exceed   
the Pre-Funding Account Deposit.  Subject to the conditions set forth in this   
Section 2.02, in consideration of the Issuer's delivery on the related          
Subsequent Transfer Dates to the Seller or its designee, or upon the order of   
the Seller, of the Subsequent Purchase Price of the related Subsequent Home     
Loans from amounts on deposit in the Pre-Funding Account, the Seller shall,     
from time to time, on any Subsequent Transfer Date sell, transfer, assign, set  
over and otherwise convey to the Issuer, without recourse, but subject to the   
other terms and provisions of this Agreement, all of the right, title and       
interest of the Seller in and to each Subsequent Home Loan (including all       
interest and principal thereon received after the related Cut-Off Date)         
identified on the Home Loan Schedule attached to the related Subsequent         
Transfer Agreement and delivered by the Seller on such Subsequent Transfer Date 
and all items in the related Indenture Trustee's Home Loan File.  The sale,     
transfer, assignment, set over, conveyance and grant by the Seller of the       
Subsequent Home Loans to the Issuer does not and is not intended to result in a 
creation or an assumption by the Issuer of any obligation of the Seller, the    
Transferor or any other person in connection with the Subsequent Home Loans or  
under any agreement or instrument relating thereto except as specifically set   
forth herein.                                                                   

(b)    The amount released from the Pre-Funding Account on any    
Subsequent Transfer Date in connection with any conveyance of Subsequent Home   
Loans shall be equal to the aggregate of the Subsequent Purchase Prices for     
such Subsequent Home Loans, which amount shall not exceed the amount then on    
deposit in the Pre-Funding Account. If the Subsequent Purchase Price for such   
Subsequent Home Loans is less than the amount required to obtain the release of 
the interest of any                                                             

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third party (including any lienholder therein), then the Transferor or the      
Seller shall cause the delivery of immediately available funds equal to such    
insufficiency to the Issuer in escrow (which funds shall not be property of the 
Trust) and the Issuer, in turn, shall remit such immediately available funds,   
together with funds from the Pre-Funding Account equal to the Subsequent        
Purchase Price, to the third party designated by the Transferor or the Seller   
that is releasing its interest in such Subsequent Home Loans.                   

   On the related Subsequent Transfer Date, the Seller shall transfer to
the Issuer the Subsequent Home Loans and the other property and rights related  
thereto described in (a) above only upon the satisfaction of each of the        
following conditions on or prior to the related Subsequent Transfer Date:       

      (i)    the Subsequent Home Loans to be conveyed on a given
     Subsequent Transfer Date must have an aggregate Principal Balance as of
      the related Cut-Off Date of not less than $5,000,000, except in the case
     of the final Subsequent Transfer Date when no minimum Principal Balance
requirement shall be applicable;                                  

             (ii)   the Transferor and/or Seller shall provide the Issuer, the
      Indenture Trustee and the Securities Insurer with an Addition Notice and
   shall provide any information reasonably requested by the Issuer, the
Indenture Trustee or the Securities Insurer with respect to the   
Subsequent Home Loans;                                            

        (iii)  the Seller shall deliver to the Issuer, the Indenture
    Trustee and the Securities Insurer a duly executed Subsequent Transfer
Agreement, including all exhibits listed therein;                 

           (iv)   the Servicer shall deposit in the Collection Account all
      collections in respect of the Subsequent Home Loans received on or after
the related Cut-Off Date;                                         

     (v)    the Transferor and the Seller shall certify to the
      Securities Insurer, the Indenture Trustee and the Issuer that, as of the
    Subsequent Transfer Date, the Transferor and the Seller, respectively,
  were not insolvent nor were they made insolvent by such transfer nor
were they aware of any such pending insolvency;                   

        (vi)   the Transferor and the Seller shall certify that such
     addition of Subsequent Home Loans will not result in a material adverse
tax consequence to the Issuer or the Securityholders;             

    (vii)  the Funding Period shall not have terminated; and

            (viii) as at the related subsequent Transfer Date the Transferor
     shall make the representations and warranties set forth in Section 3.02
and Section 3.04(a) hereof and shall reconfirm the accuracy of the
representations and warranties set forth in Section 3.03 hereof,  
including with respect to all Subsequent Home Loans.              

(c)    In addition, the Transferor and/or Seller will provide the 
Securities Insurer, the Indenture Trustee and the Issuer with data regarding    
all Subsequent Home Loans transferred to the Issuer on the related Subsequent   
Transfer Date, which data shall be delivered at least three Business Days prior 
to such Subsequent Transfer Date.  No later than the end of the Funding Period, 
the                                                                             

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following obligations shall have been satisfied with respect to all Subsequent  
Home Loans transferred to the Issuer on any Subsequent Transfer Date:           

        (i)    the Transferor and Seller shall have delivered to the
   Issuer, the Indenture Trustee and the Securities Insurer an Officer's
 Certificate confirming the satisfaction of each condition precedent
   specified in this Section 2.02 and in the related Subsequent Transfer
Agreements;                                                       

           (ii)   the Transferor and/or Seller shall have delivered to the
   Securities Insurer and the Indenture Trustee opinions of counsel with
respect to the transfer of all of the Subsequent Home Loans to the
     Issuer on any Subsequent Transfer Date substantially in the form of the
    opinions of counsel delivered to the Issuer, the Indenture Trustee and
   the Securities Insurer on the Closing Date (as to certain bankruptcy,
corporate, securities and tax law matters);                       

           (iii)  the Issuer shall pledge the Subsequent Mortgage Loans to
the Indenture Trustee under the Indenture;                        

             (iv)   the Issuer shall deliver to the Securities Insurer and the
 Seller an opinion of counsel with respect to each of the Subsequent
     Transfer Agreements substantially in the form of the opinion of counsel
     delivered to the Seller and the Securities Insurer on the Closing Date;

           (v)    the Transferor and Seller shall make the representations
and warranties set forth in Section 3.04(b) hereof; and           

          (vi)   the Securities Insurer shall deliver to the Seller, the
Indenture Trustee and the Issuer a written notice confirming the  
Securities Insurer's consent and approval to the addition of all  
      Subsequent Home Loans purchased by the Issuer on any Subsequent Transfer
Date.                                                             

(d)    [Reserved]                                                 

  Section 2.03  Ownership and Possession of Home Loan Files.  Upon the
issuance of the Securities, with respect to the Initial Home Loans, and upon    
payment of the related Subsequent Purchase Price, with respect to the           
Subsequent Home Loans, the ownership of each Debt Instrument, the related       
Mortgage and the contents of the related Servicer's Home Loan File and the      
Indenture Trustee's Home Loan File shall be vested in the Indenture Trustee for 
the benefit of the Securityholders and the Securities Insurer, although         
possession of the Servicer's Home Loan Files (other than items required to be   
maintained in the Indenture Trustee's Home Loan Files) on behalf of and for the 
benefit of the Securityholders and the Securities Insurer shall remain with the 
Servicer, and the Custodian shall take possession of the Indenture Trustee's    
Home Loan Files as contemplated in Section 2.06.                                

Section 2.04  Books and Records.                                  

   The sale of each Home Loan shall be reflected on the Seller's balance
sheets and other financial statements as a sale of assets by the Seller under   
generally accepted accounting principles ("GAAP").  The Servicer shall be       
responsible for maintaining, and shall maintain, a complete set of              

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books and records for each Home Loan which shall be clearly marked to reflect   
the ownership of each Home Loan by the Indenture Trustee for the benefit of the 
Securityholders and the Securities Insurer.                                     

Section 2.05  Delivery of Home Loan Documents.                    

    (a)    With respect to each Initial Home Loan, on the Closing Date the
Transferor and the Seller have delivered or caused to be delivered, and with    
respect to each Subsequent Home Loan, on the related Subsequent Transfer Dates, 
the Transferor and the Seller will deliver or will cause to be delivered, to    
the Custodian as the designated agent of the Indenture Trustee each of the      
following documents (collectively, the "Home Loan Files"):                      

           (i)    The original Debt Instrument, endorsed "PAY TO THE ORDER
OF FIRST BANK NATIONAL ASSOCIATION, AS INDENTURE TRUSTEE FOR THE  
      FIRSTPLUS ASSET BACKED SECURITIES, SERIES  1996-3, WITHOUT RECOURSE" and
      signed, by facsimile or manual signature, in the name of the Seller by a
     Responsible Officer thereof, together with all intervening endorsements
    that evidence a complete chain of title from the originator thereof to
    the Transferor; provided that any of the foregoing endorsements may be
contained on an allonge which shall be firmly affixed to such Debt
Instrument;                                                       

          (ii)   With respect to each Debt Instrument for a Secured Home
  Loan, either:  (A) the original Mortgage, with evidence of recording
thereon, (B) a copy of the Mortgage certified as a true copy by a 
      Responsible Officer of the Transferor or by the closing attorney, if the
     original has been transmitted for recording but has not, at the time of
     delivery of this Agreement, been returned or (C) a copy of the Mortgage
   certified by the public recording office in those instances where the
  original recorded Mortgage has been lost or has been retained by the
public recording office;                                          

          (iii)  With respect to each Debt Instrument for a Secured Home
     Loan, either (A) the original Assignment of Mortgage assigned to "FIRST
     BANK NATIONAL ASSOCIATION, AS INDENTURE TRUSTEE FOR THE FIRSTPLUS ASSET
BACKED SECURITIES, SERIES 1996-3" and signed in the name of the   
     Transferor by a Responsible Officer with evidence of recording thereon,
     (B) a copy of the Assignment of Mortgage, certified as a true copy by a
Responsible Officer of the Transferor where the original has been 
    transmitted for recording but has not, at the time of delivery of this
  Agreement, been returned or (C) a copy of the Assignment of Mortgage
   certified by the public recording office in those instances where the
original recorded Assignment of Mortgage has been lost or has been
    retained by the public recording office (provided, however, that where
the original Assignment of Mortgage is not being delivered to the 
  Custodian, such Responsible Officer may complete one or more blanket
  certificates attaching copies of one or more Assignments of Mortgage
      relating thereto); provided that any such Assignments of Mortgage may be
made by blanket assignments for Home Loans secured by Mortgaged   
    Properties located in the same county, if permitted by applicable law;
    provided, however, that the recordation of such Assignment of Mortgage
 shall not be required in the States (i) in which a legal opinion is
delivered to the Indenture Trustee and the Securities Insurer in  
    accordance with subsection (c) below and (ii) that are approved by the
Rating Agencies.                                                  

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          (iv)   With respect to each Debt Instrument for a Secured Home
Loan, either:  (A) originals of all intervening assignments of the
Mortgage, with evidence of recording thereon, (B) if the original 
   intervening assignments have not yet been returned from the recording
      office, a copy of the originals of such intervening assignments together
  with a certificate of a Responsible Officer of the Transferor or the
      closing attorney certifying that the copy is a true copy of the original
of such intervening assignments or (C) a copy of the intervening  
    assignment certified by the public recording office in those instances
     where the original recorded intervening assignment has been lost or has
      been retained by the public recording office; provided that the chain of
 intervening recorded assignments shall not be required to match the
      chain of intervening endorsements of the Debt Instrument, so long as the
     chain of intervening recorded assignments, if applicable, evidences one
or more assignments of the Mortgage from the original mortgage    
  ultimately to the person who has executed the Assignment of Mortgage
referred to in clause (iii) above; and                            

           (v)    Originals of all assumption and modification agreements,
    if any, or a copy certified as a true copy by a Responsible Officer of
     the Transferor if the original has been transmitted for recording until
   such time as the original is returned by the public recording office.

(b)    The Seller agrees to deliver or cause to be delivered on or
before the applicable Subsequent Transfer Date to the Custodian each of the     
documents identified in paragraphs (i) through (v) of subsection (a) above with 
respect to any Subsequent Home Loans.                                           

  (c)    With respect to each Secured Home Loan, the Transferor shall,
within five Business Days after the receipt thereof, and in any event, within   
nine (9) months of the Closing Date (in the case of the Initial Home Loans) or  
the related Subsequent Transfer Date (in the case of the Subsequent Home        
Loans), deliver or cause to be delivered to the Custodian:  (i) the original    
recorded Mortgage in those instances where a copy thereof certified by the      
Transferor was delivered to the Custodian; (ii) the original recorded           
Assignment of Mortgage, except in the States in which a legal opinion is        
delivered to the Indenture Trustee and Securities Insurer as provided below and 
that are approved by the Rating Agencies; (iii) any original recorded           
intervening assignments of Mortgage in those instances where copies thereof     
certified by the Transferor were delivered to the Custodian; and (iv) the       
original recorded assumption and modification agreement in those instances in   
which a copy was delivered.  Notwithstanding anything to the contrary contained 
in this Section 2.05, in those instances where the public recording office      
retains the original Mortgage or, if applicable, the Assignment of Mortgage,    
the intervening assignments of the Mortgage or the original recorded assumption 
and modification agreement after it has been recorded, or where any such        
original has been lost or destroyed, the Seller and Transferor shall be deemed  
to have satisfied their respective obligations hereunder upon delivery to the   
Custodian of a copy, as certified by the public recording office to be a true   
copy of the recorded original of such Mortgage or, if applicable, the           
Assignment of Mortgage, intervening assignments of Mortgage or assumption and   
modification agreement, respectively.  With respect to each Secured Home Loan   
in respect of which the Mortgaged Property is located in the States of Arizona, 
California, Colorado, Florida, Georgia, Nevada, Texas, Utah and Washington the  
Transferor and the Seller shall have the right to deliver to the Indenture      
Trustee and the Securities Insurer a legal opinion for each State providing     
that the recordation of the Assignment of Mortgage in such State is not         
necessary to transfer the related Secured Home Loans in respect of which the    
Mortgaged Property is located in such State, provided such legal opinion is in  
a form that is reasonably acceptable to the Indenture Trustee and the           
Securities Insurer and such legal opinion                                       

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is delivered on or before October 31, 1996.  Upon the delivery and acceptance   
by the Indenture Trustee and the Securities Insurer of the foregoing legal      
opinion for each such State and the approval of the Rating Agencies, the        
Transferor and the Seller shall not be required to record Assignment of         
Mortgages for the related Secured Home Loans in respect of which the relevant   
Mortgaged Properties are located in such State and the delivery of the          
Assignments of Mortgages for such State to the Custodian in recordable form on  
the Closing Date or Subsequent Transfer Date, as applicable, shall constitute   
full compliance with subsection (a)(iii) above and the Transferor, in its       
capacity as Servicer, shall retain record title to such Mortgages on behalf of  
the Indenture Trustee and the holders of the Offered Securities.  If the        
foregoing legal opinion is not delivered and accepted by the Indenture Trustee  
and Securities Insurer and the Rating Agencies for any of the foregoing States, 
then the Assignments of Mortgage relating to any such State shall be recorded   
in accordance with the first sentence of this subsection (c).  Notwithstanding  
the preceding provisions allowing for the non-recordation of Assignments of     
Mortgage in certain States, if an Event of Default occurs pursuant to clause    
(a)(vii) of Section 10.01 or the Transferor, as the Servicer, is terminated     
hereunder, then the Transferor, in its capacity as the Servicer or predecessor  
Servicer, shall be required in respect of Secured Loans to record all           
Assignments of Mortgage in those States in which the Transferor had previously  
been allowed not to record such Assignments of Mortgage.                        

   (d)    All Home Loan documents held by the Custodian on behalf of the
Indenture Trustee are referred to herein as the "Indenture Trustee's Home Loan  
File."  All recordings required pursuant to this Section 2.05 shall be          
accomplished by and at the expense of the Transferor.                           

      Section 2.06  Acceptance by Indenture Trustee of the Home Loans; Certain
Substitutions; Initial Certification by Custodian.                              

   (a)    The Indenture Trustee agrees to cause the Custodian to execute
and deliver on the Closing Date an acknowledgment of receipt of the Indenture   
Trustee's Home Loan File for each Initial Home Loan, and the Indenture Trustee  
agrees to cause the Custodian to execute and deliver on any Subsequent Transfer 
Date an acknowledgment of receipt of the Indenture Trustee's Home Loan File for 
each Subsequent Home Loan.  The Indenture Trustee declares that it will cause   
the Custodian to hold such documents and any amendments, replacements or        
supplements thereto, as well as any other assets included in the Trust Estate   
and delivered to the Custodian in trust, upon and subject to the conditions set 
forth herein for the benefit of the Securityholders and the Securities Insurer. 
The Indenture Trustee agrees, for the benefit of the Securityholders and the    
Securities Insurer, to cause the Custodian to review each Indenture Trustee's   
Home Loan File within 45 days after the Closing Date (or, with respect to any   
Qualified Substitute Home Loan or Subsequent Home Loan, within 45 days after    
the receipt by the Custodian thereof) and to cause the Custodian to deliver to  
the Transferor, the Seller, the Indenture Trustee, the Issuer, the Securities   
Insurer and the Servicer a certification to the effect that, as to each Home    
Loan listed in the Home Loan Schedule and as to each Subsequent Home Loan       
Listed in a Subsequent Home Loan Schedule (other than any Home Loan paid in     
full or any Home Loan specifically identified in such certification as not      
covered by such certification), (i) all documents required to be delivered to   
the Indenture Trustee pursuant to this Agreement are in its possession or in    
the possession of the Custodian on its behalf (other than as expressly          
permitted by Section 2.05(a)(ii) or 2.05(c)), (ii) all documents delivered by   
the Seller and the Transferor to the Custodian pursuant to Section 2.05 have    
been reviewed by the Custodian and have not been mutilated or damaged and       
appear regular on their face (handwritten additions, changes or corrections     
shall not constitute irregularities if initialed by the Obligor) and relate to  
such Home Loan, (iii) based on the examination of the Custodian on behalf of    
the Indenture Trustee, and                                                      

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only as to the foregoing documents, the information set forth on the Home Loan  
Schedule accurately reflects the information set forth in the Indenture         
Trustee's Home Loan File and (iv) each Debt Instrument has been endorsed as     
provided in Section 2.05.  Neither the Issuer nor the Custodian shall be under  
any duty or obligation (i) to inspect, review or examine any such documents,    
instruments, certificates or other papers to determine that they are genuine,   
enforceable, or appropriate for the represented purpose or that they are other  
than what they purport to be on their face or (ii) to determine whether any     
Indenture Trustee's Home Loan File should include any of the documents          
specified in Section 2.05(a)(v).                                                

    (b)    If the Custodian, during the process of reviewing the Indenture
Trustee's Home Loan Files, finds any document constituting a part of a          
Indenture Trustee's Home Loan File which is not executed, has not been          
received, is unrelated to any Home Loan identified in the Home Loan Schedule,   
does not conform to the requirements of Section 2.05 or does not conform, in    
all material respects, to the description thereof as set forth in the Home Loan 
Schedule, then the Custodian shall promptly so notify the Transferor, the       
Servicer, the Indenture Trustee, the Issuer, the Securities Insurer and the     
Seller.  In performing any such review, the Custodian may conclusively rely on  
the Seller and the Transferor as to the purported genuineness of any such       
document and any signature thereon.  It is understood that the scope of the     
Custodian's review of the Indenture Trustee's Home Loan Files is limited solely 
to confirming that the documents listed in Section 2.05 have been received and  
further confirming that any and all documents delivered pursuant to Section     
2.05 have been executed and relate to the Home Loans identified in the Home     
Loan Schedule and to the Subsequent Home Loans listed in the Subsequent Home    
Loan Schedule.  Neither the Issuer nor the Custodian shall have any             
responsibility for determining whether any document is valid and binding,       
whether the text of any assignment or endorsement is in proper or recordable    
form, whether any document has been recorded in accordance with the             
requirements of any applicable jurisdiction, or whether a blanket assignment is 
permitted in any applicable jurisdiction.  If a material defect in a document   
constituting part of a Indenture Trustee's Home Loan File is discovered, then   
the Seller and Transferor shall comply with the cure, substitution and          
repurchase provisions of Section 3.05 hereof.                                   

(c)    (1)    Subject to (3) below, each of the Seller and the    
Transferor shall have the option exercisable in its sole discretion, to remove  
a Home Loan (including a Home Loan for which the current Monthly Payment is not 
more than 30 days delinquent, but excluding a Home Loan which is a Defective    
Home Loan, a Defaulted Home Loan or a Home Loan for which the current Monthly   
Payment is more than 30 days past due) from the Trust and substitute therefor a 
Qualified Substitute Home Loan in the manner and subject to the conditions set  
forth in Section 3.05 applicable to substitutions made by the Transferor and    
subject to the condition that the Seller and/or the Transferor may only effect  
substitutions under this Section 2.06(c) (1) which, in the aggregate, amount to 
not more than 1.0% (as measured by the aggregate Principal Balance of the       
Deleted Home Loans) of the aggregate Cut-Off Date Principal Balances of the     
Home Loans without Securities Insurer approval and in any event may only effect 
substitutions under this Section 2.06(c) (2) which exceed such 1% with          
Securities Insurer approval (except as otherwise provided in Sections           
2.06(c)(2) and 3.05(a).                                                         

   (2)    Subject to (3) below, each of the Seller and the
Transferor shall have the option during the first 90 days after the Closing     
Date, exercisable in its sole discretion, to remove a Home Loan (including a    
Home Loan for which the current Monthly Payment is not more than 30 days        
delinquent, but excluding a Home Loan which is a Defective Home Loan, a         
Defaulted Home                                                                  

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Loan or a Home Loan for which the current Monthly Payment is more than 30 days  
past due) from the Trust and substitute therefor a Qualified Substitute Home    
Loan in the manner and subject to the conditions set forth in Section 3.05      
applicable to substitutions made by the Transferor, and subject to the          
conditions that the Seller and/or the Transferor (i) may only effect            
substitutions under this Section 2.06(c) (2) which, in the aggregate, amount to 
not more than 10% (as measured by the aggregate Principal Balance of the        
Deleted Home Loans) of the aggregate Cut-Off date Principal Balances of the     
Home Loans; and in any event (ii) may only effect substitutions which exceed 5% 
of the aggregate Cut-Off Date Principal Balances of the Home Loans with         
Securities Insurer approval.                                                    

             (3)   No substitution referred to in (1) and (2) above shall be
undertaken unless and until the Issuer and the Indenture Trustee shall have     
received written assurances from each Rating Agency that such substitution once 
effected would not result in the ratings assigned to any Class of the           
Securities being downgraded and an Officer's Certificate from the Transferor or 
the Seller, as applicable, stating that the Qualified Substitute Home Loan      
complies with the definition hereof and the substitution is not being effected  
for the primary purpose of recognizing gains or decreasing losses resulting     
from market value changes in the Deleted Home Loans and Qualified Substitute    
Home Loans included in such substitution; provided that with respect to any     
substitution under this Section 2.06(c) which, in the aggregate, amount exceeds 
5.0% or  more of the aggregate Cut-Off Date Principal Balances of the Home      
Loans, the Issuer, the Indenture Trustee and the Securities Insurer shall have  
received an opinion of counsel, which opinion of counsel shall be acceptable to 
the Securities Insurer and the Indenture Trustee, that such substitution once   
effected would not cause the Trust to become an "investment company" as defined 
under the Investment Company Act of 1940.                                       

 (d)    Upon receipt by the Issuer of a certification of a Servicing
Officer to the effect that such substitution has occurred and that the          
Substitution Adjustment (if any) has been credited to the Collection Account    
pursuant to Section 3.05 and remitted to the Indenture Trustee for deposit into 
the Note Distribution Account or the Certificate Distribution Account, as       
applicable, the Issuer shall (i) release (or cause the Custodian to release) to 
the Servicer for release to the Seller or the Transferor, as the case may be,   
the related Indenture Trustee's Home Loan File for each Deleted Home Loan and   
(ii) execute, without recourse, representation or warranty, and deliver such    
instruments of transfer presented to it by the Servicer as shall be necessary   
to transfer such Deleted Home Loan to the Seller or the Transferor, as the case 
may be.                                                                         

   (e)    On the Distribution Date in October of each year commencing in
1997, the Issuer shall deliver (or cause the Custodian to deliver) to the       
Seller, the Securities Insurer, the Indenture Trustee and the Servicer a        
certification listing all Indenture Trustee's Home Loan Files held by the       
Custodian on behalf of the Issuer on such Distribution Date.                    

ARTICLE III 

REPRESENTATIONS AND WARRANTIES

Section 3.01  Representations and Warranties of the Seller. 

  The Seller hereby represents, warrants and covenants with and to the
Issuer, the Indenture Trustee, the Servicer, the Securities Insurer and the     
Securityholders as of the Closing Date:                                         

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      (a)    The Seller is a corporation duly organized, validly existing, and
in good standing under the laws of the State of Nevada and has all licenses     
necessary to carry on its business as now being conducted and is licensed,      
qualified and in good standing in each Mortgaged Property State if the laws of  
such state require licensing or qualification in order to conduct business of   
the type conducted by the Seller and perform its obligations as Seller          
hereunder; the Seller has the power and authority to execute and deliver this   
Agreement and to perform in accordance herewith; the execution, delivery and    
performance of this Agreement (including all instruments of transfer to be      
delivered pursuant to this Agreement) by the Seller and the consummation of the 
transactions contemplated hereby have been duly and validly authorized by all   
necessary action of the Seller; this Agreement evidences the valid, binding and 
enforceable obligation of the Seller; and all requisite action has been taken   
by the Seller to make this Agreement valid, binding and enforceable upon the    
Seller in accordance with its terms, subject to the effect of bankruptcy,       
insolvency, reorganization, moratorium and other, similar laws relating to or   
affecting creditors' rights generally or the application of equitable           
principles in any proceeding, whether at law or in equity;                      

      (b)    All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to be 
taken, given or obtained, as the case may be, by or from any federal, state or  
other governmental authority or agency (other than any such actions, approvals, 
etc. under any state securities laws, real estate syndication or "Blue Sky"     
statutes, as to which the Seller makes no such representation or warranty) that 
are necessary in connection with the purchase and sale of the Securities and    
the execution and delivery by the Seller of this Agreement and the other        
related documents to which it is a party, have been duly taken, given or        
obtained, as the case may be, are in full force and effect, are not subject to  
any pending proceedings or appeals (administrative, judicial or otherwise) and  
either the time within which any appeal therefrom may be taken or review        
thereof may be obtained has expired or no review thereof may be obtained or     
appeal therefrom taken, and are adequate to authorize the consummation of the   
transactions contemplated by this Agreement and such other documents on the     
part of the Seller and the performance by the Seller of its obligations as      
Seller under this Agreement and such other documents to which it is a party;    

(c)    The consummation of the transactions contemplated by this  
Agreement will not result in (i) the breach of any terms or provisions of the   
Articles of Incorporation or Bylaws of the Seller, (ii) the breach of any term  
or provision of, or conflict with or constitute a default under or result in    
the acceleration of any obligation under, any material agreement, indenture or  
loan or credit agreement or other material instrument to which the Seller, or   
its property is subject, or  (iii) the violation of any law, rule, regulation,  
order, judgment or decree to which the Seller or its respective property is     
subject;                                                                        

 (d)    Neither this Agreement nor the Prospectus nor any statement,
report or other document prepared by the Seller and furnished or to be          
furnished pursuant to this Agreement or in connection with the transactions     
contemplated hereby contains any untrue statement of material fact or omits to  
state a material fact necessary to make the statements contained herein or      
therein not misleading;                                                         

      (e)    There is no action, suit, proceeding or investigation pending or,
to the best of the Seller's knowledge, threatened against the Seller which,     
either in any one instance or in the aggregate, may result in any material      
adverse change in the business, operations, financial condition, properties or  
assets of the Seller or in any material impairment of the right or ability of   
the Seller to                                                                   

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carry on its business substantially as now conducted, or in any material        
liability on the part of the Seller or which would draw into question the       
validity of this Agreement or the Home Loans or of any action taken or to be    
taken in connection with the obligations of the Seller contemplated herein, or  
which would be likely to impair materially the ability of the Seller to perform 
under the terms of this Agreement;                                              

     (f)    The Seller is not in default with respect to any order or decree
of any court or any order, regulation or demand of any federal, state,          
municipal or other governmental agency, which default might have consequences   
that would materially and adversely affect the condition (financial or          
otherwise) or operations of the Seller or its properties or might have          
consequences that would materially and adversely affect its performance         
hereunder;                                                                      

     (g)    As of the Closing Date, the Issuer will have good and marketable
title to each Initial Home Loan and such other items comprising the corpus of   
the Trust free and clear of any lien, mortgage, pledge, charge, security        
interest or other encumbrance;                                                  

      (h)    As of any Subsequent Transfer Date, the Issuer will have good and
marketable title to each Subsequent Home Loan transferred on such date and such 
other items comprising the corpus of the Trust free and clear of any lien,      
mortgage, pledge, charge, security interest or other encumbrance; and           

   (i)    The transfer, assignment and conveyance of the Home Loans, the
Debt Instruments and the Mortgages by the Seller pursuant to this Agreement or  
any Subsequent Transfer Agreement are not subject to the bulk transfer laws or  
any similar statutory provisions in effect in any applicable jurisdiction.      

   (j)    The Seller shall provide each Rating Agency and the Securities
Insurer with notice and a copy of any amendment to the Articles of              
Incorporation of the Seller promptly after the filing thereof.                  

     Section 3.02  Representations, Warranties and Covenants of the Servicer
and Transferor.                                                                 

The Servicer as such and in its capacity as the Transferor hereby 
represents, warrants and covenants with and to the Seller, the Issuer, the      
Indenture Trustee, the Securities Insurer and the Securityholders as of the     
Closing Date:                                                                   

    (a)    The Servicer is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Texas and has all licenses  
necessary to carry on its business as now being conducted and is licensed,      
qualified and in good standing in each Mortgaged Property State if the laws of  
such state require licensing or qualification in order to conduct business of   
the type conducted by the Servicer and perform its obligations as Servicer      
hereunder; the Servicer has the power and authority to execute and deliver this 
Agreement and to perform in accordance herewith; the execution, delivery and    
performance of this Agreement (including all instruments of transfer to be      
delivered pursuant to this Agreement) by the Servicer and the consummation of   
the transactions contemplated hereby have been duly and validly authorized by   
all necessary action of the Servicer; this Agreement evidences the valid,       
binding and enforceable obligation of the Servicer; and all requisite action    
has been taken by the Servicer to make this Agreement valid, binding and        
enforceable upon the Servicer in accordance with its terms, subject to the      
effect of bankruptcy,                                                           

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insolvency, reorganization, moratorium and other, similar laws relating to or   
affecting creditors' rights generally or the application of equitable           
principles in any proceeding, whether at law or in equity;                      

      (b)    All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to be 
taken, given or obtained, as the case may be, by or from any federal, state or  
other governmental authority or agency (other than any such actions, approvals, 
etc. under any state securities laws, real estate syndication or "Blue Sky"     
statutes, as to which the Servicer makes no such representation or warranty)    
that are necessary in connection with the execution and delivery by the         
Servicer of this Agreement and the other related documents to which it is a     
party, have been duly taken, given or obtained, as the case may be, are in full 
force and effect, are not subject to any pending proceedings or appeals         
(administrative, judicial or otherwise) and either the time within which any    
appeal therefrom may be taken or review thereof may be obtained has expired or  
no review thereof may be obtained or appeal therefrom taken, and are adequate   
to authorize the consummation of the transactions contemplated by this          
Agreement and such other documents on the part of the Servicer and the          
performance by the Servicer of its obligations as Servicer under this Agreement 
and such other documents to which it is a party;                                

(c)    The consummation of the transactions contemplated by this  
Agreement will not result in (i) the breach of any terms or provisions of the   
charter or by-laws of the Servicer, (ii) the breach of any term or provision    
of, or conflict with or constitute a default under or result in the             
acceleration of any obligation under, any material agreement, indenture or loan 
or credit agreement or other material instrument to which the Servicer or its   
property is subject, or (iii) the violation of any law, rule, regulation,       
order, judgment or decree to which the Servicer or its property is subject;     

 (d)    Neither this Agreement nor the Prospectus nor any statement,
report or other document prepared by the Servicer and furnished or to be        
furnished pursuant to this Agreement or in connection with the transactions     
contemplated hereby contains any untrue statement of material fact or omits to  
state a material fact necessary to make the statements contained herein or      
therein not misleading;                                                         

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

(f)    The Servicer is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal, state,   
municipal or other governmental agency, which default might have consequences   
that would materially and adversely affect the condition (financial or          
otherwise) or operations of the Servicer or its properties or might have        
consequences that would materially and adversely affect its performance         
hereunder;                                                                      

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    (g)    So long as FFI is the Servicer of the Home Loans hereunder, the
Servicer's Home Loan Files will be maintained at 1250 Mockingbird Lane, Dallas, 
Texas 75247-4902, or, if FFI is no longer the Servicer hereunder or if FFI      
changes the location of the Servicer's Home Loan Files, the Servicer's Home     
Loan Files shall be maintained at such address as may be indicated on an        
Officer's Certificate executed by a Servicing Officer and delivered to the      
Issuer, the Indenture Trustee, the Securities Insurer and the Seller;           

      (h)    The Servicer shall not solicit any refinancing of any of the Home
Loans; provided, that this covenant shall not prevent or restrict either (1)    
the Servicer from making general solicitations, by mail, advertisement or       
otherwise of the general public or persons on a targeted list, so long as the   
list was not generated from the Home Loan Schedule or (2) any refinancing in    
connection with an Obligor's unsolicited request for refinancing; and           

(i)    The Servicer shall not sell, transfer, assign or otherwise 
dispose of a customer or similar list comprised of the names of the Obligors    
under the Home Loans to any third party.                                        

Section 3.03  Individual Home Loans.                              

      The Transferor hereby represents and warrants to the Seller, the Issuer,
the Indenture Trustee,  the Securities Insurer and the Securityholders, with    
respect to each Initial Home Loan, as of the Closing Date and, with respect to  
each Subsequent Home Loan, as of the related Subsequent Transfer Date:          

      (a)    Home Loan Information.  The information with respect to each Home
Loan set forth in the Home Loan Schedule is true and correct in all material    
respects as of the applicable Cut-Off Date.                                     

(b)    Delivery of Home Loan Documents.  All of the original or   
certified documentation required to be delivered to the Indenture Trustee or to 
the Custodian on or prior to the Closing Date or the Subsequent Transfer Date,  
as applicable, or as otherwise provided in this Agreement has or will be so     
delivered.                                                                      

  (c)    Payments Current.  As of the applicable Cut-off Date, no more
than 0.15% (by aggregate Cut-off Date Principal Balance) of the Initial Home    
Loans are more than 30 days but not more than 60 days delinquent, based on the  
terms under which the related Mortgages, if applicable, and Debt Instruments    
have been made and none of the Home Loans are more than 60 days delinquent.     
The Transferor has not advanced funds, or induced, solicited or knowingly       
received any advance of funds from a party other than the related Obligor,      
directly or indirectly, for the payment of any amount required by any Home      
Loan.                                                                           

      (d)    No Waiver or Modification.  The terms of each Debt Instrument and
Mortgage, if applicable, have not been impaired, waived, altered or modified in 
any respect, except by written instruments reflected in the Indenture Trustee's 
Home Loan File and no provision of any Mortgage, if applicable, or Debt         
Instrument has been "whited out" or erased unless such modification has been    
initialed by each of the parties to the related Home Loan.  No instrument of    
waiver, alteration, modification or assumption has been executed except for the 
instruments that are part of the Indenture Trustee's Home Loan File and the     
terms of which are reflected in the Indenture Trustee's Home Loan File.         

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    (e)    No Defenses.  No Debt Instrument or Mortgage, if applicable, is
subject to any set-off, counterclaim or defense, including the defense of       
usury, nor will the operation of any of the terms of any Debt Instrument or     
Mortgage, if applicable, or the exercise of any right thereunder, render such   
Debt Instrument or Mortgage unenforceable, in whole or in part, or subject to   
any right of rescission, set-off, counterclaim or defense, including the        
defense of usury, and no such right of rescission, set-off, counterclaim or     
defense has been asserted in any proceeding or was asserted in any state or     
federal bankruptcy or insolvency proceeding at the time the related Home Loan   
was originated.                                                                 

    (f)    Compliance with Laws.  Any and all requirements of any federal,
state or local law applicable to each Home Loan have been complied with         
including, without limitation, all consumer, usury, truth-in-lending, consumer  
credit protection, equal credit opportunity or disclosure laws applicable to    
each Home Loan; each Home Loan was originated in compliance with all applicable 
laws and no fraud or misrepresentation was committed by any Person in           
connection therewith.                                                           

     (g)    No Satisfaction or Release of Lien.  No Mortgage, if applicable,
has been satisfied, canceled, subordinated or rescinded, in whole or in part.   
No Mortgaged Property has been released from the lien of the related Mortgage,  
if applicable, in whole or in part, nor has any instrument been executed that   
would effect any such release, cancellation, subordination or rescission, other 
than the subordination of the lien of such Mortgage securing a Home Loan with   
respect to which a related Superior Lien was released in connection with the    
refinancing of the mortgage loan relating to such Superior Lien.                

      (h)    Valid Lien.  With respect to each Debt Instrument that is secured
by a Mortgage, if applicable, such Mortgage is or creates a valid, subsisting   
and enforceable lien on the related Mortgaged Property, including, in the case  
of a Mortgage securing a Home Improvement Loan, the land and all buildings on   
the related Mortgaged Property.                                                 

    (i)    Validity of Home Loan Documents.  Each Debt Instrument and each
Mortgage, if applicable, is genuine and each is the legal, valid and binding    
obligation of the Obligor thereof, enforceable in accordance with its terms,    
except as the enforceability thereof may be limited by bankruptcy, insolvency,  
reorganization or other similar laws affecting creditors' rights in general and 
by general principles of equity.  All parties to each Debt Instrument and each  
Mortgage, if applicable, had legal capacity at the time to enter into the       
related Home Loan and to execute and deliver such Debt Instrument and Mortgage, 
and such Debt Instrument and Mortgage have been duly and properly executed by   
such parties.                                                                   

 (j)    Full Disbursement of Proceeds.  As of the applicable Cut-Off
Date, the proceeds of each Home Loan have been fully disbursed and there is no  
requirement for future advances thereunder, all costs, fees and expenses        
incurred in making or closing each Home Loan and the recording of the Mortgage, 
if applicable, were disbursed, the Obligor is not entitled to any refund of any 
amounts paid or due under the Debt Instrument or any related Mortgage and any   
and all requirements set forth in the related Home Loan documents have been     
complied with.                                                                  

   (k)    Ownership.  Immediately prior to the conveyance thereof to the
Seller, the Transferor had good and marketable title to each Home Loan, Debt    
Instrument and Mortgage, if applicable, was the sole owner thereof and had full 
right to sell each Home Loan, Debt Instrument and Mortgage to the Seller and    
upon the conveyance thereof by the Transferor to the Seller, the Seller became  
the sole                                                                        

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owner of each Home Loan, Debt Instrument and Mortgage, if applicable, free and  
clear of any encumbrance, equity, lien, pledge, charge, claim or security       
interest.                                                                       

     (l)    Ownership of Mortgaged Property.  With respect to each Home Loan
that is secured by a Mortgaged Property, the related Servicer's Home Loan File  
contains a title document reflecting that title to such Mortgaged Property is   
held at least 50% by the Obligor under such Home Loan.                          

  (m)    No Defaults.  Except with respect to any delinquent scheduled
payment set forth in subsection (c) above, there is no default, breach,         
violation or event of acceleration existing under any Mortgage, if applicable,  
or any Debt Instrument and, to the best of the Transferor's knowledge, there is 
no event which, with the passage of time or with notice and/or the expiration   
of any grace or cure period, would constitute such a default, breach, violation 
or event of acceleration and neither the Transferor nor its predecessors have   
waived any such default, breach, violation or event of acceleration, except as  
set forth in an instrument of waiver, alteration, modification or assumption    
that is included in the Indenture Trustee's Home Loan File.                     

(n)    No Condemnation or Damage.  To the best of the Transferor's
knowledge, the physical condition of each Mortgaged Property has not            
deteriorated since the date of origination of the related Home Loan (normal     
wear and tear excepted) and there is no proceeding pending for the total or     
partial condemnation of any Mortgaged Property.                                 

(o)    Mortgage Remedies Adequate.  Each Mortgage, if applicable, 
contains customary and enforceable provisions such as to render the rights and  
remedies of the holder thereof adequate for the realization against the related 
Mortgaged Property of the benefits of the security provided thereby, including, 
(i) in the case of a Mortgage designated as a deed of trust, by trustee's sale, 
and (ii) otherwise, by judicial foreclosure.                                    

      (p)    Underwriting of Home Loans.  Each Home Loan has been underwritten
by the originator thereof in accordance with such originator's then current     
underwriting guidelines.                                                        

    (q)    Terms of Home Loans.  Each Home Loan is a fixed rate loan; each
Debt Instrument has an original term to maturity of not less than 24 months nor 
more than 25 years and three months from the date of origination; each Debt     
Instrument is payable in monthly installments of principal and interest, with   
interest payable in arrears, and requires a monthly payment which is sufficient 
to amortize the original principal balance over the original term and to pay    
interest at the related Home Loan Interest Rate; and no Debt Instrument         
provides for any extension of the original term.                                

  (r)    Security.  No Debt Instrument is, or has been, secured by any
collateral except the lien of the related Mortgage, if applicable.              

      (s)    Deed of Trust.  If a Mortgage for a Secured Home Loan constitutes
a deed of trust, a trustee, duly qualified under applicable law to serve as     
such, has been properly designated and currently so serves as such and is named 
in such Mortgage, or a valid substitution of trustee has been recorded or may   
be recorded and no extraordinary fees or expenses are, or will become, payable  
by the Transferor to the trustee under the deed of trust, except in connection  
with default proceedings and a trustee's sale after default by the related      
Obligor.                                                                        

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  (t)    Types of Home Loans.  Each Home Loan whether or not a Secured
Loan is either (i) a Home Improvement Loan, (ii) a Debt Consolidation Loan,     
(iii) a Combination Loan, or (iv) a first or junior lien purchase money loan.   
No Home Loan was originated for the express purpose of purchasing a             
manufactured home.                                                              

      (u)    Completion of Improvements.  With respect to all Home Improvement
Loans that have been originated through a home improvement contractor, all      
improvements to be made to each Mortgaged Property with the proceeds of the     
related Home Loan have been completed.                                          

   (v)    Origination Practices.  The origination practices used by each
originator of the Home Loans and the servicing and collection practices used by 
the Transferor with respect to each Home Loan have been in all material         
respects legal, proper, prudent and customary with respect to the loan          
origination and servicing business as applicable to the respective loan type.   

(w)    Servicing Practices.  Each Home Loan has been serviced in  
accordance with all applicable laws and, to the best of the Transferor's        
knowledge, no fraud or misrepresentation was committed by any Person in         
connection therewith.                                                           

      (x)    No Bulk Transfer.  The sale, transfer, assignment, conveyance and
grant of the Debt Instruments and the Mortgages, if applicable, by the          
Transferor to the Seller were not subject to the bulk transfer laws or any      
similar statutory provisions in effect in any applicable jurisdiction.          

    (y)    Delinquencies.  As of the applicable Cut-Off Date, no more than
0.15% of the  Home Loans (by outstanding principal balance) were 31 days or     
more delinquent.                                                                

     (z)    Relief Act Matters.  No Obligor has notified the Transferor, and
no relief has been requested or allowed to an Obligor under the Soldiers' and   
Sailors' Civil Relief Act of 1940.                                              

 (aa)   Selection Criteria.  The Home Loans were not selected by the
Transferor for sale to the Seller or the Issuer on any basis intended to        
adversely affect the Seller or the Issuer.                                      

    (bb)   Superior Lien Delinquencies.  No Superior Lien was more than 30
days past due at the time of origination of the related Home Loan.              

      (cc)   Treasury Regulation Section 301.7701.  On the Closing Date and on
each Subsequent Transfer Date, 55% or more (by aggregate principal balance) of  
the Home Loans do not constitute "real estate mortgages" for the purpose of     
Treasury Regulation Section 301.7701 under the Code.  For this purpose a Home   
Loan does not constitute a "real estate mortgage" if:                           

      (i)    The Home Loan is not secured by an interest in real
property, or                                                      

             (ii)   The Home Loan is not an "obligation principally secured by
an interest in real property."  For this purpose an "obligation is
  principally secured by an interest in real property" if it satisfies
either the test set out in paragraph (1) or the test set out in   
paragraph (2) below.                                              

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             (1)    The 80-percent test.  An obligation is principally secured
                  by an interest in real property if the fair market value
                  of the interest in real property securing the obligation

                 (A)    was at least equal to 80 percent of the adjusted
                      issue price of the obligation  at the time the
                         obligation was originated (or, if later, the time
                      the obligation was significantly modified); or

                (B)    is at least equal to 80 percent of the adjusted
                         issue price of the obligation on the Closing Date
                   or Subsequent Transfer Date, as applicable.

                    For purposes of  this paragraph (1), the fair market value
                    of the real property interest must be first reduced by the
                  amount of any lien on the real property interest that is
                    senior to the obligation being tested, and must be further
                  reduced by a proportionate amount of any lien that is in
               parity with the obligation being tested, in each case
                   before the percentages set forth in (1)(A) and (1)(B) are
                   determined.  The adjusted issue price of an obligation is
                   its issue price plus the amount of accrued original issue
            discount, if any, as of the date of determination.

             (2)    Alternative test.  An obligation is principally secured by
                  an interest in real property if substantially all of the
               proceeds of the obligation were used to acquire or to
                  improve or protect an interest in real property that, at
            the origination date, is the only security for the
                 obligation.  For purposes of this test, loan guarantees
                  made by the United States or any state (or any political
               subdivision, agency, or instrumentality of the United
              States or of any state), or other third party credit
                 enhancement are not viewed as additional security for a
                 loan.  An obligation is not considered to be secured by
              property other than real property solely because the
                   obligor is personally liable on the obligation.  For this
               purpose only substantially all of the proceeds of the
           obligations means more than 66- 2/3% of the gross
proceeds.                             

 (dd)   Good Repair.  To the best of the Transferor's knowledge, the
related Mortgaged Property described in each Debt Instrument is free of damage  
and in good repair or will be free of damage and in good repair following the   
completion of any improvements or repairs to be financed by the related Home    
Loan.                                                                           

(ee)   Home Loan Interest Method.  Interest for each Home Loan is 
calculated at a rate of interest computed by the simple interest method or the  
actuarial method.                                                               

      (ff)   Retail Installment Contracts.  Some of the Homes Loans are retail
installment contracts for goods or services, and some of the Home Loans are     
home improvement loans for goods or services, which are either "consumer credit 
contracts" or "purchase money loans" as such terms are defined in 16 C.F.R.     
Part 433.1.                                                                     

      (gg)   Inspections to Improvements; and No Encroachment.  To the best of
the Transferor's knowledge, all required inspections, licenses and certificates 
with respect to the improvements and                                            

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the use and occupancy of all occupied portions of all property securing the     
Mortgages, if applicable, have been made, obtained or issued as applicable.  To 
the best of the Transferor's knowledge, all improvements which were considered  
in determining the appraised value of the property securing each Mortgage, if   
applicable, lay wholly within the boundaries and building restrictions lines of 
the related property and no improvements on adjoining properties encroach upon  
such property and no improvement located on or being a part of such property is 
in violation of any applicable zoning laws or regulation.                       

   (hh)   Remedies Against Originators.  In the event that any Home Loan
was originated by an entity (such entity, the "Originator") other than the      
Transferor and to the extent that the Transferor has failed to fulfill or is    
not capable of fulfilling its obligations to cure, substitute or repurchase     
such Home Loan as required hereunder, then the Securities Insurer or the        
Indenture Trustee on behalf of the Securityholders may enforce any remedies for 
breach of representations and warranties made by the Originator with respect to 
such Home Loan.                                                                 

    (ii)   Consent of Senior Lien.  With respect to each Home Loan that is
not a first mortgage loan, either (i) no consent for the Home Loan is required  
by the holder of the related prior lien or (ii) such consent has been obtained  
and has been delivered to the Indenture Trustee.                                

(jj)   Flood Insurance.  If required by federal or state law, each
property securing a Home Loan is covered by flood insurance with a standard     
mortgagee clause and extended coverage in an amount which is not less than the  
value of such property.  All such insurance policies meet the requirements of   
the current guidelines of the Federal Insurance Administration, conform to the  
requirements of the FNMA Sellers' Guide and the FNMA Servicers' Guide, and are  
of standard type and quality for the locale where the related property is       
located.  All acts required to be performed to preserve the rights and remedies 
of the Indenture Trustee in any such insurance policies have been performed     
including, without limitation, any necessary notifications of insurers and      
assignments of policies or interests therein.                                   

(kk)   No Fraudulent Conveyance.  The Home Loans are not being    
transferred with any intent to hinder, delay or defraud any creditors.          

(ll)   Value and Marketability.  To the best of the Transferor's  
knowledge, there do not exist any circumstances, conditions or information with 
respect to the Home Loan, the related Mortgaged Property securing same, the     
Obligor the Obligor's credit standing that reasonably can be expected to cause  
private institutional investors investing in same type of home loan to regard   
such Home Loan as an unacceptable investment, to increase the likelihood that   
such Home Loan will become delinquent, or adversely affect the value or         
marketability of the Home Loan.                                                 

(mm)   Environmental Compliance.  To the best of the Transferor's 
knowledge, the Mortgaged Property is free from any and all toxic or hazardous   
substances and there exists no violation of any local, state or federal         
environmental law, rule or regulation.                                          

      (nn)   Description Conforms to Prospectus Supplement.  Each Initial Home
Loan conforms, and all Initial Home Loans in the aggregate conform, in all      
material respects to the description thereof set forth in the Prospectus        
Supplement.                                                                     

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(oo)   No Buydown, GPM or Shared Appreciation Loans.  No Home Loan
contains any provisions pursuant to which principal and interest payments are   
paid or partially paid with funds deposited in any separate account established 
by the Transferor, the Obligor or anyone else on behalf of the Obligor, or paid 
by any source other than the Obligor.  No Home Loan contains any other similar  
provision which may constitute a "buydown" provision.  No Home Loan is a        
graduated payment mortgage loan.  No Home Loan has a shared appreciation or     
other contingent interest feature.                                              

(pp)   No Chattel Paper.  Each Debt Instrument is comprised of one
original promissory note and each such promissory note constitutes an           
"instrument" for purposes of Section 9-105(1)(i) of the UCC.  No Debt           
Instrument constitutes or is comprised of "chattel paper" as such term is       
defined in Section 9-105(1)(b) of the UCC.  Each Debt Instrument has been       
delivered to the Indenture Trustee.                                             

(qq)   Entire Agreement.  The Debt Instrument and the Mortgage, if
applicable, contain the entire agreement between the related Obligor and the    
lender and all obligations of the lender under the related Home Loan, and no    
other agreement defines, modifies, or expands the obligations of the lender     
under the Home Loan, except for any assumptions or modifications included in    
the Indenture Trustee's Home Loan File pursuant to Section 2.05(a)(v).          

      In light of the Transferor's underwriting guidelines, the Transferor has
reviewed all of the documents constituting each Servicer's Home Loan File and   
each Indenture Trustee's Home Loan File and has made such inquiries as it deems 
reasonable under the circumstances to make and confirm the accuracy of the      
representations set forth herein.                                               

Section 3.04  Subsequent Home Loans.                              

  (a)    The Transferor shall represent and warrant to the Seller, the
Issuer, the Indenture Trustee, the Securities Insurer and the Securityholders   
that as of each Subsequent Transfer Date:                                       

(i)    No Subsequent Home Loan provides for negative
amortization;                                                     

             (ii)   No Subsequent Home Loan has a Cut-Off Date or a Subsequent
Transfer Date later than December 27, 1996;                       

         (iii)  No Subsequent Home Loan has a maturity date later than
December 31, 2021;                                                

             (iv)   To the best of the Transferor's knowledge, the acquisition
   of the Subsequent Home Loans as of such Subsequent Transfer Date will
not result in a downgrading in any rating of the Securities;      

          (v)    The Subsequent Home Loans have not been acquired by the
      Issuer for the primary purpose of recognizing gains or decreasing losses
resulting from market value changes in such Subsequent Home Loans;

          (vi)   Each of the representations and warranties set forth in
     Section 3.03 is true and correct with respect to each of the Subsequent
Home Loans being transferred to the Issuer; and                   

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        (vii)  To the extent applicable to each Subsequent Home Loan
     being transferred to the Issuer, the quantitative criteria set forth in
   paragraph 25 of that certain Commitment to Issue a Financial Guaranty
    Insurance Policy (Application No. 96-09-7709 dated as of September 27,
  1996) (the "Securities Insurer Commitment") issued by the Securities
Insurer have been satisfied.                                      

  (b)    The Transferor shall represent and warrant to the Seller, the
Issuer, the Indenture Trustee, the Securities Insurer and the Securityholders   
that as of the end of the Funding Period, the Home Loans have satisfied all of  
the criteria set forth in paragraph 25 of the Securities Insurer Commitment (as 
defined in (a)(vii) above).                                                     

Section 3.05  Purchase and Substitution.                          

(a)    It is understood and agreed that the representations and   
warranties set forth in Sections 3.03 and 3.04, shall survive the conveyance of 
the Home Loans to the Issuer, the Grant of the Home Loans to the Indenture      
Trustee and the delivery of the Securities to the Securityholders.  Upon        
discovery by the Seller, the Servicer, the Transferor, the Custodian, the       
Issuer, the Indenture Trustee, the Securities Insurer or any Securityholder of  
a breach of any of such representations and warranties which materially and     
adversely affects the value of the Home Loans or the interest of the            
Securityholders or the Securities Insurer, or which materially and adversely    
affects the interests of the Securityholders or the Securities Insurer in the   
related Home Loan in the case of a representation and warranty relating to a    
particular Home Loan (notwithstanding that such representation and warranty was 
made to the Transferor's best knowledge), the party discovering such breach     
shall give prompt written notice to the others.  The Transferor shall within 60 
days of the earlier of its discovery or its receipt of notice of any breach of  
a representation or warranty, promptly cure such breach in all material         
respects.  If, however, within 60 days after the notice to the Transferor       
respecting such breach the Transferor has not remedied the breach and the       
breach materially and adversely affects the interests of the Securityholders or 
the Securities Insurer generally or in the related Home Loan (the "Defective    
Home Loan"), the Seller shall cause the Transferor on or before the             
Determination Date next succeeding the end of such 60 day period either (i) to  
remove such Defective Home Loan from the Trust (in which case it shall become a 
Deleted Home Loan) and substitute one or more Qualified Substitute Home Loans   
in the manner and subject to the conditions set forth in this Section 3.05 or   
(ii) to purchase such Defective Home Loan at a purchase price equal to the      
Purchase Price (as defined below) by depositing such Purchase Price in the      
Collection Account.  In addition, the Transferor shall indemnify the Trust and  
the Securities Insurer for any losses incurred in excess of the proceeds        
received from the repurchase or substitution of any such Defective Home Loan.   
In the event the Seller or the Transferor is notified that any Mortgaged        
Property for a secured Home Loan is not free of damage or not in good repair,   
regardless of the Transferor's knowledge, the Seller shall cause the Transferor 
to (x) substitute or purchase the related Home Loan in accordance with clauses  
(i) and (ii), respectively, above or (y) repair any such Mortgaged Property     
such that such Mortgaged Property is free of damage and in good repair. The     
Transferor shall provide the Servicer, the Securities Insurer, the Indenture    
Trustee and the Issuer with a certification of a Responsible Officer on the     
Determination Date next succeeding the end of such 60 day period indicating     
whether the Transferor is purchasing the Defective Home Loan or substituting in 
lieu of such Defective Home Loan a Qualified Substitute Home Loan.  With        
respect to the purchase of a Defective Home Loan pursuant to this Section, the  
"Purchase Price" shall be equal to the Principal Balance of such Defective Home 
Loan as of the date of purchase, plus all accrued and unpaid interest on such   
Defective Home Loan to but not including the Due Date in the                    

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Due Period most recently ended prior to such Determination Date computed at the 
applicable Home Loan Interest Rate, plus the amount of any unreimbursed         
Servicing Advances made by the Servicer with respect to such Defective Home     
Loan, which Purchase Price shall be deposited in the Collection Account (after  
deducting therefrom any amounts received in respect of such repurchased         
Defective Home Loan and being held in the Collection Account for future         
distribution to the extent such amounts represent recoveries of principal not   
yet applied to reduce the related Principal Balance or interest (net of the     
Servicing Fee) for the period from and after the Due Date in the Due Period     
most recently ended prior to such Determination Date).                          

 Any substitution of Home Loans pursuant to this Section 3.05(a) and
Section 2.06(c) shall be accompanied by payment by the Transferor of the        
Substitution Adjustment, if any, to be deposited in the Collection Account.     
For purposes of calculating the Available Collection Amount for any             
Distribution Date, amounts paid by the Transferor pursuant to this Section 3.05 
in connection with the repurchase or substitution of any Defective Home Loan    
that are on deposit in the Collection Account as of the Determination Date for  
such Distribution Date shall be deemed to have been paid during the related Due 
Period and shall be transferred to the Note Distribution Account to be retained 
therein or transferred to the Certificate Distribution Account pursuant to      
Section 5.01(c) on the Determination Date for such Distribution Date.           

As to any Deleted Home Loan for which the Transferor substitutes a
Qualified Substitute Home Loan or Loans, the Transferor shall effect such       
substitution by delivering to the Issuer (i) a certification executed by a      
Responsible Officer of the Transferor to the effect that the Substitution       
Adjustment has been credited to the Collection Account and remitted to the      
Indenture Trustee for deposit into the Note Distribution Account and/or the     
Certificate Distribution Account, and (ii) the documents constituting the       
Indenture Trustee's Loan File for such Qualified Substitute Home Loan or Loans. 

     In addition to the preceding repurchase obligations, each of the Seller
and the Transferor shall have the option, exercisable in its sole discretion at 
any time, to repurchase, or to substitute one or more Qualified Substitute Home 
Loans for, any Home Loan from the Issuer in the event that such Home Loan is in 
foreclosure, default or imminent default; provided that any repurchase or       
substitution pursuant to this paragraph is conducted in the same manner as the  
repurchase or substitution, respectively, of a Defective Home Loan pursuant to  
this Section 3.05.                                                              

      (b)    The Servicer shall deposit in the Collection Account all payments
received in connection with such Qualified Substitute Home Loan or Loans after  
the date of such substitution.  Monthly Payments received with respect to       
Qualified Substitute Home Loans on or before the date of substitution will be   
retained by the Transferor.  The Issuer will be entitled to all payments        
received on the Deleted Home Loan on or before the date of substitution, and    
the Transferor shall thereafter be entitled to retain all amounts subsequently  
received in respect of such Deleted Home Loan.  The Transferor shall give       
written notice to the Issuer, the Servicer (if the Transferor is not then       
acting as such), the Indenture Trustee and the Securities Insurer that such     
substitution has taken place and shall amend the Home Loan Schedule to reflect  
(i) the removal of such Deleted Home Loan from the terms of this Agreement and  
(ii) the substitution of the Qualified Substitute Home Loan.  The Transferor    
shall promptly deliver to the Issuer, the Servicer (if the Transferor is not    
then acting as such), the Indenture Trustee and the Securities Insurer a copy   
of the amended Home Loan Schedule.  Upon such substitution, such Qualified      
Substitute Home Loan or Loans shall be subject to the terms of this Agreement   
in all respects, and the Transferor shall be deemed to have made with           

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respect to such Qualified Substitute Home Loan or Loans, as of the date of      
substitution, the covenants, representations and warranties set forth in        
Section 3.03.  On the date of such substitution, the Transferor will deposit    
into the Collection Account an amount equal to the related Substitution         
Adjustment, if any.  In addition, on the date of such substitution, the Issuer  
shall cause the Indenture Trustee to release the Deleted Home Loan from the     
lien of the Indenture and the Issuer will cause such Qualified Substitute Home  
Loan to be pledged to the Indenture Trustee under the Indenture as part of the  
Trust Estate.                                                                   

(c)    It is understood and agreed that the obligations of the    
Transferor set forth in this Section 3.05 to cure, purchase or substitute for a 
Defective Home Loan (and to indemnify the Trust and the Securities Insurer for  
certain losses as described herein in connection with a Defective Home Loan)    
constitute the sole remedies of the Issuer, the Issuer, the Indenture Trustee,  
the Securityholders and the Securities Insurer hereunder respecting a breach of 
the representations and warranties contained in Sections 3.03 and 3.04.  Any    
cause of action against the Seller relating to or arising out of a defect in a  
Indenture Trustee's Home Loan File as contemplated by Section 2.06 or against   
the Transferor relating to or arising out of a breach of any representations    
and warranties made in Sections 3.03 or 3.04 shall accrue as to any Home Loan   
upon (i) discovery of such defect or breach by any party and notice thereof to  
the Seller or the Transferor, as applicable, or notice thereof by the           
Transferor or the Seller, as applicable, to the Issuer and the Securities       
Insurer, (ii) failure by the Transferor or the Seller, as applicable, to cure   
such defect or breach or purchase or substitute such Home Loan as specified     
above, and (iii) demand upon the Transferor or the Seller, as applicable, by    
the Issuer, the Securities Insurer  or the Majority Securityholders for all     
amounts payable in respect of such Home Loan.                                   

     (d)    Neither the Issuer nor the Indenture Trustee shall have any duty
to conduct any affirmative investigation other than as specifically set forth   
in this Agreement as to the occurrence of any condition requiring the           
repurchase or substitution of any Home Loan pursuant to this Section or the     
eligibility of any Home Loan for purposes of this Agreement.                    

ARTICLE IV  

ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS

Section 4.01  Duties of the Servicer.                             

     (a)    Servicing Standard.  The Servicer, as an independent contractor,
shall service and administer the Home Loans and shall have full power and       
authority, acting alone, to do any and all things in connection with such       
servicing and administration which the Servicer may deem necessary or desirable 
and consistent with the terms of this Agreement.  Notwithstanding anything to   
the contrary contained herein, the Servicer, in servicing and administering the 
Home Loans, shall employ or cause to be employed procedures (including          
collection, foreclosure, liquidation and Foreclosure Property management and    
liquidation procedures) and exercise the same care that it customarily employs  
and exercises in servicing and administering loans of the same type as the Home 
Loans for its own account, all in accordance with accepted servicing practices  
of prudent lending institutions and servicers of loans of the same type as the  
Home Loans and giving due consideration to the Securityholders' and the         
Securities Insurer's reliance on the Servicer.  The Servicer has and shall      
maintain the facilities, procedures and experienced personnel necessary to      

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comply with the servicing standard set forth in this subsection (a) and the     
duties of the Servicer set forth in this Agreement relating to the servicing    
and administration of the Home Loans.                                           

  (b)    Servicing Advances.  In accordance with the preceding general
servicing standard, the Servicer, or any Subservicer on behalf of the Servicer, 
shall make all Servicing Advances in connection with the servicing of each Home 
Loan hereunder.  Notwithstanding any provision to the contrary herein, neither  
the Servicer, nor any Subservicer on behalf of the Servicer, shall have any     
obligation to advance its own funds for any delinquent scheduled payments of    
principal and interest on any Home Loan or to satisfy or keep current the       
indebtedness secured by any Superior Liens on the related Mortgaged Property.   
No costs incurred by the Servicer or any Subservicer in respect of Servicing    
Advances shall, for the purposes of distributions to Securityholders, be added  
to the amount owing under the related Home Loan.  Notwithstanding any           
obligation by the Servicer to make a Servicing Advance hereunder with respect   
to a Home Loan, before making any Servicing Advance that is material in         
relation to the outstanding principal balance thereof, the Servicer shall       
assess the reasonable likelihood of (i) recovering such Servicing Advance and   
any prior Servicing Advances for such Home Loan, and (ii) recovering any        
amounts attributable to outstanding interest and principal owing on such Home   
Loan for the benefit of the Securityholders and the Securities Insurer in       
excess of the costs, expenses and other deductions to obtain such recovery,     
including without limitation any Servicing Advances therefor and, if            
applicable, the outstanding indebtedness of all Superior Liens.  The Servicer   
shall only make a Servicing Advance with respect to a Home Loan to the extent   
that the Servicer determines in its reasonable, good faith judgment that such   
Servicing Advance would likely be recovered as aforesaid.                       

      (c)    Waivers, Modifications and Extensions.  Consistent with the terms
of this Agreement, the Servicer may waive, modify or vary any provision of any  
Home Loan or consent to the postponement of strict compliance with any such     
provision or in any manner grant indulgence to any Obligor if in the Servicer's 
reasonable determination such waiver, modification, postponement or indulgence  
is not materially adverse to the interests of the Securityholders or the        
Securities Insurer; provided, however, unless the Obligor is in default with    
respect to the Home Loan, or such default is, in the judgment of the Servicer,  
reasonably foreseeable, the Servicer may not permit any modification with       
respect to any Home Loan that would change the Home Loan Interest Rate, defer   
(subject to the following paragraph) or forgive the payment of any principal or 
interest (unless in connection with the liquidation of the related Home Loan)   
or extend the final maturity date on the Home Loan.  The Servicer may grant a   
waiver or enter into a subordination agreement with respect to the refinancing  
of a Superior Lien on the related Mortgaged Property, provided that the Obligor 
is in a better financial or cash flow position as a result of such refinancing, 
which may include a reduction in the Obligor's scheduled monthly payment on the 
indebtedness secured by such Superior Lien.  The Servicer shall notify the      
Issuer, the Securities Insurer and the Indenture Trustee of any modification,   
waiver or amendment of any provision of any Home Loan and the date thereof, and 
shall deliver to the Custodian for deposit in the related Indenture Trustee's   
Home Loan File, an original counterpart of the agreement relating to such       
modification, waiver or amendment promptly following the execution thereof.     
Notwithstanding the preceding provisions of this subsection (c), (1) with       
respect to any Home Loan that is not a Defaulted Home Loan if the Home Loans    
that have been waived, modified or varied, in the aggregate, equal or exceed    
two percent (2%) of the aggregate Principal Balances of the Initial Home Loans  
as of the related Cut-Off Date, then any waiver, modification or variance of    
any Home Loan thereafter shall be subject to the prior written consent of the   
Securities Insurer; and (2) with, respect to any Home Loan that is a Defaulted  
Home Loan, the Servicer may modify, vary or waive such defaulted Home Loan in a 
manner that in the                                                              

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reasonable judgment of the Servicer will be likely to maximize the net proceeds 
realizable from such Defaulted Home Loan under the circumstances, including,    
without limitation, the deferment or forgiveness of any principal or interest   
payments due or to become due thereon; provided, however, that with respect to  
the preceding clauses (1) and (2), no such modification, waiver or variation of 
a Home loan pursuant to this subsection (c) shall involve the execution by the  
related Obligor of a new Debt Instrument or a new Mortgage.                     

The Servicer shall make reasonable efforts to collect all payments
called for under the terms and provisions of each Home Loan and the related     
Debt Instrument and Mortgage, if applicable.  Consistent with the foregoing,    
the Servicer may in its discretion waive or permit to be waived any late        
payment charge, prepayment charge or assumption fee or any other fee or charge  
which the Servicer would be entitled to retain hereunder as Servicing           
Compensation and extend the due date for payments due on a Debt Instrument for  
a period.                                                                       

  (d)    Instruments of Satisfaction or Release.  Without limiting the
generality of the foregoing, the Servicer is hereby authorized and empowered to 
execute and deliver on behalf of the Issuer, the Indenture Trustee, each        
Securityholder and the Securities Insurer, all instruments of satisfaction or   
cancellation, or of partial or full release, discharge and all other comparable 
instruments, with respect to the Home Loans and with respect to the related     
Mortgaged Properties.  If reasonably required by the Servicer, the Issuer and   
the Indenture Trustee shall furnish the Servicer with any powers of attorney    
and other documents necessary or appropriate to enable the Servicer to carry    
out its servicing and administrative duties under this Agreement.               

Section 4.02  Liquidation of Home Loans.                          

  (a)    In the event that any payment due under any Home Loan and not
postponed pursuant to Section 4.01(c) is not paid when the same becomes due and 
payable, or in the event the Obligor fails to perform any other covenant or     
obligation under the Home Loan and such failure continues beyond any applicable 
grace period, the Servicer shall, in accordance with the standard of care       
specified in Section 4.01(a), take such action as it shall deem to be in the    
best interest of the Securityholders and the Securities Insurer to collect or   
liquidate such Home Loan in default in a manner that in the reasonable judgment 
of the Servicer will be likely to maximize the net proceeds realizable          
therefrom under the circumstances (including, but without limitation, the       
resale or substitution of such Home Loan pursuant to Section 3.05, or, if no    
Superior Liens exist on the related Mortgaged Property, foreclose or otherwise  
comparably effect ownership in such Mortgaged Property in the name of the       
Issuer for the benefit of Securityholders and the Securities Insurer).  The     
Servicer shall give the Indenture Trustee notice of the election of remedies    
made pursuant to this Section 4.02.  The Servicer shall not be required to      
satisfy the indebtedness secured by any Superior Liens on the related Mortgaged 
Property or to advance funds to keep the indebtedness secured by such Superior  
Liens current.  In connection with any collection or liquidation activities,    
the Servicer shall exercise collection or liquidation procedures with the same  
degree of care and skill as it would exercise or use under the circumstances in 
the conduct of its own affairs.                                                 

(b)    During any Due Period occurring after a Home Loan becomes a
Liquidated Home Loan, the Servicer shall deposit into the Collection Account    
any proceeds received by it with respect to such Liquidated Home Loan or the    
related Foreclosure Property ("Post Liquidation Proceeds").                     

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      (c)    After a Home Loan has become a Liquidated Home Loan, the Servicer
shall promptly prepare and forward to the Issuer, the Indenture Trustee, the    
Securities Insurer and, upon request of any Securityholder, to such             
Securityholder a Liquidation Report detailing the following: (i) the Net        
Liquidation Proceeds, Insurance Proceeds or Released Mortgaged Property         
Proceeds received in respect of such Liquidated Home Loan; (ii) expenses        
incurred with respect thereto; (iii) any Net Loan Losses incurred in connection 
therewith; and (iv) any Post Liquidation Proceeds.                              

Section 4.03  Fidelity Bond; Errors and Omission Insurance.       

    The Servicer shall maintain with a responsible company, and at its own
expense, a blanket fidelity bond and an errors and omissions insurance policy   
in such amounts as required by, and satisfying any other requirements of, the   
FHA and the FHLMC, with broad coverage on all officers, employees or other      
persons acting in any capacity requiring such persons to handle funds, money,   
documents or papers relating to the Home Loans ("Servicer Employees").  Any     
such fidelity bond and errors and omissions insurance shall protect and insure  
the Servicer against losses, including losses resulting from forgery, theft,    
embezzlement, fraud, errors and omissions and negligent acts (including acts    
relating to the origination and servicing of loans of the same type as the Home 
Loans) of such Servicer Employees.  Such fidelity bond shall also protect and   
insure the Servicer against losses in connection with the release or            
satisfaction of a Home Loan without having obtained payment in full of the      
indebtedness secured thereby.  In the event of any loss of principal or         
interest on a Home Loan for which reimbursement is received from the Servicer's 
fidelity bond or errors and omissions insurance, the proceeds from any such     
insurance will be deposited in  the Collection Account.  No provision of this   
Section 4.03 requiring such fidelity bond and errors and omissions insurance    
shall diminish or relieve the Servicer from its duties and obligations as set   
forth in this Agreement.  Upon the request of the Issuer, the Indenture Trustee 
or the Securities Insurer, the Servicer shall cause to be delivered to          
requesting party a certified true copy of such fidelity bond and insurance      
policy.  On the Closing Date, such fidelity bond and insurance is maintained by 
the Servicer with Reliance Insurance Company of Illinois.                       

      Section 4.04  Title, Management and Disposition of Foreclosure Property.

In the event that title to any Mortgaged Property is acquired in  
foreclosure or by deed in lieu of foreclosure (a "Foreclosure Property"), the   
deed or certificate of sale shall be taken in the name of the Indenture Trustee 
for the benefit of the Securityholders and the Securities Insurer.              

The Servicer shall manage, conserve, protect and operate each     
Foreclosure Property for the Indenture Trustee, the Securityholders and the     
Securities Insurer solely for the purpose of its prudent and prompt disposition 
and sale.  The Servicer shall, either itself or through an agent selected by    
the Servicer, manage, conserve, protect and operate the Foreclosure Property in 
the same manner that it manages, conserves, protects and operates other         
foreclosure property for its own account, and in the same manner that similar   
property in the same locality as the Foreclosure Property is managed.  The      
Servicer shall attempt to sell the same (and may temporarily lease the same) on 
such terms and conditions as the Servicer deems to be in the best interest of   
the Securityholders and the Securities Insurer.                                 

 The disposition of Foreclosure Property shall be carried out by the
Servicer at such price, and upon such terms and conditions, as the Servicer     
deems to be in the best interest of the Indenture Trustee, the Securityholders  
and the Securities Insurer and, as soon as practicable thereafter, the          

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expenses of such sale shall be paid.  The Net Liquidation Proceeds or Post      
Liquidation Proceeds, as applicable, from the conservation, disposition and     
sale of the Foreclosure Property shall be promptly deposited by the Servicer in 
the Collection Account in accordance with Section 5.01 of this Agreement and    
the Indenture, which Net Liquidation Proceeds or Post Liquidation Proceeds, as  
applicable, shall equal all cash amounts received with respect thereto less the 
amounts retained and withdrawn by the Servicer for any related unreimbursed     
Servicing Advances and any other fees and expenses incurred in connection with  
such Foreclosure Property.                                                      

     Section 4.05  Access to Certain Documentation and Information Regarding
the Home Loans.                                                                 

  The Servicer shall provide to the Issuer, the Indenture Trustee, the
Securityholders, the Securities Insurer and the supervisory agents and          
examiners of each of the foregoing access to the documentation regarding the    
Home Loans required by applicable state and federal regulations, such access    
being afforded without charge but only upon reasonable request and during       
normal business hours at the offices of the Servicer designated by it.          

Section 4.06  Superior Liens.                                     

(a)    The Servicer shall file (or cause to be filed) of record a 
request for notice of any action by a lienholder under a Superior Lien for the  
protection of the Issuer's interest, where permitted by local law and whenever  
applicable state law does not require that a junior lienholder be named as a    
party defendant in foreclosure proceedings in order to foreclose such junior    
lienholder's equity of redemption.                                              

     (b)    If the Servicer is notified that any lienholder under a Superior
Lien has accelerated or intends to accelerate the obligations secured by such   
Superior Lien, or has declared or intends to declare a default under the        
related mortgage or promissory note secured thereby, or has filed or intends to 
file an election to have any Mortgaged Property sold or foreclosed, the         
Servicer shall take, on behalf of the Issuer and the Indenture Trustee, all     
reasonable actions that are necessary to protect the interests of the           
Securityholders and the Securities Insurer, and/or to preserve the security of  
the related Home Loan, including making any Servicing Advances that are         
necessary to cure the default or reinstate the Superior Lien.  The Servicer     
shall immediately notify the Issuer and the Indenture Trustee of any such       
action or circumstances. Any Servicing Advances by the Servicer pursuant to its 
obligations in this Section 4.06 shall comply with requirements set forth in    
Section 4.01(b) hereof.                                                         

Section 4.07  Subservicing.                                       

(a)    The Servicer may, with the prior written consent of the    
Securities Insurer and the Indenture Trustee, enter into Subservicing           
Agreements for any servicing and administration of Home Loans with any          
institution which is in compliance with the laws of each state necessary to     
enable it to perform its obligations under such Subservicing Agreement and is   
an Eligible Servicer.  The Servicer shall give prior written notice to the      
Issuer, the Indenture Trustee and the Securities Insurer of the appointment of  
any Subservicer.  The Servicer shall be entitled to terminate any Subservicing  
Agreement in accordance with the terms and conditions of such Subservicing      
Agreement and to either directly service the related Home Loans or enter into a 
Subservicing Agreement with a successor subservicer which qualifies hereunder.  

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      (b)    Notwithstanding any Subservicing Agreement, any of the provisions
of this Agreement relating to agreements or arrangements between the Servicer   
and a Subservicer or reference to actions taken through a Subservicer or        
otherwise, the Servicer shall remain obligated and primarily liable to the      
Issuer, the Indenture Trustee, the Securities Insurer and Securityholders for   
the servicing and administering of the Home Loans in accordance with the        
provisions of this Agreement without diminution of such obligation or liability 
by virtue of such Subservicing Agreements or arrangements or by virtue of       
indemnification from the Subservicer and to the same extent and under the same  
terms and conditions as if the Servicer alone were servicing and administering  
the Home Loans.  For purposes of this Agreement, the Servicer shall be deemed   
to have received payments on Home Loans when the Subservicer has actually       
received such payments and, unless the context otherwise requires, references   
in this Agreement to actions taken or to be taken by the Servicer in servicing  
the Home Loans include actions taken or to be taken by a Subservicer on behalf  
of the Servicer.  The Servicer shall be entitled to enter into any agreement    
with a Subservicer for indemnification of the Servicer by such Subservicer, and 
nothing contained in this Agreement shall be deemed to limit or modify such     
indemnification.                                                                

    (c)    In the event the Servicer shall for any reason no longer be the
Servicer (including by reason of an Event of Default), the successor Servicer,  
on behalf of the Issuer, the Indenture Trustee, the Securities Insurer and the  
Securityholders pursuant to Section 4.08, shall thereupon assume all of the     
rights and obligations of the Servicer under each Subservicing Agreement that   
the Servicer may have entered into, unless the successor Servicer elects to     
terminate any Subservicing Agreement in accordance with its terms.  The         
successor Servicer shall be deemed to have assumed all of the Servicer's        
interest therein and to have replaced the Servicer as a party to each           
Subservicing Agreement to the same extent as if the Subservicing Agreements had 
been assigned to the assuming party, except that the Servicer shall not thereby 
be relieved of any liability or obligations under the Subservicing Agreements.  
The Servicer at its expense and without right of reimbursement therefor, shall, 
upon request of the successor Servicer, deliver to the assuming party all       
documents and records relating to each Subservicing Agreement and the Home      
Loans then being serviced and an accounting of amounts collected and held by it 
and otherwise use its best efforts to effect the orderly and efficient transfer 
of the Subservicing Agreements to the assuming party.                           

     (d)    As part of its servicing activities hereunder, the Servicer, for
the benefit of the Issuer, the Indenture Trustee, the Securities Insurer and    
the Securityholders, shall enforce the obligations of each Subservicer under    
the related Subservicing Agreement.  Such enforcement, including, without       
limitation, the legal prosecution of claims and the pursuit of other            
appropriate remedies, shall be in such form and carried out to such an extent   
and at such time as the Servicer, in its good faith business judgment, would    
require were it the owner of the related Home Loans.  The Servicer shall pay    
the costs of such enforcement at its own expense, and shall be reimbursed       
therefor only (i) from a general recovery resulting from such enforcement to    
the extent, if any, that such recovery exceeds all amounts due in respect of    
the related Home Loan or (ii) from a specific recovery of costs, expenses or    
attorneys fees against the party against whom such enforcement is directed.     

      (e)    Any Subservicing Agreement that may be entered into and any other
transactions or services relating to the Home Loans involving a Subservicer in  
its capacity as such and not as an originator shall be deemed to be between the 
Subservicer and the Servicer alone and none of the Issuer, the Indenture        
Trustee, the Securityholders or the Securities Insurer shall be deemed parties  
thereto or shall have any claims, rights, obligations, duties or liabilities    
with respect to the Subservicer in its capacity as such except as set forth in  
Section 4.07(c) above.                                                          

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   Section 4.08  Successor Servicers.  In the event that the Servicer is
terminated pursuant to Section 10.01 hereof, or resigns pursuant to Section     
9.04 hereof or otherwise becomes unable to perform its obligations under this   
Agreement, the Indenture Trustee will become the successor servicer or will     
appoint a successor servicer in accordance with the provisions of Section 10.02 
hereof; provided that any successor servicer, including the Indenture Trustee,  
shall satisfy the requirements of an Eligible Servicer and shall be approved by 
the Rating Agencies and the Securities Insurer.                                 

ARTICLE V 

ESTABLISHMENT OF TRUST ACCOUNTS 

Section 5.01  Collection Account and Note Distribution Account.   

(a)(1) Establishment of Collection Account.  The Servicer, for the
benefit of the Securityholders and the Securities Insurer, shall cause to       
be established and maintained one or more Collection Accounts, which shall be   
separate Eligible Accounts, which may be interest-bearing, entitled "COLLECTION 
ACCOUNT, FIRST BANK NATIONAL ASSOCIATION, AS INDENTURE TRUSTEE, IN TRUST FOR    
THE FIRSTPLUS ASSET BACKED SECURITIES, SERIES 1996-3".  The Collection Account  
may be maintained with the Indenture Trustee or any other depository            
institution which satisfies the requirements set forth in the definition of     
Eligible Account.  The creation of any Collection Account other than one        
maintained with the Indenture Trustee shall be evidenced by a letter agreement  
between the Servicer and the depository institution acceptable to the           
Securities Insurer.  A copy of such letter agreement shall be furnished to the  
Indenture Trustee, the Securities Insurer and, upon request of any              
Securityholder, to such Securityholder.  Funds in the Collection Account shall  
be invested in accordance with Section 5.08.                                    

  The Collection Account shall be established, as of the Closing Date,
with Bank One, Texas, N.A., as an Eligible Account pursuant to the definition   
thereof.  The Collection Account may, upon written notice to the Issuer and the 
Indenture Trustee, be transferred to a different depository institution upon    
prior written consent of the Securities Insurer so long as such transfer is to  
an Eligible Account.                                                            

   (a)(2) Establishment of Note Distribution Account.  No later than the
Closing Date, the Servicer, for the benefit of the Securityholders, shall cause 
to be established and maintained with the Indenture Trustee one or more Note    
Distribution Accounts, which shall be separate Eligible Accounts, which may be  
interest-bearing and which shall be entitled "NOTE DISTRIBUTION ACCOUNT, FIRST  
BANK NATIONAL ASSOCIATION, AS INDENTURE TRUSTEE, IN TRUST FOR THE "FIRSTPLUS    
ASSET BACKED SECURITIES, SERIES 1996-3".  Funds in the Note Distribution        
Account shall be invested in accordance with Section 5.08.                      

     (b)(1) Deposits to Collection Account.  The Servicer shall use its best
efforts to deposit or cause to be deposited (without duplication) within one    
(1) Business Day, and shall in any event deposit within two (2) Business Days,  
of receipt thereof in the Collection Account and retain therein in trust for    
the benefit of the Securityholders and the Securities Insurer:                  

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         (i)    all payments on account of principal on the Home Loans
collected after the applicable Cut-Off Date;                      

        (ii)   all payments on account of interest on the Home Loans
collected after the applicable Cut-Off Date;                      

             (iii)  all Net Liquidation Proceeds and Post Liquidation Proceeds
pursuant to Sections 4.02 or 4.04;                                

(iv)   all Insurance Proceeds;                      

(v)    all Released Mortgaged Property Proceeds;    

           (vi)   any amounts payable in connection with the repurchase of
     any Home Loan and the amount of any Substitution Adjustment pursuant to
Sections 2.06 and 3.05;                                           

        (vii)  any amount required to be deposited in the Collection
   Account pursuant to the receipt of proceeds from any fidelity bond or
    errors and omission insurance under Section 4.03 or the deposit of the
Termination Price under Section 11.02; and                        

     (viii) interest and gains on funds held in the Collection
Account.                                                          

The Servicer shall be entitled to retain and not deposit into the 
Collection Account any amounts received with respect to a Home Loan that        
constitute additional servicing compensation pursuant to Section 7.03, and such 
amounts retained by the Servicer during a Due Period shall be excluded from the 
calculation of the Servicing Compensation that is distributable to the Servicer 
from the Note Distribution Account on the next Distribution Date following such 
Due Period.                                                                     

      (b)(2) Deposits to Note Distribution Account.  On the third Business Day
prior to the Distribution Date, the Indenture Trustee (based on information     
contained in the Servicer's Monthly Remittance Report for such Distribution     
Date) shall make the following withdrawals from the Collection Account, the     
Pre-Funding Account, the Capitalized Interest Account and the Reserve Account,  
as applicable, and deposit into the Note Distribution Account for such          
Distribution Date:                                                              

(i)    the Available Collection Amount; and                       

(ii)   the Reserve Account Withdrawal Amount, if any.             

   (c)    Withdrawals from Note Distribution Account.  No later than the
second Business Day prior to each Distribution Date, to the extent funds are    
available in the Note Distribution Account, the Indenture Trustee (based on the 
information contained in the Servicer's Monthly Remittance Report for such      
Distribution Date) shall either (1) retain funds in the Note Distribution       
Account for distribution on such Distribution Date or (2) make the following    
withdrawals from the Note Distribution Account and deposits into the other      
Trust Accounts as indicated by  11:00 a.m. (New York City time), in the         
following order of priority:                                                    

               (i)    to retain in the Note Distribution Account for
            distribution on such Distribution Date pursuant to the Indenture
in the following order, (a) to the Servicer,        

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             an amount equal to the Servicing Compensation (net of any amounts
             retained prior to deposit into the Collection Account pursuant to
          subsection (b)(1) above) and all unpaid Servicing Compensation
            from prior Due Periods, (b) to the Securities Insurer, an amount
           equal to the Guaranty Insurance Premium and all unpaid Guaranty
           Insurance Premiums from prior Due Periods, (c) to the Indenture
         Trustee, an amount equal to the Indenture Trustee fee and all
            unpaid Indenture Trustee Fees from prior Due Periods, (d) to the
           Owner Trustee, an amount equal to the Owner Trustee Fee and all
            unpaid Owner Trustee Fees from prior Due Periods, and (e) to the
          Custodian, an amount equal to the Custodian Fee and all unpaid
Custodian Fees from prior Due Periods;              

               (ii)   to retain in the Note Distribution Account for
            distribution pursuant to the Indenture on such Distribution Date
        and to the Certificate Distribution Account for distribution
          pursuant to Section 5.06, pro rata, any amounts remaining from
             the Pre-Funding Account Deposit at the end of the Funding Period,
           which will be distributed in reduction, on a pro rata basis, of
       the Class Principal Balances of each Class of Notes and the
            Certificate Principal Balance of the Certificates as provided in
      Section 8.2(c)(ii) of the Indenture and Section 5.06(c)(i)
            hereof; provided, however, that if such remaining amount is less
         than or equal to $50,000, such amount will be included in the
             Noteholders' Monthly Principal Distributable Amount and deposited
only in the Note Distribution Account;              

               (iii)  to retain in the Note Distribution Account for
             distribution pursuant to the Indenture on such Distribution Date,
      from the Available Distribution Amount remaining after the
             application of clause (i) through (ii), the Noteholders' Interest
Distributable Amount;                               

               (iv)   to retain in the Note Distribution Account for
             distribution pursuant to the Indenture on such Distribution Date,
      from the Available Distribution Amount remaining after the
           application of clauses (i) through (iii) above the Noteholders'
Principal Distributable Amount;                     

            (v)    to the Certificate Distribution Account for
            distribution pursuant to Section 5.06 on such Distribution Date,
      from the Available Distribution Amount remaining after the
application of clauses (i) through (iv) above, the  
Certificateholders' Interest Distributable Amount;  

            (vi)   to the Certificate Distribution Account for
            distribution pursuant to Section 5.06 on such Distribution Date,
      from the Available Distribution Amount remaining after the
application of clauses (i) through (v) above, the   
Certificateholders' Principal Distributable Amount; 

             (vii)  to the Certificate Distribution Account, for
           distribution pursuant to Section 5.06 on such Distribution Date
             to the Securities Insurer, from the Available Distribution Amount
   after application of clauses (i) through (vi) above the
Securities Insurer Reimbursement Amount;            

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                  (viii) on an Overcollateralization Stepdown Date, to the
          Certificate Distribution Account, for distribution pursuant to
        Section 5.06 on such Distribution Date to the holders of the
           Residual Interest from the Available Distribution Amount, after
application of clauses (i) through (vii) above the  
Overcollateralization Reduction Amount;             

             (ix)   to the Certificate Distribution Account, for
           distribution pursuant to Section 5.06 on such Distribution Date
          to the Servicer, from the Available Distribution Amount, after
           application of clauses (i) through (viii) above an amount equal
             to any Servicing Advances previously made by the Servicer and not
       previously reimbursed (the "Servicing Advance Reimbursement
Amount"); and                                       

                  (x)    if the Excess Overcollateralization Amount equals
         or exceeds zero, to the Certificate Distribution Account, for
        distribution on such Distribution Date to the holders of the
       Residual Interest from any remaining Available Distribution
           Amount after application of clauses (i) through (ix) above, the
Excess Spread, if any.                              

  Notwithstanding that the Notes have been paid in full, the Indenture
Trustee and the Servicer shall continue to maintain the Collection Account and  
the Note Distribution Account hereunder until the Certificate Principal Balance 
is reduced to zero.                                                             

   (d)    Additional Withdrawals from Collection Account.  The Indenture
Trustee, at the direction of the Servicer shall also make the following         
withdrawals from the Collection Account, in no particular order of priority:    

             (i)    to withdraw any amount not required to be deposited in the
Collection Account or deposited therein in error; and             

   (ii)   to clear and terminate the Collection Account in
connection with the termination of this Agreement.                

    The Servicer shall not retain any cash or investment in the Collection
Account for a period in excess of 12 months and cash therein shall be           
considered transferred to the Note Distribution Account on a first-in, first-   
out basis.                                                                      

Section 5.02  Claims Under Guaranty Policy.                       

   (a)    The Notes and the Certificates will be insured by the Guaranty
Policy pursuant to the terms set forth therein, notwithstanding any provisions  
to the contrary contained in the Indenture or this Agreement.  All amounts      
received under the Guaranty Policy shall be used solely for the payment to      
Securityholders of principal and interest on the Notes and the Certificates.    

 (b)(i) If for any Distribution Date a Deficiency Amount exists, the
Indenture Trustee shall complete a notice in the form set forth as Exhibit A to 
the Guaranty Policy (the "Notice") and shall submit such Notice to the Fiscal   
Agent no later than 12:00 noon, New York time, on the second Business Day       
preceding such Distribution Date.  The Notice shall constitute a claim for a    
Guaranteed Payments pursuant to the Guaranty Policy for an amount equal to such 
Deficiency Amount.  Upon receipt of the Guaranteed Payments, at or prior to the 
latest time payments of the                                                     

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Guaranteed Payments are to be made by the Securities Insurer pursuant to the    
Guaranty Policy, on behalf of the Noteholders and Certificateholders, the       
Indenture Trustee shall distribute such Guaranteed Payments as part of the      
Noteholders' Distributable Amount under the Indenture to the extent such        
Guaranteed Payments relate to the Notes and as part of the Certificateholders'  
Distributable Amount under this Agreement to the extent such Guaranteed         
Payments relate to the Certificates.                                            

(b)(ii) In addition, if the Indenture Trustee has notice that any 
of the Securityholders have been required to disgorge payments of interest or   
principal on the related Notes or the related Certificates pursuant to a final  
judgment by a court of competent jurisdiction that such payment constitutes a   
voidable preference to such Securityholders within the meaning of any           
applicable bankruptcy laws, then the Indenture Trustee shall notify the         
Securities Insurer as set forth in the Guaranty Policy for making a claim for a 
Preference Amount.  Such payment for a Preference Amount shall be disbursed to  
the receiver or trustee in bankruptcy named in the final order of the court     
exercising jurisdiction on behalf of the Securityholder and not to any          
Securityholder directly unless such Securityholder has returned principal or    
interest paid on the Securities to such receiver or trustee in bankruptcy, in   
which case such payment shall be disbursed to such Securityholder.              

(c)    The Securities Insurer is entitled to the benefit of the   
following provisions in the event that a Guaranteed Payment has been made.      
Notwithstanding any other provision hereof:                                     

           (i)    The Indenture Trustee shall immediately apply all moneys
    constituting a Guaranteed Payment to the payment to Securityholders of
     principal and interest on the Notes and Certificates, as applicable, by
     depositing such amounts in the Note Distribution Account for Guaranteed
  Payments payable on the related Class of Notes or in the Certificate
 Distribution Account for Guaranteed Payments payable on the related
    Certificates.  All amounts received under the Guaranty Policy shall be
      used solely for the payment to Securityholders of principal and interest
     on Notes and the Certificates, as applicable.  The Securities Insurer's
obligations under the Guaranty Policy with respect to a particular
     Guaranteed Payment shall be discharged to the extent funds equal to the
  applicable Guaranteed Payment are received by the Indenture Trustee,
      whether or not such funds are properly applied by the Indenture Trustee,
  the Owner Trustee or Co-Owner Trustee.  The parties hereto recognize
   that the making of the Guaranteed Payment does not relieve any of the
parties hereto of any obligation hereunder or any of the Basic    
Documents.                                                        

            (ii)   The parties hereto recognize that, to the extent that the
      Securities Insurer makes payments, directly or indirectly, on account of
principal of or interest on the Notes and the Certificates, as    
     applicable, the Securities Insurer shall be subrogated to the rights of
    the Securityholders to receive distributions of principal and interest
in accordance with the terms hereof.                              

   (iii)  To the extent the Securities Insurer is owed any
   Securities Insurer Reimbursement Amount (including without limitation
      any unreimbursed Guaranteed Payments made under the Guaranty Policy plus
   interest accrued thereon as provided in the Insurance Agreement), the
Securities Insurer shall be entitled to distributions pursuant to 
   Section 5.06(c), and the Indenture Trustee and Co-Owner Trustee shall
   otherwise treat the Securities Insurer as the owner of such rights to
distributions of any Securities Insurer Reimbursement Amount.     

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             (iv)   The Securities Insurer shall have the right to institute
     any suit, action or proceeding at law or in equity under the same terms
as a Securityholder may institute any action.                     

 (d)     The Indenture Trustee, as the holder of the Guaranty Policy
providing for the guaranty of the Notes and Certificates, hereby agrees that    
with respect to the Certificates the Indenture Trustee shall make claims under  
the Guaranty Policy at the direction or upon the request of the Owner Trustee   
or Co-Owner Trustee to receive Guaranteed Payments distributable to the         
Certificateholders as part of Certificateholders' Distributable Amount under    
this Agreement.                                                                 

Section 5.03  Pre-Funding Account.                                

     (a)     Establishment and Withdrawals.  No later than the Closing Date,
the  Servicer, for the benefit of the Securityholders, shall establish and      
maintain with the Indenture Trustee one or more separate Eligible Accounts      
entitled "PRE-FUNDING ACCOUNT, FIRST BANK NATIONAL ASSOCIATION, AS INDENTURE    
TRUSTEE, IN TRUST FOR THE FIRSTPLUS ASSET BACKED SECURITIES, SERIES 1996-3".    
On the Closing Date, the Pre-Funding Account Deposit shall be deposited into    
the Pre-Funding Account from the proceeds of the sale of the Securities.  On    
any Subsequent Transfer Date, the Servicer shall instruct the Indenture Trustee 
to:  (i) withdraw from the Pre-Funding Account an amount equal to the           
Subsequent Purchase Price for the Subsequent Home Loans sold to the Issuer on   
such Subsequent Transfer Date pursuant to a Subsequent Transfer Agreement; and  
(ii) pay such amount to or upon the order of the Seller upon satisfaction of    
the conditions set forth in Section 2.02 of this Agreement with respect to such 
transfer.  Funds in the Pre-Funding Account shall be invested in accordance     
with Section 5.08.  On or before each Distribution Date, all interest and any   
other investment earnings on funds held in the Pre-Funding Account shall be     
deposited into the Capitalized Interest Account.                                

(b)     [Reserved]                                                

 (c)     Remaining Balance.  If the Pre-Funding Account has not been
reduced to zero by the close of business on  the date on which the Funding      
Period ends, the Servicer shall direct the Indenture Trustee to deposit  any    
amounts remaining in the Pre-Funding Account (net of reinvestment earnings      
which shall be transferred to the Capitalized Interest Account) (as             
appropriate) into the Note Distribution Account and the Certificate             
Distribution Account on the third Business Day immediately preceding the Pre-   
Funding Termination Distribution Date for distribution to the Securityholders   
pro rata based on the Class Principal Balance of the Notes and the Certificate  
Principal Balance of the Certificates, provided always that in the event that   
such amounts remaining in the Pre-Funding Account are less than or are equal to 
$50,000, all such amounts shall be deemed to form part of the Noteholder's      
Monthly Principal Distributable Amount and shall be transferred to the Note     
Distribution Account to be distributed sequentially to each Class of Notes in   
ascending order of their respective Class designations in reduction of the      
respective Class Principal Balances thereof.                                    

Section 5.04  Capitalized Interest Account.                       

    (a)     Establishment and Withdrawal.  No later than the Closing Date,
the  Servicer, for the benefit of the Securityholders, shall cause to be        
established and maintained with the Indenture Trustee one or more separate      
Eligible Accounts entitled "CAPITALIZED INTEREST ACCOUNT, FIRST BANK            

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NATIONAL ASSOCIATION, AS INDENTURE TRUSTEE, IN TRUST FOR FIRSTPLUS ASSET BACKED 
SECURITIES, SERIES 1996-3".  On the Closing Date, the Capitalized Interest      
Account Deposit shall be deposited into the Capitalized Interest Account from   
the proceeds of the sale of the Securities.  The Indenture Trustee shall hold   
the Capitalized Interest Account Deposit for the benefit of the Securityholders 
and the Securities Insurer.  On the third Business Day preceding each           
Distribution Date during the Funding Period and on the first Distribution Date  
occurring after the Due Period in which the Funding Period ends, the Servicer   
shall instruct the Indenture Trustee to withdraw from the Capitalized Interest  
Account and deposit into the Note Distribution Account and/or the Certificate   
Distribution Account the Interest Shortfall, if any, with respect to such       
Distribution Date.  Funds in the Capitalized Interest Account shall be invested 
in accordance with Section 5.08.                                                

(b)     [Reserved]                                                

(c)     [Reserved]                                                

       (d)     Excess to Residual Interest.  On any Business Day occurring prior
to the last Business Day of each Due Period that occurs prior to December 27,   
1996, the Transferor and the Seller may request the Servicer to calculate the   
amount, if any, of the Capitalized Interest Excess.  If the Capitalized         
Interest Excess is greater than zero on any such Business Day prior to December 
27, 1996, such Capitalized Interest Excess will be released to the holder of    
the Residual Interest on the following Distribution Date.  On the Distribution  
Date following the Due Period in which the Funding Period ends, the Servicer    
shall instruct the Indenture  Trustee to release and distribute to the holder   
of Residual Interest the Capitalized Interest Amount, if any, that remains      
after the distribution of any Interest Shortfall on such Distribution Date.     

Section 5.05 [Reserved]                                           

Section 5.06 Certificate Distribution Account.                    

       (a)     Establishment.  No later than the Closing Date, the Servicer, for
the benefit of the Securityholders and the Securities Insurer, will establish   
and maintain with First Bank National Association for the benefit of the Owner  
Trustee or Co-Owner Trustee on behalf of the Certificateholders and the         
Securities Insurer one or more separate Eligible Accounts, which while the Co-  
Owner Trustee holds such Trust Account shall be entitled "CERTIFICATE           
DISTRIBUTION ACCOUNT, FIRST BANK NATIONAL ASSOCIATION, AS CO-OWNER TRUSTEE, IN  
TRUST FOR THE FIRSTPLUS ASSET BACKED SECURITIES, SERIES 1996-3".  Funds in the  
Certificate Distribution Account shall be invested in accordance with Section   
5.08.                                                                           

(b)     [Reserved]                                                

       (c)     Distributions.  No later than the second Business Day before each
Distribution Date, the Indenture Trustee shall withdraw from the Note           
Distribution Account all amounts required to be deposited in the Certificate    
Distribution Account with respect to the preceding Due Period pursuant to       
Section 5.01(c) and will remit such amount to the Owner Trustee or the Co-Owner 
Trustee for deposit into the Certificate Distribution Account. On each          
Distribution Date, the Owner Trustee or the Co-Owner Trustee shall distribute   
all amounts on deposit in the Certificate Distribution Account to               
Certificateholders in respect of the Certificates to the extent of amounts due  
and unpaid on the                                                               

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Certificates for principal and interest and to the other parties specified      
below in the amounts and in the following order of priority:                    

             (i)    only to the extent of funds withdrawn from the Pre-Funding
   Account attributable to the remaining amount therein and deposited in
    the Certificate Distribution Account by the Indenture Trustee pursuant
to Section 5.01(c),  pro rata, to the Certificateholders;         

     (ii)   to the Certificateholders, the Certificateholders'
Interest Distributable Amount; provided, that if there are not    
 sufficient funds in the Certificate Distribution Account to pay the
entire amount of accrued and unpaid interest then due on the      
    Certificates, the amount in the Certificate Distribution Account shall
     be applied to the payment of such interest on the Certificates pro rata
on the basis of the total such interest due on the Certificates;  

          (iii)  to the Certificateholders, on or after the Distribution
  Date on which the Class Principal Balance of the Class A-8 Notes has
   been reduced to zero, the Certificateholders' Principal Distributable
  Amount until the Certificate Principal Balance thereof is reduced to
zero;                                                             

           (iv)   to the Securities Insurer, from any remaining amounts in
      the Certificate Distribution Account after the distributions pursuant to
 items (i) through (iii) above, the Securities Insurer Reimbursement
Amount;                                                           

            (v)    on an Overcollateralization Stepdown Date, to the holders
     of the Residual Interest, from any remaining amounts in the Certificate
Distribution Account after the distributions pursuant to items (i)
through (iv) above, the Overcollateralization Reduction Amount;   

     (vi)   to the Servicer, from any remaining amounts in the
  Certificate Distribution Account after the distributions pursuant to
   items (i) through (v) above, an amount equal to the Servicing Advance
Reimbursement Amount; and                                         

       (vii)  if the Excess Overcollateralization Amount equals or
exceeds zero, to the holders of the Residual Interest, from any   
 remaining amounts in the Certificate Distribution Account after the
distributions pursuant to items (i) through (vi) above, the Excess
Spread, if any.                                                   

    (d)    All distributions made on the Certificates on each Distribution
Date will be made on a pro rata basis among the Certificateholders of record on 
the next preceding Record Date based on the Percentage Interest represented by  
their respective Certificates, and except as otherwise provided in the next     
succeeding sentence, shall be made by wire transfer of immediately available    
funds to the account of such Certificateholder, if such Certificateholder shall 
own of record Certificates which have original denominations aggregating at     
least $250,000 and shall have so notified the Owner Trustee or Co-Owner         
Trustee, and otherwise by check mailed to the address of such Certificateholder 
appearing in the Certificate Register.  The final distribution on each          
Certificate will be made in like manner, but only upon presentment and          
surrender of such Certificate at the location specified in the notice to        
Certificateholders of such final distribution.                                  

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(e)    All distributions made on the Residual Interest on each    
Distribution Date will be made on a pro rata basis among the Residual Interest  
holders of record on the next preceding Record Date based on the Percentage     
Interest represented by their respective Residual Interest, and except as       
otherwise provided in the next succeeding sentence, shall be made by wire       
transfer of immediately available funds to the account of such Residual         
Interest holder, if such Residual Interest Holder shall own of record Residual  
Interest which have original denominations aggregating at least $250,000 and    
shall have so notified the Owner Trustee or Co-Owner Trustee, and otherwise by  
check mailed to the address of such Residual Interest Holder appearing in the   
Certificate Register.  The final distribution on each Residual Interest         
Instrument will be made in like manner, but only upon presentment and surrender 
of such  Residual Interest Instrument at the location specified in the notice   
to Residual Interest Holders of such final distribution.                        

Section 5.07  Reserve Account.                                    

      (a)    Establishment.  No later than the Closing Date, the Servicer, for
the benefit of the Securityholders and the Securities Insurer, shall cause to   
be established and maintained with the Indenture Trustee one or more separate   
Eligible Accounts entitled "RESERVE ACCOUNT, FIRST BANK NATIONAL ASSOCIATION,   
AS INDENTURE TRUSTEE, IN TRUST FOR THE FIRSTPLUS ASSET BACKED SECURITIES,       
SERIES 1996-3".  On the Closing Date, the Issuer will deposit, the Reserve      
Account Initial Deposit into the Reserve Account from the net proceeds of the   
sale of the Notes and the Certificates.  On the Closing Date, the Reserve       
Account Initial Deposit will be equal to the Reserve Account Requirement.       
Funds in the Reserve Account shall be invested in accordance with Section 5.08. 

   (b)    Substitution.  On any Business Day occurring after the Closing
Date, the majority of the holders of Residual Interest may deposit with the     
Indenture Trustee a limited guaranty or a letter of credit in an amount not to  
exceed 50% of the Reserve Account Requirement as of any date of determination   
occurring prior to such Business Day, provided that such limited guaranty or    
such letter of credit is in a form approved by the Securities Insurer and the   
Rating Agencies prior to deposit in the Reserve Account.  The Indenture Trustee 
shall notify the Securities Insurer of the receipt of any such limited guaranty 
or letter of credit.                                                            

(c)    Release of Excess.  If the amount on deposit in the Reserve
Account on any Distribution Date (after giving effect to all deposits thereto   
or withdrawals therefrom on such Distribution Date) is greater than the Reserve 
Account  Requirement for such Distribution Date (such amount "the Excess        
Reserve Account Amount"), the Servicer shall first instruct the Indenture       
Trustee to cause a reduction in the amount available under the limited guaranty 
or letter of credit, if any, until (A) the Excess Reserve Account Amount is     
reduced to zero or (B) the amount available under the limited guaranty or       
letter of credit is reduced to zero.  After any limited guaranty or letter of   
credit has been reduced to zero, the Servicer shall instruct the Indenture      
Trustee to distribute any Excess Reserve Account Amount to the holders of the   
Residual Interest until the Excess Reserve Account Amount is reduced to zero.   

      (d)    Reduction of Requirement.  After the Overcollateralization Amount
reaches the Interim Required Overcollateralization, the Reserve Account         
Requirement shall be reduced incrementally (i.e., dollar-for-dollar) each time  
the Overcollateralization Amount is increased as a result of the application of 
Excess Spread to the principal amount of the Securities until the               
Overcollateralization Amount equals the Required Overcollateralization Amount   
and the Reserve                                                                 

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Account Requirement is reduced to zero.  On each occasion that the Reserve      
Account Requirement is reduced, the Servicer shall direct the Indenture Trustee 
to distribute to the holder of the Residual Interest any amounts in the Reserve 
Account in excess of the reduced Reserve Account Requirement. Once the Reserve  
Account Requirement is reduced to zero, the Servicer shall direct the Indenture 
Trustee to distribute any amounts remaining in the Reserve Account to the       
holder of the Residual Interest.                                                

(e)    Following the payment in full of the aggregate outstanding 
Principal Balance of the Notes and the Certificates and of all other amounts    
owing or to be distributed hereunder or under the Indenture or the Trust        
Agreement to the Securityholders and the termination of the Trust, any amount   
remaining on deposit in the Reserve Account shall be distributed to the holder  
of the Residual Interest and any Permitted Investments in the Reserve Account   
shall be transferred to the holder of the Residual Interest.                    

(f)    [Reserved]                                                 

(g)    Withdrawals.  Subject to the total amount on deposit in the
Reserve Account with respect to each Distribution Date  the Indenture Trustee   
shall withdraw funds from such Reserve Account and deposit in the Note          
Distribution Account an amount equal to the excess (the "Reserve Account        
Withdrawal Amount") of (A) the sum of the Trust Fees and Expenses and the       
Required Distribution Amount, over (B) the Available  Collection Amount.        

Section 5.08 Trust Accounts; Trust Account Property.              

(a)    Control of Trust Accounts.  Each of the Trust Accounts     
established hereunder has been pledged by the Issuer to the Indenture Trustee   
under the Indenture and shall be subject to the lien of the Indenture.  In      
addition to the provisions hereunder, each of the Trust Accounts shall also be  
established and maintained pursuant to the Indenture.  Amounts distributed from 
each Trust Account in accordance with the Indenture and this Agreement shall be 
released from the lien of the Indenture upon such distribution thereunder or    
hereunder.  The Indenture Trustee shall possess all right, title and interest   
in all funds on deposit from time to time in the Trust Accounts (other than the 
Certificate Distribution Account) and in all proceeds thereof (including all    
income thereon) and all such funds, investments, proceeds and income shall be   
part of the Trust Account Property and the Trust Estate.  If, at any time, any  
Trust Account ceases to be an Eligible Account, the Indenture Trustee (or the   
Servicer on its behalf) shall within 10 Business Days (or such longer period,   
not to exceed 30 calendar days, as to which each Rating Agency may consent) (i) 
establish a new Trust Account as an Eligible Account, (ii) terminate the        
ineligible Trust Account, and (iii) transfer any cash and investments from such 
ineligible Trust Account to such new Trust Account.                             

With respect to the Trust Accounts (other than the Certificate    
Distribution Account), the Indenture Trustee agrees, by its acceptance hereof,  
that each such Trust Account shall be subject to the sole and exclusive custody 
and control of the Indenture Trustee for the benefit of the Securityholders,    
the Securities Insurer and the Issuer, as the case may be, and the Indenture    
Trustee shall have sole signature and withdrawal authority with respect         
thereto.                                                                        

In addition to this Agreement and the Indenture, the Certificate  
Distribution Account established hereunder also shall be subject to and         
established and maintained in accordance with the Trust Agreement.  Subject to  
rights of the Indenture Trustee hereunder and under the Indenture, the          

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Owner Trustee or Co-Owner Trustee shall possess all right, title and interest   
for the benefit of the Certificateholders and the Securities Insurer in all     
funds on deposit from time to time in the Certificate Distribution Account and  
in all proceeds thereof (including all income thereon) and all such funds,      
investments, proceeds and income shall be part of the Trust Account Property    
and the Trust Estate.  Subject to the rights of the Indenture Trustee, the      
Owner Trustee and Co-Owner Trustee agree, by their acceptance hereof, that such 
Certificate Distribution Account shall be subject to the sole and exclusive     
custody and control of the Owner Trustee and Co-Owner Trustee for the benefit   
of the Issuer and the parties entitled to distributions therefrom, including    
without limitation, the Certificateholders and Securities Insurer, and the      
Owner Trustee and the Co-Owner Trustee shall have sole signature and withdrawal 
authority with respect to the Certificate Distribution Account.                 
Notwithstanding the preceding, the distribution of amounts from the Certificate 
Distribution Account in accordance with Section 5.06(c) also shall be made for  
the benefit of the Indenture Trustee (including without limitation as the named 
insured under the Guaranty Policy on behalf of all Securityholders, and with    
respect to its duties under the Indenture and this Agreement relating to the    
Trust Estate), and the Indenture Trustee (in its capacity as Indenture Trustee) 
shall have the right, but not the obligation, to take custody and control of    
the Certificate Distribution Account and to cause the distribution of amounts   
therefrom in the event that the Owner Trustee fails to distribute such amounts  
in accordance with Section 5.06(c).                                             

      The Servicer shall have the power, revocable by the Indenture Trustee or
by the Owner Trustee or Co-Owner Trustee with the consent of the Indenture      
Trustee, to instruct the Indenture Trustee or Owner Trustee or Co-Owner Trustee 
to make withdrawals and payments from the Trust Accounts for the purpose of     
permitting the Servicer to carry out its respective duties hereunder or         
permitting the Indenture Trustee or Owner Trustee or Co-Owner Trustee to carry  
out its duties herein or under the Indenture or the Trust Agreement, as         
applicable.                                                                     

    (b)(1) Investment of Funds.  So long as no Event of Default shall have
occurred and be continuing, the funds held in any Trust Account may be invested 
(to the extent practicable and consistent with any requirements of the Code) in 
Permitted Investments, as directed by the Affiliated Holder in writing or by    
telephone or facsimile transmission confirmed in writing by the Servicer or the 
Affiliated Holder.  In any case, funds in any Trust Account must be available   
for withdrawal without penalty, and any Permitted Investments must mature or    
otherwise be available for withdrawal, not later than three (3) Business Days   
(except with respect to the Note Distribution Account, Pre-Funding Account and  
Certificate Distribution Account, which shall be invested on a one (1) Business 
Day basis) immediately preceding the Distribution Date next following the date  
of such investment and shall not be sold or disposed of prior to its maturity   
subject to Section 5.08(b)(2) below.  All interest and any other investment     
earnings on amounts or investments held in any Trust Account shall be deposited 
into such Trust Account immediately upon receipt by the Indenture Trustee, or   
in the case of the Certificate Distribution Account, the Owner Trustee or Co-   
Owner Trustee, as applicable.  All Permitted Investments in which funds in any  
Trust Account (other than the Certificate Distribution Account) are invested    
must be held by or registered in the name of "FIRST BANK NATIONAL ASSOCIATION,  
AS INDENTURE TRUSTEE, IN TRUST FOR THE FIRSTPLUS ASSET BACKED SECURITIES,       
SERIES 1996-3".  While the Co-Owner Trustee holds the Certificate Distribution  
Account, all Permitted Investments in which funds in the Certificate            
Distribution Account are invested shall be held by or registered in the name of 
"FIRST BANK NATIONAL ASSOCIATION, AS CO-OWNER TRUSTEE, IN TRUST FOR THE         
FIRSTPLUS ASSET BACKED SECURITIES, SERIES 1996-3".                              

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    (b)(2) Insufficiency and Losses in Trust Accounts.  If any amounts are
needed for disbursement from any Trust Account held by or on behalf of the      
Indenture Trustee and sufficient uninvested funds are not available to make     
such disbursement, the Indenture Trustee, or Owner Trustee or Co-Owner Trustee  
in the case of the Certificate Distribution Account, shall cause to be sold or  
otherwise converted to cash a sufficient amount of the investments in such      
Trust Account.  The Indenture Trustee, or Owner Trustee or Co-Owner Trustee in  
the case of the Certificate Distribution Account, shall not be liable for any   
investment loss or other charge resulting therefrom, unless such loss or charge 
is caused by the failure of the Indenture Trustee or Owner Trustee or Co-Owner  
Trustee, respectively, to perform in accordance with this Section 5.08.         

           If any losses are realized in connection with any investment in
any Trust Account pursuant to this Agreement and the Indenture, then the        
Affiliated Holder shall deposit the amount of such losses (to the extent not    
offset by income from other investments in such Trust Account) in such Trust    
Account immediately upon the realization of such loss or, to the extent that    
the Affiliated Holder fails to deposit any portion of such amount, the Servicer 
shall deposit any insufficiency from such failure in such Trust Account.  All   
interest and any other investment earnings on amounts held in any Trust Account 
shall be taxed to the Issuer and for federal and state income tax purposes the  
Issuer shall be deemed to be the owner of each Trust Account.                   

   (c)    Subject to Section 6.1 of the Indenture, the Indenture Trustee
shall not in any way be held liable by reason of any insufficiency in any       
Account held by the Indenture Trustee resulting from any investment loss on any 
Permitted Investment included therein (except to the extent that the Indenture  
Trustee is the obligor and has defaulted thereon).                              

      (d)    With respect to the Trust Account Property, the Indenture Trustee
acknowledges and agrees that:                                                   

                   (i)    any Trust Account Property that is held in deposit
           accounts shall be held solely in the Eligible Accounts, subject
           to the last sentence of Section 5.08(a); and each such Eligible
            Account shall be subject to the exclusive custody and control of
            the Indenture Trustee, and the Indenture Trustee shall have sole
signature authority with respect thereto;           

            (ii)   any Trust Account Property that constitutes
            Physical Property shall be delivered to the Indenture Trustee in
             accordance with paragraph (a) of the definition of "Delivery" and
         shall be held, pending maturity or disposition, solely by the
          Indenture Trustee or a financial intermediary (as such term is
         defined in Section 8-313(4) of the UCC) acting solely for the
Indenture Trustee;                                  

                (iii)  any Trust Account Property that is a book-entry
        security held through the Federal Reserve System pursuant to
           federal book-entry regulations shall be delivered in accordance
           with paragraph (b) of the definition of "Delivery" and shall be
    maintained by the Indenture Trustee, pending maturity or
          disposition, through continued book-entry registration of such
      Trust Account Property as described in such paragraph; and

      (iv)   any Trust Account Property that is an
            "uncertificated security" under Article VIII of the UCC and that
is not governed by clause (C) above shall be        

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           delivered to the Indenture Trustee in accordance with paragraph
          (c) of the definition of "Delivery" and shall be maintained by
           the Indenture Trustee, pending maturity or disposition, through
     continued registration of the Indenture Trustee's (or its
nominee's) ownership of such security.              

  (e)    The Servicer shall have the power, revocable by the Indenture
Trustee or by the Issuer with the consent of the Indenture Trustee, to instruct 
the Indenture Trustee to make withdrawals and payments from the Trust Accounts  
for the purpose of permitting the Servicer or the Issuer to carry out its       
respective duties hereunder or permitting the Indenture Trustee to carry out    
its duties under the Indenture.                                                 

Section 5.09  Allocation of Losses.                               

      (a)    In the event that Net Liquidation Proceeds, Insurance Proceeds or
Released Mortgaged Property Proceeds on a Liquidated Mortgage Loan are less     
than the related Principal Balance plus accrued interest thereon, or any        
Obligor makes a partial payment of any Monthly Payment due on a Mortgage Loan,  
such Net Liquidation Proceeds, Insurance Proceeds, Released Mortgaged Property  
Proceeds or partial payment shall be applied to payment of the related Debt     
Instrument, first to interest accrued at the Home Loan Interest Rate and then   
to principal.                                                                   

      (b)    On any Distribution Date, any Net Loan Losses attributable to any
Home Loans which became Liquidated Mortgage Loans during the immediately        
preceding Due Period shall be allocated as follows: (1) until the Reserve       
Account is reduced to zero, such Net Loan Losses will be included in the        
calculation of the Regular Principal Distribution Amount; (2) after the Reserve 
Account is reduced to zero, and until the Overcollateralization Amount is       
reduced to zero, such Net Loan Losses (minus any amount allocated pursuant to   
clause (1) to reduce the Reserve Account to zero on such Distribution Date)     
will be allocated to the principal attributable to the holders of the Residual  
Interest to reduce the Overcollateralization Amount, and (3) thereafter, such   
Net Loan Losses will be included in the calculation of the Regular Principal    
Distribution Amount in an amount equal to such Net Loan Losses minus any        
amounts allocated pursuant to clauses (1) and (2) on such Distribution Date.    

ARTICLE VI  

STATEMENTS AND REPORTS; SPECIFICATION OF TAX MATTERS

Section 6.01  Statements.                                         

      (a)    No later than each Determination Date, the Servicer shall deliver
to the Indenture Trustee and the Securities Insurer, by facsimile, the receipt  
and legibility of which shall be confirmed telephonically, and with hard copy   
thereof to be delivered no later than one (1) Business Day after such           
Determination Date, the Servicer's Monthly Remittance Report, setting forth the 
date of such Report (day, month and year), the name of the Issuer (i.e.         
"FIRSTPLUS Home Loan Owner Trust 1996-3"), the Series designation of the        
Securities (i.e. "Series 1996-3"), and the date of this Agreement.              
Furthermore, no later than each Determination Date, the Servicer shall deliver  
to the Indenture Trustee and the Securities Insurer a magnetic tape or computer 
disk providing such                                                             

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information regarding the Servicer's activities in servicing the Home Loans     
during the related Due Period as the Indenture Trustee and the Securities       
Insurer may reasonably require.                                                 

    (b)    Subject to the modification of the Servicer's Monthly Statement
by the Servicer with the prior written consent of the Securities Insurer and    
the Indenture Trustee, on each Distribution Date, the Servicer shall prepare    
and the Indenture Trustee shall distribute a monthly statement (the "Servicer's 
Monthly Statement") to the Seller, the Securityholders, the Securities Insurer  
and the Rating Agencies, stating the date of original issuance of the           
Securities (day, month and year), the name of the Issuer (i.e. "FIRSTPLUS Home  
Loan Owner Trust 1996-3"), the series designation of the Notes and Certificates 
(i.e. "Series 1996-3"), the date of this Agreement and the following            
information:                                                                    

 (i)        the Available Collection Amount and Required
Distribution Amount for the related Distribution Date;            

       (ii)      the amount, if any, on deposit in the Pre-Funding
     Account and the Capitalized Interest Account on such Distribution Date;

             (iii)     the Class Principal Balance of each Class of Notes, the
Certificate Principal Balance of the Certificates, and the Pool   
     Principal Balance (including, until the Funding Period ends, the amount
remaining in the Pre-Funding Account and the Capitalized Interest 
      Account as of such Distribution Date) as of the first day of the related
     Due Period and after giving effect to distributions made to the holders
of such Securities on such Distribution Date;                     

         (iv)      the Class Pool Factor with respect to each Class of
    Notes then outstanding and the Certificate Pool Factor with respect to
the Certificates then outstanding;                                

          (v)       the amount of principal and interest received on the
Home Loans during the related Due Period;                         

   (vi)      the Noteholders' Distributable Amount and the
Certificateholders' Distributable Amount;                         

             (vii)     the amount, if any, of the Excess Overcollateralization
      Amount and, if applicable, the Overcollateralization Reduction Amount or
     any other amount to be distributed to the Securityholders or the holder
of the Residual Interest on such Distribution Date;               

            (viii)    the Servicing Compensation, the Indenture Trustee Fee,
the Owner Trustee Fee, the Custodian Fee, if any, and the Guaranty
Insurance Premium for such Distribution Date;                     

           (ix)      the Overcollateralization Amount on such Distribution
     Date, the Required Overcollateralization Amount as of such Distribution
      Date, the Net Loan Losses incurred during the related Due Period and the
cumulative Net Loan Losses as of such Distribution Date;          

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    (x)       the Reserve Account Requirement and the amount
   remaining on deposit in the Reserve Account on such Distribution Date
      after giving effect to the distributions made to Securityholders on such
Distribution Date;                                                

             (xi)      the weighted average maturity of the Home Loans and the
weighted average Home Loan Interest Rate of the Home Loans;       

            (xii)     certain performance information, including delinquency
      and foreclosure information with respect to the Home Loans, as set forth
in the Servicer's Monthly Remittance Report;                      

          (xiii)    the amount of any Guaranteed Payment included in the
      amounts distributed to the Noteholders and/or Certificateholders on such
Distribution Date;                                                

    (xiv)     as identified with respect to the each Insured
    Security, the amount of any Securities Insurer Reimbursement Amount to
    be distributed to the Securities Insurer on such Distribution Date and
 the amount of any Securities Insurer Reimbursement Amount remaining
unsatisfied following such distribution;                          

          (xv)      the number of and aggregate Principal Balance of all
Home Loans in foreclosure proceedings (other than any Home Loans  
   described in clause (xvi)) and the percent of the aggregate Principal
    Balances of such Home Loans to the aggregate Principal Balances of all
 Home Loans, all as of the close of business on the first day of the
related Due Period;                                               

          (xvi)     the number of and the aggregate Principal Balance of
 the Home Loans in bankruptcy proceedings (other than any Home Loans
    described in clause (xvii)) and the percent of the aggregate Principal
    Balances of such Home Loans to the aggregate Principal Balances of all
 Home Loans, all as of the close of business on the first day of the
related Due Period;                                               

         (xvii)    the number of Foreclosure Properties, the aggregate
 Principal Balance of the related Home Loans, the book value of such
Foreclosure Properties and the percent of the aggregate Principal 
    Balances of such Home Loans to the aggregate Principal Balances of all
 Home Loans, all as of the close of business on the first day of the
related Due Period;                                               

            (xviii)   during the related Due Period, the aggregate Principal
Balance of Home Loans for each of the following: (A) that became  
   Defaulted Home Loans, (B) that became Liquidated Home Loans, (C) that
  became Deleted Home Loans pursuant to Section 3.05(c) as a result of
     such Deleted Home loans being Defective Home Loans, and (D) that became
Deleted Home loans pursuant to Section 3.05(c) as a result of such
     Deleted Home Loans being Defaulted Home Loans or a Home Loan in default
     or imminent default, including the foregoing amounts by loan type (i.e.
  Combination Loans, Debt Consolidation Loans, Home Improvement Loans,
Personal Property Loan and Purchase or Refinance Loans);          

        (xix)     the cumulative aggregate Principal Balance of Home
 Loans that became Defaulted Home Loans and the cumulative aggregate
    Principal Balance of Home Loans that became Liquidated Home Loans from
the Closing Date through the most current Due Period,             

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   including the foregoing amounts by loan type (i.e. Combination Loans,
Debt Consolidation Loans and Home Improvement Loans); and         

        (xx)      the scheduled principal payments and the principal
prepayments received with respect to the Home Loans during the Due
Period.                                                           

All reports prepared by the Servicer of the withdrawals from and  
deposits in the Collection Account will be based in whole or in part upon the   
information provided to the Indenture Trustee by the Servicer, and the          
Indenture Trustee may fully rely upon and shall have no liability with respect  
to such information provided by the Servicer.                                   

      (c)    Within a reasonable period of time after the end of each calendar
year, the Servicer shall prepare and direct the Indenture Trustee to distribute 
to each Person who at any time during the calendar year was a Securityholder,   
such information as is reasonably necessary to provide to such Person a         
statement containing the information set forth in subclauses (b)(iv) and (v)    
above, aggregated for such calendar year or applicable portion thereof during   
which such Person was a Securityholder.  Such obligation of the Indenture       
Trustee shall be deemed to have been satisfied to the extent that substantially 
comparable information shall be provided by the Servicer to the Securityholders 
pursuant to any requirements of the Code as are in force from time to time.     

      (d)    On each Distribution Date, the Indenture Trustee shall forward to
the holder of the Residual Interest a copy of the Servicer's Monthly Statement  
in respect of such Distribution Date and a statement setting forth the amounts  
actually distributed to such holder of  the Residual Interest on such           
Distribution Date, together with such other information as the Indenture        
Trustee deems necessary or appropriate.                                         

      (e)    Within a reasonable period of time after the end of each calendar
year, the Servicer shall prepare and direct the Indenture Trustee to distribute 
to each Person who at any time during the calendar year was a holder of         
Residual Interest, if requested in writing by such Person, such information as  
is reasonably necessary to provide to such Person a statement containing the    
information provided pursuant to the previous paragraph aggregated for such     
calendar year or applicable portion thereof during which such Person was a      
holder of Residual Interest.  Such obligation of the Indenture Trustee shall be 
deemed to have been satisfied to the extent that substantially comparable       
information shall be provided by the Servicer to the holder of Residual         
Interest pursuant to any requirements of the Code as are in force from time to  
time.                                                                           

 (f)    Upon reasonable advance notice in writing, the Servicer will
provide to each Securityholder which is a savings and loan association, bank or 
insurance company access to information and documentation regarding the Home    
Loans sufficient to permit such Securityholder to comply with applicable        
regulations of the FDIC or other regulatory authorities with respect to         
investment in such Securities.                                                  

      (g)    The Servicer or its agent shall furnish to the Indenture Trustee,
who in turn shall forward to each Securityholder and the holder of Residual     
Interest, during the term of this Agreement, such periodic, special, or other   
reports, including information tax returns or reports required with respect to  
the Securities and the Residual Interest, including Internal Revenue Service    
Forms 1099 and (if instructed in writing by the Seller on the basis of the      
advice of legal counsel) Form 1066, Schedule Q and other similar reports that   
are required to be filed by the Servicer or its                                 

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agent and the holder of Residual Interest, whether or not provided for herein,  
as shall be necessary, reasonable, or appropriate with respect to the           
Securityholders or the holder of Residual Interest, or otherwise with respect   
to the purposes of this Agreement, all such reports or information to be        
provided by and in accordance with such applicable instructions and directions  
as the Securityholders or the holder of Residual Interest may reasonably        
require.                                                                        

  (h)     Reports and computer tapes furnished by the Servicer and the
Indenture Trustee pursuant to this Agreement shall be deemed confidential and   
of proprietary nature, and shall not be copied or distributed except in         
connection with the purposes and requirements of this Agreement.  No Person     
entitled to receive copies of such reports or tapes shall use the information   
therein for the purpose of soliciting the customers of the Seller or the        
Servicer or for any other purpose except as set forth in this Agreement.        

Section 6.02  Reports of Foreclosure and Abandonment of Mortgaged 
Property.                                                                       

      Each year beginning in 1997 the Servicer, at its expense, shall make the
reports of foreclosures and abandonments of any Mortgaged Property required by  
Section 6050J of the Code.  The reports from the Servicer shall be in form and  
substance sufficient to meet the reporting requirements imposed by such Section 
6050J of the Code.                                                              

Section 6.03  Specification of Certain Tax Matters.               

      Each Securityholder shall provide the Indenture Trustee with a completed
and executed Form W-9 prior to purchasing a Security.  The Indenture Trustee    
shall comply with all requirements of the Code, and applicable state and local  
law, with respect to the withholding from any distributions made to any         
Securityholder of any applicable withholding taxes imposed thereon and with     
respect to any applicable reporting requirements in connection therewith.       

ARTICLE VII 

GENERAL SERVICING PROCEDURE 

Section 7.01  Assumption Agreements.                              

  When a Mortgaged Property has been or is about to be conveyed by the
Obligor, the Servicer shall, to the extent it has knowledge of such conveyance  
or prospective conveyance, exercise its rights to accelerate the maturity of    
the related Home Loan under any "due-on-sale" clause contained in the related   
Mortgage or Debt Instrument; provided, however, that the Servicer shall not     
exercise any such right if the "due-on-sale" clause, in the reasonable belief   
of the Servicer, is not enforceable under applicable law.  In such event or in  
the event the related Mortgage and Debt Instrument do not contain a "due-on-    
sale" clause, the Servicer shall enter into an assumption and modification      
agreement with the person to whom such property has been or is about to be      
conveyed, pursuant to which such person becomes liable under the Debt           
Instrument and, unless prohibited by applicable law or the Mortgage Documents,  
the Obligor remains liable thereon.  The Servicer is also authorized to enter   
into a substitution of liability agreement with such person, pursuant to which  
the original Obligor is released from liability and such person is substituted  
as Obligor and becomes liable under the Debt Instrument.  The Servicer shall    
notify the Custodian that any such substitution or assumption agreement has     
been completed by forwarding to the Custodian the original of such              

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substitution or assumption agreement, which original shall be added by the      
Custodian to the related Indenture Trustee's Home Loan File and shall, for all  
purposes, be considered a part of such Indenture Trustee's Home Loan File to    
the same extent as all other documents and instruments constituting a part      
thereof.  In connection with any assumption or substitution agreement entered   
into pursuant to this Section 7.01, the Servicer shall not change the Home Loan 
Interest Rate or the Monthly Payment, defer or forgive the payment of principal 
or interest, reduce the outstanding principal amount or extend the final        
maturity date on such Home Loan.  Any fee collected by the Servicer for         
consenting to any such conveyance or entering into an assumption or             
substitution agreement shall be retained by or paid to the Servicer as          
additional Servicing Compensation.                                              

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

     Section 7.02  Satisfaction of Mortgages and Release of Home Loan Files.

  Subject to the provisions of s 4.01 and 4.02, the Servicer shall not
grant a satisfaction or release of a Mortgage without having obtained payment   
in full of the indebtedness secured by the Mortgage or otherwise prejudice any  
right the Securityholders or the Securities Insurer may have under the mortgage 
instruments.  The Servicer shall maintain the fidelity bond and errors and      
omissions insurance as provided for in Section 4.03 insuring the Servicer       
against any loss it may sustain with respect to any Home Loan not satisfied in  
accordance with the procedures set forth herein.                                

Upon the payment in full of any Home Loan, or the receipt by the  
Servicer of a notification that payment in full will be escrowed in a manner    
customary for such purposes, the Servicer will immediately notify the Custodian 
by an Officers' Certificate (which certificate shall include a statement to the 
effect that all amounts received or to be received in connection with such      
payment which are required to be deposited in the Collection Account pursuant   
to Section 5.01(b) have been or will be so deposited) of a Servicing Officer    
and shall request delivery to it of the Indenture Trustee's Home Loan File.     
Upon receipt of such certification and request and in accordance with Section   
2.9 of the Indenture, the Custodian shall promptly release the related          
Indenture Trustee's Home Loan File to the Servicer.  Expenses incurred in       
connection with any instrument of satisfaction or deed of reconveyance shall be 
payable only from and to the extent of Servicing Compensation and shall not be  
chargeable to the Collection Account, the Note Distribution Account, or the     
Certificate Distribution Account.  Upon receipt by the Custodian of the         
certification of a Servicing Officer with respect to the release of the         
Indenture Trustee's Home Loan File for any Home Loan or any documents included  
therein, the Custodian shall release to the Servicer such Indenture Trustee's   
Home Loan File and shall deliver such instruments of transfer presented to it   
by the Servicer as shall be necessary or appropriate for the release of such    
Indenture Trustee's Home Loan File in accordance with such certification of the 
Servicing Officer.  The release to the Service of an Indenture Trustee's Home   
Loan File pursuant to such certification shall not require or be subject to the 
prior approval of the Indenture Trustee in the case of a release in connection  
with the following: (1) the satisfaction or release of a Mortgage upon the      
payment in full of the Home Loan or upon such Home Loan becoming a Liquidated   
Home Loan; (2) a Home loan in default for which the Servicer is or will be      
pursuant foreclosure or another method of liquidation pursuant to Section 4.02; 
or (3) the correction of documentation in the Indenture Trustee's Home Loan     
File for errors and                                                             

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ambiguities, provided that such corrections shall be performed and returned to  
the Custodian in a prompt manner, and provided further that no more than 100    
Indenture Trustee's Home Loan Files shall be released and held by the Servicer  
at any one time.  In the case of a release of the related Indenture Trustee's   
Home Loan File to the Servicer in connection with a substitution or repurchase  
of any Home Loan pursuant to Section 2.06(c) and (d), Section 3.05 or Section   
11.02 or a release for other servicing reasons, such release of the Indenture   
Trustee's Home Loan File by the Custodian shall be subject to the prior         
approval of the Indenture Trustee.                                              

 The Indenture Trustee shall execute and deliver to the Servicer any
court pleadings, requests for trustee's sale or other documents necessary to    
the foreclosure or trustee's sale in respect of a Mortgaged Property or to any  
legal action brought to obtain judgment against any Obligor on the Debt         
Instrument or Mortgage or to obtain a deficiency judgment, or to enforce any    
other remedies or rights provided by the Debt Instrument or Mortgage or         
otherwise available at law or in equity.  Together with such documents or       
pleadings, the Servicer shall deliver to the Indenture Trustee a certificate of 
a Servicing Officer requesting that such pleadings or documents be executed by  
the Indenture Trustee and certifying as to the reason such documents or         
pleadings are required and that the execution and delivery thereof by the       
Indenture Trustee will not invalidate or otherwise affect the lien of the       
Mortgage, except for the termination of such a lien upon completion of the      
foreclosure or trustee's sale.  The Indenture Trustee shall, upon receipt of a  
written request from a Servicing Officer, execute any document provided to the  
Indenture Trustee by the Servicer or take any other action requested in such    
request that is, in the opinion of the Servicer as evidenced by such request,   
required by any state or other jurisdiction to discharge the lien of a Mortgage 
upon the satisfaction thereof and the Indenture Trustee will sign and post, but 
will not guarantee receipt of, any such documents to the Servicer, or such      
other party as the Servicer may direct, within five Business Days, or more      
promptly if needed, of the Indenture Trustee's receipt of such certificate or   
documents.  Such certificate or documents shall establish to the Indenture      
Trustee's satisfaction that the related Home Loan has been paid in full by or   
on behalf of the Obligor and that such payment has been deposited in the        
Collection Account.                                                             

     Subject to any other applicable terms and conditions of this Agreement,
the Indenture Trustee and Servicer shall be entitled to approve an assignment   
in lieu of satisfaction with respect to any Home Loan, provided the obligee     
with respect to such Home Loan following such proposed assignment provides the  
Indenture Trustee and Servicer with a "Certification for Assignment of Home     
Loan" in form and substance satisfactory to the Indenture Trustee and Servicer, 
providing the following:  (i) that the Home Loan is secured by Mortgaged        
Property located in a jurisdiction in which an assignment in lieu of            
satisfaction is required to preserve lien priority, minimize or avoid mortgage  
recording taxes or otherwise comply with or facilitate a refinancing under the  
laws of such jurisdiction; (ii) that the substance of the assignment is, and is 
intended to be, a refinancing of such Home Loan and that the form of the        
transaction is solely to comply with  or facilitate the transaction under such  
local laws; (iii) that the Home Loan following the proposed assignment will     
have a rate of interest at least 0.25 percent below or above the rate of        
interest on such Home Loan prior to such proposed assignment; and (iv) that     
such assignment is at the request of the borrower under the related Home Loan.  
Upon approval of an assignment in lieu of satisfaction with respect to any Home 
Loan, the Servicer shall receive cash in an amount equal to the unpaid          
principal balance of and accrued interest on such Home Loan and the Servicer    
shall treat such amount as a Principal Prepayment with respect to such Home     
Loan for all purposes hereof.                                                   

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Section 7.03  Servicing Compensation.                             

As compensation for its services hereunder, the Servicer shall be 
entitled to receive from the Collection Account, the Servicing Fee out of which 
the Servicer shall pay any servicing fees owed or payable to any Subservicer.   
Additional servicing compensation in the form of assumption and other           
administrative fees, amounts remitted pursuant to Section 7.01 and late payment 
charges shall be part of the Servicing Compensation payable to the Services     
hereunder and shall be paid either by the Servicer retaining such additional    
servicing compensation prior to deposit in the Collection Account pursuant to   
Section 5.01(b)(1) or if deposited into the Collection Account as part of the   
Servicing Compensation withdrawn from the Note Distribution Account pursuant to 
Section 8.2(c) of the Indenture.                                                

  The Servicer shall be required to pay all expenses incurred by it in
connection with its servicing activities hereunder and shall not be entitled to 
reimbursement therefor except as specifically provided for herein.  The         
Servicer also agrees to pay (i) all reasonable costs and expenses incurred by   
the Indenture Trustee, the Owner Trustee or the Seller in investigating the     
Servicer's activities hereunder when, in the reasonable opinion of the          
Indenture Trustee, the Owner Trustee or the Seller, such investigation is       
warranted on the basis of adverse information about the Servicer obtained from  
a reasonably reliable source, (ii) all reasonable costs and expenses incurred   
by any successor servicer or the Indenture Trustee in replacing the Servicer in 
the event of a default by the Servicer in the performance of its duties under   
the terms and conditions of this Agreement, and (iii) the annual Rating Agency  
monitoring fees.                                                                

Section 7.04  Quarterly Statements as to Compliance.              

  Not later than the last day of the second month following the end of
each quarter of the Servicer's Fiscal Year, beginning in February, 1997, the    
Servicer will deliver to the Indenture Trustee, the Issuer, the Securities      
Insurer and to each Securityholder, an Officer's Certificate stating that (i)   
the Servicer has fully complied with the provisions of Articles V and VII, (ii) 
a review of the activities of the Servicer during the preceding quarter and of  
performance under this Agreement has been made under such officer's             
supervision, and (iii) to the best of such officers' knowledge, based on such   
review, the Servicer has fulfilled all its obligations under this Agreement     
throughout such quarter, or, if there has been a default in the fulfillment of  
any such obligation, specifying each such default known to such officers and    
the nature and status thereof and the action being taken by the Servicer to     
cure such default.                                                              

    Section 7.05  Annual Independent Public Accountants' Servicing Report.

  On or before 120 days after the end of each of the Servicer's fiscal
years elapsing during the term of its appointment under this Agreement,         
beginning with the first fiscal year ending after the Closing Date, the         
Servicer, at its expense, shall furnish to the Seller, the Indenture Trustee,   
the Issuer, the Securityholders, the Securities Insurer and the Rating Agencies 
(i) an opinion by a firm of independent certified public accountants on the     
financial position of the Servicer at the end of the relevant fiscal year and   
the results of operations and changes in financial position of the Servicer for 
such year then ended on the basis of an examination conducted in accordance     
with generally accepted auditing standards, and (ii) if the Servicer is then    
servicing any Home Loans, a statement from such independent certified public    
accountants to the effect that based on an examination of certain specified     
documents and records relating to the servicing of the Servicer's loan          
portfolio                                                                       

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conducted substantially in compliance with the audit program for mortgages      
serviced for the United States Department of Housing and Urban Development      
Mortgage Audit Standards, or the Uniform Single Attestation Program for         
Mortgage Bankers (the "Applicable Accounting Standards"), such firm is of the   
opinion that such servicing has been conducted in compliance with the           
Applicable Accounting Standards except for (a) such exceptions as such firm     
shall believe to be immaterial and (b) such other exceptions as shall be set    
forth in such statement.                                                        

Section 7.06  Right to Examine Servicer Records.                  

    Each Securityholder, the Indenture Trustee, the Issuer, the Securities
Insurer and each of their respective agents shall have the right upon           
reasonable prior notice, during normal business hours and as often as           
reasonably required, to examine, audit and copy, at the expense of the Person   
making such examination, any and all of the books, records or other information 
of the Servicer (including without limitation any Subservicer to the extent     
provided in the related Subservicing Agreement) whether held by the Servicer or 
by another on behalf of the Servicer, which may be relevant to the performance  
or observance by the Servicer of the terms, covenants or conditions of this     
Agreement.  Each Securityholder, the Indenture Trustee, the Issuer and the      
Securities Insurer agree that any information obtained pursuant to the terms of 
this Agreement shall be held confidential.                                      

Section 7.07  Reports to the Indenture Trustee; Collection Account
Statements.                                                                     

     If the Collection Account is not maintained with the Indenture Trustee,
then not later than 25 days after each Record Date, the Servicer shall forward  
to the Indenture Trustee and the Securities Insurer a statement, certified by a 
Servicing Officer, setting forth the status of the Collection Account as of the 
close of business on the preceding Record Date and showing, for the period      
covered by such statement, the aggregate of deposits into the Collection        
Account for each category of deposit specified in Section 5.01(b), the          
aggregate of withdrawals from the Collection Account for each category of       
withdrawal specified in Section 5.01(b)(2) and (d) and the aggregate amount of  
permitted withdrawals not made in the related Due Period in each case, for the  
related Due Period.                                                             

ARTICLE VIII  

REPORTS TO BE PROVIDED BY SERVICER

Section 8.01  Financial Statements.                               

   The Servicer understands that, in connection with the transfer of the
Securities, Securityholders may request that the Servicer make available to the 
Securityholders, to prospective Securityholders and the Securities Insurer      
annual audited financial statements of the Servicer for one or more of the most 
recently completed five fiscal years for which such statements are available,   
which request shall not be unreasonably denied.                                 

     The Servicer also agrees to make available on a reasonable basis to the
Securityholders, any prospective Securityholder and the Securities Insurer a    
knowledgeable financial or accounting officer for the purpose of answering      
reasonable questions respecting recent developments affecting the Servicer or   
the financial statements of the Servicer and to permit the Securityholders, any 
prospective Securityholder and the Securities Insurer to inspect the Servicer's 
servicing facilities during normal business hours for the purpose of satisfying 
the Securityholders and such prospective                                        

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Securityholder and the Securities Insurer that the Servicer has the ability to  
service the Home Loans in accordance with this Agreement.                       

ARTICLE IX  

THE SERVICER

Section 9.01  Indemnification; Third Party Claims.                

     (a)    The Servicer agrees to indemnify and hold the Indenture Trustee,
the Issuer, the Seller, the Securities Insurer and each Securityholder harmless 
from and against any and all claims, losses, penalties, fines, forfeitures,     
legal fees and related costs, judgments, and any other costs, fees and expenses 
that the Indenture Trustee, the Issuer, the Seller, the Securities Insurer or   
any Securityholder may sustain directly resulting from the negligence or        
willful misconduct of the Servicer in the performance of its duties hereunder   
or in the servicing of the Home Loans in compliance with the terms of this      
Agreement.  IT IS THE EXPRESS INTENTION OF THE PARTIES TO THIS AGREEMENT THAT   
THE INDEMNIFICATION AND HOLD HARMLESS OBLIGATIONS OF THE SERVICER SET FORTH IN  
THE PRECEDING SENTENCE SHALL APPLY FULLY TO CLAIMS, LOSSES, ETC. RESULTING FROM 
ACTS OR OMISSIONS THAT MAY CONSTITUTE ORDINARY NEGLIGENCE ON THE PART OF THE    
SERVICER.  The Servicer shall not be liable or responsible for any of the       
representations, covenants, warranties, responsibilities, duties or liabilities 
of any prior Servicer.  The Servicer shall immediately notify the Indenture     
Trustee, the Issuer, the Seller, the Securities Insurer and each Securityholder 
if a claim is made by a third party with respect to this Agreement, and the     
Servicer shall assume (with the consent of the Indenture Trustee and the        
Issuer) the defense of any such claim and advance all expenses in connection    
therewith, including reasonable counsel fees, and promptly advance funds to     
pay, discharge and satisfy any judgment or decree which may be entered against  
the Servicer, the Indenture Trustee, the Issuer, the Seller, the Securities     
Insurer and/or any Securityholder in respect of such claim.                     

   (b)    The Seller agrees to indemnify and hold the Indenture Trustee,
the Issuer, the Servicer, the Securities Insurer and each Securityholder        
harmless from and against any and all claims, losses, penalties, fines,         
forfeitures, legal fees and related costs, judgments, and any other costs, fees 
and expenses that the Indenture Trustee, the Issuer, the Servicer, the          
Securities Insurer or any Securityholder may sustain directly resulting from    
the negligence or willful misconduct of the Seller in the performance of its    
duties hereunder or in compliance with the terms of this Agreement.  IT IS THE  
EXPRESS INTENTION OF THE PARTIES TO THIS AGREEMENT THAT THE INDEMNIFICATION AND 
HOLD HARMLESS OBLIGATIONS OF THE SELLER SET FORTH IN THE PRECEDING SENTENCE     
SHALL APPLY FULLY TO CLAIMS, LOSSES, ETC. RESULTING FROM ACTS OR OMISSIONS THAT 
MAY CONSTITUTE ORDINARY NEGLIGENCE ON THE PART OF THE SELLER.  The Seller shall 
immediately notify the Indenture Trustee, the Issuer, the Servicer, the         
Securities Insurer and each Securityholder if a claim is made by a third party  
with respect to this Agreement, and the Seller shall assume (with the consent   
of the Indenture Trustee and the Issuer) the defense of any such claim and      
advance all expenses in connection therewith, including reasonable counsel      
fees, and promptly advance funds to pay, discharge and satisfy any judgment or  
decree which may be entered against the Seller, the Servicer, the Indenture     
Trustee, the Issuer, the Securities Insurer and/or any Securityholder in        
respect of such claim.                                                          

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(c)    The Transferor agrees to indemnify and hold the Indenture  
Trustee, the Issuer, the Servicer, the Securities Insurer and each              
Securityholder harmless from and against any and all claims, losses, penalties, 
fines, forfeitures, legal fees and related costs, judgments, and any other      
costs, fees and expenses that the Indenture Trustee, the Issuer, the Servicer,  
the Securities Insurer or any Securityholder may sustain directly resulting     
from the negligence or willful misconduct of the Transferor in the performance  
of its duties hereunder or in compliance with the terms of this Agreement.  IT  
IS THE EXPRESS INTENTION OF THE PARTIES TO THIS AGREEMENT THAT THE              
INDEMNIFICATION AND HOLD HARMLESS OBLIGATIONS OF THE TRANSFEROR SET FORTH IN    
THE PRECEDING SENTENCE SHALL APPLY FULLY TO CLAIMS, LOSSES, ETC. RESULTING FROM 
ACTS OR OMISSIONS THAT MAY CONSTITUTE ORDINARY NEGLIGENCE ON THE PART OF THE    
TRANSFEROR.  The Transferor shall immediately notify the Indenture Trustee, the 
Issuer, the Servicer, the Securities Insurer and each Securityholder if a claim 
is made by a third party with respect to this Agreement, and the Transferor     
shall assume (with the consent of the Indenture  Trustee and the Issuer) the    
defense of any such claim and advance all expenses in connection therewith,     
including reasonable counsel fees, and promptly advance funds to pay, discharge 
and satisfy any judgment or decree which may be entered against the Transferor, 
the Servicer, the Indenture Trustee, the Issuer, the Securities Insurer and/or  
any Securityholder in respect of such claim.                                    

   (d)    The obligations of the Servicer, the Seller and the Transferor
under this Section 9.01 shall survive the termination of this Agreement.        

Section 9.02  Merger or Consolidation of the Servicer.            

The Servicer shall keep in full effect its existence, rights and  
franchises as a corporation, and will obtain and preserve its qualification to  
do business as a foreign corporation and maintain such other licenses and       
permits, in each jurisdiction necessary to protect the validity and             
enforceability of this Agreement or any of the Home Loans and to perform its    
duties under this Agreement.                                                    

      Any Person into which the Servicer may be merged or consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the 
Servicer shall be a party, or any Person succeeding to the business of the      
Servicer, shall be an Eligible Servicer and shall be the successor of the       
Servicer, as applicable hereunder, without the execution or filing of any paper 
or any further act on the part of any of the parties hereto, anything herein to 
the contrary notwithstanding.  The Servicer shall send notice of any such       
merger, conversion, consolidation or succession to the Indenture Trustee, the   
Issuer and the Securities Insurer.                                              

Section 9.03  Limitation on Liability of the Servicer and Others. 

The Servicer and any director, officer, employee or agent of the  
Servicer may rely on any document of any kind which it in good faith reasonably 
believes to be genuine and to have been adopted or signed by the proper         
authorities respecting any matters arising hereunder.  Subject to the terms of  
Section 9.01 herein, the Servicer shall have no obligation to appear with       
respect to, prosecute or defend any legal action which is not incidental to the 
Servicer's duty to service the Home Loans in accordance with this Agreement.    

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Section 9.04  Servicer Not to Resign; Assignment.                 

  (a)    The Servicer shall not resign from the obligations and duties
hereby imposed on it except by mutual consent of the Servicer, the Seller, the  
Indenture Trustee, the Issuer,  the Securities Insurer and the Majority         
Securityholders, or upon the determination that the Servicer's duties hereunder 
are no longer permissible under applicable law and such incapacity cannot be    
cured by the Servicer.  Any such determination permitting the resignation of    
the Servicer shall be evidenced by a written opinion of counsel (who may be an  
employee of the Servicer) to such effect delivered to the Indenture Trustee,    
the Issuer, the Securities Insurer and the Seller, which opinion of counsel     
shall be in form and substance acceptable to the Indenture Trustee, the Issuer  
and the Securities Insurer.  No such resignation shall become effective until   
the Indenture Trustee or a successor servicer  has assumed the Servicer's       
responsibilities and obligations hereunder in accordance with Section 10.02.    

(b)    The Servicer shall not assign this Agreement or any of its 
obligations, rights and duties hereunder without the prior written consent the  
Seller, the Indenture Trustee, the Issuer, the Securities Insurer and the       
Majority Securityholders; provided, however, the Servicer may assign this       
Agreement without the prior written consent of the Seller, the Indenture        
Trustee and the Issuer, but with the prior written consent of the Securities    
Insurer and the Majority Securityholders to (i) the Indenture Trustee or (ii)   
any Person that (A) is satisfactory to the Indenture Trustee, the Issuer, the   
Securities Insurer and the Majority Securityholders, (B) services not less than 
$25,000,000 in aggregate outstanding principal amount of loans similar in type  
to the Home Loans, (C) has a net worth of not less than $2,500,000, (D) has a   
blanket fidelity bond and errors and omissions insurance coverage satisfying    
the requirements set forth in Section 4.03 and (E) will not cause any rating of 
any Class of the Securities in effect immediately prior to such assignment to   
be qualified, downgraded or withdrawn, as evidenced by a letter from each       
Rating Agency to such effect.  Any such assignment to a successor servicer      
(other than the Indenture Trustee) shall be effective only upon delivery to the 
Indenture Trustee, the Issuer and the Securities Insurer of an agreement, duly  
executed by the Servicer and such successor servicer in a form reasonably       
satisfactory to the Indenture Trustee and the Issuer, in which such successor   
servicer shall assume the due and punctual performance of each covenant and     
condition to be performed or observed by the Servicer hereunder.                

Section 9.05  Relationship of Servicer to Issuer and the Indenture
Trustee.                                                                        

    The relationship of the Servicer (and of any successor to the Servicer
as servicer under this Agreement) to the Issuer and the Indenture Trustee under 
this Agreement is intended by the parties hereto to be that of an independent   
contractor and not of a joint venturer, agent or partner of the Issuer or the   
Indenture Trustee.                                                              

ARTICLE X.

DEFAULT 

Section 10.01  Events of Default.                                 

  (a)    In case one or more of the following Events of Default by the
Servicer shall occur and be continuing, that is to say:                         

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           (i)    any failure by the Servicer to deposit in the Collection
   Account in accordance with Section 5.01(b) any payments in respect of
the Home Loans received by the Servicer no later than the second  
     Business Day following the day on which such payments were received; or

             (ii)   failure by the Servicer duly to observe or perform, in any
     material respect, any other covenants, obligations or agreements of the
Servicer as set forth in this Agreement, which failure continues  
unremedied for a period of 60 days after the date on which written
   notice of such failure, requiring the same to be remedied and stating
  that such notice is a "Notice of Default" hereunder, shall have been
      given (a) to the Servicer by the Indenture Trustee or the Issuer, or (b)
to the Servicer, the Indenture Trustee or the Issuer by any       
Securityholder or the Securities Insurer; or                      

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

     (iv)   the Servicer shall consent to the appointment of a
      conservator or receiver or liquidator in any insolvency, readjustment of
     debt, marshaling of assets and liabilities or similar proceedings of or
    relating to the Servicer or of or relating to all or substantially all
of the Servicer's property; or                                    

           (v)    the Servicer shall admit in writing its inability to pay
    its debts as they become due, file a petition to take advantage of any
     applicable insolvency or reorganization statute, make an assignment for
 the benefit of its creditors, or voluntarily suspend payment of its
obligations; or                                                   

             (vi)   the Majority Securityholders or the Securities Insurer (A)
   shall receive notice from the Servicer that the Servicer is no longer
able to discharge its duties under this Agreement or (B) shall    
      determine, in their reasonable judgment and based upon published reports
    (including wire services), which they reasonably believe in good faith
to be reliable, that the Servicer                                 

                 (1)    has experienced a material adverse change in its
                  business, assets, liabilities, operations,
                        condition (financial or otherwise) or prospects,

                  (2)    has defaulted on any of its material obligations,
or                      

                   (3)    has ceased to conduct its business in the ordinary
course; or              

        (vii)  as of any Determination Date, the total Expected Loan
     Losses (as defined below) exceed (1) commencing in September 1996 up to
     the fifth (5th) anniversary of the August 31, 1996 Cut-Off Date, 12% of
the sum of the Initial Pool Principal Balance and the aggregate   
    Principal Balance as of the applicable Cut-Off Dates of all Subsequent
  Home Loans conveyed to the Issuer, or (2) thereafter up to the tenth
(10th) anniversary of the                                         

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August 31, 1996 Cut-Off Date, 18% of the sum of the Initial Pool  
Principal Balance and the aggregate Principal Balance as of the   
   applicable Cut-Off Dates of all Subsequent Home Loans conveyed to the
  Issuer (where the "Expected Loan Losses" shall be the sum of (A) the
cumulative Net Loan Losses, plus (B) the cumulative accrued and   
    uncollected interest on the Liquidated Home Loans, plus (C) 25% of the
    aggregate Principal Balance of the Home Loans which are then more than
30 but less than 60 days delinquent, plus (D) 50% of the aggregate
      Principal Balance of the Home Loans which are then more than 60 but less
than 90 days delinquent, plus (E) 100% of the aggregate Principal 
     Balance of the Home Loans which are then more than 90 days delinquent).

  (b)    then, and in each and every such case, so long as an Event of
Default shall not have been remedied, the Majority Securityholders, the         
Securities Insurer, the Indenture Trustee or the Issuer by notice in writing to 
the Servicer may, in addition to whatever rights such Person may have at law or 
equity to damages, including injunctive relief and specific performance, and    
with the consent of the Securities Insurer (which consent shall not be          
unreasonably withheld), terminate all the rights and obligations of the         
Servicer under this Agreement and in and to the Home Loans and the proceeds     
thereof, as servicer under this Agreement.  Upon receipt by the Servicer of     
such written notice, all authority and power of the Servicer under this         
Agreement, whether with respect to the Home Loans or otherwise, shall, subject  
to Section 10.02, pass to and be vested in a successor servicer acceptable to   
the Securities Insurer, or the Indenture Trustee if a successor servicer cannot 
be retained in a timely manner, and the successor servicer, or Indenture        
Trustee, as applicable, is hereby authorized and empowered to execute and       
deliver, on behalf of the Servicer, as attorney-in-fact or otherwise, any and   
all documents and other instruments and do or cause to be done all other acts   
or things necessary or appropriate to effect the purposes of such notice of     
termination, including, but not limited to, the transfer and endorsement or     
assignment of the Home Loans and related documents.  The Servicer agrees to     
cooperate with the successor servicer in effecting the termination of the       
Servicer's responsibilities and rights hereunder, including, without            
limitation, the transfer to the successor servicer for administration by it of  
all amounts which shall at the time be credited by the Servicer to each         
Collection Account or thereafter received with respect to the Home Loans.       

Section 10.02  Indenture Trustee to Act; Appointment of Successor.

 On and after the date the Servicer receives a notice of termination
pursuant to Section 10.01, or the Indenture Trustee receives the resignation of 
the Servicer evidenced by an opinion of counsel or accompanied by the consents  
required by Section 9.04, or the Servicer is removed as servicer pursuant to    
this Article X, then, subject to Section 4.08, the Indenture Trustee shall      
appoint a successor servicer acceptable to the Securities Insurer to be the     
successor in all respects to the Servicer in its capacity as servicer under     
this Agreement and the transactions set forth or provided for herein and shall  
be subject to all the responsibilities, duties and liabilities relating thereto 
placed on the Servicer by the terms and provisions hereof; provided, however,   
that the successor servicer shall not be liable for any actions of any servicer 
prior to it; provided further, however, that if a successor servicer cannot be  
retained in a timely manner, the Indenture Trustee shall act as successor       
servicer.  In the event the Indenture Trustee assumes the responsibilities of   
the Servicer pursuant to this Section 10.02, the Indenture Trustee will make    
reasonable efforts consistent with applicable law to become licensed, qualified 
and in good standing in each Mortgaged Property State the laws of which require 
licensing or qualification, in order to perform its obligations as Servicer     
hereunder or, alternatively, shall retain an agent who is so licensed,          
qualified and in good standing in any such Mortgaged Property State.  The       
successor servicer shall be obligated to make Servicing Advances                

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hereunder.  As compensation therefor, the successor servicer appointed pursuant 
to the following paragraph, shall be entitled to all funds relating to the Home 
Loans which the Servicer would have been entitled to receive from the           
Collection Account pursuant to Section 5.01(c) as if the Servicer had continued 
to act as servicer hereunder, together with other servicing compensation in the 
form of assumption fees, late payment charges or otherwise as provided in       
Sections 7.01 and 7.03.  The Servicer shall not be entitled to any termination  
fee if it is terminated pursuant to Section 10.01, but shall be entitled to any 
accrued and unpaid Servicing Fee to the date of termination.                    

   Any collections received by the Servicer after removal or resignation
shall be endorsed by it to the Indenture Trustee and remitted directly to the   
Indenture Trustee or, at the direction of the Indenture Trustee, to the         
successor servicer.  The compensation of any successor servicer (including,     
without limitation, the Indenture Trustee) so appointed shall be the Servicing  
Fees, together with other Servicing Compensation provided for herein.  In the   
event the Indenture Trustee is required to solicit bids to appoint a successor  
servicer, the Indenture Trustee shall solicit, by public announcement, bids     
from housing and home finance institutions, banks and mortgage servicing        
institutions meeting the qualifications set forth in Section 9.04(b)(ii) above. 
Such public announcement shall specify that the successor servicer shall be     
entitled to the full amount of the Servicing Fees and Servicing Compensation    
provided for herein.  Within thirty days after any such public announcement,    
the Indenture Trustee shall negotiate and effect the sale, transfer and         
assignment of the servicing rights and responsibilities hereunder to the        
qualified party submitting the highest qualifying bid.  The Indenture Trustee   
shall deduct from any sum received by the Indenture Trustee from the successor  
to the Servicer in respect of such sale, transfer and assignment all costs and  
expenses of any public announcement and of any sale, transfer and assignment of 
the servicing rights and responsibilities hereunder and the amount of any       
unreimbursed Servicing Advances made by the Indenture Trustee.  After such      
deductions, the remainder of such sum shall be paid by the Indenture Trustee to 
the Servicer at the time of such sale, transfer and assignment to the           
Servicer's successor.  The Indenture Trustee, the Issuer, any Custodian, the    
Servicer and any such successor servicer shall take such action, consistent     
with this Agreement, as shall be necessary to effectuate any such succession.   
The Servicer agrees to cooperate with the Indenture Trustee and any successor   
servicer in effecting the termination of the Servicer's servicing               
responsibilities and rights hereunder and shall promptly provide the Indenture  
Trustee or such successor servicer, as applicable, all documents and records    
reasonably requested by it to enable it to assume the Servicer's functions      
hereunder and shall promptly also transfer to the Indenture Trustee or such     
successor servicer, as applicable, all amounts which then have been or should   
have been deposited in the Collection Account by the Servicer or which are      
thereafter received with respect to the Home Loans.  Neither the Indenture      
Trustee nor any other successor servicer shall be held liable by reason of any  
failure to make, or any delay in making, any distribution hereunder or any      
portion thereof caused by (i) the failure of the Servicer to deliver, or any    
delay in delivering, cash, documents or records to it, or (