MORGAN STANLEY ABS CAPITAL I INC, S-3, 1997-01-14

MORGAN STANLEY ABS CAPITAL I INC
S-3, 1997-01-14

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<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 14, 1997

REGISTRATION NO. 333-
================================================================================

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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

Morgan Stanley ABS Capital I Inc.
(Exact name of registrant as specified in its charter)

Delaware [Applied For]
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)

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

1585 Broadway
2nd Floor
New York, New York 10036
(212) 761-4000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)

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

Craig S. Phillips
President
Morgan Stanley ABS Capital I Inc.
1585 Broadway
2nd Floor
New York, New York 10036
(212) 761-4000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)

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

With a copy to:
Gregory D. Walker, Esq. Geoffrey K. Hurley, Esq.
Morgan Stanley & Co. Incorporated Latham & Watkins
1585 Broadway, 38th Floor 885 Third Avenue
New York, New York 10036 New York, New York 10022

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

<PAGE> 2

Approximate date of commencement of proposed sale to the public: From
time to time on or after the effective date of the registration statement, as
determined by market conditions.

If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]

If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, please check the following box. [X]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.[ ]____________

If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering.[ ]____________

If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box.[ ]

CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
================================================================================================================================
Title of Each Proposed Proposed
Class of Amount Maximum Maximum Amount of
Securities to be to be Offering Price Aggregate Registration
Registered Registered(1) Per Unit(2) Offering Price(2) Fee
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Asset Backed
Notes and $1,000,000(3) 100% $1,000,000 $303.03
Asset Backed
Certificates...........
================================================================================================================================
</TABLE>

(1) The Registration Statement relates to the initial offering from time to
time of the Asset Backed Notes and Asset Backed Certificates and to any
resales thereof in market making transactions by Morgan Stanley & Co.
Incorporated, an affiliate of the Registrant, to the extent required.

(2) Estimated for the purpose of calculating the registration fee.

(3) Not specified as to each Class of Asset Backed Securities to be
registered pursuant to General Instruction II.D of Form S-3.

The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.

<PAGE> 3
VERSION #1

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION, OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED JANUARY 14, 1997
PROSPECTUS SUPPLEMENT
(To Prospectus dated ______________, 199_)

$___________________
(Approximate)

HOME EQUITY LOAN TRUST 199_-__
HOME EQUITY LOAN ASSET BACKED CERTIFICATES, SERIES 199_-_

Morgan Stanley ABS Capital I Inc.
Depositor

[ __________________________________ ]
Master Servicer

Each Home Equity Loan Asset Backed Certificate, Series 199_-_
(collectively, the "Certificates") will represent an undivided interest in the
Home Equity Loan Trust 199_-_ (the "Trust Fund") to be formed pursuant to a
Pooling and Servicing Agreement among [___________________], as Master Servicer,
Morgan Stanley ABS Capital I Inc., as Depositor, and [__________], as Trustee.
The property of the Trust Fund will include a pool of [adjustable rate] home
equity revolving credit line loans made or to be made in the future (the
"Mortgage Loans") under certain home equity revolving credit line loan
agreements. The Mortgage Loans are secured by first, second and third mortgages
or deeds of trusts on one- to four-family residential properties. See "Index of
Defined Terms" on page S-___ of this Prospectus Supplement and on page 136 of
the Prospectus for the location of the definitions of certain capitalized terms.

The aggregate undivided interest in the Trust Fund represented by the
Certificates will, as of ____________, 199_ (the "Cut-off Date"), represent
approximately __% of the outstanding principal balances of the Mortgage Loans.
The remaining undivided interest in the Trust Fund not represented by the
Certificates (the "Transferor Interest") will initially be equal to
$_________________, which as of the Cut-off Date is _% of the outstanding
principal balances of the Mortgage Loans. Only the Certificates are offered
hereby.

Distributions of principal and interest on the Certificates will be
made on the ______ day of each month or, if such date is not a Business Day,
then on the succeeding Business Day (each, a "Distribution Date"), commencing
___________, 199_. On each Distribution Date, holders of the Certificates will
be entitled to receive, from and to the limited extent of funds available in the
Collection Account (as defined herein), distributions with respect to interest
and principal calculated as set forth under "Summary-- Interest" and
"--Principal Payments from Principal Collections" and "Description of the
Certificates-- Distributions on the Certificates" herein. The Certificates are
not guaranteed by the Depositor or any

<PAGE> 4

affiliate thereof. [However, the Certificates will be unconditionally and
irrevocably guaranteed as to the payment of the Guaranteed Distributions (as
defined herein) on each Distribution Date pursuant to the terms of a financial
guaranty insurance policy (the "Policy") to be issued by

[INSURER]

Morgan Stanley & Co. Incorporated ("Morgan Stanley" or the
"Underwriter") intends to make a secondary market in the Certificates but is
under no obligation to do so. There can be no assurance that a secondary market
for the Certificates will develop or, if it does develop, that it will continue.
See "Risk Factors" herein and in the Prospectus.
(Continued on following page)

PROSPECTIVE INVESTORS SHOULD REVIEW THE INFORMATION SET FORTH UNDER
"RISK FACTORS" ON PAGE S___ HEREIN AND ON PAGE 21 IN THE
ACCOMPANYING PROSPECTUS.

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

THE CERTIFICATES REPRESENT INTERESTS IN THE TRUST FUND ONLY AND DO NOT
REPRESENT INTERESTS IN OR OBLIGATIONS OF THE DEPOSITOR, THE
SELLER, THE MASTER SERVICER, THE TRUSTEE, OR ANY OF
THEIR RESPECTIVE AFFILIATES, EXCEPT TO THE EXTENT
PROVIDED HEREIN. NEITHER THE CERTIFICATES
NOR THE MORTGAGE LOANS ARE INSURED OR
GUARANTEED BY ANY GOVERNMENTAL
AGENCY.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMIS-
SION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
======================================================================================================
Price to Underwriting Proceeds to
Public(1) Discount(2) the Depositor(3)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Certificate................ % % %
- ------------------------------------------------------------------------------------------------------

Total.......................... $ $ $
- ------------------------------------------------------------------------------------------------------
</TABLE>

(1) Plus accrued interest, if any, from _______________, 199_.
(2) The Depositor has agreed to indemnify Morgan Stanley against certain
liabilities, including liabilities under the Securities Act of 1933.
(3) Before deducting expenses, estimated to be $_______________.

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

The Certificates are offered subject to prior sale, when, as and if
delivered to and accepted by the Morgan Stanley and subject to Morgan Stanley's
right to reject orders in whole or in part. It is

S-2

<PAGE> 5

expected that delivery of the Certificates will be made in book-entry form only
through the facilities of The Depository Trust Company, CEDEL S.A. and the
Euroclear System on or about ______________, 199_ (the "Closing Date").

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

MORGAN STANLEY & CO.
Incorporated

________________, 199_.

S-3

<PAGE> 6

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

No dealer, salesperson or other individual has been authorized to give
any information or to make any representations not contained in this Prospectus
Supplement or the Prospectus and, if given or made, such information or
representations must not be relied upon as having been authorized by the
Depositor or any Underwriter. This Prospectus Supplement and the Prospectus do
not constitute an offer to sell or a solicitation of an offer to buy any of the
securities offered hereby in any jurisdiction to any person to whom it is
unlawful to make such offer in such jurisdiction. Neither the delivery of this
Prospectus Supplement or the Prospectus nor any sale made hereunder shall, under
any circumstances, create an implication that the information herein or therein
is correct at any time subsequent to the date hereof or that there has been no
change in the affairs of the Depositor since that date.

Until ninety days after the date of this Prospectus Supplement, all
dealers effecting transactions in the Certificates, whether or not participating
in this distribution, may be required to deliver a Prospectus Supplement and
Prospectus. This is in addition to the obligation of dealers acting as
underwriters to deliver a Prospectus Supplement and Prospectus with respect to
their unsold allotments or subscriptions.

This Prospectus Supplement does not contain complete information about
the offering of the Certificates. Additional information is contained in the
Prospectus of the Depositor dated __________, 199___ (the "Prospectus") and
purchasers are urged to read both this Prospectus Supplement and the Prospectus
in full. Sales of the Certificates may not be consummated unless the purchaser
has received both this Prospectus Supplement and the Prospectus.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The Trustee on behalf of any Trust Fund will provide without charge to
each person to whom this Prospectus Supplement is delivered, on the written or
oral request of such person, a copy of any or all of the documents referred to
in the Prospectus under "Incorporation of Certain Documents by Reference" that
have been or may be incorporated by reference in the Prospectus (not including
exhibits to the information that is incorporated by reference unless such
exhibits are specifically incorporated by reference into the information that
the Prospectus incorporates). Such requests should be directed to the Corporate
Trust Office of the Trustee at ___________________, telephone: ________
_______________, facsimile number _________________, attention:
_______________________.

S-4

<PAGE> 7

TABLE OF CONTENTS
Page
----
PROSPECTUS SUPPLEMENT

<S> <C>
Summary .................................................................. 6
Risk Factors............................................................... 21
The Certificate Insurer.................................................... 24
The Master Servicer........................................................ 24
The Home Equity Loan Program............................................... 25
Description of the Mortgage Loans.......................................... 27
Maturity and Prepayment Considerations..................................... 36
Description of the Certificates............................................ 37
Description of the Purchase Agreement...................................... 60
Use of Proceeds............................................................ 61
Certain Federal Income Tax Considerations.................................. 61
State Taxes................................................................ 65
ERISA Considerations....................................................... 65
Legal Investment Considerations............................................ 66
Underwriting............................................................... 67
Legal Matters.............................................................. 67
Experts .................................................................. 67
Ratings .................................................................. 68
Index of Defined Terms..................................................... 69
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURE.............. S-1

PROSPECTUS

Prospectus Supplement or Current Report on Form 8-K..........................4
Available Information........................................................4
Incorporation of Certain Documents by Reference..............................5
Reports to Securityholders...................................................5
Summary of Terms.............................................................6
Risk Factors................................................................21
The Trust Fund..............................................................31
Use of Proceeds.............................................................47
The Depositor...............................................................47
Description of the Securities...............................................47
Credit Enhancement..........................................................64
Yield and Prepayment Considerations.........................................70
The Agreements..............................................................73
Certain Legal Aspects of the Loans..........................................88
Federal Income Tax Consequences............................................104
State Tax Considerations...................................................127
ERISA Considerations.......................................................127
Legal Investment...........................................................131
Method of Distribution.....................................................132
Legal Matters..............................................................133
Financial Information......................................................133
Rating.....................................................................133
Index of Defined Terms.....................................................135
</TABLE>

S-5

<PAGE> 8

SUMMARY

The following summary of certain pertinent information is qualified in
its entirety by reference to the detailed information appearing elsewhere in
this Prospectus Supplement and the accompanying Prospectus. Certain capitalized
terms used in the Summary are defined elsewhere in the Prospectus Supplement or
in the Prospectus. See "Index of Defined Terms" on page S-__ of this Prospectus
Supplement and on page 135 of the Prospectus for the location of the definitions
of certain capitalized terms.

Trust Fund.................... Home Equity Loan Trust 199_-_ (the "Trust") will
be formed pursuant to a pooling and servicing
agreement (the "Agreement") to be dated as of
______________, 199_ (the "Cut-off Date") among
________________, as master servicer (together
with any successor in such capacity, the "Master
Servicer"), Morgan Stanley ABS Capital I Inc., as
depositor (the "Depositor"), and
_____________________, as trustee (the
"Trustee"). The property of the Trust will
include: a pool of [adjustable rate] home equity
revolving credit line loans made or to be made in
the future (the "Mortgage Loans"), under certain
home equity revolving credit line loan agreements
(the "Credit Line Agreements") and secured by
first, second and third mortgages and deeds of
trust on residential properties that are one- to
four-family properties (the "Mortgaged
Properties"); the collections in respect of the
Mortgage Loans received after the Cut-off Date
(exclusive of payments in respect of accrued
interest due on or prior to the Cut-off Date or
due in the month of _____________); property that
secured a Mortgage Loan which has been acquired
by foreclosure or deed in lieu of foreclosure; an
irrevocable and unconditional limited financial
guaranty insurance policy (the "Policy"); an
assignment of the Depositor's rights under the
Purchase Agreement (as defined herein); rights
under certain hazard insurance policies covering
the Mortgaged Properties; and certain other
property, as described more fully under
"Description of the Certificates--General"
herein. On the Closing Date, the Mortgage Loans
will be purchased by the Depositor from
_____________________ (the "Seller"), [an
affiliate of the Depositor,] which either
directly or through its affiliates acquired the
Mortgage Loans in the ordinary course of business
from _______________, the originator of the
Mortgage Loans.

The Trust Fund property will include the unpaid
principal balance of each Mortgage Loan as of the
Cut-off Date (the "Cut-off Date Principal
Balance") plus any additions thereto as a result
of new advances made pursuant to the applicable
Credit Line Agreement (the

S-6

<PAGE> 9

"Additional Balances") during the life of the
Trust Fund. With respect to any date, the "Pool
Balance" will be equal to the aggregate of the
Principal Balances of all Mortgage Loans as of
such date. The aggregate Cut-off Date Principal
Balance of the Mortgage Loans is $____________
(the "Cut-off Date Pool Balance"). The "Principal
Balance" of a Mortgage Loan (other than a
Liquidated Mortgage Loan) on any day is equal to
its Cut-off Date Principal Balance, plus (i) any
Additional Balances in respect of such Mortgage
Loan, minus (ii) all collections credited against
the Principal Balance of such Mortgage Loan in
accordance with the related Credit Line Agreement
prior to such day. The Principal Balance of a
Liquidated Mortgage Loan (as defined herein)
after final recovery of related Liquidation
Proceeds (as defined herein) will be zero.

Securities Offered............ Each of the Home Equity Loan Asset Backed
Certificates, Series 199_-_ offered hereby (the
"Certificates") represents an undivided interest
in the Trust Fund. Each Certificate represents
the right to receive payments of interest at the
variable rate described below (the "Certificate
Rate"), payable monthly, and payments of
principal at such time and to the extent provided
herein under "Description of the Certificates--
Distributions on the Certificates." The aggregate
undivided interest in the Trust Fund represented
by the Certificates as of the Closing Date will
equal $__________________ (the "Original Invested
Amount"), which represents __% of the Cut-off
Date Pool Balance. The "Original Certificate
Principal Balance" will equal
$__________________. Following the Closing Date,
the "Invested Amount" with respect to any date
will be an amount equal to the Original Invested
Amount minus (i) the amount of Investor Principal
Collections (as defined herein) previously
distributed to Certificateholders, and minus (ii)
an amount equal to the product of the Investor
Floating Allocation Percentage and the
Liquidation Loss Amounts (each as defined
herein). The Transferor (as described below) will
own the remaining undivided interest (the
"Transferor Interest") in the Mortgage Loans,
which is equal to the Pool Balance minus the
Invested Amount and will initially equal
approximately __% of the Cut-off Date Pool
Balance. The Transferor (the "Transferor") as of
any date is the owner of the Transferor Interest
which initially will be _________________. The
Certificates will be issued pursuant to the
Agreement. The principal amount of the
outstanding Certificates (the "Certificate
Principal Balance") on any date is equal to the
Original

S-7

<PAGE> 10

Certificate Principal Balance minus the aggregate
of amounts actually distributed as principal to
the Certificateholders. See "Description of the
Certificates" herein.

Removal of Certain
Mortgage Loans;
Additional Balances........... In order to permit the Transferor to remove
Mortgage Loans from the Trust Fund at such times,
if any, as the overcollateralization exceeds the
level required to maintain the ratings on the
Certificates, on any Distribution Date the
Transferor may, but shall not be obligated to,
remove from the Trust Fund certain Mortgage Loans
without notice to the Certificateholders. The
Transferor is permitted to designate the Mortgage
Loans to be removed. Mortgage Loans so designated
will only be removed upon satisfaction of the
following conditions: (i) No Rapid Amortization
Event (as defined herein) has occurred, (ii) the
Transferor Interest as of the Transfer Date (as
defined herein) (after giving effect to such
removal) exceeds the Minimum Transferor Interest
(as defined below); (iii) the transfer of any
Mortgage Loans on any Transfer Date during the
Managed Amortization Period (as defined herein)
shall not, in the reasonable belief of the
Transferor, cause a Rapid Amortization Event to
occur or an event which with notice or lapse of
time or both would constitute a Rapid
Amortization Event; (iv) the Transferor shall
have delivered to the Trustee a "Mortgage Loan
Schedule" containing a list of all Mortgage Loans
remaining in the Trust after such removal; (v)
the Transferor shall represent and warrant that
no selection procedures which are adverse to the
interests of the Certificateholders or the
Certificate Insurer were used by the Transferor
in selecting such Mortgage Loans; (vi) in
connection with the first such retransfer of
Mortgage Loans, the Rating Agencies (as defined
herein) shall have been notified of the proposed
transfer and prior to the Transfer Date shall not
have notified the Transferor in writing that such
transfer would result in a reduction or
withdrawal of the ratings assigned to the
Certificates without regard to the Policy; and
(vii) the Transferor shall have delivered to the
Trustee and the Certificate Insurer an officer's
certificate confirming the conditions set forth
in clauses (i) through (vi) above. See
"Description of the Certificates--Optional
Transfers of Mortgage Loans to the Transferor"
herein.

The "Minimum Transferor Interest" as of any date
is an amount equal to the lesser of (a) __% of
the Pool

S-8

<PAGE> 11

Balance on such date and (b) the Transferor
Interest as of the Closing Date.

During the term of the Trust Fund, all Additional
Balances will be transferred to and become
property of the Trust. The Pool Balance at any
time will generally fluctuate from day to day
because the amount of Additional Balances and the
amount of principal payments with respect to the
Mortgage Loans will usually differ from day to
day. Because the Transferor Interest is equal to
the Pool Balance minus the Invested Amount, the
amount of the Transferor Interest will fluctuate
from day to day as draws are made with respect to
the Mortgage Loans and as Principal Collections
are received.

The Mortgage Loans............ The Mortgage Loans are secured by first, second
and third mortgages on Mortgaged Properties
located in ___ states. On the Closing Date,
_______________ will sell the Mortgage Loans to
the Depositor, pursuant to a purchase agreement
(the "Purchase Agreement").

The percentage of the Cut-off Date Principal
Balance of the Mortgage Loans secured primarily
by Mortgaged Properties located in the states of
__________, ________, __________, _______, ______
and ________ is approximately ____%, ____%,
____%, ____%, ____% and ____%, respectively. The
"Combined Loan- to-Value Ratio" of each Mortgage
Loan is the ratio of (A) the sum of (i) the
maximum amount the borrower was permitted to draw
down under the related Credit Line Agreement (the
"Credit Limit") and (ii) the amounts of any
related senior mortgage loans (computed as of the
date of origination of each such Mortgage Loans)
to (B) the lesser of (i) the appraised value of
the Mortgaged Property or (ii) [in the case of a
Mortgaged Property purchased within one year of
the origination of the related Mortgage Loan,]
the purchase price of such Mortgaged Property. As
of the Cut-off Date the Combined Loan-to-Value
Ratios ranged from ____% to ______% and, as of
the Cut-off Date, the weighted average Combined
Loan-to-Value Ratio of the Mortgage Loans was
approximately ____%

Interest on each Mortgage Loan is payable monthly
and computed on the related daily outstanding
Principal Balance for each day in the billing
cycle at a variable rate per annum (the "Loan
Rate") equal at any time (subject to maximum
rates, as described herein under "Description of
the Mortgage Loans--Mortgage Loan

S-9

<PAGE> 12

Terms," and further subject to applicable usury
limitations) to the sum of (i) [the highest prime
rate published in the "Money Rates" section of
The Wall Street Journal] and (ii) a Margin within
the range of ____% to ____%. As of the Cut-off
Date, the weighted average Margin was
approximately ____%. Loan Rates are adjusted
[monthly on the first business day of the
calendar month preceding the Due Date]. As to
each Mortgage Loan, the "Due Date" is the
fifteenth day of each month. The Cut-off Date
Principal Balances ranged from zero to
$__________ and averaged approximately
$__________. Credit Limits under the Mortgage
Loans as of the Cut-off Date ranged from
$__________ to $__________ and averaged
approximately $__________. Each Mortgage Loan was
originated in the period from ______________,
199_ to _______________, 199_. As of the Cut-off
Date, the maximum Credit Limit Utilization Rate
(as defined herein) was 100% and the weighted
average Credit Limit Utilization Rate was
approximately ____%. As of the Cut-off Date,
approximately ____% by Cut-off Date Principal
Balance of the Mortgage Loans represented first
liens on the related Mortgaged Properties,
approximately ____% by Cut-off Date Principal
Balance of the Mortgage Loans represented second
liens on the related Mortgaged Properties and
approximately ____% of the Mortgage Loans
represented third liens. As of the Cut-off Date,
the Mortgage Loans had remaining terms to
scheduled maturity ranging from ___ months to ___
months and had a weighted average of
approximately ___ months. See "Description of the
Mortgage Loans" herein.

Denominations................. The Certificates will be offered for purchase in
denominations of [$1,000] and multiples of [$1]
in excess thereof. The interest in the Trust
evidenced by a Certificate (the "Percentage
Interest") will be equal to the percentage
derived by dividing the denomination of such
Certificate by the Original Certificate Principal
Balance.

Registration of Certificates.. The Certificates will initially be issued in
book-entry form. Persons acquiring beneficial
ownership interests in the Certificates
("Certificate Owners") may elect to hold their
Certificate interests through The Depository
Trust Company ("DTC"), in the United States, or
Centrale de Livraison de Valeurs Mobilieres S.A.
("CEDEL") or the Euroclear System ("Euroclear"),
in Europe. Transfers within DTC, CEDEL or
Euroclear, as the case may be, will be in
accordance with the usual rules and operating
procedures of the relevant system. So long as the
Certificates are Book-Entry Certificates

S-10

<PAGE> 13

(as defined herein), such Certificates will be
evidenced by one or more Certificates registered
in the name of Cede & Co. ("Cede"), as the
nominee of DTC or one of the relevant
depositaries (collectively, the "European
Depositaries"). Cross-market transfers between
persons holding directly or indirectly through
DTC, on the one hand, and counterparties holding
directly or indirectly through CEDEL or
Euroclear, on the other, will be effected in DTC
through Citibank N.A. ("Citibank") or The Chase
Manhattan Bank ("Chase"), the relevant
depositaries of CEDEL or Euroclear, respectively,
and each a participating member of DTC. The
Certificates will initially be registered in the
name of Cede. The interests of the
Certificateholders will be represented by book
entries on the records of DTC and participating
members thereof. No Certificate Owner will be
entitled to receive a definitive certificate
representing such person's interest, except in
the event that Definitive Certificates (as
defined herein) are issued under the limited
circumstances described herein. All references in
this Prospectus Supplement to any Certificates
reflect the rights of Certificate Owners only as
such rights may be exercised through DTC and its
participating organizations for so long as such
Certificates are held by DTC. See "Risk
Factors--Consequences of Owning Book-Entry
Certificates," "Description of the
Certificates--Book-Entry Certificates" herein and
"Annex I" hereto.

Depositor..................... Morgan Stanley ABS Capital I Inc., a Delaware
corporation and a direct, wholly-owned subsidiary
of Morgan Stanley Group Inc. The principal
executive offices of the Depositor are located at
1585 Broadway, 37th Floor, New York, New York
10036 (Telephone: (212) 761-4000). See "The
Depositor" in the Prospectus.

Master Servicer of the
Mortgage Loans................ [___________________] See "The Master Servicer"
and "The Home Equity Loan Program--Servicing of
the Mortgage Loans" herein.

Collections................... All collections on the Mortgage Loans will
generally be allocated in accordance with the
Credit Line Agreements between amounts collected
in respect of interest and amounts collected in
respect of principal. As to any Distribution
Date, "Interest Collections" will be equal to the
amounts collected during the related Collection
Period, including the portion of Net Liquidation
Proceeds (as defined below) allocated to interest
pursuant to the

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<PAGE> 14

terms of the Credit Line Agreements less
Servicing Fees for the related Collection Period.

As to any Distribution Date, "Principal
Collections" will be equal to the sum of (i) the
amounts collected during the related Collection
Period, including the portion of Net Liquidation
Proceeds allocated to principal pursuant to the
terms of the Credit Line Agreements and (ii) any
Transfer Deposit Amounts (as defined herein).

"Net Liquidation Proceeds" with respect to a
Mortgage Loan are the proceeds (excluding amounts
drawn on the Policy) received in connection with
the liquidation of any Mortgage Loan, whether
through trustee's sale, foreclosure sale or
otherwise, reduced by related expenses, but not
including the portion, if any, of such amount
that exceeds the Principal Balance of the
Mortgage Loan plus any accrued and unpaid
interest thereon to the end of the Collection
Period during which such Mortgage Loan became a
Liquidated Mortgage Loan.

With respect to any Distribution Date, the
portion of Interest Collections allocable to the
Certificates ("Investor Interest Collections")
will equal the product of (a) Interest
Collections for such Distribution Date and (b)
the Investor Floating Allocation Percentage. With
respect to any Distribution Date, the "Investor
Floating Allocation Percentage" is the percentage
equivalent of a fraction determined by dividing
the Invested Amount at the close of business on
the preceding Distribution Date (or at the
Closing Date in the case of the first
Distribution Date) by the Pool Balance at the
beginning of the related Collection Period. The
remaining amount of Interest Collections will be
allocated to the Transferor Interest as more
fully described under "Description of the
Certificates--Allocations and Collections"
herein.

On each Distribution Date, the Investor Interest
Collections will be applied in the following
order of priority: (i) as payment to the Trustee
for its fee for services rendered pursuant to the
Agreement; (ii) as payment for the premium for
the Policy; (iii) as payment for the accrued
interest due and any overdue accrued interest
(with interest thereon) on the Certificate
Principal Balance of the Certificates; (iv) to
pay any Investor Loss Amount (as defined herein)
for such Distribution Date; (v) as payment for
any Investor Loss Amount for a previous
Distribution Date that was not previously (a)
funded by Investor Interest Collections allocable
to the

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<PAGE> 15

Certificateholders, (b) absorbed by the
Overcollateralization Amount, (c) funded by
amounts on deposit in the Spread Account or (d)
funded by draws on the Policy; (vi) to reimburse
prior draws made from the Policy (with interest
thereon); (vii) to pay principal on the
Certificates until the Invested Amount exceeds
the Certificate Principal Balance by the Required
Overcollateralization Amount, each as defined
herein (such amount, if any, paid pursuant to
this clause (vii) being referred to herein as the
"Accelerated Principal Distribution Amount");
(viii) any other amounts required to be deposited
in an account for the benefit of the Certificate
Insurer and Certificateholders pursuant to the
Agreement or amounts owed to the Certificate
Insurer pursuant to the Insurance Agreement; (ix)
certain amounts that may be required to be paid
to the Master Servicer pursuant to the Agreement;
and (x) to the Transferor to the extent permitted
as described under "Description of the
Certificates--Distributions on the Certificates"
herein.

Investor Interest Collections available after the
payment of interest on the Certificates may be
insufficient to cover any Investor Loss Amount.
If such insufficiency results in the Certificate
Principal Balance exceeding the Invested Amount,
a draw in an amount equal to such difference will
be made on the Policy in accordance with the
terms of the Policy.

The "Overcollateralization Amount" on any date of
determination is the amount, if any, by which the
Invested Amount exceeds the Certificate Principal
Balance on such day. Payments to
Certificateholders pursuant to clause (iii) above
will be interest payments on the Certificates.
Payments to Certificateholders pursuant to
clauses (iv), (v) and (vii) will be principal
payments on the Certificates and will therefore
reduce the Certificate Principal Balance,
however, payments pursuant to clause (vii) will
not reduce the Invested Amount. The Accelerated
Principal Distribution Amount is not guaranteed
by the Policy.

"Liquidation Loss Amount" means with respect to
any Liquidated Mortgage Loan, the unrecovered
Principal Balance thereof at the end of the
related Collection Period in which such Mortgage
Loan became a Liquidated Mortgage Loan, after
giving effect to the Net Liquidation Proceeds in
connection therewith. The "Investor Loss Amount"
shall be the product of the Investor Floating
Allocation Percentage and the

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<PAGE> 16

Liquidation Loss Amount for such Distribution
Date. See "Description of the
Certificates--Distributions on the Certificates"
herein.

Principal Collections will be allocated between
the Certificateholders and the Transferor
("Investor Principal Collections" and "Transferor
Principal Collections", respectively) in
accordance with their percentage interests in the
Mortgage Loans of __% and __%, respectively, as
of the Cut-off Date (the "Fixed Allocation
Percentage"), but a lesser amount of Principal
Collections may be distributed to
Certificateholders during the Managed
Amortization Period, as described below. The
"Investor Fixed Allocation Percentage" shall be
__%.

The Master Servicer will deposit Interest
Collections and Principal Collections in respect
of the Mortgage Loans in an account established
for such purpose under the Agreement (the
"Collection Account"). See "Description of the
Certificates--Payments on Mortgage Loans;
Deposits to Collection Account" herein.

Collection Period............. As to any Distribution Date other than the first
Distribution Date, the "Collection Period" is the
calendar month preceding the month of such
Distribution Date. As to the first Distribution
Date, the "Collection Period" is the period
beginning after the Cut-off Date and ending on
the last day of _____________, 199_.

Interest...................... Interest on the Certificates will be distributed
monthly on the fifteenth day of each month or, if
such day is not a Business Day, then the next
succeeding Business Day (each, a "Distribution
Date"), commencing on ______________, 199_, at
the Certificate Rate for the related Interest
Period (as defined below). The "Certificate Rate"
for an Interest Period will generally equal the
sum of [(a) the London Interbank offered rate for
one-month Eurodollar deposits ("LIBOR") appearing
on the Telerate Screen Page 3750, as of the
second LIBOR Business Day (as defined herein)
prior to the first day of such Interest Period
(or as of two LIBOR Business Days prior to the
Closing Date, in the case of the first Interest
Period) and (b) ____%.] Notwithstanding the
foregoing, in no event will the amount of
interest required to be distributed in respect of
the Certificates on any Distribution Date exceed
a rate equal to the weighted average of the Loan
Rates (net of the Servicing Fee Rate, the fee
payable to the Trustee and the rate at which the
premium payable to the Certificate Insurer is
calculated) weighted on the basis of

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<PAGE> 17

the daily balance of each Mortgage Loan during
the related billing cycle prior to the Collection
Period relating to such Distribution Date.
[Interest on the Certificates in respect of any
Distribution Date will accrue from the preceding
Distribution Date (or in the case of the first
Distribution Date, from the date of the initial
issuance of the Certificates (the "Closing Date")
through the day preceding such Distribution Date
(each such period, an "Interest Period") on the
basis of the actual number of days in the
Interest Period and a 360-day year.]

Interest payments on the Certificates will be
funded from Investor Interest Collections, any
funds on deposit in the Spread Account and from
draws on the Policy. See "Description of the
Certificates" herein.

Principal Payments from
Principal Collections......... For the period beginning on the first
Distribution Date and, unless a Rapid
Amortization Event (as defined herein) shall have
earlier occurred, ending on the Distribution Date
in _____________, 200_ (the "Managed Amortization
Period"), the amount of Principal Collections
payable to Certificateholders as of each
Distribution Date during the Managed Amortization
Period will equal, to the extent funds are
available therefor, the Scheduled Principal
Collections Distribution Amount for such
Distribution Date. On any Distribution Date
during the Managed Amortization Period, the
"Scheduled Principal Collections Distribution
Amount" shall equal the lesser of (i) the Maximum
Principal Payment (as defined herein) and (ii)
the Alternative Principal Payment (as defined
herein). With respect to any Distribution Date,
the "Maximum Principal Payment" will equal the
product of the Investor Fixed Allocation
Percentage and Principal Collections for such
Distribution Date. With respect to any
Distribution Date, the "Alternative Principal
Payment" will equal the greater of (x) ____% of
the Certificate Principal Balance immediately
prior to such Distribution Date and (y) the
amount, but not less than zero, of Principal
Collections for such Distribution Date less the
aggregate of Additional Balances created during
the related Collection Period.

Beginning with the first Distribution Date
following the end of the Managed Amortization
Period, the amount of Principal Collections
payable to Certificateholders on each
Distribution Date will be equal to the Maximum

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<PAGE> 18

Principal Payment. See "Description of the
Certificates--Distributions on the Certificates"
herein.

In addition, to the extent funds are available
therefor (including funds available under the
Policy), on the Distribution Date in
_____________ 20__, Certificateholders will be
entitled to receive as payment of principal an
amount equal to the outstanding Certificate
Principal Balance.

Distributions of Principal Collections based upon
the Investor Fixed Allocation Percentage may
result in distributions of principal to
Certificateholders in amounts that are greater
relative to the declining Pool Balance than would
be the case if the Investor Floating Allocation
Percentage were used to determine the percentage
of Principal Collections distributed in respect
of the Invested Amount. The aggregate
distributions of principal to Certificateholders
will not exceed the Original Certificate
Principal Balance.

The Certificate Insurer....... [Insurer] (the "Certificate Insurer") is a
__________ insurance company engaged exclusively
in the business of writing financial guaranty
insurance, principally in respect of securities
offered in domestic and foreign markets. The
Certificate Insurer's claims-paying ability is
rated ____ by _________________________ and _____
by _________________________. See "The
Certificate Insurer" herein.

Policy........................ On or before the Closing Date, the Policy will be
issued by the Certificate Insurer pursuant to the
provisions of the Insurance and Indemnity
Agreement (the "Insurance Agreement") to be dated
as of _____________, 199_, among the Seller, the
Depositor, the Master Servicer and the
Certificate Insurer.

The Policy will irrevocably and unconditionally
guarantee payment on each Distribution Date to
the Trustee for the benefit of the
Certificateholders the full and complete payment
of (i) the Guaranteed Principal Distribution
Amount (as defined herein) with respect to the
Certificates for such Distribution Date and (ii)
accrued and unpaid interest due on the
Certificates (together, the "Guaranteed
Distributions"), with such Guaranteed
Distributions having been calculated in
accordance with the original terms of the
Certificates or the Agreement except for
amendments or modifications to which the
Certificate Insurer has given its prior written
consent. The effect of the Policy is to guarantee

S-16

<PAGE> 19

the timely payment of interest on, and the
ultimate payment of the principal amount of, all
of the Certificates.

The "Guaranteed Principal Distribution Amount"
for any Distribution Date shall be the amount by
which the Certificate Principal Balance (after
giving effect to all other amounts distributable
and allocable to principal on the Certificates on
such Distribution Date) exceeds the Invested
Amount for such Distribution Date. In addition,
the Policy will guarantee the payment of the
outstanding Certificate Principal Balance on the
Distribution Date in ____________, 20__ (after
giving effect to all other amounts distributable
and allocable to principal on such Distribution
Date).

In accordance with the Agreement, the Trustee
will be required to establish and maintain an
account (the "Spread Account") for the benefit of
the Certificate Insurer and the
Certificateholders. The Trustee shall deposit the
amounts into the Spread Account as required by
the Agreement.

In the absence of payments under the Policy,
Certificateholders will directly bear the credit
and other risks associated with their undivided
interest in the Trust Fund. See "Description of
the Certificates--The Policy" herein.

Overcollateralization
Amount........................ The distribution of Accelerated Principal
Distribution Amounts, if any, to
Certificateholders may result in the Invested
Amount being greater than the Certificate
Principal Balance, thereby creating the
Overcollateralization Amount. The
Overcollateralization Amount, if any, will be
available to absorb any Investor Loss Amount not
covered by Investor Interest Collections.
Payments of Accelerated Principal Distribution
Amounts are not covered by the Policy. Any
Investor Loss Amounts not covered by such
overcollateralization, amounts on deposit in the
Spread Account or Investor Interest Collections
will be covered by draws on the Policy to the
extent provided therein.

Record Date................... The last day preceding a Distribution Date or, if
the Certificates are no longer Book-Entry
Certificates, the last day of the month preceding
a Distribution Date.

Servicing..................... The Master Servicer will be responsible for
servicing, managing and making collections on the
Mortgage

S-17

<PAGE> 20

Loans. The Master Servicer will deposit all
collections in respect of the Mortgage Loans into
the Collection Account as described under
"Description of the Certificates--Payments on
Mortgage Loans; Deposits to Collection Account"
herein. On the third Business Day prior to each
Distribution Date (the "Determination Date"), the
Master Servicer will calculate, and instruct the
Trustee regarding the amounts available to be
paid, as described under "Description of the
Certificates-- Payments on Mortgage Loans;
Deposits to Collection Account" herein, to the
Certificateholders on such Distribution Date. See
"Description of the Certificates--Distributions
on the Certificates" herein. With respect to each
Collection Period, the Master Servicer will
receive from collections in respect of interest
on the Mortgage Loans, on behalf of itself, a
portion of such collections as a monthly
servicing fee (the "Servicing Fee") in the amount
of approximately ____% per annum (the "Servicing
Fee Rate") on the aggregate Principal Balances of
the Mortgage Loans as of the first day of each
such Collection Period. See "Description of the
Certificates--Servicing Compensation and Payment
of Expenses" herein. In certain limited
circumstances, the Master Servicer may resign or
be removed, in which event either the Trustee or
a third-party servicer will be appointed as a
successor Master Servicer. See "Description of
the Certificates--Certain Matters Regarding the
Master Servicer and the Transferor" herein.

Final Payment of
Principal; Termination........ The Trust Fund will terminate on the Distribution
Date following the later of (A) payment in full
of all amounts owing to the Certificate Insurer
and (B) the earliest of (i) the Distribution Date
on which the Certificate Principal Balance has
been reduced to zero, (ii) the final payment or
other liquidation of the last Mortgage Loan in
the Trust Fund, (iii) the optional retransfer to
the Transferor of the Certificates, as described
below and (iv) the Distribution Date in
______________, 20__. The Certificates will be
subject to optional retransfer to the Transferor
on any Distribution Date after the Certificate
Principal Balance is reduced to an amount less
than or equal to $________________ (__% of the
Original Certificate Principal Balance) and all
amounts due and owing to the Certificate Insurer
and unreimbursed draws on the Policy, together
with interest thereon, as provided under the
Insurance Agreement, have been paid. The
retransfer price will be equal to the sum of the
outstanding Certificate Principal Balance and
accrued and unpaid interest thereon at the
Certificate Rate through the

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<PAGE> 21

day preceding the final Distribution Date. See
"Description of the Certificates--Termination;
Retirement of the Certificates" herein and "The
Agreements--Termination; Optional Termination" in
the Prospectus.

In addition, the Trust Fund may be liquidated as
a result of certain events of bankruptcy,
insolvency or receivership relating to the
Transferor. See "Description of the
Certificates--Rapid Amortization Events" herein.

Trustee....................... [ ], a ____________________________ (the
"Trustee") will act as Trustee on behalf of the
Certificateholders.

Mandatory Retransfer of
Certain Mortgage Loans........ The Seller will make certain representations and
warranties in the Agreement with respect to the
Mortgage Loans. If the Seller breaches certain of
its representations and warranties with respect
to any Mortgage Loan and such breach materially
and adversely affects the interests of the
Certificateholders or the Certificate Insurer and
is not cured within the specified period, the
Mortgage Loan will be removed from the Trust Fund
upon the expiration of a specified period from
the date on which the Seller becomes aware or
receives notice of such breach and will be
reassigned to the Seller. See "Description of the
Certificates--Assignment of Mortgage Loans"
herein.

Federal Income Tax
Consequences.................. Subject to the qualifications set forth in
"Certain Federal Income Tax Consequences" herein,
special tax counsel to the Depositor is of the
opinion that, under existing law, a Certificate
will be treated as a debt instrument for Federal
income tax purposes as of the Closing Date. Under
the Agreement, the Transferor, the Depositor and
the Certificateholders will agree to treat the
Certificates as indebtedness for federal income
tax purposes. Furthermore, special tax counsel to
the Depositor is of the opinion that the Trust
Fund will not be treated as either an association
or a publicly traded partnership taxable as a
corporation. See "Certain Federal Income Tax
Consequences" herein and in the Prospectus for
additional information concerning the application
of federal income tax laws.

ERISA Considerations.......... The acquisition of a Certificate by a pension or
other employee benefit plan (a "Plan") subject to
the Employee Retirement Income Security Act of
1974, as amended

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<PAGE> 22

("ERISA"), could, in some instances, result in a
"prohibited transaction" or other violation of
the fiduciary responsibility provisions of ERISA
and Code Section 4975. Certain exemptions from
the prohibited transaction rules could be
applicable to the acquisition of the
Certificates. Any Plan fiduciary considering
whether to purchase any Certificate on behalf of
a Plan should consult with its counsel regarding
the applicability of the provisions of ERISA and
the Code. See "ERISA Considerations" herein and
in the Prospectus.

Legal Investment
Considerations................ The Certificates will not constitute "mortgage
related securities" for purposes of the Secondary
Mortgage Market Enhancement Act of 1984
("SMMEA"), because not all of the Mortgages
securing the Mortgage Loans are first mortgages.
Accordingly, many institutions with legal
authority to invest in comparably rated
securities based solely on first mortgages may
not be legally authorized to invest in the
Certificates. See "Legal Investment
Considerations" herein and "Legal Investment" in
the Prospectus.

Certificate Rating............ It is a condition to the issuance of the
Certificates that they be rated "___" by _____
and "___" by _________ (each a "Rating Agency").
In general, ratings address credit risk and do
not address the likelihood of prepayments. See
"Ratings" herein and "Risk Factors--Rating of the
Securities" in the Prospectus.

Risk Factors.................. For a discussion of certain risks associated with
an investment in the Certificates, see "Risk
Factors" on page S-___ herein and on page 21 in
the Prospectus.

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<PAGE> 23

RISK FACTORS
[Description will depend on the particulars of the Mortgage Loans]

Investors should consider the following risks in connection with the
purchase of Certificates.

Consequences of Owning Book-Entry Certificates. Issuance of the
Certificates in book-entry form may reduce the liquidity of such Certificates in
the secondary trading market since investors may be unwilling to purchase
Certificates for which they cannot obtain physical certificates. See
"Description of the Certificates--Book-Entry Certificates" herein and "Risk
Factors-Book-Entry Registration" in the Prospectus.

Since transactions in the Certificates can be effected only through
DTC, CEDEL, Euroclear, participating organizations, indirect participants and
certain banks, the ability of a Certificate Owner to pledge a Certificate to
persons or entities that do not participate in the DTC, CEDEL or Euroclear
system may be limited due to lack of a physical certificate representing the
Certificates. See "Description of the Certificates--Book-Entry Certificates"
herein and "Risk Factors-Book-Entry Registration" in the Prospectus.

Certificate Owners may experience some delay in their receipt of
distributions of interest and principal on the Certificates since such
distributions will be forwarded by the Trustee to DTC and DTC will credit such
distributions to the accounts of its Participants (as defined herein) which will
thereafter credit them to the accounts of Certificate Owners either directly or
indirectly through indirect participants. Certificate Owners will not be
recognized as Certificateholders as such term is used in the Agreement, and
Certificate Owners will be permitted to exercise the rights of
Certificateholders only indirectly through DTC and its Participants. See
"Description of the Certificates--Book-Entry Certificates" herein and "Risk
Factors-Book-Entry Registration" in the Prospectus.

Cash Flow Considerations and Risks. Minimum monthly payments on the
Mortgage Loans will at least equal and may exceed accrued interest. Even
assuming that the Mortgaged Properties provide adequate security for the
Mortgage Loans, substantial delays could be encountered in connection with the
liquidation of Mortgage Loans that are delinquent and resulting shortfalls in
distributions to Certificateholders could occur if the Certificate Insurer were
unable to perform on its obligations under the Policy. Further, liquidation
expenses (such as legal fees, real estate taxes, and maintenance and
preservation expenses) will reduce the proceeds payable to Certificateholders
and thereby reduce the security for the Mortgage Loans. In the event any of the
Mortgaged Properties fail to provide adequate security for the related Mortgage
Loans, Certificateholders could experience a loss if the Certificate Insurer
were unable to perform its obligations under the Policy.

Prepayment Considerations and Risks. Substantially all of the Mortgage
Loans may be prepaid in whole or in part at any time without penalty. Home
equity loans, such as the Mortgage Loans, have been originated in significant
volume only during the past few years and neither the Depositor nor the Master
Servicer is aware of any publicly available studies or statistics on the rate of
prepayment of such loans. Generally, home equity loans are not viewed by
borrowers as permanent financing. Accordingly, the Mortgage Loans may experience
a higher rate of prepayment than traditional loans. The Trust Fund's prepayment
experience may be affected by a wide variety of factors, including general
economic conditions, interest rates, the availability of alternative financing
and homeowner mobility. In addition, substantially all of the Mortgage Loans
contain due-on-sale provisions and the Master Servicer intends to enforce such
provisions unless (i) such enforcement is not permitted by applicable law or
(ii) the Master Servicer, in a manner consistent with reasonable commercial
practice, permits the purchaser of the related Mortgaged Property to assume the
Mortgage Loan. To the extent permitted by applicable law,

S-21

<PAGE> 24

such assumption will not release the original borrower from its obligation under
any such Mortgage Loan. See "Description of the Certificates" herein and
"Certain Legal Aspects of Loans--Due-on-Sale Clauses" in the Prospectus for a
description of certain provisions of the Credit Line Agreements that may affect
the prepayment experience on the Mortgage Loans. The yield to maturity and
weighted average life of the Certificates will be affected primarily by the rate
and timing of prepayments on the Mortgage Loans. Any reinvestment risks
resulting from a faster or slower incidence of prepayment of Mortgage Loans will
be borne entirely by the Certificateholders. See "Maturity and Prepayment
Considerations" herein and "Yield and Prepayment Considerations" in the
Prospectus.

Certificate Rating. The rating of the Certificates will depend
primarily on an assessment by the Rating Agencies of the Mortgage Loans and upon
the claims-paying ability of the Certificate Insurer. Any reduction in a rating
assigned to the claims-paying ability of the Certificate Insurer below the
rating initially given to the Certificates may result in a reduction in the
rating of the Certificates. The rating by the Rating Agencies of the
Certificates is not a recommendation to purchase, hold or sell the Certificates,
inasmuch as such rating does not comment as to the market price or suitability
for a particular investor. There is no assurance that the ratings will remain in
place for any given period of time or that the ratings will not be lowered or
withdrawn by the Rating Agencies. In general, the ratings address credit risk
and do not address the likelihood of prepayments. The ratings of the
Certificates do not address the possibility of the imposition of United States
withholding tax with respect to non-U.S. persons.

Legal Considerations--Lien Priority. The Mortgage Loans are secured by
mortgages or deeds of trust (which generally are first, second and third
mortgages). With respect to Mortgage Loans that are secured by first mortgages,
the Master Servicer has the power under certain circumstances to consent to a
new mortgage lien on the Mortgaged Property having priority over such Mortgage
Loan. Mortgage Loans secured by second and third mortgages are entitled to
proceeds that remain from the sale of the related Mortgaged Property after any
related senior mortgage loan and prior statutory liens have been satisfied. In
the event that such proceeds are insufficient to satisfy such loans and prior
liens in the aggregate and the Certificate Insurer is unable to perform its
obligations under the Policy, the Certificateholders will bear (i) the risk of
delay in distributions while a deficiency judgment against the borrower is
obtained and (ii) the risk of loss if the deficiency judgment cannot be obtained
or is not realized upon. See "Certain Legal Aspects of Loans" in the Prospectus.

Under the terms of the Agreement, so long as the long-term senior
unsecured debt of the Master Servicer is rated at least "____" by ___ and "____"
by _______, the Master Servicer will be entitled to maintain possession of the
documentation relating to each Mortgage Loan sold by it, including the Credit
Line Agreements and the Related Documents or other evidence of indebtedness
signed by the borrower, and the assignments of the related mortgages to the
Trust Fund will not be required to be recorded. Failure to deliver the Related
Documents to the Trustee will have the result in most (if not all) of the states
in which the Related Documents will be held, and failure to record the
assignments of the related mortgages to the Trustee will have the result in
certain states in which the Mortgaged Properties are located, of making the sale
of the Cut-off Date Principal Balances, Additional Balances and Related
Documents potentially ineffective against (i) any creditors of the [Master
Servicer], who may have been fraudulently or inadvertently induced to rely on
the Mortgage Loans as assets of the Master Servicer, or (ii) any purchaser of a
Mortgage Loan who had no notice of the prior conveyance to the Trust Fund if
such purchaser perfects his interest in the Mortgage Loan by taking possession
of the Related Documents or other evidence of indebtedness or otherwise. In such
event, the Trust Fund will be an unsecured creditor of the [Master Servicer].

BANKRUPTCY AND INSOLVENCY RISKS

S-22

<PAGE> 25

The sale of the Mortgage Loans from the Seller to the Depositor
pursuant to the Purchase Agreement will be treated as a sale of the Mortgage
Loans. The Seller will warrant that such transfer is either a sale of its
interest in the Mortgage Loans or a grant of a first priority perfected security
interest therein. However, in the event of an insolvency of the Seller, the
receiver of the Seller may attempt to recharacterize the sale of the Mortgage
Loans as a borrowing by the Seller, secured by a pledge of the applicable
Mortgage Loans. If the receiver decided to challenge such transfer, (i) if the
Mortgage Loans have not been delivered to the Trustee, the interest of the Trust
Fund in the Mortgage Loans will be that of an unperfected security interest and
(ii) even if the Mortgage Loans have been delivered to the Trustee, delays in
payments of the Certificates and reductions in the amounts thereof could occur.
The Depositor will warrant in the Agreement that the transfer of the Mortgage
Loans by it to the Trust Fund is either a valid transfer and assignment of such
Mortgage Loans to the Trust Fund or the grant to the Trust Fund of a security
interest in such Mortgage Loans.

If a conservator, receiver or trustee were appointed for the
Transferor, or if certain other events relating to the bankruptcy or insolvency
of the Transferor were to occur, Additional Balances would not be sold to the
Trust Fund. In such an event, the Rapid Amortization Period would commence and
the Trustee would attempt to sell the Mortgage Loans (unless Certificateholders
holding Certificates evidencing undivided interests aggregating at least 51% of
the Certificate Principal Balance instruct otherwise), thereby causing early
payment of the Certificate Principal Balance. The net proceeds of such sale will
first be paid to the Certificate Insurer to the extent of unreimbursed draws
under the Policy and other amounts owing to the Certificate Insurer pursuant to
the Insurance Agreement. The Investor Fixed Allocation Percentage of remaining
amounts will be distributed to the Certificateholders and the Policy will cover
any amount by which such remaining net proceeds are insufficient to pay the
Certificate Principal Balance in full.

In the event of a bankruptcy or insolvency of the Master Servicer, the
bankruptcy trustee or receiver may have the power to prevent the Trustee or the
Certificateholders from appointing a successor Master Servicer.

[Geographic Concentration. As of the Cut-off Date, approximately _____%
(by Cut-off Date Principal Balance) of the Mortgaged Properties are located in
the State of __________. An overall decline in the __________ residential real
estate market could adversely affect the values of the Mortgaged Properties
securing such Mortgage Loans such that the Principal Balances of the related
Mortgage Loans, together with any primary financing on such Mortgaged
Properties, could equal or exceed the value of such Mortgaged Properties. As the
residential real estate market is influenced by many factors, including the
general condition of the economy and interest rates, no assurances may be given
that the __________ residential real estate market will not weaken. If the
__________ residential real estate market should experience an overall decline
in property values after the dates of origination of the Mortgage Loans, the
rates of losses on the Mortgage Loans would be expected to increase, and could
increase substantially.]

[Master Servicer's Ability to Change the Terms of the Mortgage Loans.
The Master Servicer may agree to changes in the terms of a Credit Line
Agreement, provided that such changes (i) do not adversely affect the interest
of the Certificateholders or the Certificate Insurer, and (ii) are consistent
with prudent business practice. There can be no assurance that changes in
applicable law or the marketplace for home equity loans or prudent business
practice will not result in changes in the terms of the Mortgage Loans. In
addition, the Agreement permits the Master Servicer, within certain limitations
described therein, to increase the Credit Limit of the related Mortgage Loan or
reduce the Margin for such Mortgage Loan. Any such increase in the Credit Line
of a Mortgage Loan would increase the Loan-to-Value Ratio of such Mortgage Loan
and, accordingly, would increase the risk of the Trust Fund's investment in such

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<PAGE> 26

Mortgage Loan. In addition, any reduction in the Margin of a Mortgage Loan would
reduce the excess cash flow available to absorb losses.]

Delinquent Mortgage Loans. The Trust Fund will include Mortgage Loans
which are or fewer days delinquent as of the Cut-off Date. The Cut-off Date
Principal Balance of such delinquent Mortgage Loan was $_________________.

For a discussion of additional risks pertaining to the Certificates,
see "Risk Factors" in the Prospectus.

THE CERTIFICATE INSURER

The following information set forth in this section has been provided
by the Certificate Insurer. Accordingly, neither the Depositor nor the Master
Servicer makes any representation as to the accuracy and completeness of such
information.

[Description of Certificate Insurer]

THE MASTER SERVICER

GENERAL

[The Master Servicer will service the Mortgage Loans in accordance with
the terms set forth in the Agreement. The Master Servicer may perform any of its
obligations under the Agreement through one or more subservicers.
Notwithstanding any such subservicing arrangement, the Master Servicer will
remain liable for its servicing duties and obligations under the Agreement as if
the Master Servicer alone were servicing the Mortgage Loans. As of the Closing
Date, the Master Servicer will service the Mortgage Loans without subservicing
arrangements.]

THE MASTER SERVICER

[__________________] will act as Master Servicer for the Mortgage Loans
pursuant to the Agreement. [Description of Master Servicer]

At ______________, 199_, __________________ provided servicing for
approximately $____ [million] aggregate principal amount of first-lien mortgage
loans,substantially all of which are being serviced for unaffiliated persons.
At___________, 199_, _______________ provided servicing for approximately $___
[million] aggregate principal amount of first and second lien mortgage loans
originated under home equity lines of credit.

The principal executive offices of the Master Servicer are located at
____________________________ (telephone (___) ________.

S-24

<PAGE> 27

THE HOME EQUITY LOAN PROGRAM

UNDERWRITING PROCEDURES RELATING TO HOME EQUITY LOANS

The following is a description of the underwriting procedures
customarily employed by the Seller with respect to home equity loans.

[Each revolving home equity line of credit is originated after a review
by the Seller in accordance with its established underwriting procedures, which
are intended to assess the applicant's ability to assume and repay such home
equity lines of credit and the adequacy of the real property which serves as
collateral for such home equity lines of credit. The maximum home equity line of
credit provided by the Seller is $___________________________.

Each applicant for a home equity line of credit is required to complete
an application which lists the applicant's assets, liabilities, income, credit
and employment history and other demographic and personal information. If
information in the loan application demonstrates that there is sufficient income
and equity to justify making a home equity line of credit, the Seller will
conduct a further credit investigation of the applicant. This investigation
includes (i) obtaining and reviewing an independent credit bureau report on the
credit history of the borrower in order to evaluate the borrower's ability to
repay; (ii) obtaining a verification of employment from the applicant's
employer; (iii) obtaining and reviewing pay stubs, income tax returns and/or W-2
forms in order to verify the applicant's income; and (iv) in the case of all
home equity lines of credit originated with a Credit Limit in excess of
$___________________ or with any Credit Limit, if originated after
_______________, obtaining a drive-by appraised value (a "Drive-By Appraised
Value") of the property to be mortgaged through an independent frontal exterior
inspection and neighborhood observation (a "Drive-By Appraisal") of the property
or, in the case of home equity lines of credit originated prior to _____________
in an amount of $__________________ or less, making an estimate of the value
(the "Estimated Value") of the property to be mortgaged through, (a) in the case
of home equity lines of credit originated for such properties located in the
State of ___________________, the use of a formula that assumed that the then
current value of the property was equal to the amount the applicant paid for the
property together with appreciation of _____% of the purchase price for each
year since the applicant purchased the property and (b) in the case of home
equity lines of credit originated for such properties located in
________________________, a property tax bill which reflected a 100% assessment
on the property.

Although no complete title search of the property to be mortgaged is
required, a bring-down to the date of origination of the home equity lines of
credit of the complete title search obtained by the borrower at the time of his
original purchase of the mortgaged property must be delivered.

The Seller calculates the maximum amount of the loan that the customer
may obtain by taking ____% (or, in the case of home equity lines of credit
originated prior to ____________, ___%) of the Drive-By Appraised Value or
Estimated Value, as the case may be, of the property and subtracting any
outstanding senior mortgage balance. Financial insurance premiums and fees are
not considered in the loan amount when making such computation.

Applications for loans exceeding the maximum amount calculated in the
preceding paragraph require regional manager approval. Overrides of other
criteria may be authorized by branch managers up to their lending limits. Among
the reasons that the Seller grants overrides are the existence of compensating
balances of the borrower in accounts held by the Seller (which balances will not
necessarily be available in the event of a default or delinquency of any
Mortgage Loan in the Pool) and relationships between the borrower and the trust
department of the Seller.

S-25

<PAGE> 28

No information is available with respect to the portio of the home
equity lines of credit in the Seller's portfolio as to which overrides of
underwriting criteria were granted.]

SERVICING OF THE MORTGAGE LOANS

[Centralized controls and standards have been established by the Master
Servicer for the servicing and collection of home equity lines of credit.
Servicing includes, but is not limited to, post-origination loan processing,
customer service, remittance processing, collections and liquidations.

The collection process is initiated ten days after the payment due date
with the computer generation of a late notice. To make payment arrangements, a
collector attempts to contact the borrower when the home equity line of credit
is 15 to 30 days past due.

During the period when an account is 45 to 60 days past due, a credit
bureau report is obtained, homeowner's insurance is verified, the status of
senior mortgages and property taxes is checked and a title search and "drive-by"
appraisal are ordered.

If arrangements have not been made to cure the delinquency within 60
days of the line becoming past due, drawing privileges are cancelled. The line
is referred to outside counsel and is placed on a "non-accrual" status after 90
days of delinquency. All legal expenses are assessed to the account and become
the responsibility of the borrower. When it is determined by the Master Servicer
that there is no possibility of recovery from the mortgaged property or from
other leviable assets or wage attachments, the line is charged-off.

Reinstatement arrangements can be made up until the point of sale. Any
foreclosures initiated on a junior mortgage are subject to the senior mortgage
or mortgages and any outstanding property taxes. If the Servicer purchases the
property through the foreclosure action, the account is transferred to the
Master Servicer's REO Department which is maintained at ____________________.
The REO Department is responsible for maintaining and marketing the property.

The Master Servicer may not foreclose on the property securing a junior
mortgage loan unless the Master Servicer forecloses subject to any senior
mortgages, in which case the Master Servicer may pay the entire amount due on
the senior mortgage to the senior mortgagees at or prior to the foreclosure
sale. If a senior mortgage is in default after the Servicer has initiated its
foreclosure action, the Master Servicer may advance funds to keep senior
mortgages current until such time as the Master Servicer satisfies such senior
mortgages. In the event that foreclosure proceedings have been instituted on a
senior mortgage prior to the initiation of the Master Servicer's foreclosure
action, the Master Servicer may either satisfy the senior mortgage at the time
of the foreclosure sale or take other action to protect the Trust Fund's
interest in the related property.]

FORECLOSURE AND DELINQUENCY EXPERIENCE

The following tables set forth the delinquency and loss experience for
each of the periods shown for the Master Servicer's portfolio of home equity
lines of credit. The Master Servicer believes that there have been no material
trends or anomalies in the historical delinquency and loss experience as
represented in the following tables. The information in the tables below has not
been adjusted to eliminate the effect of the growth in the size of the Master
Servicer's portfolio during the periods shown. Accordingly, loss and delinquency
as percentages of aggregate principal balance of such loans for each period may
be higher than those shown if a group of such loans were artificially isolated
at a point in time and the information showed the activity only in that isolated
group. The data presented in the following tables

S-26

<PAGE> 29

are for illustrative purposes only, and there is no assurance that the
delinquency and loss experience of the Mortgage Loans will be similar to that
set forth below.

DELINQUENCY STATUS AS OF ___________, 199__*

Dollars Percent Units Percent
------- ------- ----- -------
<S> <C> <C> <C> <C>
Current............................. $ % %
30-59 days..........................
60-89 days..........................
90+ days............................
------ ------- ------ ------

Total........................... $ 100.00% 100.00%
</TABLE>

- ----------
* Delinquencies are reported on a contractual basis.

As of ___________, 199_, loans with an aggregate balance of $_______
are in bankruptcy and ____ loans with an aggregate balance of $___________ are
in foreclosure. Of the loans in foreclosure, there will be a _______, 199_
charge off of $_______. [In addition to this charge off, there is an anticipated
charge off of approximately $ which may also be realized in _______________.]

DESCRIPTION OF THE MORTGAGE LOANS

GENERAL

The Mortgage Loans were originated pursuant to loan agreements and
disclosure statements (the "Credit Line Agreements") and are secured by
mortgages or deeds of trust, which are either first or second mortgages or deeds
of trust, on Mortgaged Properties located in ____ states. The Mortgaged
Properties securing the Mortgage Loans consist of residential properties that
are one- to four-family properties. See "--Mortgage Loan Terms" below.

S-27

<PAGE> 30

Mortgage Loan and (ii) any outstanding principal balances of mortgage loans
senior to such Mortgage Loan (calculated at the date of origination of the
Mortgage Loan) to (B) the lesser of (i) the appraised value of the related
Mortgaged Property as set forth in the loan files at such date of origination or
(ii) [in the case of a Mortgaged Property purchased within one year of the
origination of the related Mortgage Loan,] the purchase price of such Mortgaged
Property. Credit Limits under the Mortgage Loans as of the Cut-off Date ranged
from $_____ to $_____ and averaged approximately $_____ . The weighted average
second mortgage ratio (which is the Credit Limit for the related Mortgage Loan,
provided such Mortgage Loan was in the second lien position, divided by the sum
of such Credit Limit and the outstanding principal balance of any mortgage loan
senior to the related Mortgage Loan) was approximately _____%. The weighted
average third mortgage ratio (which is the Credit Limit for the related Mortgage
Loan, provided such Mortgage Loan was in the third lien position, divided by the
sum of such Credit Limit and the outstanding principal balance of any mortgage
loan senior to the related Mortgage Loan) was approximately _____%. As of the
Cut-off Date, approximately _____% by Cut-off Date Principal Balance of the
Mortgage Loans represented first liens on the related Mortgaged Properties,
approximately _____% of the Mortgage Loans represented second liens and
approximately _____% of the Mortgage Loans represented third liens. As of the
Cut-off Date, approximately _____% of the Mortgage Loans are secured by
Mortgaged Properties which are single-family residences and _____% were
owner-occupied. As of the Cut-off Date, approximately _____%, _____%, _____%,
_____%, _____% and _____% by Cut-off Date Principal Balance are located in
__________, ________, __________, _______, ______ and ________], respectively.

MORTGAGE LOAN TERMS

A borrower may access a Mortgage Loan by writing a check in a minimum
amount of [$250]. The Mortgage Loans bear interest at a variable rate which
changes monthly on the first business day of the related month with changes in
the applicable Index Rate. The Mortgage Loans are subject to a maximum per annum
interest rate (the "Maximum Rate") ranging from _____% to _____% per annum and
subject to applicable usury limitations. As of the Cut-off Date, the weighted
average Maximum Rate was approximately _____%. See "Certain Legal Aspects of the
Loans--Applicability of Usury Laws" in the Prospectus. The daily periodic rate
on the Mortgage Loans (the "Loan Rate") is the sum of the Index Rate plus the
spread (the "Margin") which generally ranges between _____% and _____% and had a
weighted average, as of the Cut-off Date, of approximately _____%, divided by
365 days. The "Index Rate" is based on [the highest "prime rate" published in
the "Money Rates" table of The Wall Street Journal as of the first business day
of each calendar month] [other applicable index].

In general, the home equity loans may be drawn upon for a period (the
"Draw Period") of either five years (which may be extendible for an additional
five years, upon the approval of __________________ or three years. Home equity
loans with an initial Draw Period of five years, which constitute approximately
_____% of the Mortgage Loans by Cut-off Date Principal Balance, are subject to a
fifteen year repayment period (the "Repayment Period") following the end of the
Draw Period during which the outstanding principal balance of the loan will be
repaid in monthly installments equal to 1/180 of the outstanding principal
balance as of the end of the Draw Period. Mortgage Loans with a Draw Period of
three years, which constitute approximately _____% of the Mortgage Loans by
Cut-off Date Principal Balance, are subject to a ten year Repayment Period
following the end of the Draw Period during which the outstanding principal
balance of the loan will be paid in monthly installments equal to 1/120 of the
outstanding principal balance as of the end of the Draw Period.

The minimum payment due during the Draw Period will be equal to the
finance charges accrued on the outstanding principal balance of the home equity
loan during the related billing period. The minimum payment due during the
repayment period will be equal to the sum of the finance charges

S-28

<PAGE> 31

accrued on the outstanding principal balance of the Mortgage Loan during the
related billing period and the principal payment described above.

Set forth below is a description of certain characteristics of the
Mortgage Loans as of the Cut-off Date:

PRINCIPAL BALANCES
<TABLE>
<CAPTION>

<S> <C> <C> <C>
$_______ to $_________............... $ %
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ and over....................
------ ------- -------
Total.............................. $ 100.00%
====== ======= =======
</TABLE>

S-29

<PAGE> 32

GEOGRAPHIC DISTRIBUTION(1)

Number of Percent of Pool
Mortgage Cut-off Date by Cut-off Date
State Loans Principal Balance Principal Balance
- ----- -------- ----------------- -----------------
<S> <C> <C> <C>
$ %

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

Total.............................. $ 100.00%
====== ========== =========
</TABLE>

- ----------
(1) Geographic location is determined by the address of the Mortgaged
Property securing the related Mortgage Loan.

COMBINED LOAN-TO-VALUE RATIOS(1)
<TABLE>
<CAPTION>

Number of Percent of Pool
Range of Combined Mortgage Cut-off Date by Cut-off Date
Loan-to-Value Ratios Loans Principal Balance Principal Balance
- -------------------- --------- ----------------- -----------------
<S> <C> <C> <C>
$_______ to $_________............... $ %
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ and over....................
------- ------- -------

Total.............................. $ 100.00%
======= ======= =======
</TABLE>

- ------------
(1) The ratio (expressed as a percentage) of (A) the sum of (i) the Credit
Limit of the Mortgage Loans and (ii) any outstanding principal balances
of mortgage loans senior to the Mortgage Loans (calculated at the date
of origination of the Mortgage Loans) to (B) the lesser of (i) the
appraised value of the related Mortgaged Property as set forth in loan
files at such date of origination or (ii) in the case of a Mortgaged
Property purchased within one year of the origination of the related
Mortgage Loan, the purchase price of such Mortgaged Property.

S-30

<PAGE> 33

PROPERTY TYPE

Number of Percent of Pool
Mortgage Cut-off Date by Cut-off Date
Property Type Loans Principal Balance Principal Balance
- ------------- --------- ----------------- -----------------
<S> <C> <C> <C>
Single Family........................ $ %
Two- to Four-Family..................
Condominium..........................
PUD..................................
-------- ------------ -------

Total.............................. $ 100.00%
======== ============ =======
</TABLE>

LIEN PRIORITY

Number of Percent of Pool
Mortgage Cut-off Date by Cut-off Date
Lien Priority Loans Principal Balance Principal Balance
- ------------- -------- ----------------- -----------------
<S> <C> <C> <C>
First Lien........................... $ %
Second Lien..........................
Third Lien...........................

Total.............................. $ 100.00%
======== ============= =======
</TABLE>

LOAN RATES(1)

<TABLE>
<CAPTION>
Number of Percent of Pool
Range of Mortgage Cut-off Date by Cut-off Date
Loan Rates Loans Principal Balance Principal Balance
---------- --------- ----------------- -----------------
<S> <C> <C>
$_______ to $_________............... $ %
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............

</TABLE>

S-31

<PAGE> 34

<TABLE>
<S> <C> <C> <C>
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
-------- ------- -------

Total.............................. $ 100.00%
======== ======= =======
</TABLE>

- ----------
(1) Approximately % of the Mortgage Loans by Cut-Off Date Principal Balance
are subject to an introductory rate of _____% per annum.

S-32

<PAGE> 35

MARGIN

Number of Percent of Pool
Range of Mortgage Cut-off Date by Cut-off Date
Margins Loans Principal Balance Principal Balance
------- --------- ----------------- -----------------
<S> <C> <C> <C>
$_______ to $_________............... $ %
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
-------- ------- -------

Total.............................. $ 100.00%
======== ======= =======
</TABLE>

CREDIT LIMIT UTILIZATION RATES

<TABLE>
<CAPTION>
Number of Percent of Pool
Range of Credit Limit Mortgage Cut-off Date by Cut-off Date
Utilization Rates Loans Principal Balance Principal Balance
- ----------------- --------- ----------------- -----------------
<S> <C> <C> <C>
$_______ to $_________............... $ %
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
-------- ------- -------

Total.............................. $ 100.00%
======== ======= =======
</TABLE>

CREDIT LIMITS

S-33

<PAGE> 36

Number of Percent of Pool
Mortgage Cut-off Date by Cut-off Date
Range of Credit Limits Loans Principal Balance Principal Balance
- ---------------------- --------- ----------------- -----------------
<S> <C> <C> <C>
$_______ to $_________............... $ %
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ to $_________...............
$_______ and over....................
-------- ------- -------

Total.............................. $ 100.00%
======== ======= =======
</TABLE>

MAXIMUM RATES

<TABLE>
<CAPTION>
Number of Percent of Pool
Mortgage Cut-off Date by Cut-off Date
Maximum Rates Loans Principal Balance Principal Balance
------------- --------- ----------------- -----------------
<S> <C> <C> <C>
$-------............................. $ %
$-------.............................
$------- ............................
$------- ............................
-------- ------- -------

Total.............................. $ 100.00%
======== ======= =======

</TABLE>

S-34

<PAGE> 37

MONTHS REMAINING TO SCHEDULED MATURITY(1)

<TABLE>
<CAPTION>
Number of Percent of Pool
Range of Months Mortgage Cut-off Date by Cut-off Date
Remaining to Scheduled Maturity Loans Principal Balance Principal Balance
- ------------------------------- --------- ----------------- -----------------
<S> <C> <C> <C>
_______ to _________................. $ %
_______ to _________.................
_______ to _________.................
_______ to _________.................
_______ to _________.................
_______ to _________.................
_______ to _________.................
_______ to _________.................
_______ to _________.................
_______ to _________.................
_______ to _________.................
-------- ------- -------

Total.............................. $ 100.00%
======== ======= =======
</TABLE>

ORIGINATION YEAR

<TABLE>
<CAPTION>
Number of Percent of Pool
Mortgage Cut-off Date by Cut-off Date
Origination Year Loans Principal Balance Principal Balance
---------------- --------- ----------------- -----------------
<S> <C> <C> <C>
$---------........................... $ %
$---------...........................
-------- ------- -------

Total.............................. $ 100.00%
======== ======= =======
</TABLE>

DELINQUENCY STATUS

<TABLE>
<CAPTION>
Number of Percent of Pool
Mortgage Cut-off Date by Cut-off Date
Number of Days Delinquent Loans Principal Balance Principal Balance
- ------------------------- --------- ----------------- -----------------
<S> <C> <C> <C>
0 to 29.............................. $ %
30 to 59.............................
60 to 89.............................
-------- ------- -------

Total.............................. $ 100.00%
======== ======= =======
</TABLE>

S-35

<PAGE> 38

MATURITY AND PREPAYMENT CONSIDERATIONS

The Agreement, except as otherwise described herein, provides that the
Certificateholders will be entitled to receive on each Distribution Date
distributions of principal, in the amounts described herein under "Description
of the Certificates--Distributions on the Certificates," until the Certificate
Principal Balance is reduced to zero. During the Managed Amortization Period,
Certificateholders will receive amounts from Principal Collections based upon
their Fixed Allocation Percentage subject to reduction as described below.
During the Rapid Amortization Period, Certificateholders will receive amounts
from Principal Collections based solely upon their Fixed Allocation Percentage.
Because prior distributions of Principal Collections to Certificateholders serve
to reduce the Investor Floating Allocation Percentage but do not change their
Fixed Allocation Percentage, allocations of Principal Collections based on the
Fixed Allocation Percentage may result in distributions of principal to the
Certificateholders in amounts that are, in most cases, greater relative to the
declining balance of the Mortgage Loans than would be the case if the Investor
Floating Allocation Percentage were used to determine the percentage of
Principal Collections distributed to Certificateholders. This is especially true
during the Rapid Amortization Period when the Certificateholders are entitled to
receive Investor Principal Collections and not a lesser amount. In addition,
Investor Interest Collections may be distributed as principal to
Certificateholders in connection with the Accelerated Principal Distribution
Amount, if any. Moreover, to the extent of losses allocable to the
Certificateholders, Certificateholders may also receive as payment of principal
the amount of such losses either from Investor Interest Collections or, in some
instances, draws under the Policy. The level of losses may therefore affect the
rate of payment of principal on the Certificates.

To the extent obligors make more draws than principal payments, the
Transferor Interest may grow. Because during the Rapid Amortization Period the
Certificateholders share of Principal Collections is based upon its Fixed
Allocation Percentage (without reduction), an increase in the Transferor
Interest due to additional draws may also result in Certificateholders receiving
principal at a greater rate. The Agreement permits the Transferor, at its
option, but subject to the satisfaction of certain conditions specified in the
Agreement, including the conditions described below, to remove certain Mortgage
Loans from the Trust Fund at any time during the life of the Trust Fund, so long
as the Transferor Interest (after giving effect to such removal) is not less
than the Minimum Transferor Interest. Such removals may affect the rate at which
principal is distributed to Certificateholders by reducing the overall Pool
Balance and thus the amount of Principal Collections. See "Description of the
Certificates--Optional Retransfers of Mortgage Loans to the Transferor" herein.

All of the Mortgage Loans may be prepaid in full or in part at any
time. [However, Mortgage Loans secured by Mortgaged Properties in California are
subject to an account termination fee equal to the lesser of $350 and six months
interest on the amount prepaid, to the extent the prepaid amount exceeds 20% of
the unpaid principal balance, if the account is terminated on or before its
fifth year anniversary. In addition, Mortgage Loans secured by Mortgaged
Properties in other jurisdictions may be subject to account termination fees to
the extent permitted by law. In general, such account termination fees do not
exceed $350 and do not apply to accounts terminated subsequent to a date
designated in the related Mortgage Note which, depending on the jurisdiction,
ranges between [six months and five years] following origination.] The
prepayment experience with respect to the Mortgage Loans will affect the
weighted average life of the Certificates.

The rate of prepayment on the Mortgage Loans cannot be predicted.
Neither the Depositor nor the Master Servicer is aware of any publicly available
studies or statistics on the rate of prepayment of such Mortgage Loans.
Generally, home equity revolving credit lines are not viewed by borrowers as
permanent financing. Accordingly, the Mortgage Loans may experience a higher
rate of prepayment than traditional first mortgage loans. On the other hand,
because the Mortgage Loans amortize as described

S-36

<PAGE> 39

under "Description of the Mortgage Loans--Mortgage Loan Terms" herein, rates of
principal payment on the Mortgage Loans will generally be slower than those of
traditional fully-amortizing first mortgages in the absence of prepayments on
such Mortgage Loans. The prepayment experience of the Trust Fund with respect to
the Mortgage Loans may be affected by a wide variety of factors, including
general economic conditions, prevailing interest rate levels, the availability
of alternative financing, homeowner mobility, the frequency and amount of any
future draws on the Credit Line Agreements and changes affecting the
deductibility for Federal income tax purposes of interest payments on home
equity credit lines. Substantially all of the Mortgage Loans contain
"due-on-sale" provisions, and, with respect to the Mortgage Loans, the Master
Servicer intends to enforce such provisions, unless such enforcement is not
permitted by applicable law. The enforcement of a "due-on-sale" provision will
have the same effect as a prepayment of the related Mortgage Loan. See "Certain
Legal Aspects of The Loans--Due-on-Sale Clauses" in the Prospectus.

The yield to an investor who purchases the Certificates in the
secondary market at a price other than par will vary from the anticipated yield
if the rate of prepayment on the Mortgage Loans is actually different than the
rate anticipated by such investor at the time such Certificates were purchased.

Collections on the Mortgage Loans may vary because, among other things,
borrowers may make payments during any month as low as the minimum monthly
payment for such month or as high as the entire outstanding principal balance
plus accrued interest and the fees and charges thereon. It is possible that
borrowers may fail to make scheduled payments. Collections on the Mortgage Loans
may vary due to seasonal purchasing and payment habits of borrowers.

No assurance can be given as to the level of prepayments that will be
experienced by the Trust Fund and it can be expected that a portion of borrowers
will not prepay their Mortgage Loans to any significant degree. See "Yield and
Prepayment Considerations" in the Prospectus.

DESCRIPTION OF THE CERTIFICATES

The Certificates will be issued pursuant to the Agreement. The form of
the Agreement has been filed as an exhibit to the Registration Statement of
which this Prospectus Supplement and the Prospectus is a part. The following is
a description of the material provisions of the Agreement. Wherever particular
sections or defined terms of the Agreement are referred to, such sections or
defined terms are hereby incorporated herein by reference.

GENERAL

The Certificates will be issued in denominations of [$1,000] and
multiples of [$1] in excess thereof and will evidence specified undivided
interests in the Trust Fund. The property of the Trust Fund will consist of, to
the extent provided in the Agreement: (i) each of the Mortgage Loans that from
time to time are subject to the Agreement; (ii) collections on the Mortgage
Loans received after the Cut-off Date (exclusive of payments in respect of
accrued interest due on or prior to the Cut-off Date or due in the month of
_____ ); (iii) Mortgaged Properties relating to the Mortgage Loans that are
acquired by foreclosure or deed in lieu of foreclosure; (iv) the Collection
Account and the Security Account for the Certificates (excluding net earnings
thereon); (v) the Policy; (vi) the Spread Account (for the benefit of the
Certificate Insurer and the Certificateholders); and (vii) an assignment of the
Depositor's rights under the Purchase Agreement. Definitive Certificates (as
defined below), if issued, will be transferable and exchangeable at the
corporate trust office of the Trustee, which will initially maintain the
Security Register for the Certificates. See "--Book-Entry Certificates" below.
No service charge will be made

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for any registration of exchange or transfer of Certificates, but the Trustee
may require payment of a sum sufficient to cover any tax or other governmental
charge.

The aggregate undivided interest in the Trust Fund represented by the
Certificates as of the Closing Date will equal $ _____ (the "Original Invested
Amount"), which represents __% of the Cut-off Date Pool Balance. The "Original
Certificate Principal Balance" will equal $ _____. Following the Closing Date,
the "Invested Amount" with respect to any Distribution Date will be an amount
equal to the Original Invested Amount minus (i) the amount of Investor Principal
Collections previously distributed to Certificateholders, and minus (ii) an
amount equal to the product of the Investor Floating Allocation Percentage and
the Liquidation Loss Amounts (each as defined herein). The principal amount of
the outstanding Certificates (the "Certificate Principal Balance") on any
Distribution Date is equal to the Original Certificate Principal Balance minus
the aggregate of amounts actually distributed as principal to the
Certificateholders. See "--Distributions on the Certificates" below. Each
Certificate represents the right to receive payments of interest at the
Certificate Rate and payments of principal as described below.

The Transferor will own the remaining undivided interest in the
Mortgage Loans (the "Transferor Interest"), which is equal to the Pool Balance
less the Invested Amount. The Transferor Interest will initially equal $ , which
represents _% of the Cut-off Date Pool Balance. The Transferor as of any date is
the owner of the Transferor Interest which initially will be the Seller. In
general, the Pool Balance will vary each day as principal is paid on the
Mortgage Loans, liquidation losses are incurred, Additional Balances are drawn
down by borrowers and Mortgage Loans are transferred to the Trust Fund.

The Transferor has the right to sell or pledge the Transferor Interest
at any time, provided (i) the Rating Agencies (as defined herein) have notified
the Transferor and the Trustee in writing that such action will not result in
the reduction or withdrawal of the ratings assigned to the Certificates, and
(ii) certain other conditions specified in the Agreement are satisfied.

BOOK-ENTRY CERTIFICATES

The Certificates will be book-entry Certificates (the "Book-Entry
Certificates"). Persons acquiring beneficial ownership interests in the
Certificates ("Certificate Owners") may elect to hold their Certificates through
the Depository Trust Company ("DTC") in the United States, or CEDEL or Euroclear
(in Europe) if they are participants of such systems, or indirectly through
organizations which are participants in such systems. The Book-Entry
Certificates will be issued in one or more certificates which equal the
aggregate principal balance of the Certificates and will initially be registered
in the name of Cede & Co., the nominee of DTC. CEDEL and Euroclear will hold
omnibus positions on behalf of their participants through customers' securities
accounts in CEDEL's and Euroclear's names on the books of their respective
depositaries which in turn will hold such positions in customers' securities
accounts in the depositaries' names on the books of DTC. Citibank will act as
depositary for CEDEL and Chase will act as depositary for Euroclear (in such
capacities, individually the "Relevant Depositary" and collectively the
"European Depositaries"). Investors may hold such beneficial interests in the
Book-Entry Certificates in minimum denominations representing Certificate
Principal Balances of [$1,000] and in multiples of [$1] in excess thereof.
Except as described below, no person acquiring a Book-Entry Certificate (each, a
"beneficial owner") will be entitled to receive a physical certificate
representing such Certificate (a "Definitive Certificate"). Unless and until
Definitive Certificates are issued, it is anticipated that the only
"Certificateholder" of the Certificates will be Cede & Co., as nominee of DTC.
Certificate Owners will not be Certificateholders as that term is used in the
Agreement. Certificate Owners are only permitted to exercise their rights
indirectly through the participating organizations that utilize the services of
DTC, including securities brokers and dealers, banks and trust companies and
clearing corporations and certain other organizations ("Participants") and DTC.

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The beneficial owner's ownership of a Book-Entry Certificate will be
recorded on the records of the brokerage firm, bank, thrift institution or other
financial intermediary (each, a "Financial Intermediary") that maintains the
beneficial owner's account for such purpose. In turn, the Financial
Intermediary's ownership of such Book-Entry Certificate will be recorded on the
records of DTC (or of a participating firm that acts as agent for the Financial
Intermediary, whose interest will in turn be recorded on the records of DTC, if
the beneficial owner's Financial Intermediary is not a DTC participant and on
the records of CEDEL or Euroclear, as appropriate).

Certificate Owners will receive all distributions of principal of, and
interest on, the Certificates from the Trustee through DTC and DTC participants.
While the Certificates are outstanding (except under the circumstances described
below), under the rules, regulations and procedures creating and affecting DTC
and its operations (the "Rules"), DTC is required to make book-entry transfers
among Participants on whose behalf it acts with respect to the Certificates and
is required to receive and transmit distributions of principal of, and interest
on, the Certificates. Participants and organizations that have indirect access
to the DTC system, such as banks, brokers, dealers and trust companies that
clear through or maintain a custodial relationship with a Participant, either
directly or indirectly ("Indirect Participants") with whom Certificate Owners
have accounts with respect to Certificates are similarly required to make
book-entry transfers and receive and transmit such distributions on behalf of
their respective Certificate Owners. Accordingly, although Certificate Owners
will not possess certificates, the Rules provide a mechanism by which
Certificate Owners will receive distributions and will be able to transfer their
interest.

Certificate Owners will not receive or be entitled to receive
certificates representing their respective interests in the Certificates, except
under the limited circumstances described below. Unless and until Definitive
Certificates are issued, Certificate Owners who are not Participants may
transfer ownership of Certificates only through Participants and Indirect
Participants by instructing such Participants and Indirect Participants to
transfer Certificates, by book-entry transfer, through DTC for the account of
the purchasers of such Certificates, which account is maintained with their
respective Participants. Under the Rules and in accordance with DTC's normal
procedures, transfers of ownership of Certificates will be executed through DTC
and the accounts of the respective Participants at DTC will be debited and
credited. Similarly, the Participants and Indirect Participants will make debits
or credits, as the case may be, on their records on behalf of the selling and
purchasing Certificate Owners.

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

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

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

DTC which is a New York-chartered limited purpose trust company,
performs services for its participants, some of which (and/or their
representatives) own DTC. In accordance with its normal procedures, DTC is
expected to record the positions held by each DTC participant in the Book-Entry
Certificates, whether held for its own account or as a nominee for another
person. In general, beneficial ownership of Book-Entry Certificates will be
subject to the rules, regulations and procedures governing DTC and DTC
participants as in effect from time to time.

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

Euroclear was created in 1968 to hold securities for participants of
Euroclear ("Euroclear Participants") and to clear and settle transactions
between Euroclear Participants through simultaneous electronic book-entry
delivery against payment, thereby eliminating the need for physical movement of
certificates and any risk from lack of simultaneous transfers of securities and
cash. Transactions may now be settled in any of 32 currencies, including United
States dollars. Euroclear includes various other services, including securities
lending and borrowing and interfaces with domestic markets in several countries
generally similar to the arrangements for cross-market transfers with DTC
described above. Euroclear is operated by the Brussels, Belgium office of Morgan
Guaranty Trust Company of New York (the "Euroclear Operator"), under contract
with Euroclear Clearance Systems S.C., a Belgian cooperative corporation (the
"Cooperative"). All operations are conducted by the Euroclear Operator, and all
Euroclear securities clearance accounts and Euroclear cash accounts are accounts
with the Euroclear Operator, not the Cooperative. The Cooperative establishes
policy for Euroclear on behalf of Euroclear Participants. Euroclear Participants
include banks (including central banks), securities brokers and dealers and
other professional financial intermediaries. Indirect access to Euroclear is
also available to other firms that clear through or maintain a custodial
relationship with a Euroclear Participant, either directly or indirectly.

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

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

Distributions on the Book-Entry Certificates will be made on each
Distribution Date by the Trustee to DTC. DTC will be responsible for crediting
the amount of such payments to the accounts of the applicable DTC participants
in accordance with DTC's normal procedures. Each DTC participant will be
responsible for disbursing such payments to the beneficial owners of the
Book-Entry Certificates that it represents and to each Financial Intermediary
for which it acts as agent. Each such Financial Intermediary will be responsible
for disbursing funds to the beneficial owners of the Book-Entry Certificates
that it represents.

Under a book-entry format, beneficial owners of the Book-Entry
Certificates may experience some delay in their receipt of payments, since such
payments will be forwarded by the Trustee to Cede. Distributions with respect to
Certificates held through CEDEL or Euroclear will be credited to the cash
accounts of CEDEL Participants or Euroclear Participants in accordance with the
relevant system's rules and procedures, to the extent received by the Relevant
Depositary. Such distributions will be subject to tax reporting in accordance
with relevant United States tax laws and regulations. See "Certain Federal
Income Tax Consequences--Foreign Investors" and "--Backup Withholding" herein.
Because DTC can only act on behalf of Financial Intermediaries, the ability of a
beneficial owner to pledge Book-Entry Certificates to persons or entities that
do not participate in the Depository system, or otherwise take actions in
respect of such Book-Entry Certificates, may be limited due to the lack of
physical certificates for such Book-Entry Certificates. In addition, issuance of
the Book-Entry Certificates in book-entry form may reduce the liquidity of such
Certificates in the secondary market since certain potential investors may be
unwilling to purchase Certificates for which they cannot obtain physical
certificates.

Monthly and annual reports on the Trust Fund provided by the Master
Servicer to CEDE, as nominee of DTC, may be made available to beneficial owners
upon request, in accordance with the rules, regulations and procedures creating
and affecting the Depository, and to the Financial Intermediaries to whose DTC
accounts the Book-Entry Certificates of such beneficial owners are credited.

DTC has advised the Transferor and the Trustee that, unless and until
Definitive Certificates are issued, DTC will take any action permitted to be
taken by the holders of the Book-Entry Certificates under the Agreement only at
the direction of one or more Financial Intermediaries to whose DTC accounts the
Book-Entry Certificates are credited, to the extent that such actions are taken
on behalf of Financial Intermediaries whose holdings include such Book-Entry
Certificates. CEDEL or the Euroclear Operator, as the case may be, will take any
other action permitted to be taken by a Certificateholder under the Agreement on
behalf of a CEDEL Participant or Euroclear Participant only in accordance with
its relevant rules and procedures and subject to the ability of the Relevant
Depositary to effect such

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actions on its behalf through DTC. DTC may take actions, at the direction of the
related Participants, with respect to some Certificates which conflict with
actions taken with respect to other Certificates.

Definitive Certificates will be issued to beneficial owners of the
Book-Entry Certificates, or their nominees, rather than to DTC, only if (a) DTC
or the Transferor advises the Trustee in writing that DTC is no longer willing,
qualified or able to discharge properly its responsibilities as nominee and
depository with respect to the Book-Entry Certificates and the Transferor or the
Trustee is unable to locate a qualified successor, (b) the Transferor, at its
sole option, elects to terminate a book-entry system through DTC or (c) after
the occurrence of an Event of Servicing Termination (as defined herein),
beneficial owners having Percentage Interests aggregating not less than 51% of
the Certificate Principal Balance of the Book-Entry Certificates advise the
Trustee and DTC through the Financial Intermediaries and the DTC participants in
writing that the continuation of a book-entry system through DTC (or a successor
thereto) is no longer in the best interests of beneficial owners.

Upon the occurrence of any of the events described in the immediately
preceding paragraph, the Trustee will be required to notify all beneficial
owners of the occurrence of such event and the availability through DTC of
Definitive Certificates. Upon surrender by DTC of the global certificate or
certificates representing the Book-Entry Certificates and instructions for
re-registration, the Trustee will issue Definitive Certificates, and thereafter
the Trustee will recognize the holders of such Definitive Certificates as
Certificateholders under the Agreement.

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

ASSIGNMENT OF MORTGAGE LOANS

At the time of issuance of the Certificates, the Depositor will
transfer to the Trust Fund all of its right, title and interest in and to each
Mortgage Loan (including any Additional Balances arising in the future), related
Credit Line Agreements, mortgages and other related documents (collectively, the
"Related Documents"), including all collections received on or with respect to
each such Mortgage Loan after the Cut-off Date (exclusive of payments in respect
of accrued interest due on or prior to the Cut-off Date or due in the month of
_____ ). The Trustee, concurrently with such transfer, will deliver the
Certificates to the Depositor and the Transferor Certificate (as defined in the
Agreement) to the Transferor. Each Mortgage Loan transferred to the Trust Fund
will be identified on a schedule (the "Mortgage Loan Schedule") delivered to the
Trustee pursuant to the Agreement. Such schedule will include information as to
the Cut-off Date Principal Balance of each Mortgage Loan, as well as information
with respect to the Loan Rate.

The Agreement will permit the Seller to maintain possession of the
Related Documents and certain other documents relating to the Mortgage Loans
(the "Mortgage Files") and assignments of the Mortgage Loans to the Trustee will
not be required to be recorded for so long as the long-term senior unsecured
debt of __________________ is rated at least " _____ " by ___ and " _____ " by
_______. In the event that the long-term senior unsecured debt rating of
__________________ does not satisfy the above-described standards (an
"Assignment Event"), _____________________ will have 90 days to record
assignments of the mortgages for each such Mortgage Loan in favor of the Trustee
and 60 days to deliver the Mortgage Files pertaining to each such Mortgage Loan
to the Trustee (unless opinions of counsel satisfactory to the Rating Agencies
and the Certificate Insurer to the effect that recordation of

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such assignments or delivery of such documentation is not required in the
relevant jurisdiction to protect the interest of ____________________ and the
Trustee in the Mortgage Loans).

Within [90] days of an Assignment Event, the Trustee will review the
Mortgage Loans and the Related Documents and if any Mortgage Loan or Related
Document is found to be defective in any material respect and such defect is not
cured within [90] days following notification thereof to the Seller and the
Depositor by the Trustee, the Seller will be obligated to accept the transfer of
such Mortgage Loan from the Trust Fund. Upon such transfer, the Principal
Balance of such Mortgage Loan will be deducted from the Pool Balance, thus
reducing the amount of the Transferor Interest. If the deduction would cause the
Transferor Interest to become less than the Minimum Transferor Interest at such
time (a "Transfer Deficiency"), the Seller will be obligated to either
substitute an Eligible Substitute Mortgage Loan or make a deposit into the
Collection Account in the amount (the "Transfer Deposit Amount") equal to the
amount by which the Transferor Interest would be reduced to less than the
Minimum Transferor Interest at such time. Any such deduction, substitution or
deposit, will be considered a payment in full of such Mortgage Loan. Any
Transfer Deposit Amount will be treated as a Principal Collection.
Notwithstanding the foregoing, however, prior to all required deposits to the
Collection Account being made no such transfer shall be considered to have
occurred unless such deposit is actually made. The obligation of the Seller to
accept a transfer of a Defective Mortgage Loan is the sole remedy regarding any
defects in the Mortgage Loans and Related Documents available to the Trustee or
the Certificateholders.

An "Eligible Substitute Mortgage Loan" is a mortgage loan substituted
by the Depositor for a Defective Mortgage Loan which must, on the date of such
substitution, (i) have an outstanding Principal Balance (or in the case of a
substitution of more than one Mortgage Loan for a Defective Mortgage Loan, an
aggregate Principal Balance), not __% more or less than the Transfer Deficiency
relating to such Defective Mortgage Loan; (ii) have a Loan Rate not less than
the Loan Rate of the Defective Mortgage Loan and not more than __% in excess of
the Loan Rate of such Defective Mortgage Loan; [(iii) have a Loan Rate based on
the same Index with adjustments to such Loan Rate made on the same Interest Rate
Adjustment Date as that of the Defective Mortgage Loan; (iv) have a Margin that
is not less than the Margin of the Defective Mortgage Loan and not more than ___
basis points higher than the Margin for the Defective Mortgage Loan;] (v) have a
mortgage of the same or higher level of priority as the mortgage relating to the
Defective Mortgage Loan; (vi) have a remaining term to maturity not more than
___ months earlier and not more than __ months later than the remaining term to
maturity of the Defective Mortgage Loan; (vii) comply with each representation
and warranty as to the Mortgage Loans set forth in the Agreement (deemed to be
made as of the date of substitution); (viii) in general, have an original
Combined Loan-to-Value Ratio not greater than that of the Defective Mortgage
Loan; and (ix) satisfy certain other conditions specified in the Agreement. To
the extent the Principal Balance of an Eligible Substitute Mortgage Loan is less
than the Principal Balance of the related Defective Mortgage Loan and to the
extent that the Transferor Interest would be reduced below the Minimum
Transferor Interest, the Seller will be required to make a deposit to the
Collection Account equal to such difference.

The Seller will make certain representations and warranties as to the
accuracy in all material respects of certain information furnished to the
Trustee with respect to each Mortgage Loan (e.g., Cut-off Date Principal Balance
and the Loan Rate). In addition, the Seller will represent and warrant on the
Closing Date that at the time of transfer to the Depositor, the Seller has
transferred or assigned all of its rights, title and interest in each Mortgage
Loan and the Related Documents, free of any lien (subject to certain
exceptions). Upon discovery of a breach of any such representation and warranty
which materially and adversely affects the interests of the Certificateholders
or the Certificate Insurer in the related Mortgage Loan and Related Documents,
the Seller will have a period of [90] days after discovery or notice of the
breach to effect a cure. If the breach cannot be cured within the [90-day]
period, the

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Seller will be obligated to accept a transfer of the Defective Mortgage Loan
from the Trust Fund. The same procedure and limitations that are set forth in
the second preceding paragraph for the transfer of Defective Mortgage Loans will
apply to the transfer of a Mortgage Loan that is required to be transferred
because of such breach of a representation or warranty in the Agreement that
materially and adversely affects the interests of the Certificateholders.

Mortgage Loans required to be transferred to the Seller as described in
the preceding paragraphs are referred to as "Defective Mortgage Loans."

AMENDMENTS TO CREDIT LINE AGREEMENTS

Subject to applicable law, the Master Servicer may change the terms of
the Credit Line Agreements at any time provided that such changes (i) do not
adversely affect the interest of the Certificateholders or the Certificate
Insurer, and (ii) are consistent with prudent business practice. In addition,
the Agreement permits the Master Servicer, within certain limitations described
therein, to increase the Credit Limit of the related Mortgage Loan or reduce the
Margin for such Mortgage Loan.

OPTIONAL TRANSFERS OF MORTGAGE LOANS TO THE TRANSFEROR

In order to permit the Transferor to remove Mortgage Loans from the
Trust Fund at such times, if any, as the overcollateralization exceeds the level
required to maintain the ratings on the Certificates, on any Distribution Date
the Transferor may, but shall not be obligated to, remove on such Distribution
Date (the "Transfer Date") from the Trust Fund, certain Mortgage Loans without
notice to the Certificateholders. The Transferor is permitted to designate the
Mortgage Loans to be removed. Mortgage Loans so designated will only be removed
upon satisfaction of the following conditions: (i) no Rapid Amortization Event
(as defined herein) has occurred; (ii) the Transferor Interest as of such
Transfer Date (after giving effect to such removal) exceeds the Minimum
Transferor Interest; (iii) the transfer of any Mortgage Loans on any Transfer
Date during the Managed Amortization Period (as defined herein) shall not, in
the reasonable belief of the Transferor, cause a Rapid Amortization Event to
occur or an event which with notice or lapse of time or both would constitute a
Rapid Amortization Event; (iv) the Transferor shall have delivered to the
Trustee a "Mortgage Loan Schedule" containing a list of all Mortgage Loans
remaining in the Trust Funds after such removal; (v) the Transferor shall
represent and warrant that no selection procedures which the Transferor
reasonably believes are adverse to the interests of the Certificateholders or
the Certificate Insurer were used by the Transferor in selecting such Mortgage
Loans; (vi) in connection with the first such retransfer of Mortgage Loans, the
Rating Agencies shall have been notified of the proposed transfer and prior to
the Transfer Date shall not have notified the Transferor in writing that such
transfer would result in a reduction or withdrawal of the ratings assigned to
the Certificates without regard to the Policy; and (vii) the Transferor shall
have delivered to the Trustee and the Certificate Insurer an officer's
certificate confirming the conditions set forth in clauses (i) through (vi)
above.

As of any date of determination, the "Minimum Transferor Interest" is
an amount equal to the lesser of (a) _% of the Pool Balance on such date and (b)
the Transferor Interest as of the Closing Date.

PAYMENTS ON MORTGAGE LOANS; DEPOSITS TO COLLECTION ACCOUNT

The Trustee shall establish and maintain on behalf of the Master
Servicer an account (the "Collection Account") for the benefit of the
Certificateholders and the Transferor, as their interests may appear. The
Collection Account will be an Eligible Account (as defined herein). Subject to
the investment provision described in the following paragraphs, within two days
of receipt by the Master

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Servicer of amounts in respect of the Mortgage Loans (excluding amounts
representing administrative charges, annual fees, taxes, assessments, credit
insurance charges, insurance proceeds to be applied to the restoration or repair
of a Mortgaged Property or similar items), the Master Servicer will deposit such
amounts in the Collection Account. Amounts so deposited may be invested in
Eligible Investments (as described in the Agreement) maturing no later than one
Business Day prior to the date on which the amount on deposit therein is
required to be deposited in the Collection Account or on such Distribution Date
if approved by the Rating Agencies and the Certificate Insurer. Not later than
the third Business Day prior to each Distribution Date (the "Determination
Date"), the Master Servicer will notify the Trustee of the amount of such
deposit to be included in funds available for the related Distribution Date.

An "Eligible Account" is (i) an account that is maintained with a
depository institution whose debt obligations at the time of any deposit therein
have the highest short-term debt rating by the Rating Agencies, (ii) one or more
accounts with a depository institution having a minimum long-term unsecured debt
rating of "____" by _______ and "____" by ___, which accounts are fully insured
by either the Savings Association Insurance Fund ("SAIF") or the Bank Insurance
Fund ("BIF") of the Federal Deposit Insurance Corporation established by such
fund, (iii) a segregated trust account maintained with the Trustee or an
Affiliate of the Trustee in its fiduciary capacity or (iv) otherwise acceptable
to each Rating Agency and the Certificate Insurer as evidenced by a letter from
each Rating Agency and the Certificate Insurer to the Trustee, without reduction
or withdrawal of their then current ratings of the Certificates.

Eligible Investments are specified in the Agreement and are limited to
(i) obligations of the United States or any agency thereof, provided such
obligations are backed by the full faith and credit of the United States; (ii)
general obligations of or obligations guaranteed by any state of the United
States or the District of Columbia receiving the highest long-term debt rating
of each Rating Agency rating the Certificates, or such lower rating as will not
result in the downgrading or withdrawal of the ratings then assigned to the
Certificates by each such Rating Agency; (iii) commercial or finance company
paper which is then receiving the highest commercial or finance company paper
rating of each such Rating Agency, or such lower rating as will not result in
the downgrading or withdrawal of the ratings then assigned to the Certificates
by each such Rating Agency; (iv) certificates of deposit, demand or time
deposits, or bankers' acceptances issued by any depository institution or trust
company incorporated under the laws of the United States or of any state thereof
and subject to supervision and examination by federal and/or state banking
authorities, provided that the commercial paper and/or long term unsecured debt
obligations of such depository institution or trust company (or in the case of
the principal depository institution in a holding company system, the commercial
paper or long-term unsecured debt obligations of such holding company, but only
if Moody's Investors Service, Inc. ("Moody's") is not a Rating Agency) are then
rated one of the two highest long-term and the highest short-term ratings of
each such Rating Agency for such securities, or such lower ratings as will not
result in the downgrading or withdrawal of the rating then assigned to the
Certificates by any such Rating Agency; (iv) demand or time deposits or
certificates of deposit issued by any bank or trust company or savings
institution to the extent that such deposits are fully insured by the FDIC; (v)
guaranteed reinvestment agreements issued by any bank, insurance company or
other corporation containing, at the time of the issuance of such agreements,
such terms and conditions as will not result in the downgrading or withdrawal of
the rating then assigned to the Certificates by any such Rating Agency; (vi)
repurchase obligations with respect to any security described in clauses (i) and
(ii) above, in either case entered into with a depository institution or trust
company (acting as principal) described in clause (iv) above; (vii) securities
(other than stripped bonds, stripped coupons or instruments sold at a purchase
price in excess of 115% of the face amount thereof) bearing interest or sold at
a discount issued by any corporation incorporated under the laws of the United
States or any state thereof which, at the time of such investment, have one of
the two highest ratings of each Rating Agency (except if the Rating Agency is
Moody's, such rating shall be the highest commercial paper rating of Moody's for
any such securities), or such lower rating as will not result in the

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downgrading or withdrawal of the rating then assigned to the Certificates by any
such Rating Agency, as evidenced by a signed writing delivered by each such
Rating Agency; and (viii) such other investments having a specified stated
maturity and bearing interest or sold at a discount acceptable to each Rating
Agency as will not result in the downgrading or withdrawal of the rating then
assigned to the Certificates by any such Rating Agency, as evidenced by a signed
writing delivered by each such Rating Agency; provided that no such instrument
shall be a Permitted Investment if such instrument evidences the right to
receive interest only payments with respect to the obligations underlying such
instrument.

ALLOCATIONS AND COLLECTIONS

All collections on the Mortgage Loans will generally be allocated in
with the Credit Line Agreements between amounts collected in respect of interest
and amounts collected in respect of principal. As to any Distribution Date,
"Interest Collections" will be equal to the amounts collected during the related
Collection Period, including such portion of Net Liquidation Proceeds allocated
to interest pursuant to the terms of the Credit Line Agreements less Servicing
Fees for the related Collection Period.

As to any Distribution Date, "Principal Collections" will be equal to
the sum of (i) the amounts collected during the related Collection Period,
including such portion of Net Liquidation Proceeds allocated to principal
pursuant to the terms of the Credit Line Agreements and (ii) any Transfer
Deposit Amounts. "Net Liquidation Proceeds" with respect to a Mortgage Loan are
equal to the Liquidation Proceeds, reduced by related expenses, but not
including the portion, if any, of such amount that exceeds the Principal Balance
of the Mortgage Loan plus accrued and unpaid interest thereon to the end of the
Collection Period during which such Mortgage Loan became a Liquidated Mortgage
Loan. "Liquidation Proceeds" are the proceeds (excluding any amounts drawn on
the Policy) received in connection with the liquidation of any Mortgage Loan,
whether through trustee's sale, foreclosure sale or otherwise.

With respect to any Distribution Date, the portion of Interest
Collections allocable to the Certificates ("Investor Interest Collections") will
equal the product of (a) Interest Collections for such Distribution Date and (b)
the Investor Floating Allocation Percentage. With respect to any Distribution
Date, the "Investor Floating Allocation Percentage" is the percentage equivalent
of a fraction determined by dividing the Invested Amount at the close of
business on the preceding Distribution Date (or the Closing Date in the case of
the first Distribution Date) by the Pool Balance at the beginning of the related
Collection Period. The remaining amount of Interest Collections will be
allocated to the Transferor Interest.

Principal Collections will be allocated between the Certificateholders
and the Transferor ("Investor Principal Collections" and "Transferor Principal
Collections", respectively) as described herein.

The Trustee will deposit any amounts drawn under the Policy into the
Collection Account.

With respect to any date, the "Pool Balance" will be equal to the
aggregate of the Principal Balances of all Mortgage Loans as of such date. The
Principal Balance of a Mortgage Loan (other than a Liquidated Mortgage Loan) on
any day is equal to the Cut-off Date Principal Balance thereof, plus (i) any
Additional Balances in respect of such Mortgage Loan minus (ii) all collections
credited against the Principal Balance of such Mortgage Loan in accordance with
the related Credit Line Agreement prior to such day. The Principal Balance of a
Liquidated Mortgage Loan after final recovery of related Liquidation Proceeds
shall be zero.

DISTRIBUTIONS ON THE CERTIFICATES

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Beginning with the first Distribution Date (which will occur on
__________, 199_), distributions on the Certificates will be made by the Trustee
or the Paying Agent on each Distribution Date to the persons in whose names such
Certificates are registered at the close of business on the day prior to each
Distribution Date or, if the Certificates are no longer Book-Entry Certificates,
at the close of business on the last day of the month preceding such
Distribution Date (the "Record Date"). The term "Distribution Date" means the
fifteenth day of each month or, if such day is not a Business Day, then the next
succeeding Business Day. Distributions will be made by check or money order
mailed (or upon the request of a Certificateholder owning Certificates having
denominations aggregating at least $_________, by wire transfer or otherwise) to
the address of the person entitled thereto (which, in the case of Book-Entry
Certificates, will be DTC or its nominee) as it appears on the Certificate
Register in amounts calculated as described herein on the Determination Date.
However, the final distribution in respect of the Certificates will be made only
upon presentation and surrender thereof at the office or the agency of the
Trustee specified in the notice to Certificateholders of such final
distribution. For purposes of the Agreement, a "Business Day" is any day other
than (i) a Saturday or Sunday or (ii) a day on which banking institutions in New
York State are required or authorized by law to be closed.

Application of Interest Collections. On each Distribution Date, the
Trustee or the Paying Agent will apply the Investor Interest Collections in the
following manner and order of priority:

(i) as payment to the Trustee for its fee for services
rendered pursuant to the Agreement;

(ii) as payment for the premium for the Policy;

(iii) as payment for the accrued interest due and any overdue
accrued interest (with interest thereon to the extent permitted by law)
on the Certificate Principal Balance of the Certificates;

(iv) to pay Certificateholders the Investor Loss Amount for
such Distribution Date;

(v) as payment for any Investor Loss Amount for a previous
Distribution Date that was not previously (a) funded by Investor
Interest Collections, (b) absorbed by the Overcollateralization Amount,
(c) funded by amounts on deposit in the Spread Account or (d) funded by
draws on the Policy;

(vi) to reimburse prior draws made from the Policy (with
interest thereon);

(vii) to pay principal on the Certificates until the Invested
Amount exceeds the Certificate Principal Balance by the Required
Overcollateralization Amount (such amount so paid, the "Accelerated
Principal Distribution Amount");

(viii) to deposit any other amounts required to be deposited
in an account for the benefit of the Certificate Insurer and the
Certificateholders or owed to the Certificate Insurer pursuant to the
Insurance Agreement;

(ix) to pay certain amounts that may be required to be paid
to the Master Servicer pursuant to the Agreement; and

(x) to the Transferor to the extent permitted as described
herein.

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Payments to Certificateholders pursuant to clause (iii) will be
interest payments on the Certificates. Payments to Certificateholders pursuant
to clauses (iv), (v) and (vii) will be principal payments on the Certificates
and will therefore reduce the Certificate Principal Balance, however, payments
pursuant to clause (vii) will not reduce the Invested Amount. The Accelerated
Principal Distribution Amount is not guaranteed by the Policy.

To the extent that Investor Interest Collections are applied to pay the
interest on the Certificates, Investor Interest Collections may be insufficient
to cover Investor Loss Amounts. If such insufficiency results in the Certificate
Principal Balance exceeding the Invested Amount, a draw will be made on the
Policy in accordance with the terms of the Policy.

The "Required Overcollateralization Amount" shall be an amount set
forth in the Agreement. "Liquidation Loss Amount" means with respect to any
Liquidated Mortgage Loan, the unrecovered Principal Balance thereof during the
Collection Period in which such Mortgage Loan became a Liquidated Mortgage Loan,
after giving effect to the Net Liquidation Proceeds in connection therewith. The
"Investor Loss Amount" shall be the product of the Investor Floating Allocation
Percentage and the Liquidation Loss Amount for such Distribution Date.

A "Liquidated Mortgage Loan" means, as to any Distribution Date, any
Mortgage Loan in respect of which the Master Servicer has determined, based on
the servicing procedures specified in the Agreement, as of the end of the
preceding Collection Period that all Liquidation Proceeds which it expects to
recover with respect to the disposition of the related Mortgaged Property have
been recovered. The Investor Loss Amount will be allocated to the
Certificateholders.

As to any Distribution Date other than the first Distribution Date, the
"Collection Period" is the calendar month preceding each Distribution Date. As
to the first Distribution Date, the "Collection Period" is the period beginning
after the Cut-off Date and ending on the last day of _______________ 199_.

Interest will be distributed on each Distribution Date at the
Certificate Rate for the related Interest Period (as defined below). The
"Certificate Rate" for a Distribution Date will generally equal the sum of [(a)
LIBOR, calculated as specified below, as of the second LIBOR Business Day prior
to the immediately preceding Distribution Date (or as of two LIBOR Business Days
prior to the Closing Date, in the case of the first Distribution Date) plus (b)
____% per annum.] Notwithstanding the foregoing, in no event will the amount of
interest required to be distributed in respect of the Certificates on any
Distribution Date exceed a rate equal to the weighted average of the Loan Rates
(net of the Servicing Fee Rate, the fee payable to the Trustee and the rate at
which the premium payable to the Certificate Insurer is calculated) weighted on
the basis of the daily balance of each Mortgage Loan during the related billing
cycle prior to the Collection Period relating to such Distribution Date.

[Interest on the Certificates in respect of any Distribution Date will
accrue on the Certificate Principal Balance from the preceding Distribution Date
(or in the case of the first Distribution Date, from the date of the initial
issuance of the Certificates (the "Closing Date")) through the day preceding
such Distribution Date (each such period, an "Interest Period") on the basis of
the actual number of days in the Interest Period and a 360-day year.] Interest
payments on the Certificates will be funded from Investor Interest Collections
and, if necessary, from draws on the Policy.

[Calculation of the LIBOR Rate. On each Distribution Date, LIBOR shall
be established by the Trustee and as to any Interest Period, LIBOR will equal
the rate for United States dollar deposits for [one month] which appears on the
Telerate Screen Page 3750 as of 11:00 A.M., London time, on the second

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LIBOR Business Day prior to the first day of such Interest Period. "Telerate
Screen Page 3750" means the display designated as page 3750 on the Telerate
Service (or such other page as may replace page 3750 on that service for the
purpose of displaying London interbank offered rates of major banks). If such
rate does not appear on such page (or such other page as may replace that page
on that service, or if such service is no longer offered, such other service for
displaying LIBOR or comparable rates as may be selected by the Depositor after
consultation with the Trustee), the rate will be the Reference Bank Rate. The
"Reference Bank Rate" will be determined on the basis of the rates at which
deposits in U.S. Dollars are offered by the reference banks (which shall be
[three] major banks that are engaged in transactions in the London interbank
market, selected by the Depositor after consultation with the Trustee) as of
11:00 A.M., London time, on the day that is two LIBOR Business Days prior to the
immediately preceding Distribution Date to prime banks in the London interbank
market for a period of one month in amounts approximately equal to the principal
amount of the Certificates then outstanding. The Trustee will request the
principal London office of each of the reference banks to provide a quotation of
its rate. If at least two such quotations are provided, the rate will be the
arithmetic mean of the quotations. If on such date fewer than two quotations are
provided as requested, the rate will be the arithmetic mean of the rates quoted
by one or more major banks in New York City, selected by the Depositor after
consultation with the Trustee, as of 11:00 A.M., New York City time, on such
date for loans in U.S. Dollars to leading European banks for a period of one
month in amounts approximately equal to the principal amount of the Certificates
then outstanding. If no such quotations can be obtained, the rate will be LIBOR
for the prior Distribution Date. "LIBOR Business Day" means any day other than
(i) a Saturday or a Sunday or (ii) a day on which banking institutions in the
State of New York or in the city of London, England are required or authorized
by law to be closed.]

Transferor Collections. Collections allocable to the Transferor
Interest that are not distributed to Certificateholders will be distributed to
the Transferor only to the extent that such distribution will not reduce the
amount of the Transferor Interest as of the related Distribution Date below the
Minimum Transferor Interest. Amounts not distributed to the Transferor because
of such limitations will be retained in the Collection Account until the
Transferor Interest exceeds the Minimum Transferor Interest, at which time such
excess shall be released to the Transferor. If any such amounts are still
retained in the Collection Account upon the commencement of the Rapid
Amortization Period, such amounts will be paid to the Certificateholders as a
reduction of the Certificate Principal Balance.

Overcollateralization. The distribution of the aggregate Accelerated
Principal Distribution Amount, if any, to Certificateholders may result in the
Invested Amount being greater than the Certificate Principal Balance, thereby
creating overcollateralization. The Overcollateralization Amount, if any, will
be available to absorb any Investor Loss Amount that is not covered by Investor
Interest Collections.

Distributions of Principal Collections. For the period beginning on the
first Distribution Date and, unless a Rapid Amortization Event shall have
earlier occurred, ending on the Distribution Date in ______________ 20__ (the
"Managed Amortization Period"), the amount of Principal Collections payable to
Certificateholders as of each Distribution Date during the Managed Amortization
Period will equal, to the extent funds are available therefor, the Scheduled
Principal Collections Distribution Amount for such Distribution Date. On any
Distribution Date during the Managed Amortization Period, the "Scheduled
Principal Collections Distribution Amount" shall equal the lesser of (i) the
Maximum Principal Payment (as defined herein) and (ii) the Alternative Principal
Payment (as defined herein). With respect to any Distribution Date, the "Maximum
Principal Payment" will equal the product of the Investor Fixed Allocation
Percentage and Principal Collections for such Distribution Date. With respect to
any Distribution Date, the "Alternative Principal Payment" will equal the
greater of (x) ___% of the Certificate Principal Balance immediately prior to
such Distribution Date and (y) the amount, but not less

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than zero, of Principal Collections for such Distribution Date less the
aggregate of Additional Balances created during the related Collection Period.

Beginning with the first Distribution Date following the end of the
Managed Amortization Period, the amount of Principal Collections payable to
Certificateholders on each Distribution Date will be equal to the Maximum
Principal Payment.

The amount of Principal Collections to be distributed to
Certificateholders on the first Distribution Date will reflect Principal
Collections and Additional Balances during the first Collection Period which is
the period beginning after the Cut-off Date through the last day of __________
199_.

Distributions of Principal Collections based upon the Investor Fixed
Allocation Percentage may result in distributions of principal to
Certificateholders in amounts that are greater relative to the declining Pool
Balance than would be the case if the Investor Floating Allocation Percentage
were used to determine the percentage of Principal Collections distributed in
respect of the Invested Amount. Principal Collections not allocated to the
Certificateholders will be allocated to the Transferor Interest. The aggregate
distributions of principal to the Certificateholders will not exceed the
Original Certificate Principal Balance.

In addition, to the extent of funds available therefor (including funds
available under the Policy), on the Distribution Date in ____________ 20__,
Certificateholders will be entitled to receive as a payment of principal an
amount equal to the outstanding Certificate Principal Balance.

The Paying Agent. The Paying Agent shall initially be the Trustee,
together with any successor thereto in such capacity (the "Paying Agent"). The
Paying Agent shall have the revocable power to withdraw funds from the
Collection Account for the purpose of making distributions to the
Certificateholders.

RAPID AMORTIZATION EVENTS

As described above, the Managed Amortization Period will continue
through the Distribution Date in _________ 20__, unless a Rapid Amortization
Event occurs prior to such date in which case the Rapid Amortization Period will
commence prior to such date. "Rapid Amortization Event" refers to any of the
following events:

(a) failure on the part of the Seller (i) to make a payment or
deposit required under the Agreement within three Business Days after
the date such payment or deposit is required to be made or (ii) to
observe or perform in any material respect any other covenants or
agreements of the Seller set forth in the Purchase Agreement, which
failure continues unremedied for a period of 60 days after written
notice;

(b) any representation or warranty made by the Seller in the
Purchase Agreement proves to have been incorrect in any material
respect when made and continues to be incorrect in any material respect
for a period of 60 days after written notice and as a result of which
the interests of the Certificateholders are materially and adversely
affected; provided, however, that a Rapid Amortization Event shall not
be deemed to occur if the Seller has purchased or made a substitution
for the related Mortgage Loan or Mortgage Loans if applicable during
such period (or within an additional 60 days with the consent of the
Trustee) in accordance with the provisions of the Agreement;

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(d) the Trust Fund becomes subject to regulation by the
Securities and Exchange Commission as an investment company within the
meaning of the Investment Company Act of 1940, as amended.

In the case of any event described in clause (a) or (b), a Rapid
Amortization Event will be deemed to have occurred only if, after the applicable
grace period, if any, described in such clauses, either the Trustee or
Certificateholders holding Certificates evidencing more than 51% of the
Percentage Interests or the Certificate Insurer (so long as there is no default
by the Certificate Insurer in the performance of its obligations under the
Policy), by written notice to the Depositor and the Master Servicer (and to the
Trustee, if given by the Certificateholders) declare that a Rapid Amortization
Event has occurred as of the date of such notice. In the case of any event
described in clause (c) or (d), a Rapid Amortization Event will be deemed to
have occurred without any notice or other action on the part of the Trustee or
the Certificateholders immediately upon the occurrence of such event.

In addition to the consequences of a Rapid Amortization Event discussed
above, if the Transferor voluntarily files a bankruptcy petition or goes into
liquidation or any person is appointed a receiver or bankruptcy trustee of the
Transferor, on the day of any such filing or appointment no further Additional
Balances will be transferred to the Trust, the Transferor will immediately cease
to transfer Additional Balances to the Trust and the Transferor will promptly
give notice to the Trustee of any such filing or appointment. Within 15 days,
the Trustee will publish a notice of the liquidation or the filing or
appointment stating that the Trustee intends to sell, dispose of or otherwise
liquidate the Mortgage Loans in a commercially reasonable manner and to the best
of its ability. Unless otherwise instructed within a specified period by
Certificateholders representing undivided interests aggregating more than 51% of
the aggregate principal amount of the Certificates, the Trustee will sell,
dispose of or otherwise liquidate the Mortgage Loans in a commercially
reasonable manner and on commercially reasonable terms. Any proceeds will be
treated as collections allocable to the Certificateholders and the Investor
Fixed Allocation Percentage of such remaining proceeds and will be distributed
to the Certificateholders on the date such proceeds are received (the
"Dissolution Distribution Date"). If the portion of such proceeds allocable to
the Certificateholders are not sufficient to pay in full the remaining amount
due on the Certificates, the Policy will cover such shortfall.

Notwithstanding the foregoing, if a conservator, receiver or
trustee-in-bankruptcy is appointed for the Transferor and no Rapid Amortization
Event exists other than such conservatorship, receivership or insolvency of the
Transferor, the conservator, receiver or trustee-in-bankruptcy may have the
power to prevent the commencement of the Rapid Amortization Period or the sale
of Mortgage Loans described above.

THE POLICY

[On or before the Closing Date, the Policy will be issued by the
Certificate Insurer pursuant to the provisions of the Agreement and the
Insurance and Indemnity Agreement (the "Insurance Agreement") to be dated as of
____________, 199_, among the Seller, the Depositor, the Master Servicer and the
Certificate Insurer.

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Date and (ii) accrued and unpaid interest due on the Certificates (together, the
"Guaranteed Distributions"), with such Guaranteed Distributions having been
calculated in accordance with the original terms of the Certificates or the
Agreement except for amendments or modifications to which the Certificate
Insurer has given its prior written consent. The effect of the Policy is to
guarantee the timely payment of interest on, and the ultimate payment of the
principal amount of, all of the Certificates.

The "Guaranteed Principal Distribution Amount" shall be the amount, if
any, by which the Certificate Principal Balance (after giving effect to all
other amounts distributable and allocable to principal on the Certificates)
exceeds the Invested Amount as of such Distribution Date (after giving effect to
all other amounts distributable and allocable to principal on the Certificates
for such Distribution Date). In addition, the Policy will guarantee the payment
of the outstanding Certificate Principal Balance on the Distribution Date in
______________ 20__ (after giving effect to all other amounts distributable and
allocable to principal on such Distribution Date).

In accordance with the Agreement, the Trustee will be required to
establish and maintain an account (the "Spread Account") for the benefit of the
Certificate Insurer and the Certificateholders. The Trustee shall deposit the
amounts into the Spread Account as required by the Agreement.

Payment of claims on the Policy will be made by the Certificate Insurer
following Receipt by the Certificate Insurer of the appropriate notice for
payment on the later to occur of (i) 12:00 noon, New York City time, on the
second Business Day following Receipt of such notice for payment and (ii) 12:00
noon, New York City time, on the relevant Distribution Date.

If payment of any amount guaranteed by the Certificate Insurer pursuant
to the Policy is avoided as a preference payment under applicable bankruptcy,
insolvency, receivership or similar law, the Certificate Insurer will pay such
amount out of the funds of the Certificate Insurer on the later of (a) the date
when due to be paid pursuant to the Order referred to below or (b) the first to
occur of (i) the fourth Business Day following Receipt by the Certificate
Insurer from the Trustee of (A) a certified copy of the order (the "Order") of
the court or other governmental body which exercised jurisdiction to the effect
that the Certificateholder is required to return the amount of any Guaranteed
Distributions distributed with respect to the Certificates during the term of
the related Policy because such distributions were avoidable preference payments
under applicable bankruptcy law, (B) a certificate of the Certificateholder that
the Order has been entered and is not subject to any stay and (C) an assignment
duly executed and delivered by the Certificateholder, in such form as is
reasonably required by the Certificate Insurer and provided to the
Certificateholder by the Certificate Insurer, irrevocably assigning to the
Certificate Insurer all rights and claims of the Certificateholder relating to
or arising under the Certificates against the debtor which made such preference
payment or otherwise with respect to such preference payment, or (ii) the date
of Receipt by the Certificate Insurer from the Trustee of the items referred to
in clauses (A), (B) and (C) above if, at least four Business Days prior to such
date of Receipt, the Certificate Insurer shall have Received written notice from
the Trustee that such items were to be delivered on such date and such date was
specified in such notice. Such payment shall be disbursed to the receiver,
conservator, debtor-in-possession or trustee in bankruptcy named in the Order
and not to the Trustee or any Certificateholder directly (unless a
Certificateholder has previously paid such amount to the receiver, conservator,
debtor-in-possession or trustee in bankruptcy named in the Order in which case
such payment shall be disbursed to the Trustee for distribution to such
Certificateholder upon proof of such payment reasonably satisfactory to the
Certificate Insurer).

The terms "Receipt" and "Received", with respect to the Policy, mean
actual delivery to the Certificate Insurer and to its fiscal agent appointed by
the Certificate Insurer at its option, if any, prior to 12:00 noon, New York
City time, on a Business Day; delivery either on a day that is not a Business

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Day or after 12:00 noon, New York City time, shall be deemed to be Receipt on
the next succeeding Business Day. If any notice or certificate given under the
Policy by the Trustee is not in proper form or is not properly completed,
executed or delivered it shall be deemed not to have been Received, and the
Certificate Insurer or the fiscal agent shall promptly so advise the Trustee and
the Trustee may submit an amended notice.

Under the Policy, "Business Day" means any day other than (i) a
Saturday or Sunday or (ii) a day on which banking institutions in The City of
New York, New York are authorized or obligated by law or executive order to be
closed.

The Certificate Insurer's obligations under the Policy in respect of
Guaranteed Distributions shall be discharged to the extent funds are transferred
to the Trustee as provided in the Policy, whether or not such funds are properly
applied by the Trustee.

The Certificate Insurer shall be subrogated to the rights of each
Certificateholder to receive payments of principal and interest, as applicable,
with respect to distributions on the Certificates to the extent of any payment
by the Certificate Insurer under the Policy. To the extent the Certificate
Insurer makes Guaranteed Distributions, either directly or indirectly (as by
paying through the Trustee), to the Certificateholders, the Certificate Insurer
will be subrogated to the rights of the Certificateholders, as applicable, with
respect to such Guaranteed Distributions, shall be deemed to the extent of the
payments so made to be a registered Certificateholder for purposes of payment
and shall receive all future Guaranteed Distributions until all such Guaranteed
Distributions by the Certificate Insurer have been fully reimbursed, provided
that the Certificateholders have received the full amount of the Guaranteed
Distributions.

The terms of the Policy cannot be modified, altered or affected by any
other agreement or instrument, or by the merger, consolidation or dissolution of
the Seller. The Policy by its terms may not be cancelled or revoked. The Policy
is governed by the laws of the State of ________.

The Policy is not covered by the Property/Casualty Insurance Security
fund specified in Article 76 of the New York Insurance Law. The Policy is not
covered by the Florida Insurance Guaranty Association created under Part II of
Chapter 631 of the Florida Insurance Code. In the event the Certificate Insurer
were to become insolvent, any claims arising under the Policy are excluded from
coverage by the California Insurance Guaranty Association, established pursuant
to Article 14.2 of Chapter 1 of part 2 of Division 1 of the California Insurance
Code.

Pursuant to the terms of the Agreement, unless a Certificate Insurer
default exists, the Certificate Insurer shall be deemed to be the Holder of the
Certificates for certain purposes (other than with respect to payment on the
Certificates), will be entitled to exercise all rights of the Certificateholders
thereunder, without the consent of such Holders and the Holders of the
Certificates may exercise such rights only with the prior written consent of the
Certificate Insurer. In addition, the Certificate Insurer will have certain
additional rights as third party beneficiary to the Agreement.

In the absence of payments under the Policy, Certificateholders will
bear directly the credit and other risks associated with their undivided
interest in the Trust.]

REPORTS TO CERTIFICATEHOLDERS

Concurrently with each distribution to the Certificateholders, the
Master Servicer will forward to the Trustee for mailing to such
Certificateholder a statement setting forth among other items:

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(i) the Investor Floating Allocation Percentage for the
preceding Collection Period;

(ii) the amount being distributed to Certificateholders;

(iii) the amount of interest included in such distribution
and the related Certificate Rate;

(iv) the amount, if any, of overdue accrued interest
included in such distribution (and the amount of interest thereon);

(v) the amount, if any, of the remaining overdue accrued
interest after giving effect to such distribution;

(vi) the amount, if any, of principal included in such
distribution;

(vii) the amount, if any, of the reimbursement of previous
Liquidation Loss Amounts included in such distribution;

(viii) the amount, if any, of the aggregate unreimbursed
Liquidation Loss Amounts after giving effect to such distribution;

(ix) the Servicing Fee for such Distribution Date;

(x) the Invested Amount and the Certificate Principal
Balance, each after giving effect to such distribution;

(xi) the Pool Balance as of the end of the preceding
Collection Period;

(xii) the number and aggregate Principal Balances of the
Mortgage Loans as to which the minimum monthly payment is delinquent
for 30-59 days, 60-89 days and 90 or more days, respectively, as of the
end of the preceding Collection Period;

(xiii) the book value of any real estate which is acquired by
the Trust through foreclosure or grant of deed in lieu of foreclosure;
and

(xiv) the amount of any draws on the Policy.

In the case of information furnished pursuant to clauses (iii), (iv),
(v), (vi), (vii) and (viii) above, the amounts shall be expressed as a dollar
amount per Certificate with a $1,000 denomination.

Within 60 days after the end of each calendar year commencing in 1996,
the Master Servicer will be required to forward to the Trustee a statement
containing the information set forth in clauses (iii) and (vi) above aggregated
for such calendar year.

COLLECTION AND OTHER SERVICING PROCEDURES ON MORTGAGE LOANS

The Master Servicer will make reasonable efforts to collect all
payments called for under the Mortgage Loans and will, consistent with the
Agreement, follow such collection procedures as it follows from time to time
with respect to the home equity loans in its servicing portfolio comparable to
the Mortgage Loans. Consistent with the above, the Master Servicer may in its
discretion waive any late

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payment charge or any assumption or other fee or charge that may be collected in
the ordinary course of servicing the Mortgage Loans.

With respect to the Mortgage Loans, the Master Servicer may arrange
with a borrower a schedule for the payment of interest due and unpaid for a
period, provided that any such arrangement is consistent with the Master
Servicer's policies with respect to the home equity mortgage loans it owns or
services. In accordance with the terms of the Agreement, the Master Servicer may
consent under certain circumstances to the placing of a subsequent senior lien
in respect of a Mortgage Loan.

HAZARD INSURANCE

The Agreement provides that the Master Servicer maintain certain hazard
insurance on the Mortgaged Properties relating to the Mortgage Loans. While the
terms of the related Credit Line Agreements generally require borrowers to
maintain certain hazard insurance, the Master Servicer will not monitor the
maintenance of such insurance.

The Agreement requires the Master Servicer to maintain for any
Mortgaged Property relating to a Mortgage Loan acquired upon foreclosure of a
Mortgage Loan, or by deed in lieu of such foreclosure, hazard insurance with
extended coverage in an amount equal to the lesser of (a) the maximum insurable
value of such Mortgaged Property or (b) the outstanding balance of such Mortgage
Loan plus the outstanding balance on any mortgage loan senior to such Mortgage
Loan at the time of foreclosure or deed in lieu of foreclosure, plus accrued
interest and the Master Servicer's good faith estimate of the related
liquidation expenses to be incurred in connection therewith. The Agreement
provides that the Master Servicer may satisfy its obligation to cause hazard
policies to be maintained by maintaining a blanket policy insuring against
losses on such Mortgaged Properties. If such blanket policy contains a
deductible clause, the Master Servicer will be obligated to deposit in the
Collection Account the sums which would have been deposited therein but for such
clause. The Master Servicer will initially satisfy these requirements by
maintaining a blanket policy. As set forth above, all amounts collected by the
Master Servicer (net of any reimbursements to the Master Servicer) under any
hazard policy (except for amounts to be applied to the restoration or repair of
the Mortgaged Property) will ultimately be deposited in the Collection Account.

In general, the standard form of fire and extended coverage policy
covers physical damage to or destruction of the improvements on the property by
fire, lightning, explosion, smoke, windstorm and hail, and the like, strike and
civil commotion, subject to the conditions and exclusions specified in each
policy. Although the policies relating to the Mortgage Loans will be
underwritten by different insurers and therefore will not contain identical
terms and conditions, the basic terms thereof are dictated by state laws and
most of such policies typically do not cover any physical damage resulting from
the following: war, revolution, governmental actions, floods and other
water-related causes, earth movement (including earthquakes, landslides and
mudflows), nuclear reactions, wet or dry rot, vermin, rodents, insects or
domestic animals, theft and, in certain cases vandalism. The foregoing list is
merely indicative of certain kinds of uninsured risks and is not intended to be
all-inclusive or an exact description of the insurance policies relating to the
Mortgaged Properties.

REALIZATION UPON DEFAULTED MORTGAGE LOANS

The Master Servicer will foreclose upon or otherwise comparably convert
to ownership Mortgaged Properties securing such of the Mortgage Loans as come
into default when, in accordance with applicable servicing procedures under the
Agreement, no satisfactory arrangements can be made for the collection of
delinquent payments. In connection with such foreclosure or other conversion,
the

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Master Servicer will follow such practices as it deems necessary or advisable
and as are in keeping with its general subordinate mortgage servicing
activities, provided the Master Servicer will not be required to expend its own
funds in connection with foreclosure or other conversion, correction of default
on a related senior mortgage loan or restoration of any property unless, in its
sole judgment, such foreclosure, correction or restoration will increase Net
Liquidation Proceeds. The Master Servicer will be reimbursed out of Liquidation
Proceeds for advances of its own funds as liquidation expenses before any Net
Liquidation Proceeds are distributed to Certificateholders or the Transferor.

OPTIONAL PURCHASE OF DEFAULTED LOAN

The Master Servicer may, at its option, purchase from the Trust Fund
any Mortgage Loan which is delinquent in payment by 91 days or more. Any such
purchase shall be at a price equal to 100% of the Principal Balance of such
Mortgage Loan plus accrued interest thereon at the applicable Loan Rate from the
date through which interest was last paid by the related mortgagor to the first
day of the month in which such amount is to be distributed to
Certificateholders.

SERVICING COMPENSATION AND PAYMENT OF EXPENSES

With respect to each Collection Period, the Master Servicer will
receive from interest collections in respect of the Mortgage Loans a portion of
such interest collections as a monthly Servicing Fee in the amount equal to
approximately _____% per annum ("Servicing Fee Rate") on the aggregate Principal
Balances of the Mortgage Loans as of the first day of the related Collection
Period (or at the Cut-off Date for the first Collection Period). All assumption
fees, late payment charges and other fees and charges, to the extent collected
from borrowers, will be retained by the Master Servicer as additional servicing
compensation.

The Master Servicer will pay certain ongoing expenses associated with
the Trust Fund and incurred by it in connection with its responsibilities under
the Agreement. In addition, the Master Servicer will be entitled to
reimbursement for certain expenses incurred by it in connection with defaulted
Mortgage Loans and in connection with the restoration of Mortgaged Properties,
such right of reimbursement being prior to the rights of Certificateholders to
receive any related Net Liquidation Proceeds.

EVIDENCE AS TO COMPLIANCE

The Agreement provides for delivery on or before ___________ in each
year, beginning in ___________, 199_, to the Trustee of an annual statement
signed by an officer of the Master Servicer to the effect that the Master
Servicer has fulfilled its material obligations under the Agreement throughout
the preceding fiscal year, except as specified in such statement.

On or before _____________ of each year, beginning ___________, 199_,
the Master Servicer will furnish a report prepared by a firm of nationally
recognized independent public accountants (who may also render other services to
the Master Servicer or the Transferor) to the Trustee, the Certificate Insurer
and the Rating Agencies to the effect that such firm has examined certain
documents and the records relating to servicing of the Mortgage Loans under the
Agreement and that, on the basis of such examination, such firm believes that
such servicing was conducted in compliance with the Agreement except for (a)
such exceptions as such firm believes to be immaterial and (b) such other
exceptions as shall be set forth in such report.

CERTAIN MATTERS REGARDING THE MASTER SERVICER AND THE TRANSFEROR

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The Agreement provides that the Master Servicer may not resign from its
obligations and duties thereunder, except in connection with a permitted
transfer of servicing, unless (i) such duties and obligations are no longer
permissible under applicable law or are in material conflict by reason of
applicable law with any other activities of a type and nature presently carried
on by it or its affiliate or (ii) upon the satisfaction of the following
conditions: (a) the Master Servicer has proposed a successor servicer to the
Trustee in writing and such proposed successor servicer is reasonably acceptable
to the Trustee; (b) the Rating Agencies have confirmed to the Trustee that the
appointment of such proposed successor servicer as the Master Servicer will not
result in the reduction or withdrawal of the then current rating of the
Certificates; and (c) such proposed successor servicer is reasonably acceptable
to the Certificate Insurer. No such resignation will become effective until the
Trustee or a successor servicer has assumed the Master Servicer's obligations
and duties under the Agreement.

The Master Servicer may perform any of its duties and obligations under
the Agreement through one or more subservicers or delegates, which may be
affiliates of the Master Servicer. Notwithstanding any such arrangement, the
Master Servicer will remain liable and obligated to the Trustee and the
Certificateholders for the Master Servicer's duties and obligations under the
Agreement, without any diminution of such duties and obligations and as if the
Master Servicer itself were performing such duties and obligations.

The Agreement provides that the Master Servicer will indemnify the
Trust Fund and the Trustee from and against any loss, liability, expense, damage
or injury suffered or sustained as a result of the Master Servicer's actions or
omissions in connection with the servicing and administration of the Mortgage
Loans which are not in accordance with the provisions of the Agreement. Under
the Agreement,the Transferor will indemnify an injured party for the entire
amount of any losses, claims, damages or liabilities arising out of or based on
the Agreement (other than losses resulting from defaults under the Mortgage
Loans). In the event of an Event of Servicing Termination (as defined below)
resulting in the assumption of servicing obligations by a successor Master
Servicer, the successor Master Servicer will indemnify the Transferor for any
losses, claims,damages and liabilities of the Transferor as described in this
paragraph arising from the successor Master Servicer's actions or omissions. The
Agreement provides that neither the Depositor, the Transferor nor the Master
Servicer nor their directors, officers, employees or agents will be under any
other liability to the Trust Fund, the Trustee, the Certificateholders or any
other person for any action taken or for refraining from taking any action
pursuant to the Agreement. However, neither the Depositor, the Transferor nor
the Master Servicer will be protected against any liability which would
otherwise be imposed by reason of willful misconduct, bad faith or gross
negligence of the Depositor, the Transferor or the Master Servicer in the
performance of its duties under the Agreement or by reason of reckless disregard
of its obligations thereunder. In addition, the Agreement provides that the
Master Servicer will not be under any obligation to appear in, prosecute or
defend any legal action which is not incidental to its servicing
responsibilities under the Agreement and which in its opinion may expose it to
any expense or liability. The Master Servicer may, in its sole discretion,
undertake any such legal action which it may deem necessary or desirable with
respect to the Agreement and the rights and duties of the parties thereto and
the interest of the Certificateholders thereunder.

Any corporation into which the Master Servicer may be merged or
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Master Servicer shall be a party, or any corporation
succeeding to the business of the Master Servicer shall be the successor of the
Master Servicer hereunder, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything in the Agreement
to the contrary notwithstanding.

EVENTS OF SERVICING TERMINATION

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"Events of Servicing Termination" will consist of: (i) any failure by
the Master Servicer to deposit in the Collection Account any deposit required to
be made under the Agreement, which failure continues unremedied for five
business days after the giving of written notice of such failure to the Master
Servicer by the Trustee, or to the Master Servicer and the Trustee by the
Certificate Insurer or Certificateholders evidencing an aggregate, undivided
interest in the Trust Fund of at least 25% of the Certificate Principal Balance;
(ii) any failure by the Master Servicer duly to observe or perform in any
material respect any other of its covenants or agreements in the Agreement
which, in each case, materially and adversely affects the interests of the
Certificateholders or the Certificate Insurer and continues unremedied for 60
days after the giving of written notice of such failure to the Master Servicer
by the Trustee, or to the Master Servicer and the Trustee by the Certificate
Insurer or Certificateholders evidencing an aggregate, undivided interest in the
Trust Fund of at least 25% of the Certificate Principal Balance; or (iii)
certain events of insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings relating to the Master Servicer and certain
actions by the Master Servicer indicating insolvency, reorganization or
inability to pay its obligations. Under certain other circumstances, the
Certificate Insurer with the consent of holders of Investor Certificates
evidencing an aggregate, undivided interest in the Trust Fund of at least 51% of
the Certificate Principal Balance may deliver written notice to the Master
Servicer terminating all the rights and obligations of the Master Servicer under
the Agreement.

Notwithstanding the foregoing, a delay in or failure of performance
referred to under clause (i) above for a period of ten Business Days or referred
to under clause (ii) above for a period of 60 Business Days, shall not
constitute an Event of Servicing Termination if such delay or failure could not
be prevented by the exercise of reasonable diligence by the Master Servicer and
such delay or failure was caused by an act of God or other similar occurrence.
Upon the occurrence of any such event the Master Servicer shall not be relieved
from using its best efforts to perform its obligations in a timely manner in
accordance with the terms of the Agreement and the Master Servicer shall provide
the Trustee, the Depositor, the Transferor, the Certificate Insurer and the
Certificateholders prompt notice of such failure or delay by it, together with a
description of its efforts to so perform its obligations.

RIGHTS UPON AN EVENT OF SERVICING TERMINATION

So long as an Event of Servicing Termination remains unremedied, either
the Trustee, or Certificateholders evidencing an aggregate, undivided interest
in the Trust Fund of at least 51% of the Certificate Principal Balance or the
Certificate Insurer, may terminate all of the rights and obligations of the
Master Servicer under the Agreement and in and to the Mortgage Loans, whereupon
the Trustee will succeed to all the responsibilities, duties and liabilities of
the Master Servicer under the Agreement and will be entitled to similar
compensation arrangements. In the event that the Trustee would be obligated to
succeed the Master Servicer but is unwilling or unable so to act, it may
appoint, or petition a court of competent jurisdiction for the appointment of, a
housing and home finance institution or other mortgage loan or home equity loan
servicer with all licenses and permits required to perform its obligations under
the Agreement and having a net worth of at least $__________ and acceptable to
the Certificate Insurer to act as successor to the Master Servicer under the
Agreement. Pending such appointment, the Trustee will be obligated to act in
such capacity unless prohibited by law. Such successor will be entitled to
receive the same compensation that the Master Servicer would otherwise have
received (or such lesser compensation as the Trustee and such successor may
agree). A receiver or conservator for the Master Servicer may be empowered to
prevent the termination and replacement of the Master Servicer where the only
Event of Servicing Termination that has occurred is an Insolvency Event.

AMENDMENT

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The Agreement may be amended from time to time by the Master Servicer,
the Depositor and the Trustee and with the consent of the Certificate Insurer,
but without the consent of the Certificateholders, to cure any ambiguity, to
correct or supplement any provisions therein which may be inconsistent with any
other provisions of the Agreement, to add to the duties of the Depositor, the
Transferor or the Master Servicer or to add or amend any provisions of the
Agreement as required by the Rating Agencies in order to maintain or improve any
rating of the Certificates (it being understood that, after obtaining the
ratings in effect on the Closing Date, neither the Transferor, the Trustee nor
the Master Servicer is obligated to obtain, maintain, or improve any such
rating) or to add any other provisions with respect to matters or questions
arising under the Agreement which shall not be inconsistent with the provisions
of the Agreement, provided that such action will not, as evidenced by an opinion
of counsel, materially and adversely affect the interests of any
Certificateholder or the Certificate Insurer; provided, that any such amendment
will not be deemed to materially and adversely affect the Certificateholders and
no such opinion will be required to be delivered if the person requesting such
amendment obtains a letter from the Rating Agencies stating that such amendment
would not result in a downgrading of the then current rating of the
Certificates. The Agreement may also be amended from time to time by the Master
Servicer, the Depositor, and the Trustee, with the consent of Certificateholders
evidencing an aggregate, undivided interest in the Trust Fund of at least 51% of
the Certificate Principal Balance and the Certificate Insurer for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of the Agreement or of modifying in any manner the rights of the
Certificateholders, provided that no such amendment will (i) reduce in any
manner the amount of, or delay the timing of, collections of payments on the
Certificates or distributions or payments under the Policy which are required to
be made on any Certificate without the consent of the holder of such Certificate
or (ii) reduce the aforesaid percentage required to consent to any such
amendment, without the consent of the holders of all Certificates then
outstanding.

TERMINATION; RETIREMENT OF THE CERTIFICATES

The Trust Fund will terminate on the Distribution Date following the
later of (A) payment in full of all amounts owing to the Certificate Insurer and
(B) the earliest of (i) the Distribution Date on which the Certificate Principal
Balance has been reduced to zero, (ii) the final payment or other liquidation of
the last Mortgage Loan in the Trust Fund, (iii) the optional transfer to the
Transferor of the Certificates, as described below and (iv) the Distribution
Date in ____________ 20__.

The Certificates will be subject to optional transfer to the Transferor
on any Distribution Date after the Certificate Principal Balance is reduced to
an amount less than or equal to __% of the Original Certificate Principal
Balance and all amounts due and owing to the Certificate Insurer and
unreimbursed draws on the Policy, together with interest thereon, as provided
under the Insurance Agreement, have been paid. The transfer price will be equal
to the sum of the outstanding Certificate Principal Balance and accrued and
unpaid interest thereon at the Certificate Rate through the day preceding the
final Distribution Date. In no event, however, will the Trust Fund created by
the Agreement continue for more than 21 years after the death of certain
individuals named in the Agreement. Written notice of termination of the
Agreement will be given to each Certificateholder, and the final distribution
will be made only upon surrender and cancellation of the Certificates at an
office or agency appointed by the Trustee which will be specified in the notice
of termination.

In addition, the Trust Fund may be liquidated as a result of certain
events of bankruptcy, insolvency or receivership relating to the Transferor. See
"--Rapid Amortization Events" herein.

THE TRUSTEE

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[__________], a _____________ with its principal place of business in
________, has been named Trustee pursuant to the Agreement.

The commercial bank or trust company serving as Trustee may own
Certificates and have normal banking relationships with the Depositor, the
Master Servicer, the Seller and the Certificate Insurer and/or their affiliates.

The Trustee may resign at any time, in which event the Depositor will
be obligated to appoint a successor Trustee, as approved by the Certificate
Insurer. The Depositor may also remove the Trustee if the Trustee ceases to be
eligible to continue as such under the Agreement or if the Trustee becomes
insolvent. Upon becoming aware of such circumstances, the Depositor will be
obligated to appoint a successor Trustee, as approved by the Certificate
Insurer. Any resignation or removal of the Trustee and appointment of a
successor Trustee will not become effective until acceptance of the appointment
by the successor Trustee.

No holder of a Certificate will have any right under the Agreement to
institute any proceeding with respect to the Agreement unless such holder
previously has given to the Trustee written notice of default and unless
Certificateholders evidencing an aggregate, undivided interest in the Trust of
at least 51% of the Certificate Principal Balance have made written requests
upon the Trustee to institute such proceeding in its own name as Trustee
thereunder and have offered to the Trustee reasonable indemnity and the Trustee
for 60 days has neglected or refused to institute any such proceeding. The
Trustee will be under no obligation to exercise any of the trusts or powers
vested in it by the Agreement or to make any investigation of matters arising
thereunder or to institute, conduct or defend any litigation thereunder or in
relation thereto at the request, order or direction of any of the
Certificateholders, unless such Certificateholders have offered to the Trustee
reasonable security or indemnity against the cost, expenses and liabilities
which may be incurred therein or thereby.

CERTAIN ACTIVITIES

The Trust Fund will not: (i) borrow money; (ii) make loans; (iii)
invest in securities for the purpose of exercising control; (iv) underwrite
securities; (v) except as provided in the Agreement, engage in the purchase and
sale (or turnover) of investments; (vi) offer securities in exchange for
property (except Certificates for the Mortgage Loans); or (vii) repurchase or
otherwise reacquire its securities. See "--Evidence as to Compliance" above for
information regarding reports as to the compliance by the Master Servicer with
the terms of the Agreement.

DESCRIPTION OF THE PURCHASE AGREEMENT

The Mortgage Loans to be transferred to the Trust Fund by the Depositor
will be purchased by the Depositor from ____________________ pursuant to the
Purchase Agreement to be entered into between the Depositor, as purchaser of the
Mortgage Loans, and _________________, as Seller of the Mortgage Loans. Under
the Purchase Agreement, the Seller will agree to transfer the Mortgage Loans and
related Additional Balances to the Depositor. Pursuant to the Agreement, the
Mortgage Loans will be immediately transferred by the Depositor to the Trust
Fund, and the Depositor will assign its rights in, to and under the Purchase
Agreement to the Trust Fund. The following is a description of the material
provisions of the Purchase Agreement.

TRANSFERS OF MORTGAGE LOANS

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Pursuant to the Purchase Agreement, the Seller will transfer and assign
to the Depositor, all of its right, title and interest in and to the Mortgage
Loans and all of the Additional Balances thereafter created. The purchase price
of the Mortgage Loans is a specified percentage of the face amount thereof as of
the time of transfer and is payable by the Depositor in cash. The purchase price
of each Additional Balance comprising the Principal Balance of a Mortgage Loan
is the amount of such Additional Balance.

REPRESENTATIONS AND WARRANTIES

The Seller will represent and warrant to the Depositor that, among
other things, as of the Closing Date, it is duly organized and in good standing
and that it has the authority to consummate the transactions contemplated by the
Purchase Agreement. The Seller will also represent and warrant to the Depositor
that, among other things, immediately prior to the sale of the Mortgage Loans to
the Depositor, the Seller was the sole owner and holder of the Mortgage Loans
free and clear of any and all liens and security interests. The Seller will make
similar representations and warranties in the Agreement. The Seller will also
represent and warrant to the Depositor that, among other things, as of the
Closing Date, (a) the Purchase Agreement constitutes a legal, valid and binding
obligation of the Seller and (b) the Purchase Agreement constitutes a valid sale
to the Depositor of all right, title and interest of the Seller in and to the
Mortgage Loans and the proceeds thereof.

ASSIGNMENT TO TRUST FUND

The Seller expressly acknowledges and consents to the Depositor's
transfer of its rights relating to the Mortgage Loans under the Agreement to the
Trust Fund. The Seller also agrees to perform its obligations under the Purchase
Agreement for the benefit of the Trust Fund.

TERMINATION

The Purchase Agreement will terminate upon the termination of the Trust
Fund.

USE OF PROCEEDS

The net proceeds to be received from the sale of the Certificates will
be applied by the Depositor towards the purchase of the Mortgage Loans.

CERTAIN FEDERAL INCOME TAX CONSEQUENCES

GENERAL

The following discussion, which summarizes the material U.S. federal
income tax aspects of the purchase, ownership and disposition of the
Certificates, is based on the provisions of the Internal Revenue Code of 1986,
as amended (the "Code"), the Treasury Regulations thereunder, and published
rulings and court decisions in effect as of the date hereof, all of which are
subject to change, possibly retroactively. This discussion does not address
every aspect of the U.S. federal income tax laws which may be relevant to
Certificate Owners in light of their personal investment circumstances or to
certain types of Certificate Owners subject to special treatment under the U.S.
federal income tax laws (for example, banks and life insurance companies).
Accordingly, investors should consult their tax advisors regarding U.S. federal,
state, local, foreign and any other tax consequences to them of investing in the
Certificates.

CHARACTERIZATION OF THE CERTIFICATES AS INDEBTEDNESS

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Based on the application of existing law to the facts as set forth in
the Agreement and other relevant documents and assuming compliance with the
terms of the Agreement as in effect on the date of issuance of the Certificates,
_____________, special tax counsel to the Depositor ("Tax Counsel"), is of the
opinion that the Certificates will be treated as debt instruments for Federal
income tax purposes as of such date. Accordingly, upon issuance, the
Certificates will be treated as "Debt Securities" as described in the
Prospectus. See "Certain Federal Income Tax Consequences" in the Prospectus. The
Transferor and the Certificateholders express in the Agreement their intent
that, for applicable tax purposes, the Certificates will be indebtedness secured
by the Mortgage Loans. The Transferor, the Depositor and the Certificateholders,
by accepting the Certificates, and each Certificate Owner by its acquisition of
a beneficial interest in a Certificate, have agreed to treat the Certificates as
indebtedness for U.S. federal income tax purposes. However, because different
criteria are used to determine the non-tax accounting characterization of the
transaction, the Transferor intends to treat this transaction as a sale of an
interest in the Asset Balances of the Mortgage Loans for financial accounting
and certain regulatory purposes.

In general, whether for U.S. federal income tax purposes a transaction
constitutes a sale of property or a loan, the repayment of which is secured by
property, is a question of fact, the resolution of which is based upon the
economic substance of the transaction rather than its form or the manner in
which it is labeled. While the Internal Revenue Service (the "IRS") and the
courts have set forth several factors to be taken into account in determining
whether the substance of a transaction is a sale of property or a secured loan,
the primary factor in making this determination is whether the transferee has
assumed the risk of loss or other economic burdens relating to the property and
has obtained the benefits of ownership thereof. Tax Counsel has analyzed and
relied on several factors in reaching its opinion that the weight of the
benefits and burdens of ownership of the Mortgage Loans has been retained by the
Transferor and has not been transferred to the Certificate Owners.

In some instances, courts have held that a taxpayer is bound by the
particular form it has chosen for a transaction, even if the substance of the
transaction does not accord with its form. Tax Counsel has advised that the
rationale of those cases will not apply to this transaction, because the form of
the transaction as reflected in the operative provisions of the documents either
accords with the characterization of the Certificates as debt or otherwise makes
the rationale of those cases inapplicable to this situation.

TAXATION OF INTEREST INCOME OF CERTIFICATE OWNERS

Assuming that the Certificate Owners are holders of debt obligations
for U.S. federal income tax purposes, the Certificates generally will be taxable
as Debt Securities. See "Certain Federal Income Tax Consequences" in the
Prospectus.

While it is not anticipated that the Certificates will be issued at a
greater than de minimis discount, under Treasury regulations (the "OID
Regulations") it is possible that the Certificates could nevertheless be deemed
to have been issued with original issue discount ("OID") if the interest were
not treated as "unconditionally payable" under the OID Regulations. If such
regulations were to apply, all of the taxable income to be recognized with
respect to the Certificates would be includible in income of Certificate Owners
as OID, but would not be includible again when the interest is actually
received. See "Certain Federal Income Tax Consequences--Taxation of Debt
Securities; Interest and Acquisition Discount" in the Prospectus for a
discussion of the application of the OID rules if the Certificates are in fact
issued at a greater than de minimis discount or are treated as having been
issued with OID under the OID Regulations. For purposes of calculating OID, it
is likely that the Certificates will be treated as Pay-Through Securities.

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POSSIBLE CLASSIFICATION OF THE CERTIFICATES AS A PARTNERSHIP OR ASSOCIATION
TAXABLE AS A CORPORATION

The opinion of Tax Counsel is not binding on the courts or the IRS. It
is possible that the IRS could assert that, for purposes of the Code, the
transaction contemplated by this Prospectus with respect to the Certificates
constitutes a sale of the Mortgage Loans (or an interest therein) to the
Certificate Owners and that the proper classification of the legal relationship
between the Transferor and the Certificate Owners resulting from this
transaction is that of a partnership, a publicly traded partnership treated as a
corporation, or an association taxable as a corporation. Since Tax Counsel has
advised that the Certificates will be treated as indebtedness in the hands of
the Certificateholders for U.S. federal income tax purposes, the Transferor will
not attempt to comply with U.S. federal income tax reporting requirements
applicable to partnerships or corporations as such requirements would apply if
the Certificates were treated as indebtedness.

If it were determined that this transaction created an entity
classified as a corporation (including a publicly traded partnership taxable as
a corporation), the Trust Fund would be subject to U.S. federal income tax at
corporate income tax rates on the income it derives from the Mortgage Loans,
which would reduce the amounts available for distribution to the Certificate
Owners. Cash distributions to the Certificate Owners generally would be treated
as dividends for tax purposes to the extent of such corporation's earnings and
profits.

If the transaction were treated as creating a partnership between the
Certificate Owners and the Transferor, the partnership itself would not be
subject to U.S. federal income tax (unless it were to be characterized as a
publicly traded partnership taxable as a corporation); rather, the Transferor
and each Certificate Owner would be taxed individually on their respective
distributive shares of the partnership's income, gain, loss, deductions and
credits. The amount and timing of items of income and deductions of the
Certificate Owner could differ if the Certificates were held to constitute
partnership interests rather than indebtedness. Assuming that all of the
provisions of the Agreement, as in effect on the date of issuance, are complied
with, it is the opinion of Tax Counsel that the Trust Fund will not be treated
as either an association or partnership taxable as a corporation.

POSSIBLE CLASSIFICATION AS A TAXABLE MORTGAGE POOL

In relevant part, Section 7701(i) of the Code provides that any entity
(or a portion of an entity) that is a "taxable mortgage pool" will be classified
as a taxable corporation and will not be permitted to file a consolidated U.S.
federal income tax return with another corporation. Subject to a grandfather
provision for existing entities, any entity (or a portion of any entity) will be
a taxable mortgage pool if (i) substantially all of its assets consist of debt
instruments, more than 50% of which are real estate mortgages, (ii) the entity
is the obligor under debt obligations with two or more maturities, and (iii)
under the terms of the entity's debt obligations (or an underlying arrangement),
payments on such debt obligations bear a relationship to the debt instruments
held by the entity.

Assuming that all of the provisions of the Agreement, as in effect on
the date of issuance, are complied with, Tax Counsel is of the opinion that the
arrangement created by the Agreement will not be a taxable mortgage pool under
Section 7701(i) of the Code because only one class of indebtedness secured by
the Mortgage Loans is being issued.

The opinion of Tax Counsel is not binding on the IRS or the courts. If
the IRS were to contend successfully (or future regulations were to provide)
that the arrangement created by the Agreement is a taxable mortgage pool, such
arrangement would be subject to U.S. federal corporate income tax on its

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taxable income generated by ownership of the Mortgage Loans. Such a tax might
reduce amounts available for distributions to Certificate Owners. The amount of
such a tax would depend upon whether distributions to Certificate Owners would
be deductible as interest expense in computing the taxable income of such an
arrangement as a taxable mortgage pool.

FOREIGN INVESTORS

In general, subject to certain exceptions, interest (including OID)
paid on a Certificate to a nonresident alien individual, foreign corporation or
other non-United States person is not subject to U.S. federal income tax,
provided that such interest is not effectively connected with a trade or
business of the recipient in the United States and the Certificate Owner
provides the required foreign person information certification. See "Certain
Federal Income Tax Consequences--Tax Treatment of Foreign Investors" in the
Prospectus.

If the interests of the Certificate Owners were deemed to be
partnership interests, the partnership would be required, on a quarterly basis,
to pay withholding tax equal to the product, for each foreign partner, of such
foreign partner's distributive share of "effectively connected" income of the
partnership multiplied by the highest rate of tax applicable to that foreign
partner. In addition, such foreign partner would be subject to branch profits
tax. Each non-foreign partner would be required to certify to the partnership
that it is not a foreign person. The tax withheld from each foreign partner
would be credited against such foreign partner's U.S. income tax liability.

If the Trust Fund were taxable as a corporation, distributions to
foreign persons, to the extent treated as dividends, would generally be subject
to withholding at the rate of 30%, unless such rate were reduced by an
applicable tax treaty.

BACKUP WITHHOLDING

Certain Certificate Owners may be subject to backup withholding at the
rate of 31% with respect to interest paid on the Certificates if the Certificate
Owners, upon issuance, fail to supply the Trustee or his broker with his
taxpayer identification number, furnish an incorrect taxpayer identification
number, fail to report interest, dividends, or other "reportable payments" (as
defined in the Code) properly, or, under certain circumstances, fail to provide
the Trustee or his broker with a certified statement, under penalty of perjury,
that he is not subject to backup withholding.

The Trustee will be required to report annually to the IRS, and to each
Certificateholder of record, the amount of interest paid (and OID accrued, if
any) on the Certificates (and the amount of interest withheld for U.S. federal
income taxes, if any) for each calendar year, except as to exempt holders
(generally, holders that are corporations, certain tax-exempt organizations or
nonresident aliens who provide certification as to their status as
nonresidents). As long as the only "Certificateholder" of record is Cede, as
nominee for DTC, Certificate Owners and the IRS will receive tax and other
information including the amount of interest paid on the Certificates owned from
Participants and Indirect Participants rather than from the Trustee. (The
Trustee, however, will respond to requests for necessary information to enable
Participants, Indirect Participants and certain other persons to complete their
reports.) Each non-exempt Certificate Owner will be required to provide, under
penalty of perjury, a certificate on IRS Form W-9 containing his or her name,
address, correct Federal taxpayer identification number and a statement that he
or she is not subject to backup withholding. Should a nonexempt Certificate
Owner fail to provide the required certification, the Participants or Indirect
Participants (or the Paying Agent) will be required to withhold 31% of the
interest (and principal) otherwise payable to

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the holder, and remit the withheld amount to the IRS as a credit against the
holder's federal income tax liability.

STATE TAXES

The Depositor makes no representations regarding the tax consequences
of purchase, ownership or disposition of the Certificates under the tax laws of
any state. Investors considering an investment in the Certificates should
consult their own tax advisors regarding such tax consequences.

All investors should consult their own tax advisors regarding the
Federal, state, local or foreign income tax consequences of the purchase,
ownership and disposition of the Certificates.

ERISA CONSIDERATIONS

Any Plan fiduciary which proposes to cause a Plan to acquire any of the
Certificates should consult with its counsel with respect to the potential
consequences under the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and the Code, of the Plans acquisition and ownership of such
Certificates. See "ERISA Considerations" in the Prospectus. Section 406 of ERISA
prohibits "parties in interest" with respect to an employee benefit plan subject
to ERISA and/or the excise tax provisions set forth under Section 4975 of the
Code (a "Plan") from engaging in certain transactions involving such Plan and
its assets unless a statutory or administrative exemption applies to the
transaction. Section 4975 of the Code imposes certain excise taxes on prohibited
transactions involving Plans and other arrangements (including, but not limited
to, individual retirement accounts) described under that Section; ERISA
authorizes the imposition of civil penalties for prohibited transactions
involving Plans not subject to the requirements of Section 4975 of the Code.

Certain employee benefit plans, including governmental plans and
certain church plans, are not subject to ERISA's requirements. Accordingly,
assets of such plans may be invested in the Offered Certificates without regard
to the ERISA considerations described herein and in the Prospectus, subject to
the provisions of other applicable federal and state law. Any such plan that is
qualified and exempt from taxation under Sections 401(a) and 501(a) of the Code
may nonetheless be subject to the prohibited transaction rules set forth in
Section 503 of the Code.

[Availability of Underwriter's Exemption for Certificates. The DOL has
granted to Morgan Stanley & Co. Incorporated Prohibited Transaction Exemption
90-24, Exemption Application No. D- 8019, 55 Fed. Reg. 20,548 (1990) (the
"Exemption") which exempts from the application of certain of the prohibited
transaction rules transactions relating to: (1) the acquisition, sale and
holding by Plans of certain certificates representing an undivided interest in
certain asset-backed pass-through trusts, with respect to which Morgan Stanley
or any of its affiliates is the sole underwriter or the manager or co- manager
of the underwriting syndicate; and (2) the servicing, operation and management
of such asset- backed pass-through trusts, provided that the general conditions
and certain other conditions set forth in the Exemption are satisfied. Morgan
Stanley believes that the Exemption [will] [will not] apply to the acquisition
and holding of Offered Certificates by Plans.

General Conditions of the Exemption. Section II of the Exemption sets
forth the following general conditions which must be satisfied before a
transaction involving the acquisition, sale and holding of the Certificates or a
transaction in connection with the servicing, operation and management of the
Trust may be eligible for exemptive relief thereunder:

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(1) The acquisition of the Certificates by a Plan is on terms
(including the price for such Certificates) that are at least as
favorable to the investing Plan as they would be in an arm's length
transaction with an unrelated party.

(2) The rights and interests evidenced by the Certificates
acquired by the Plan are not subordinated to the rights and interests
evidenced by other certificates of the Trust;

(3) The Certificates acquired by the Plan have received a
rating at the time of such acquisition that is in one of the three
highest generic ratings categories from any of Duff & Phelps Inc.,
Fitch Investors Service, Inc., Moody's Investors Service, Inc. and
Standard & Poor's Ratings Group;

(4) The Trustee is not an affiliate of the Depositor, any
Underwriter, the Seller, the Master Servicer, any insurer of the
Mortgage Loans, any borrower whose obligations under one or more
Mortgage Loans constitute more than 5% of the aggregate unamortized
principal balance of the assets in the Trust (determined on the date of
initial issuance of Certificates of the Trust), or any of their
respective affiliates (the "Restricted Group");

(5) The sum of all payments made to and retained by the
Underwriter in connection with the distribution of the Certificates
represents not more than reasonable compensation for underwriting such
Certificates; the sum of all payments made to and retained by the
Seller pursuant to the sale of the Mortgage Loans to the Trust
represents not more than the fair market value of such Mortgage Loans;
the sum of all payments made to and retained by the Master Servicer
represent not more than reasonable compensation for the Master
Servicer's services under the Agreement and reimbursement of the Master
Servicer's reasonable expenses in connection therewith; and

(6) The Plan investing in the Certificates is an "accredited
investor" as defined in Rule 501(a)(1) of Regulation D of the
Securities and Exchange Commission under the Securities Act of 1933 as
amended.

Before purchasing a Certificate, a fiduciary of a Plan should itself
confirm (a) that the Certificates constitute "certificates" for purposes of the
Exemption and (b) that the specific and general conditions set forth in the
Exemption and the other requirements set forth in the Exemption would be
satisfied.]

Any Plan fiduciary considering whether to purchase any Certificates on
behalf of a Plan should consult with its counsel regarding the applicability of
the fiduciary responsibility and prohibited transaction provisions of ERISA and
the Code to such investment. Among other things, before purchasing any
Certificates, a fiduciary of a Plan subject to the fiduciary responsibility
provisions of ERISA or an employee benefit plan subject to the prohibited
transaction provisions of the Code should make its own determination as to the
availability of the exemptive relief provided in the Exemption, and also
consider the availability of any other prohibited transaction exemptions.

LEGAL INVESTMENT CONSIDERATIONS

Although, as a condition to their issuance, the Certificates will be
rated in the [highest] rating category of the Rating Agencies, the Certificates
will not constitute "mortgage related securities" for purposes of the Secondary
Mortgage Market Enhancement Act of 1984 ("SMMEA"), because not all of the
Mortgages securing the Mortgage Loans are first mortgages. Accordingly, many
institutions with

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legal authority to invest in comparably rated securities based on first mortgage
loans may not be legally authorized to invest in the Certificates, which because
they evidence interests in a pool that includes junior mortgage loans are not
"mortgage related securities" under SMMEA. See "Legal Investment" in the
Prospectus.

UNDERWRITING

Subject to the terms and conditions set forth in the underwriting
agreement, dated ___________, 199_, (the "Underwriting Agreement"), between the
Depositor and the Underwriter, an affiliate of the Depositor, the Depositor has
agreed to sell to the Underwriter, and the Underwriter has agreed to purchase
from the Depositor all the Certificates.

In the Underwriting Agreement, the Underwriter has agreed, subject to
the terms and conditions set forth therein, to purchase all the Certificates
offered hereby if any of the Certificates are purchased.

The Depositor has been advised by the Underwriter that it proposes
initially to offer the Certificates to the public in Europe and the United
States at the offering price set forth on the cover page hereof and to certain
dealers at such price less a discount not in excess of ____% of the Certificate
denominations. The Underwriter may allow and such dealers may reallow a discount
not in excess of _____% of the Certificate denominations to certain other
dealers. After the initial public offering, the public offering price, such
concessions and such discounts may be changed.

The distribution of the Certificates by the Underwriter will be
effected from time to time in one or more negotiated transactions or otherwise
at varying prices to be determined, in each case, at the time of sale. The
Underwriter may effect such transactions by selling the Certificates to or
through dealers, and such dealers may receive from the Underwriter compensation
in the form of underwriting discounts, concessions or commissions. The
Underwriter and any dealers that participate with the Underwriter in the
distribution of the Certificates may be deemed to be underwriters, and any
discounts, commissions or concessions received by them, and any profit on the
resale of the Certificates purchased by them, may be deemed to be underwriting
discounts and commissions under the Securities Act of 1933, as amended (the
"Act").

The Underwriting Agreement provides that the Depositor will indemnify
the Underwriter against certain civil liabilities, including liabilities under
the Act.

LEGAL MATTERS

Certain legal matters with respect to the Certificates will be passed
upon for the Depositor by _______________, and for the Underwriter by
__________________.

EXPERTS

The consolidated balance sheets of [Insurer] and Subsidiaries as of
___________, 199_ and 199_ and the related consolidated statements of income,
changes in shareholder's equity, and cash flows for each of the three years in
the period ended ___________, 199_, incorporated by reference in this Prospectus
Supplement, have been incorporated herein in reliance on the report of

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________________________, independent accountants, given on the authority of
that firm as experts in accounting and auditing.

RATINGS

It is a condition to the issuance of the Certificates that they be
rated ___ by ____ ("____") and, ____ by ____ ("____" and, together with ______,
the "Rating Agencies").

A securities rating addresses the likelihood of the receipt by
Certificateholders of distributions on the Mortgage Loans. The rating takes into
consideration the characteristics of the Mortgage Loans and the structural,
legal and tax aspects associated with the Certificates. The ratings on the
Certificates do not, however, constitute statements regarding the likelihood or
frequency of prepayments on the Mortgage Loans or the possibility that
Certificateholders might realize a lower than anticipated yield.

The ratings assigned to the Certificates will depend primarily upon the
creditworthiness of the Certificate Insurer. Any reduction in a rating assigned
to the claims-paying ability of the Certificate Insurer below the ratings
initially assigned to the Certificates may result in a reduction of one or more
of the ratings assigned to the Certificates.

The ratings of the Rating Agencies do not address the possibility that,
as a result of principal prepayments, Certificateholders may receive a lower
than anticipated yield.

The security ratings assigned to the Certificates should be evaluated
independently from similar ratings on other types of securities. A security
rating is not a recommendation to buy, sell or hold securities and may be
subject to revision or withdrawal at any time by the Rating Agencies.

The Depositor has not requested a rating of the Certificates by any
rating agency other than the Rating Agencies; there can be no assurance,
however, as to whether any other rating agency will rate the Certificates or, if
it does, what rating would be assigned by such other rating agency. The rating
assigned by such other rating agency to the Certificates could be lower than the
respective ratings assigned by the Rating Agencies.

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INDEX OF DEFINED TERMS

Page
----
<S> <C>
1934 Act..................................................................S-68
Accelerated Principal Distribution Amount.............................S-14, 48
Additional Balances........................................................S-8
Agreement..................................................................S-7
Alternative Principal Payment.........................................S-16, 50
Assignment Event..........................................................S-43
BIF ....................................................................S-46
Book-Entry Certificates...................................................S-39
Business Day..........................................................S-48, 54
Cede ....................................................................S-12
CEDEL ................................................................S-11, 41
CEDEL Participants........................................................S-41
Certificate Insurer.......................................................S-17
Certificate Owners....................................................S-11, 39
Certificate Principal Balance..........................................S-8, 39
Certificate Rate...................................................S-49, 8, 15
Certificateholder.........................................................S-65
Certificates............................................................S-1, 8
Citibank..................................................................S-12
Closing Date.......................................................S-3, 16, 49
Code ....................................................................S-62
Collection Account....................................................S-15, 45
Collection Period.....................................................S-15, 49
Combined Loan-to-Value Ratio..............................................S-10
Cooperative...............................................................S-41
Credit Limit..............................................................S-10
Credit Limit Utilization Rate.............................................S-28
Credit Line Agreements....................................................S-28
Cut-off Date............................................................S-1, 7
Cut-off Date Pool Balance..................................................S-8
Cut-off Date Principal Balance.............................................S-7
Definitive Certificate................................................S-39, 45
Depositor..................................................................S-7
Determination Date....................................................S-19, 46
Dissolution Distribution Date.............................................S-52
Distribution Date..................................................S-1, 15, 48
Draw Period...............................................................S-29
DTC ............................................................S-11, 39, 41
Due Date..................................................................S-11
Eligible Account..........................................................S-46
Eligible Substitute Mortgage Loan.........................................S-44
ERISA ................................................................S-21, 66
Euroclear.................................................................S-11
Euroclear Operator........................................................S-41
Euroclear Participants....................................................S-41
European Depositaries.................................................S-12, 39
</TABLE>

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<TABLE>
<S> <C>
Events of Servicing Termination.........................................S-59
Financial Intermediary..................................................S-40
Fixed Allocation Percentage.............................................S-15
Guaranteed Distributions............................................S-17, 53
Guaranteed Principal Distribution Amount............................S-18, 53
Index Rate..............................................................S-29
Insurance Agreement.................................................S-17, 52
Interest Collections................................................S-47, 12
Interest Period.....................................................S-16, 49
Invested Amount.........................................................S-39
Investor Fixed Allocation Percentage....................................S-15
Investor Floating Allocation Percentage.............................S-13, 47
Investor Interest Collections.......................................S-13, 47
Investor Loss Amount................................................S-49, 14
Investor Principal Collections......................................S-15, 47
IRS ..................................................................S-52
LIBOR ..................................................................S-15
LIBOR Business Day......................................................S-50
Liquidated Mortgage Loan................................................S-49
Liquidation Loss Amount.............................................S-14, 49
Liquidation Proceeds....................................................S-47
Loan Rate...........................................................S-10, 29
Managed Amortization Period.........................................S-16, 50
Margin..................................................................S-29
Maximum Principal Payment...........................................S-16, 50
Maximum Rate............................................................S-29
Minimum Transferor Interest..........................................S-9, 45
Money Rates.........................................................S-11, 29
Morgan Stanley...........................................................S-2
Mortgage Files..........................................................S-43
Mortgage Loan Schedule...........................................S-9, 43, 45
Mortgage Loans........................................................S-7, 1
Mortgaged Properties.....................................................S-7
Net Liquidation Proceeds............................................S-13, 47
OID ..................................................................S-63
OID Regulations.........................................................S-63
Order ..................................................................S-53
Original Certificate Principal Balance...............................S-8, 39
Original Invested Amount.............................................S-8, 39
Overcollateralization Amount............................................S-14
Paying Agent............................................................S-51
Percentage Interest.....................................................S-11
Plan ..............................................................S-10, 66
Policy................................................................S-2, 7
Pool Balance.........................................................S-8, 47
Principal Balance........................................................S-8
Principal Collections...............................................S-13, 47
Purchase Agreement......................................................S-10
Rating Agency........................................................S-21-69
Receipt.................................................................S-53
</TABLE>

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<PAGE> 73

<TABLE>
<S> <C>
Received................................................................S-53
Record Date.............................................................S-48
Reference Bank Rate.....................................................S-50
Related Documents.......................................................S-43
Relevant Depositary.....................................................S-39
Repayment Period........................................................S-29
Required Overcollateralization Amount...................................S-49
Restricted Group........................................................S-67
Rules ..................................................................S-40
SAIF ..................................................................S-46
Scheduled Principal Collections Distribution Amount.....................S-50
Seller...................................................................S-7
Servicing Fee Rate......................................................S-57
SMMEA ..........................................................S-21, 67, 68
Spread Account......................................................S-18, 53
Tax Counsel.............................................................S-63
Telerate Screen Page 3750...............................................S-50
Terms and Conditions....................................................S-42
Transfer Date...........................................................S-45
Transfer Deficiency.....................................................S-44
Transfer Deposit Amount.................................................S-44
Transferor...............................................................S-8
Transferor Interest...............................................S-1, 8, 39
Transferor Principal Collections....................................S-15, 47
Trust ...............................................................S-7, 20
Trustee.................................................................S-74
Underwriter..............................................................S-2
Underwriting Agreement..................................................S-68
U.S. Person.............................................................S-76
</TABLE>

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ANNEX I

GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURE

Except in certain limited circumstances, the globally offered Home
Equity Loan Asset Backed Certificates, Series 199_-_ (the "Global Securities")
will be available only in book-entry form. Investors in the Global Securities
may hold such Global Securities through any of DTC, CEDEL or Euroclear. The
Global Securities will be tradeable as home market instruments in both the
European and U.S. domestic markets. Initial settlement and all secondary trades
will settle in same-day funds.

Secondary market trading between investors holding Global Securities
through CEDEL and Euroclear will be conducted in the ordinary way in accordance
with their normal rules and operating procedures and in accordance with
conventional eurobond practice (i.e., seven calendar day settlement).

Secondary market trading between investors holding Global Securities
through DTC will be conducted according to the rules and procedures applicable
to U.S. corporate debt obligations and prior Home Equity Loan Asset Backed
Certificates issues.

Secondary cross-market trading between CEDEL or Euroclear and DTC
Participants holding Certificates will be effected on a delivery-against-payment
basis through the respective Depositaries of CEDEL and Euroclear (in such
capacity) and as DTC Participants.

Non-U.S. holders (as described below) of Global Securities will be
subject to U.S. withholding taxes unless such holders meet certain requirements
and deliver appropriate U.S. tax documents to the securities clearing
organizations or their participants.

INITIAL SETTLEMENT

All Global Securities will be held in book-entry form by DTC in the
name of Cede & Co. as nominee of DTC. Investors' interests in the Global
Securities will be represented through financial institutions acting on their
behalf as direct and indirect Participants in DTC. As a result, CEDEL and
Euroclear will hold positions on behalf of their participants through their
respective Depositaries, which in turn will hold such positions in accounts as
DTC Participants.

Investors electing to hold their Global Securities through DTC will
follow the settlement practices applicable to prior Home Equity Loan Asset
Backed Certificates issues. Investor securities custody accounts will be
credited with their holdings against payment in same-day funds on the settlement
date.

Investors electing to hold their Global Securities through CEDEL or
Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds, except that there will be no temporary global security
and no "lock-up" or restricted period. Global Securities will be credited to the
securities custody accounts on the settlement date against payment in same-day
funds.

SECONDARY MARKET TRADING

Since the purchaser determines the place of delivery, it is important
to establish at the time of the trade where both the purchaser's and seller's
accounts are located to ensure that settlement can be made on the desired value
date.

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Trading between DTC Participants. Secondary market trading between DTC
Participants will be settled using the procedures applicable to prior Home
Equity Loan Asset Backed Certificates issues in same-day funds.

Trading between CEDEL and/or Euroclear Participants. Secondary market
trading between CEDEL Participants or Euroclear Participants will be settled
using the procedures applicable to conventional eurobonds in same-day funds.

Trading between DTC seller and CEDEL or Euroclear purchaser. When
Global Securities are to be transferred from the account of a DTC Participant to
the account of a CEDEL Participant or a Euroclear Participant, the purchaser
will send instructions to CEDEL or Euroclear through a CEDEL Participant or
Euroclear Participant at least one business day prior to settlement. CEDEL or
Euroclear will instruct the respective Depositary, as the case may be, to
receive the Global Securities against payment. Payment will include interest
accrued on the Global Securities from and including the last coupon payment date
to and excluding the settlement date, on the basis of the actual number of days
in such accrual period and a year assumed to consist of 360 days. For
transactions settling on the 31st of the month, payment will include interest
accrued to and excluding the first day of the following month. Payment will then
be made by the respective Depositary of the DTC Participant's account against
delivery of the Global Securities. After settlement has been completed, the
Global Securities will be credited to the respective clearing system and by the
clearing system, in accordance with its usual procedures, to the CEDEL
Participant's or Euroclear Participant's account. The securities credit will
appear the next day (European time) and the cash debt will be back-valued to,
and the interest on the Global Securities will accrue from, the value date
(which would be the preceding day when settlement occurred in New York). If
settlement is not completed on the intended value date (i.e., the trade fails),
the CEDEL or Euroclear cash debt will be valued instead as of the actual
settlement date.

CEDEL Participants and Euroclear Participants will need to make
available to the respective clearing systems the funds necessary to process
same-day funds settlement. The most direct means of doing so is to preposition
funds for settlement, either from cash on hand or existing lines of credit, as
they would for any settlement occurring within CEDEL or Euroclear. Under this
approach, they may take on credit exposure to CEDEL or Euroclear until the
Global Securities are credited to their accounts one day later.

As an alternative, if CEDEL or Euroclear has extended a line of credit
to them, CEDEL Participants or Euroclear Participants can elect not to
preposition funds and allow that credit line to be drawn upon the finance
settlement. Under this procedure, CEDEL Participants or Euroclear Participants
purchasing Global Securities would incur overdraft charges for one day, assuming
they cleared the overdraft when the Global Securities were credited to their
accounts. However, interest on the Global Securities would accrue from the value
date. Therefore, in many cases the investment income on the Global Securities
earned during that one-day period may substantially reduce or offset the amount
of such overdraft charges, although this result will depend on each CEDEL
Participant's or Euroclear Participant's particular cost of funds.

Since the settlement is taking place during New York business hours,
DTC Participants can employ their usual procedures for sending Global Securities
to the respective European Depositary for the benefit of CEDEL Participants or
Euroclear Participants. The sale proceeds will be available to the DTC seller on
the settlement date. Thus, to the DTC Participants a cross-market transaction
will settle no differently than a trade between two DTC Participants.

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<PAGE> 76

Trading between CEDEL or Euroclear Seller and DTC Purchaser. Due to
time zone differences in their favor, CEDEL Participants and Euroclear
Participants may employ their customary procedures for transactions in which
Global Securities are to be transferred by the respective clearing system,
through the respective Depositary, to a DTC Participant. The seller will send
instructions to CEDEL or Euroclear through a CEDEL Participant or Euroclear
Participant at least one business day prior to settlement. In these cases CEDEL
or Euroclear will instruct the respective Depositary, as appropriate, to deliver
the Global Securities to the DTC Participant's account against payment. Payment
will include interest accrued on the Global Securities from and including the
last coupon payment to and excluding the settlement date on the basis of the
actual number of days in such accrual period and a year assumed to consist of
360 days. For transactions settling on the 31st of the month, payment will
include interest accrued to and excluding the first day of the following month.
The payment will then be reflected in the account of the CEDEL Participant or
Euroclear Participant the following day, and receipt of the cash proceeds in the
CEDEL Participant's or Euroclear Participant's account would be back-valued to
the value date (which would be the preceding day, when settlement occurred in
New York). Should the CEDEL Participant or Euroclear Participant have a line of
credit with its respective clearing system and elect to be in debt in
anticipation of receipt of the sale proceeds in its account, the back-valuation
will extinguish any overdraft incurred over that one-day period. If settlement
is not completed on the intended value date (i.e., the trade fails), receipt of
the cash proceeds in the CEDEL Participant's or Euroclear Participant's account
would instead be valued as of the actual settlement date.

Finally, day traders that use CEDEL or Euroclear and that purchase
Global Securities from DTC Participants for delivery to CEDEL Participants or
Euroclear Participants should note that these trades would automatically fail on
the sale side unless affirmative action were taken. At least three techniques
should be readily available to eliminate this potential problem:

(a) borrowing through CEDEL or Euroclear for one day (until the
purchase side of the day trade is reflected in their CEDEL or Euroclear
accounts) in accordance with the clearing system's customary procedures;

(b) borrowing the Global Securities in the U.S. from a DTC Participant
no later than one day prior to settlement, which would give the Global
Securities sufficient time to be reflected in their CEDEL or Euroclear account
in order to settle the sale side of the trade; or

(c) staggering the value dates for the buy and sell sides of the trade
so that the value date for the purchase from the DTC Participant is at least one
day prior to the value date for the sale to the CEDEL Participant or Euroclear
Participant.

CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS

A beneficial owner of Global Securities holding securities through
CEDEL or Euroclear (or through DTC if the holder has an address outside the
U.S.) will be subject to the 30% U.S. withholding tax that generally applies to
payments of interest (including original issue discount) on registered debt
issued by U.S. Persons, unless (i) each clearing system, bank or other financial
institution that holds customers' securities in the ordinary course of its trade
or business in the chain of intermediaries between such beneficial owner and the
U.S. entity required to withhold tax complies with applicable certification
requirements and (ii) such beneficial owner takes one of the following steps to
obtain an exemption or reduced tax rate:

Exemption for non-U.S. Persons (Form W-8). Beneficial owners of Global
Securities that are non-U.S. Persons can obtain a complete exemption from the
withholding tax by filing a signed Form W-8

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<PAGE> 77

(Certificate of Foreign Status). If the information shown on Form W-8 changes, a
new Form W-8 must be filed within 30 days of such change.

Exemption for non-U.S. Persons with effectively connected income (Form
4224). A non-U.S. Person, including a non-U.S. corporation or bank with a U.S.
branch, for which the interest income is effectively connected with its conduct
of a trade or business in the United States, can obtain an exemption from the
withholding tax by filing Form 4224 (Exemption from Withholding of Tax on Income
Effectively Connected with the Conduct of a Trade or Business in the United
States).

Exemption or reduced rate for non-U.S. Persons resident in treaty
countries (Form 1001). Non-U.S. Persons that are Certificate Owners residing in
a country that has a tax treaty with the United States can obtain an exemption
or reduced tax rate (depending on the treaty terms) by filing Form 1001
(Ownership, Exemption or Reduced Rate Certificate). If the treaty provides only
for a reduced rate, withholding tax will be imposed at that rate unless the
filer alternatively files Form W-8. Form 1001 may be filed by the Certificate
Owners or his agent.

Exemption for U.S. Persons (Form W-9). U.S. Persons can obtain a
complete exemption from the withholding tax by filing Form W-9 (Payer's Request
for Taxpayer Identification Number and Certification).

U.S. Federal Income Tax Reporting Procedure. The Certificate Owner of a
Global Security or, in the case of a Form 1001 or a Form 4224 filer, his agent,
files by submitting the appropriate form to the person through whom it holds
(the clearing agency, in the case of persons holding directly on the books of
the clearing agency). Form W-8 and Form 1001 are effective for three calendar
years and Form 4224 is effective for one calendar year.

The term "U.S. Person" means (i) a citizen or resident of the United
States, (ii) a corporation or partnership organized in or under the laws of the
United States or any political subdivision thereof or (iii) an estate or trust
the income of which is includible in gross income for United States tax
purposes, regardless of its source. This summary does not deal with all aspects
of U.S. federal income tax withholding that may be relevant to foreign holders
of the Global Securities. Investors are advised to consult their own tax
advisors for specific tax advice concerning their holding and disposing of the
Global Securities.

A-4

<PAGE> 78

VERSION #2

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED JANUARY 14, 1997
PROSPECTUS SUPPLEMENT
(To Prospectus dated ___________, 199__)

$___________
(Approximate)

HOME EQUITY LOAN TRUST 199___
$___________ HOME EQUITY LOAN ASSET BACKED NOTES, SERIES 199_-_
$__________ HOME EQUITY LOAN ASSET BACKED CERTIFICATES, SERIES 199_-_

Morgan Stanley ABS Capital I Inc.
Depositor
[_____________________________]
Master Servicer

The Home Equity Loan Trust 199__ (the "Trust Fund") will be formed
pursuant to a trust agreement to be dated as of ______, 199_ (the "Trust
Agreement") and entered into by Morgan Stanley ABS Capital I Inc. (the
"Depositor"), ________________ and _____________, as owner trustee (the "Owner
Trustee"). The Trust Fund will issue $___________ aggregate principal amount
of Home Equity Loan Asset Backed Notes (the "Notes"). The Notes will be issued
pursuant to an indenture to be dated as of __________ __, 199_ (the
"Indenture"), between the Trust Fund and ____________, as indenture trustee
(the "Indenture Trustee"). The Trust Fund will also issue $____________
aggregate principal amount of Home Equity Loan Asset Backed Certificates,
Series 199_-_ (the "Certificates" and, together with the Notes, the
"Securities"). See "Index of Defined Terms" on Page S-__ of this Prospectus
Supplement and on Page 135 of the Prospectus for the location of the
definitions of certain capitalized terms.

The property of the Trust Fund will include a pool of [adjustable
rate] home equity revolving credit line loans made or to be made in the future
(the "Mortgage Loans") under certain home equity revolving credit line loan
agreements. The Mortgage Loans are secured by first, second and third
mortgages or deeds of trust on one- to four-family residential properties. [In
addition, the Securities will have the benefit of an irrevocable and
unconditional limited financial guaranty insurance policy (the "Policy") issued
by ______________ (the "Certificate Insurer") covering [describe].]

Distributions of principal and interest on the Notes will be made on
the _________ day of each month or, if such date is not a Business Day, then on
the succeeding Business Day (each a "Distribution Date"), commencing on
________, 199_ to the extent described under "Summary of Terms--Description of
the Securities" and "Description of the Securities" herein. Interest will
accrue on the Notes at a rate (the "Note Rate") equal to ___% per annum from
the Closing Date to the first Distribution Date and at [a floating rate equal
to [LIBOR] (as defined herein) plus ___% per annum] [___% per annum]
thereafter.

<PAGE> 79
The Certificates will represent fractional undivided interests in the
Trust Fund. Distribution of principal and interest on the Certificates will be
made on each Distribution Date to the extent described herein. Interest will
accrue on the Certificates at a rate (the "Pass-Through Rate") equal to ___%
per annum from the Closing Date to the first Distribution Date and at [a
floating rate equal to [LIBOR] plus ___% per annum] [___% per annum]
thereafter.

Payments of interest and principal on the Notes will have equal
priority with payments of principal and interest (and will be made pro rata) on
the Certificates.

There is currently no market for the Securities offered hereby and
there can be no assurance that such a market will develop or if it does develop
that it will continue. See "Risk Factors" herein.
(continued on following page)

PROSPECTIVE INVESTORS SHOULD REVIEW THE INFORMATION SET FORTH UNDER
"RISK FACTORS" ON PAGE S-__ HEREIN AND ON PAGE 21 IN THE
ACCOMPANYING PROSPECTUS.

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

THE SECURITIES REPRESENT INTERESTS IN OR OBLIGATIONS OF THE TRUST
ONLY AND DO NOT REPRESENT INTERESTS IN OR OBLIGATIONS OF
THE DEPOSITOR, OWNER TRUSTEE, INDENTURE TRUSTEE OR ANY
AFFILIATE THEREOF, EXCEPT TO THE EXTENT PROVIDED
HEREIN. THE SECURITIES ARE NOT INSURED OR
GUARANTEED BY ANY GOVERNMENTAL AGENCY.

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

The Securities offered hereby will be purchased by Morgan Stanley &
Co. Incorporated ("Morgan Stanley") from the Depositor and will, in each case,
be offered by Morgan Stanley from time to time to the public in negotiated
transactions or otherwise at varying prices to be determined at the time of
sale. The aggregate proceeds to the Depositor from the sale of the Notes are
expected to be $_____________ and from the sale of the Certificates are
expected to be $__________ before deducting expenses payable by the Depositor
of $_______. The Securities are offered subject to prior sale and subject to
Morgan Stanley's right to reject orders in whole or in part. It is expected
that the Notes will be delivered in book-entry form through the facilities of
The Depository Trust Company, [Cedel, S.A. and the Euroclear System] on or
about _______, 199_.

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

MORGAN STANLEY & CO.
Incorporated

_______________, 199_

S-2
<PAGE> 80

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

No dealer, salesperson or other individual has been authorized to give
any information or to make any representations not contained in this Prospectus
Supplement or the Prospectus and, if given or made, such information or
representations must not be relied upon as having been authorized by the
Depositor or any Underwriter. This Prospectus Supplement and the Prospectus do
not constitute an offer to sell or a solicitation of an offer to buy any of the
securities offered hereby in any jurisdiction to any person to whom it is
unlawful to make such offer in such jurisdiction. Neither the delivery of this
Prospectus Supplement or the Prospectus nor any sale made hereunder shall,
under any circumstances, create an implication that the information herein or
therein is correct at any time subsequent to the date hereof or that there has
been no change in the affairs of the Depositor since that date.

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

Until ninety days after the date of this Prospectus Supplement, all
dealers effecting transactions in the Securities, whether or not participating
in this distribution, may be required to deliver a Prospectus Supplement and
Prospectus to investors. This is in addition to the obligation of dealers
acting as underwriters to deliver a Prospectus Supplement and Prospectus with
respect to their unsold allotments or subscriptions.

This Prospectus Supplement does not contain complete information about
the offering of the Securities. Additional information is contained in the
Prospectus of the Depositor dated __________, 199___ (the "Prospectus") and
purchaser are urged to read both this Prospectus Supplement and the Prospectus
in full. Sales of the Securities may not be consummated unless the purchaser
has received both this Prospectus Supplement and the Prospectus.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The Trustee on behalf of any Trust Fund will provide without charge to
each person to whom this Prospectus Supplement is delivered, on the written or
oral request of such person, a copy of any or all of the documents referred to
in the Prospectus under "Incorporation of Certain Documents by Reference" that
have been or may be incorporated by reference in the Prospectus (not including
exhibits to the information that is incorporated by reference unless such
exhibits are specifically incorporated by reference into the information that
the Prospectus incorporates). Such requests should be directed to the
Corporate Trust Office of the Trustee at __________, telephone: __________,
facsimile number: ________, attention: ___________.

S-3

<PAGE> 81
TABLE OF CONTENTS
<TABLE>
<CAPTION>

Page
PROSPECTUS SUPPLEMENT
<S> <C>
Summary of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-6
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-17
The Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-20
The [Letter of Credit][Surety Bond] Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-20
The Master Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-21
The Home Equity Loan Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-21
Description Of The Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-24
Principal Balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-26
Geographic Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-26
Combined Loan-To-Value Ration(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-27
Property Type . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-27
Lien Priority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-28
Loan Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-28
Margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-29
Credit Limit Utilization Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-29
Credit Limits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-30
Maximum Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-30
Months Remaining To Scheduled Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-31
Origination Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-31
Delinquency Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-31
Maturity and Prepayment Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-33
Description Of The Master Servicing Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-34
Description Of The Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-37
The Depositor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-39
The Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-40
The Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-43
Administration Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-44
The Indenture Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-44
The Owner Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-45
Use Of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-45
Federal Income Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-45
State Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-46
ERISA Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-47
Legal Investment Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-49
Underwriting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-50
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-50
Ratings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-50
Index Of Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-51
</TABLE>

<TABLE>
<CAPTION>
PROSPECTUS
<S> <C>
Prospectus Supplement or Current Report on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Available Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Incorporation of Certain Documents by Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
</TABLE>

S-4
<PAGE> 82
<TABLE>
<S> <C>
Reports to Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Summary of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
The Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
The Depositor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Description of the Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Credit Enhancement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Yield and Prepayment Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
The Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Certain Legal Aspects of the Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Federal Income Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
State Tax Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
ERISA Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
Legal Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
Method of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133
Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133
Rating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133
Index of Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135

</TABLE>

S-5
<PAGE> 83
SUMMARY OF TERMS

The following summary of certain pertinent information is qualified in its
entirety by reference to the detailed information appearing elsewhere in this
Prospectus Supplement and in the accompanying Prospectus. Certain capitalized
terms used herein are defined elsewhere in the Prospectus Supplement or in the
Prospectus. See "Index of Defined Terms" on page S-__ of this Prospectus
Supplement and on page 135 of the Prospectus for the location of the definition
of certain capitalized terms.

Title of Securities . . . . . . . . . . . . . . . Home Equity Loan Asset
Backed Notes, Series
199__-__(the "Notes") and
Home Equity Loan Asset Backed
Certificates, Series 199__-__
(the "Certificates" and,
together with the Notes, the
"Securities").

Securities Offered . . . . . . . . . . . . . . . All of the Securities,
including the Class ___,
Class __ and Class __ Notes
and the Class __, Class __
and Class __ Certificates.
Each Security represents the
right to receive payments of
interest at the variable rate
described below, payable
monthly, and payments of
principal at such time and to
the extent provided below.

Trust Fund . . . . . . . . . . . . . . . . . . . Home Equity Loan Trust
199_-_ (the "Trust
Fund"), a Delaware business
trust established pursuant to
the Trust Agreement (as
defined herein), dated as of
___, 199_ (the "Cut-off
Date"). The property of the
Trust will include: a pool of
[adjustable rate] home equity
revolving credit line loans
made or to be made in the
future (the "Mortgage
Loans"), under certain home
equity revolving credit line
loan agreements (the "Credit
Line Agreements") and secured
by first, second and third
liens on one- to four-family
residential properties that
are one- to four-family
properties (the "Mortgaged
Properties"); the collections
in respect of the Mortgage
Loans received after the
Cut-off Date (exclusive of
payments in respect of
accrued interest due on or
prior to the Cut-off Date or
due in the month of
_____________); property that
secured a Mortgage Loan which
has been acquired by
foreclosure or deed in lieu
of foreclosure; [an
irrevocable and unconditional
limited financial guaranty
insurance policy (the
"Policy")]; an assignment of
the Depositor's rights under
the Purchase Agreement (as
defined herein); rights under
certain hazard insurance
policies covering the
Mortgaged Properties; and
certain other property, as
described more fully under
"The Trust Fund" herein.

S-6

<PAGE> 84
The Trust Fund will include
the unpaid principal balance
of each Mortgage Loan as of
the Cut-off Date (the "Cut-off
Date Principal Balance") plus
any additions thereto as a
result of new advances made
pursuant to the applicable
Credit Line Agreement
(the "Additional Balances")
during the life of the
Trust Fund. With respect to
any date, the "Pool
Balance" will be equal to the
aggregate of the
Principal Balances of all
Mortgage Loans as of such
date. The "Principal Balance"
of a Loan (other than a
Liquidated Loan) on any day is
equal to its Cut-off Date
Principal Balance, plus (i)
any Additional Balances in
respect of such Mortgage Loan
minus (ii) all collections
credited against the Principal
Balance of such Mortgage Loan
in accordance with the
related Credit Line Agreement
prior to such day. The
Principal Balance of a
Liquidated Loan after the
final recovery of related
Liquidation Proceeds shall be
zero.

Indenture . . . . . . . . . . . . . . . . . . . . The Notes will be issued
pursuant to an indenture
dated as of _________, 199_
(the "Indenture") between the
Trust Fund and the Indenture
Trustee. The Indenture
Trustee will allocate
distributions of principal
and interest to holders of
the Notes (the "Noteholders")
in accordance with the
Indenture.

Trust Agreement . . . . . . . . . . . . . . . . . Pursuant to a trust
agreement dated as of
_______, 199___ (the "Trust
Agreement"), among the
Depositor, ________ and the
Owner Trustee, the Trust Fund
will issue the Certificates
in an initial aggregate
amount of $__________. The
Certificates will represent
fractional undivided
interests in the Trust Fund.

Depositor . . . . . . . . . . . . . . . . . . . . Morgan Stanley ABS
Capital I Inc., a Delaware
corporation and a direct
wholly-owned subsidiary of
the Morgan Stanley Group Inc.

Master Servicer . . . . . . . . . . . . . . . . [________________________].
The Master Servicer will
service the Mortgage Loans
pursuant to a Master
Servicing Agreement dated
_________, 199__ between the
Issuer and the Master
Servicer.

Indenture Trustee . . . . . . . . . . . . . . . . _______________ (the
"Indenture Trustee").

Owner Trustee . . . . . . . . . . . . . . . . . . _______________ (the
"Owner Trustee").

Cut-off Date . . . . . . . . . . . . . . . . . . ____________, 199__.

S-7

<PAGE> 85
Closing Date . . . . . . . . . . . . . . . . . . On or about __________
__, 199__.

Determination Date . . . . . . . . . . . . . . . The ___ business day, but
no later than the
___ calendar day, of
each month (the
"Determination Date").

The Mortgage Loans . . . . . . . . . . . . . . . The Mortgage Loans are
secured by first, second and
third liens on Mortgaged
Properties. The Mortgage
Loans were originated or
acquired in the normal course
of its business by
[_____________] (in such
capacity, the "Seller"). On
the Closing Date,
[_____________] will sell the
Mortgage Loans to the
Depositor, pursuant to a
purchase agreement (the
"Purchase Agreement"). The
aggregate Principal Balance
of the Mortgage loans as of
the Cut-off Date is
$___________ (the "Cut-off
Date Pool Principal
Balance").

The percentage of the Cut-off
Date Principal Balance of the
Mortgage Loans secured
primarily by Mortgaged
Properties located in the
states of [__________,
_________, _________,
_______, ______ and ________]
is approximately ____%,
____%, ____%, ____%, ____%
and ____%, respectively. The
"Combined Loan-to-Value
Ratio" of each Mortgage Loan
is the ratio of (A) the sum
of (i) the maximum amount the
borrower was permitted to
draw down under the related
Credit Line Agreement (the
"Credit Limit") and (ii) the
amounts of any related senior
mortgage loans (computed as
of the date of origination of
each such Mortgage Loans) to
(B) the lesser of (i) the
appraised value of the
Mortgaged Property or (ii)
[in the case of a Mortgaged
Property purchased within one
year of the origination of
the related Mortgage Loan],
the purchase price of such
Mortgaged Property. As of
the Cut-off Date the Combined
Loan-to-Value Ratios ranged
from ____% to ______% and, as
of the Cut-off Date, the
weighted average Combined
Loan-to-Value Ratio of the
Mortgage Loans was
approximately ____%.
Interest on each Mortgage
Loan is payable monthly and
computed on the related daily
outstanding Principal Balance
for each day in the billing
cycle at a variable rate per
annum (the "Loan Rate") equal
at any time (subject to
maximum rates, as described
herein under "Description of
the Mortgage Loans--Mortgage
Loan Terms," and further
subject to applicable usury
limitations) to the sum of
[(i) the highest prime rate
published in the "Money
Rates" section of The Wall
Street Journal] and (ii) a

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<PAGE> 86
Margin within the range of
___% to ____%. As of the
Cut-off Date, the weighted
average Margin was approxi-
mately ___%. Loan Rates are
adjusted [monthly] on the
[first business day of the
calendar month] preceding the
Due Date. As to each
Mortgage Loan, the "Due Date"
is the ___ day of each month.
The Cut-off Date Principal
Balances ranged from zero to
$____ and averaged
approximately $___. Credit
Limits under the Mortgage
Loans as of the Cut-off Date
ranged from $___ to $___ and
averaged approximately $___ .
Each Mortgage Loan was
originated in the period from
__________ __, 19__ to
__________ __, 19__. As of
the Cut-off Date, the maximum
Credit Limit Utilization Rate
(as defined herein) was
[100%] and the weighted
average Credit Limit
Utilization Rate was
approximately ____%. As of
the Cut-off Date,
approximately ____% by
Cut-off Date Principal
Balance of the Mortgage Loans
represented first liens on
the related Mortgaged
Properties, approximately
____% of the Mortgage Loans
represented second liens and
approximately __% of the
Mortgage Loans represented
third liens. As of the
Cut-off Date, the Mortgage
Loans had remaining terms to
scheduled maturity ranging
from ___ months to ____
months and had a weighted
average of approximately ___
months. See "The Home Equity
Loan Program" and
"Description of the Mortgage
Loans" herein.

Distribution Date . . . . . . . . . . . . . . . . The ____ day of each
month or, if such day is not
a Business Day, the next
succeeding Business Day,
commencing with _______,
199_. A "Business Day" is
any day other than a Saturday
or Sunday or another day on
which banking institutions in
New York, New York [and
____________] are authorized
or obligated by law,
regulations or executive
order to be closed.

Final Scheduled
Distribution Dates . . . . . . . . . . . . . With respect to the Class
___ Certificates,
_____________. To the extent
not previously paid, the
principal balance (the
"Security Principal Balance")
of the Notes will be due on
the Distribution Date in
_______, 199_. Failure to
pay the full principal
balance of Notes on or before
the applicable final
scheduled payment dates
constitutes an Event of
Default under the Indenture.

Record Date . . . . . . . . . . . . . . . . . . . The last day preceding a
Distribution Date or, if the
Securities are no longer
Book-Entry Securities, the
last day of the month
preceding a Distribution
Date.

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<PAGE> 87
Collections . . . . . . . . . . . . . . . . . . . All collections on the
Mortgage Loans will be
allocated by the Master
Servicer in accordance with
the Loan Agreements between
amounts collected in respect
of interest ("Interest
Collections") and amounts
collected in respect of
principal ("Principal
Collections" and collectively
with Interest Collections,
the "Collections"). The
Master Servicer will
generally deposit Collections
distributable to the Holders
in an account established for
such purpose under the
Servicing Agreement (the
"Collection Account"). See
"Description of the Master
Servicing
Agreement--Allocations and
Collections" herein and "The
Agreements--Payments on
Loans; Deposits to Security
Account" and "--Collection
Procedures" in the
Prospectus.

Description of the Securities . . . . . . . . . .

A. Distributions . . . . . . . . . . . . . . On each Distribution
Date, collections on the
Mortgage Loans will be
applied in the following
order of priority:

(i) [to the Master
Servicer, the Servicing Fee];

(ii) as payment for the
accrued interest due and any
overdue accrued interest (with
interest thereon) on the
respective Security Principal
of the Notes and the
Certificates;

(iii) as principal on the
Securities, the excess of
Principal Collections over
Additional Balances created
during the preceding
Collection Period, such
amount to be allocated
between the Notes and
Certificates, pro rata, based
on their respective Security
Principal Balances;

(iv) as principal on the
Securities, as payment for any
Liquidation Loss Amounts on
the Mortgage Loans;

(v) as payment for the
premium on the Policy;

(vi) to reimburse prior
draws made on the Policy; and

(vii) any remaining amounts
to the Seller.

As to any Distribution Date,
the "Collection Period" is the
calendar month preceding the
month of such Distribution
Date. "Liquidation Loss
Amount" means

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<PAGE> 88
with respect to any Liquidated
Mortgage Loan, the unrecovered
Principal Balance thereof at
the end of the related
Collection Period in which
such Mortgage Loan became a
Liquidated Mortgage Loan
after giving effect to the
Net Liquidation Proceeds
received in connection
therewith.

B. Note Rate . . . . . . . . . . . . . . . Interest will accrue on the
unpaid Security Principal
Balance of the Notes at the
per annum rate (the "Note
Rate") equal to ___% per
annum from the Closing Date
to the first Distribution
Date and thereafter interest
will accrue on the Notes from
and including the preceding
Distribution Date to but
excluding such current
Distribution Date (each, an
"Interest Accrual Period") at
[a floating rate equal to
LIBOR (as defined herein)
plus ___%] [___%]. [Interest
will be calculated on the
basis of the actual number of
days in each Interest Accrual
Period divided by 360.] A
failure to pay interest on
any Notes on any Distribution
Date that continues for
[five] days constitutes an
Event of Default under the
Indenture.

C. Pass-Through Rate . . . . . . . . . . . Interest will accrue on the
unpaid Principal Balance of
the Certificates at the per
annum rate (the "Pass-Through
Rate") equal to ___% per
annum from the Closing Date to
the first Distribution Date
and thereafter interest will
accrue on the Certificates
for each Interest Accrual
Period at [a floating rate
equal to LIBOR (as defined
herein) plus ___%] [___%].
[Interest will be calculated
on the basis of the actual
number of days in each
Interest Accrual Period
divided by 360.] A failure
to pay interest on any
Certificates on any
Distribution Date that
continues for five days
constitutes an Event of
Default under the Trust
Agreement.

D. Form and Registration . . . . . . . . . . The Securities will initially
be delivered in book-entry
form ("Book-Entry
Securities"). Holders of such
Securities may elect to hold
their interests through The
Depository Trust Company
("DTC"), [in the United
States, or Centrale de
Livraison de Valeurs
Mobilieres S.A. or the
Euroclear System
("Euroclear"), in Europe].
Transfers within DTC [, Cedel
or Euroclear, as the case may
be,] will be in accordance
with the usual rules and
operating procedures of the
relevant system. So long as
the Securities are Book-Entry
Securities, such Securities
will be evidenced by one or
more securities registered in
the name of Cede & Co.
("Cede"), as the nominee of
DTC [or one of the relevant
depositaries

S-11

<PAGE> 89
(collectively, the "European
Depositaries")].
Cross-market transfers
between persons holding
directly or indirectly
through DTC[, on the one
hand, and counterparties
holding directly or
indirectly through Cedel or
Euroclear, on the other,]
will be effected in DTC
through Citibank N.A.
("Citibank") or The Chase
Manhattan Bank ("Chase") the
relevant depositaries of
Cedel and Euroclear,
respectively, and each a
participating member of DTC.
The Securities will initially
be registered in the name of
Cede. The interests of such
Holders will be represented
by book entries on the
records of DTC and
participating members
thereof. No Holder of a
Security will be entitled to
receive a definitive note
representing such person's
interest, except in the event
that Securities in fully
registered, certificated form
("Definitive Securities") are
issued under the limited
circumstances described in
"Description of the
Securities--Book-Entry
Registration of Securities"
in the Prospectus. All
references in this Prospectus
Supplement to Securities
reflect the rights of Holders
of such Notes only as such
rights may be exercised
through DTC and its
participating organizations
for so long as such
Securities are held by DTC.
See "Risk Factors--Book-Entry
Securities" herein and "Risk
Factors--Book-Entry
Registration" in the
Prospectus.

E. Denominations . . . . . . . . . . . . . . The Securities will be issued
in minimum denominations of
$[1,000] and integral
multiples of $[1] in excess
thereof.

[Final Payment of Principal;
Termination . . . . . . . . . . . . . . . . . The Trust Fund will
terminate on the Distribution
Date following the earlier of
(i) _________________________
and (ii) the final payment or
other liquidation of the last
Mortgage Loan in the Trust
Fund. The Mortgage Loans
will be subject to optional
repurchase by the Master
Servicer on any Distribution
Date after the Principal
Balance is reduced to an
amount less than or equal to
$_____ (____% of the initial
Principal Balance). The
repurchase price will be
equal to the sum of the
outstanding Principal Balance
and accrued and unpaid
interest thereon at the
weighted average of the Loan
Rates through the day
preceding the final
Distribution Date. See
"Description of the
Securities--Optional
Termination" herein and "The
Agreements--Termination;
Optional Termination" in the
Prospectus.

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<PAGE> 90
[Letter of Credit]
[Surety Bond]
Issuer . . . . . . . . . . . . . . . . . . . _________________ (the
"[Letter of Credit]
[Surety Bond] Issuer"). See
"The [Letter of Credit]
[Surety Bond] Issuer" herein.
[Letter of Credit]
[Surety Bond] . . . . . . . . . . . . . . . . On the Closing Date, the
[Letter of Credit] [Surety
Bond] Issuer will issue a
[letter of credit] [surety
bond] (the "[Letter of
Credit] [Surety Bond]") in
favor of the Owner Trustee on
behalf of the Trust Fund. In
the event that, on any
Distribution Date, available
amounts on deposit in the
Collection Account with
respect to the preceding
Collection Period are
insufficient to provide for
the payment of the amount
required to be distributed to
the Holders and the Master
Servicer on such Distribution
Date, the Trustee will draw
on the [Letter of Credit]
[Surety Bond], to the extent
of the [Letter of Credit]
[Surety Bond] Amount for such
Distribution Date, in an
amount equal to such
deficiency. See "Description
of the Securities--
Distributions" herein and
"Credit Enhancement" in the
Prospectus.

[[Letter of Credit]
[Surety Bond]
Amount . . . . . . . . . . . . . . . . . . . The amount available under
the [Letter of Credit]
[Surety Bond] (the "[Letter
of Credit] [Surety Bond]
Amount") for the initial
Distribution Date will be
$______. For each
Distribution Date thereafter,
the [Letter of Credit]
[Surety Bond] Amount will
equal the lesser of (i)___ %
of the Pool Balance as of the
first day of the preceding
Collection Period (after
giving effect to any amounts
distributed with respect to
principal of the Mortgage
Loans on the Distribution
Date occurring in such
preceding Collection Period)
and (ii) the [Letter of
Credit] [Surety Bond] Amount
as of the first day of the
preceding Collection Period,
minus any amounts drawn under
the [Letter of Credit]
[Surety Bond] during such
preceding Collection Period,
plus any amounts paid to the
[Letter of Credit] [Surety
Bond] Issuer on the
Distribution Date occurring
in such preceding Collection
Period up to the amount of
any previous draws on the
[Letter of Credit] [Surety
Bond].]

Federal Income Tax
Consequences . . . . . . . . . . . . . . . . [_____________], special
counsel to the Depositor
("Tax Counsel"), is of the
opinion that the Trust Fund
will not be an association
(or a publicly traded

S-13

<PAGE> 91
partnership) taxable as a
corporation for federal income
tax purposes. The Trust Fund
will agree, and the
Noteholders will agree by
their purchase of the Notes,
to treat the Notes as debt
for federal income tax
purposes. Based on the
application of existing law
to the facts as set forth in
the Agreement and other
relevant documents and
assuming compliance with the
terms of the Agreement as in
effect on the date of
issuance of the Notes and
Certificates, Tax Counsel is
of the opinion that the Notes
will be treated as debt
instruments for federal
income tax purposes as of
such date.

It is not anticipated that
the Notes will be issued with
original issue discount
("OID"). The stated interest
thereon will be taxable to a
Noteholder as ordinary
interest income when received
or accrued in accordance with
such Noteholder's method of
tax accounting.

The Trust Fund and the Master
Servicer will agree, and the
Certificateholders will agree
by their purchase of
Certificates, to treat the
Trust Fund as a partnership
for purposes of federal and
state income tax, franchise
tax and any other tax
measured in whole in part by
income, with the assets of
the partnership being the
assets held by the Trust
Fund, the partners of the
partnership being the
Certificateholders, and the
Notes being debt of the
partnership. However, the
proper characterization of
the arrangement involving the
Trust Fund, the Certificates,
the Notes, the Trust Fund and
the Master Servicer is not
clear because there is no
authority on transactions
closely comparable to that
contemplated herein. See
"Federal Income Tax
Consequences" and "State Tax
Consequences" herein and
"Federal Income Tax
Consequences" and "State Tax
Considerations" in the
Prospectus concerning the
application of federal, state
and local tax laws.

ERISA Considerations . . . . . . . . . . . . . . Generally, plans that are
subject to the requirements
of ERISA and the Code are
permitted to purchase
instruments that are similar
to the Notes that are debt
under applicable state law
and have no "substantial
equity features" without
reference to the prohibited
transaction requirements of
ERISA and the Code. In the
opinion of ERISA Counsel (as
defined herein), the Notes
will be classified as
indebtedness without
substantial equity features
for ERISA purposes. However,
if the Notes are deemed to be
equity

S-14

<PAGE> 92
interests and no statutory,
regulatory or administrative
exemption applies, the Trust
Fund will hold plan assets
by reason of a Plan's
investment in the Notes.
Accordingly, any Plan
fiduciary considering whether
to purchase the Notes on
behalf of a Plan should
consult with its counsel
regarding the applicability
of the provisions of ERISA
and the Code and the
availability of any
exemptions. Under current
law the purchase and holding
of the Certificates by or on
behalf of any employee
benefit plan (a "Plan")
subject to the fiduciary
responsibility provisions of
the Employee Retirement
Income Security Act of 1974,
as amended ("ERISA"), may
result in a "prohibited
transaction" within the
meaning of ERISA and the Code
or other violation of the
fiduciary responsibility
provisions of ERISA and
Section 4975 of the Code.
[Consequently, Certificates
may not be transferred to a
proposed transferee that is a
Plan subject to ERISA or that
is described in Section
4975(e)(1) of the Code, or a
person acting on behalf of
any such Plan or using the
assets of such plan unless
the Owner Trustee and the
Depositor receive the opinion
of counsel reasonably
satisfactory to the Owner
Trustee and the Depositor to
the effect that the purchase
and holding of such
Certificate will not result
in the assets of the Trust
Fund being deemed to be "plan
assets" for ERISA purposes
and will not be a prohibited
transaction under ERISA or
Section 4975 of the Code.]
See "ERISA Considerations"
herein and in the Prospectus.

Legal Investment . . . . . . . . . . . . . . . . The Securities will not
constitute "mortgage related
securities" for purposes of
the Secondary Mortgage Market
Enhancement Act of 1984
("SMMEA"), because some of
the Mortgages securing the
Mortgage Loans are not first
mortgages. Accordingly, many
institutions with legal
authority to invest in
comparably rated securities
based solely on first
mortgages may not be legally
authorized to invest in the
Certificates. See "Legal
Investment Considerations"
herein and "Legal Investment"
in the Prospectus.

Rating . . . . . . . . . . . . . . . . . . . . . It is a condition to the
issuance of the Securities
that they be rated _________
by at least ____ nationally
recognized statistical rating
organizations (each a "Rating
Agency"). In general, ratings
address credit risk and do not
address the likelihood of
prepayments. A security rating
is not a recommendation to
buy, sell or hold securities.

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<PAGE> 93
Risk Factors . . . . . . . . . . . . . . . . . . For a discussion of certain
risks associated with an
investment in the Securities,
see "Risk Factors" on page
S-__ herein and on page 21
in the Prospectus.

S-16

<PAGE> 94
RISK FACTORS
[Description will depend on the particulars of the Mortgage Loans]

Investors should consider the following risks in connection with the
purchase of the Securities.

BOOK-ENTRY SECURITIES

Consequences of Owning Book-Entry Securities. Issuance of the
Securities in book-entry form may reduce the liquidity of such Securities in
the secondary trading market since investors may be unwilling to purchase
Securities for which they cannot obtain physical securities.

Since transactions in the Securities can be effected only through DTC,
CEDEL, Euroclear, participating organizations, indirect participants and
certain banks, the ability of a Security Owner to pledge a Security to persons
or entities that do not participate in the DTC, CEDEL or Euroclear system may
be limited due to lack of a physical security representing the Securities.

Security Owners may experience some delay in their receipt of
distributions of interest and principal on the Securities since such
distributions will be forwarded by the Trustee to DTC and DTC will credit such
distributions to the accounts of its Participants (as defined herein) which
will thereafter credit them to the accounts of Security Owners either directly
or indirectly through indirect participants. Security Owners will not be
recognized as Securityholders as such term is used in the Agreement and
Security Owners will be permitted to exercise the rights of Securityholders
only indirectly through DTC and its Participants. See "Description of the
Securities--Book-Entry Securities" herein and "Risk Factors--Book-Entry
Registration" in the Prospectus.

CASH FLOW CONSIDERATIONS AND RISKS

Minimum monthly payments will at least equal and may exceed accrued
interest. Even assuming that the Mortgaged Properties provide adequate
security for the Mortgage Loans, substantial delay could be encountered in
connection with the liquidation of Mortgage Loans that are delinquent and
corresponding delays in the receipt of related proceeds by Holders could occur
if the [Letter of Credit] [Surety Bond] provider were unable to perform on its
obligations under the [Letter of Credit] [Surety Bond]. Further, liquidation
expenses (such as legal fees, real estate taxes, and maintenance and
preservation expenses) will reduce the proceeds payable to Holders and thereby
reduce the security for the Mortgage Loans. In the event any of the Mortgaged
Properties fail to provide adequate security for the related Mortgage Loans,
Holders could experience a loss if the [Letter of Credit] [Surety Bond]
provider were unable to perform its obligations under the [Letter of Credit]
[Surety Bond].]

PREPAYMENT CONSIDERATIONS AND RISKS

Substantially all of the Mortgage Loans may be prepaid in whole or in
part at any time without penalty. Home equity loans, such as the Mortgage
Loans, have been originated in significant volume only during the past few
years and neither the Depositor nor the Master Servicer is aware of any
publicly available studies or statistics on the rate of prepayment of such
loans. Generally, home equity loans are not viewed by borrowers as permanent
financing. Accordingly, the Mortgage Loans may experience a higher rate of
prepayment than traditional loans. The Trust Fund's prepayment experience may
be affected by a wide variety of factors, including general economic
conditions, interest rates, the availability of alternative financing and
homeowner mobility. In addition, substantially all of the Mortgage Loans
contain due-on-sale provisions and the Master Servicer intends to enforce such
provisions unless (i) such

S-17

<PAGE> 95
enforcement is not permitted by applicable law or (ii) the Master Servicer, in
a manner consistent with reasonable commercial practice, permits the purchaser
of the related Mortgaged Property to assume the Mortgage Loan. To the extent
permitted by applicable law, such assumption will not release the original
borrower from its obligation under any such Mortgage Loan. See "Certain Legal
Aspects of the Loans--Due-on-Sale Clauses" in the Prospectus for a description
of certain provisions of the Credit Line Agreements that may affect the
prepayment experience on the Mortgage Loans. The yield to maturity and
weighted average life of the Securities will be affected primarily by the rate
and timing of prepayments on the Mortgage Loans. Any reinvestment risks
resulting from a faster or slower incidence of prepayment of Mortgage Loans
will be borne entirely by the Securityholders.

Certificate Rating. The rating of the Securities will depend
primarily on an assessment by the Rating Agencies of the Loans and upon the
claims-paying ability [Letter of Credit] [Surety Bond] provider. Any reduction
in a rating assigned to the claims-paying ability of the [Letter of
Credit][Surety Bond] provider below the rating initially given to the
Securities may result in a reduction in the rating of the Securities. The
rating by the Rating Agencies of the Securities is not a recommendation to
purchase, hold or sell the Securities, inasmuch as such rating does not comment
as to the market price or suitability for a particular investor. There is no
assurance that the ratings will remain in place for any given period of time or
that the ratings will not be lowered or withdrawn by the Rating Agencies. In
general, the ratings address credit risk and do not address the likelihood of
prepayments. The ratings of the Securities do not address the possibility of
the imposition of United States withholding tax with respect to non-U.S.
persons.

LEGAL CONSIDERATIONS--LIEN PRIORITY

[The Mortgage Loans are secured by deeds of trust or mortgages (which
generally are second mortgages). With respect to Mortgage Loans that are
secured by first mortgages, the Master Servicer has the power under certain
circumstances to consent to a new mortgage lien on the Mortgaged Property
having priority over such Mortgage Loan.] Mortgage Loans secured by second
mortgages are entitled to proceeds that remain from the sale of the related
Mortgage Property after any related senior mortgage loan and prior statutory
liens have been satisfied. In the event that such proceeds are insufficient to
satisfy such loans and prior liens in the aggregate [and the [Letter of Credit]
[Surety Bond] provider is unable to perform its obligations under the [Letter
of Credit] [Surety Bond] or if the coverage under the [Letter of Credit]
[Surety Bond] is exhausted] the Trust Fund and, accordingly, the Holders, bear
(i) the risk of delay in distributions while a deficiency judgment against the
borrower is obtained and (ii) the risk of loss if the deficiency judgment
cannot be obtained or is not realized upon. See "Certain Legal Aspects of the
Loans" in the Prospectus.

LEGAL CONSIDERATIONS--SECURITY INTEREST

Under the terms of the Purchase Agreement, so long as the long-term
senior unsecured debt of [the Master Servicer] is rated at least "____" by ____
[and "________" by ______], the Master Servicer will be entitled to maintain
possession of the documentation relating to each Mortgage Loan sold by it,
including the Credit Line Agreements and the Related Documents or other
evidence of indebtedness signed by the borrower, and the assignments of the
related mortgages to the Trust Fund will not be required to be recorded.
Failure to deliver the Related Documents to the Owner Trustee will have the
result in most (if not all) of the states in which the Related Documents will
be held, and failure to record the assignments of the related mortgages to the
Owner Trustee will have the result in certain states in which the Mortgaged
Properties are located, of making the sale of the Cut-off Date Principal
Balances, Additional Balances and Related Documents potentially ineffective
against (i) any creditors of the Master Servicer, who may have been
fraudulently or inadvertently induced to rely on the Mortgage Loans as

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<PAGE> 96
assets of the [Master Servicer], or (ii) any purchaser of a Mortgage Loan who
had no notice of the prior conveyance to the Trust Fund if such purchaser
perfects his interest in the Mortgage Loan by taking possession of the Related
Documents or other evidence of indebtedness or otherwise. In such event, the
Trust Fund would be an unsecured creditor of the [Master Servicer].

BANKRUPTCY AND INSOLVENCY RISKS

The sale of the Mortgage Loans from the Seller to the Depositor
pursuant to the Purchase Agreement will be treated as a sale of the Mortgage
Loans. The Seller will warrant that such transfer is either a sale of its
interest in the Mortgage Loans or a grant of a first priority perfected
security interest therein. In the event of an insolvency of the Seller, the
receiver of the Seller may attempt to recharacterize the sale of the Mortgage
Loans as a borrowing by the Seller secured by a pledge of the Mortgage Loans.
If the receiver decided to challenge such transfer, delays in payments of the
Securities and possible reductions in the amount thereof could occur. The
Depositor will warrant in the Trust Agreement that the transfer of its interest
in the Mortgage Loans to the Trust Fund is a valid transfer and assignment of
such interest.

If a conservator, receiver or trustee were appointed for the Seller,
or if certain other events relating to the bankruptcy or insolvency of the
Seller were to occur, Additional Balances would not be transferred by the
Seller to the Trust Fund. In such an event, an Event of Default under the
Pooling and Servicing Agreement and Indenture would occur and the Owner Trustee
would attempt to sell the Mortgage Loans (unless Holders holding Securities
evidencing undivided interests aggregating at least 51% of each of the Security
Principal Balance of the Notes and the Certificates instruct otherwise),
thereby causing early payment of the Security Principal Balance of the Notes
and the Certificates.

In the event of a bankruptcy or insolvency of the Master Servicer, the
bankruptcy trustee or receiver may have the power to prevent the applicable
Trustee or the Holders from appointing a successor Master Servicer.

[Geographic Concentration. As of the Cut-off Date, approximately
_____% (by Cut-off Date Principal Balance) of the Mortgaged Properties are
located in the State of __________. An overall decline in the __________
residential real estate market could adversely affect the values of the
Mortgaged Properties securing such Mortgage Loans such that the Principal
Balances of the related Mortgage Loans, together with any primary financing on
such Mortgaged Properties, could equal or exceed the value of such Mortgaged
Properties. As the residential real estate market is influenced by many
factors, including the general condition of the economy and interest rates, no
assurances may be given that the __________ residential real estate market will
not weaken. If the __________ residential real estate market should experience
an overall decline in property values after the dates of origination of the
Mortgage Loans, the rates of losses on the Mortgage Loans would be expected to
increase, and could increase substantially.]

MASTER SERVICER'S ABILITY TO CHANGE THE TERMS OF THE MORTGAGE LOANS

[The Master Servicer may agree to changes in the terms of a Credit
Line Agreement, provided that such changes (i) do not adversely affect the
interest of the Holders or the [Letter of Credit] [Surety Bond] provider, and
(ii) are consistent with prudent business practice. There can be no assurance
that changes in applicable law or the marketplace for home equity loans or
prudent business practice will not result in changes in the terms of the
Mortgage Loans. In addition, the Master Servicing Agreement permits the Master
Servicer, within certain limitations described therein, to increase the Credit
Limit of the related Mortgage Loan or reduce the Margin for such Mortgage
Loan.] Any such increase in the

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<PAGE> 97
Credit Limit of a Mortgage Loan would increase the Loan-to-Value Ratio of such
Mortgage Loan and, accordingly, would increase the risk of the Trust Fund's
investment in such Mortgage Loan. In addition, any reduction in the Margin of
a Mortgage Loan would reduce the excess cash flow available to absorb losses.

DELINQUENT MORTGAGE LOANS

The Trust Fund will include Mortgage Loans which are __ or fewer days
delinquent. The Cut-off Date Principal Balance of such delinquent Mortgage
Loans was $______________.]

For a discussion of additional risks pertaining to the Securities, see
"Risk Factors" in the Prospectus.

THE TRUST FUND

GENERAL

The Issuer, Home Equity Loan Trust 199_, is a business trust formed
under the laws of the State of Delaware pursuant to the Trust Agreement for the
transactions described in this Prospectus Supplement. The Trust Agreement
constitutes the "governing instrument" under the laws of the State of Delaware
relating to business trusts. After its formation, the Issuer will not engage
in any activity other than (i) acquiring, holding and managing the Mortgage
Loans and the other assets of the Trust Fund and proceeds therefrom, (ii)
issuing the Notes and the Certificates, (iii) making payments on the Notes and
the Certificates and (iv) engaging in other activities that are necessary,
suitable or convenient to accomplish the foregoing or are incidental thereto or
connected therewith.

The property of the Trust Fund will consist of: (i) each of the
Mortgage Loans that are secured by first, second and third mortgages or deeds
of trust on Mortgaged Properties; (ii) collections on the Mortgage Loans
received after the Cut-off Date; (iii) Mortgaged Properties relating to the
Mortgage Loans that are acquired by foreclosure or deed in lieu of foreclosure;
(iv) the Collection Account and the Distribution Account (excluding net
earnings thereon); (v) the [Letter of Credit] [Surety Bond]; and (vi) an
assignment of the Depositor's rights under the Purchase Agreement, including
all rights of the Depositor to purchase Additional Balances.

The Trust Fund's principal offices are in __________, Delaware, in
care of ________________________, as Owner Trustee, at __________.

THE [LETTER OF CREDIT] [SURETY BOND] ISSUER

The following information with respect to _________ ("_______") has
been furnished by __________. Accordingly, none of the Issuer, the Depositor
or the Master Servicer makes any representation as to the accuracy and
completeness of such information.

[Description of Letter of Credit/Surety Issuer]

S-20

<PAGE> 98
THE MASTER SERVICER

GENERAL

[The Master Servicer will service the Mortgage Loans in accordance
with the terms set forth in the Master Servicing Agreement. The Master
Servicer may perform any of its obligations under the Master Servicing
Agreement through one or more subservicers. Notwithstanding any such
subservicing arrangement, the Master Servicer will remain liable for its
servicing duties and obligations under the Master Servicing Agreement as if the
Master Servicer alone were servicing the Mortgage Loans. As of the Closing
Date, the Master Servicer will service the Mortgage Loans without subservicing
arrangements.]

THE MASTER SERVICER

______________________ ("_______________") will act as Master Servicer
for the Mortgage Loans pursuant to the Master Servicing Agreement.

At ______________, 199_, _______________________ provided servicing
for approximately $______ [billion] aggregate principal amount of first-lien
mortgage loans, substantially all of which are being serviced for unaffiliated
persons. At _____________, 199_, [ ] provided servicing
for approximately $______ [million] aggregate principal amount of first and
second lien mortgage loans originated under home equity lines of credit.

The principal executive offices of _____________________ are located
at _________________. Its telephone number is ( ) ___-________.

THE HOME EQUITY LOAN PROGRAM

UNDERWRITING PROCEDURES RELATING TO HOME EQUITY LOANS

The following is a description of the underwriting procedures
customarily employed by the Seller with respect to home equity loans. [Each
revolving home equity line of credit is originated after a review by the Seller
in accordance with its established underwriting procedures, which are intended
to assess the applicant's ability to assume and repay such home equity lines of
credit and the adequacy of the real property which serves as collateral for
such home equity lines of credit. The maximum home equity line of credit
provided by the Seller is $___________________________].

S-21
<PAGE> 99
of $__________________ or less, making an estimate of the value (the "Estimated
Value") of the property to be mortgaged through, (a) in the case of home equity
lines of credit originated for such properties located in the State of
___________________, the use of a formula that assumed that the then current
value of the property was equal to the amount the applicant paid for the
property together with appreciation of _____% of the purchase price for each
year since the applicant purchased the property and (b) in the case of home
equity lines of credit originated for such properties located in
________________________, a property tax bill which reflected a 100% assessment
on the property].

Applications for loans exceeding the maximum amount calculated in the
preceding paragraph require regional manager approval. Overrides of other
criteria may be authorized by branch managers up to their lending limits.
Among the reasons that the Seller grants overrides are the existence of
compensating balances of the borrower in accounts held by the Seller (which
balances will not necessarily be available in the event of a default or
delinquency of any Mortgage Loan in the Pool) and relationships between the
borrower and the trust department of the Seller.

No information is available with respect to the portion of the home
equity lines of credit in the Seller's portfolio as to which overrides of
underwriting criteria were granted.

SERVICING OF THE MORTGAGE LOANS

[Centralized controls and standards have been established by the
Master Servicer for the servicing and collection of home equity lines of
credit. Servicing includes, but is not limited to, post-origination loan
processing, customer service, remittance processing, collections and
liquidations.

The collection process is initiated ten days after the payment due
date with the computer generation of a late notice. To make payment
arrangements, a collector attempts to contact the borrower when the home equity
line of credit is 15 to 30 days past due.

If arrangements have not been made to cure the delinquency within 60
days of the line becoming past due, drawing privileges are cancelled. The line
is referred to outside counsel and is placed on a "non-accrual" status after 90
days of delinquency. All legal expenses are assessed to the account and become
the responsibility of the borrower. When it is determined by the Master
Servicer that there is no possibility of recovery from the mortgaged property
or from other leviable assets or wage attachments, the line is charged-off.

S-22

<PAGE> 100
Reinstatement arrangements can be made up until the point of sale.
Any foreclosures initiated on a junior mortgage are subject to the senior
mortgage or mortgages and any outstanding property taxes. If the Servicer
purchases the property through the foreclosure action, the account is
transferred to the Master Servicer's REO Department which is maintained at
____________________. The REO Department is responsible for maintaining and
marketing the property.

The Master Servicer may not foreclose on the property securing a
junior mortgage loan unless the Master Servicer forecloses subject to any
senior mortgages, in which case the Master Servicer may pay the entire amount
due on the senior mortgage to the senior mortgagees at or prior to the
foreclosure sale. If a senior mortgage is in default after the Servicer has
initiated its foreclosure action, the Master Servicer may advance funds to keep
senior mortgages current until such time as the Master Servicer satisfies such
senior mortgages. In the event that foreclosure proceedings have been
instituted on a senior mortgage prior to the initiation of the Master
Servicer's foreclosure action, the Master Servicer may either satisfy the
senior mortgage at the time of the foreclosure sale or take other action to
protect the Trust Fund's interest in the related property.]

FORECLOSURE AND DELINQUENCY EXPERIENCE

The following tables set forth the delinquency and loss experience
for each of the periods shown for the Master Servicer's portfolio of home
equity lines of credit. The Master Servicer believes that there have been no
material trends or anomalies in the historical delinquency and loss experience
as represented in the following tables. The information in the tables below
has not been adjusted to eliminate the effect of the growth in the size of the
Master Servicer's portfolio during the periods shown. Accordingly, loss and
delinquency as percentages of aggregate principal balance of such loans for
each period may be higher than those shown if a group of such loans were
artificially isolated at a point in time and the information showed the
activity only in that isolated group. The data presented in the following
tables are for illustrative purposes only, and there is no assurance that the
delinquency and loss experience of the Mortgage Loans will be similar to that
set forth below.

DELINQUENCY STATUS AS OF ___________, 199__*
<TABLE>
<CAPTION>

Dollars Percent Units Percent
------- ------- ----- -------
<S> <C> <C> <C> <C>
Current . . . . . . . . . . . . . $ % %
30-59 days . . . . . . . . . . .
60-89 days . . . . . . . . . . .
90+ days . . . . . . . . . . . .
------ ------- ------ ------

Total . . . . . . . . . . . . $ 100.00% 100.00%
</TABLE>

- ----------
* Delinquencies are reported on a contractual basis.

As of _____________, 199_, ______ loans with an aggregate balance of
$___________ are in bankruptcy and ________ loans with an aggregate balance of
$___________ are in foreclosure. Of the loans in foreclosure, there will be a
____________ 199_ charge off of $________. [In addition to this

S-23

<PAGE> 101
charge off, there is an anticipated charge off of approximately $_____________
which may also be realized in _________.]

DESCRIPTION OF THE MORTGAGE LOANS

GENERAL

The Mortgage Loans were originated pursuant to loan agreements and
disclosure statements (the "Credit Line Agreements") and are secured by
mortgages or deeds of trust, which are first and more subordinate mortgages or
deeds of trust, on Mortgaged Properties located in [__] states. The Mortgaged
Properties securing the Mortgage Loans consist of residential properties that
are one- to four-family properties. See "--Mortgage Loan Terms" below.

The Cut-off Date Pool Balance is $______________, which is equal to
the aggregate Principal Balances of the Mortgage Loans as of the Cut-off Date.
As of the Cut-off Date, the Mortgage Loans were not more than __ days
delinquent. The average Cut-off Date Principal Balance was approximately $____,
the minimum Cut-off Date Principal Balance was zero, the maximum Cut-off Date
Principal Balance was $______, the minimum Loan Rate and the maximum Loan Rate
as of the Cut-off Date were ____% and ____% per annum, respectively, and the
weighted average Loan Rate as of the Cut-off Date was approximately ___% per
annum. As of the Cut-off Date, the weighted average Credit Limit Utilization
Rate was approximately ____%, the minimum Credit Limit Utilization Rate was
zero and the maximum Credit Limit Utilization Rate was 100%. The "Credit Limit
Utilization Rate" is determined by dividing the Cut-off Date Principal Balance
of a Mortgage Loan by the Credit Limit of the related Credit Line Agreement.
The remaining term to scheduled maturity for the Mortgage Loans as of the
Cut-off Date ranged from ____ months to ____ months and the weighted average
remaining term to scheduled maturity was approximately _____ months. As of the
Cut-off Date, the Combined Loan-to-Value Ratio of the Mortgage Loans ranged
from ____% to ______% and the weighted average Combined Loan-to-Value Ratio was
__%. The Combined Loan-to-Value Ratio for a Mortgage Loan is the ratio
(expressed as a percentage) of (A) the sum of (i) the Credit Limit of the
Mortgage Loan and (ii) any outstanding principal balances of mortgage loans
senior to such Mortgage Loan (calculated at the date of origination of the
Mortgage Loan) to (B) the lesser of (i) the appraised value of the related
Mortgaged Property as set forth in the loan files at such date of origination
or (ii) [in the case of a Mortgaged Property purchased within one year of the
origination of the related Mortgage Loan], the purchase price of such Mortgaged
Property. Credit Limits under the Mortgage Loans as of the Cut-off Date ranged
from $______ to $____ and averaged approximately $_____ . The weighted average
[second] [third] mortgage ratio (which is the Credit Limit for the related
Mortgage Loan, provided such Mortgage Loan was in the [second] [third] lien
position, divided by the sum of such Credit Limit and the outstanding principal
balance of any mortgage loan senior to the related Mortgage Loan) was
approximately _____%. As of the Cut-off Date, approximately _____% by Cut-off
Date Principal Balance of the Mortgage Loans represented first liens on the
related Mortgaged Properties, approximately ____% of the Mortgage Loans
represented second liens and approximately ____% of the Mortgage Loans
represented third liens. As of the Cut-off Date, approximately ______% of the
Mortgage Loans are secured by Mortgaged Properties which are single-family
residences and ___% were owner-occupied. As of the Cut-off Date, approximately
____%, ____%,____%,______%,______% and ______% by Cut-off Date Principal
Balance are located in [__________, ________, __________, _______, ______ and
________], respectively.

MORTGAGE LOAN TERMS

S-24

<PAGE> 102
A borrower may access a Mortgage Loan by writing a check in a minimum
amount of [$250]. The Mortgage Loans bear interest at a variable rate which
changes [monthly on the first business day of the related month] with changes
in the applicable Index Rate. The Mortgage Loans are subject to a maximum per
annum interest rate (the "Maximum Rate") ranging from _____% to _____% per
annum and subject to applicable usury limitations. As of the Cut-off Date, the
weighted average Maximum Rate was approximately ______%. See "Certain Legal
Aspects of the Loans--Applicability of Usury Laws" in the Prospectus. The
daily periodic rate on the Mortgage Loans (the "Loan Rate") is the sum of the
Index Rate plus the spread (the "Margin") which generally ranges between ____%
and ____% and had a weighted average, as of the Cut-off Date, of approximately
___%, divided by 365 days. The "Index Rate" is based on [the highest "prime
rate" published in the "Money Rates" table of The Wall Street Journal as of the
first business day of each calendar month].

[In general, the home equity loans may be drawn upon for a period (the
"Draw Period") of either five years (which may be extendible for an additional
five years, upon the approval of [________]) or three years. Home equity loans
with an initial Draw Period of five years, which constitute approximately ____%
of the Mortgage Loans by Cut-off Date Principal Balance, are subject to a
fifteen year repayment period (the "Repayment Period") following the end of the
Draw Period during which the outstanding principal balance of the loan will be
repaid in monthly installments equal to [1/180] of the outstanding principal
balance as of the end of the Draw Period. Mortgage Loans with a Draw Period of
three years, which constitute approximately ____% of the Mortgage Loans by
Cut-off Date Principal Balance, are subject to a ten year Repayment Period
following the end of the Draw Period during which the outstanding principal
balance of the loan will be paid in monthly installments equal to [1/120] of
the outstanding principal balance as of the end of the Draw Period.]

[The minimum payment due during the Draw Period will be equal to the
finance charges accrued on the outstanding principal balance of the home equity
loan during the related billing period. The minimum payment due during the
repayment period will be equal to the sum of the finance charges accrued on the
outstanding principal balance of the Mortgage Loan during the related billing
period and the principal payment described above.]

Set forth below is a description of certain characteristics of the
Mortgage Loans as of the Cut-off Date:

S-25

<PAGE> 103
PRINCIPAL BALANCES
<TABLE>
<CAPTION>

Number of Percent of Pool
Mortgage Cut-off Date by Cut-off Date
Range of Principal Balances Loans Principal Balance Principal Balance
- --------------------------- ----- ----------------- -----------------
<S> <C> <C> <C>
$_______ to $_________ . . . . . $ %
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ and over . . . . . . . .
-------- ----------- -------

Total . . . . . . . . . . . . . $ 100.00%
======== ========== =======
</TABLE>

GEOGRAPHIC DISTRIBUTION(1)
<TABLE>
<CAPTION>

Number of Percent of Pool
Mortgage Cut-off Date by Cut-off Date
State Loans Principal Balance Principal Balance
- ----- -------- ----------------- -----------------
<S> <C> <C> <C>
$ %

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

Total . . . . . . . . . . . . . $ 100.00%
======== ============= =======

- ------------
(1) Geographic location is determined by the address of the Mortgaged Property securing the related Mortgage Loan.
</TABLE>

S-26
<PAGE> 104
COMBINED LOAN-TO-VALUE RATIOS(1)

Range of Combined Number of Percent of Pool
- ----------------- Mortgage Cut-off Date by Cut-off Date
Loan-to-Value Ratios Loans Principal Balance Principal Balance
- -------------------- --------- ----------------- -----------------
<S> <C> <C> <C>
$_______ to $_________ . . . . . $ %
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ and over . . . . . . . .
-------- ---------- -------

Total . . . . . . . . . . . . . $ 100.00%
======== ========== =======

- -------------
(1) The ratio (expressed as a percentage) of (A) the sum of (i) the Credit Limit of the Mortgage Loans and (ii) any outstanding
principal balances of mortgage loans senior to the Mortgage Loans (calculated at the date of origination of the Mortgage
Loans) to (B) the lesser of (i) the appraised value of the related Mortgaged Property as set forth in loan files at such
date of origination or (ii) [in the case of a Mortgaged Property purchased within one year of the origination of the
related Mortgage Loan, the purchase price of such Mortgaged Property].
</TABLE>

PROPERTY TYPE

<TABLE>
<CAPTION>
Number of Percent of Pool
Mortgage Cut-off Date by Cut-off Date
Property Type Loans Principal Balance Principal Balance
- ------------- --------- ----------------- -----------------
<S> <C> <C> <C>
Single Family . . . . . . . . . . $ %
Two- to Four-Family . . . . . . .
Condominium . . . . . . . . . . .
PUD . . . . . . . . . . . . . . .
-------- -------------- -------

Total . . . . . . . . . . . . . $ 100.00%
======== ============== =======
</TABLE>

S-27
<PAGE> 105
LIEN PRIORITY

<TABLE>
<CAPTION>
Number of Percent of Pool
Mortgage Cut-off Date by Cut-off Date
Lien Priority Loans Principal Balance Principal Balance
- ------------- -------- ----------------- -----------------
<S> <C> <C> <C>
First Lien . . . . . . . . . . . $ %
Second Lien . . . . . . . . . . . $ %
Third Lien . . . . . . . . . . . $ %
-------- ------------- -------

Total . . . . . . . . . . . . . $ 100.00%
======== ============= =======
</TABLE>

LOAN RATES(1)

Range of Number of Percent of Pool
-------- Mortgage Cut-off Date by Cut-off Date
Loan Rates Loans Principal Balance Principal Balance
---------- --------- ----------------- -----------------
<S> <C> <C> <C>
$_______ to $_________ . . . . . $ %
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
-------- ---------- -------

Total . . . . . . . . . . . . . $ 100.00%
======== ========== =======

- --------------
(1) Approximately % of the Mortgage Loans by Cut-Off Date Principal Balance are subject to an introductory rate of _____%
per annum.

</TABLE>

S-28
<PAGE> 106
MARGIN

<TABLE>
<CAPTION>
Number of Percent of Pool
Range of Mortgage Cut-off Date by Cut-off Date
Margins Loans Principal Balance Principal Balance
------- --------- ----------------- -----------------
<S> <C> <C> <C>
$_______ to $_________ . . . . . $ %
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
-------- ---------- -------

Total . . . . . . . . . . . . . $ 100.00%
======== ========== =======
</TABLE>

CREDIT LIMIT UTILIZATION RATES

Number of Percent of Pool
Range of Credit Limit Mortgage Cut-off Date by Cut-off Date
Utilization Rates Loans Principal Balance Principal Balance
- ----------------- --------- ----------------- -----------------
<S> <C> <C> <C>
$_______ to $_________ . . . . . $ %
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
-------- ---------- -------

Total . . . . . . . . . . . . . $ 100.00%
======== ========== =======

S-29
</TABLE>
<PAGE> 107
CREDIT LIMITS

<TABLE>
<CAPTION>
Number of Percent of Pool
Mortgage Cut-off Date by Cut-off Date
Range of Credit Limits Loans Principal Balance Principal Balance
- ---------------------- --------- ----------------- -----------------
<S> <C> <C> <C>
$_______ to $_________ . . . . . $ %
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ to $_________ . . . . .
$_______ and over . . . . . . . .
-------- ---------- -------

Total . . . . . . . . . . . . . $ 100.00%
======== ========== =======
</TABLE>

MAXIMUM RATES

<TABLE>
<CAPTION>
Number of Percent of Pool
Mortgage Cut-off Date by Cut-off Date
Maximum Rates Loans Principal Balance Principal Balance
------------- --------- ----------------- -----------------
<S> <C> <C> <C>
$_______ . . . . . . . . . . . . $ %
$_______ . . . . . . . . . . . .
$_______ . . . . . . . . . . . .
$_______ . . . . . . . . . . . .
-------- ---------- -------

Total . . . . . . . . . . . . . $ 100.00%
======== ========== =======
</TABLE>

S-30

<PAGE> 108
MONTHS REMAINING TO SCHEDULED MATURITY(1)

<TABLE>
<CAPTION>
Number of Percent of Pool
Range of Months Mortgage Cut-off Date by Cut-off Date
Remaining to Scheduled Maturity Loans Principal Balance Principal Balance
- ------------------------------- --------- ----------------- -----------------
<S> <C> <C> <C>
_______ to _________ . . . . . . $ %
_______ to _________ . . . . . .
_______ to _________ . . . . . .
_______ to _________ . . . . . .
_______ to _________ . . . . . .
_______ to _________ . . . . . .
_______ to _________ . . . . . .
_______ to _________ . . . . . .
_______ to _________ . . . . . .
_______ to _________ . . . . . .
_______ to _________ . . . . . .
-------- ---------- -------

Total . . . . . . . . . . . . . $ 100.00%
======== ========== =======
</TABLE>

ORIGINATION YEAR

<TABLE>
<CAPTION>
Number of Percent of Pool
Mortgage Cut-off Date by Cut-off Date
Origination Year Loans Principal Balance Principal Balance
---------------- --------- ----------------- -----------------
<S> <C> <C> <C>
$_________ . . . . . . . . . . . $ %
$_________ . . . . . . . . . . .
-------- ---------- -------

Total . . . . . . . . . . . . . $ 100.00%
======== ========== =======
</TABLE>

DELINQUENCY STATUS

<TABLE>
<CAPTION>
Number of Percent of Pool
Mortgage Cut-off Date by Cut-off Date
Number of Days Delinquent Loans Principal Balance Principal Balance
- ------------------------- --------- ----------------- -----------------
<S> <C> <C> <C>
0 to 29 . . . . . . . . . . . . . $ %
30 to 59 . . . . . . . . . . . .
60 to 89 . . . . . . . . . . . .
-------- ---------- -------

Total . . . . . . . . . . . . . $ 100.00%
========= =========== =======
</TABLE>

S-31

<PAGE> 109
ASSIGNMENT OF MORTGAGE LOANS

At the time of issuance of the Securities, the Depositor will transfer
to the Trust Fund all of its right, title and interest in and to each Mortgage
Loan (including its right to purchase any Additional Balances arising in the
future), related Credit Line Agreements, mortgages and other related documents
(collectively, the "Related Documents"), without recourse, including all
collections received on or with respect to each such Mortgage Loan after the
Cut-off Date (exclusive of payments in respect of accrued interest due on or
prior to the Cut-off Date or due in the month of ______). The Owner Trustee,
concurrently with such transfer, will deliver the Securities. Each Mortgage
Loan transferred to the Owner Trust will be identified on a schedule delivered
to the Owner Trustee pursuant to the Purchase Agreement. Such schedule will
include information as to the Cut-off Date Principal Balance of each Mortgage
Loan, as well as information with respect to the Loan Rate.

[The Purchase Agreement will permit the Seller to maintain possession
of the Related Documents and certain other documents relating to the Mortgage
Loans (the "Mortgage Files") and assignments of the Mortgage Loans to the Owner
Trustee will not be required to be recorded for so long as the long-term senior
unsecured debt of [_________________] is rated at least "____" by ___ and
"____" by _______. In the event that the long-term senior unsecured debt
rating of [_______] does not satisfy the above-described standards (an
"Assignment Event"), [____________________] will have 90 days to record
assignments of the mortgages for each such Mortgage Loan in favor of the Owner
Trustee and 60 days to deliver the Mortgage Files pertaining to each such
Mortgage Loan to the Trustee (unless opinions of counsel satisfactory to the
Rating Agencies and the [Letter of Credit][Surety Bond] provider to the effect
that recordation of such assignments or delivery of such documentation is not
required in the relevant jurisdiction to protect the interest of
[_____________] and the Owner Trustee in the Mortgage Loans).] In lieu of
delivery of original documentation, [_______________] may deliver documents
which have been imaged optically upon delivery of an opinion of counsel that
such documents do not impair the enforceability of the transfer to the Trust
Fund of the Mortgage Loans.

Within [90] days of on Assignment Event, the Owner Trustee will review
the Mortgage Loans and the Related Documents and if any Mortgage Loan or Related
Document is found to be defective in any material respect and such defect is not
cured within [90] days following notification thereof to the Seller and the
Depositor by the Owner Trustee, the Seller will be obligated to repurchase the
Mortgage Loan and to deposit the Repurchase Price into the Collection Account.
Upon such retransfer, the Principal Balance of such Mortgage Loan will be
deducted from the Pool Balance. In lieu of any such repurchase, the Seller may
substitute an Eligible Substitute Mortgage Loan. Any such repurchase or
substitution will be considered a payment in full of such Mortgage Loan. The
obligation of the Seller to accept a transfer of a Defective Mortgage Loan is
the sole remedy regarding any defects in the Mortgage Loans and Related
Documents available to the Owner Trustee or the Holders.

With respect to any Mortgage Loan, the "Repurchase Price" is equal to
the Principal Balance of such Mortgage Loan at the time of any transfer
described above plus accrued and unpaid interest thereon to the date of
repurchase.

[An "Eligible Substitute Mortgage Loan" is a mortgage loan substituted
by the Depositor for a Defective Mortgage Loan which must, on the date of such
substitution, (i) have an outstanding Principal Balance (or in the case of a
substitution of more than one Mortgage Loan for a Defective Mortgage Loan, an
aggregate Principal Balance), not __% more or less than the Transfer Deficiency
relating to such Defective Mortgage Loan; (ii) have a Loan Rate not less than
the Loan Rate of the Defective Mortgage Loan and not more than 1% in excess of
the Loan Rate of such Defective Mortgage Loan; (iii) have a Loan Rate based on
the same Index with adjustments to such Loan Rate made on the same Interest
Rate

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Adjustment Date as that of the Defective Mortgage Loan; (iv) have a Margin that
is not less than the Margin of the Defective Mortgage Loan and not more than
___ basis points higher than the Margin for the Defective Mortgage Loan; (v)
have a mortgage of the same or higher level of priority as the mortgage
relating to the Defective Mortgage Loan; (vi) have a remaining term to maturity
not more than ___ months earlier and not more than __ months later than the
remaining term to maturity of the Defective Mortgage Loan; (vii) comply with
each representation and warranty as to the Mortgage Loans set forth in the
Purchase Agreement (deemed to be made as of the date of substitution); (viii)
in general, have an original Combined Loan-to-Value Ratio not greater than that
of the Defective Mortgage Loans; and (ix) satisfy certain other conditions
specified in the Purchase Agreement. To the extent the Principal Balance of an
Eligible Substitute Mortgage Loan is less than the Principal Balance of the
related Defective Mortgage Loan, the Seller will be required to make a deposit
to the Collection Account equal to such difference.]

The Seller will make certain representations and warranties as to the
accuracy in all material respects of certain information furnished to the Owner
Trustee with respect to each Mortgage Loan (e.g., Cut-off Date Principal
Balance and the Loan Rate). In addition, the Seller will represent and warrant
on the Closing Date that at the time of transfer to the Depositor, the Seller
has transferred or assigned all of its right, title and interest in each
Mortgage Loan and the Related Documents, free of any lien (subject to certain
exceptions). Upon discovery of a breach of any such representation and
warranty which materially and adversely affects the interests of the Holders or
the [Letter of Credit][Surety Bond] provider in the Related Mortgage Loan and
Related Documents, the Seller will have a period of [90] days after discovery
or notice of the breach to effect a cure. If the breach cannot be cured within
the [90-day] period, the Seller will be obligated to repurchase or substitute
the Defective Mortgage Loan from the Trust Fund. The same procedure and
limitations that are set forth above for the repurchase or substitution of
Defective Mortgage Loans will apply to the transfer of a Mortgage Loan that is
required to be repurchased or substituted because of a breach of a
representation or warranty in the Purchase Agreement that materially and
adversely affects the interests of the Holders.

Mortgage Loans required to be transferred to the Seller as described
in the preceding paragraphs are referred to as "Defective Mortgage Loans."

MATURITY AND PREPAYMENT CONSIDERATIONS

All of the Mortgage Loans may be prepaid in full or in part at any
time. [However, Mortgage Loans secured by Mortgaged Properties in California
are subject to an account termination fee equal to the lesser of $350 and six
months interest on the amount prepaid, to the extent the prepaid amount exceeds
20% of the unpaid principal balance, if the account is terminated on or before
its fifth year anniversary. In addition, Mortgage Loans secured by Mortgaged
Properties in other jurisdictions may be subject to account termination fees to
the extent permitted by law. In general, such account termination fees do not
exceed $350 and do not apply to accounts terminated subsequent to a date
designated in the related Mortgage Note which, depending on the jurisdiction,
ranges between six months and five years following origination.] The
prepayment experience with respect to the Mortgage Loans will affect the
weighted average life of the Securities.

The rate of prepayment on the Mortgage Loans cannot be predicted.
Neither the Depositor nor the Master Servicer is aware of any publicly
available studies or statistics on the rate of prepayment of such Mortgage
Loans. Generally, home equity revolving credit lines are not viewed by
borrowers as permanent financing. Accordingly, the Mortgage Loans may
experience a higher rate of prepayment than traditional first mortgage loans.
On the other hand, because the Mortgage Loans amortize as described under
"Description of the Mortgage Loans--Mortgage Loan Terms" herein, rates of
principal payment

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on the Mortgage Loans will generally be slower than those of traditional
fully-amortizing first mortgages in the absence of prepayments on such Mortgage
Loans. The prepayment experience of the Trust Fund with respect to the
Mortgage Loans may be affected by a wide variety of factors, including general
economic conditions, prevailing interest rate levels, the availability of
alternative financing, homeowner mobility, the frequency and amount of any
future draws on the Credit Line Agreements and changes affecting the
deductibility for Federal income tax purposes of interest payments on home
equity credit lines. Substantially all of the Mortgage Loans contain
"due-on-sale" provisions, and, with respect to the Mortgage Loans, the Master
Servicer intends to enforce such provisions, unless such enforcement is not
permitted by applicable law. The enforcement of a "due-on-sale" provision will
have the same effect as a prepayment of the related Mortgage Loan. See
"Certain Legal Aspects of the Loans--Due-on-Sale Clauses" in the Prospectus.

The yield to an investor who purchases the Securities in the secondary
market at a price other than par will vary from the anticipated yield if the
rate of prepayment on the Mortgage Loans is actually different than the rate
anticipated by such investor at the time such Securities were purchased.

Collections on the Mortgage Loans may vary because, among other
things, borrowers may make payments during any month as low as the minimum
monthly payment for such month or as high as the entire outstanding principal
balance plus accrued interest and the fees and charges thereon. It is possible
that borrowers may fail to make scheduled payments. Collections on the
Mortgage Loans may vary due to seasonal purchasing and payment habits of
borrowers.

No assurance can be given as to the level of prepayments that will be
experienced by the Trust Fund and it can be expected that a portion of
borrowers will not prepay their Mortgage Loans to any significant degree. See
"Yield and Prepayment Considerations" in the Prospectus.

DESCRIPTION OF THE MASTER SERVICING AGREEMENT

The Master Servicer shall establish and maintain on behalf of the
Owner Trustee an account (the "Collection Account") for the benefit of the
Holders. The Collection Account will be an Eligible Account (as defined
herein). Subject to the investment provision described in the following
paragraphs, upon receipt by the Master Servicer of amounts in respect of the
Mortgage Loans (excluding amounts representing administrative charges, annual
fees, taxes, assessments, credit insurance charges, insurance proceeds to be
applied to the restoration or repair of a Mortgaged Property or similar items),
the Master Servicer will deposit such amounts in the Collection Account.
Amounts so deposited may be invested in Eligible Investments (as described in
the Servicing Agreement) maturing no later than one Business Day prior to the
date on which the amount on deposit therein is required to be deposited in the
Distribution Account or on such Distribution Date if approved by the Rating
Agencies. Not later than the _____ Business Day prior to each Distribution
Date (the "Determination Date"), the Master Servicer will notify the Owner
Trustee and the Indenture Trustee of the amount of such deposit to be included
in funds available for the related Distribution Date.

The Owner Trustee and the Indenture Trustee will establish one or more
accounts (the "Security Account") into which will be deposited amounts
withdrawn from the Collection Account for distribution to Holders on a
Distribution Date. The Security Account will be an Eligible Account. Amounts
on deposit therein will be invested in Eligible Investments maturing on or
before the Business Day prior to the related Distribution Date.

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An "Eligible Account" is (i) an account that is maintained with a
depository institution whose debt obligations at the time of any deposit
therein have the highest short-term debt rating by the Rating Agencies, (ii)
one or more accounts with a depository institution having a minimum long-term
unsecured debt rating of "____" by _____ and "____" by _____, which accounts
are fully insured by either the Savings Association Insurance Fund ("SAIF") or
the Bank Insurance Fund ("BIF") of the Federal Deposit Insurance Corporation
established by such fund, (iii) a segregated trust account maintained with the
Owner Trustee or an Affiliate of the Owner Trustee in its fiduciary capacity or
(iv) otherwise acceptable to each Rating Agency as evidenced by a letter from
each Rating Agency to the Owner Trustee, without reduction or withdrawal of
their then current ratings of the Securities.

Eligible Investments are specified in the Servicing Agreement and are
limited to (i) obligations of the United States or any agency thereof, provided
such obligations are backed by the full faith and credit of the United States;
(ii) general obligations of or obligations guaranteed by any state of the
United States or the District of Columbia receiving the highest long-term debt
rating of each Rating Agency rating the Securities, or such lower rating as
will not result in the downgrading or withdrawal of the ratings then assigned
to the Securities by each such Rating Agency; (iii) commercial or finance
company paper which is then receiving the highest commercial or finance company
paper rating of each such Rating Agency, or such lower rating as will not
result in the downgrading or withdrawal of the ratings then assigned to the
Securities by each such Rating Agency; (iv) certificates of deposit, demand or
time deposits, or bankers' acceptances issued by any depository institution or
trust company incorporated under the laws of the United States or of any state
thereof and subject to supervision and examination by federal and/or state
banking authorities, provided that the commercial paper and/or long term
unsecured debt obligations or such depository institution or trust company (or
in the case of the principal depository institution in a holding company
system, the commercial paper or long-term unsecured debt obligations of such
holding company, but only if Moody's Investors Service, Inc. is not a Rating
Agency) are then rated one of the two highest long-term and the highest
short-term ratings of each such Rating Agency for such securities, or such
lower ratings as will not result in the downgrading or withdrawal of the rating
then assigned to the Securities by any such Rating Agency; (iv) demand or time
deposits or certificates of deposit issued by any bank or trust company or
savings institution to the extent that such deposits are fully insured by the
FDIC; (v) guaranteed reinvestment agreements issued by any bank, insurance
company or other corporation containing, at the time of the issuance of such
agreements, such terms and conditions as will not result in the downgrading or
withdrawal of the rating then assigned to the Securities by any such Rating
Agency; (vi) repurchase obligations with respect to any security described in
clauses (i) and (ii) above, in either case entered into with a depository
institution or trust company (acting as principal) described in clause (iv)
above; (vii) securities (other than stripped bonds, stripped coupons or
instruments sold at a purchase price in excess of 115% of the face amount
thereof) bearing interest or sold at a discount issued by any corporation
incorporated under the laws of the United States or any state thereof which, at
the time of such investment, have one of the two highest ratings of each Rating
Agency (except if the Rating Agency is Moody's, such rating shall be the
highest commercial paper rating of Moody's for any such securities), or such
lower rating as will not result in the downgrading or withdrawal of the rating
then assigned to the Securities by any such Rating Agency, as evidenced by a
signed writing delivered by each such Rating Agency; and (viii) such other
investments having a specified stated maturity and bearing interest or sold at
a discount acceptable to each Rating Agency as will not result in the
downgrading or withdrawal of the rating then assigned to the Securities by any
such Rating Agency, as evidenced by a signed writing delivered by each such
Rating Agency; provided that no such instrument shall be a Permitted Investment
if such instrument evidences the right to receive interest only payments with
respect to the obligations underlying such instrument.

ALLOCATIONS AND COLLECTIONS

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All collections on the Mortgage Loans will generally be allocated in
accordance with the Credit Line Agreements between amounts collected in respect
of interest and amounts collected in respect of principal. As to any
Distribution Date, "Interest Collections" will be equal to the aggregate of the
amounts collected during the related Collection Period, including Net
Liquidation Proceeds (as defined below), allocated to interest pursuant to the
terms of the Credit Line Agreements.

As to any Distribution Date, "Principal Collections" will be equal to
the sum of (i) the amounts collected during the related Collection Period,
including Net Liquidation Proceeds, and allocated to principal pursuant to the
terms of the Credit Line Agreements and (ii) any Substitution Adjustment
Amounts. "Net Liquidation Proceeds" with respect to a Mortgage Loan are equal
to the aggregate of all amounts received upon liquidation of such Mortgage
Loan, including, without limitation, insurance proceeds, reduced by related
expenses, but not including the portion, if any, of such amount that exceeds
the Principal Balance of the Mortgage Loan at the end of the Collection Period
immediately preceding the Collection Period in which such Mortgage Loan became
a Liquidated Mortgage Loan plus accrued and unpaid interest thereon through the
date of liquidation.

With respect to any date, the "Pool Balance" will be equal to the
aggregate of the Principal Balances of all Mortgage Loans as of such date. The
Principal Balance of a Mortgage Loan (other than a Liquidated Mortgage Loan) on
any day is equal to the Cut-off Date Principal Balance thereof, plus (i) any
Additional Balances in respect of such Mortgage Loan minus (ii) all collections
credited against the Principal Balance of such Mortgage Loan in accordance with
the related Credit Line Agreement prior to such day. The Principal Balance of
a Liquidated Mortgage Loan after final recovery of related Liquidation Proceeds
shall be zero.

HAZARD INSURANCE

[The Master Servicing Agreement provides that the Master Servicer
maintain certain hazard insurance on the Mortgaged Properties relating to the
Mortgage Loans. While the terms of the related Credit Line Agreements
generally require borrowers to maintain certain hazard insurance, the Master
Servicer will not monitor the maintenance of such insurance.

The Master Servicing Agreement requires the Master Servicer to
maintain for any Mortgaged Property relating to a Mortgage Loan acquired upon
foreclosure of a Mortgage Loan, or by deed in lieu of such foreclosure, hazard
insurance with extended coverage in an amount equal to the lesser of (a) the
maximum insurable value of such Mortgaged Property or (b) the outstanding
balance of such Mortgage Loan plus the outstanding balance on any mortgage loan
senior to such Mortgage Loan at the time of foreclosure or deed in lieu of
foreclosure, plus accrued interest and the Master Servicer's good faith
estimate of the related liquidation expenses to be incurred in connection
therewith. The Master Servicing Agreement provides that the Master Servicer
may satisfy its obligation to cause hazard policies to be maintained by
maintaining a blanket policy insuring against losses on such Mortgaged
Properties. If such blanket policy contains a deductible clause, the Master
Servicer will be obligated to deposit in the Collection Account the sums which
would have been deposited therein but for such clause. The Master Servicer
will initially satisfy these requirements by maintaining a blanket policy. As
set forth above, all amounts collected by the Master Servicer (net of any
reimbursements to the Master Servicer) under any hazard policy (except for
amounts to be applied to the restoration or repair of the Mortgaged Property)
will ultimately be deposited in the Collection Account.

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Although the policies relating to the Mortgage Loans will be underwritten by
different insurers and therefore will not contain identical terms and
conditions, the basic terms thereof are dictated by state laws and most of such
policies typically do not cover any physical damage resulting from the
following: war, revolution, governmental actions, floods and other
water-related causes, earth movement (including earthquakes, landslides and
mudflows), nuclear reactions, wet or dry rot, vermin, rodents, insects or
domestic animals, theft and, in certain cases vandalism. The foregoing list is
merely indicative of certain kinds of uninsured risks and is not intended to be
all-inclusive or an exact description of the insurance policies relating to the
Mortgaged Properties.]

REALIZATION UPON DEFAULTED MORTGAGE LOANS

[The Master Servicer will foreclose upon or otherwise comparably
convert to ownership Mortgaged Properties securing such of the Mortgage Loans
as come into default when in accordance with applicable servicing procedures
under the Master Servicing Agreement, no satisfactory arrangements can be made
for the collection of delinquent payments. In connection with such foreclosure
or other conversion, the Master Servicer will follow such practices as it deems
necessary or advisable and as are in keeping with its general subordinate
mortgage servicing activities, provided the Master Servicer will not be
required to expend its own funds in connection with foreclosure or other
conversion, correction of default on a related senior mortgage loan or
restoration of any property unless, in its sole judgment, such foreclosure,
correction or restoration will increase net Liquidation Proceeds. The Master
Servicer will be reimbursed out of Liquidation Proceeds for advances of its own
funds as liquidation expenses before any Net Liquidation Proceeds are
distributed to Holders or the [Transferor][Seller]. "Net Liquidation Proceeds"
with respect to a Mortgage Loan is the amount received upon liquidation of such
Mortgage Loan reduced by related expenses, which may include the amount
advanced in respect of a senior mortgage, up to the unpaid Principal Balance of
the Mortgage Loan plus accrued and unpaid interest thereon.]

SERVICING COMPENSATION AND PAYMENT OF EXPENSES

With respect to each Collection Period, other than the first
Collection Period, the Master Servicer will retain from interest collections in
respect of the Mortgage Loan a portion of such interest collections as a
monthly Servicing Fee in the amount equal to ___% per annum ("Servicing Fee
Rate") on the aggregate Principal Balances of the Mortgage Loans as of the
first day of each such Collection Period. All assumption fees, late payment
charges and other fees and charges, to the extent collected from borrowers,
will be retained by the Master Servicer as additional servicing compensation.

[The Master Servicer will pay certain ongoing expenses associated with
the Trust Fund and incurred by it in connection with its responsibilities under
the Servicing Agreement, including, without limitation, payment of the fees and
disbursements of the Trustee, any custodian appointed by the Trustee, the
entity maintaining the Security Register relating to the Securities and any
paying agent. In addition, the Master Servicer will be entitled to
reimbursement for certain expenses incurred by it in connection with defaulted
Mortgage Loans and in connection with the restoration of Mortgaged Properties,
such right of reimbursement being prior to the rights of Holders to receive any
related Net Liquidation Proceeds.]

DESCRIPTION OF THE SECURITIES

GENERAL

The Notes will be issued pursuant to the Indenture dated as of
___________, 199_, between the Trust Fund and _______________, as Indenture
Trustee. The Certificates will be issued pursuant to the

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Trust Agreement dated as of ______________, 199_, among the Depositor,
__________, and ______________, as Owner Trustee. The following is a
description of the material provisions of the Securities, Indenture and Trust
Agreement. As used herein, "Agreement" shall mean either the Trust Agreement
or the Indenture, as the context requires.

The Securities will be issued in fully registered, certificated form
only. The Securities will be freely transferable and exchangeable at the
corporate trust office of the Owner Trustee, with respect to the Certificates,
or the Indenture Trustee, with respect to the Notes.

BOOK-ENTRY SECURITIES

The Senior Certificates will be book-entry Certificates (the
"Book-Entry Certificates"). Persons acquiring beneficial ownership interests in
the Senior Certificates ("Certificate Owners") will hold their Certificates
through the Depository Trust Company ("DTC") in the United States, or CEDEL or
Euroclear (in Europe) if they are participants of such systems, or indirectly
through organizations which are participants in such systems. The Book-Entry
Certificates will be issued in one or more certificates which equal the
aggregate principal balance of the Certificates and will initially be
registered in the name of Cede & Co., the nominee of DTC. CEDEL and Euroclear
will hold omnibus positions on behalf of their participants through customers'
securities accounts in CEDEL's and Euroclear's names on the books of their
respective depositaries which in turn will hold such positions in customers'
securities accounts in the depositaries' names on the books of DTC. Citibank
N.A. will act as depositary for CEDEL and Chase will act as depositary for
Euroclear (in such capacities, individually the "Relevant Depositary" and
collectively the "European Depositaries"). Investors may hold such beneficial
interests in the Book-Entry Certificates in minimum denominations representing
Certificate Principal Balances of $1,000 and in integral multiples in excess
thereof. Except as described below, no person acquiring a Book-Entry
Certificate (each, a "beneficial owner") will be entitled to receive a physical
certificate representing such Certificate (a "Definitive Certificate"). Unless
and until Definitive Certificates are issued, it is anticipated that the only
"Certificateholder" of the Certificates will be Cede & Co., as nominee of DTC.
Certificate Owners will not be Certificateholders as that term is used in the
Pooling and Servicing Agreement. Certificate Owners are only permitted to
exercise their rights indirectly through the participating organizations that
utilize the services of DTC, including securities brokers and dealers, banks
and trust companies and clearing corporations and certain other organizations
("Participants") and DTC.

DISTRIBUTIONS

On each Distribution Date, collections on the Mortgage Loans will be
applied in the following order of priority:

(i) [to the Master Servicer, the Servicing Fee];

(ii) as payment for the accrued interest due and any overdue
accrued interest on the respective Security Principal Balance
of the Notes and the Certificates;

(iii) as principal on the Securities, the excess of Principal
Collections over Additional Balances created during the
preceding Collection Period, such amount to be allocated
between the Notes and Certificates pro rata, based on their
respective Security Principal Balances;

(iv) as principal on the Securities, as payment for any Liquidation
Loss Amounts on the Mortgage Loans;

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(v) as payment for the premium for the [Letter of Credit][Surety
Bond];

(vi) to reimburse prior draws made on the [Letter of Credit][Surety
Bond]; and

(vii) any remaining amounts to the Seller.

As to any Distribution Date, the "Collection Period" is the calendar
month preceding the month of such Distribution Date. "Liquidation Loss Amount"
means, with respect to any Liquidated Mortgage Loan, the unrecovered Principal
Balance thereof at the end of the Collection Period in which such Mortgage Loan
became a Liquidated Mortgage Loan after giving effect to the Net Liquidation
Proceeds in connection therewith.

INTEREST

Note Rate. Interest will accrue on the unpaid Security Principal
Balance of the Notes at the per annum rate (the "Note Rate") equal to __% per
annum from the Closing Date to the first Distribution Date and thereafter
interest will accrue on the Notes from and including the preceding Distribution
Date to but excluding such current Distribution Date (each, an "Interest
Accrual Period") at [a floating rate equal to LIBOR (as defined herein) plus
__%] [__%]. [Interest will be calculated on the basis of the actual number of
days in each Interest Accrual Period divided by 360.] A failure to pay
interest on any Notes on any Distribution Date that continues for [five] days
constitutes an Event of Default under the Indenture.

Pass-Through Rate. Interest will accrue on the unpaid Security
Principal Balance of the Certificates at the per annum rate (the "Pass-Through
Rate") equal to __% per annum from the Closing Date to the first Distribution
Date and thereafter interest will accrue on the Certificates for each Interest
Accrual Period at [a floating rate equal to LIBOR (as defined herein) plus __%]
[__%]. [Interest will be calculated on the basis of the actual number of days
in each Interest Accrual Period divided by 360.] A failure to pay interest on
any Certificates on any Distribution Date that continues for five days
constitutes an Event of Default under the Trust Agreement.

OPTIONAL TERMINATION

The Trust Fund will terminate on the Distribution Date following the
earlier of (i) _________________________ and (ii) the final payment or other
liquidation of the last Mortgage Loan in the Trust Fund. The Mortgage Loans
will be subject to optional repurchase by the Master Servicer on any
Distribution Date after the Principal Balance is reduced to an amount less than
or equal to $_____ (__% of the initial Principal Balance). The repurchase
price will be equal to the sum of the outstanding Principal Balance and accrued
and unpaid interest thereon at the weighted average of the Loan Rates through
the day preceding the final Distribution Date.

THE DEPOSITOR

Morgan Stanley ABS Capital I Inc., the Depositor, is a Delaware
corporation and a direct, wholly-owned subsidiary of Morgan Stanley Group Inc.
The Depositor maintains its principal office at 1585 Broadway, 37th Floor, New
York, New York 10036. Its telephone number is (212) 761-4000.

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THE INDENTURE

The following is a description of the material terms of the Indenture.
Whenever particular sections or defined terms of the Indenture are referred to,
such sections or defined terms are thereby incorporated herein by reference.
See "Description of the Securities" herein for a summary of certain additional
terms of the Indenture.

REPORTS TO NOTEHOLDERS

The Indenture Trustee will mail to each Noteholder, at such
Noteholder's request, at its address listed on the Note Register maintained
with the Indenture Trustee a report setting forth certain amounts relating to
the Notes.

EVENTS OF DEFAULT; RIGHTS UPON EVENT OF DEFAULT

With respect to the Notes, "Events of Default" under the Indenture
will consist of: (i) a default for [five] days or more in the payment of any
interest on any Note; (ii) a default in the payment of the principal of or any
installment of the principal of any Note when the same becomes due and payable;
(iii) a default in the observance or performance of any covenant or agreement
of the Trust Fund made in the Indenture and the continuation of any such
default for a period of 30 days after notice thereof is given to the Trust Fund
by the Indenture Trustee or to the Trust Fund and the Indenture Trustee by the
holders of at least 25% in principal amount of the Notes then outstanding; (iv)
any representation or warranty made by the Trust Fund in the Indenture or in
any certificate delivered pursuant thereto or in connection therewith having
been incorrect in a material respect as of the time made, and such breach not
having been cured within 30 days after notice thereof is given to the Trust
Fund by the Indenture Trustee or to the Trust Fund and the Indenture Trustee by
the holders of at least 25% in principal amount of Notes then outstanding; or
(v) certain events of bankruptcy, insolvency, receivership or liquidation of
the Trust Fund. [The amount of principal required to be paid to Noteholders
under the Indenture will generally be limited to amounts available to be
deposited in the Collection Account. Therefore, the failure to pay principal
on the Notes generally will not result in the occurrence of an Event of Default
until the final scheduled Distribution Date for such Notes.] If there is an
Event of Default with respect to a Note due to late payment or nonpayment of
interest due on a Note, additional interest will accrue on such unpaid interest
at the interest rate on the Note (to the extent lawful) until such interest is
paid. Such additional interest on unpaid interest shall be due at the time
such interest is paid. If there is an Event of Default due to late payment or
nonpayment of principal on a Note, interest will continue to accrue on such
principal at the interest rate on the Note until such principal is paid. If an
Event of Default should occur and be continuing with respect to the Notes, the
Indenture Trustee or holders of a majority in principal amount of Notes then
outstanding may declare the principal of such Notes to be immediately due and
payable. Such declaration may, under certain circumstances, be rescinded by
the holders of a majority in principal amount of the Notes then outstanding.
If the Notes are due and payable following an Event of Default with respect
thereto, the Indenture Trustee may institute proceedings to collect amounts due
or foreclose on Trust Fund property or exercise remedies as a secured party.
If an Event of Default occurs and is continuing with respect to the Notes, the
Indenture Trustee will be under no obligation to exercise any of the rights or
powers under the Indenture at the request or direction of any of the holders of
the Notes, if the Indenture Trustee reasonably believes it will not be
adequately indemnified against the costs, expenses and liabilities which might
be incurred by it in complying with such request. Subject to the provisions
for indemnification and certain limitations contained in the Indenture, the
holders of a majority in principal amount of the outstanding Notes will have
the right to direct the time, method and place of conducting any proceeding or
any remedy available to the Indenture Trustee, and the holders of a majority in
principal amount of the Notes then outstanding may, in certain cases, waive any
default with

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respect thereto, except a default in the payment of principal or interest or a
default in respect of a covenant or provision of the Indenture that cannot be
modified without the waiver or consent of all the holders of the outstanding
Notes. No holder of a Note will have the right to institute any proceeding
with respect to the Indenture, unless (i) such holder previously has given the
Indenture Trustee written notice of a continuing Event of Default, (ii) the
holders of not less than 25% in principal amount of the outstanding Notes have
made written request to the Indenture Trustee to institute such proceeding in
its own name as Indenture Trustee, (iii) such holder or holders have offered
the Indenture Trustee reasonable indemnity, (iv) the Indenture Trustee has for
60 days failed to institute such proceeding and (v) no direction inconsistent
with such written request has been given to the Indenture Trustee during the
60-day period by the holders of a majority in principal amount of the Notes.
In addition, the Indenture Trustee and the Noteholders, by accepting the Notes,
will covenant that they will not at any time institute against the Trust Fund
any bankruptcy, reorganization or other proceeding under any federal or state
bankruptcy or similar law. With respect to the Trust Fund, neither the
Indenture Trustee nor the Owner Trustee in its individual capacity, nor any
holder of a Certificate representing an ownership interest in the Trust nor any
of their respective owners, beneficiaries, agents, officers, directors,
employees, affiliates, successors or assigns will, in the absence of an express
agreement to the contrary, be personally liable for the payment of the
principal of or interest on the Notes or for the agreements of the Trust
contained in the Indenture.

CERTAIN COVENANTS

The Indenture will provide that the Trust may not consolidate with or
merge into any other entity, unless (i) the entity formed by or surviving such
consolidation or merger is organized under the laws of the United States, any
state or the District of Columbia, (ii) such entity expressly assumes the Trust
Fund's obligation to make due and punctual payments upon the Notes and the
performance or observance of any agreement and covenant of the Trust Fund under
the Indenture, (iii) no Event of Default shall have occurred and be continuing
immediately after such merger or consolidation, (iv) the Trust Fund has been
advised that the ratings of the Securities then in effect would not be reduced
or withdrawn by any Rating Agency as a result of such merger or consolidation
and (v) the Trust Fund has received an opinion of counsel to the effect that
such consolidation or merger would have no material adverse tax consequence to
the Trust Fund or to any Noteholder or Certificateholder. The Trust Fund will
not, among other things, (i) except as expressly permitted by the Indenture,
sell, transfer, exchange or otherwise dispose of any of the assets of the Trust
Fund, (ii) claim any credit on or make any deduction from the principal and
interest payable in respect of the Notes (other than amounts withheld under the
Code or applicable state law) or assert any claim against any present or former
holder of Notes because of the payment of taxes levied or assessed upon the
Trust Fund, (iii) dissolve or liquidate in whole or in part, (iv) permit the
validity or effectiveness of the Indenture to be impaired or permit any person
to be released from any covenants or obligations with respect to the Notes
under the Indenture except as may be expressly permitted thereby or (v) permit
any lien, charge excise, claim, security interest, mortgage or other
encumbrance to be created on or extend to or otherwise arise upon or burden the
assets of the Trust Fund or any part thereof, or any interest therein or the
proceeds thereof. The Trust Fund may not engage in any activity other than as
specified under "The Trust Fund" herein. The Trust Fund will not incur, assume
or guarantee any indebtedness other than indebtedness incurred pursuant to the
Notes and the Indenture.

ANNUAL COMPLIANCE STATEMENT

The Trust Fund will be required to file annually with the Indenture
Trustee a written statement as to the fulfillment of its obligations under the
Indenture.

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INDENTURE TRUSTEE'S ANNUAL REPORT

The Indenture Trustee will be required to mail each year to all
Noteholders a report relating to any change in its eligibility and
qualification to continue as Indenture Trustee under the Indenture, any amounts
advanced by it under the Indenture, the amount, interest rate and maturity date
of any indebtedness owing by the Trust Fund to the Indenture Trustee in its
individual capacity, any change in the property and funds physically held by
the Indenture Trustee as such and any action taken by it that materially
affects the Notes and that has not been previously reported, but if no such
changes have occurred, then no report shall be required.

SATISFACTION AND DISCHARGE OF INDENTURE

The Indenture will be discharged with respect to the collateral
securing the Notes upon the delivery to the Indenture Trustee for cancellation
of all the Notes or, with certain limitations, upon deposit with the Indenture
Trustee of funds sufficient for the payment in full of all the Notes.

MODIFICATION OF INDENTURE

With the consent of the holders of a majority in principal amount of
the Notes then outstanding, the Trust Fund and the Indenture Trustee may
execute a supplemental indenture to add provisions to, change in any manner or
eliminate any provisions of, the Indenture, or modify (except as provided
below) in any manner the rights of the Noteholders. Without the consent of the
holder of each outstanding Note affected thereby, however, no supplemental
indenture will: (i) change the due date of any installment of principal of or
interest on any Note or reduce the principal amount thereof, the interest rate
specified thereon or the redemption price with respect thereto or change any
place of payment where or the coin or currency in which any Note or any
interest thereon is payable; (ii) impair the right to institute suit for the
enforcement of certain provisions of the Indenture regarding payment; (iii)
reduce the percentage of the aggregate amount of the outstanding Notes, the
consent of the holders of which is required for any supplemental indenture or
the consent of the holders of which is required for any waiver of compliance
with certain provisions of the Indenture or of certain defaults thereunder and
their consequences as provided for in the Indenture; (iv) modify or alter the
provisions of the Indenture regarding the voting of Notes held by the Trust
Fund, the Depositor or an affiliate of any of them; (v) decrease the percentage
of the aggregate principal amount of Notes required to amend the sections of
the Indenture which specify the applicable percentage of aggregate principal
amount of the Notes necessary to amend the Indenture or certain other related
agreements; or (vi) permit the creation of any lien ranking prior to or on a
parity with the lien of the Indenture with respect to any of the collateral for
the Notes or, except as otherwise permitted or contemplated in the Indenture,
terminate the lien of the Indenture on any such collateral or deprive the
holder of any Note of the security afforded by the lien of the Indenture. The
Trust Fund and the Indenture Trustee may also enter into supplemental
indentures, without obtaining the consent of the Noteholders, for the purpose
of, among other things, adding any provisions to or changing in any manner or
eliminating any of the provisions of the Indenture or of modifying in any
manner the rights of the Noteholders; provided that such action will not
materially and adversely affect the interest of any Noteholder.

VOTING RIGHTS

At all times, the voting rights of Noteholders under the Indenture
will be allocated among the Notes pro rata in accordance with their outstanding
principal balances.

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CERTAIN MATTERS REGARDING THE INDENTURE TRUSTEE AND THE DEPOSITOR

Neither the Depositor, the Indenture Trustee nor any director, officer
or employee of the Depositor or the Indenture Trustee will be under any
liability to the Trust Fund or the related Noteholders for any action taken or
for refraining from the taking of any action in good faith pursuant to the
Indenture or for errors in judgment; provided, however, that none of the
Indenture Trustee, the Depositor and any director, officer or employee thereof
will be protected against any liability which would otherwise be imposed by
reason of willful malfeasance, bad faith or gross negligence in the performance
of duties or by reason of reckless disregard of obligations and duties under
the Indenture. Subject to certain limitations set forth in the Indenture, the
Indenture Trustee and any director, officer, employee or agent of the Indenture
Trustee shall be indemnified by the Trust Fund and held harmless against any
loss, liability or expense incurred in connection with investigating, preparing
to defend or defending any legal action, commenced or threatened, relating to
the Indenture other than any loss, liability or expense incurred by reason of
willful malfeasance, bad faith or gross negligence in the performance of its
duties under such Indenture or by reason of reckless disregard of its
obligations and duties under the Indenture. Any such indemnification by the
Trust Fund will reduce the amount distributable to the Noteholders. All
persons into which the Indenture Trustee may be merged or with which it may be
consolidated or any person resulting from such merger or consolidation shall be
the successor of the Indenture Trustee under each Indenture.

THE TRUST AGREEMENT

The following is a description of the material terms of the Trust
Agreement. Whenever particular sections or defined terms of the Trust
Agreement are referred to, such sections or defined terms are thereby
incorporated herein by reference. See "Description of the Securities" herein
for a summary of certain additional terms of the Trust Agreement.

AMENDMENT

The Trust Agreement may be amended by the Depositor and the Owner
Trustee, without consent of the Holders, to cure any ambiguity, to correct or
supplement any provision or for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions thereof or of
modifying in any manner the rights of such Holders; provided, however, that
such action will not, as evidenced by an opinion of counsel satisfactory to the
Owner Trustee, adversely affect in any material respect the interests of any
Holders. The Trust Agreement may also be amended by the Depositor and the
Owner Trustee with the consent of the holders of Certificates evidencing at
least a majority in principal amount of then outstanding Certificates and
Holders owning Voting Interests (as herein defined) aggregating not less than a
majority of the aggregate Voting Interests for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
the Trust Agreement or modifying in any manner the rights of the Holders.

TERMINATION

Upon termination of the Trust Fund, the Owner Trustee shall direct the
Indenture Trustee promptly to sell the assets of the Trust Fund (other than the
Collection Account) in a commercially reasonable manner and on commercially
reasonable terms. The proceeds from any such sale, disposition or liquidation
of the Mortgage Loans will be treated as collections on the Mortgage Loans and
deposited in the Collection Account. The Trust Agreement will provide that the
Owner Trustee does not have the power to commence a voluntary proceeding in
bankruptcy with respect to the Trust Fund without the unanimous prior approval
of all Holders (including the Depositor) of the Trust Fund and the delivery to

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the Owner Trustee by each Holder (including the Depositor) of a certificate
certifying that the Holder reasonably believes that the Trust Fund is
insolvent.

LIABILITY OF THE DEPOSITOR

Under the Trust Agreement, the Depositor will agree to be liable
directly to an injured party for the entire amount of any losses, claims,
damages or liabilities (other than those incurred by a Noteholder or a Holder
in the capacity of an investor with respect to the Trust Fund) arising out of
or based on the arrangement created by the Trust Agreement.

VOTING INTERESTS

As of any date, the aggregate principal balance of all Certificates
outstanding will constitute the voting interest of the Issuer (the "Voting
Interests"), except that, for purposes of determining Voting Interests,
Certificates owned by the Issuer or its affiliates (other than the Depositor)
will be disregarded and deemed not to be outstanding, and except that, in
determining whether the Owner Trustee is protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only
Certificates that the Owner Trustee knows to be so owned will be so
disregarded. Certificates so owned that have been pledged in good faith may be
regarded as outstanding if the pledgee establishes to the satisfaction of the
Owner Trustee the pledgor's right so to act with respect to such Certificates
and that the pledgee is not the Issuer or its affiliates.

CERTAIN MATTERS REGARDING THE OWNER TRUSTEE AND THE DEPOSITOR

Neither the Depositor, the Owner Trustee nor any director, officer or
employee of the Depositor or the Owner Trustee will be under any liability to
the Trust Fund or the related Holders for any action taken or for refraining
from the taking of any action in good faith pursuant to the Trust Agreement or
for errors in judgment; provided, however, that none of the Owner Trustee, the
Depositor and any director, officer or employee thereof will be protected
against any liability which would otherwise be imposed by reason of willful
malfeasance, bad faith or gross negligence in the performance of duties or by
reason of reckless disregard of obligations and duties under the Trust
Agreement. Subject to certain limitations set forth in the Trust Agreement,
the Owner Trustee and any director, officer, employee or agent of the Owner
Trustee shall be indemnified by the Trust Fund and held harmless against any
loss, liability or expense incurred in connection with investigating, preparing
to defend or defending any legal action, commenced or threatened, relating to
the Trust Agreement other than any loss, liability or expense incurred by
reason of willful malfeasance, bad faith or gross negligence in the performance
of its duties under such Trust Agreement or by reason of reckless disregard of
its obligations and duties under the Trust Agreement. Any such indemnification
by the Trust Fund will reduce the amount distributable to the Holders. All
persons into which the Owner Trustee may be merged or with which it may be
consolidated or any person resulting from such merger or consolidation shall be
the successor of the Owner Trustee under each Trust Agreement.

ADMINISTRATION AGREEMENT

The _________________, in its capacity as Administrator, will enter
into the Administration Agreement with the Trust Fund and the Owner Trustee
pursuant to which the Administrator will agree, to the extent provided in such
Administration Agreement, to provide notices and perform other administrative
obligations required by the Indenture and the Trust Agreement.

THE INDENTURE TRUSTEE

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[ ] is the Indenture Trustee under the Indenture. The mailing
address of the Indenture Trustee is [ ], Attention: Corporate Trust Department.

THE OWNER TRUSTEE

[ ] is the Owner Trustee under the Trust Agreement. The mailing
address of the Owner Trustee is [ ], Attention: Corporate Trust Administration.

USE OF PROCEEDS

The net proceeds from the sale of the Securities will be applied by
the Depositor towards the purchase price of the Mortgage Loans.

FEDERAL INCOME TAX CONSEQUENCES

GENERAL

The following discussion, which summarizes the material U.S. federal
income tax aspects of the purchase, ownership and disposition of the Notes and
Certificates, is based on the provision of the Internal Revenue Code of 1985,
as amended (the "Code"), the Treasury Regulations thereunder, and published
rulings and court decisions in effect as of the date hereof, all of which are
subject to change, possibly retroactively. This discussion does not address
every aspect of the U.S. federal income tax laws which may be relevant to
Noteholders and Certificate owners in light of their personal investment
circumstances or to certain types of Certificate owners subject to special
treatment under the U.S. federal income tax laws (for example, tax exempt
investors, banks and life insurance companies). Accordingly, investors should
consult their tax advisors regarding U.S. federal, state, local, foreign and
any other tax consequences to them of investing in the Notes and Certificates.

TAX CHARACTERIZATION OF THE TRUST FUND AS A PARTNERSHIP

[___________], special counsel to the Depositor ("Tax Counsel"), is of
the opinion that the Trust Fund will not be an association (or a publicly
traded partnership) taxable as a corporation for federal income tax purposes.
This opinion is based on the assumption that the terms of the Trust Agreement
and related documents will be complied with, and on Tax Counsel's conclusions
that (1) the Trust Fund will not have certain characteristics necessary for a
business trust to be classified as an association taxable as a corporation and
(2) the nature of the income of the Trust Fund exempts it from the rule that
certain publicly traded partnerships are taxable as corporations, so that the
Trust Fund will not be characterized as a publicly traded partnership taxable
as a corporation.

If the Trust Fund were taxable as a corporation for federal income tax
purposes, the Trust Fund would be subject to corporate income tax on its
taxable income. The Trust Fund's taxable income would include all its income,
possibly reduced by its interest expense on the Notes. Any such corporate
income tax could materially reduce cash available to make payments on the Notes
and distributions on the Certificates, and Certificateholders could be liable
for any such tax that is unpaid by the Trust Fund.

TAX CONSEQUENCES TO HOLDERS OF THE NOTES

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The Trust Fund will agree, and the Noteholders will agree by their
purchase of the Notes, to treat the Notes as debt for federal income tax
purposes. Based on the application of existing law to the facts as set forth
in the Agreement and other relevant documents and assuming compliance with the
terms of the Agreement as in effect on the date of issuance of the Notes and
Certificates, Tax Counsel is of the opinion that the Notes will be treated as
debt instruments for federal income tax purposes as of such date. See "Federal
Income Tax Consequences--Tax Consequences to Holders of the Notes" in the
Prospectus.

It is not anticipated that the Notes will be issued with original
issue discount ("OID"). The stated interest thereon will be taxable to a
Noteholders as ordinary interest income when received or accrued in accordance
with such Noteholder's method of tax accounting. Under the OID regulations, a
holder of a Note issued with a de minimis amount of OID must include such OID
in income, on a pro rata basis, as principal payments are made on the Note. It
is believed that any prepayment premium aid as a result of a mandatory
redemption will be taxable as contingent interest when it becomes fixed and
unconditionally payable. A purchaser who buys a Note for more or less than its
principal amount will generally be subject, respectively, to the premium
amortization or market discount rules of the Code.

TAX CONSEQUENCES TO HOLDERS OF THE CERTIFICATES

The Trust Fund and the Master Servicer will agree, and the
Certificateholders will agree by their purchase of Certificates, to treat the
Trust Fund as partnership for purposes of federal and state income tax,
franchise tax and any other tax measured in whole or in part by income, with
the assets of the partnership being the assets held by the Trust Fund, the
partners of the partnership being the Certificateholders, and the Notes being
debts of the partnership. However, the proper characterization of the
arrangement involving the Certificates, the Notes, the Trust Fund and the
Master Servicer is not clear because there is no authority on transactions
closely comparable to that contemplated herein. For example, because the
Certificates have certain features contemplated herein. For example, because
the Certificates have certain features characteristic of debt, the Certificates
might be considered debt of the Trust Fund. Any such characterization would
not result in materially adverse tax consequences to Certificateholders as
compared to the consequences from treatment of the Certificates as equity in a
partnership.

As a partnership, the Trust Fund will not be subject to federal income
tax. Rather, each Certificateholder will be required to separately take into
account such holder's allocated share of income, gains, losses, deductions and
credits of the Trust Fund. The Trust Fund's income will consist primarily of
interest and finance charges earned on the Mortgage Loans (including
appropriate adjustments for market discount, OID and bond premium) and any gain
upon collection or disposition of Loans. The Trust Fund's deductions will
consist primarily of interest accruing with respect to the Notes, servicing and
other fees, and losses or deductions upon collection or disposition of Loans.
See "Federal Income Tax Consequences--Tax Consequences to Holders of the
Certificates" in the Prospectus.

The Trust Fund expects to withhold on the portion of its taxable
income that is allocable to foreign Certificateholders pursuant to Section 1446
of the Code, as if such income were effectively connected to a U.S. trade or
business, at a rate of 35% for foreign holders that are taxable as corporations
and 39.6% for all other foreign holders. Subsequent adoption of Treasury
regulations or the issuance of other administrative pronouncements may require
the Trust Fund to change its withholding procedures. See "Federal Income Tax
Consequences--Tax Consequences to Holders of the Certificates--Tax Consequences
to Foreign Certificateholders" in the Prospectus.

STATE TAX CONSEQUENCES

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In addition to the federal income tax consequences described in
"Federal Income Tax Consequences" herein, potential investors should consider
the state income tax consequences of the acquisition, ownership, and
disposition of the Securities offered hereunder. State income tax law may
differ substantially from the corresponding federal tax law, and this
discussion does not purport to describe any aspect of the income tax laws of
any state. Therefore, potential investors should consult their own tax
advisors with respect to the various tax consequences of investments in the
Securities offered hereunder.

ERISA CONSIDERATIONS

GENERAL

The Employee Retirement Income Security Act of 1974, as amended
("ERISA") and Section 4975 of the Code impose certain restrictions on employee
benefit plans subject to ERISA or plans or arrangements subject to Section 4975
of the Code ("Plans") and on persons who are parties in interest or
disqualified persons ("parties in interest") with respect to such Plans.
Certain employee benefit plans, such as governmental plans and church plans (if
no election has been made under section 410(d) of the Code), are not subject to
the restrictions of ERISA, and assets of such plans may be invested in the
Securities without regard to the ERISA considerations described below, subject
to other applicable federal and state law. However, any such governmental or
church plan which is qualified under section 401(a) of the Code and exempt from
taxation under section 501(a) of the Code is subject to the prohibited
transaction rules set forth in section 503 of the Code. Any Plan fiduciary
which proposes to cause a Plan to acquire any of the Securities should consult
with its counsel with respect to the potential consequences under ERISA, and
the Code, of the Plan's acquisition and ownership of the Securities. See
"ERISA Considerations" in the Prospectus. Investments by Plans are also
subject to ERISA's general fiduciary requirements, including the requirement of
investment prudence and diversification and the requirement that a Plan's
investments be made in accordance with the documents governing the Plan.

PROHIBITED TRANSACTIONS

GENERAL

Section 406 of ERISA prohibits parties in interest with respect to a
Plan from engaging in certain transactions (including loans) involving a Plan
and its assets unless a statutory or administrative exemption applies to the
transaction. Section 4975 of the Code imposes certain excise taxes (or, in
some cases, a civil penalty may be assessed pursuant to section 502(i) of
ERISA) on parties in interest which engage in non-exempt prohibited
transactions.

PLAN ASSET REGULATION

The United States Department of Labor ("Labor") has issued final
regulations concerning the definition of what constitutes the assets of a Plan
for purposes of ERISA and the prohibited transaction provisions of the Code
(the "Plan Asset Regulation"). The Plan Asset Regulation describes the
circumstances under which the assets of an entity in which a Plan invests will
be considered to be "plan assets" such that any person who exercises control
over such assets would be subject to ERISA's fiduciary standards. Under the
Plan Asset Regulation, generally when a Plan invests in another entity, the
Plan's assets do not include, solely by reason of such investment, any of the
underlying assets of the entity. However, the Plan Asset Regulation provides
that, if a Plan acquires an "equity interest" in an entity that is neither a
"publicly-offered security" (as defined therein) nor a security issued by an
investment company registered under the Investment Company Act of 1940, the
assets of the entity will be treated

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as assets of the Plan unless certain exceptions apply. If the
[Notes/Certificates] were deemed to be equity interests and no statutory,
regulatory or administrative exemption applies, the Trust Fund could be
considered to hold plan assets by reason of a Plan's investment in the Notes.
Such plan assets would include an undivided interest in any assets held by the
Trust Fund. In such an event, the Trustee and other persons, in providing
services with respect to the Trust Fund's assets, may be parties in interest
with respect to such Plans, subject to the fiduciary responsibility provisions
of Title I of ERISA, including the prohibited transaction provisions of Section
406 of ERISA, and Section 4975 of the Code with respect to transactions
involving the Trust Fund's assets. Under the Plan Asset Regulation, the term
"equity interest" is defined as any interest in an entity other than an
instrument that is treated as indebtedness under "applicable local law" and
which has no "substantial equity features." Although the Plan Assets
Regulation is silent with respect to the question of which law constitutes
"applicable local law" for this purpose, Labor has stated that these
determinations should be made under the state law governing interpretation of
the instrument in question. In the preamble to the Plan Assets Regulation,
Labor declined to provide a precise definition of what features are equity
features or the circumstances under which such features would be considered
"substantial," noting that the question of whether a plan's interest has
substantial equity features is an inherently factual one, but that in making a
determination it would be appropriate to take into account whether the equity
features are such that a Plan's investment would be a practical vehicle for the
indirect provision of investment management services.

[_____________] ("ERISA Counsel") has rendered its opinion that the
Notes will be classified as indebtedness without substantial equity features
for ERISA purposes. ERISA Counsel's opinion is based upon the terms of the
Notes, the opinion of Tax Counsel that the Notes will be classified as debt
instruments for federal income tax purposes and the ratings which have been
assigned to the Notes. However, if contrary to ERISA Counsel's opinion the
Notes are deemed to be equity interests in the Trust Fund and no statutory,
regulatory or administrative exemption applies, the Trust Fund could be
considered to hold plan assets by reason of a Plan's investment in the Notes.

[THE UNDERWRITER'S EXEMPTION

Availability of Underwriter's Exemption for Certificates. The DOL has
granted to Morgan Stanley & Co. Incorporated Prohibited Transaction Exemption
90-24, Exemption Application No. D-8019, 55 Fed. Reg. 20,548 (1990) (the
"Exemption") which exempts from the application of certain of the prohibited
transaction rules transactions relating to: (1) the acquisition, sale and
holding by Plans of certain certificates representing an undivided interest in
certain asset-backed pass-through trusts, with respect to which Morgan Stanley
or any of its affiliates is the sole underwriter or the manager or co-manager
of the underwriting syndicate; and (2) the servicing, operation and management
of such asset-backed pass-through trusts, provided that the general conditions
and certain other conditions set forth in the Exemption are satisfied. Morgan
Stanley believes that the Exemption [will] [will not] apply to the acquisition
and holding of the [Notes/Certification].

General Conditions of the Exemption. Section II of the Exemption sets
forth the following general conditions which must be satisfied before a
transaction involving the acquisition, sale and holding of the Certificates or
a transaction in connection with the servicing, operation and management of the
Trust Fund may be eligible for exemptive relief thereunder:

(1) The acquisition of the [Notes/Certificates] by a Plan
is on terms (including the price for such [Notes/Certificates]) that
are at least as favorable to the investing Plan as they would be in an
arm's length transaction with an unrelated party.

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(2) The rights and interests evidenced by the
[Notes/Certificates] acquired by the Plan are not subordinated to the
rights and interests evidenced by other certificates of the Trust
Fund;

(3) The [Notes/Certificates] acquired by the Plan have
received a rating at the time of such acquisition that is in one of
the three highest generic ratings categories from any of Duff & Phelps
Inc., Fitch Investors Service, Inc., Moody's Investors Service, Inc.
and Standard & Poor's Ratings Group;

(4) The Trustee is not an affiliate of the Depositor, any
Underwriter, the Seller, the Master Servicer, any insurer of the
Mortgage Loans, any borrower whose obligations under one or more
Mortgage Loans constitute more than 5% of the aggregate unamortized
principal balance of the assets in the Trust Fund (determined on the
date of initial issuance of [Notes/Certificates] of the Trust Fund),
or any of their respective affiliates (the "Restricted Group");

(5) The sum of all payments made to and retained by the
Underwriter in connection with the distribution of the [Notes/
Certificates] represents not more than reasonable compensation for
underwriting such [Notes/Certificates]; the sum of all payments made to
and retained by the Seller pursuant to the sale of the Mortgage Loans
to the Trust Fund represents not more than the fair market value of
such Mortgage Loans; the sum of all payments made to and retained by
the Master Servicer represent not more than reasonable compensation
for the Master Servicer's services under the Agreement and
reimbursement of the Master Servicer's reasonable expenses in
connection therewith; and

(6) The Plan investing in the [Notes/Certificates] is an
"accredited investor" as defined in Rule 501(a)(1) of Regulation D of
the Securities and Exchange Commission under the Securities Act of
1933 as amended.

Before purchasing a [Notes/Certificate], a fiduciary of a Plan should
itself confirm (a) that the Certificates constitute "certificates" for purposes
of the Exemption and (b) that the specific and general conditions set forth in
the Exemption and the other requirements set forth in the Exemption would be
satisfied.]

REVIEW BY PLAN FIDUCIARIES

Any Plan fiduciary considering whether to purchase any [Notes/Certificates]
on behalf of a Plan should consult with its counsel regarding the applicability
of the fiduciary responsibility and prohibited transaction provisions of ERISA
and the Code to such investment. Among other things, before purchasing any
[Notes/Certificates], a fiduciary of a Plan should make its own determination
as to whether the Trust Fund, as obligor on the [Notes/Certificates], is a
party in interest with respect to the Plan, the availability of the exemptive
relief provided in the Plan Asset Regulations and the availability of any other
prohibited transaction exemptions. Purchasers should analyze whether the
decision may have an impact with respect to purchases of the
[Notes/Certificates].

LEGAL INVESTMENT CONSIDERATIONS

The appropriate characterization of the Securities under various legal
investment restrictions, and thus the ability of investors subject to these
restrictions to purchase Securities, may be subject to significant interpretive
uncertainties. All investors whose investment authority is subject to legal
restrictions should consult their own legal advisors to determine whether, and
to what extent, the Securities will constitute legal investments for them. The
Depositor makes no representation as to the

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proper characterization of the Securities for legal investment or financial
institution regulatory purposes, or as to the ability of particular investors
to purchase Securities under applicable legal investment restrictions. The
uncertainties described above (and any unfavorable future determinations
concerning legal investment or financial institution regulatory characteristics
of the Securities) may adversely affect the liquidity of the Securities.

UNDERWRITING

Subject to the terms and conditions set forth in the underwriting
agreement, dated ___________, 199__ (the "Underwriting Agreement"), between the
Depositor and the Underwriter, an affiliate of the Depositor, the Depositor has
agreed to sell to the Underwriter, and the Underwriter has agreed to purchase
from the Depositor all the [Notes/Certificates].

In the Underwriting Agreement, the Underwriter has agreed, subject to
the terms and conditions set forth therein, to purchase all the
[Notes/Certificates] offered hereby if any of the [Notes/Certificates] are
purchased.

The Depositor has been advised by the Underwriter that it proposes
initially to offer the [Notes/Certificates] to the public in Europe and the
United States at the offering price set forth on the cover page hereof and to
certain dealers at such price less a discount not in excess of ____% of the
[Note/Certificate] denominations. The Underwriter may allow and such dealers
may reallow a discount not in excess of _____% of the [Note/Certificate]
denominations to certain other dealers. After the initial public offering, the
public offering price, such concessions and such discounts may be changed.

The distribution of the [Notes/Certificates] by the Underwriter will
be effected from time to time in one or more negotiated transactions or
otherwise at varying prices to be determined, in each case, at the time of
sale. The Underwriter may effect such transactions by selling the
[Notes/Certificates] to or through dealers, and such dealers may receive from
the Underwriter compensation in the form of underwriting discounts, concessions
or commissions. The Underwriter and any dealers that participate with the
Underwriter in the distribution of the [Notes/Certificates] may be deemed to be
underwriters, and any discounts, commissions or concessions received by them,
and any profit on the resale of the [Notes/Certificates] purchased by them, may
be deemed to be underwriting discounts and commissions under the Securities Act
of 1933, as amended (the "Act").

LEGAL MATTERS

Certain legal matters with respect to the Securities will be passed
upon for the Depositor by _____________________ and for the Underwriter by
____________________.

RATINGS

It is a condition to the issuance of the Certificates that they be
rated ___ by ____ ("____") and, ____ by ____ ("____" and, together with ______,
the "Rating Agencies").

A securities rating addresses the likelihood of the receipt by
Certificateholders of distributions on the Mortgage Loans. The rating takes
into consideration the characteristics of the Mortgage Loans and the
structural, legal and tax aspects associated with the Certificates. The
ratings on the Certificates do not, however, constitute statements regarding
the likelihood or frequency of prepayments on the Mortgage Loans or the
possibility that Certificateholders might realize a lower than anticipated
yield.

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<PAGE> 128
The ratings assigned to the Certificates will depend primarily upon
the creditworthiness of the Certificate Insurer. Any reduction in a rating
assigned to the claims-paying ability of the Certificate Insurer below the
ratings initially assigned to the Certificates may result in a reduction of one
or more of the ratings assigned to the Certificates.

The ratings of the Rating Agencies do not address the possibility
that, as a result of principal prepayments, Certificateholders may receive a
lower than anticipated yield.

The Depositor has not requested a rating of the Certificates by any
rating agency other than the Rating Agencies; there can be no assurance,
however, as to whether any other rating agency will rate the Certificates or,
if it does, what rating would be assigned by such other rating agency. The
rating assigned by such other rating agency to the Certificates could be lower
than the respective ratings assigned by the Rating Agencies.

S-51

<PAGE> 129
INDEX OF DEFINED TERMS

<TABLE>
<S> <C>
Additional Balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-7
Assignment Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-32
BIF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-35
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1, 9, 34
Cede . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-2, 10, 38
Cedel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-11, 12, 17, 38
Certificate Insurer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1
Certificate Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-38
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1, 6
Chase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-12
Citibank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-12
Collection Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-10, 34
Collection Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-10, 39
Collections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-10
Combined Loan-to-Value Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-8
Credit Limit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-8
Credit Limit Utilization Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-24
Credit Line Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-6, 24
Cut-off Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-6
Cut-off Date Principal Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-7
Definitive Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-38
Definitive Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-12
Depositor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1
Determination Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-8, 34
Distribution Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1
Draw Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-25
Due Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-9
Eligible Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-35
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-15, 47
ERISA Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-48
Euroclear . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-11
Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-40
Exemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-48
Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1, 7
Indenture Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1, 7
Index Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-25
Interest Accrual Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-11, 39
Interest Collections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-10, 36
Labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-47
Liquidation Loss Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-9, 39
Loan Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-8, 25
Margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-25
Maximum Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-25
Money Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-8, 25
Mortgage Files . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-32
Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1, 6
Mortgaged Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-6
</TABLE>

S-52

<PAGE> 130
<TABLE>
<S> <C>
Net Liquidation Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-36, 37
Note Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1, 11, 39
Noteholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-7
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1, 6
OID . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-14, 46
Owner Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1, 7
Pass-Through Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1
Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-15
Plan Asset Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-47
Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1, 6
Pool Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-7, 36
Principal Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-7
Principal Collections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-10
Purchase Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-8
Rating Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-15
Related Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-32
Relevant Depositary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-38
Repayment Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-25
Repurchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-32
SAIF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-35
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1, 6
Security Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-34
Security Principal Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-9
Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-8
Servicing Fee Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-37
SMMEA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-15
Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1, 7
Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1, 6
Underwriting Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-50
Voting Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-44
</TABLE>

S-53

<PAGE> 131
VERSION #3

$___________
(Approximate)

MORTGAGE LOAN ASSET-BACKED PASS-THROUGH CERTIFICATES,
SERIES 199_-__

Distributions payable on the ___ day of each month,
commencing in ___________, 199__

Morgan Stanley ABS Capital I Inc.
Depositor

[__________________]
Master Servicer

The Mortgage Loan Asset-Backed Pass-Through Certificates, Series
199__-__ (collectively, the "Certificates") will represent the entire
beneficial interest in a Trust Fund consisting primarily of a pool (the
"Mortgage Pool") of [fixed-rate] [adjustable-rate] Mortgage Loans secured
primarily by first, second and third liens on one- to four-family residential
properties. Only the Classes of Certificates identified in the table below
(collectively, the "Offered Certificates") are offered hereby. See "Index of
Defined Terms" on page S-__ of this Prospectus Supplement and on page 136 of
the Prospectus for the location of the definitions of certain capitalized
terms. (continued on following page)

PROSPECTIVE INVESTORS SHOULD REVIEW THE INFORMATION SET FORTH UNDER
"RISK FACTORS" ON PAGE S-__ HEREIN AND ON PAGE 21 IN THE
ACCOMPANYING PROSPECTUS.

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

THE CERTIFICATES DO NOT REPRESENT AN INTEREST IN OR OBLIGATION OF THE
DEPOSITOR, THE SELLER, THE MASTER SERVICER, THE TRUSTEE OR ANY OF
THEIR RESPECTIVE AFFILIATES. NEITHER THE CERTIFICATES NOR
THE MORTGAGE LOANS ARE INSURED OR GUARANTEED BY ANY
GOVERNMENTAL ENTITY, THE DEPOSITOR, THE SELLER,
THE MASTER SERVICER, THE TRUSTEE OR ANY OF THEIR
AFFILIATES OR ANY OTHER PERSON. DISTRIBUTIONS
ON THE CERTIFICATES WILL BE PAYABLE
SOLELY FROM THE ASSETS TRANSFERRED
TO THE TRUST FUND FOR THE
BENEFIT OF CERTIFICATEHOLDERS.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
<PAGE> 132
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
======================================================================================================
Initial Class
Certificate

Balance (1) Pass-Through Rate
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Class A- $ %
- ------------------------------------------------------------------------------------------------------
Class $ %
- ------------------------------------------------------------------------------------------------------
Class PO $ (2)
- ------------------------------------------------------------------------------------------------------
Class X (3) (4)
- ------------------------------------------------------------------------------------------------------
Class A-R $ %
- ------------------------------------------------------------------------------------------------------
Class B- $ %
- ------------------------------------------------------------------------------------------------------
Class $ %
- ------------------------------------------------------------------------------------------------------
Class $ %

======================================================================================================
</TABLE>

(1) Subject to the permitted variance described under "Summary of
Terms--Offered Certificates" herein.
(2) The Class PO Certificates will be Principal Only Certificates and will
not bear interest.
(3) The Class X Certificates will be Notional Amount Certificates, will
have no principal balance and will bear interest on their Notional
Amount (initially expected to be approximately $ ).
(4) The Pass-Through Rate for the Class X Certificates for any
Distribution Date will be equal to the excess of (a) the weighted
average of the Net Mortgage Rates of the Non-Discount Mortgage Loans
over (b) __% per annum. The Pass-Through Rate for the Class X
Certificates for the first Distribution Date is expected to be
approximately __% per annum.

The Senior Certificates, other than the Class PO and Class X
Certificates (the "Underwritten Senior Certificates"), will be purchased by
_______ and the Class ____ Certificates (together with the Underwritten Senior
Certificates, the "Underwritten Certificates") offered hereby will be purchased
by Morgan Stanley & Co. Incorporated and ______ (each, an "Underwriter") from
the Depositor and will be offered by the Underwriters from time to time in
negotiated transactions or otherwise at varying prices to be determined at the
time of sale. Proceeds to the Depositor from the sale of the Underwritten
Certificates are expected to be approximately $_______ , plus accrued interest,
before deducting issuance expenses payable by the Depositor. The Class __,
Class PO and Class X Certificates will be issued to the Depositor on or about
_________, 199_ as partial consideration for the sale of the Mortgage Loans to
the Trust Fund.

S-2
<PAGE> 133
The Underwritten Certificates are offered by the respective
Underwriters, subject to prior sale, when, as and if delivered to and accepted
by the Underwriters and subject to their right to reject orders in whole or in
part. It is expected that delivery of the Underwritten Senior Certificates,
other than the Class A-R Certificates, will be made in book-entry form only
through the facilities of The Depository Trust Company, that the Class A-R
Certificates will be delivered at the offices of _________________ in New York,
New York and that the Class __ Certificates will be delivered at the offices
of_______________ in New York, New York, in each case on or about _________,
199_.

MORGAN STANLEY & CO.
Incorporated

, 199
- ------------------ --

S-3
<PAGE> 134
(continued from cover page)

The Mortgage Loans will be sold to the Depositor by [_________] (the
"Seller").

An election will be made to treat the Trust Fund as a "real estate
mortgage investment conduit" (the "REMIC") for federal income tax purposes. As
described more fully herein and in the Prospectus, the Offered Certificates,
other than the Class A-R Certificates, will constitute "regular interests" in
the REMIC. The Class A-R Certificates will constitute the sole class of
"residual interest" in the REMIC. Prospective investors are cautioned that a
Class A-R Certificateholder's REMIC taxable income and the tax liability
thereon will exceed cash distributions in certain periods, in which event such
holder must have sufficient alternative sources of funds to pay such tax
liability. See "Federal Income Tax Consequences" herein and in the Prospectus.

The Class A-R Certificates will be subject to certain transfer
restrictions. See "Description of the Certificates--Restrictions on Transfer
of the Class A-R Certificates" herein.

The yield to investors on each Class of Offered Certificates will be
sensitive in varying degrees to, among other things, the rate and timing of
principal payments (including prepayments) of the Mortgage Loans, which may
vary significantly over time. The yield to maturity of a Class of Offered
Certificates purchased at a discount or premium will be more sensitive to the
rate and timing of payments thereon. Holders of the Offered Certificates
should consider, in the case of any such Certificates purchased at a discount,
and particularly the Principal Only Certificates, the risk that a slower than
anticipated rate of principal payments on the Mortgage Loans could result in an
actual yield that is lower than the anticipated yield and, in the case of any
Offered Certificates purchased at a premium and particularly the Interest Only
Certificates, the risk that a faster than anticipated rate of principal
payments on the Mortgage Loans could result in an actual yield that is lower
than the anticipated yield. Holders of the Interest Only Certificates should
carefully consider the risk that a rapid rate of principal payments on the
Mortgage Loans could result in the failure of such holders to recover their
initial investments. The yield to investors in the Offered Certificates, and
particularly the Class ____ Certificates, also will be adversely affected by
Net Interest Shortfalls and by Realized Losses. No representation is made as
to the anticipated rate of prepayments on the Mortgage Loans, the amount and
timing of Net Interest Shortfalls or Realized Losses, or as to the resulting
yield to maturity of any Class of Certificates.

Each Underwriter intends to make a secondary market in the Classes of
Underwritten Certificates being purchased by it, but no Underwriter has an
obligation to do so. There is currently no secondary market for the Offered
Certificates and there can be no assurance that such a market will develop or,
if it does develop, that it will continue or that it will provide
Certificateholders with a sufficient level of liquidity of investment.

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

No dealer, salesperson or other individual has been authorized to give
any information or to make any representations not contained in this Prospectus
Supplement or the Prospectus and, if given or made, such information or
representations must not be relied upon as having been authorized by the
Depositor or any Underwriter. This Prospectus Supplement and the Prospectus do
not constitute an offer to sell or a solicitation of an offer to buy any of the
securities offered hereby in any jurisdiction to any person to whom it is
unlawful to make such offer in such jurisdiction. Neither the delivery of this
Prospectus Supplement or the Prospectus nor any sale made hereunder shall,
under any circumstances, create an implication that the information herein or
therein is correct at any time subsequent to the date hereof or that there has
been no change in the affairs of the Depositor since that date.

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

S-4
<PAGE> 135
Until ninety days after the date of this Prospectus Supplement, all
dealers effecting transactions in the Offered Certificates, whether or not
participating in this distribution, may be required to deliver a Prospectus
Supplement and the Prospectus. This is in addition to the obligation of
dealers to deliver a Prospectus Supplement and the Prospectus when acting as
underwriters and with respect to their unsold allotments or subscriptions.

This Prospectus Supplement does not contain complete information about
the offering of the Offered Certificates. Additional information is contained
in the Prospectus of the Depositor dated _______, 199_ (the "Prospectus") and
purchasers are urged to read both this Prospectus Supplement and the Prospectus
in full. Sales of the Offered Certificates may not be consummated unless the
purchaser has received both this Prospectus Supplement and the Prospectus.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The Trustee on behalf of any Trust Fund will provide without charge to
each person to whom this Prospectus Supplement is delivered, on the written or
oral request of such person, a copy of any or all of the documents referred to
in the Prospectus under "Incorporation of Certain Documents by Reference" that
have been or may be incorporated by reference in the Prospectus (not including
exhibits to the information that is incorporated by reference unless such
exhibits are specifically incorporated by reference into the information that
the Prospectus incorporates). Such requests should be directed to the
Corporate Trust Office of the Trustee at telephone:______________, facsimile
number:________________, attention:________________.

S-5
<PAGE> 136
TABLE OF CONTENTS

PROSPECTUS SUPPLEMENT

<TABLE>
<S> <C>
Summary of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-7
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-17
The Mortgage Pool . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-19
Servicing of Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-27
Description of the Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-30
Yield, Prepayment and Maturity Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-43
Credit Enhancement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-50
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-52
Federal Income Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-52
ERISA Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-53
Underwriting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-55
Legal Matetters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-55
Ratings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-55
Index of Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-57

PROSPECTUS

Prospectus Supplement or Current Report on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Available Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Incorporation of Certain Documents by Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Reports to Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Summary of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
The Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
The Depositor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Description of the Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Credit Enhancement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Yield and Prepayment Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
The Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Certain Legal Aspects of the Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Federal Income Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
State Tax Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
ERISA Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
Legal Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
Method of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133
Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133
Rating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133
Index of Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135
</TABLE>

S-6
<PAGE> 137

SUMMARY OF TERMS

This Summary of Terms is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus Supplement and in
the accompanying Prospectus. Certain capitalized terms used in this Summary of
Terms are defined elsewhere in this Prospectus Supplement or in the Prospectus.
See "Index of Defined Terms" on page S-__ of this Prospectus Supplement and on
page 135 of the Prospectus for the location of the definitions of certain
capitalized terms.

Title of Certificates . . . . . . . . . . . . . Mortgage Loan Asset-Backed
Pass-Through Certificates,
Series 199_-__ (the
"Certificates").

Offered Certificates . . . . . . . . . . . . . Class A-____, Class ____,
Class PO, Class X, Class A-R,
Class B-___ and Class ____
Certificates. Only the
Offered Certificates are
offered hereby. The
aggregate initial Class
Certificate Balances of the
Certificates will be subject
to a permitted variance in
the aggregate of plus or
minus __%. Variances in the
Class Certificate Balances
may result in variances in
the Notional Amount of the
Class of Notional Amount
Certificates. The Notional
Amount of the Class X
Certificates for any
Distribution Date will be
equal to the aggregate of
the Stated Principal Balances
of the Non-Discount Mortgage
Loans with respect to such
Distribution Date. The
initial Notional Amount of
the Class X Certificates will
be equal to the aggregate of
the Stated Principal Balances
of the Non-Discount Mortgage
Loans as of the Cut-off Date.

Certificates other than the
Offered Certificates . . . . . . . . . . . . . In addition to the Offered
Certificates, the following
Classes of Certificates will
be issued in the indicated
approximate initial Class
Certificate Balances and will
bear interest at the
indicated Pass-Through Rates,
but are not offered hereby:

<TABLE>
<CAPTION>
Initial Class
Certificate Pass-Through
Balance Rate
------------- ------------
<S> <C>
Class (1)....... $ %
Class (1)....... $ %
Class (1)....... $ %
</TABLE>

-----------
(1) The Class ____, Class____
and Class ____ Certificates
will provide limited credit
support to the Senior
Certificates and the other
Subordinated Certificates, as
described under "Description
of the

S-7
<PAGE> 138
Certificates--Principal--
Subordinated Principal
Distribution Amount"
and "Credit Enhancement --
Subordination of Certain
Classes" herein.

Any information contained
herein with
respect to the Class ___ ,
Class ____ and Class _____
Certificates is provided
only to permit a better
understanding of the Offered
Certificates.
Designations
Regular Certificates . . . . . . . . . . . All Classes of Certificates
other than the Class A-R
Certificates.

Residual Certificates . . . . . . . . . . . Class A-R Certificates.

Senior Certificates . . . . . . . . . . . . Class A-__, Class_____,
Class PO, Class X and Class
A-R Certificates.

Subordinated Certificates . . . . . . . . . Class B-__, Class_____, and
Class____Certificates.

Principal Only Certificates . . . . . . . . Class PO Certificates.

Interest Only Certificates . . . . . . . . Class X Certificates.

Notional Amount
Certificates . . . . . . . . . . . . . . . Class X Certificates.

Fixed Rate Certificates . . . . . . . . . . All Classes of Certificates
other than the Class PO and
Class X Certificates.

Variable Rate Certificates . . . . . . . . Class X Certificates.

Physical Certificates . . . . . . . . . . . Class PO, Class X and Class
A-R Certificates and the
Subordinated Certificates.

Book-Entry Certificates . . . . . . . . . . All Classes of Certificates
other than the Physical
Certificates.

Trust Fund . . . . . . . . . . . . . . . . . . The Certificates will
represent the entire
beneficial ownership interest
in the Trust Fund, which will
consist primarily of the
Mortgage Pool.

Pooling and Servicing
Agreement . . . . . . . . . . . . . . . . . . The Certificates will be
issued pursuant to a Pooling
and Servicing Agreement,
dated as of ____, 199_ (the
"Agreement"), among the
Depositor, the Master
Servicer and the Trustee.

Depositor . . . . . . . . . . . . . . . . . . . Morgan Stanley ABS Capital I
Inc. (the "Depositor"), a
Delaware corporation and a
direct, wholly-owned
subsidiary of Morgan Stanley
Group Inc. See "The
Depositor" in the Prospectus.

S-8
<PAGE> 139
Master Servicer . . . . . . . . . . . . . . . . [___________] (in its
capacity as master servicer
of the Mortgage Loans, the
"Master Servicer"). See
"Servicing of Mortgage
Loans--The Master Servicer"
herein. The Master Servicer
will be responsible for the
servicing of the Mortgage
Loans and will receive the
Master Servicing Fee from
interest collected on the
Mortgage Loans. See
"Servicing of Mortgage
Loans--Servicing Compensation
and Payment of Expenses"
herein.

Seller . . . . . . . . . . . . . . . . . . . . [___________] (in its
capacity as seller of the
Mortgage Loans, the
"Seller"). The Mortgage
Loans were originated or
acquired in the normal course
of its business by the Seller
and will be acquired by the
Depositor in a privately
negotiated transaction.

Trustee . . . . . . . . . . . . . . . . . . . . _________________, a
_____________________
organized under the laws of
_____________________ (the
"Trustee").

Cut-off Date . . . . . . . . . . . . . . . . . _________, 199__.

Closing Date . . . . . . . . . . . . . . . . . On or about ____________,
199__.

Determination Date . . . . . . . . . . . . . . The ______day of each month
or, if such day is not a
business day, the preceding
business day; provided that
the Determination Date in
each month will be at least
two business days prior to
the related Distribution
Date.

Mortgage Loans . . . . . . . . . . . . . . . . The Mortgage Pool will
consist primarily of
[fixed-rate]
[adjustable-rate] mortgage
loans secured primarily by
first, second and third liens
on one-to four- family
residential properties.
Distributions of principal
and interest on the
Certificates will be based
solely on payments received
on the Mortgage Loans, as
described under "Description
of the Certificates" herein.
See "The Mortgage Pool"
herein.

Distribution Date . . . . . . . . . . . . . . . The ____ day of each month
or, if such day is not a
business day, on the first
business day thereafter,
commencing in ___________
199_ (each, a "Distribution
Date"). Distributions on
each Distribution Date will
be made to Certificateholders
of record as of the related
Record Date, except that the
final distribution on the
Certificates will be made
only upon presentment and
surrender of the Certificates
at the Corporate Trust Office
of the Trustee.

S-9
<PAGE> 140
Record Date . . . . . . . . . . . . . . . . . . The Record Date for each
Distribution Date will be the
last business day of the
month preceding the month of
such Distribution Date.

Priority of Distributions . . . . . . . . . . . Distributions will be made
on each Distribution Date
from Available Funds in the
following order of priority:
[(i) to interest on each
interest bearing Class of
Senior Certificates; (ii) to
principal on the Classes of
Senior Certificates then
entitled to receive
distributions of principal,
in the order and subject to
the priorities set forth
herein under "Description of
the Certificates--Principal,"
in each case in an aggregate
amount up to the maximum
amount of principal to be
distributed on such Classes
on such Distribution Date;
(iii) to any Class PO
Deferred Amounts with respect
to the Class PO Certificates,
but only from amounts that
would be distributable on
such Distribution Date as
principal of the Subordinated
Certificates; and (iv) to
interest on and then
principal of each Class of
Subordinated Certificates, in
the order of their numerical
Class designations, beginning
with the Class __
Certificates, in each case
subject to the limitations
set forth herein under
"Description of the
Certificates--Principal."
Under certain circumstances
described herein,
distributions from Available
Funds for a Distribution Date
that would otherwise be made
on the Subordinated
Certificates may be
distributed instead on the
Senior Certificates.] See
"Description of the
Certificates--Allocation of
Losses" herein.

Distributions of Interest . . . . . . . . . . . To the extent funds are
available therefor, each
interest bearing Class of
Certificates will be entitled
to receive interest in the
amount of the Interest
Distribution Amount for such
Class. The Class PO
Certificates are Principal
Only Certificates and will
not bear interest. See
"Description of the
Certificates--Interest"
herein.

A. Interest Distribution
Amount . . . . . . . . . . . . . . . . . For each interest bearing
Class of Certificates, the
amount of interest accrued
during the related Interest
Accrual Period at the
applicable Pass-Through Rate
on the related Class
Certificate Balance or
Notional Amount, as the case
may be.

B. Pass-Through Rate . . . . . . . . . . . . The Pass-Through Rate for
each interest bearing Class
of Offered Certificates for
each Distribution Date will
be as set forth or described
on the cover page hereof.

S-10
<PAGE> 141
The Pass-Through Rate for
the Class X Certificates for
any Distribution Date will be
equal to the excess of (a)
the weighted average of the
Net Mortgage Rates of the
Non-Discount Mortgage Loans
over (b)____ % per annum.
The Pass-Through Rate for the
Class X Certificates for the
first Distribution Date is
expected to be approximately
___% per annum.

With respect to each
Distribution Date, the
"Interest Accrual Period"
for each interest bearing
Class of Certificates will be
[the calendar month preceding
the month of such
Distribution Date.]

Distributions of Principal . . . . . . . . . . On each Distribution Date,
to the extent funds are
available therefor, principal
distributions in reduction of
the Class Certificate
Balances of each Class of
Certificates (other than the
Notional Amount Certificates)
will be made in the order and
subject to the priorities set
forth herein under
"Description of the
Certificates--Principal" in
an aggregate amount equal to
such Class' allocable portion
of the Senior Principal
Distribution Amount, the
Class PO Principal
Distribution Amount or the
Subordinated Principal
Distribution Amount, as
applicable. The Notional
Amount Certificates do not
have principal balances and
are not entitled to any
distributions in respect of
principal of the Mortgage
Loans. See "Description of
the Certificates--Principal"
herein.

Credit Enhancement
General . . . . . . . . . . . . . . . . . . Credit enhancement for the
Senior Certificates will be
provided by the Subordinated
Certificates and credit
enhancement for each Class of
Subordinated Certificates
will be provided by the Class
or Classes of Subordinated
Certificates with higher
numerical Class designations,
as described below. The
aggregate of the initial
Class Certificate Balances of
the Class ___ , Class _____
and Class ___ Certificates,
which are the only
Certificates supporting the
Class Certificates, is
expected to be approximately
$_______ .

Subordination . . . . . . . . . . . . . . . . The rights of holders of the
Subordinated Certificates to
receive distributions with
respect to the Mortgage Loans
in the Trust Fund will be
subordinated to such rights
of holders of the Senior
Certificates, and the rights
of the holders of each Class
of Subordinated Certificates
(other than the Class ______
Certificates) to receive such
distributions will be further
subordinated to such rights
of the Class or Classes of
Subordinated Certificates
with

S-11
<PAGE> 142
lower numerical Class
designations, in each case
only to the extent described
under "Credit
Enhancement--Subordination of
Certain Classes" herein.

The subordination of the
Subordinated Certificates to
the Senior Certificates, and
the further subordination
within the Subordinated
Certificates, is intended to
increase the likelihood of
timely receipt by the
holders of Certificates with
higher relative payment
priority of the maximum amount
to which they are entitled on
any Distribution Date and to
provide such holders
protection against losses on
the Mortgage Loans to the
extent described under
"Description of the
Certificates--Allocation of
Losses" herein. The
Subordinated Certificates also
provide protection, to a
lesser extent, against Special
Hazard Losses, Bankruptcy
Losses and Fraud Losses.
However, in certain
circumstances the amount of
available subordination
(including the limited
subordination provided for
certain types of losses) may
be exhausted and shortfalls in
distributions on the
Certificates could result.
Holders of the Senior
Certificates will bear their
proportionate share of any
losses realized on the
Mortgage Loans in excess of
the available subordination
amount. See "Description of
the Certificates--Priority of
Distributions Among
Certificates," "--Allocation
of Losses," and "Credit
Enhancement--Subordination of
Certain Classes" herein.]

In addition, Realized Losses
on the Mortgage Loans will
reduce the Class Certificate
Balances of the applicable
Class of Subordinated
Certificates to the extent of
any losses allocated thereto
(as described under
"Description of the
Certificates--Allocation of
Losses" herein), without the
receipt of cash attributable
to such reduction. As a
result of such reductions,
less interest will accrue on
such Class of Subordinated
Certificates than otherwise
would be the case. The yield
to maturity of the
Subordinated Certificates will
also be affected by the
disproportionate allocation of
principal prepayments to the
Senior Certificates, Net
Interest Shortfalls, other
cash shortfalls in Available
Funds and distribution of
funds to Class PO
Certificateholders otherwise
available for distribution on
the Subordinated Certificates
to the extent of reimbursement
for Class PO Deferred
Amounts. See "Description of
the Certificates--Allocation
of Losses" herein.

Advances . . . . . . . . . . . . . . . . . . . The Master Servicer is
obligated to make cash
advances ("Advances") with
respect to delinquent
payments of

S-12
<PAGE> 143
principal of and interest on
any Mortgage Loan to the
extent described under
"Servicing of the Mortgage
Loans--Advances" herein. The
Trustee will be obligated to
make any such Advance if the
Master Servicer fails in its
obligation to do so, to the
extent provided in the
Agreement. See "Servicing of
Mortgage Loans--Advances"
herein.

Prepayment Considerations and Risks;
Reinvestment Risk . . . . . . . . . . . . . The rate of principal
payments on the Offered
Certificates, the aggregate
amount of distributions on
the Offered Certificates and
the yield to maturity of the
Offered Certificates will be
related to the rate and
timing of payments of
principal on the Mortgage
Loans.

Since the rate of payment of
principal on the Mortgage
Loans will depend on future
events and a variety of
factors, no assurance can be
given as to such rate or the
rate of principal
prepayments. The extent to
which the yield to maturity of
a Class of Offered
Certificates may vary from the
anticipated yield may depend
upon the degree to which it is
purchased at a discount or
premium, and the degree to
which the timing of payments
thereon is sensitive to
prepayments, liquidations and
purchases of the Mortgage
Loans. Further, an investor
should consider the risk that,
in the case of the Principal
Only Certificates and any
other Offered Certificate
purchased at a discount, a
slower than anticipated rate
of principal payments
(including prepayments) on the
Mortgage Loans could result in
an actual yield to such
investor that is lower than
the anticipated yield and, in
the case of the Interest Only
Certificates and any other
Offered Certificate purchased
at a premium, a faster than
anticipated rate of principal
payments could result in an
actual yield to such investor
that is lower than the
anticipated yield. Investors
in the Interest Only
Certificates should carefully
consider the risk that a rapid
rate of principal payments on
the Mortgage Loans could
result in the failure of such
investors to recover their
initial investments.

Because the Mortgage Loans
may be prepaid at any time, it
is not possible to predict the
rate at which distributions of
principal of the Offered
Certificates will be
received. Since prevailing
interest rates are subject to
fluctuation, there can be no
assurance that investors in
the Offered Certificates will
be able to reinvest the
distributions thereon at
yields equaling or exceeding
the yields on such Offered
Certificates. It is possible
that yields on any

S-13
<PAGE> 144
such reinvestments will be
lower, and may be
significantly lower, than the
yields on the Offered
Certificates. See "Risk
Factors--Prepayment
Considerations and Risks" and
"Yield, Prepayment and
Maturity Considerations"
herein.

Optional Termination . . . . . . . . . . . . . On any Distribution Date on
which the Pool Principal
Balance is less than [10]% of
the Cut-off Date Pool
Principal Balance, the Master
Servicer will have the option
to purchase, in whole, the
Mortgage Loans and the REO
Property, if any, remaining
in the Trust Fund. See
"Description of the
Certificates--Optional
Termination" herein.

Federal Income Tax
Consequences . . . . . . . . . . . . . . . . An election will be made to
treat the Trust Fund as a
"real estate mortgage
investment conduit" ("REMIC")
for federal income tax
purposes. The Regular
Certificates will constitute
"regular interests" in the
REMIC and the Residual
Certificates will constitute
the sole class of "residual
interest" in the REMIC. The
Class __, Class PO and Class
X Certificates will, and
depending on their respective
issue prices certain other
Classes of Offered
Certificates may, be issued
with original issue discount
("OID") for federal income
tax purposes. See "Federal
Income Tax Consequences"
herein and in the Prospectus.

The holders of the Class A-R
Certificates will be subject
to special federal income tax
rules that may significantly
reduce the after-tax yield of
such Certificates. Further,
significant restrictions
apply to the transfer of the
Class A-R Certificates. See
"Description of the
Certificates--Restrictions on
Transfer of the Class A-R
Certificates" herein.

The Interest Only
Certificates and the Principal
Only Certificates will, and
certain other Classes of
Offered Certificates may, be
issued with original issue
discount for federal income
tax purposes. See "Federal
Income Tax Consequences"
herein and in the Prospectus.

ERISA Considerations . . . . . . . . . . . . . A fiduciary of any employee
benefit plan or other
retirement arrangement
subject to the Employee
Retirement Income Security
Act of 1974, as amended
("ERISA"), or Section 4975 of
the Code should review
carefully with its legal
advisors whether the purchase
or holding of Class __
Certificates could give rise
to a transaction that is
prohibited or is not
otherwise permitted either
under ERISA or Section 4975
of the

S-14
<PAGE> 145
Code or whether there exists
any statutory or
administrative exemption
applicable to an investment
therein. [The U.S. Department
of Labor has issued an
individual exemption,
Prohibited Transaction
Exemption 90-24, to Morgan
Stanley & Co. Incorporated
that generally exempts from
the application of certain of
the prohibited transaction
provisions of Section 406 of
ERISA, and the excise taxes
imposed on such prohibited
transaction by Section 4975(a)
and (b) of the Code and
Section 502(i) of ERISA,
transactions relating to the
purchase, sale and holding of
pass-through certificates
underwritten by such
Underwriter such as the Class
__ Certificates and the
servicing and operation of
asset pools, provided that
certain conditions are
satisfied. A fiduciary of any
employee benefit plan subject
to ERISA or the Code should
consult with its legal
advisors regarding the
requirements of ERISA and the
Code.] See "ERISA
Considerations" herein and in
the Prospectus.

Legal Investment . . . . . . . . . . . . . . . The Senior Certificates and
the Class ____ Certificates
[will] [will not] constitute
"mortgage related securities"
for purposes of the Secondary
Mortgage Market Enhancement
Act of 1984 ("SMMEA") so long
as they are rated in one of
the two highest rating
categories by at least one
nationally recognized
statistical rating
organization and, as such,
are legal investments for
certain entities to the
extent provided for in SMMEA.

It is anticipated that the
Class ____ and Class ____
Certificates will not be rated
in one of the two highest
rating categories by a
nationally recognized
statistical rating
organization and, therefore,
will not constitute "mortgage
related securities" for
purposes of SMMEA.

Institutions whose investment
activities are subject to
review by federal or state
regulatory authorities should
consult with their counsel or
the applicable authorities to
determine whether an
investment in the Offered
Certificates complies with
applicable guidelines, policy
statements or restrictions.
See "Legal Investment" in the
Prospectus.

Ratings . . . . . . . . . . . . . . . . . . . . It is a condition to the
issuance of the Senior
Certificates that they be
rated _____ by ("________")
and _______ by ("_______"
and, together with _____, the
"Rating Agencies"). See
"Ratings" herein. It is a
condition to the issuance of
the Class __ , Class __ and
Class __ Certificates that
they be rated at least _____
,_____ and

S-15
<PAGE> 146
_____ , respectively, by ____.
The ratings of the Offered
Certificates of any Class
should be evaluated
independently from similar
ratings on other types of
securities. A rating is not a
recommendation to buy, sell or
hold securities and may be
subject to revision or
withdrawal at any time by
either of the Rating Agencies.
See "Risk Factors--Certificate
Rating" and "Ratings" herein.

Risk Factors . . . . . . . . . . . . . . . . . For a discussion of certain
risks associated with an
investment in the
Certificates, see "Risk
Factors" on page S-__ herein
and on page 135 in the
Prospectus.

S-16
<PAGE> 147
RISK FACTORS
[Description will depend on the particulars of the Mortgage Loans]

Investors should consider the following risks in connection with the
purchase of the Certificates.

Consequences of Owning Book-Entry Certificates. Issuance of the
Certificates in book-entry form may reduce the liquidity of such Certificates
in the secondary trading market since investors may be unwilling to purchase
Certificates for which they cannot obtain physical certificates. See
"Description of the Certificates--Book-Entry Certificates" herein and "Risk
Factors--Book-Entry Registration" in the Prospectus.

Certificate Owners may experience some delay in their receipt of
distributions of interest and principal on the Certificates since such
distributions will be forwarded by the Trustee to DTC and DTC will credit such
distributions to the accounts of its Participants (as defined herein) which
will thereafter credit them to the accounts of Certificate Owners either
directly or indirectly through indirect participants. Certificate Owners will
not be recognized as Certificateholders as such term is used in the Agreement,
and Certificate Owners will be permitted to exercise the rights of
Certificateholders only indirectly through DTC and its Participants. See
"Description of the Certificates--Book-Entry Certificates" herein and "Risk
Factors--Book-Entry Registration" in the Prospectus.

Cash Flow Considerations. Minimum monthly payments on the Mortgage
Loans will at least equal and may exceed accrued interest. Even assuming that
the Mortgaged Properties provide adequate security for the Mortgage Loans,
substantial delays could be encountered in connection with the liquidation of
Mortgage Loans that are delinquent and resulting shortfalls in distributions to
Certificateholders could occur. Further, liquidation expenses (such as legal
fees, real estate taxes, and maintenance and preservation expenses) will reduce
the proceeds payable to Certificateholders and thereby reduce the security for
the Mortgage Loans. In the event any of the Mortgaged Properties fail to
provide adequate security for the related Mortgage Loans, Certificateholders
could experience a loss.

Prepayment Considerations and Risks. Substantially all of the
Mortgage Loans may be prepaid in whole or in part at any time without penalty.
Home equity loans, such as the Mortgage Loans, have been originated in
significant volume only during the past few years and neither the Depositor nor
the Master Servicer is aware of any publicly available studies or statistics on
the rate of prepayment of such loans. Generally, home equity loans are not
viewed by borrowers as permanent financing. Accordingly, the Mortgage Loans
may experience a higher rate of prepayment than traditional loans. The Trust's
prepayment experience may be affected by a wide variety of factors, including
general economic conditions, interest rates, the availability of alternative
financing and homeowner mobility. In addition, substantially all of the
Mortgage Loans contain due-on-sale provisions and the Master Servicer intends
to enforce such provisions unless (i) such enforcement is not permitted by
applicable law or (ii) the Master Servicer, in a manner consistent with
reasonable commercial practice, permits the purchaser of the related Mortgaged
Property to assume the Mortgage Loan. To the extent permitted by applicable
law, such assumption will not release the original borrower from its obligation
under any such Mortgage Loan.

S-17
<PAGE> 148
See "Yield, Prepayment and Maturity Considerations--Prepayment Considerations
and Risks" herein and "Certain Legal Aspects of Loans--Due-on-Sale Clauses" in
the Prospectus for a description of certain provisions of the Mortgage Loans
that may affect the prepayment experience thereof. The yield to maturity and
weighted average life of the Certificates will be affected primarily by the
rate and timing of prepayments on the Mortgage Loans. Any reinvestment risks
resulting from a faster or slower incidence of prepayment of Mortgage Loans
will be borne entirely by the Certificateholders. See "Yield, Prepayment and
Maturity Considerations" herein and "Yield and Prepayment Considerations" in
the Prospectus.

Certificate Rating. The rating of the Certificates will depend
primarily on an assessment by the Rating Agencies of the Mortgage Loans. The
rating by the Rating Agencies of the Certificates is not a recommendation to
purchase, hold or sell the Certificates, inasmuch as such rating does not
comment as to the market price or suitability for a particular investor. There
is no assurance that the ratings will remain in place for any given period of
time or that the ratings will not be lowered or withdrawn by the Rating
Agencies. In general, the ratings address credit risk and do not address the
likelihood of prepayments. The ratings of the Certificates do not address the
possibility of the imposition of United States withholding tax with respect to
non-U.S. persons.

Bankruptcy and Insolvency Risks. The sale of the Mortgage Loans from
the Seller to the Depositor will be treated as a sale of the Mortgage Loans.
However, in the event of an insolvency of the Seller,the receiver of the Seller
may attempt to recharacterize the sale of the Mortgage Loans as a borrowing by
the Seller, secured by a pledge of the applicable Mortgage Loans. If the
receiver decided to challenge such transfer, delays in payments of the
Certificates and reductions in the amounts thereof could occur. The Depositor
will warrant in the Agreement that the transfer of the Mortgage Loans by it to
the Trust Fund is either a valid transfer and assignment of such Mortgage Loans
to the Trust Fund or the grant to the Trust Fund of a security interest in such
Mortgage Loans.

Geographic Concentration. As of the Cut-off Date, approximately
_____% (by Cut-off Date Pool Principal Balance) of the Mortgaged Properties are
located in the State of __________. An overall decline in the __________
residential real estate market could adversely affect the values of the
Mortgaged Properties securing such Mortgage Loans such that the Principal
Balances of the related Mortgage Loans could equal or exceed the value of such
Mortgaged Properties. As the residential real estate market is influenced by
many factors, including the general condition of the economy and interest
rates, no assurances may be given that the __________ residential real estate
market will not weaken. If the __________ residential real estate market
should experience an overall decline in property values after the dates of
origination of the Mortgage Loans, the rates of losses on the Mortgage Loans
would be expected to increase, and could increase substantially.

Delinquent Mortgage Loans. The Trust Fund will include Mortgage Loans
which are 89 or fewer days delinquent as of the Cut-off Date. The Cut-off Date
Pool Principal Balance of Mortgage Loans which are between 30 days and 89 days
delinquent as of the Cut-off Date was $____________. If there are not
sufficient Available Funds on any Distribution Dates, the aggregate amount of
principal returned to the Certificateholders may be less than the respective
Class Certificate Principal Balances on the day the Certificates were issued.

S-18
<PAGE> 149
Risks of Holding Subordinated Certificates. The subordination of the
Subordinated Certificates to the Senior Certificates, and the further
subordination within the Subordinated Certificates, is intended to increase the
likelihood of timely receipt by the holders of Certificates with higher
relative payment priority of the maximum amount to which they are entitled on
any Distribution Date and to provide such holders protection against losses on
the Mortgage Loans to the extent described herein under "Description of the
Certificates--Allocation of Losses" and "Credit Enhancement--Subordination of
Certain Classes." However, in certain circumstances the amount of available
subordination (including the limited subordination provided for certain types
of losses) may be exhausted and shortfalls in distributions on the Certificates
could result. Holders of the Senior Certificates will bear their proportionate
share of any losses realized on the Mortgage Loans in excess of the available
subordination amount.

In addition, the weighted average life of, and the yield to maturity
on, the Subordinated Certificates, in increasing order of their numerical Class
designation, will be progressively more sensitive to the rate and timing of
mortgagor defaults and the severity of ensuing losses on the Mortgage Loans.
If the actual rate and severity of losses on the Mortgage Loans is higher than
those assumed by a holder of a Subordinated Certificate, the actual yield to
maturity of such Certificate may be lower than the yield expected by such
holder based on such assumption. The timing of losses on Mortgage Loans will
also affect an investor's actual yield to maturity, even if the rate of
defaults and severity of losses over the life of the Mortgage Pool are
consistent with an investor's expectations. Realized Losses on the Mortgage
Loans will reduce the Class Certificate Balances of the applicable Class of
Subordinated Certificates to the extent of any losses allocated thereto (as
described under "Description of the Certificates--Allocation of Losses"
herein), without the receipt of cash attributable to such reduction. As a
result of such reductions, less interest will accrue on such Class of
Subordinated Certificates than otherwise would be the case. The yield to
maturity of the Subordinated Certificates will also be affected by the
disproportionate allocation of principal prepayments to the Senior
Certificates, Net Interest Shortfalls, other cash shortfalls in Available Funds
and distribution of funds to Class PO Certificateholders otherwise available
for distribution on the Subordinated Certificates to the extent of
reimbursement for Class PO Deferred Amounts. See "Description of the
Certificates--Allocation of Losses" and "Yield, Prepayment and Maturity
Considerations--The Subordinated Certificates" herein.

For a discussion of additional risks pertaining to the Offered
Certificates, see "Risk Factors" in the Prospectus.

THE MORTGAGE POOL

GENERAL

The Depositor will purchase the Mortgage Loans from the Seller
pursuant to the Purchase Agreement, dated ____________, 199_ (the "Purchase
Agreement"). Pursuant to the Pooling and Servicing Agreement dated as of the
Cut-off Date among the Master Servicer, the Depositor and the Trustee (the
"Agreement"), the Depositor will cause the Mortgage Loans to be assigned to the
Trustee for the benefit of the holders of the Certificates (the
"Certificateholders").

Under the Purchase Agreement, the Seller will make certain
representations, warranties and covenants to the Depositor relating to, among
other things, the due execution and enforceability of the Agreement and certain
characteristics of the Mortgage Loans and, subject to the limitations described
below under "--Assignment of the Mortgage Loans," will be obligated to
repurchase or substitute a similar mortgage loan for any Mortgage Loan as to
which there exists deficient documentation or an uncured material breach of any
such representation, warranty or covenant. The Seller will represent and

S-19
<PAGE> 150
warrant to the Depositor in the Agreement that the Mortgage Loans were selected
from among the outstanding one- to four-family mortgage loans in the Seller's
portfolio as to which the representations and warranties set forth in the
Agreement can be made and that such selection was not made in a manner that
would adversely affect the interests of the Certificateholders. See "The Trust
Fund--Representations by Sellers; Repurchases" in the Prospectus. Under the
Agreement, the Depositor will assign all its right, title and interest in and
to such representations, warranties and covenants (including the Seller's
repurchase obligation) under the Purchase Agreement to the Trustee for the
benefit of Certificateholders. The Depositor will make no representations or
warranties with respect to the Mortgage Loans and will have no obligation to
repurchase or substitute Mortgage Loans with deficient documentation or which
are otherwise defective. The Seller is selling the Mortgage Loans without
recourse and will have no obligation with respect to the Certificates in its
capacity as Seller other than the repurchase obligation described above. The
obligations of ___________, as Master Servicer, with respect to the
Certificates are limited to the Master Servicer's contractual servicing
obligations under the Agreement.

Certain information with respect to the Mortgage Loans expected to be
included in the Mortgage Pool is set forth below. Prior to the Closing Date,
Mortgage Loans may be removed from the Mortgage Pool and other Mortgage Loans
may be substituted therefor. The Depositor believes that the information set
forth herein under "The Mortgage Pool" with respect to the Mortgage Pool as
presently constituted is representative of the characteristics of the Mortgage
Pool as it will be constituted at the Closing Date, although certain
characteristics of the Mortgage Loans in the Mortgage Pool may vary. Unless
otherwise indicated, information presented herein under "The Mortgage Pool"
expressed as a percentage (other than rates of interest) are approximate
percentages based on the Stated Principal Balances of the Mortgage Loans as of
the Cut-off Date.

As of the Cut-off Date, the aggregate of the Stated Principal Balances
of the Mortgage Loans is expected to be approximately $_______ (the "Cut-off
Date Pool Principal Balance"). The Mortgage Loans provide for the amortization
of the amount financed over a series of substantially equal monthly payments.
All the Mortgage Loans provide for payments due as of the first day of each
month (the "Due Date"). At origination, substantially all of the Mortgage
Loans had stated terms to maturity of [30 years]. The Mortgage Loans to be
included in the Mortgage Pool were originated or purchased by [the Seller] and
were originated substantially in accordance with [the Seller's] underwriting
criteria described below under "--Underwriting Standards."

Scheduled monthly payments made by the Mortgagors on the Mortgage
Loans ("Scheduled Payments") either earlier or later than the scheduled Due
Dates thereof will not affect the amortization schedule or the relative
application of such payments to principal and interest. [All of the Mortgage
Notes provide for a ________ (__) day grace period for monthly payments. Any
Mortgage Loan may be prepaid in full or in part at any time; however,
approximately ____% of the Mortgage Loans provide for the payment by the
borrower of a prepayment charge in limited circumstances on full prepayments
made within ____ years from the date of execution of the related Mortgage Note.
In general, the Mortgage Note provides that a prepayment charge will apply if,
during the first ____ years from the date of origination of such Mortgage Loan,
the borrower prepays such Mortgage Loan in full. The amount of the prepayment
charge will generally be equal to ____ months' advance interest calculated on
the basis of the rate in effect at the time of such prepayment on the amount
prepaid in excess of __% of the original balance of such Mortgage Loan.]

Each Mortgage Loan was originated after ____________.

S-20
<PAGE> 151
The latest stated maturity date of any Mortgage Loan is _________.
The earliest stated maturity date of any Mortgage Loan is ___________.

As of the Cut-off Date, no Mortgage Loan was delinquent more than [89]
days.

[No] Mortgage Loan will be subject to a buydown agreement. [No]
Mortgage Loan provides for deferred interest or negative amortization.

[No] Mortgage Loan had a Loan-to-Value Ratio at origination of more
than [95]%. Each Mortgage Loan with a Loan-to-Value Ratio at origination of
greater than 80% may be covered by a primary mortgage guaranty insurance policy
issued by a mortgage insurance company acceptable to FNMA or FHLMC, which
policy provides coverage in an amount equal to the excess of the original
principal balance of the related Mortgage Loan over __% of the value of the
related Mortgaged Property, plus accrued interest thereon and related
foreclosure expenses.

The Loan-to-Value Ratio of a Mortgage Loan is equal to (i) the
principal balance of such Mortgage Loan at the date of origination, divided by
(ii) the Collateral Value of the related Mortgaged Property. The Collateral
Value of a Mortgaged Property is the lesser of (x) the appraised value based on
an appraisal made for [the Seller] by an independent fee appraiser at the time
of the origination of the related Mortgage Loan, and (y) the sales price of
such Mortgaged Property at such time of origination. With respect to a
Mortgage Loan the proceeds of which were used to refinance an existing mortgage
loan, the Collateral Value is the appraised value of the Mortgaged Property
based upon the appraisal obtained at the time of refinancing. No assurance can
be given that the values of the Mortgaged Properties have remained or will
remain at their levels as of the dates of origination of the related Mortgage
Loans. If the residential real estate market should experience an overall
decline in property values such that the outstanding balances of the Mortgage
Loans become equal to or greater than the value of the Mortgaged Properties,
actual losses on the Mortgage Loans could be higher than losses now generally
experienced in the mortgage lending industry.

The following information sets forth in tabular format certain
information, as of the Cut-off Date, as to the Mortgage Loans. Other than with
respect to rates of interest, percentages (approximate) are stated by Stated
Principal Balance of the Mortgage Loans as of the Cut-off Date and have been
rounded in order to total 100%.

S-21
<PAGE> 152
MORTGAGE RATES(1)

<TABLE>
<CAPTION>
Number of Mortgage Aggregate Principal Percent of
Mortgage Rates (%) Loans Balance Outstanding Mortgage Pool

- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
_____............ $ %
_____..............
_____..............
_____..............
_____..............
_____..............
_____..............
_____..............
_____..............
_____..............
_____..............
_____..............

Totals............. $ 100.00%
== ========== =========
</TABLE>

- ---------
(1) As of the Cut-off Date, the weighted average Mortgage Rate of the
Mortgage Loans (as so adjusted) is expected to be approximately
_____%. Without such adjustment, the weighted average Mortgage Rate
of the Mortgage Loans is expected to be approximately ______% per
annum.

ORIGINAL LOAN-TO-VALUE RATIOS(1)

<TABLE>
<CAPTION>
Original Loan-to-Value Number of Aggregate Principal Percent of
Rates (%) Mortgage Loans Balance Outstanding Mortgage Pool

- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
_____ and below..... $ %
_____ to _____......
_____ to _____......
_____ to _____......
_____ to _____......
_____ to _____......
_____ to _____......
_____ to _____......
_____ to _____......
_____ to _____...... --- ---------- ---------

Totals.............. $ 100.00%
- ----- == ========== ==========
</TABLE>
(1) The weighted average original Loan-to-Value Ratio of the Mortgage
Loans is expected to be approximately _______%.

S-22
<PAGE> 153
CURRENT MORTGAGE LOAN PRINCIPAL BALANCES(1)
<TABLE>
<CAPTION>
Current Mortgage Loan Number of Aggregate Principal Percent of
Amounts Mortgage Loans Balance Outstanding Mortgage Pool

- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 0 - $ ______... $ %
$ _______ - $ _______...
$ _______ - $ _______...
$ _______ - $ _______...
$ _______ - $ _______...
$ _______ - $ _______...
$ _______ - $ _______...
$ _______ - $ _______...
$ _______ - $ _______...
$ _______ - $ _______...
$ _______ - $ _______...
$ _______ - $ _______...
$ _______ - $ _______...
$ _______ - $ _______...
$ _______ - $ _______... -- ---------- ---------

$ 100.00%
Totals.............. == ========== =========

</TABLE>

- --------
(1) As of the Cut-off Date, the average current Mortgage Loan principal
balance is expected to be approximately $_______ .

DOCUMENTATION PROGRAM FOR MORTGAGE LOANS

<TABLE>
<CAPTION>
Type of Program Number of Aggregate Principal Percent of
Mortgage Loans Balance Outstanding Mortgage Pool
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Full................ $ %
Alternative.........
Reduced.............
Streamlined......... -- ---------- ---------

$ 100.00%
Totals.............. == ========== =========

</TABLE>

S-23
<PAGE> 154
TYPE OF MORTGAGED PROPERTIES

<TABLE>
<CAPTION>
Property Type Number of Aggregate Principal Percent of
Mortgage Loans Balance Outstanding Mortgage Pool
- ---------------------------------------------------------------------------------------------------------

<S> <C> <C> <C>
Single Family........... $ %
Condominium.............
Two- to Four-Family
Planned Unit Development -- ---------- ---------

Totals.............. $ 100.00%
== ========== ========
</TABLE>

OCCUPANCY TYPES(1)

<TABLE>
<CAPTION>
Occupancy Type Number of Aggregate Principal Percent of
Mortgage Loans Balance Outstanding Mortgage Pool
- ----------------------------------------------------------------------------------------------------------

<S> <C> <C> <C>
Primary Residence... $ %
Investor Residence...
Second Residence.... -- ---------- ---------

Totals.............. $ 100.00%
== ========== =========
</TABLE>

- -----------
(1) Based upon representations of the related mortgagors at the time of
origination.

S-24
<PAGE> 155
STATE DISTRIBUTION OF MORTGAGED PROPERTIES(1)

<TABLE>
<CAPTION>
State Number of Aggregate Principal Percent of
Mortgage Loans Balance Outstanding Mortgage Pool
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Other (less than [2]%) -- $ %
--------- --------

Totals.............. $ 100.00%
== ========== ========
</TABLE>

- -----------
(1) Other includes other states with under [2]% concentrations
individually. No more than approximately % of the Mortgage Loans will
be secured by Mortgaged Properties located in any one postal zip code
area.

PURPOSE OF MORTGAGE LOANS

<TABLE>
<CAPTION>
Loan Purpose Number of Aggregate Principal Percent of
Mortgage Loans Balance Outstanding Mortgage Pool
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Purchase........... $ %
Refinance (rate/term)..
Refinance (cash out)...
-- ---------- ---------

Totals.............. $ 100.00%
== ========== =========
</TABLE>

REMAINING TERMS TO MATURITY(1)

<TABLE>
<CAPTION>
Remaining Term to Number of Aggregate Principal Percent of
Maturity (Months) Mortgage Loans Balance Outstanding Mortgage Pool
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
- ---.................
- ---.................
- ---.................
- ---.................
- ---.................
- ---.................
- ---.................
- ---.................
- ---.................
- ---.................
- ---.................

Totals.............. $ 100.00%
== ========== ========
</TABLE>

- -----------
(1) As of the Cut-off Date, the weighted average remaining term to
maturity of the Mortgage Loans is expected to be approximately
months.

S-25
<PAGE> 156
ASSIGNMENT OF THE MORTGAGE LOANS

Pursuant to the Agreement, the Depositor on the Closing Date will
sell, transfer, assign, set over and otherwise convey without recourse to the
Trustee in trust for the benefit of the Certificateholders all right, title and
interest of the Depositor in and to each Mortgage Loan and all right, title and
interest in and to the Purchase Agreement and all other assets included in the
Trust Fund described under "Credit Enhancement" herein, including all principal
and interest received on or with respect to the Mortgage Loans, exclusive of
principal and interest due on or prior to the Cut-off Date.

In connection with such transfer and assignment, the Depositor will
deliver or cause to be delivered to the Trustee, or a custodian for the
Trustee, among other things, the original promissory note (the "Mortgage Note")
(and any modification or amendment thereto) endorsed in blank without recourse,
the original instrument creating a first lien on the related Mortgaged Property
(the "Mortgage") with evidence of recording indicated thereon, an assignment in
recordable form of the Mortgage, the title policy with respect to the related
Mortgaged Property and, if applicable, all recorded intervening assignments of
the Mortgage and any riders or modifications to such Mortgage Note and Mortgage
(except for any such documents not returned from the public recording office,
which will be delivered to the Trustee as soon as the same is available to the
Depositor) (collectively, the "Mortgage File"). Assignments of the Mortgage
Loans to the Trustee (or its nominee) will be recorded in the appropriate
public office for real property records, except in states such as California
where in the opinion of counsel such recording is not required to protect the
Trustee's interests in the Mortgage Loan against the claim of any subsequent
transferee or any successor to or creditor of the Depositor or the Seller.

The Trustee will review each Mortgage File within 90 days of the
Closing Date (or promptly after the Trustee's receipt of any document permitted
to be delivered after the Closing Date) and if any document in a Mortgage File
is found to be missing or defective in a material respect and the Seller does
not cure such defect within 90 days of notice thereof from the Trustee (or
within such longer period not to exceed ___ days after the Closing Date as
provided in the Agreement in the case of missing documents not returned from
the public recording office), the Seller will be obligated to repurchase the
related Mortgage Loan from the Trust Fund. Rather than repurchase the Mortgage
Loan as provided above, the Seller may remove such Mortgage Loan (a "Deleted
Mortgage Loan") from the Trust Fund and substitute in its place another
mortgage loan (a "Replacement Mortgage Loan"); however, such substitution is
permitted only within two years of the Closing Date and may not be made unless
an opinion of counsel is provided to the Trustee to the effect that such
substitution will not disqualify the REMIC or result in a prohibited
transaction tax under the Code. Any Replacement Mortgage Loan generally will,
on the date of substitution, among other characteristics set forth in the
Agreement, (i) have a principal balance, after deduction of all Scheduled
Payments due in the month of substitution, not in excess of, and not more than
10% less than, the Stated Principal Balance of the Deleted Mortgage Loan (the
amount of any shortfall to be deposited by the Seller in the Certificate
Account and held for distribution to the Certificateholders on the related
Distribution Date (a "Substitution Adjustment Amount")), (ii) have a Mortgage
Rate not lower than, and not more than 1% per annum higher than, that of the
Deleted Mortgage Loan, (iii) have a Loan-to-Value Ratio not higher than that of
the Deleted Mortgage Loan, (iv) have a remaining term to maturity not greater
than (and not more than one year less than) that of the Deleted Mortgage Loan,
and (v) comply with all of the representations and warranties set forth in the
Agreement as of the date of substitution. This cure, repurchase or
substitution obligation constitutes the sole remedy available to
Certificateholders or the Trustee for omission of, or a material defect in, a
Mortgage Loan document.

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<PAGE> 157
UNDERWRITING STANDARDS

The following is a description of the underwriting procedures
customarily employed by [the Seller] with respect to mortgage loans such as the
Mortgage Loans: ________.

SERVICING OF MORTGAGE LOANS

GENERAL

The Master Servicer will service the Mortgage Loans in accordance with
the terms set forth in the Pooling and Servicing Agreement. The Master
Servicer may perform any of its obligations under the Pooling and Servicing
Agreement through one or more subservicers. Notwithstanding any such
subservicing arrangement, the Master Servicer will remain liable for its
servicing duties and obligations under the Pooling and Servicing Agreement as
if the Master Servicer alone were servicing the Mortgage Loans. [As of the
Closing Date, the Master Servicer will service the Mortgage Loans without
subservicing arrangements.]

The information set forth in the following section through and
including the section captioned "Delinquency Status as of _____________, 199_"
has been provided by [the Master Servicer]. No representation is made by the
Depositor or any of its affiliates as to the accuracy or completeness of any
such information.

THE MASTER SERVICER

[____________] will act as the Master Servicer of the Mortgage Loans
pursuant to the Pooling and Servicing Agreement.

As of __________, 199_, [the Master Servicer] provided servicing for
approximately $__________ [million] in mortgage loans.

The principal executive offices of the Master Servicer are located at
____________________________. Its telephone number is (___) ___-____.

LOAN SERVICING

[The Master Servicer services substantially all of the mortgage loans
it originates or acquires. Servicing includes, but is not limited to,
collecting and remitting mortgage loan payments, accounting for principal and
interest, holding escrow (impound) funds for payment of taxes and insurance,
making inspections as required of the mortgaged properties, preparation of tax
related information in connection with the mortgage loans, supervision of
delinquent mortgage loans, loss mitigation efforts, foreclosure proceedings
and, if applicable, the disposition of mortgaged properties, and generally
administering the mortgage loans, for which it receives servicing fees.]

COLLECTION PROCEDURES

When a mortgagor fails to make a payment on a mortgage loan, the
Master Servicer attempts to cause the deficiency to be cured by corresponding
with the mortgagor. In most cases, deficiencies are

S-27
<PAGE> 158
cured promptly. Pursuant to the Master Servicer's servicing procedures, the
Master Servicer generally mails to the mortgagor a notice of intent to
foreclose after the loan becomes 31 days past due (two payments due but not
received) and, within 60 days thereafter, if the loan remains delinquent,
institutes appropriate legal action to foreclose on the mortgaged property.
Foreclosure proceedings may be terminated if the delinquency is cured.
Mortgage loans to borrowers in bankruptcy proceedings may be restructured in
accordance with law and with a view to maximizing recovery of such loans,
including any deficiencies.

Once foreclosure is initiated by the Master Servicer, a foreclosure
tracking system is used to monitor the progress of the proceedings. The system
includes state specific parameters to monitor whether proceedings are
progressing within the time frame typical for the state in which the mortgaged
property is located. During the foreclosure proceeding, the Master Servicer
determines the amount of the foreclosure bid and whether to liquidate the
mortgage loan.

After foreclosure, the Master Servicer may liquidate the mortgaged
property and charge-off the loan balance which was not recovered through
liquidation proceeds. If foreclosed, the mortgaged property is sold at a
public or private sale and may be purchased by the Master Servicer.

Servicing and charge-off policies and collection practices may change
over time in accordance with, among other things, the Master Servicer's
business judgment, changes in the servicing portfolio and applicable laws and
regulations.

FORECLOSURE AND DELINQUENCY EXPERIENCE

The following table summarizes the delinquency experience of mortgage
loans serviced by the Master Servicer as of ___________, 199_. A mortgage loan
is characterized as delinquent if the borrower has not paid the minimum payment
due by the due date. The table below excludes mortgage loans where the
mortgage loan is in foreclosure or the borrower has filed for bankruptcy. The
delinquency percentages may be affected by the size and relative lack of
seasoning of the servicing portfolio because many of such loans were not
outstanding long enough to give rise to some or all of the periods of
delinquency indicated in the chart below. Accordingly, the information should
not be considered as a basis for assessing the likelihood, amount, or severity
of delinquency or losses on the Mortgage Loans, and no assurances can be given
that the foreclosure experience presented in the second paragraph below the
table will be indicative of such experience on the Mortgage Loans.

Delinquency Status as of _________, 199_

<TABLE>
<CAPTION>
Dollars Percent Units Percent

<S> <C> <C> <C> <C>
Current $________ _____% _____ _____%

30-59 Days $________ _____% _____ _____%

60-89 Days $________ _____% _____ _____%

90+ Days $________ _____% _____ _____%

Total $________ _____% _____ _____%
</TABLE>

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This table does not include ________ mortgage loans with principal
balances aggregating $_____________ that were sold, but were being serviced on
an interim basis pending transfer of servicing, as of ___________, 199_. As of
the date hereof, servicing with respect to such mortgage loans has been
transferred.

Delinquencies are reported on a contractual basis. As of
_____________, 199_, __________ mortgage loans with an aggregate principal
balance of $______________ were in foreclosure and, there were ___________
loans in bankruptcy with a combined loan balance of $______________.

Over the last several years, there has been a general deterioration of
the real estate market and weakening economy in many regions of the country,
including __________. The general deterioration of the real estate market has
been reflected in increases in delinquencies of loans secured by real estate,
slower absorption rates of real estate into the market and lower sales prices
for real estate. The general weakening of the economy has been reflected in
decreases in the financial strength of borrowers and decreases in the value of
collateral serving as security for loans. If the real estate market and
economy continue to decline, the Master Servicer may experience an increase in
delinquencies on the loans it services and higher net losses on liquidated
mortgage loans.

SERVICING COMPENSATION AND PAYMENT OF EXPENSES

[The Master Servicer will be paid a monthly fee from interest
collected with respect to each Mortgage Loan (as well as from any liquidation
proceeds from a Liquidated Mortgage Loan that are applied to accrued and unpaid
interest) equal to one-twelfth of the Stated Principal Balance thereof
multiplied by the Servicing Fee Rate (such product, the "Servicing Fee"). The
Servicing Fee Rate for each Mortgage Loan will equal ________% per annum. The
amount of the monthly Servicing Fee is subject to adjustment with respect to
prepaid Mortgage Loans, as described herein under "--Adjustment to Master
Servicing Fee in Connection with Certain Prepaid Mortgage Loans." The Master
Servicer is also entitled to receive, as additional servicing compensation,
amounts in respect of interest paid on Principal Prepayments (as defined below)
received from the 2nd day through the 15th day of a month ("Prepayment Interest
Excess"), all late payment fees, assumption fees, prepayment penalties and
other similar charges and all reinvestment income earned on amounts on deposit
in the Certificate Account and Distribution Account. The Master Servicer is
obligated to pay certain ongoing expenses associated with the Mortgage Loans
and incurred by the Trustee in connection with its responsibilities under the
Pooling and Servicing Agreement.]

ADJUSTMENT TO MASTER SERVICING FEE IN CONNECTION WITH CERTAIN PREPAID MORTGAGE
LOANS

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of such Master Servicing Fee,] by an amount sufficient to pass through to
Certificateholders the full amount of interest to which they would be entitled
in respect of each such prepaid Mortgage Loan on the related Distribution Date.
If shortfalls in interest as a result of prepayments in any Prepayment Period
exceed an amount equal to [one-half of] the Master Servicing Fee otherwise
payable on the related Distribution Date, the amount of interest available to
be distributed to Certificateholders will be reduced by the amount of such
excess. See "Description of the Certificates--Interest" herein.

ADVANCES

Subject to the following limitations, the Master Servicer will be
required to advance prior to each Distribution Date, from its own funds or
funds in the Certificate Account that do not constitute Available Funds for
such Distribution Date, an amount equal to the aggregate of payments of
principal and interest on the Mortgage Loans (net of the Master Servicing Fee
with respect to the related Mortgage Loans) which were due on the related Due
Date and which were delinquent on the related Determination Date, together with
an amount equivalent to interest on each Mortgage Loan as to which the related
Mortgaged Property has been acquired by the Trust Fund through foreclosure or
deed-in-lieu of foreclosure ("REO Property") (any such advance, an "Advance").

Advances are intended to maintain a regular flow of scheduled interest
and principal payments on the Certificates rather than to guarantee or insure
against losses. The Master Servicer is obligated to make Advances with respect
to delinquent payments of principal of or interest on each Mortgage Loan to the
extent that such Advances are, in its reasonable judgment, recoverable from
future payments and collections or insurance payments or proceeds of
liquidation of the related Mortgage Loan. If the Master Servicer determines on
any Determination Date to make an Advance, such Advance will be included with
the distribution to Certificateholders on the related Distribution Date. Any
failure by the Master Servicer to make an Advance as required under the
Agreement with respect to the Certificates will constitute an Event of Default
thereunder, in which case the Trustee or the successor master servicer will be
obligated to make any such Advance, in accordance with the terms of the
Agreement.

DESCRIPTION OF THE CERTIFICATES

GENERAL

The Certificates will be issued pursuant to the Agreement. Set forth
below are descriptions of the material terms and provisions pursuant to which
the Certificates will be issued. When particular provisions or terms used in
the Agreement are referred to, the actual provisions (including definitions of
terms) are incorporated by reference.

The Mortgage Loan Asset-Backed Pass-Through Certificates, Series 199_
- - __ will consist of the Class A-__, Class ___, Class PO, Class X and Class A-R
Certificates (collectively, the "Senior Certificates") and the Class B-__,
Class ___ and Class ____ Certificates (collectively, the "Subordinated
Certificates"). The Senior Certificates and Subordinated Certificates are
collectively referred to herein as the "Certificates." Only the Classes of
Certificates listed on the cover page hereof (collectively, the "Offered
Certificates") are offered hereby. The Classes of Offered Certificates will
have the respective initial Class Certificate Balances or initial Notional
Amounts (subject to the permitted variance) and Pass-Through Rates set forth or
described on the cover hereof.

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The Class Certificate Balance of any Class of Certificates as of any
Distribution Date is the initial Class Certificate Balance thereof (A) reduced
by the sum of (i) all amounts previously distributed to holders of Certificates
of such Class as payments of principal, (ii) the amount of Realized Losses
(including Excess Losses) allocated to such Class and (iii) in the case of any
Class of Subordinated Certificates, any amounts allocated to such Class in
reduction of its Class Certificate Balance in respect of payments of Class PO
Deferred Amounts, as described below under "--Allocation of Losses." In
addition, the Class Certificate Balance of the Class of Subordinated
Certificates then outstanding with the highest numerical Class designation will
be reduced if and to the extent that the aggregate of the Class Certificate
Balances of all Classes of Certificates, following all distributions and the
allocation of Realized Losses on a Distribution Date, exceeds the Pool
Principal Balance as of the Due Date occurring in the month of such
Distribution Date. The Notional Amount Certificates do not have principal
balances and are not entitled to any distributions in respect of principal of
the Mortgage Loans.

The Notional Amount of the Class X Certificates for any Distribution
Date will be equal to the aggregate of the Stated Principal Balances of the
Non-Discount Mortgage Loans with respect to such Distribution Date. A
"Non-Discount Mortgage Loan" is a Mortgage Loan with a Net Mortgage Rate equal
to or greater than ___%. The initial Notional Amount of the Class X
Certificates will be equal to the aggregate of the Stated Principal Balance of
the Non-Discount Mortgage Loans as of the Cut-off Date.

The Senior Certificates will have an initial aggregate principal
balance of approximately $_____ and will evidence in the aggregate an initial
beneficial ownership interest of approximately ____% in the Trust Fund. The
Class B-__ and Class B-__ Certificates will each evidence in the aggregate an
initial beneficial ownership interest of approximately ___% and ___%,
respectively, in the Trust Fund.

The Book-Entry Certificates will be issuable in book-entry form only.
The Physical Certificates will be issued in fully registered certificated form.
The Physical Certificates (other than Class A-R Certificates) offered hereby
will be issued in minimum dollar denominations of [$1,000] and integral
multiples of [$1] in excess thereof. A single Certificate of each such Class
may be issued in an amount different than described above. The Class A-R
Certificates will be issued as a single Certificate in a denomination of
[$1,000].

BOOK-ENTRY CERTIFICATES

Each Class of Book-Entry Certificates will be issued in one or more
certificates which equal the aggregate initial Class Certificate Balance of
each such Class of Certificates and which will be held by a nominee of The
Depository Trust Company (together with any successor depository selected by
the Depositor, the "Depository"). Beneficial interests in the Book-Entry
Certificates will be held indirectly by investors through the book-entry
facilities of the Depository, as described herein. Investors may hold such
beneficial interests in the Book-Entry Certificates in minimum denominations
representing an original principal amount of [$1,000] and integral multiples of
[$1] in excess thereof. [One investor of each Class of Book-Entry Certificates
may hold a beneficial interest therein that is not an integral multiple of
$1,000.] The Depositor has been informed by the Depository that its nominee
will be CEDE & Co. ("CEDE"). Accordingly, CEDE is expected to be the holder of
record of the Book-Entry Certificates. Except as described in the Prospectus
under "Description of the Securities--Book-Entry Registration of Securities,"
no person acquiring a Book-Entry Certificate (each, a "beneficial owner") will
be entitled to receive a physical certificate representing such Certificate (a
"Definitive Certificate").

Unless and until Definitive Certificates are issued, it is anticipated
that the only "Certificateholder" of the Book-Entry Certificates will be CEDE,
as nominee of the Depository.

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<PAGE> 162
Beneficial owners of the Book-Entry Certificates will not be
Certificateholders, as that term is used in the Agreement. Beneficial owners
are only permitted to exercise the rights of Certificateholders indirectly
through Financial Intermediaries and the Depository. Monthly and annual
reports on the Trust Fund provided to CEDE, as nominee of the Depository, may
be made available to beneficial owners upon request, in accordance with the
rules, regulations and procedures creating and affecting the Depository, and to
the Financial Intermediaries to whose Depository accounts the Book-Entry
Certificates of such beneficial owners are credited.

For a description of the procedures generally applicable to the
Book-Entry Certificates, see "Description of the Securities--Book-Entry
Registration of Securities" in the Prospectus.

PAYMENTS ON MORTGAGE LOANS; ACCOUNTS

On or prior to the Closing Date, the Master Servicer will establish an
account (the "Certificate Account"), which will be maintained in trust for the
benefit of the Certificateholders. Funds credited to the Certificate Account
may be invested for the benefit and at the risk of the Master Servicer in
Permitted Investments, that are scheduled to mature on or prior to the business
day preceding the next Distribution Date. On or prior to the business day
immediately preceding each Distribution Date, the Master Servicer will withdraw
from the Certificate Account the amount of Available Funds and will deposit
such Available Funds in an account established and maintained with the Trustee
on behalf of the Certificateholders (the "Distribution Account").

"Permitted Investments" will be specified in the Agreement and will be
limited to (i) obligations of the United States or any agency thereof, provided
such obligations are backed by the full faith and credit of the United States;
(ii) general obligations of or obligations guaranteed by any state of the
United States or the District of Columbia receiving the highest long-term debt
rating of each Rating Agency rating the Certificates, or such lower rating as
will not result in the downgrading or withdrawal of the ratings then assigned
to the Certificates by each such Rating Agency; (iii) commercial or finance
company paper which is then receiving the highest commercial or finance company
paper rating of each such Rating Agency, or such lower rating as will not
result in the downgrading or withdrawal of the ratings then assigned to the
Certificates by each such Rating Agency; (iv) certificates of deposit, demand
or time deposits, or bankers' acceptances issued by any depository institution
or trust company incorporated under the laws of the United States or of any
state thereof and subject to supervision and examination by federal and/or
state banking authorities, provided that the commercial paper and/or long-term
unsecured debt obligations of such depository institution or trust company (or
in the case of the principal depository institution in a holding company
system, the commercial paper or long-term unsecured debt obligations of such
holding company, but only if Moody's Investors Service, Inc. ("Moody's") is not
a Rating Agency) are then rated one of the two highest long-term and the
highest short-term ratings of each such Rating Agency for such securities, or
such lower ratings as will not result in the downgrading or withdrawal of the
rating then assigned to the Certificates by any such Rating Agency; (iv) demand
or time deposits or certificates of deposit issued by any bank or trust company
or savings institution to the extent that such deposits are fully insured by
the FDIC; (v) guaranteed reinvestment agreements issued by any bank, insurance
company or other corporation containing, at the time of the issuance of such
agreements, such terms and conditions as will not result in the downgrading or
withdrawal of the rating then assigned to the Certificates by any such Rating
Agency; (vi) repurchase obligations with respect to any security described in
clauses (i) and (ii) above, in either case entered into with a depository
institution or trust company (acting as principal) described in clause (iv)
above; (vii) securities (other than stripped bonds, stripped coupons or
instruments sold at a purchase price in excess of 115% of the face amount
thereof) bearing interest or sold at a discount issued by any corporation
incorporated under the laws of the United

S-32
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States or any state thereof which, at the time of such investment, have one of
the two highest ratings of each Rating Agency (except if the Rating Agency is
Moody's, such rating shall be the highest commercial paper rating of Moody's
for any such securities), or such lower rating as will not result in the
downgrading or withdrawal of the rating then assigned to the Certificates by
any such Rating Agency, as evidenced by a signed writing delivered by each such
Rating Agency; and (viii) such other investments having a specified stated
maturity and bearing interest or sold at a discount acceptable to each Rating
Agency as will not result in the downgrading or withdrawal of the rating then
assigned to the Certificates by any such Rating Agency, as evidenced by a
signed writing delivered by each such Rating Agency; provided that no such
instrument shall be a Permitted Investment if such instrument evidences the
right to receive interest only payments with respect to the obligations
underlying such instrument.

DISTRIBUTIONS

Distributions on the Certificates will be made by the Trustee on the
__ day of each month, or if such day is not a business day, on the first
business day thereafter, commencing in ____ 199_ (each, a "Distribution Date"),
to the persons in whose names such Certificates are registered at the close of
business on the last business day of the month preceding the month of such
Distribution Date (the "Record Date").

Distributions on each Distribution Date will be made by check mailed
to the address of the person entitled thereto as it appears on the applicable
certificate register or, in the case of a Certificateholder who holds [100%] of
a Class of Certificates or who holds Certificates with an aggregate initial
Certificate Balance of [$1,000,000] or more or who holds an Interest Only
Certificate and who has so notified the Trustee in writing in accordance with
the Agreement, by wire transfer in immediately available funds to the account
of such Certificateholder at a bank or other depository institution having
appropriate wire transfer facilities; provided, however, that the final
distribution in retirement of the Certificates will be made only upon
presentment and surrender of such Certificates at the Corporate Trust Office of
the Trustee.

PRIORITY OF DISTRIBUTIONS AMONG CERTIFICATES

As more fully described below under "--Interest," "--Principal" and
"--Allocation of Losses," distributions will be made on each Distribution Date
from Available Funds in the following order of priority: (i) to interest on
each interest bearing Class of Senior Certificates; (ii) to principal on the
Classes of Senior Certificates then entitled to receive distributions of
principal, in the order and subject to the priorities set forth below under
"--Principal," in each case in an aggregate amount up to the maximum amount of
principal to be distributed on such Classes on such Distribution Date; (iii) to
any Class PO Deferred Amounts with respect to the Class PO Certificates, but
only from amounts that would otherwise be distributed on such Distribution Date
as principal of the Subordinated Certificates; and (iv) to interest on and then
principal of each Class of Subordinated Certificates, in the order of their
numerical Class designations, beginning with the Class ____ Certificates, in
each case subject to the limitations set forth below under "--Principal."

"Available Funds" with respect to any Distribution Date will be equal
to the sum of (i) all scheduled installments of interest (net of the related
Expense Fees) and principal due on the Due Date in the month in which such
Distribution Date occurs and received prior to the related Determination Date,
together with any Advances in respect thereof; (ii) all proceeds of any primary
mortgage guaranty insurance policies and any other insurance policies with
respect to the Mortgage Loans, to the extent such proceeds are not applied to
the restoration of the related Mortgaged Property or released to the Mortgagor

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in accordance with the Master Servicer's normal servicing procedures
(collectively, "Insurance Proceeds") and all other cash amounts received and
retained in connection with the liquidation of defaulted Mortgage Loans, by
foreclosure or otherwise ("Liquidation Proceeds") during the calendar month
preceding the month of such Distribution Date (in each case, net of
unreimbursed expenses incurred in connection with a liquidation or foreclosure
and unreimbursed Advances, if any); (iii) all partial or full prepayments
received during the month preceding the month of such Distribution Date; and
(iv) amounts received with respect to such Distribution Date as the
Substitution Adjustment Amount or purchase price in respect of a Deleted
Mortgage Loan or a Mortgage Loan repurchased by the Seller or the Master
Servicer as of such Distribution Date, reduced by amounts in reimbursement for
Advances previously made and other amounts as to which the Master Servicer is
entitled to be reimbursed from the Certificate Account pursuant to the
Agreement.

With respect to any Distribution Date, the Class PO Deferred Amount is
the aggregate of the applicable PO Percentage of each Realized Loss, other than
any Excess Loss, to be allocated to the Class PO Certificates on such
Distribution Date on or prior to the Senior Credit Support Depletion Date or
previously allocated to the Class PO Certificates and not yet paid to the
holders of the Class PO Certificates.

INTEREST

The Classes of Offered Certificates will have the respective
Pass-Through Rates set forth or described on the cover hereof.

The Pass-Through Rate for the Class X Certificates for any
Distribution Date will be equal to the excess of (a) the average of the Net
Mortgage Rates of the Non-Discount Mortgage Loans, weighted on the basis of the
Stated Principal Balances thereof, over (b)___% per annum. The Pass-Through
Rate for the Class X Certificates for the first Distribution Date is expected
to be approximately ___% per annum. The Net Mortgage Rate for each Mortgage
Loan is the interest rate thereon (the "Mortgage Rate") less the Servicing Fee
Rate for such Mortgage Loan.

On each Distribution Date, to the extent of funds available therefor,
each interest bearing Class of Certificates will be entitled to receive an
amount allocable to interest (as to each such Class, the "Interest Distribution
Amount") with respect to the related Interest Accrual Period. The Interest
Distribution Amount for any interest bearing Class will be equal to the sum of
(i) interest at the applicable Pass-Through Rate on the related Class
Certificate Balance or Notional Amount, as the case may be, and (ii) the sum of
the amounts, if any, by which the amount described in clause (i) above on each
prior Distribution Date exceeded the amount actually distributed as interest on
such prior Distribution Dates and not subsequently distributed ("Unpaid
Interest Amounts"). The Class PO Certificates are Principal Only Certificates
and will not bear interest.

[With respect to each Distribution Date, the "Interest Accrual Period"
for each interest bearing Class of Certificates will be the calendar month
preceding the month of such Distribution Date.]

The interest entitlement described above for each Class of
Certificates for any Distribution Date will be reduced by the amount of "Net
Interest Shortfalls" for such Distribution Date. With respect to any
Distribution Date, the "Net Interest Shortfall" is equal to (i) the amount of
interest that would otherwise have been received with respect to any Mortgage
Loan that was the subject of (x) a Relief Act Reduction or (y) a Special Hazard
Loss, Fraud Loss, Debt Service Reduction or Deficient Valuation, after the
exhaustion of the respective amounts of coverage provided by the Subordinated
Certificates for such

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types of losses and (ii) any Net Prepayment Interest Shortfalls with respect to
such Distribution Date. A "Relief Act Reduction" is a reduction in the amount
of monthly interest payment on a Mortgage Loan pursuant to the Soldiers' and
Sailors' Civil Relief Act of 1940. See "Certain Legal Aspects of the
Loans--Soldiers' and Sailors' Civil Relief Act" in the Prospectus. With
respect to any Distribution Date, a "Net Prepayment Interest Shortfall" is the
amount by which the aggregate of Prepayment Interest Shortfalls during the
calendar month preceding the month of such Distribution Date exceeds the
aggregate amount payable on such Distribution Date by the Master Servicer as
described under "Servicing of Mortgage Loans--Adjustment to Master Servicing
Fee in Connection with Certain Prepaid Mortgage Loans." A "Prepayment Interest
Shortfall" is the amount by which interest paid by a borrower in connection
with a prepayment of principal on a Mortgage Loan is less than one month's
interest at the related Mortgage Rate on the Stated Principal Balance of such
Mortgage Loan. Each Class' pro rata share of such Net Interest Shortfalls will
be based on the amount of interest such Class otherwise would have been
entitled to receive on such Distribution Date.

Accrued interest to be distributed on any Distribution Date will be
calculated, in the case of each interest bearing Class of Certificates, on the
basis of the related Class Certificate Balance or Notional Amount, as
applicable, immediately prior to such Distribution Date. [Interest will be
calculated and payable on the basis of a 360-day year divided into twelve
30-day months.]

In the event that, on a particular Distribution Date, Available Funds
in the Certificate Account applied in the order described above under
"--Priority of Distributions Among Certificates" are not sufficient to make a
full distribution of the interest entitlement on the Certificates, interest
will be distributed on each Class of Certificates of equal priority based on
the amount of interest each such Class would otherwise have been entitled to
receive in the absence of such shortfall. Any Unpaid Interest Amount will be
carried forward and added to the amount holders of each such Class of
Certificates will be entitled to receive on the next Distribution Date. Such a
shortfall could occur, for example, if losses realized on the Mortgage Loans
were exceptionally high or were concentrated in a particular month. Any Unpaid
Interest Amount so carried forward will not bear interest.

PRINCIPAL

General. All payments and other amounts received in respect of
principal of the Mortgage Loans will be allocated between (i) the Senior
Certificates (other than the Notional Amount Certificates and the Class PO
Certificates) and the Subordinated Certificates and (ii) the Class PO
Certificates, in each case based on the applicable Non-PO Percentage and the
applicable PO Percentage, respectively, of such amounts.

The Non-PO Percentage with respect to any Mortgage Loan with a Net
Mortgage Rate ("NMR") less than ___% (each such Mortgage Loan, a "Discount
Mortgage Loan") will be equal to NMR/___%. The Non-PO Percentage with respect
to any Mortgage Loan with a Net Mortgage Rate equal to or greater than ___%
(each such Mortgage Loan, a "Non-Discount Mortgage Loan") will be 100%. The PO
Percentage with respect to any Discount Mortgage Loan will be equal to (___% -
NMR)/___%. The PO Percentage with respect to any Non-Discount Mortgage Loan
will be 0%.

Non-PO Formula Principal Amount. On each Distribution Date, the
Non-PO Formula Principal Amount will be distributed as principal of the Senior
Certificates (other than the Notional Amount Certificates and the Class PO
Certificates) and the Subordinated Certificates, to the extent of the amount
available from Available Funds for the distribution of principal on such
respective Classes, as described below.

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<PAGE> 166
The Non-PO Formula Principal Amount for any Distribution Date will
equal the sum of the applicable Non-PO Percentage of (a) all monthly payments
of principal due on each Mortgage Loan on the related Due Date, (b) the
principal portion of the purchase price of each Mortgage Loan that was
repurchased by the Seller or another person pursuant to the Agreement as of
such Distribution Date, (c) the Substitution Adjustment Amount in connection
with any Deleted Mortgage Loan received with respect to such Distribution Date,
(d) any Insurance Proceeds or Liquidation Proceeds allocable to recoveries of
principal of Mortgage Loans that are not yet Liquidated Mortgage Loans received
during the calendar month preceding the month of such Distribution Date, (e)
with respect to each Mortgage Loan that became a Liquidated Mortgage Loan
during the calendar month preceding the month of such Distribution Date, the
amount of the Liquidation Proceeds allocable to principal received with respect
to such Mortgage Loan and (f) all partial and full principal prepayments by
borrowers received during the related Prepayment Period.

Senior Principal Distribution Amount. On each Distribution Date prior
to the Senior Credit Support Depletion Date, the Non-PO Formula Principal
Amount, up to the amount of the Senior Principal Distribution Amount for such
Distribution Date, will be distributed as principal of the following Classes of
Senior Certificates in the following order of priority:

(i) to the Class A-R Certificates until the Class
Certificate Balance thereof has been reduced to zero;

(ii) concurrently, to the Class ____ and Class _____
Certificates, pro rata based on their respective Class Certificate
Balances, until the Class Certificate Balances thereof have been
reduced to zero;

(iii) sequentially, to the Class ___ and Class ____
Certificates, in that order, until the respective Class Certificate
Balances thereof have been reduced to zero;

(iv) sequentially, to the Class ____ and Class ____
Certificates, in that order, until the respective Class Certificate
Balances thereof have been reduced to zero; and

(v) to the Class ____ Certificates until the Class Certificate
Balance thereof has been reduced to zero.

Notwithstanding the foregoing, on each Distribution Date on and after
the Senior Credit Support Depletion Date, the Non-PO Formula Principal Amount
will be distributed, concurrently as principal of the Classes of Senior
Certificates (other than the Notional Amount Certificates and the Class PO
Certificates), pro rata, in accordance with their respective Class Certificate
Balances immediately prior to such Distribution Date.

The Senior Credit Support Depletion Date is the date on which the
Class Certificate Balance of each Class of Subordinated Certificates has been
reduced to zero.

The Senior Principal Distribution Amount for any Distribution Date
will equal the sum of (i) the Senior Percentage of the applicable Non-PO
Percentage of all amounts described in clauses (a) through (d) of the
definition of "Non-PO Formula Principal Amount" for such Distribution Date,
(ii) with respect to each Mortgage Loan that became a Liquidated Mortgage Loan
during the calendar month preceding the month of such Distribution Date, the
lesser of (x) the Senior Percentage of the applicable Non-PO Percentage of the
Stated Principal Balance of such Mortgage Loan and (y) either (A) the Senior

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Prepayment Percentage or (B) if an Excess Loss was sustained with respect to
such Liquidated Mortgage Loan during such preceding calendar month, the Senior
Percentage of the applicable Non-PO Percentage of the amount of the Liquidation
Proceeds allocable to principal received with respect to such Mortgage Loan,
and (iii) the Senior Prepayment Percentage of the applicable Non-PO Percentage
of amounts described in clause (f) of the definition of "Non-PO Formula
Principal Amount" for such Distribution Date; provided, however, that if a
Bankruptcy Loss that is an Excess Loss is sustained with respect to a Mortgage
Loan that is not a Liquidated Mortgage Loan, the Senior Principal Distribution
Amount will be reduced on the related Distribution Date by the Senior
Percentage of the applicable Non-PO Percentage of the principal portion of such
Bankruptcy Loss.

"Stated Principal Balance" means as to any Mortgage Loan and Due Date,
the unpaid principal balance of such Mortgage Loan as of such Due Date, as
specified in the amortization schedule at the time relating thereto (before any
adjustment to such amortization schedule by reason of any moratorium or similar
waiver or grace period), after giving effect to any previous partial
prepayments and Liquidation Proceeds received and to the payment of principal
due on such Due Date and irrespective of any delinquency in payment by the
related Mortgagor. The Pool Principal Balance with respect to any Distribution
Date equals the aggregate of the Stated Principal Balances of the Mortgage
Loans outstanding on the Due Date in the month preceding the month of such
Distribution Date.

The Senior Percentage for any Distribution Date is the percentage
equivalent of a fraction the numerator of which is the aggregate of the Class
Certificate Balances of each Class of Senior Certificates (other than the Class
PO Certificates) immediately prior to such date and the denominator of which is
the aggregate of the Class Certificate Balances of all Classes of Certificates,
other than the Class PO Certificates, immediately prior to such date.

The Senior Prepayment Percentage for any Distribution Date occurring
during the ____ years beginning on the first Distribution Date will equal 100%.
Thereafter, the Senior Prepayment Percentage will, except as described below,
be subject to gradual reduction as described in the following paragraph. This
disproportionate allocation of certain unscheduled payments in respect of
principal will have the effect of accelerating the amortization of the Senior
Certificates which receive these unscheduled payments of principal (other than
the Class PO Certificates) while, in the absence of Realized Losses, increasing
the interest in the Pool Principal Balance evidenced by the Subordinated
Certificates. Increasing the respective interest of the Subordinated
Certificates relative to that of the Senior Certificates is intended to
preserve the availability of the subordination provided by the Subordinated
Certificates.

The Senior Prepayment Percentage for any Distribution Date occurring
on or after the _____ anniversary of the first Distribution Date will be as
follows: for any Distribution Date in the _____ year thereafter, the Senior
Percentage plus __% of the Subordinated Percentage for such Distribution Date;
for any Distribution Date in the ______ year thereafter, the Senior Percentage
plus __% of the Subordinated Percentage for such Distribution Date; for any
Distribution Date in the _____ year thereafter, the Senior Percentage plus __%
of the Subordinated Percentage for such Distribution Date; for any Distribution
Date in the ______ year thereafter, the Senior Percentage plus __% of the
Subordinated Percentage for such Distribution Date; and for any Distribution
Date thereafter, the Senior Percentage for such Distribution Date (unless on
any of the foregoing Distribution Dates the Senior Percentage exceeds the
initial Senior Percentage, in which case the Senior Prepayment Percentage for
such Distribution Date will once again equal 100%). Notwithstanding the
foregoing, no decrease in the Senior Prepayment Percentage will occur if (i)
the outstanding principal balance of all Mortgage Loans delinquent __ days or
more (averaged over the preceding _________ period), as a percentage of the
aggregate principal balance of the Subordinated Certificates (averaged over the
preceding _________

S-37
<PAGE> 168
period), is equal to or greater than __%, or (ii) cumulative Realized Losses
with respect to the Mortgage Loans exceed (a) with respect to the Distribution
Date on the _____ anniversary of the first Distribution Date, __% of the
aggregate of the principal balances of the Subordinated Certificates as of the
Cut-off Date (the "Original Subordinated Principal Balance"), (b) with respect
to the Distribution Date on the _____ anniversary of the first Distribution
Date, __% of the Original Subordinated Principal Balance, (c) with respect to
the Distribution Date on the _______ anniversary of the first Distribution
Date, __% of the Original Subordinated Principal Balance, (d) with respect to
the Distribution Date on the ______ anniversary of the first Distribution Date,
__% of the Original Subordinated Principal Balance, and (e) with respect to the
Distribution Date on the _____ anniversary of the first Distribution Date, __%
of the Original Subordinated Principal Balance. The Subordinated Prepayment
Percentage as of any Distribution Date will be calculated as the difference
between 100% and the Senior Prepayment Percentage for such date.

If on any Distribution Date the allocation to the Class of Senior
Certificates then entitled to distributions of principal of full and partial
principal prepayments and other amounts in the percentage required above would
reduce the outstanding Class Certificate Balance of such Class below zero, the
distribution to such Class of Certificates of the Senior Prepayment Percentage
of such amounts for such Distribution Date will be limited to the percentage
necessary to reduce the related Class Certificate Balance to zero.

Subordinated Principal Distribution Amount. On each Distribution
Date, to the extent of Available Funds therefor, the Non-PO Formula Principal
Amount, up to the amount of the Subordinated Principal Distribution Amount for
such Distribution Date, will be distributed as principal of the Subordinated
Certificates. Except as provided in the next paragraph, each Class of
Subordinated Certificates will be entitled to receive its pro rata share of the
Subordinated Principal Distribution Amount (based on its respective Class
Certificate Balance), in each case to the extent of the amount available from
Available Funds for distribution of principal. Distributions of principal of
the Subordinated Certificates will be made sequentially to the Classes of
Subordinated Certificates in the order of their numerical Class designations,
beginning with the Class ___ Certificates, until the respective Class
Certificate Balances thereof are reduced to zero. The Subordinated Percentage
for any Distribution Date will be calculated as the difference between 100% and
the Senior Percentage.

With respect to each Class of Subordinated Certificates, if on any
Distribution Date the sum of the related Class Subordination Percentages of
such Class and all Classes of Subordinated Certificates which have higher
numerical Class designations than such Class (the "Applicable Credit Support
Percentage") is less than the Applicable Credit Support Percentage for such
Class on the date of issuance of the Certificates (the "Original Applicable
Credit Support Percentage"), no distribution of partial principal prepayments
and principal prepayments in full will be made to any such Classes (the
"Restricted Classes") and the amount of partial principal prepayments and
principal prepayments in full otherwise distributable to the Restricted Classes
will be allocated among the remaining Classes of Subordinated Certificates, pro
rata, based upon their respective Class Certificate Balances, and distributed
in the sequential order described above.

The Class Subordination Percentage with respect to any Distribution
Date and each Class of Subordinated Certificates, will equal the fraction
(expressed as a percentage) the numerator of which is the Class Certificate
Balance of such Class of Subordinated Certificates immediately prior to such
Distribution Date and the denominator of which is the aggregate of the Class
Certificate Balances of all Classes of Certificates immediately prior to such
Distribution Date.

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<PAGE> 169
The approximate Original Applicable Credit Support Percentages for the
Subordinated Certificates on the date of issuance of the Certificates are
expected to be as follows:

<TABLE>
<S> <C>
Class ........................................... %
Class ........................................... %
Class ........................................... %
Class ........................................... %
Class ........................................... %
Class ........................................... %
</TABLE>

The Subordinated Principal Distribution Amount for any Distribution
Date will equal (A) the sum of (i) the Subordinated Percentage of the
applicable Non-PO Percentage of all amounts described in clauses (a) through
(d) of the definition of "Non-PO Formula Principal Amount" for such
Distribution Date, (ii) with respect to each Mortgage Loan that became a
Liquidated Mortgage Loan during the calendar month preceding the month of such
Distribution Date, the applicable Non-PO Percentage of the Liquidation Proceeds
allocable to principal received with respect to such Mortgage Loan, after
application of such amounts pursuant to clause (ii) of the definition of Senior
Principal Distribution Amount, up to the Subordinated Percentage of the
applicable Non-PO Percentage of the Stated Principal Balance of such Mortgage
Loan and (iii) the Subordinated Prepayment Percentage of the applicable Non-PO
Percentage of the amounts described in clause (f) of the definition of "Non-PO
Formula Principal Amount" for such Distribution Date reduced by (B) the amount
of any payments in respect of Class PO Deferred Amounts on the related
Distribution Date.

Residual Certificates. The Class A-R Certificates will remain
outstanding for so long as the Trust Fund shall exist, whether or not they are
receiving current distributions of principal or interest. In addition to
distributions of interest and principal as described above, on each
Distribution Date, the holders of the Class A-R Certificates will be entitled
to receive any Available Funds remaining after payment of interest and
principal on the Senior Certificates and Class PO Deferred Amounts on the Class
PO Certificates and interest and principal on the Subordinated Certificates, as
described above. It is not anticipated that there will be any significant
amounts remaining for any such distribution.

Class PO Principal Distribution Amount. On each Distribution Date,
distributions of principal of the Class PO Certificates will be made in an
amount (the "Class PO Principal Distribution Amount") equal to the lesser of
(x) the PO Formula Principal Amount for such Distribution Date and (y) the
product of (i) Available Funds remaining after distribution of interest on the
Senior Certificates and (ii) a fraction, the numerator of which is the PO
Formula Principal Amount and the denominator of which is the sum of the PO
Formula Principal Amount and the Senior Principal Distribution Amount.

If the Class PO Principal Distribution Amount on a Distribution Date
is calculated as provided in clause (y) above, principal distributions to
holders of the Senior Certificates (other than the Class PO Certificates) will
be in an amount equal to the product of (i) Available Funds remaining after
distribution of interest on the Senior Certificates and (ii) a fraction, the
numerator of which is the Senior Principal Distribution Amount and the
denominator of which is the sum of the Senior Principal Distribution Amount and
the PO Formula Principal Amount.

The PO Formula Principal Amount for any Distribution Date will equal
the sum of the applicable PO Percentage of (a) all monthly payments of
principal due on each Mortgage Loan on the related Due Date, (b) the principal
portion of the purchase price of each Mortgage Loan that was repurchased by the
Seller or another person pursuant to the Agreement as of such Distribution
Date, (c) the Substitution

S-39
<PAGE> 170
Adjustment Amount in connection with any Deleted Mortgage Loan received with
respect to such Distribution Date, (d) any Insurance Proceeds or Liquidation
Proceeds allocable to recoveries of principal of Mortgage Loans that are not
yet Liquidated Mortgage Loans received during the calendar month preceding the
month of such Distribution Date, (e) with respect to each Mortgage Loan that
became a Liquidated Mortgage Loan during the calendar month preceding the month
of such Distribution Date, the amount of Liquidation Proceeds allocable to
principal received with respect to such Mortgage Loan and (f) all partial and
full principal prepayments by borrowers received during the related Prepayment
Period; provided, however, that if a Bankruptcy Loss that is an Excess Loss is
sustained with respect to a Discount Mortgage Loan that is not a Liquidated
Mortgage Loan, the PO Formula Principal Amount will be reduced on the related
Distribution Date by the applicable PO Percentage of the principal portion of
such Bankruptcy Loss.

ALLOCATION OF LOSSES

On each Distribution Date, the applicable PO Percentage of any
Realized Loss, including any Excess Loss, on a Discount Mortgage Loan will be
allocated to the Class PO Certificates until the Class Certificate Balance
thereof is reduced to zero. The amount of any such Realized Loss, other than
an Excess Loss, allocated on or prior to the Senior Credit Support Depletion
Date will be treated as a Class PO Deferred Amount. To the extent funds are
available on such Distribution Date or on any future Distribution Date from
amounts that would otherwise be allocable to the Subordinated Principal
Distribution Amount, Class PO Deferred Amounts will be paid on the Class PO
Certificates prior to distributions of principal on the Subordinated
Certificates. Any distribution of Available Funds in respect of unpaid Class
PO Deferred Amounts will not further reduce the Class Certificate Balance of
the Class PO Certificates. The Class PO Deferred Amounts will not bear
interest. The Class Certificate Balance of the Class of Subordinated
Certificates then outstanding with the highest numerical Class designation will
be reduced by the amount of any payments in respect of Class PO Deferred
Amounts. After the Senior Credit Support Depletion Date, no new Class PO
Deferred Amounts will be created.

On each Distribution Date, the applicable Non-PO Percentage of any
Realized Loss, other than any Excess Loss, will be allocated first to the
Subordinated Certificates, in the reverse order of their numerical Class
designations (beginning with the Class of Subordinated Certificates then
outstanding with the highest numerical Class designation), in each case until
the Class Certificate Balance of the respective Class of Certificates has been
reduced to zero, and then to the Senior Certificates (other than the Notional
Amount Certificates and the Class PO Certificates) pro rata, based upon their
respective Class Certificate Balances.

On each Distribution Date, the applicable Non-PO Percentage of Excess
Losses will be allocated pro rata among the Classes of Senior Certificates
(other than the Notional Amount Certificates and the Class PO Certificates) and
the Subordinated Certificates based upon their respective Class Certificate
Balances.

Because principal distributions are paid to certain Classes of
Certificates (other than the Class PO Certificates) before other Classes of
Certificates, holders of such Certificates that are entitled to receive
principal later bear a greater risk of being allocated Realized Losses on the
Mortgage Loans than holders of Classes that are entitled to receive principal
earlier.

[Realized Losses allocated to a Class of Certificates comprised of
multiple payment Components will be allocated pro rata among the Components of
such Class of Certificates based on their respective Component Balances.]

S-40
<PAGE> 171
In general, a "Realized Loss" means, with respect to a Liquidated
Mortgage Loan, the amount by which the remaining unpaid principal balance of
the Mortgage Loan exceeds the amount of Liquidation Proceeds applied to the
principal balance of the related Mortgage Loan. "Excess Losses" are (i)
Special Hazard Losses in excess of the Special Hazard Loss Coverage Amount,
(ii) Bankruptcy Losses in excess of the Bankruptcy Loss Coverage Amount and
(iii) Fraud Losses in excess of the Fraud Loss Coverage Amount. "Bankruptcy
Losses" are losses that are incurred as a result of Debt Service Reductions and
Deficient Valuations. "Special Hazard Losses" are Realized Losses in respect
of Special Hazard Mortgage Loans. "Fraud Losses" are losses sustained on a
Liquidated Mortgage Loan by reason of a default arising from fraud, dishonesty
or misrepresentation. See "Credit Enhancement--Subordination of Certain
Classes" herein.

A "Liquidated Mortgage Loan" is a defaulted Mortgage Loan as to which
the Master Servicer has determined that all recoverable liquidation and
insurance proceeds have been received. A "Special Hazard Mortgage Loan" is a
Liquidated Mortgage Loan as to which the ability to recover the full amount due
thereunder was substantially impaired by a hazard not insured against under a
standard hazard insurance policy of the type described in the Prospectus under
"Credit Enhancement." See "Credit Enhancement--Subordination of Certain
Classes" herein.

STRUCTURING ASSUMPTIONS

Unless otherwise specified, the information in the tables in this
Prospectus Supplement has been prepared on the basis of the following assumed
characteristics of the Mortgage Loans and the following additional assumptions
(collectively, the "Structuring Assumptions"): (i) the Mortgage Pool consists
of Mortgage Loans with the following characteristics:

<TABLE>
<CAPTION>
Principal Mortgage Net Mortgage Original Term to Remaining Term to
Balance Rate Rate Maturity (in months) Maturity (in months) Loan Age
--------- -------- ------------ -------------------- ------------------- --------
<S> <C> <C> <C> <C> <C>
$ %; %;
$ %; %;
</TABLE>

(ii) the Mortgage Loans prepay at the specified constant percentages of SPA,
(iii) no defaults in the payment by Mortgagors of principal of and interest on
the Mortgage Loans are experienced, (iv) scheduled payments on the Mortgage
Loans are received on the first day of each month commencing in the calendar
month following the Closing Date and are computed prior to giving effect to
prepayments received on the last day of the prior month, (v) prepayments are
allocated as described herein without giving effect to loss and delinquency
tests, (vi) there are no Net Interest Shortfalls and prepayments represent
prepayments in full of individual Mortgage Loans and are received on the last
day of each month, commencing in the calendar month of the Closing Date, (vii)
the scheduled monthly payment for each Mortgage Loan has been calculated such
that each Mortgage Loan will amortize in amounts sufficient to repay the
current balance of such Mortgage Loan by its respective remaining term to
maturity, (viii) the initial Class Certificate Balance or Notional Amount, as
applicable, of each Class of Certificates is as set forth on the cover page
hereof and under "Summary of Terms--Certificates other than the Offered
Certificates," (ix) interest accrues on each interest bearing Class of
Certificates at the applicable interest rate set forth or described on the
cover hereof and as described herein, (x) distributions in respect of the
Certificates are received in cash on the ____ day of each month commencing in
the calendar month following the Closing Date, (xi) the closing date of the
sale of the Offered Certificates is the date set forth under "Summary of
Terms--Closing Date," (xii) the Seller is not required to

S-41
<PAGE> 172
repurchase or substitute for any Mortgage Loan, (xiii) the Master Servicer does
not exercise the option to repurchase the Mortgage Loans described herein under
"--Optional Purchase of Defaulted Loans" and "--Optional Termination" and (xiv)
no Class of Certificates becomes a Restricted Class. While it is assumed that
each of the Mortgage Loans prepays at the specified constant percentages of
SPA, this is not likely to be the case. Moreover, discrepancies may exist
between the characteristics of the actual Mortgage Loans which will be
delivered to the Trustee and characteristics of the Mortgage Loans used in
preparing the tables herein.

Prepayments of mortgage loans commonly are measured relative to a
prepayment standard or model. The model used in this Prospectus Supplement is
the Standard Prepayment Assumption ("SPA"), which represents an assumed rate of
prepayment each month of the then outstanding principal balance of a pool of
new mortgage loans. SPA does not purport to be either a historical description
of the prepayment experience of any pool of mortgage loans or a prediction of
the anticipated rate of prepayment of any pool of mortgage loans, including the
Mortgage Loans. 100% SPA assumes prepayment rates of 0.2% per annum of the
then unpaid principal balance of such pool of mortgage loans in the first month
of the life of such mortgage loans and an additional 0.2% per annum in each
month thereafter (for example, 0.4% per annum in the second month) until the
30th month. Beginning in the 30th month and in each month thereafter during
the life of such mortgage loans, 100% SPA assumes a constant prepayment rate of
6% per annum. Multiples may be calculated from this prepayment rate sequence.
For example,___% SPA assumes prepayment rates will be___% per annum in month
one,___% per annum in month two, and increasing by ___% in each succeeding
month until reaching a rate of ___% per annum in month 30 and remaining
constant at %___ per annum thereafter. 0% SPA assumes no prepayments. There
is no assurance that prepayments will occur at any SPA rate or at any other
constant rate.

OPTIONAL PURCHASE OF DEFAULTED LOANS

The Master Servicer may, at its option, purchase from the Trust Fund
any Mortgage Loan which is delinquent in payment by 91 days or more. Any such
purchase shall be at a price equal to 100% of the Stated Principal Balance of
such Mortgage Loan plus accrued interest thereon at the applicable Mortgage
Rate from the date through which interest was last paid by the related
mortgagor or advanced (and not reimbursed) to the first day of the month in
which such amount is to be distributed.

OPTIONAL TERMINATION

The Master Servicer will have the right to repurchase all remaining
Mortgage Loans and REO Properties in the Mortgage Pool and thereby effect early
retirement of the Certificates, subject to the Pool Principal Balance of such
Mortgage Loans and REO Properties at the time of repurchase being less than or
equal to 10% of the Cut-off Date Pool Principal Balance. In the event the
Master Servicer exercises such option, the purchase price distributed with
respect to each Certificate will be 100% of its then outstanding principal
balance plus any Class PO Deferred Amounts in the case of the Class PO
Certificates and, in the case of an interest bearing Certificate, any unpaid
accrued interest thereon at the applicable Pass-Through Rate (in each case
subject to reduction as provided in the Agreement if the purchase price is
based in part on the appraised value of any REO Properties and such appraised
value is less than the Stated Principal Balance of the related Mortgage Loans).
Distributions on the Certificates in respect of any such optional termination
will first be paid to the Senior Certificates and then to the Subordinated
Certificates. The proceeds from any such distribution may not be sufficient to
distribute the full amount to which each Class of Certificates is entitled if
the purchase price is based in part on the

S-42
<PAGE> 173
appraised value of any REO Property and such appraised value is less than the
Stated Principal Balance of the related Mortgage Loan.

THE TRUSTEE

______________________ will be the Trustee under the Agreement. The
Depositor and the Master Servicer may maintain other banking relationships in
the ordinary course of business with ___________________. Offered Certificates
may be surrendered at the Corporate Trust Office of the Trustee located at
_______________________________, Attention: _____________________ or at such
other addresses as the Trustee may designate from time to time.

RESTRICTIONS ON TRANSFER OF THE CLASS A-R CERTIFICATES

The Class A-R Certificates will be subject to the restrictions on
transfer described in the Prospectus under "Federal Income Tax Consequences."
The Agreement provides that the Class A-R Certificates (in addition to certain
other Classes of Certificates) may not be acquired by an ERISA Plan. See
"ERISA Considerations" herein. Each Class A-R Certificate will contain a
legend describing the foregoing restrictions.

YIELD, PREPAYMENT AND MATURITY CONSIDERATIONS

GENERAL

[The effective yield to the holders of the interest bearing
Certificates will be lower than the yield otherwise produced by the applicable
rate at which interest is passed through to such holders and the purchase price
of such Certificates because monthly distributions will not be payable to such
holders until the ____ day (or, if such day is not a business day, the
following business day) of the month following the month in which interest
accrues on the Mortgage Loans (without any additional distribution of interest
or earnings thereon in respect of such delay).]

Delinquencies on the Mortgage Loans which are not advanced by or on
behalf of the Master Servicer (because amounts, if advanced, would be
nonrecoverable), will adversely affect the yield on the Certificates. Because
of the priority of distributions, shortfalls resulting from delinquencies not
so advanced will be borne first by the Subordinated Certificates, in the
reverse order of their numerical Class designations, and then by the Senior
Certificates. If, as a result of such shortfalls, the aggregate of the Class
Certificate Balances of all Classes of Certificates exceeds the Pool Principal
Balance, the Class Certificate Balance of the Class of Subordinated
Certificates then outstanding with the highest numerical Class designation will
be reduced by the amount of such excess.

Net Interest Shortfalls will adversely affect the yields on the
Offered Certificates. In addition, although all losses initially will be borne
by the Subordinated Certificates, in the reverse order of their numerical Class
designations (either directly or through distributions in respect of Class PO
Deferred Amounts on the Class PO Certificates), Excess Losses will be borne by
all Classes of Certificates (other than the Notional Amount Certificates) on a
pro rata basis. Moreover, since the Subordinated Principal Distribution Amount
for each Distribution Date will be reduced by the amount of any distributions
on such Distribution Date in respect of Class PO Deferred Amounts, the amount
distributable as principal on each such Distribution Date to each Class of
Subordinated Certificates then entitled to a distribution of principal will be
less than it otherwise would be in the absence of such Class PO Deferred
Amounts. As a result, the yields on the Offered Certificates will depend on
the rate and timing of Realized Losses,

S-43
<PAGE> 174
including Excess Losses. Excess Losses could occur at a time when one or more
Classes of Subordinated Certificates are still outstanding and otherwise
available to absorb other types of Realized Losses.

PREPAYMENT CONSIDERATIONS AND RISKS

The rate of principal payments on the Offered Certificates, the
aggregate amount of distributions on the Offered Certificates and the yield to
maturity of the Offered Certificates will be related to the rate and timing of
payments of principal on the Mortgage Loans. The rate of principal payments on
the Mortgage Loans will in turn be affected by the amortization schedules of
the Mortgage Loans and by the rate of principal prepayments (including for this
purpose prepayments resulting from refinancing, liquidations of the Mortgage
Loans due to defaults, casualties, condemnations and repurchases by the Seller
or Master Servicer). The Mortgage Loans may be prepaid by the Mortgagors at
any time without a prepayment penalty. The Mortgage Loans are subject to the
"due-on-sale" provisions included therein. See "The Mortgage Pool" herein.

Prepayments, liquidations and purchases of the Mortgage Loans
(including any optional purchase by the Master Servicer of a defaulted Mortgage
Loan and any optional repurchase of the remaining Mortgage Loans in connection
with the termination of the Trust Fund, in each case as described under
"Description of the Certificates--Optional Purchase of Defaulting Loans" and
"--Optional Termination" herein) will result in distributions on the Offered
Certificates of principal amounts which would otherwise be distributed over the
remaining terms of the Mortgage Loans. Since the rate of payment of principal
of the Mortgage Loans will depend on future events and a variety of factors, no
assurance can be given as to such rate or the rate of principal prepayments.
The extent to which the yield to maturity of a Class of Offered Certificates
may vary from the anticipated yield will depend upon the degree to which such
Offered Certificate is purchased at a discount or premium, and the degree to
which the timing of payments thereon is sensitive to prepayments, liquidations
and purchases of the Mortgage Loans. Further, an investor should consider the
risk that, in the case of the Principal Only Certificates and any other Offered
Certificate purchased at a discount, a slower than anticipated rate of
principal payments (including prepayments) on the Mortgage Loans could result
in an actual yield to such investor that is lower than the anticipated yield
and, in the case of the Interest Only Certificates and any other Offered
Certificate purchased at a premium, a faster than anticipated rate of principal
payments could result in an actual yield to such investor that is lower than
the anticipated yield. Investors in the Interest Only Certificates should
carefully consider the risk that a rapid rate of principal payments on the
Mortgage Loans could result in the failure of such investors to recover their
initial investments.

The rate of principal payments (including prepayments) on pools of
mortgage loans may vary significantly over time and may be influenced by a
variety of economic, geographic, social and other factors, including changes in
mortgagors' housing needs, job transfers, unemployment, mortgagors' net equity
in the mortgaged properties and servicing decisions. In general, if prevailing
interest rates were to fall significantly below the Mortgage Rates on the
Mortgage Loans, the Mortgage Loans could be subject to higher prepayment rates
than if prevailing interest rates were to remain at or above the Mortgage Rates
on the Mortgage Loans. Conversely, if prevailing interest rates were to rise
significantly, the rate of prepayments on the Mortgage Loans would generally be
expected to decrease. No assurances can be given as to the rate of prepayments
on the Mortgage Loans in stable or changing interest rate environments.

As described herein under "Description of the
Certificates--Principal," the Senior Prepayment Percentage of the applicable
Non-PO Percentage of all principal prepayments will be initially distributed to
the Classes of Senior Certificates (other than the Class PO Certificates) then
entitled to receive

S-44
<PAGE> 175
principal prepayment distributions. This may result in all (or a
disproportionate percentage) of such principal prepayments being distributed to
holders of such Classes of Senior Certificates and none (or less than their pro
rata share) of such principal prepayments being distributed to holders of the
Subordinated Certificates during the periods of time described in the
definition of "Senior Prepayment Percentage."

The timing of changes in the rate of prepayments on the Mortgage Loans
may significantly affect an investor's actual yield to maturity, even if the
average rate of principal payments is consistent with an investor's
expectation. In general, the earlier a prepayment of principal on the Mortgage
Loans, the greater the effect on an investor's yield to maturity. The effect
on an investor's yield as a result of principal payments occurring at a rate
higher (or lower) than the rate anticipated by the investor during the period
immediately following the issuance of the Offered Certificates may not be
offset by a subsequent like decrease (or increase) in the rate of principal
payments.

The tables below indicate the sensitivity of the pre-tax corporate
bond equivalent yields to maturity of certain Classes of Certificates to
various constant percentages of SPA. The yields set forth in the tables were
calculated by determining the monthly discount rates that, when applied to the
assumed streams of cash flows to be paid on the applicable Classes of
Certificates, would cause the discounted present value of such assumed streams
of cash flows to equal the assumed aggregate purchase prices of such Classes
and converting such monthly rates to corporate bond equivalent rates. Such
calculations do not take into account variations that may occur in the interest
rates at which investors may be able to reinvest funds received by them as
distributions on such Certificates and consequently do not purport to reflect
the return on any investment in any such Class of Certificate when such
reinvestment rates are considered.

SENSITIVITY OF THE INTEREST ONLY CERTIFICATES

As indicated in the table below, the yield to investors in the Class X
Certificates will be sensitive to the rate of principal payments (including
prepayments) of the Non-Discount Mortgage Loans (particularly those with high
Net Mortgage Rates), which generally can be prepaid at any time. On the basis
of the assumptions described below, the yield to maturity on the Class X
Certificates would be approximately 0% if prepayments were to occur at a
constant rate of approximately __% SPA. If the actual prepayment rate of the
Non-Discount Mortgage Loans were to exceed the foregoing level for as little as
one month while equaling such level for the remaining months, the investors in
the Class X Certificates would not fully recoup their initial investments.

As described above under "Description of the Certificates--General,"
the Pass-Through Rate of the Class X Certificates in effect from time to time
is calculated by reference to the Net Mortgage Rates of the Non-Discount
Mortgage Loans. The Non-Discount Mortgage Loans will have higher Net Mortgage
Rates (and higher Mortgage Rates) than the other Mortgage Loans. In general,
mortgage loans with higher mortgage rates tend to prepay at higher rates than
mortgage loans with relatively lower mortgage rates in response to a given
change in market interest rates. As a result, the Non-Discount Mortgage Loans
may prepay at higher rates, thereby reducing the Pass-Through Rate and Notional
Amount of the Class X Certificates.

The information set forth in the following table has been prepared on
the basis of the Structuring Assumptions and on the assumption that the
purchase price of the Class X Certificates (expressed as a percentage of
initial Notional Amount) is as follows:

<TABLE>
<S> <C>
Class Price*
----- -----
</TABLE>

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<PAGE> 176
<TABLE>
<S> <C>
Class X . . . . . . . . . . . . %
</TABLE>

__________
* The price does not include accrued interest. Accrued interest has been
added to such price in calculating the yields set forth in the table below.

SENSITIVITY OF THE INTEREST ONLY CERTIFICATES TO PREPAYMENTS
(PRE-TAX YIELDS TO MATURITY)

SPA Prepayment/Assumption

<TABLE>
<CAPTION>
Class 0% % % % % %
- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Class X % % % % % %
</TABLE>

It is unlikely that the Non-Discount Mortgage Loans will have the
precise characteristics described herein or that the Non-Discount Mortgage
Loans will all prepay at the same rate until maturity or that all of the
Non-Discount Mortgage Loans will prepay at the same rate or time. As a result
of these factors, the pre-tax yields on the Class X Certificates are likely to
differ from those shown in the table above, even if all of the Mortgage Loans
prepay at the indicated percentages of SPA. No representation is made as to
the actual rate of principal payments on the Mortgage Loans for any period or
over the lives of the Class X Certificates or as to the yield on the Class X
Certificates. Investors must make their own decisions as to the appropriate
prepayment assumptions to be used in deciding whether to purchase the Class X
Certificates.

SENSITIVITY OF THE PRINCIPAL ONLY CERTIFICATES

The Class PO Certificates will be "principal only" certificates and
will not bear interest. As indicated in the table below, a lower than
anticipated rate of principal payments (including prepayments) on the Discount
Mortgage Loans will have a negative effect on the yield to investors in the
Principal Only Certificates.

As described above under "Description of the Certificates--Principal,"
the Class PO Principal Distribution Amount is calculated by reference to the
principal payments (including prepayments) on the Discount Mortgage Loans. The
Discount Mortgage Loans will have lower Net Mortgage Rates (and lower Mortgage
Rates) than the other Mortgage Loans. In general, mortgage loans with higher
mortgage rates tend to prepay at higher rates than mortgage loans with
relatively lower mortgage rates in response to a given change in market
interest rates. As a result, the Discount Mortgage Loans may prepay at lower
rates, thereby reducing the rate of payment of principal and the resulting
yield of the Class PO Certificates.

The information set forth in the following table has been prepared on
the basis of the Structuring Assumptions and on the assumption that the
aggregate purchase price of the Principal Only Certificates (expressed as a
percentage of initial Class Certificate Balance) is as follows:

<TABLE>
<CAPTION>
Class Price
----- -----

<S> <C>
Class PO............. %
</TABLE>

S-46
<PAGE> 177
SENSITIVITY OF THE PRINCIPAL ONLY CERTIFICATES TO PREPAYMENTS
(PRE-TAX YIELDS TO MATURITY)

SFA Prepayment/Assumption

<TABLE>
<CAPTION>
Class 0% % % % % %
- ----- ---- --- --- --- --- ---
<S> <C> <C> <C> <C> <C> <C>

Class PO % % % % % %
</TABLE>

It is unlikely that the Discount Mortgage Loans will have the precise
characteristics described herein or that the Discount Mortgage Loans will all
prepay at the same rate until maturity or that all of such Discount Mortgage
Loans will prepay at the same rate or time. As a result of these factors, the
pre-tax yield on the Principal Only Certificates is likely to differ from those
shown in the table above, even if all of the Mortgage Loans prepay at the
indicated percentages of SPA. No representation is made as to the actual rate
of principal payments on the Mortgage Loans for any period or over the life of
the Principal Only Certificates or as to the yield on the Principal Only
Certificates. Investors must make their own decisions as to the appropriate
prepayment assumptions to be used in deciding whether to purchase the Principal
Only Certificates.

ADDITIONAL INFORMATION

The Depositor intends to file certain additional yield tables and
other computational materials with respect to one or more Classes of
Underwritten Certificates with the Commission in a report on Form 8-K to be
dated_____, 199_. Such tables and materials were prepared by each Underwriter
at the request of certain prospective investors, based on assumptions provided
by, and satisfying the special requirements of, such prospective investors.
Such tables and assumptions may be based on assumptions that differ from the
Structuring Assumptions. Accordingly, such tables and other materials may not
be relevant to or appropriate for investors other than those specifically
requesting them.

WEIGHTED AVERAGE LIVES OF THE OFFERED CERTIFICATES

The weighted average life of an Offered Certificate is determined by
(a) multiplying the amount of the net reduction, if any, of the Class
Certificate Balance of such Certificate on each Distribution Date by the number
of years from the date of issuance to such Distribution Date, (b) summing the
results and (c) dividing the sum by the aggregate amount of the net reductions
in Class Certificate Balance of such Certificate referred to in clause (a).

For a discussion of the factors which may influence the rate of
payments (including prepayments) of the Mortgage Loans, see "--Prepayment
Considerations and Risks" herein and "Yield and Prepayment Considerations" in
the Prospectus.

In general, the weighted average lives of the Offered Certificates
will be shortened if the level of prepayments of principal of the Mortgage
Loans increases. However, the weighted average lives of the Offered
Certificates will depend upon a variety of other factors, including the timing
of changes in such rate of principal payments and the priority sequence of
distributions of principal of the Classes of Certificates.

S-47
<PAGE> 178
The interaction of the foregoing factors may have different effects on
various Classes of Offered Certificates and the effects on any Class may vary
at different times during the life of such Class. Accordingly, no assurance
can be given as to the weighted average life of any Class of Offered
Certificates. Further, to the extent the prices of the Offered Certificates
represent discounts or premiums to their respective original Class Certificate
Balances, variability in the weighted average lives of such Classes of Offered
Certificates will result in variability in the related yields to maturity. For
an example of how the weighted average lives of the Classes of Offered
Certificates may be affected at various constant percentages of SPA, see the
Decrement Tables below.

DECREMENT TABLES

The following tables indicate the percentages of the initial Class
Certificate Balances of the Classes of Offered Certificates (other than the
Notional Amount Certificates) that would be outstanding after each of the dates
shown at various constant percentages of SPA and the corresponding weighted
average lives of such Classes. The tables have been prepared on the basis of
the Structuring Assumptions. It is not likely that (i) the Mortgage Loans will
have the precise characteristics described herein or (ii) all of the Mortgage
Loans will prepay at a constant percentage of SPA. Moreover, the diverse
remaining terms to maturity of the Mortgage Loans could produce slower or
faster principal distributions than indicated in the tables, which have been
prepared using the specified constant percentages of SPA, even if the remaining
term to maturity of the Mortgage Loans is consistent with the remaining terms
to maturity of the Mortgage Loans specified in the Structuring Assumptions.

PERCENT OF INITIAL CLASS CERTIFICATE
BALANCES OUTSTANDING*

Class A-

<TABLE>
<CAPTION>
Distribution Date 0% % % % % % % %
- ----------------- -- - - - - - - -
<S> <C> <C> <C> <C> <C> <C> <C> <C>

Initial............ % % % % % % % %
19.................
19.................
20.................
20.................
20.................
20.................
20.................
20.................
20.................
20.................
20.................
20.................

-- -- -- -- -- --
</TABLE>

Weighted Average Life (in years)**..........

Class A-

S-48
<PAGE> 179
<TABLE>
<CAPTION>
Distribution Date 0% % % % % % % %
- ----------------- -- - - - - - - -

<S> <C> <C> <C> <C> <C> <C> <C> <C>
Initial............ % % % % % % % %
19.................
19.................
20.................
20.................
20.................
20.................
20.................
20.................
20.................
20.................
20.................
20.................

-- -- -- -- -- --
</TABLE>

Weighted Average Life (in years)**..........

- -------------
* Rounded to the nearest whole percentage.

** Determined as specified under "--Weighted Average Lives of the Offered
Certificates" herein.

LAST SCHEDULED DISTRIBUTION DATE

The Last Scheduled Distribution Date for each Class of Offered
Certificates is the Distribution Date in _____, 20__, which is the Distribution
Date in the ____ month following the latest scheduled maturity date for any of
the Mortgage Loans. Since the rate of distributions in reduction of the Class
Certificate Balance or Notional Amount of each Class of Offered Certificates
will depend on the rate of payment (including prepayments) of the Mortgage
Loans, the Class Certificate Balance or Notional Amount of any such Class could
be reduced to zero significantly earlier or later than the Last Scheduled
Distribution Date. The rate of payments on the Mortgage Loans will depend on
their particular characteristics, as well as on prevailing interest rates from
time to time and other economic factors, and no assurance can be given as to
the actual payment experience of the Mortgage Loans. See "Yield, Prepayment
and Maturity Considerations--Prepayment Considerations and Risks" and
"--Weighted Average Lives of the Offered Certificates" herein and "Yield and
Prepayment Considerations" in the Prospectus.

THE SUBORDINATED CERTIFICATES

The weighted average life of, and the yield to maturity on, the
Subordinated Certificates, in increasing order of their numerical Class
designation, will be progressively more sensitive to the rate and timing of
mortgagor defaults and the severity of ensuing losses on the Mortgage Loans.
If the actual rate and severity of losses on the Mortgage Loans is higher than
those assumed by a holder of a Subordinated Certificate, the actual yield to
maturity of such Certificate may be lower than the yield expected by such
holder based on such assumption. The timing of losses on Mortgage Loans will
also affect an investor's actual yield to maturity, even if the rate of
defaults and severity of losses over the life of the Mortgage

S-49
<PAGE> 180
Pool are consistent with an investor's expectations. In general, the earlier a
loss occurs, the greater the effect on an investor's yield to maturity.
Realized Losses on the Mortgage Loans will reduce the Class Certificate
Balances of the applicable Class of Subordinated Certificates to the extent of
any losses allocated thereto (as described under "Description of the
Certificates--Allocation of Losses" herein), without the receipt of cash
attributable to such reduction. In addition, shortfalls in cash available for
distributions on the Subordinated Certificates will result in a reduction in
the Class Certificate Balance of the Class of Subordinated Certificates then
outstanding with the highest numerical Class designation if and to the extent
that the aggregate of the Class Certificate Balances of all Classes of
Certificates, following all distributions and the allocation of Realized Losses
on a Distribution Date, exceeds the Pool Principal Balance as of the Due Date
occurring in the month of such Distribution Date. As a result of such
reductions, less interest will accrue on such Class of Subordinated
Certificates than otherwise would be the case. The yield to maturity of the
Subordinated Certificates will also be affected by the disproportionate
allocation of principal prepayments to the Senior Certificates, Net Interest
Shortfalls, other cash shortfalls in Available Funds and distribution of funds
to Class PO Certificateholders otherwise available for distribution on the
Subordinated Certificates to the extent of reimbursement for Class PO Deferred
Amounts. See "Description of the Certificates--Allocation of Losses" herein.

If on any Distribution Date, the Applicable Credit Support Percentage
for any Class of Subordinated Certificates is less than its Original Applicable
Credit Support Percentage, all partial principal prepayments and principal
prepayments in full available for distribution on the Subordinated Certificates
will be allocated solely to such Class and all other Classes of Subordinated
Certificates with lower numerical Class designations, thereby accelerating the
amortization thereof relative to that of the Restricted Classes and reducing
the weighted average lives of such Classes of Subordinated Certificates
receiving such distributions. Accelerating the amortization of the Classes of
Subordinated Certificates with lower numerical Class designations relative to
the other Classes of Subordinated Certificates is intended to preserve the
availability of the subordination provided by such other Classes.

CREDIT ENHANCEMENT

SUBORDINATION OF CERTAIN CLASSES

The rights of the holders of the Subordinated Certificates to receive
distributions with respect to the Mortgage Loans will be subordinated to such
rights of the holders of the Senior Certificates and the rights of the holders
of each Class of Subordinated Certificates (other than the Class B-1
Certificates) to receive such distributions will be further subordinated to
such rights of the Class or Classes of Subordinated Certificates with lower
numerical Class designations, in each case only to the extent described herein.
The subordination of the Subordinated Certificates to the Senior Certificates
and the subordination of the Classes of Subordinated Certificates with higher
numerical Class designations to those with lower numerical Class designations
is intended to increase the likelihood of receipt, respectively, by the Senior
Certificateholders and the holders of Subordinated Certificates with lower
numerical Class designations of the maximum amount to which they are entitled
on any Distribution Date and to provide such holders protection against
Realized Losses, other than Excess Losses. In addition, the Subordinated
Certificates will provide limited protection against Special Hazard Losses,
Bankruptcy Losses and Fraud Losses up to the Special Hazard Loss Coverage
Amount, Bankruptcy Loss Coverage Amount and Fraud Loss Coverage Amount,
respectively, as described below. The applicable Non-PO Percentage of Realized
Losses, other than Excess Losses, will be allocated to the Class of
Subordinated Certificates then outstanding with the highest numerical Class
designation. In addition, the Class Certificate Balance of such Class of
Subordinated Certificates will be reduced by the amount of distributions on the
Class PO Certificates in reimbursement for Class PO Deferred Amounts.

S-50
<PAGE> 181
The Subordinated Certificates will provide limited protection to the
Classes of Certificates of higher relative priority against (i) Special Hazard
Losses in an initial amount expected to be up to approximately $________ (the
"Special Hazard Loss Coverage Amount"), (ii) Bankruptcy Losses in an initial
amount expected to be up to approximately $________ (the "Bankruptcy Loss
Coverage Amount") and (iii) Fraud Losses in an initial amount expected to be up
to approximately $________ (the "Fraud Loss Coverage Amount").

[The Special Hazard Loss Coverage Amount will be reduced, from time to
time, to be an amount equal on any Distribution Date to the lesser of (a) the
greatest of (i) __% of the aggregate of the principal balances of the Mortgage
Loans, (ii) _____ the principal balance of the largest Mortgage Loan and (iii)
the aggregate principal balances of the Mortgage Loans secured by Mortgaged
Properties located in the single California postal zip code area having the
highest aggregate principal balance of any such zip code area and (b) the
Special Hazard Loss Coverage Amount as of the Closing Date less the amount, if
any, of losses attributable to Special Hazard Mortgage Loans incurred since the
Closing Date. All principal balances for the purpose of this definition will
be calculated as of the first day of the month preceding such Distribution Date
after giving effect to scheduled installments of principal and interest on the
Mortgage Loans then due, whether or not paid.

The Fraud Loss Coverage Amount will be reduced, from time to time, by
the amount of Fraud Losses allocated to the Certificates. In addition, on each
anniversary of the Cut-off Date, the Fraud Loss Coverage Amount will be reduced
as follows: (a) on the _____, ______, _____ and ______ anniversaries of the
Cut-off Date, to an amount equal to the lesser of (i) __% of the then current
Pool Principal Balance and (ii) the excess of the Fraud Loss Coverage Amount as
of the preceding anniversary of the Cut-off Date over the cumulative amount of
Fraud Losses allocated to the Certificates since such preceding anniversary and
(b) on the _____ anniversary of the Cut-off Date, to zero.

The Bankruptcy Loss Coverage Amount will be reduced, from time to
time, by the amount of Bankruptcy Losses allocated to the Certificates.]

The amount of coverage provided by the Subordinated Certificates for
Special Hazard Losses, Bankruptcy Losses and Fraud Losses may be cancelled or
reduced from time to time for each of the risks covered, provided that the then
current ratings of the Certificates assigned by the Rating Agencies are not
adversely affected thereby without regard to the guaranty provided by the
Policy. In addition, a reserve fund or other form of credit enhancement may be
substituted for the protection provided by the Subordinated Certificates for
Special Hazard Losses, Bankruptcy Losses and Fraud Losses.

As used herein, a "Deficient Valuation" is a bankruptcy proceeding
whereby the bankruptcy court may establish the value of the Mortgaged Property
at an amount less than the then outstanding principal balance of the Mortgage
Loan secured by such Mortgaged Property or may reduce the outstanding principal
balance of a Mortgage Loan. In the case of a reduction in the value of the
related Mortgaged Property, the amount of the secured debt could be reduced to
such value, and the holder of such Mortgage Loan thus would become an unsecured
creditor to the extent the outstanding principal balance of such Mortgage Loan
exceeds the value so assigned to the Mortgaged Property by the bankruptcy
court. In addition, certain other modifications of the terms of a Mortgage
Loan can result from a bankruptcy proceeding, including the reduction (a "Debt
Service Reduction") of the amount of the monthly payment on the related
Mortgage Loan. Notwithstanding the foregoing, no such occurrence shall be
considered a Debt Service Reduction or Deficient Valuation so long as the
Master Servicer is pursuing any other remedies that may be available with
respect to the related Mortgage Loan and (i) such Mortgage Loan is not in
default with respect to payment due thereunder or (ii) scheduled monthly
payments of principal

S-51
<PAGE> 182
and interest are being advanced by the Master Servicer without giving effect to
any Debt Service Reduction or Deficient Valuation.

USE OF PROCEEDS

The Depositor will apply the net proceeds of the sale of the
Certificates against the purchase price of the Mortgage Loans.

FEDERAL INCOME TAX CONSEQUENCES

For federal income tax purposes, an election will be made to treat the
Trust Fund as a REMIC. Assuming such an election is timely made and the terms
of the Pooling and Servicing Agreement are complied with, __________________,
special tax counsel to the Depositor ("Tax Counsel"), is of the opinion that
the Trust Fund will qualify as a REMIC within the meaning of the Code. The
Regular Certificates will constitute the regular interests in the REMIC. The
Residual Certificates will constitute the sole class of "residual interest" in
the REMIC. See "Federal Income Tax Consequences" in the Prospectus.

The Regular Certificates generally will be treated as debt instruments
issued by the REMIC for federal income tax purposes. Income on the Regular
Certificates must be reported under an accrual method of accounting.

In the opinion of Tax Counsel, the Principal Only Certificates will be
treated for federal income tax purposes as having been issued with an amount of
Original Issue Discount ("OID") equal to the difference between their principal
balance and their issue price. Although the tax treatment is not entirely
certain, Notional Amount Certificates will be treated as having been issued
with OID for federal income tax purposes equal to the excess of all expected
payments of interest on such Certificates over their issue price. Although
unclear, a holder of a Notional Amount Certificate may be entitled to deduct a
loss to the extent that its remaining basis exceeds the maximum amount of
future payments to which such Certificateholder would be entitled if there were
no further prepayments of the Mortgage Loans. The remaining Classes of Regular
Certificates, depending on their respective issue prices (as described in the
Prospectus under "Federal Income Tax Consequences"), may be treated as having
been issued with OID for federal income tax purposes. For purposes of
determining the amount and rate of accrual of OID and market discount, the
Trust Fund intends to assume that there will be prepayments on the Mortgage
Loans at a rate equal to___% SPA (the "Prepayment Assumption"). No
representation is made as to whether the Mortgage Loans will prepay at the
foregoing rate or any other rate. See "Yield, Prepayment and Maturity
Considerations" herein and "Federal Income Tax Consequences" in the Prospectus.
Computing accruals of OID in the manner described in the Prospectus may
(depending on the actual rate of prepayments during the accrual period) result
in the accrual of negative amounts of OID on the Certificates issued with OID
in an accrual period. Holders will be entitled to offset negative accruals of
OID only against future OID accrual on such Certificates.

If the holders of any Regular Certificates are treated as holding such
Certificates at a premium, such holders should consult their tax advisors
regarding the election to amortize bond premium and the method to be employed.

S-52
<PAGE> 183
As is described more fully under "Federal Income Tax Consequences" in
the Prospectus, the Offered Certificates will represent qualifying assets under
Sections 593(d), 856(c)(5)(A) and 7701(a)(19)(C) of the Code, and net interest
income attributable to the Offered Certificates will be "interest on
obligations secured by mortgages on real property" within the meaning of
Section 856(c)(3)(B) of the Code, to the extent the assets of the Trust Fund
are assets described in such sections. The Regular Certificates will represent
qualifying assets under Section 860G(a)(3) if acquired by a REMIC within the
prescribed time periods of the Code.

The holders of the Residual Certificates must include the taxable
income of the REMIC in their federal taxable income. The resulting tax
liability of the holders may exceed cash distributions to such holders during
certain periods. All or a portion of the taxable income from a Residual
Certificate recognized by a holder may be treated as "excess inclusion" income,
which with limited exceptions, is subject to U.S. federal income tax.

Prospective purchasers of a Residual Certificate should consider
carefully the tax consequences of an investment in Residual Certificates
discussed in the Prospectus and should consult their own tax advisors with
respect to those consequences. See "Federal Income Tax Consequences--Taxation
on Holders of Residual Interest Securities" in the Prospectus. Specifically,
prospective holders of Residual Certificates should consult their tax advisors
regarding whether, at the time of acquisition, a Residual Certificate will be
treated as a "noneconomic" residual interest, a "non-significant value"
residual interest and a "tax avoidance potential" residual interest. See
"Federal Income Tax Consequences--Taxation of Holders of Residual Interest
Securities" in the Prospectus. Additionally, for information regarding
Prohibited Transactions and Treatment of Realized Losses, see "Federal Income
Tax Consequences" in the Prospectus.

ERISA CONSIDERATIONS

Any Plan fiduciary which proposes to cause a Plan (as defined below)
to acquire any of the Offered Certificates should consult with its counsel with
respect to the potential consequences under the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") and/or the Code, of the Plan's
acquisition and ownership of such Certificates. See "ERISA Considerations" in
the Prospectus. Section 406 of ERISA prohibits "parties in interest" with
respect to an employee benefit plan subject to ERISA and/or the excise tax
provisions set forth under Section 4975 of the Code (a "Plan") from engaging in
certain transactions involving such Plan and its assets unless a statutory or
administrative exemption applies to the transaction. Section 4975 of the Code
imposes certain excise taxes on prohibited transactions involving Plans and
other arrangements (including, but not limited to, individual retirement
accounts) described under that Section; ERISA authorizes the imposition of
civil penalties for prohibited transactions involving Plans not subject to the
requirements of Section 4975 of the Code.

Certain employee benefit plans, including governmental plans and
certain church plans, are not subject to ERISA's requirements. Accordingly,
assets of such plans may be invested in the Offered Certificates without regard
to the ERISA considerations described herein and in the Prospectus, subject to
the provisions of other applicable federal and state law. Any such plan that
is qualified and exempt from taxation under Sections 401(a) and 501(a) of the
Code may nonetheless be subject to the prohibited transaction rules set forth
in Section 503 of the Code.

S-53
<PAGE> 184
the prohibited transaction rules transactions relating to: (1) the
acquisition, sale and holding by Plans of certain certificates representing an
undivided interest in certain asset-backed pass-through trusts, with respect to
which Morgan Stanley or any of its affiliates is the sole underwriter or the
manager or co-manager of the underwriting syndicate; and (2) the servicing,
operation and management of such asset-backed pass-through trusts, provided
that the general conditions and certain other conditions set forth in the
Exemption are satisfied. Morgan Stanley believes that the Exemption [will]
[will not] apply to the acquisition and holding of Offered Certificates by
Plans.

General Conditions of the Exemption. Section II of the Exemption sets
forth the following general conditions which must be satisfied before a
transaction involving the acquisition, sale and holding of the Certificates or
a transaction in connection with the servicing, operation and management of the
Trust may be eligible for exemptive relief thereunder:

(1) The acquisition of the Certificates by a Plan is on
terms (including the price for such Certificates) that are at least as
favorable to the investing Plan as they would be in an arm's length
transaction with an unrelated party.

(2) The rights and interests evidenced by the
Certificates acquired by the Plan are not subordinated to the rights
and interests evidenced by other certificates of the Trust;

(4) The Trustee is not an affiliate of the Depositor, any
Underwriter, the Seller, the Master Servicer, any insurer of the
Mortgage Loans, any borrower whose obligations under one or more
Mortgage Loans constitute more than 5% of the aggregate unamortized
principal balance of the assets in the Trust (determined on the date
of initial issuance of Certificates of the Trust), or any of their
respective affiliates (the "Restricted Group");

(5) The sum of all payments made to and retained by the
Underwriter in connection with the distribution of the Certificates
represents not more than reasonable compensation for underwriting such
Certificates; the sum of all payments made to and retained by the
Seller pursuant to the sale of the Mortgage Loans to the Trust
represents not more than the fair market value of such Mortgage Loans;
the sum of all payments made to and retained by the Master Servicer
represent not more than reasonable compensation for the Master
Servicer's services under the Agreement and reimbursement of the
Master Servicer's reasonable expenses in connection therewith; and

(6) The Plan investing in the Certificates is an
"accredited investor" as defined in Rule 501(a)(1) of Regulation D of
the Securities and Exchange Commission under the Securities Act of
1933 as amended.

S-54
<PAGE> 185
UNDERWRITING

The Depositor has been advised by the Underwriter that it proposes
initially to offer the Certificates to the public in Europe and the United
States at the offering price set forth on the cover page hereof and to certain
dealers at such price less a discount not in excess of ____% of the Certificate
denominations. The Underwriter may allow and such dealers may reallow a
discount not in excess of _____% of the Certificate denominations to certain
other dealers. After the initial public offering, the public offering price,
such concessions and such discounts may be changed.

The Underwriting Agreement provides that the Depositor will indemnify
the Underwriter against certain civil liabilities, including liabilities under
the Act.

LEGAL MATTERS

The validity of the Certificates, including certain federal income tax
consequences with respect thereto, will be passed upon for the Depositor by
__________________. [______________] will pass upon certain legal matters on
behalf of the Underwriters.

RATINGS

It is a condition to the issuance of the Senior Certificates that they
be rated ___ by ____ ("____") and, ____ by ____ ("____" and, together with
______, the "Rating Agencies"). It is a condition to the issuance of the Class
B- , Class B- and Class B- Certificates that they be rated at least ______,
_____ and ____, respectively, by _____.

The ratings assigned by ____ to mortgage pass-through certificates
address the likelihood of the receipt of all distributions on the mortgage
loans by the related certificateholders under the agreements pursuant to which
such certificates are issued. ____'s ratings take into consideration the
credit quality of the related mortgage pool, including any credit support
providers, structural and legal aspects associated with such certificates, and
the extent to which the payment stream on the mortgage pool is

S-55
<PAGE> 186
adequate to make the payments required by such certificates. ____'s ratings on
such certificates do not, however, constitute a statement regarding frequency
of payments of the mortgage loans.

The ratings assigned by _____ to mortgage pass-through certificates
address the likelihood of the receipt of all distributions on the mortgage
loans by the related certificateholders under the agreements pursuant to which
such certificates are issued. _____'s ratings take into consideration the
credit quality of the related mortgage pool, including any credit support
providers, structural and legal aspects associated with such certificates, and
the extent to which the payment stream on such mortgage pool is adequate to
make payments required by such certificates. ____'s ratings on such
certificates do not, however, constitute a statement regarding frequency of
prepayments on the related mortgage loans.

The ratings of the Rating Agencies do not address the possibility
that, as a result of principal prepayments, Certificateholders may receive a
lower than anticipated yield.

The security ratings assigned to the Offered Certificates should be
evaluated independently from similar ratings on other types of securities. A
security rating is not a recommendation to buy, sell or hold securities and may
be subject to revision or withdrawal at any time by the Rating Agencies.

The Depositor has not requested a rating of the Offered Certificates
by any rating agency other than the Rating Agencies; there can be no assurance,
however, as to whether any other rating agency will rate the Offered
Certificates or, if it does, what rating would be assigned by such other rating
agency. The rating assigned by such other rating agency to the Offered
Certificates could be lower than the respective ratings assigned by the Rating
Agencies.

S-56
<PAGE> 187
INDEX OF DEFINED TERMS

<TABLE>
<CAPTION>
Page

<S> <C>
Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-12, 30
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-8, 19
Applicable Credit Support Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-40
Available Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-33
Bankruptcy Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-41
Bankruptcy Loss Coverage Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-51
Beneficial Owner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-31
CEDE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-31
Certificate Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-32
Certificateholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-19
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1, 24
Class PO Principal Distribution Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-39
Cut-off Date Pool Principal Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-20
Debt Service Reduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-51
Deficient Valuation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-51
Definitive Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-31
Deleted Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-26
Depositor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1, 8
Depository . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-31
Discount Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-35
Distribution Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-41
Distribution Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-9, 33
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-14, 53
Excess Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-41
Exemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-53
Fraud Loss Coverage Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-51
Fraud Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-41
Insurance Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-34
Interest Distribution Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-34
Interest Accrual Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-11, 34
Liquidated Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-41
Liquidation Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-34
Master Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-9
Mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-26, 32
Mortgage File . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-26
Mortgage Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-26
Mortgage Pool . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1, 20
Mortgage Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-34
Net Prepayment Interest Shortfall . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-35
Net Interest Shortfall . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-34
NMR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-35
Non-Discount Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-31, 35
Non-PO Formula Principal Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-35
Offered Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1, 30
OID . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-14
</TABLE>

S-57
<PAGE> 188
<TABLE>
<CAPTION>
Page

<S> <C>
Original Subordinated Principal Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-38
Original Applicable Credit Support Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-38
Permitted Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-34
Prepayment Assumption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-52
Prepayment Interest Excess . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-29
Prepayment Interest Shortfall . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-35
Principal Only Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-46
Prospectus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-50
Rating Agencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-15, 55
Realized Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-41
Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-33
Regular Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-4, 14
Relief Act Reduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-35
REMIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-14, 52
REO Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-30
Replacement Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-26
Residual Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-4, 14
Restricted Classes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-38
Scheduled Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-20
Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-4, 9
Senior Prepayment Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-45
Senior Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-30
Servicing Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-29
SMMEA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-15
SPA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-42
Special Hazard Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-41
Special Hazard Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-41
Special Hazard Loss Coverage Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-51
Stated Principal Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-37
Subordinated Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-30
Substitution Adjustment Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-26
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-9
Underwriter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-2
Underwritten Senior Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-2
Underwritten Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-2
Unpaid Interest Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-34
</TABLE>

S-58
<PAGE> 189
VERSION #4

$___________
(Approximate)

MORTGAGE LOAN ASSET-BACKED PASS-THROUGH CERTIFICATES,
SERIES 199_-__

$____ [Adjustable Rate] Class A-1 Certificates
$____ ____% Class A-2 Certificates

Distributions payable on the ___ day of each month,
commencing in ___________, 199__

Morgan Stanley ABS Capital I Inc.
Depositor

[__________________]
Master Servicer

The Mortgage Loan Asset-Backed Pass-Through Certificates, Series 199_-_ (the
"Certificates") will include the following two senior classes (the "Class A
Certificates"): (i) Class A-1 Certificates and (ii) Class A-2 Certificates. In
addition to the Class A Certificates, the Mortgage Loan Asset-Backed
Pass-Through Certificates Series 199_-_ will include the Class I S Certificates
(the "Group I Subordinate Certificates"), the Class II S Certificates (the
"Group II Subordinate Certificates"; and, together with the Group I Subordinate
Certificates, the "Subordinate Certificates") and the Class R Certificates (the
"Residual Certificates"). Only the Class A Certificates are offered hereby.
The Pass-Through Rate (as defined herein) on the Class A-1 Certificates is
adjustable and is calculated as described herein. The Pass-Through Rate on the
Class A-2 Certificates will be the rate set forth above, subject to increase as
described herein. Interest distributions on the Class A Certificates will be
payable monthly at one-twelfth the annual rate.

The Depositor has caused ______________ (the "Certificate Insurer") to issue
two certificate guaranty insurance policies (the "Certificate Insurance
Policies") for the benefit of the Class A Certificateholders pursuant to which
it will guarantee certain payments to the Class A Certificateholders as
described herein.
(Continued on following page)

[INSURER]
PROSPECTIVE INVESTORS SHOULD REVIEW THE INFORMATION SET FORTH UNDER
"RISK FACTORS" ON PAGE S-__ HEREIN AND ON PAGE 21 IN THE
ACCOMPANYING PROSPECTUS

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

PROCEEDS OF THE ASSETS IN THE TRUST FUND AND PROCEEDS FROM THE
CERTIFICATE INSURANCE POLICIES ARE THE SOLE SOURCE OF PAYMENTS

<PAGE> 190
ON THE CLASS A CERTIFICATES. THE CLASS A CERTIFICATES DO NOT
REPRESENT AN INTEREST IN OR OBLIGATION OF THE DEPOSITOR, THE
CERTIFICATE INSURER, THE MASTER SERVICER, THE TRUSTEE OR
ANY OF THEIR AFFILIATES. NEITHER THE CLASS A
CERTIFICATES NOR THE UNDERLYING MORTGAGE
LOANS ARE INSURED OR GUARANTEED BY ANY
GOVERNMENTAL AGENCY OR INSTRUMENTALITY
OR BY THE DEPOSITOR, THE MASTER SERVICER
OR ANY OF THEIR AFFILIATES.

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

There is currently no secondary market for the Class A Certificates.
Morgan Stanley & Co. Incorporated (the "Underwriter") intends to make a
secondary market in the Class A Certificates, but is not obligated to do so.
There can be no assurance that a secondary market for the Class A Certificates
will develop or, if it does develop, that it will continue. The Class A
Certificates will not be listed on any securities exchange.

The Class A Certificates will be purchased from the Depositor by the
Underwriters and will be offered by the Underwriters from time to time to the
public in negotiated transactions or otherwise at varying prices to be
determined at the time of sale. The proceeds to the Depositor from the sale of
the Class A Certificates, before deducting expenses payable by the Depositor,
will be equal to approximately ____% of the aggregate initial principal balance
of the Class A Certificates, plus accrued interest on the Class A-2
Certificates from _______________, 199_.

The Class A Certificates are offered by the Underwriter subject to
prior sale, when, as and if delivered to and accepted by the Underwriter and
subject to certain other conditions. The Underwriter reserves the right to
withdraw, cancel or modify such offer and to reject any order in whole or in
part. It is expected that delivery of the Class A Certificates will be made
only in book-entry form through the facilities of The Depository Trust Company,
Cedel Bank, societe anonyme, and the Euroclear System as further discussed
herein, on or about ___________, 199__, against payment therefor in immediately
available funds. The Class A Certificates will be offered in Europe and the
United States of America.
--------------

MORGAN STANLEY & CO.
Incorporated

____________, 199_

S-2
<PAGE> 191
(Continued from previous page)

The Certificates will each evidence a beneficial ownership interest in
one of two loan groups (each, a "Loan Group") comprising a trust fund (the
"Trust Fund") consisting primarily of first, second and third lien mortgage
loans on one-to-four-family residential properties (the "Mortgage Loans"), to
be deposited by Morgan Stanley ABS Capital I Inc. (the "Depositor") into the
Trust Fund and any funds on deposit in the Interest Coverage Accounts and the
Pre-Funding Accounts (each as defined herein). The Mortgage Loans will be
purchased by the Depositor from ____________ (the "Seller"). The separate Loan
Groups are referred to as the "Group I Loans" and "Group II Loans." The Group
I Loans are adjustable-rate Mortgage Loans. The Group II Loans are fixed-rate
Mortgage Loans. Additional Group I Loans and Group II Loans are intended to be
purchased by the Trust Fund from the Depositor on or before __________, 199_
from funds on deposit in the Pre-Funding Accounts. On the Delivery Date (as
defined herein), the Depositor will pay to the Trustee approximately
$___________ and $______________ for deposit in the Group I and Group II
Pre-Funding Account, respectively. On the Delivery Date, the Depositor will
also pay to the Trustee for deposit in the Interest Coverage Accounts an amount
as required by the Certificate Insurer and specified in the Pooling and
Servicing Agreement. The interest rate (the "Mortgage Rate") on each Group I
Loan [(i) with an Index of Six-Month LIBOR (each as defined herein) will be
subject to semi-annual adjustment (in the case of certain of the Group I Loans,
after an initial period of two years or three years from origination), and (ii)
with an Index of One-Year CMT (as defined herein) will be subject to annual
adjustment, in each case based on the sum of the related Index and the related
Gross Margin (as defined herein), subject to certain periodic and lifetime rate
limitations (as described herein)]. The Mortgage Rate on each Group II Loan
will be fixed. The Index for the Group I Loans will be based on [either (i)
six-month London interbank offered rates for United States dollar deposits
("Six-Month LIBOR") or (ii) the weekly average yield on U.S. Treasury
securities adjusted to a constant maturity of one year ("One-Year CMT"), each
as described herein.] Certain characteristics of the Mortgage Loans are
described herein under "The Mortgage Pool." All distributions (other than
Cross-Collateralization Payments as described herein) and losses with respect
to a Loan Group will be allocated solely among the Certificates related to such
Loan Group. The rights of the holders of the Group I Subordinate Certificates
to receive distributions with respect to the Group I Loans will be subordinate
to the rights of the holders of the Class A-1 Certificates to the extent
described herein and in the Prospectus. The rights of the holders of the Group
II Subordinate Certificates to receive distributions with respect to the Group
II Loans will be subordinate to the rights of the holders of the Class A-2
Certificates to the extent described herein and in the Prospectus.

It is a condition of the issuance of the Class A Certificates that
they be rated "___" by ___________________________ ("__"), "___" by
_______________ ("___") and "___" by _____________________ ("_______").

The Class A Certificates initially will be represented by certificates
registered in the name of Cede & Co., as nominee of The Depository Trust
Company ("DTC"), as further described herein. The interests of beneficial
owners of the Class A Certificates will be represented by book entries on the
records of DTC and the participating members of DTC. Persons acquiring
beneficial ownership interests in the Class A Certificates may elect to hold
such interests through DTC in the United States, or Cedel or Euroclear (each as
defined herein) in Europe. Definitive certificates will be available for the
Class A Certificates only under the limited circumstances described herein.
See "Description of the Certificates--Book-Entry Registration" herein.

As described herein, a "real estate mortgage investment conduit"
("REMIC") election will be made in connection with the Trust Fund (exclusive of
the Interest Coverage Accounts and the Pre-

S-3
<PAGE> 192
Funding Accounts) for federal income tax purposes. The Class A Certificates
and the Subordinate Certificates will represent ownership of "regular
interests" in the REMIC and the Class R Certificates will constitute the sole
class of "residual interests" in the REMIC. See "Federal Income Tax
Consequences" herein and in the Prospectus.

Distributions on the Class A Certificates, will be made on the 25th
day of each month or, if such day is not a business day, then on the next
business day, commencing in _______ 199_ (each, a "Distribution Date"). As
described herein, interest payable with respect to each Distribution Date (i)
on the Class A-1 Certificates, will accrue on the basis of a 360-day year and
the actual number of days elapsed during the period commencing on the
Distribution Date immediately preceding the month on which such Distribution
Date occurs and ending on the calendar day immediately preceding such
Distribution Date, except with respect to the first Distribution Date, which
has an accrual period from _________, 199_ to ____________, 199_ and (ii) on
the Class A-2 Certificates will accrue on the basis of a 30-day month, and will
be based on the Certificate Principal Balance thereof and the then-applicable
Pass-Through Rate thereof, as reduced by certain interest shortfalls.
Distributions in respect of principal of the Class A Certificates will be made
as described herein under "Description of the Certificates--Class A Principal
Distribution Amount."

If purchased at a price other than par, the yield to maturity on the
Class A Certificates will be sensitive to the rate and timing of principal
payments (including prepayments, defaults and liquidations) on the Mortgage
Loans. The Mortgage Loans generally may be prepaid in full or in part at any
time; however, a prepayment may subject the related Mortgagor to a prepayment
charge with respect to the majority of the Mortgage Loans in each Loan Group.
The yield to investors on the Class A Certificates will be adversely affected
by any shortfalls in interest collected on the Mortgage Loans due to
prepayments, liquidations or otherwise, to the extent not otherwise covered as
described herein. See "Summary-Special Prepayment Considerations" and
"--Special Yield Considerations" herein, "Yield and Prepayment Considerations"
herein and in the Prospectus.

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

The Class A certificates offered by this Prospectus supplement
constitute part of a separate series of certificates issued by the depositor
and are being offered pursuant to its prospectus dated ____________, 199_, of
which this Prospectus supplement is a part and which accompanies this
prospectus supplement. The Prospectus contains important information regarding
this offering which is not contained herein, and prospective investors are
urged to read the Prospectus and this Prospectus supplement in full. Sales of
the Class A certificates may not be consummated unless the pruchaser has
received both this Prospectus supplement and the Prospectus.

Until ninety days after the date of this Prospectus supplement, all
dealers effecting transactions in the Class A certificates, whether or not
participating in this distribution, may be required to deliver a Prospectus
supplement and the Prospectus to which it relates. This delivery requirement
is in addition to the obligation of dealers to deliver a Prospectus supplement
and Prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.

S-4
<PAGE> 193
No dealer, salesman or other person has been authorized to give any
information or to make any representations not contained in this Prospectus
Supplement and the Prospectus and, if given or made, such information or
representations must not be relied upon as having been authorized by the
Depositor or by the Underwriter. This Prospectus Supplement and the Prospectus
do not constitute an offer to sell, or a solicitation of an offer to buy, the
securities offered hereby to anyone in any jurisdiction in which the person
making such offer or solicitation is not qualified to do so or to anyone to
whom it is unlawful to make any such offer or solicitation. Neither the
delivery of this Prospectus Supplement and the Prospectus nor any sale made
hereunder shall, under any circumstances, create an implication that
information herein or therein is correct as of any time since the date of this
Prospectus Supplement or the Prospectus.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The Trustee on behalf of any Trust Fund will provide without charge to
each person to whom this Prospectus Supplement is delivered, on the written or
oral request of such person, a copy of any or all of the documents referred to
in the Prospectus under "Incorporation of Certain Documents by Reference" that
have been or may be incorporated by reference in the Prospectus (not including
exhibits to the information that is incorporated by reference unless such
exhibits are specifically incorporated by reference into the information that
the Prospectus incorporates). Such requests should be directed to the
Corporate Trust Office of the Trustee at telephone:______________, facsimile
number:________________, attention:________________.

S-5
<PAGE> 194
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PROSPECTUS SUPPLEMENT Page
----
<S> <C>
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-7
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-26
The Mortgage Pool . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-29
Description of the Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-50
[Name of Insurer] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-63
Yield and Prepayment Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-64
Servicing of Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-69
Federal Income Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-73
Underwriting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-75
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-75
Ratings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-75
Legal Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-76
ERISA Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-77
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-79
Underwriting Guidelines Applicable to the Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
<CAPTION>

PROSPECTUS
<S> <C>
Prospectus Supplement or Current Report on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Available Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Incorporation of Certain Documents by Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Reports to Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Summary of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
The Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
The Depositor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Description of the Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Credit Enhancement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Yield and Prepayment Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
The Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Certain Legal Aspects of the Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Federal Income Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
State Tax Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
ERISA Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
Legal Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
Method of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133
Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133
Rating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133
Index of Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135
</TABLE>

S-6
<PAGE> 195
SUMMARY

The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere herein and in the Prospectus.
Capitalized terms used herein and not otherwise defined herein have the
meanings assigned in the Prospectus.

<TABLE>
<S> <C>
Title of Securities . . . . . . . . . . . . . . . Mortgage Loan Asset-Backed Pass-Through
Certificates, Series 199_-_.

Depositor . . . . . . . . . . . . . . . . . . . . Morgan Stanley ABS Capital I Inc. (the
"Depositor"). See "The Depositor" in the
Prospectus.

Master Servicer . . . . . . . . . . . . . . . . . _____________ (the "Master Servicer"). See
"Servicing of Mortgage Loans--The Master Servicer"
herein.

Seller . . . . . . . . . . . . . . . . . . . . . _____________________, (the "Seller"). See "The
Mortgage Pool" herein.

Trustee . . . . . . . . . . . . . . . . . . . . . _______________________ (the "Trustee").

Statistical Reference Date . . . . . . . . . . . ___________, 199_. The statistical information
contained herein concerning the Initial Mortgage
Loans (unless otherwise stated) is based on the
principal balance of the Initial Mortgage Loans as
of the Statistical Reference Date. The Depositor
does not expect that such information would be
materially different as of the Cut-off Date.

Cut-off Date . . . . . . . . . . . . . . . . . . _______________, 199_.

Delivery Date . . . . . . . . . . . . . . . . . . On or about ________________, 199_.

Denominations . . . . . . . . . . . . . . . . . . The Class A Certificates will be issued,
maintained and transferred on the book-entry
records of The Depository Trust Company ("DTC")
and its Participants (as defined in the
Prospectus). The Class A Certificates will be
issued in minimum denominations of $[25,000] and
integral multiples of $[1] in excess thereof.

Certificate Registration . . . . . . . . . . . . The Class A Certificates will be represented by
one or more certificates registered in the name of
Cede & Co., as nominee of DTC (Class A
Certificates so registered, "Book-Entry
Certificates"). No person acquiring an interest
</TABLE>

S-7
<PAGE> 196
<TABLE>
<S> <C>
in the Book-Entry Certificates (a "Certificate
Owner") will be entitled to receive a Class A
Certificate in fully registered, certificated form
(a "Definitive Certificate"), except under the
limited circumstances described herein. The
interests of Certificate Owners of the Book-Entry
Certificates will be represented by book entries
on the records of DTC and participating members of
DTC. Certificate Owners may elect to hold their
interests in the Class A Certificates through DTC
in the United States, or Cedel Bank, societe
anonyme ("Cedel"), or the Euroclear System
("Euroclear") in Europe. Transfers within DTC,
Cedel or Euroclear, as the case may be, will be in
accordance with the usual rules and operating
procedures of the relevant system. Cross-market
transfers between persons holding directly or
indirectly through DTC, on the one hand, and
counterparties holding directly or indirectly
through Cedel or Euroclear, on the other, will be
effected in DTC through Citibank N.A. ("Citibank")
or Morgan Guaranty Trust Company of New York
("Morgan Guaranty"), the relevant depositories of
Cedel and Euroclear, respectively, and each a
participating member of DTC. All references
herein to Class A Certificates and Class A
Certificateholders reflect the rights of
Certificate Owners only as such rights may be
exercised through DTC and its participating
organizations, for so long as such Certificates
remain Book-Entry Certificates. See "Risk
Factors--Book-Entry Certificates " and
"Description of the Certificates--Book-Entry
Registration."

The Mortgage Pool . . . . . . . . . . . . . . . . The Mortgage Pool will consist of two groups (each
a "Loan Group") of mortgage loans (the "Mortgage
Loans"). The separate Loan Groups are referred to
herein as the "Group I Loans" and "Group II
Loans." The Group I Loans are adjustable-rate,
one- to four-family mortgage loans. The Group II
Loans are fixed-rate, one- to four-family mortgage
loans. The Initial Group I Loans (as defined
herein) have an initial aggregate principal
balance as of the Statistical Reference Date of
$___________________. The Initial Group II Loans
(as defined herein) have an initial aggregate
principal balance as of the Statistical Reference
Date of $___________.

</TABLE>

S-8
<PAGE> 197
<TABLE>
<S> <C>
The Group I Loans and the Group II Loans are
secured by first liens, on fee simple interests in
one- to four-family residential real properties
(each, a "Mortgaged Property"). The Initial Group
I Loans had approximate individual principal
balances at origination of at least $_____ but not
more than $______ with an average principal
balance at origination of approximately $______.
The Initial Group II Loans had approximate
individual principal balances at origination of at
least $_______ but not more than $________ with an
average principal balance at origination of
approximately $________. Approximately ____% of
the Initial Group I Mortgage Loans have terms to
maturity from the date of origination or
modification of __ years and approximately ___% of
the Initial Group I Mortgage Loans have terms to
maturity from the date of origination or
modification of __ years or less. Approximately
____% of the Initial Group II Mortgage Loans have
terms to maturity from the date of origination or
modification of __ years and _____% of the Initial
Group II Mortgage Loans have terms to maturity
from the date of origination or modification of __
years or less. The Initial Group I Loans have a
weighted average remaining term to stated maturity
of approximately ___ months as of the Statistical
Reference Date. Approximately _____% of the
Initial Group I Loans (by aggregate principal
balance as of the Statistical Reference Date) are
refinance mortgage loans. The Initial Group II
Loans have a weighted average remaining term to
stated maturity of approximately ___ [years]
[months] as of the Statistical Reference Date.
Approximately _____% of the Initial Group II Loans
(by aggregate principal balance as of the
Statistical Reference Date) are refinance mortgage
loans. None of the Initial Group I Loans or
Initial Group II Loans were thirty or more days
delinquent in their Monthly Payments (such
Mortgage Loans, "Delinquent Mortgage Loans") as of
the Cut-off Date. Prospective investors in the
Class A Certificates should be aware, however,
that only approximately _____% and ______% of the
Initial Group I Loans and Initial Group II Loans,
respectively (by aggregate principal balance as of
</TABLE>

S-9
<PAGE> 198
<TABLE>
<S> <C>
the Statistical Reference Date), had a first
Monthly Payment due on or before __________, 199_,
and therefore, the remaining Initial Group I Loans
and Initial Group II Loans could not have been
Delinquent Mortgage Loans as of the Cut-off Date.
Approximately ____% of the Initial Group II Loans
(by aggregate principal balance as of the
Statistical Reference Date) will be secured by
second liens on the related Mortgaged Property.
Approximately ___% of the Initial Group II Loans
(by aggregate principal balance as of the
Statistical Reference Date) will be secured by
third liens on the related Mortgaged Property.
Each of the Mortgage Loans will have been
originated by the Seller or acquired by the Seller
as described herein. For a further description of
the Mortgage Loans, see "The Mortgage Pool"
herein.

S-10
<PAGE> 199
<TABLE>
<S> <C>
Rate and to fully amortize the outstanding
principal balance of such Mortgage Loan over its
remaining term to stated maturity. As of the
Statistical Reference Date, the Initial Group I
Loans will bear interest at Mortgage Rates of at
least ____% per annum, but no more than ____% per
annum, with a weighted average Mortgage Rate of
approximately ____% per annum as of the
Statistical Reference Date. The Group I Loans
will have different Adjustment Dates, Gross
Margins, Periodic Rate Caps, Lifetime Rate Caps
and Lifetime Rate Floors, each as described
herein.

The Mortgage Rate on each Group II Loan is fixed.
As of the Statistical Reference Date, the Initial
Group II Loans will bear interest at Mortgage
Rates of at least ____% per annum but no more than
____% per annum, with a weighted average Mortgage
Rate of approximately ____% per annum as of the
Statistical Reference Date.

Pursuant to the Pooling and Servicing Agreement,
the Trust Fund will be obligated to purchase from
the Depositor on or before ___________, 199_,
additional Group I Loans and Group II Loans (the
"Group I Subsequent Mortgage Loans" and "Group II
Subsequent Mortgage Loans," respectively), subject
to certain conditions described herein. See "The
Mortgage Pool" herein.

The Mortgage Loans were underwritten in accordance
with the underwriting standards described in "The
Mortgage Pool--Underwriting Standards" and
Appendix A to this Prospectus Supplement. See
also "Risk Factors--Underwriting Standards" in
this Prospectus Supplement.

For a further description of the Mortgage Loans,
see "The Mortgage Pool" herein.

Pre-Funding Accounts . . . . . . . . . . . . . . On the Delivery Date, the Depositor will pay to
the Trustee approximately $___________ (the "Group
I Original Pre-Funded Amount") and $_________ (the
"Group II Original Pre-Funded Amount"; and
together with the Group I
</TABLE>

S-11
<PAGE> 200
<TABLE>
<S> <C>
Original Pre-Funded Amount, the "Original
Pre-Funded Amounts") for deposit in the
Pre-Funding Accounts to provide the Trust Fund
with sufficient funds to purchase Subsequent
Mortgage Loans for the Group I Loans and Group II
Loans. Each Original Pre-Funded Amount will be
reduced during the related Funding Period (as
defined herein) by the amount thereof used to
purchase Subsequent Mortgage Loans for the Group I
Loans and Group II Loans in accordance with the
Pooling and Servicing Agreement (on any date of
determination, the related Original Pre-Funded
Amount as so reduced, the related "Pre-Funded
Amount"). See "The Mortgage Pool--Conveyance of
Subsequent Mortgage Loans and the Pre-Funding
Accounts" herein.

Interest Coverage Accounts . . . . . . . . . . . On the Delivery Date, the Depositor will pay to
the Trustee for deposit in the Interest Coverage
Accounts an amount as required by the Certificate
Insurer and specified in the Pooling and Servicing
Agreement. Funds on deposit in the Interest
Coverage Accounts will be applied by the Trustee
to cover shortfalls in the Group I and Group II
Class A Interest Distribution Amount (each as
defined herein) attributable to the pre-funding
feature during the related Funding Period. See
"Description of the Certificates--Interest
Coverage Account" herein.

The Index . . . . . . . . . . . . . . . . . . . . The Index applicable with respect to the Group I
Loans shall be based upon either [(i) the average
of the interbank offered rates for six-month
United States dollar deposits in the London market
("Six-Month LIBOR") as published in The Wall
Street Journal and as most recently available as
of the first business day forty-five, thirty or
five days prior to the Adjustment Date, as
specified in the related Mortgage Note or (ii) the
weekly average yield on U.S. Treasury securities
adjusted to a constant maturity of one year
("One-Year CMT") as published by the Federal
Reserve Board in Statistical Release H.15(519) and
most recently available as of the first business
day forty-five days prior to the Adjustment Date,
as specified in the related Mortgage Note.]
</TABLE>

S-12
<PAGE> 201
<TABLE>
<S> <C>
In the event that the Index specified in a
Mortgage Note is no longer available, an index
reasonably acceptable to the Trustee that is based
on comparable information will be selected by the
Master Servicer. See "The Mortgage Pool" herein.

The Class A Certificates . . . . . . . . . . . . The Class A Certificates will each evidence a
beneficial ownership interest in a trust fund (the
"Trust Fund") consisting primarily of the Mortgage
Pool and any amounts on deposit in the Interest
Coverage Accounts and the Pre-Funding Accounts.
The Class A Certificates will be issued pursuant
to a Pooling and Servicing Agreement, to be dated
as of the Cut-off Date, among the Depositor, the
Master Servicer and the Trustee (the "Pooling and
Servicing Agreement"). The Class A Certificates
will have the following approximate Certificate
Principal Balances as of the Delivery Date:

$___________ Class A-1 Certificates
$___________ Class A-2 Certificates

For a description of the allocation of interest
and principal distributions to the Class A
Certificates, see "Summary-Interest Distributions"
and "--Principal Distributions" below, and
"Description of the Certificates--Class A Interest
Distribution Amount" and "--Class A Principal
Distribution Amount" herein.

The Class A Certificates will be entitled to the
benefit of two certificate guaranty insurance
policies (the "Certificate Insurance Policies") to
be issued by _______________ (the "Certificate
Insurer"), which will insure the payment of (i) on
each Distribution Date, an amount equal to (a) the
related Class A Interest Distribution Amount (as
defined herein) minus the related Available
Funds (as defined herein) and (b) the related
Subordination Deficit (as defined herein) (to the
extent not covered, with respect to the Class A-2
Certificates, by Cross- Collateralization Payments)
and (ii) the unpaid related Preference Amount (as
defined herein).
</TABLE>

S-13
<PAGE> 202
<TABLE>
<S> <C>
The Certificate Insurance Policies do
not insure the payment of the Group I Class A
Available Funds Cap Carry-Forward Amount (as
defined herein). See "Description of the
Certificates."

Pass-Through Rate on the
Class A Certificates . . . . . . . . . . . . . The Pass-Through Rate on the Class A-1
Certificates is adjustable and is calculated as
follows: beginning on the Distribution Date in
__________ 199_, and on each Distribution Date
thereafter, the Pass-Through Rate applicable to
the Class A-1 Certificates will be adjusted to
equal the lesser of (i) (a) with respect to any
Distribution Date which occurs on or prior to the
date on which the aggregate Principal Balance of
the Mortgage Loans is less than ____% of the sum
of the aggregate Principal Balance of the Mortgage
Loans as of the Cut-off Date and the Original
Pre-Funded Amounts, One-Month LIBOR (as defined
herein) plus ____%, or (b) with respect to any
Distribution Date thereafter, One-Month LIBOR plus
____% and (ii) the Group I Class A Available Funds
Pass-Through Rate.

The "Group I Class A Available Funds Pass-Through
Rate," as of any Distribution Date, is equal to
(i) the weighted average of the Mortgage Rates of
the Group I Loans, minus (ii) the sum of the
Servicing Fee Rate and the rates per annum at
which the Trustee's Fee and Premium Amount (each
as defined herein) accrue and minus (iii)
commencing on the seventh Distribution Date, ____%
per annum.

The "Class A-1 Formula Pass-Through Rate" for a
Distribution Date is the lesser of (x) the rate
determined by clause (i) of the definition of
Pass-Through Rate for the Class A-1 Certificates
on such Distribution Date and (y) the weighted
average of Net Lifetime Rate Caps of the Group I
Loans. The Net Lifetime Rate Cap on each Group I
Loan is equal to the related Lifetime Rate Cap
minus the sum of the Servicing Fee Rate and the
rates per annum, at which the Trustee's Fee and
the Premium Amount accrue.

The Pooling and Servicing Agreement provides that
if the Pass-Through Rate on the Class A-1
</TABLE>

S-14
<PAGE> 203
<TABLE>
<S> <C>
Certificates is less than the Class A-1 Formula
Pass-Through Rate and any resulting shortfall in
interest is not paid on such Distribution Date
from any available Net Monthly Excess Cashflow, as
defined herein, then the amount of any such
shortfall will be carried forward and paid to the
extent of available funds, as described herein, to
the Holders of the Class A-1 Certificates on
future Distribution Dates and shall accrue
interest at the applicable Class A-1 Formula
Pass-Through Rate, until paid (such shortfall,
together with such accrued interest, the "Group I
Class A Available Funds Cap Carry-Forward
Amount"). The Certificate Insurance Policies do
not cover the Group I Class A Available Funds Cap
Carry-Forward Amount, nor do the ratings assigned
to the Class A-1 Certificates address the payment
of the Group I Class A Available Funds Cap
Carry-Forward Amount.

The Pass-Through Rate with respect to the Class
A-2 Certificates is equal to (i) with respect to
any Distribution Date which occurs on or prior to
the date on which the aggregate Principal Balance
of the Mortgage Loans is less than ____% of the
sum of the aggregate Principal Balance of the
Mortgage Loans as of the Cut-off Date and the
Original Pre-Funded Amounts, ____% per annum, and
(ii) with respect to any Distribution Date
thereafter, ____% per annum. See "Description of
the Certificates--Class A Interest Distribution
Amounts" herein.

See "Description of the Certificates-Class A
Interest Distribution Amount" and "--Calculation
of One-Month LIBOR" herein.

Interest Distributions . . . . . . . . . . . . . On each Distribution Date, the holders of the
Class A Certificates will be entitled to receive,
to the extent of amounts available for
distribution as described herein, interest
distributions in an amount equal to the sum of (i)
interest accrued for the related Accrual Period
(as defined herein) on the Certificate Principal
Balance thereof immediately prior to such
Distribution Date at the then-applicable
Pass-Through Rate (based on a 360-day year and the
actual number of days elapsed, with respect to
</TABLE>

S-15
<PAGE> 204
<TABLE>
<S> <C>
the Class A-1 Certificates, and a 30-day month,
with respect to the Class A-2 Certificates),
subject to reduction only in the event of
shortfalls caused by the Relief Act (as defined in
the Prospectus and allocated as described herein)
or the failure of the Master Servicer to cover
Prepayment Interest Shortfalls to the extent
described herein and (ii) the Group I Class A
Carry-Forward Amount or Group II Class A
Carry-Forward Amount (each as defined herein), as
applicable, allocable to interest. The aggregate
amount of interest allocable to the Class A-1
Certificates and Class A-2 Certificates (the
related "Class A Interest Distribution Amount")
will be allocable to the related Class A
Certificates on a pro rata basis. See
"Description of the Certificates--Priority of
Payment" and "--Class A Interest Distribution
Amount" herein.

Any Prepayment Interest Shortfalls (as defined
herein) resulting from full or partial prepayments
in any calendar month will be offset by the Master
Servicer on the Distribution Date in the following
calendar month to the extent such Prepayment
Interest Shortfalls do not exceed the Servicing
Fee payable to the Master Servicer with respect to
such Distribution Date. An amount equal to the
Class A Certificates' pro rata share, based on the
amount of interest payable on each such class, of
any Prepayment Interest Shortfalls not so covered
by the Master Servicer will be made available by
the Certificate Insurer for distribution to the
Class A Certificateholders. See "Servicing the
Mortgage Loans--Servicing Compensation and Payment
of Expenses" and "Description of the
Certificates--Class A Interest Distribution
Amount" herein.

Principal Distributions . . . . . . . . . . . . . Holders of the Class A-1 Certificates and
Class A-2 Certificates will be entitled to receive
on each Distribution Date, to the extent of
amounts available for distribution as described
herein remaining after interest on the Class A-1
Certificates and Class A-2 Certificates,
respectively, is distributed, an amount (the
related "Class A Principal Distribution Amount")
equal to the sum of (i) the portion of
</TABLE>

S-16
<PAGE> 205
<TABLE>
<S> <C>
any Group I Class A Carry-Forward Amount or Group
II Class A Carry-Forward Amount, as applicable,
which relates to a shortfall in a distribution of
a related Subordination Deficit, (ii) all
scheduled installments of principal in respect of
the Mortgage Loans in the related Loan Group
received or advanced during the related Due
Period, together with all unscheduled recoveries
of principal on such Mortgage Loans received by
the Master Servicer during the prior calendar
month, (iii) the Principal Balance of each
Mortgage Loan in the related Loan Group that was
repurchased by either the Seller or by the
Depositor, (iv) any amounts delivered by the
Depositor on the Master Servicer Remittance Date
(as defined herein) in connection with a
substitution of a Mortgage Loan in the related
Loan Group, (v) the net Liquidation Proceeds (as
defined in the Prospectus) collected by the Master
Servicer of all Mortgage Loans in the related Loan
Group during the prior calendar month (to the
extent such net Liquidation Proceeds are related
to principal), (vi) the amount of any related
Subordination Deficit for such Distribution Date,
(vii) the proceeds received by the Trustee of any
termination of the related Loan Group (to the
extent such proceeds are related to principal),
(viii) the amount of any related Subordination
Increase Amount (as defined herein) for such
Distribution Date and (ix) with respect to the
Class A-1 Certificates and Class A-2 Certificates,
with respect to the Distribution Date occurring in
_________, 199_, any amounts in the related
Pre-Funding Account after giving effect to any
purchase of related Subsequent Mortgage Loans;
minus (x) the amount of any related Subordination
Reduction Amount (as defined herein) for such
Distribution Date.

In no event will any Class A Principal
Distribution Amount with respect to any
Distribution Date be less than zero or greater
than the Certificate Principal Balance of the
related Class A Certificates.

See "Description of the Certificates--Priority of
</TABLE>

S-17
<PAGE> 206
<TABLE>
<S> <C>
Payment" and "--Class A Principal Distribution
Amount" herein.

Credit Enhancement . . . . . . . . . . . . . . . The credit enhancement provided for the benefit of
the Class A Certificateholders consists solely of
(a) the overcollateralization mechanics which
utilize the internal cash flows of the Mortgage
Loans in the related Loan Group (and, to the
extent of Cross-Collateralization Payments payable
to the Class A-2 Certificates as described herein,
cash flows on the Mortgage Loans in Loan Group I)
and (b) the related Certificate Insurance Policy.

Overcollateralization. The subordination
provisions of the Trust Fund result in a limited
acceleration of the Class A Certificates relative
to the amortization of the Mortgage Loans in the
related Loan Group, generally in the early months
of the transaction. The accelerated amortization
is achieved by the application of certain excess
interest to the payment of the Certificate
Principal Balance of the related Class A
Certificates. This acceleration feature creates
overcollateralization which equals the excess of
the aggregate Principal Balances of the Mortgage
Loans in the related Loan Group and the related
Pre-Funded Amount over the Certificate Principal
Balance of the related Class A Certificates. Once
the required level of overcollateralization is
reached, and subject to the provisions described
in the next paragraph, the acceleration feature
will cease, unless necessary to maintain the
required level of overcollateralization.

The Pooling and Servicing Agreement provides that,
subject to certain trigger tests, the required
level of overcollateralization with respect to
each Loan Group may increase or decrease over
time. An increase would result in a temporary
period of accelerated amortization of the related
Class A Certificates to increase the actual level
of overcollateralization to its required level; a
decrease would result in a temporary period of
decelerated amortization to reduce the actual
level of overcollateralization to its required
level. See "Description of the
Certificates--Overcollateralization Provisions."
</TABLE>

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The Certificate Insurance Policies. The Class A
Certificateholders will have the benefit of the
related Certificate Insurance Policy, as discussed
more fully below. See "Description of the
Certificates--The Certificate Guaranty Insurance
Policies" herein.

Certificate Insurer . . . . . . . . . . . ___________________ (the "Certificate Insurer").
See "__________________" herein.

Certificate Guaranty
Insurance Policies . . . . . . . . . . . . . . The Certificate Insurer will issue the Certificate
Insurance Policies as a means of providing
additional credit enhancement to the Class A
Certificates. Under the Certificate Insurance
Policies, the Certificate Insurer will pay the
Trustee, for the benefit of the holders of the
related Class A Certificates, as further described
herein, an amount that will insure the payment of
(i) on each Distribution Date, an amount equal to
(a) the related Class A Interest Distribution
Amount minus the related Available Funds and (b)
the related Subordination Deficit (to the extent
not covered, with respect to the Class A-2
Certificates, by Cross-Collateralization Payments)
and (ii) the related unpaid Preference Amount.
The Certificate Insurance Policies do not insure
the payment of the Group I Class A Available Funds
Cap Carry-Forward Amount. A payment by the
Certificate Insurer under a Certificate Insurance
Policy is referred to herein as an "Insured
Payment." See "Description of the
Certificates--The Certificate Guaranty Insurance
Policies" herein.

Cross-Collateralization . . . . . . . . . . . . . In the event that on any Distribution Date after
giving effect to distributions pertaining to a
particular Loan Group and its related Certificates
(except for any payment to be made as principal
from proceeds of the related Certificate Insurance
Policy), either a Reimbursement Amount with
respect to either Loan Group exists or a
Subordination Deficit exists with respect to Loan
Group II or the Subordinated Amount with respect
to Loan Group II would be less than the related
Required Subordinated Amount (such difference, a
"Cross-Collateralized Subordination Shortfall"),
the Class A-2 Certificates or the
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Certificate Insurer, as the case may be, will be
entitled to receive an additional payment (a
"Cross-Collateralization Payment") in respect of
principal to the extent of such Subordination
Deficit or Cross-Collateralized Subordination
Shortfall or as reimbursement of the Reimbursement
Amount, as the case may be, out of funds then on
deposit in the Certificate Account for the other
Loan Group that is otherwise payable on such
Distribution Date to the Subordinate Certificates
related to such other Loan Group.

Mandatory Prepayments
on the Group I and
Group II Class A
Certificates . . . . . . . . . . . . . . . . . The Class A-1 Certificates and Class A-2
Certificates will be prepaid in part on the _____,
199_ Distribution Date in the event that any
amount remains on deposit in the related
Pre-Funding Account on such Distribution Date
after the purchase by the Trust Fund of the
related Subsequent Mortgage Loans, if any.
Although no assurance can be given, it is
anticipated by the Depositor that the principal
amount of the related Subsequent Mortgage Loans
purchased by the Trust Fund will require the
application of substantially all of the related
Original Pre-Funded Amount (as defined herein) and
that there should be no material amount of
principal prepaid to the Class A-1
Certificateholders and Class A-2
Certificateholders from the related Pre-Funding
Account. However, it is unlikely that the
Depositor will be able to deliver Subsequent
Mortgage Loans with an aggregate principal balance
identical to the related Original Pre-Funded
Amount. See "Description of the
Certificates--Mandatory Prepayments on Class A-1
Certificates and Class A-2 Certificates" herein.

Advances . . . . . . . . . . . . . . . . . . . . The Master Servicer is required to make advances
("Advances") in respect of delinquent payments of
principal and interest on the Mortgage Loans,
subject to the limitations described herein. See
"Description of the Certificates--Advances" herein
and in the Prospectus.
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Optional Termination . . . . . . . . . . . . . . At its option, on any Distribution Date when the
aggregate Principal Balance of the Mortgage Loans
is less than ____% of the sum of the aggregate
principal balance of the Mortgage Loans as of the
Cut-off Date and the aggregate principal balance
of the Subsequent Mortgage Loans as of the related
Subsequent Cut-off Date (as defined herein), the
holder of a majority percentage interest of the
Class R Certificates (or the Master Servicer (or
the Certificate Insurer, if ______ is removed as
Master Servicer) if the Principal Balance of the
Mortgage Loans is less than ____% of such sum) may
purchase from the Trust Fund all remaining
Mortgage Loans and other assets thereof at the
price described herein, and thereby effect early
retirement of the related Certificates. See
"Servicing of Mortgage Loans--Termination" herein
and "The Agreements--Termination; Optional
Termination" in the Prospectus.

Special Prepayment
Considerations . . . . . . . . . . . . . . . . The rate and timing of principal payments on the
Class A Certificates will depend, among other
things, on the rate and timing of principal
payments (including prepayments, defaults,
liquidations and purchases of the Mortgage Loans
in the related Loan Group due to a breach of a
representation or warranty) on the related
Mortgage Loans. As is the case with
mortgage-backed securities generally, the Class A
Certificates are subject to substantial inherent
cash-flow uncertainties because the Mortgage Loans
in the related Loan Group may be prepaid at any
time; [however, a prepayment may subject the
related Mortgagor to a prepayment charge with
respect to the majority of the Mortgage Loans in
each Loan Group.] Generally, when prevailing
interest rates increase, prepayment rates on
mortgage loans tend to decrease, resulting in a
slower return of principal to investors at a
time when reinvestment at such higher prevailing
rates would be desirable. Conversely, when
prevailing interest rates decline, prepayment
rates on mortgage loans tend to increase, resulting
in a faster return of principal to
</TABLE>

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<S> <C>
investors at a time when reinvestment
at comparable yields may not be possible.

See "Description of the Certificates--Class A
Principal Distribution Amount" and "Yield and
Prepayment Considerations" herein and in the
Prospectus.

Special Yield
Considerations . . . . . . . . . . . . . . . . The yield to maturity on the Class A Certificates
will depend on, among other things, the rate and
timing of principal payments (including
prepayments, defaults, liquidations and purchases
of the Mortgage Loans in the related Loan Group
due to a breach of a representation or warranty)
on the Mortgage Loans in the related Loan Group
and the allocation thereof to reduce the
Certificate Principal Balance thereof. The yield
to maturity on the Class A Certificates will also
depend on the related Pass-Through Rate and the
purchase price for such Certificates.

If the Class A Certificates are purchased at a
premium and principal distributions thereon occur
at a rate faster than anticipated at the time of
purchase, the investor's actual yield to maturity
will be lower than that assumed at the time of
purchase. Conversely, if the Class A Certificates
are purchased at a discount and principal
distributions thereon occur at a rate slower than
that assumed at the time of purchase, the
investor's actual yield to maturity will be lower
than that assumed at the time of purchase.

The Class A-1 Certificates were structured
assuming, among other things, a prepayment rate
equal to _____ CPR (as defined herein) and
corresponding weighted average life as described
herein. The Class A-2 Certificates were
structured assuming, among other things, a
prepayment rate equal to _____ of the Prepayment
Assumption (as defined herein) and corresponding
weighted average lives as described herein. The
prepayment, yield and other assumptions to be used
for pricing purposes for the Class A Certificates
may vary as determined at the time of sale.
</TABLE>

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See "Yield and Prepayment Considerations" herein
and in the Prospectus.

Federal Income Tax
Consequences . . . . . . . . . . . . . . . . . A real estate mortgage investment conduit
("REMIC") election will be made with respect to
the Trust Fund (exclusive of the Interest Coverage
Accounts and the Pre-Funding Accounts) for federal
income tax purposes. Upon the issuance of the
Class A Certificates, ________________, counsel to
the Depositor, will deliver its opinion generally
to the effect that, assuming compliance with all
provisions of the Pooling and Servicing Agreement,
for federal income tax purposes, the Trust Fund
(exclusive of the Interest Coverage Accounts and
the Pre-Funding Accounts) will qualify as a REMIC
under Sections 860A through 86OG of the Internal
Revenue Code of 1986 (the "Code").

For federal income tax purposes, the Class R
Certificates will be the sole class of "residual
interests" in the REMIC and the Class A
Certificates and the Subordinate Certificates will
represent ownership of "regular interests" in the
REMIC and will generally be treated as
representing ownership of debt instruments of the
REMIC.

For federal income tax reporting purposes, the
Class A Certificates will not be treated as having
been issued with original issue discount. The
prepayment assumption that will be used in
determining the rate of accrual of original issue
discount, market discount and premium, if any, for
federal income tax purposes will be a rate equal
to _____ CPR, with respect to the Class A-1
Certificates, and _____ of the Prepayment
Assumption, with respect to the Class A-2
Certificates. No representation is made that the
Mortgage Loans will prepay at these rates or at
any other rates.

For further information regarding the federal
income tax consequences of investing in the Class
A Certificates, see "Federal Income Tax
Consequences" herein and in the Prospectus.
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ERISA Considerations . . . . . . . . . . . . . . A fiduciary of any employee benefit plan or other
retirement arrangement subject to the Employee
Retirement Income Security Act of 1974, as amended
("ERISA"), or Section 4975 of the Code should
review carefully with its legal advisors whether
the purchase or holding of Class A Certificates
could give rise to a transaction that is
prohibited or is not otherwise permitted either
under ERISA or Section 4975 of the Code or whether
there exists any statutory or administrative
exemption applicable to an investment therein.
The U.S. Department of Labor has issued an
individual exemption, Prohibited Transaction
Exemption 90-24, to Morgan Stanley & Co.
Incorporated that generally exempts from the
application of certain of the prohibited
transaction provisions of Section 406 of ERISA,
and the excise taxes imposed on such prohibited
transaction by Section 4975(a) and (b) of the Code
and Section 502(i) of ERISA, transactions relating
to the purchase, sale and holding of pass-through
certificates underwritten by the Underwriter such
as the Class A Certificates and the servicing and
operation of asset pools, provided that certain
conditions are satisfied. A fiduciary of any
employee benefit plan subject to ERISA or the Code
should consult with its legal advisors regarding
the requirements of ERISA and the Code. See
"ERISA Considerations" herein and in the
Prospectus.

Legal Investment . . . . . . . . . . . . . . . . The Class A-1 Certificates will constitute
"mortgage related securities" for purposes of the
Secondary Mortgage Market Enhancement Act of 1984
("SMMEA") for so long as they are rated in at
least the second highest rating category by one or
more nationally recognized statistical rating
agencies. The Class A-2 Certificates will not
constitute "mortgage related securities" for
purposes of SMMEA because the Group II Loans
include Mortgage Loans that are secured by
subordinate liens on the related Mortgaged
Properties. Institutions whose investment
activities are subject to legal investment laws
and regulations, regulatory capital requirements
or review by regulatory authorities may be subject
to restrictions on investment in the Class A
Certificates and should
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consult with their legal advisors. See "Legal
Investment" herein and in the Prospectus.

Ratings . . . . . . . . . . . . . . . . . . . . . It is a condition to the issuance of the Class
Certificates that they be rated "___" by
__________________ ("___") and "___" by
_______________ ("___") and "___" by
___________________ ("______"). The ratings of
the Class A Certificates should be evaluated
independently from similar ratings on other types
of securities. A rating is not a recommendation
to buy, sell or hold securities and may be subject
to revision or withdrawal at any time by the
rating organization. A security rating does not
address the frequency of prepayments of Mortgage
Loans, or the corresponding effect on yield to
investors. Also, the ratings issued by ___, ___
and _______ on payment of principal and interest
do not cover the payment of the Group I Class A
Available Funds Cap Carry-Forward Amount. See
"Yield and Prepayment Considerations" and
"Ratings" herein and in the Prospectus.

Risk Factors . . . . . . . . . . . . . . . . . . For a discussion of certain risks associated with
an investment in the Certificates, see "Risk
Factors" on page S-__ herein and on page 21 in the
Prospectus.
</TABLE>

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<PAGE> 214
RISK FACTORS

[Description will depend on the particulars of the Mortgage Loans.]

Investors should consider, among other things, the items discussed
under "Risk Factors" in the Prospectus and the following factors in connection
with the purchase of the Certificates.

UNDERWRITING STANDARDS

The Mortgage Loans were underwritten by ____________________(the
"Seller") in accordance with its underwriting standards described in "The
Mortgage Pool--Underwriting" below and in Appendix A to this Prospectus
Supplement which are primarily intended to provide single family mortgage loans
for non-conforming credits. A "non-conforming credit" means a mortgage loan
which is ineligible for purchase by FNMA or FHLMC due to credit characteristics
that do not meet the FNMA or FHLMC underwriting guidelines, including
mortgagors whose creditworthiness and repayment ability do not satisfy such
FNMA or FHLMC underwriting guidelines and mortgagors who may have a record of
credit write-offs, outstanding judgments, prior bankruptcies and other credit
items that do not satisfy such FNMA or FHLMC underwriting guidelines.
ACCORDINGLY, MORTGAGE LOANS UNDERWRITTEN UNDER THE SELLER'S NON-CONFORMING
CREDIT UNDERWRITING STANDARDS ARE LIKELY TO EXPERIENCE RATES OF DELINQUENCY,
FORECLOSURE AND LOSS THAT ARE HIGHER, AND MAY BE SUBSTANTIALLY HIGHER, THAN
MORTGAGE LOANS ORIGINATED IN ACCORDANCE WITH THE FNMA OR FHLMC UNDERWRITING
GUIDELINES.

Under the Seller's non-conforming credit underwriting standards, the
critical factors in underwriting a Mortgage Loan are the income and employment
history of the prospective mortgagor, the creditworthiness of the prospective
mortgagor, an assessment of the value of the related Mortgaged Property and the
adequacy of such property as collateral in relation to the amount of such
Mortgage Loan. Therefore, changes in values of the Mortgaged Properties may
have a greater effect on the delinquency, foreclosure and loss experience of
the related Mortgage Loans than on mortgage loans originated in accordance with
the FNMA or FHLMC credit underwriting guidelines. No assurance can be given
that the values of the Mortgaged Properties in the related Loan Group have
remained or will remain at the levels in effect on the dates of origination of
the related Mortgage Loans. If the values of the Mortgaged Properties in Loan
Group I and Loan Group II decline after the dates of origination of the related
Mortgage Loans, then the rates of delinquencies, foreclosures and losses on the
Group I Loans and Group II Loans may increase and such increase may be
substantial.

CASH FLOW CONSIDERATIONS

Minimum monthly payments on the Mortgage Loans will at least equal and
may exceed accrued interest. Even assuming that the Mortgaged Properties
provide adequate security for the Mortgage Loans, substantial delays could be
encountered in connection with the liquidation of Mortgage Loans that are
delinquent and resulting shortfalls in distributions to Certificateholders
could occur. Further, liquidation expenses (such as legal fees, real estate
taxes, and maintenance and preservation expenses) will reduce the proceeds
payable to Certificateholders and thereby reduce the security for the Mortgage
Loans. In the event any of the Mortgaged Properties fail to provide adequate
security for the related Mortgage Loans, Certificateholders could experience a
loss.

PREPAYMENT CONSIDERATIONS AND RISKS

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Substantially all of the Mortgage Loans may be prepaid in whole or in
part at any time without penalty. Home equity loans, such as the Mortgage
Loans, have been originated in significant volume only during the past few
years and neither the Depositor nor the Master Servicer is aware of any
publicly available studies or statistics on the rate of prepayment of such
loans. Generally, home equity loans are not viewed by borrowers as permanent
financing. Accordingly, the Mortgage Loans may experience a higher rate of
prepayment than traditional loans. The Trust's prepayment experience may be
affected by a wide variety of factors, including general economic conditions,
interest rates, the availability of alternative financing and homeowner
mobility. In addition, substantially all of the Mortgage Loans contain
due-on-sale provisions and the Master Servicer intends to enforce such
provisions unless (i) such enforcement is not permitted by applicable law or
(ii) the Master Servicer, in a manner consistent with reasonable commercial
practice, permits the purchaser of the related Mortgaged Property to assume the
Mortgage Loan. To the extent permitted by applicable law, such assumption will
not release the original borrower from its obligation under any such Mortgage
Loan. See "Yield and Prepayment Considerations" herein and "Certain Legal
Aspects of Loans--Due-on-Sale Clauses" in the Prospectus for a description of
certain provisions of the Mortgage Loans that may affect the prepayment
experience thereof. The yield to maturity and weighted average life of the
Certificates will be affected primarily by the rate and timing of prepayments
on the Mortgage Loans. Any reinvestment risks resulting from a faster or
slower incidence of prepayment of Mortgage Loans will be borne entirely by the
Certificateholders. See "Yield and Prepayment Considerations" herein and in
the Prospectus.

CERTIFICATE RATING

The rating of the Certificates will depend primarily on an assessment
by the Rating Agencies of the Mortgage Loans. The rating by the Rating
Agencies of the Certificates is not a recommendation to purchase, hold or sell
the Certificates, inasmuch as such rating does not comment as to the market
price or suitability for a particular investor. There is no assurance that the
ratings will remain in place for any given period of time or that the ratings
will not be lowered or withdrawn by the Rating Agencies. In general, the
ratings address credit risk and do not address the likelihood of prepayments.
The ratings of the Certificates do not address the possibility of the
imposition of United States withholding tax with respect to non-U.S. persons.

BANKRUPTCY AND INSOLVENCY RISKS

The sale of the Mortgage Loans from the Seller to the Depositor will
be treated as a sale of the Mortgage Loans. However, in the event of an
insolvency of the Seller, the receiver of the Seller may attempt to
recharacterize the sale of the Mortgage Loans as a borrowing by the Seller,
secured by a pledge of the applicable Mortgage Loans. If the receiver decided
to challenge such transfer, delays in payments of the Certificates and
reductions in the amounts thereof could occur.

GEOGRAPHIC CONCENTRATION

As of the Cut-off Date, approximately _____% (by Cut-off Date Pool
Principal Balance) of the Mortgaged Properties are located in the State of
__________. An overall decline in the __________ residential real estate
market could adversely affect the values of the Mortgaged Properties securing
such Mortgage Loans such that the Principal Balances of the related Mortgage
Loans could equal or exceed

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<PAGE> 216
the value of such Mortgaged Properties. As the residential real estate market
is influenced by many factors, including the general condition of the economy
and interest rates, no assurances may be given that the __________ residential
real estate market will not weaken. If the __________ residential real estate
market should experience an overall decline in property values after the dates
of origination of the Mortgage Loans, the rates of losses on the Mortgage Loans
would be expected to increase, and could increase substantially.

DELINQUENT MORTGAGE LOANS

The Trust Fund will include Mortgage Loans which are 89 or fewer days
delinquent as of the Cut-off Date. The Cut-off Date Pool Principal Balance of
Mortgage Loans which are between 30 days and 89 days delinquent as of the
Cut-off Date was $____________. If there are not sufficient Available Funds on
any Distribution Dates, the aggregate amount of principal returned to the
Certificateholders may be less than the respective Class Certificate Principal
Balances on the day the Certificates were issued.

RISK OF MORTGAGE LOAN YIELD REDUCING PASS-THROUGH RATES ON THE CLASS A-1
CERTIFICATES

The Pass-Through Rate on the Class A-1 Certificates is generally
expected to be based upon clause (i) of the definition thereof, which is
primarily based upon the value of One-Month LIBOR (as defined herein) as
adjusted every month, while the Mortgage Rates on the Group I Loans adjust
semiannually or annually based upon different indices, either [Six-Month LIBOR
or One-Year CMT], as described under "The Mortgage Pool--Mortgage Rate
Adjustment" herein. However, clause (ii) of the definition of the Pass-Through
Rate on the Class A-1 Certificates limits the Pass-Through Rate on the Class
A-1 Certificates to the Group I Class A Available Funds Pass-Through Rate,
which is generally based upon the Mortgage Rates on the Group I Loans, which
are subject to [Six-Month LIBOR or One-Year CMT.] As a result, the interest
paid to the Class A-1 Certificates may be less than would be determined using
clause (i) of the related definition of Pass-Through Rate. In particular,
because the Mortgage Rates on the Group I Loans adjust less frequently, the
Pass-Through Rate on the Class A-1 Certificates may be determined by the Group
I Class A Available Funds Pass-Through Rate for extended periods in a rising
interest rate environment. In addition, with respect to the Class A-1
Certificates, One-Month LIBOR, [Six-Month LIBOR and One-Year CMT] may respond
to different economic and market factors, and there is not necessarily any
correlation between them. Thus, it is possible, for example, that One-Month
LIBOR may rise during periods in which [Six-Month LIBOR or One-Year CMT] is
stable or is failing or that, even if One-Month LIBOR, [Six-Month LIBOR and
One-Year CMT] all rise during the same period, One-Month LIBOR may rise much
more rapidly than [Six-Month LIBOR and One-Year CMT]. In addition, the
Mortgage Rates on the Group I Loans are subject to the Periodic Rate Caps and
to specified Lifetime Rate Caps and Lifetime Rate Floors, and the Mortgage
Rates on the ____ Loans and _____ Loans, which represent _____% and ____% of
the Initial Group I Loans, respectively (by aggregate outstanding principal
balance as of the Statistical Reference Date), will not have a first Adjustment
Date until ____ years and _____ years, respectively, from the origination of
each such ____ Loan and ____ Loan.

THE SUBSEQUENT MORTGAGE LOANS

Subsequent Mortgage Loans may have characteristics different from
those of the related Initial Mortgage Loans. However, each Subsequent Mortgage
Loan must satisfy the eligibility criteria referred to herein under "The
Mortgage Pool--Conveyance of Subsequent Mortgage Loans and the Pre-Funding
Accounts" at the time of its conveyance to the Trust Fund and be underwritten
in accordance with the

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criteria set forth herein under "The Mortgage Pool--Underwriting" and Appendix
A to this Prospectus Supplement.

MANDATORY PREPAYMENT

To the extent that amounts on deposit in the Pre-Funding Accounts have
not been fully applied to the purchase of Subsequent Mortgage Loans by the
Trust Fund by the end of the related Funding Period, the Holders of the related
Class A Certificates will receive, as described herein, on the Distribution
Date occurring in ________, 199_, any amounts in the related Pre-Funding
Account after giving effect to any purchase of related Subsequent Mortgage
Loans. Although no assurances can be given, the Depositor intends that the
principal amount of Subsequent Mortgage Loans sold to the Trust Fund will
require the application of substantially all amounts on deposit in the
Pre-Funding Accounts and that there will be no material principal payment to
the related Class A Certificateholders on such Distribution Date.

BOOK-ENTRY CERTIFICATES

Issuance of the Class A Certificates in book-entry form may reduce the
liquidity of such Certificates in the secondary trading market since investors
may be unwilling to purchase Certificates for which they cannot obtain physical
certificates. See "Description of the Certificates--Book-Entry Registration"
herein and "Risk Factors--Book-Entry Registration" in the Prospectus.

Since transactions in the Book-Entry Certificates will be effected
only through DTC, Cedel, Euroclear, participating organizations, indirect
participants and certain banks, the ability of a Certificate Owner to pledge
Book-Entry Certificate to persons or entities that do not participate in the
DTC, Cedel or Euroclear systems may be limited due to lack of a physical
certificate representing such Certificates. See "Description of the
Certificates--Book-Entry Registration" herein and "Risk Factors--Book-Entry
Registration" in the Prospectus.

Certificate Owners may experience some delay in their receipt of
distributions of interest and principal on the Book-Entry Certificates since
such distributions will be forwarded by the Trustee to DTC, and DTC will credit
such distributions to the accounts of its Participants (as defined herein)
which will thereafter credit them to the accounts of Certificate Owners either
directly or indirectly through indirect participants. Certificate Owners will
not be recognized as Certificateholders as such term is used in the Pooling and
Servicing Agreement, and Certificate Owners will be permitted to exercise the
rights of Certificateholders only indirectly through DTC and its Participants.
See "Description of the Certificates--Book-Entry Registration" herein and "Risk
Factors--Book-Entry Registration" in the Prospectus.

THE MORTGAGE POOL

GENERAL

The statistical information presented in this Prospectus Supplement
describes only the mortgage loans included in the Trust Fund as of the Delivery
Date (with respect to Loan Group I and Loan Group II, the "Initial Group I
Loans" and "Initial Group II Loans," respectively) and does not include
mortgage loans purchased by the Trust Fund after the Delivery Date (the
"Subsequent Mortgage Loans"). In addition, such statistical information is
dated as of the Statistical Reference Date, and not as of the Cut-off Date, so
such information will vary slightly from the final initial Mortgage Pool.

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With respect to Loan Group I and Loan Group II, Subsequent Mortgage
Loans are intended to be purchased by the Trust Fund from the Depositor from
time to time on or before __________, 199_, from funds on deposit in the
Pre-Funding Accounts. The Subsequent Mortgage Loans, if available, will be
purchased by the Depositor, and sold by the Depositor to the Trust Fund to
become part of the related Loan Group. The Pooling and Servicing Agreement
will provide that the Group I Loans and Group II Loans, following the
conveyance of the Subsequent Mortgage Loans, must conform in the aggregate for
each such Loan Group as determined separately to certain specified
characteristics described below under "--Conveyance of Subsequent Mortgage
Loans and the Pre-Funding Accounts." In the sole discretion of the Certificate
Insurer, Subsequent Mortgage Loans with characteristics varying from those
described herein may be purchased by the Trust Fund; provided, however, that
the addition of such Group I Loans and Group II Loans will not materially
affect the aggregate characteristics of the entire related Loan Group.

The Mortgage Loans underlying the Certificates consist of the "Group I
Loans," which had an aggregate outstanding principal balance as of the
Statistical Reference Date of $_______________ and the "Group II Loans," which
had an aggregate outstanding principal balance as of the Statistical Reference
Date of $_____________ (each such group of Mortgage Loans, "Loan Group I" or
"Loan Group II," respectively, or a "Loan Group"). The Group I Loans will
consist of adjustable rate, monthly payment, first lien mortgage loans with
terms to maturity of approximately __ years from the date of origination or
modification. The Group II Loans will generally consist of fixed-rate, monthly
payment, first, second and third lien mortgage loans. Approximately ___% of
the Initial Group II Mortgage Loans have terms to maturity from the date of
origination or modification of __ years and approximately _____% of the Initial
Group II Mortgage Loans have terms to maturity from the date of origination or
modification of __ years or less. The Mortgage Loans will be originated or
acquired by the Seller, substantially in accordance with the underwriting
criteria described herein under "--Underwriting" below and in Appendix A. The
Depositor will acquire the Group I Loans and Group II Loans to be included in
Mortgage Pool from the Seller. The Seller in turn either originated such
Mortgage Loans or acquired them pursuant to various mortgage loan purchase
agreements. The Seller will make certain representations and warranties with
respect to the Mortgage Loans and, as more particularly described in the
Prospectus, will have certain repurchase or substitution obligations in
connection with a breach of any such representation or warranty, as well as in
connection with an omission or defect in respect of certain constituent
documents required to be delivered with respect to the Mortgage Loans, in any
event if such breach, omission or defect cannot be cured and it materially and
adversely affects the interests of Certificateholders. See "The Trust
Fund--Representations by Sellers; Repurchases" and "The Agreements--Assignment
of Trust Fund Assets" in the Prospectus. The Mortgage Loans will have been
originated or acquired by the Seller in accordance with the underwriting
criteria described herein. See "--Underwriting" below and Appendix A to this
Prospectus Supplement.

Pursuant to the terms of the Pooling and Servicing Agreement, the
Depositor will assign the representations and warranties made by the Seller to
the Trustee for the benefit of the Certificateholders and the Certificate
Insurer.

Each Mortgage Loan will contain a customary "due-on-sale" clause. See
"Certain Legal Aspects of Loans--Due-On-Sale Clauses" in the Prospectus.

Approximately _____% and _____% of the Initial Group I Loans and
Initial Group II Loans, respectively, provide for payment of a prepayment
charge. Generally, each such Mortgage Loan provides for payment of a
prepayment charge for certain partial prepayments and all prepayments in full
made within approximately three or five years of the origination of such
Mortgage Loan, in an amount equal

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<PAGE> 219
to six months' advance interest on the amount of the prepayment that, when
added to all other amounts prepaid during the twelve-month period immediately
preceding the date of the prepayment, exceeds twenty percent of the original
principal amount of the Mortgage Loan. The Seller will be entitled to all
prepayment charges received on the Mortgage Loans and such amounts will not be
available for distribution on the Certificates.

[None] of the Mortgage Loans are covered by a primary mortgage
insurance policy. See "Credit Enhancement--Pool Insurance Policies" in the
Prospectus.

MORTGAGE RATE ADJUSTMENT

The Mortgage Rate (as defined herein) on each Group I Loan will be
subject to adjustment, commencing (i) with respect to approximately ____% of
the Initial Group I Loans, approximately ___ months after the date of
origination, (ii) with respect to approximately ____% of the Initial Group I
Loans, approximately ______ years after origination (each such Group I Loan, a
"____ Loan") and (iii) with respect to approximately ___% of the Initial Group
I Loans, approximately _______ years after origination (each such Group I Loan,
a "____ Loan"). [The Mortgage Rate on each Group I Loan (i) with an Index of
Six-Month LIBOR, will adjust semi-annually (except with respect to
approximately _____% of the Initial Group I Loans, which will adjust every
three years) or (ii) with an Index of One-Year CMT, will adjust annually, in
each case on the first day of the months specified in the related Mortgage Note
(each such date, an "Adjustment Date") to a rate equal to the sum, generally
rounded to the nearest one-eighth of one percentage point (12.5 basis points),
of (i) the related Index plus (ii) a fixed percentage (the "Gross Margin"),
which is generally subject to a maximum increase or decrease in the Mortgage
Rate on any Adjustment Date (the "Periodic Rate Cap") of _____% with respect to
approximately ____% of the Initial Group I Loans and ____% with respect to
approximately ____% of the Initial Group I Loans (which percentage includes the
initial ___ Loans, which loans have a Periodic Rate Cap of ____ for the first
Adjustment Date and for each Adjustment Date thereafter, and _____ Loans, which
loans have a Periodic Rate Cap of _____% for the first Adjustment Date and
_____ for each Adjustment Date thereafter), each by aggregate Principal Balance
as of the Statistical Reference Date and to specified maximum and minimum
lifetime Mortgage Rates ("Lifetime Rate Caps" and "Lifetime Rate Floors,"
respectively).] The Mortgage Loans were generally originated with an initial
Mortgage Rate below the sum of the current Index and the Gross Margin. The
Index applicable with respect to the Group I Loans is based upon either [(i)
the average of the interbank offered rates for six-month United States dollar
deposits in the London market ("Six-Month LIBOR") as published in The Wall
Street Journal and as most recently available as of the first business day
forty-five, thirty or five days prior to the Adjustment Date, as specified in
the related Mortgage Note or (ii) the weekly average yield on U.S. Treasury
securities adjusted to a constant maturity of one year ("One-Year CMT") as
published by the Federal Reserve Board in Statistical Release H.15(519) and
most recently available as of the first business day forty-five days prior to
the Adjustment Date], as specified in the related Mortgage Note. The Index for
all of the Initial Group I Loans will be [Six-Month LIBOR]. Subsequent
Mortgage Loans in Loan Group I will have an Index based on either [Six-Month
LIBOR or One-Year CMT]. Due to the application of the Periodic Rate Caps,
Lifetime Rate Caps and Lifetime Rate Floors, the Mortgage Rate on any Group I
Loan as adjusted on any related Adjustment Date, may not equal the sum of the
related Index and the Gross Margin. The Mortgage Rate on each Group II Loan is
fixed. The Due Date is generally the first day of the month of all of the
Mortgage Loans.

Approximately _____% of the Initial Group I Loans, including all
Initial Group I Loans that are ___ Loans and ___ Loans, will not have reached
their first Adjustment Date on or before the Statistical Reference Date. The
initial Mortgage Rate with respect to such Mortgage Loans is generally lower
than

S-31
<PAGE> 220
the rate that would have been produced if the applicable Gross Margin had been
added to the Index in effect at origination. Group I Loans that have not
reached their first Adjustment Date are, therefore, more likely to be subject
to the Periodic Rate Cap on their first Adjustment Date.

MORTGAGE LOAN CHARACTERISTICS

Group I Loans

The Initial Group I Loans will consist of Mortgage Loans with an
aggregate Principal Balance outstanding as of the Statistical Reference Date,
after deducting payments of principal due on or prior to such date, of
$_____________. All percentages of the Initial Group I Loans described herein
are approximate percentages (except as otherwise indicated) by aggregate
principal balance as of the Statistical Reference Date.

Approximately _____% of the Initial Group I Loans have original terms
to stated maturity of approximately __ years and approximately _____% of the
Initial Group I Loans have terms to stated maturity of approximately ___ years.

Effective with the first payment due on a Group I Loan after each
related Adjustment Date, the Monthly Payment will be adjusted to an amount that
will fully amortize the outstanding principal balance of the Mortgage Loan over
its remaining term. The weighted average number of months from the Statistical
Reference Date to the next Adjustment Date for the Initial Group I Loans is
approximately __ months.

As of the Statistical Reference Date, each Initial Group I Loan will
have an unpaid principal balance of not less than $______ or more than $_______
and the average unpaid principal balance of the Initial Group I Loans will be
approximately $__________. The latest stated maturity date of any of the
Initial Group I Loans will be ____________, 20__; however, the actual date on
which any Mortgage Loan is paid in full may be earlier than the stated maturity
date due to unscheduled payments of principal. Based on information supplied
by the mortgagors in connection with their loan applications at origination,
approximately _____% of the Initial Group I Loans will be secured by Mortgaged
Properties which are owner occupied primary residences, approximately _____% of
the Initial Group I Loans will be secured by Mortgaged Properties which are
second homes and approximately ____% of the Initial Group I Loans will be
secured by Mortgaged Properties which are non-owner occupied properties. No
Initial Group I Loan provides for negative amortization or deferred interest.

Set forth below is a description of certain additional characteristics
of the Initial Group I Loans as of the Statistical Reference Date (except as
otherwise indicated). Dollar amounts and percentages may not add up to totals
due to rounding.

S-32
<PAGE> 221
INITIAL MORTGAGE RATES

<TABLE>
<CAPTION>
Percentage of
Statistical Reference Date
Number of Initial Aggregate Unpaid Aggregate
Initial Mortgage Rate Group I Loans Principal Balance Principal Balance
--------------------- --------------------------- ----------------------------- -----------------------------
<S> <C> <C> <C>

</TABLE>

The weighted average Initial Mortgage Rate of the Initial Group I
Loans will be approximately ____% per annum.

S-33
<PAGE> 222
NEXT INTEREST ADJUSTMENT DATE

<TABLE>
<CAPTION>
Percentage of
Statistical Reference Date
Number of Initial Aggregate Unpaid Aggregate
Next Interest Adjustment Date Group I Loans Principal Balance Principal Balance
----------------------------- ------------------------ ------------------------- --------------------------
<S> <C> <C> <C>

</TABLE>

The weighted average remaining months to the next interest Adjustment
Date of the Initial Group I Loans will be approximately __ months.

GROSS MARGIN

<TABLE>
<CAPTION>
Percentage of
Statistical Reference Date
Number of Initial Aggregate Unpaid Aggregate
Gross Margins Group I Loans Principal Balance Principal Balance
------------- -------------------------- ------------------------- -------------------------------
<S> <C> <C> <C>

</TABLE>

The weighted average Gross Margin of the Initial Group I Loans will be
approximately ____% per annum.

S-34
<PAGE> 223
LIFETIME RATE CAP

<TABLE>
<CAPTION>
Percentage of
Statistical Reference Date
Number of Initial Aggregate Unpaid Aggregate
Lifetime Rate Cap Group I Loans Principal Balance Principal Balance
----------------- ------------------------- ------------------------ --------------------------------
<S> <C> <C> <C>

</TABLE>

The weighted average Lifetime Rate Cap of the Initial Group I Loans
will be approximately _____% per annum.

LIFETIME RATE FLOOR

<TABLE>
<CAPTION>
Percentage of
Statistical Reference Date
Number of Initial Aggregate Unpaid Aggregate
Lifetime Rate Floor Group I Loans Principal Balance Principal Balance
------------------- ------------------------- ------------------------ -------------------------------
<S> <C> <C> <C>

</TABLE>

The weighted average Lifetime Rate Floor of the Initial Group I Loans
(other than the Initial Group I Loans which have a Lifetime Rate Floor of
_____%) will be approximately _____% per annum.

S-35
<PAGE> 224

REMAINING MONTHS TO STATED MATURITY

<TABLE>
<CAPTION>
Percentage of
Remaining Months Statistical Reference Date
to Number of Initial Aggregate Unpaid Aggregate
Stated Maturity Group I Loans Principal Balance Principal Balance
--------------- --------------------------- -------------------------- ---------------------------------
<S> <C> <C> <C>

</TABLE>

The weighted average remaining term to stated maturity of the Initial
Group I Loans will be approximately ___ months.

YEARS OF ORIGINATION

<TABLE>
<CAPTION>
Percentage of
Statistical Reference Date
Number of Initial Aggregate Unpaid Aggregate
Years of Origination Group I Loans Principal Balance Principal Balance
-------------------- ------------------------- ------------------------- --------------------------------
<S> <C> <C> <C>

</TABLE>

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<PAGE> 225
The earliest month and year of origination of any Initial Group I Loan
is ____________ and the latest month and year of origination will be __________.

ORIGINAL LOAN-TO-VALUE RATIOS

<TABLE>
<CAPTION>
Percentage of
Statistical Reference Date
Number of Initial Aggregate Unpaid Aggregate
Original Loan-to-Value Ratios Group I Loans Principal Balance Principal Balance
----------------------------- ----------------------- ------------------------ ----------------------------
<S> <C> <C> <C>

</TABLE>

The minimum and maximum Loan-to-Value Ratios at origination of the
Initial Group I Loans were approximately ____% and ______%, respectively, and
the weighted average Loan-to-Value Ratio at origination of the Initial Group I
Loans was approximately _______%.

MORTGAGE LOAN PROGRAM

<TABLE>
<CAPTION>
Percentage of
Statistical Reference Date
Number of Initial Aggregate Unpaid Aggregate
Loan Program Group I Loans Principal Balance Principal Balance
------------ ------------------------- ------------------------ --------------------------------
<S> <C> <C> <C>

</TABLE>

S-37
<PAGE> 226
See "--Underwriting" below and Appendix A to the Prospectus Supplement
for a description of the Seller's mortgage loan documentation programs.

ORIGINAL MORTGAGE LOAN PRINCIPAL BALANCES

<TABLE>
<CAPTION>
Percentage of
Original Statistical Reference Date
Mortgage Loan Number of Initial Aggregate Unpaid Aggregate
Original Balance Group I Loans Principal Balance Principal Balance
------------------------- ------------------------- ------------------------ -------------------------------
<S> <C> <C> <C>

</TABLE>

The average original principal balance of the Initial Group I Loans
will be approximately $_________.

PROPERTY TYPES

<TABLE>
<CAPTION>
Percentage of
Statistical Reference Date
Number of Initial Aggregate Unpaid Aggregate
Property Type Group I Loans Principal Balance Principal Balance
------------- ------------------------- ------------------------ --------------------------------
<S> <C> <C> <C>

</TABLE>

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<PAGE> 227
RISK CATEGORIES

<TABLE>
<CAPTION>
Percentage of
Statistical Reference Date
Number of Initial Aggregate Unpaid Aggregate
Risk Classification Group I Loans Principal Balance Principal Balance
------------------- ------------------------- ------------------------ -------------------------------
<S> <C> <C> <C>

</TABLE>

See "--Underwriting" below and Appendix A to this Prospectus
Supplement for a description of the Seller's risk classifications.

GEOGRAPHIC DISTRIBUTION OF MORTGAGED PROPERTIES

<TABLE>
<CAPTION>
Percentage of
Statistical Reference Date
Number of Initial Aggregate Unpaid Aggregate
State Group I Loans Principal Balance Principal Balance
----- ------------------------- ------------------------ ------------------------------
<S> <C> <C> <C>

</TABLE>

S-39
<PAGE> 228
No more than approximately ____% of the Initial Group I Loans will be
secured by Mortgaged Properties located in any one zip code.

PURPOSES OF GROUP I LOANS

<TABLE>
<CAPTION>
Percentage of
Statistical Reference Date
Number of Initial Aggregate Unpaid Aggregate
Loan Purpose Group I Loans Principal Balance Principal Balance
------------ ------------------------- ------------------------ ------------------------------
<S> <C> <C> <C>

</TABLE>

In general, in the case of a Mortgage Loan made for "rate/term"
refinance purposes (not for "equity take-out"), substantially all of the
proceeds are used to pay in full the principal balance of a previous mortgage
loan of the mortgagor with respect to a Mortgaged Property and to pay
origination and closing costs associated with such refinancing. Mortgage Loans
made for "equity take out" may involve use of a portion of the proceeds to pay
in full the principal balance of such previous mortgage loan and related costs
but the proceeds are generally retained by the mortgagor for uses unrelated to
the Mortgaged Property. The amount of such proceeds retained by the mortgagor
may be substantial.

OCCUPANCY STATUS

<TABLE>
<CAPTION>
Percentage of
Statistical Reference Date
Number of Initial Aggregate Unpaid Aggregate
Occupancy Group I Loans Principal Balance Principal Balance
--------- ------------------------- ------------------------ ------------------------------
<S> <C> <C> <C>

</TABLE>

S-40
<PAGE> 229
Group II Loans

The Initial Group II Loans will consist of Mortgage Loans with an
aggregate Principal Balance outstanding as of the Statistical Reference Date,
after deducting payments of principal due on or prior to such date, of
$___________. All percentages of the Initial Group II Loans described herein
are approximate percentages (except as otherwise indicated) by aggregate
principal balance as of the Statistical Reference Date.

Approximately _____% of the Initial Group II Loans have original terms
to stated maturity of approximately __ years.

As of the Statistical Reference Date, each Initial Group II Loan will
have an unpaid principal balance of not less than $_________ or more than
$_______ and the average unpaid principal balance of the Initial Group II Loans
will be approximately $__________. The latest stated maturity date of any of
the Initial Group II Loans will be _______________, 20__; however, the actual
date on which any Mortgage Loan is paid in full may be earlier than the stated
maturity date due to unscheduled payments of principal. Based on information
supplied by the mortgagors in connection with their loan applications at
origination, approximately _____% of the Initial Group II Loans will be secured
by Mortgaged Properties which are owner occupied primary residences,
approximately _____% of the Initial Group II Loans will be secured by Mortgaged
Properties which are second homes and approximately _______% of the Initial
Group II Loans will be secured by Mortgaged Properties which are non-owner
occupied properties. No Initial Group II Loan provides for negative
amortization or deferred interest.

Set forth below is a description of certain additional characteristics
of the Group II Loans as of the Statistical Reference Date (except as otherwise
indicated). Dollar amounts and percentages may not add up to totals due to
rounding.

MORTGAGE RATES

<TABLE>
<CAPTION>
Percentage of
Statistical Reference Date
Number of Initial Aggregate Unpaid Aggregate
Mortgage Rates Group II Loans Principal Balance Principal Balance
-------------- ------------------------- ------------------------ -----------------------------
<S> <C> <C> <C>

</TABLE>

S-41
<PAGE> 230
The weighted average Mortgage Rate of the Initial Group II Loans will
be approximately ____% per annum.

REMAINING MONTHS TO STATED MATURITY

<TABLE>
<CAPTION>
Percentage of
Remaining Months Statistical Reference Date
to Number of Initial Aggregate Unpaid Aggregate
Stated Maturity Group II Loans Principal Balance Principal Balance
--------------- ------------------------- ------------------------ --------------------------------
<S> <C> <C> <C>

</TABLE>

The weighted average remaining term to stated maturity of the Initial
Group II Loans will be approximately ___ months.

YEARS OF ORIGINATION

<TABLE>
<CAPTION>
Percentage of
Statistical Reference Date
Number of Initial Aggregate Unpaid Aggregate
Years of Origination Group II Loans Principal Balance Principal Balance
-------------------- ------------------------- ------------------------ -------------------------------
<S> <C> <C> <C>

</TABLE>

S-42
<PAGE> 231
The earliest month and year of origination of any Initial Group II
Loan is ______________ and the latest month and year of origination is
___________.

ORIGINAL LOAN-TO VALUE RATIOS(1)

<TABLE>
<CAPTION>
Percentage of
Statistical Reference Date
Number of Initial Aggregate Unpaid Aggregate
Original Loan-to-Value Ratios Group II Loans Principal Balance Principal Balance
----------------------------- ----------------------- ------------------------ -----------------------------
<S> <C> <C> <C>

</TABLE>

- -----------------
(1) The Loan-to-Value Ratio of Group II Loans secured by second and third
liens includes the outstanding principal balance of the related senior liens.

The minimum and maximum Loan-to-Value Ratios at origination of the
Initial Group II Loans were approximately ___% and ___%, respectively, and the
weighted average Loan-to-Value Ratio at origination of the Initial Group II
Loans was approximately ____%.

MORTGAGE LOAN PROGRAM

<TABLE>
<CAPTION>
Percentage of
Statistical Reference Date
Number of Initial Aggregate Unpaid Aggregate
Loan Program Group II Loans Principal Balance Principal Balance
------------ ------------------------- ------------------------ --------------------------------
<S> <C> <C> <C>

</TABLE>

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<PAGE> 232
See "--Underwriting" below and Appendix A to the Prospectus Supplement
for a description of the Seller's mortgage loan documentation programs.

ORIGINAL MORTGAGE LOAN PRINCIPAL BALANCES

<TABLE>
<CAPTION>
Percentage of
Original Statistical Reference Date
Mortgage Loan Number of Initial Aggregate Unpaid Aggregate
Principal Balance Group II Loans Principal Balance Principal Balance
----------------- ------------------------- ------------------------ -------------------------------
<S> <C> <C> <C>

</TABLE>

The average original principal balance of the Initial Group II Loans
will be approximately $____________.

PROPERTY TYPE

<TABLE>
<CAPTION>
Percentage of
Statistical Reference Date
Number of Initial Aggregate Unpaid Aggregate
Property Type Group II Loans Principal Balance Principal Balance
------------- ------------------------- ------------------------ ------------------------------
<S> <C> <C> <C>
</TABLE>

S-44
<PAGE> 233
RISK CATEGORIES

<TABLE>
<CAPTION>
Percentage of
Statistical Reference Date
Number of Initial Aggregate Unpaid Aggregate
Risk Classification Group II Loans Principal Balance Principal Balance
------------------- ------------------------- ------------------------ ------------------------------
<S> <C> <C> <C>

</TABLE>

See "--Underwriting" below and Appendix A to this Prospectus
Supplement for a description of the Seller's risk classifications.

GEOGRAPHIC DISTRIBUTION OF MORTGAGED PROPERTIES

<TABLE>
<CAPTION>
Percentage of
Statistical Reference Date
Number of Initial Aggregate Unpaid Aggregate
State Group II Loans Principal Balance Principal Balance
----- ------------------------- ------------------------ -------------------------------
<S> <C> <C> <C>

</TABLE>

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<PAGE> 234
No more than approximately ____% of the Initial Group II Loans will be
secured by Mortgaged Properties located in any one zip code.

PROPERTIES OF GROUP II LOANS

<TABLE>
<CAPTION>
PERCENTAGE OF
STATISTICAL REFERENCE DATE
NUMBER OF INITIAL AGGREGATE UNPAID AGGREGATE
LOAN PURPOSE GROUP II LOANS PRINCIPAL BALANCE PRINCIPAL BALANCE
------------ ------------------------- ------------------------ -------------------------------
<S> <C> <C> <C>

</TABLE>

In general, in the case of a Mortgage Loan made for "rate/term"
refinance purposes (not for "equity take-out"), substantially all of the
proceeds are used to pay in full the principal balance of a previous mortgage
loan of the mortgagor with respect to a Mortgaged Property and to pay
origination and closing costs associated with such refinancing. Mortgage Loans
made for "equity take out" may involve the use of a portion of the proceeds to
pay in full the principal balance of such previous mortgage loan and related
costs but the proceeds are generally retained by the mortgagor for uses
unrelated to the Mortgaged Property. The amount of such proceeds retained by
the mortgagor may be substantial.

OCCUPANCY STATUS

S-46
<PAGE> 235
<TABLE>
<CAPTION>
Percentage of
Statistical Reference Date
Number of Initial Aggregate Unpaid Aggregate
Occupancy Group II Loans Principal Balance Principal Balance
--------- ------------------------- ------------------------ -------------------------------
<S> <C> <C> <C>

</TABLE>

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<PAGE> 236
CONVEYANCE OF SUBSEQUENT MORTGAGE LOANS AND THE PRE-FUNDING ACCOUNTS

With respect to Loan Group I and Loan Group II, under the Pooling and
Servicing Agreement, following the initial issuance of the Certificates, the
Trust Fund will be obligated to purchase from the Depositor during the Funding
Period, subject to the availability thereof, additional Mortgage Loans (the
"Subsequent Mortgage Loans") secured by first, second and third liens on one-to
four-family residential properties. Each Subsequent Mortgage Loan will have
been underwritten in accordance with the criteria set forth herein under "The
Mortgage Pool--Underwriting" and Appendix A to this Prospectus Supplement.
Subsequent Mortgage Loans will be transferred to the Trust Fund pursuant to
subsequent transfer instruments (the "Subsequent Transfer Instruments") between
the Depositor and the Trust Fund. In connection with the purchase of
Subsequent Mortgage Loans on such dates of transfer (the "Subsequent Transfer
Dates"), the Trust Fund will be required to pay to the Depositor from amounts
on deposit in one of the Pre-Funding Accounts (as defined below) a cash
purchase price of 100% of the principal balance thereof. The Depositor will
designate the Subsequent Transfer Date as the cut-off date (the "Subsequent
Cut-off Date") with respect to the related Subsequent Mortgage Loans purchased
on such date. The amount paid from each Pre-Funding Account on each Subsequent
Transfer Date will not include accrued interest on the related Subsequent
Mortgage Loans. Following each Subsequent Transfer Date, the aggregate
principal balance of the Mortgage Loans in the related Loan Group will increase
by an amount equal to the aggregate principal balance of the related Subsequent
Mortgage Loans so purchased and the amount in the related Pre-Funding Account
will decrease accordingly.

Two accounts (each, a "Pre-Funding Account") will be established by
the Trustee and funded by the Depositor with approximately $_______ with
respect to Loan Group I (the "Original Group I Pre-Funded Amount") and
$____________ with respect to Loan Group II (the "Original Group II Pre-Funded
Amount") on the Delivery Date to provide the Trust Fund with sufficient funds
to purchase Subsequent Mortgage Loans. The related Original Pre-Funded Amount
will be reduced during the Funding Period by the amount used to purchase
Subsequent Mortgage Loans for a related Loan Group in accordance with the
Pooling and Servicing Agreement (on any date of determination, the related
Original Pre-Funded Amount as so reduced, the "Pre-Funded Amount"). During the
period (the "Funding Period"), determined separately for Loan Group I and Loan
Group II, from the Delivery Date until the earliest of (i) the date on which
the amount on deposit in the related Pre-Funding Account is less than $10,000
or (ii) _______________, 199_, the related Pre-Funded Amount will be maintained
in the related Pre-Funding Account.

Any conveyance of Subsequent Mortgage Loans on a Subsequent Transfer
Date is subject to certain conditions including, but not limited to: (a) each
such Subsequent Mortgage Loan must satisfy the representations and warranties
specified in the related Subsequent Transfer Instrument and the Pooling and
Servicing Agreement; (b) the Depositor will not select such Subsequent Mortgage
Loans in a manner that it believes is adverse to the interests of the
Certificateholders or the Certificate Insurer; (c) the Depositor will deliver
certain opinions of counsel acceptable to the Certificate Insurer with respect
to the validity of the conveyance of such Subsequent Mortgage Loans; (d) as of
the respective Subsequent Cutoff Date the Subsequent Mortgage Loans will
satisfy the following criteria: (i) such Subsequent Mortgage Loan may not be 30
or more days contractually delinquent as of the related Subsequent Cut-off
Date; (ii) the remaining stated term to maturity of such Subsequent Mortgage
Loan will not exceed 360 months; (iii) such Subsequent Mortgage Loan may not
provide for negative amortization; (iv) such Subsequent Mortgage Loan will be
underwritten in accordance with the criteria set forth under "The Mortgage
Pool--Underwriting" herein and Appendix A to this Prospectus Supplement; (v)
such Subsequent Mortgage Loan will not have a Loan-to-Value Ratio (or Combined
Loan-to-Value Ratio in the case of second lien Mortgage Loans) greater than
100%; and (vi) such Subsequent Mortgage Loans will have as

S-48
<PAGE> 237
of the end of the Funding Period, a weighted average term since origination not
in excess of [__] months. In addition, following the purchase of any
Subsequent Mortgage Loan by the Trust Fund, the Group I Loans and Group II
Loans (including the related Subsequent Mortgage Loans) will, as determined
separately for each Loan Group: (i) have a weighted average original term to
stated maturity of not more than 360 months; (ii) have a weighted average
Loan-to-Value Ratio (or weighted average Combined Loan-to-Value Ratio in the
case of second and third lien Mortgage Loans) of not more than _____% with
respect to Loan Group I, and _____% with respect to Loan Group II, each by
aggregate principal balance of the related Mortgage Loans; (iii) have no
related Mortgage Loan with a principal balance in excess of $_______; and (iv)
have a weighted average Gross Margin not less than ____% with respect to the
Group I Loans. In addition, the Trustee shall not agree to any Subsequent
Transfer without a signed certification from the Certificate Insurer that the
Subsequent Mortgage Loans meet the above criteria plus any additional criteria
in the Insurance Agreement. In the sole discretion of the Certificate Insurer,
Subsequent Mortgage Loans with characteristics varying from those set forth
above may be purchased by the Trust Fund; provided, however, that the addition
of such Mortgage Loans will not materially affect the aggregate characteristics
of the entire related Loan Group.

UNDERWRITING

[Description will depend on the particulars of the Seller]

The Standard Non-Conforming Program

All of the Mortgage Loans were underwritten by the Seller in
accordance with the "Standard NonConforming Program" which does not meet the
credit underwriting standards of FNMA or FHLMC. This program is described in
detail in Appendix A to this Prospectus Supplement. The Seller's current
single family mortgage loan volume is generally originated based on loan
packages submitted through a mortgage broker network. Such loan packages,
which generally contain relevant credit, property and underwriting information
on the loan request, are compiled by the applicable mortgage broker and
submitted to the Seller for approval and funding. The mortgage broker receives
as compensation all or a portion of the loan origination fee charged to the
mortgagor at the time the loan is made. As part of their quality control
procedures, the Seller accepts loan packages submitted by preapproved mortgage
brokers. In connection with the approval process, they require that the
mortgage broker be licensed by the appropriate state agencies, as required, and
review a package of documents consisting of, among other things, an
application, resumes of key personnel, narrative of the company, organizational
documentation and financial statements. At least annually, the Seller reviews
the performance of each of its respective mortgage brokers for poor processing,
misrepresentation, fraud or delinquency, and substandard mortgage brokers are
terminated.

Each prospective mortgagor completes a mortgage loan application that
includes information with respect to the applicant's liabilities, income,
credit history, employment history and personal information. At least two
credit reports on each applicant from national credit reporting companies are
required. The report typically contains information relating to such matters
as credit history with local and national merchants and lenders, installment
debt payments and any record of defaults, bankruptcies, repossessions, or
judgments.

Mortgaged properties are appraised by licensed appraisers. The Seller
does not approve all appraisers but instead relies on the mortgage brokers to
evaluate the appraiser's experience and ability; however, in the event that a
mortgage broker uses an appraiser who has not been approved by the Seller, the
related appraisal will be reviewed by an approved appraiser of the Seller for
conformance with its

S-49
<PAGE> 238
guidelines. The Seller requires the appraiser to address neighborhood
conditions, site and zoning status and condition and valuation of improvements.
Following each appraisal, the appraiser prepares a report which includes a
reproduction cost analysis (when appropriate) based on the current cost of
constructing a similar home and a market value analysis based on recent sales
of comparable homes in the area. All appraisals are required to conform to the
Uniform Standards of Professional Appraisal Practice and FIRREA and must be on
forms acceptable to FNMA and FHLMC. Every appraisal is reviewed by a
non-affiliated appraisal review firm, or by another review appraiser acceptable
to the Seller before the mortgage loan is made.

ADDITIONAL INFORMATION

The description in this Prospectus Supplement of the Mortgage Pool and
the Mortgaged Properties is based upon the Mortgage Pool as constituted at the
close of business on the Statistical Reference Date, as adjusted for the
scheduled principal payments due on or before such date. Prior to the issuance
of the Class A Certificates, Mortgage Loans may be removed from the Mortgage
Pool as a result of incomplete documentation or otherwise, if the Depositor
deems such removal necessary or appropriate. A limited number of other
mortgage loans may be added to the Mortgage Pool prior to the issuance of the
Class A Certificates. The Depositor believes that the information set forth
herein will be substantially representative of the characteristics of the
Mortgage Pool as it will be constituted at the time the Class A Certificates
are issued although the range of Mortgage Rates and maturities and certain
other characteristics of the Mortgage Loans in the Mortgage Pool may vary.

A Current Report on Form 8-K will be available to purchasers of the
Class A Certificates and will be filed, together with the Pooling and Servicing
Agreement, with the Securities and Exchange Commission within fifteen days
after the initial issuance of the Class A Certificates. In the event Mortgage
Loans are removed from or added to the Mortgage Pool as set forth in the
preceding paragraph, such removal or addition will be noted in the Current
Report on Form 8-K. In addition, a Current Report on Form 8-K will be filed
following each purchase of Subsequent Mortgage Loans.

DESCRIPTION OF THE CERTIFICATES

GENERAL

The Mortgage Loan Asset-Backed Pass-Through Certificates, Series 199_,
__ (the "Certificates") will include the following two senior classes (the
"Class A Certificates"): (i) Class A-1 Certificates (the "Class A-1
Certificates") and (ii) Class A-2 Certificates (the "Class A-2 Certificates").
In addition to the Class A Certificates, the Mortgage Loan Asset-Backed
Pass-Through Certificates, Series 199_, __ will include the Class I S
Certificates (the "Group I Subordinate Certificates"), the Class II S
Certificates (the "Group II Subordinate Certificates"; and, together with the
Group I Subordinate Certificates, the "Subordinate Certificates") and the Class
R Certificates (the "Residual Certificates"). Only the Class A Certificates
are offered hereby. The Pass-Through Rate (as defined herein) on the Class A-1
Certificates is adjustable and is calculated as described under "--Class A
Interest Distribution Amounts" below. The Pass-Through Rate on the Class A-2
Certificates is fixed at ____% per annum, subject to increase as described
herein. Interest distributions on the Class A Certificates will be payable
monthly at one-twelfth the annual rate.

The Certificates will evidence the entire beneficial ownership
interest in the Trust Fund. The Trust Fund will consist of: (i) the Mortgage
Loans; (ii) such assets as from time to time are identified

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as deposited in respect of the Mortgage Loans in the Certificate Accounts;
(iii) property acquired by foreclosure of such Mortgage Loans or deed in lieu
of foreclosure; (iv) the Trustee's rights with respect to the Mortgage Loans
under all insurance policies (including the Certificate Insurance Policies)
required to be maintained pursuant to the Pooling and Servicing Agreement and
any proceeds thereof; (v) liquidation proceeds; (vi) released mortgaged
property proceeds; and (vii) amounts on deposit in the Interest Coverage
Accounts and the Pre-Funding Accounts.

Distributions on the Class A Certificates will be made on the 25th day
of each month or, if such day is not a business day, then on the next
succeeding business day (each, a "Distribution Date"), commencing in
___________ 199_, to Certificateholders of record on the immediately preceding
Record Date. The record date (the "Record Date") for each Distribution Date
will be the close of business on the last day of the month immediately
preceding the related Distribution Date.

The Class A Certificates will be issued, maintained and transferred on
the book-entry records of The Depository Trust Company ("DTC") and its
Participants (as defined in the Prospectus).

The Class A Certificates will be represented by one or more
certificates registered in the name of the nominee of DTC (Class A Certificates
so registered, "Book-Entry Certificates"). No person acquiring an interest in
the Class A Certificates will be entitled to receive a certificate representing
such person's interest (a "Definitive Certificate"), except as set forth below
under "--Book-Entry Registration." Unless and until Definitive Certificates are
issued for the Class A Certificates under the limited circumstances described
herein, all references to actions by Certificateholders with respect to the
Class A Certificates shall refer to actions taken by DTC upon instructions from
its Participants, and all references herein to distributions, notices, reports
and statements to Certificateholders with respect to the Class A Certificates
shall refer to distributions, notices, reports and statements to DTC or its
nominee, as the registered holder of the Class A Certificates, for distribution
to Certificate Owners by DTC in accordance with DTC procedures.

BOOK-ENTRY REGISTRATION

Each Class of Book-Entry Certificates will be issued in one or more
certificates which equal the aggregate initial Class Certificate Balance of
each such Class of Certificates and which will be held by a nominee of The
Depository Trust Company (together with any successor depository selected by
the Depositor, the "Depository"). Beneficial interests in the Book-Entry
Certificates will be held indirectly by investors through the book-entry
facilities of the Depository, as described herein. Investors may hold such
beneficial interests in the Book-Entry Certificates in minimum denominations
representing an original principal amount of [$25,000] and integral multiples
of [$1] in excess thereof. One investor of each Class of Book-Entry
Certificates may hold a beneficial interest therein that is not an integral
multiple of $1,000. The Depositor has been informed by the Depository that its
nominee will be Cede & Co. ("CEDE"). Accordingly, CEDE is expected to be the
holder of record of the Book-Entry Certificates. Except as described in the
Prospectus under "Description of the Securities--Book-Entry Registration of
Securities," no person acquiring a Book-Entry Certificate (each, a "beneficial
owner") will be entitled to receive a physical certificate representing such
Definitive Certificate.

Unless and until Definitive Certificates are issued, it is anticipated
that the only "Certificateholder" of the Book-Entry Certificates will be CEDE,
as nominee of the Depository. Beneficial owners of the Book-Entry Certificates
will not be Certificateholders, as that term is used in the Pooling and
Servicing Agreement. Beneficial owners are only permitted to exercise the
rights of Certificateholders indirectly through Financial Intermediaries and
the Depository. Monthly and annual

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reports on the Trust Fund provided to CEDE, as nominee of the Depository, may
be made available to beneficial owners upon request, in accordance with the
rules, regulations and procedures creating and affecting the Depository, and to
the Financial Intermediaries to whose Depository accounts the Book-Entry
Certificates of such beneficial owners are credited.

For a description of the procedures generally applicable to the
Book-Entry Certificates, see "Description of the Securities--Book-Entry
Registration of Securities" in the Prospectus.

OVERCOLLATERALIZATION PROVISIONS AND SUPPORT FEATURES

Overcollateralization Resulting from Cash Flow Structure. The Pooling
and Servicing Agreement requires that, on each Distribution Date, the Net
Monthly Excess Cashflow with respect to each Loan Group, if any, be applied on
such Distribution Date as an accelerated payment of principal on the related
Class A Certificates, but only to the limited extent hereafter described. The
"Net Monthly Excess Cashflow" for any Distribution Date is equal to (x) the
amount on deposit in the Certificate Account on such Distribution Date with
respect to the Mortgage Loans in the related Loan Group, other than the related
Insured Payments and the Trustee's Fee and Premium Amount payable on such
Distribution Date (such amount, the related "Available Funds" for such
Distribution Date) minus (y) the sum of (i) the sum of the related Class A
Interest Distribution Amount and the related Class A Principal Distribution
Amount (calculated for this purpose without regard to any Subordination
Increase Amount, Subordination Reduction Amount or portion thereof included
therein) and (ii) any related Reimbursement Amount (as defined herein) owed to
the Certificate Insurer. This application has the effect of accelerating the
amortization of the related Class A Certificates relative to the amortization
of the Mortgage Loans in the related Loan Group.

With respect to any Distribution Date, the excess, if any, of (x) the
sum of the aggregate Principal Balances of the Mortgage Loans in the related
Loan Group as of the close of business on the last day of the related Due
Period (as defined herein) and the amount of funds in the related Pre-Funding
Account as of such Distribution Date over (y) the Certificate Principal Balance
of the related Class A Certificates as of such Distribution Date (and following
the making of all distributions on such Distribution Date) is the "Subordinated
Amount" as of such Distribution Date. The Pooling and Servicing Agreement
requires that the Net Monthly Excess Cashflows will be applied as an
accelerated payment of principal on the related Class A Certificates until the
related Subordinated Amount has increased to the level equal to the related
Required Subordinated Amount for such Distribution Date. Any amount of Net
Monthly Excess Cashflow actually applied as an accelerated payment of principal
is a "Subordination Increase Amount." The required level of the Subordinated
Amount with respect to a Distribution Date is the "Required Subordinated
Amount" with respect to such Distribution Date. Initially, the Required
Subordinated Amount will be set at an amount equal to a percentage, specified
in the Pooling and Servicing Agreement, of the aggregate Principal Balances of
the related Mortgage Loans in the related Loan Group as of the Cut-off Date and
the related Original Pre-Funded Amount. The Pooling and Servicing Agreement
generally provides that the Required Subordinated Amounts may, over time,
decrease, or increase, subject to certain floors, caps and triggers.

In the event that the Required Subordinated Amount is permitted to
decrease or "step down" on a Distribution Date in the future, the Pooling and
Servicing Agreement provides that a portion of the principal which would
otherwise be distributed to the Holders of the related Class A Certificates on
such Distribution Date shall be distributed to the Holders of the related Group
I or Group II Subordinate Certificates on such Distribution Date, or applied to
the payment of any Group I Class A Available Funds Cap Carry-Forward Amount.
This has the effect of decelerating the amortization of the Class A

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Certificates relative to the, amortization of the Mortgage Loans in the related
Loan Group, and of reducing the related Subordinated Amount. With respect to
any Distribution Date, the difference, if any, between (a) the related
Subordinated Amount that would apply on such Distribution Date after taking
into account all distributions to be made on such Distribution Date (exclusive
of any reductions thereto attributable to Subordination Reduction Amounts (as
described below) on such Distribution Date) and (b) the related Required
Subordinated Amount for such Distribution Date is the related "Excess
Subordinated Amount" with respect to such Distribution Date. With respect to
any Distribution Date, an amount equal to the lesser of (a) the related Excess
Subordinated Amount and (b) the principal collections received by the Master
Servicer with respect to the prior Due Period is the related "Subordination
Reduction Amount." In addition, due to the cash flow stricture of the
Certificates as described below, Subordination Reduction Amounts may result
even prior to the occurrence of any decrease or "step down" in the related
Required Subordinated Amount. This is because the Holders of the related Class
A Certificates will generally be entitled to receive 100% of collected
principal, even though the Certificate Principal Balances of the related Class
A Certificates will, following the accelerated amortization resulting from the
application of the related Net Monthly Excess Cashflow, represent less than
100% of the related Mortgage Loan's principal balance. In the absence of the
provisions relating to Subordination Reduction Amounts, the foregoing may
otherwise increase the Subordinated Amounts above their Required Subordinated
Amount requirements even without the application of any Net Monthly Excess
Cashflow.

The Pooling and Servicing Agreement provides that, on any Distribution
Date, all unscheduled collections on account of principal (other than any such
amount applied to the payment of a Subordination Reduction Amount) with respect
to Mortgage Loans in the related Loan Group during the period beginning on the
second day of the calendar month preceding the calendar month in which such
Distribution Date occurs, and ending on the first day of the calendar month in
which such Distribution Date occurs (the "Due Period") will be distributed to
the Holders of the related Class A Certificates on such Distribution Date. If
any Mortgage Loan became a Liquidated Mortgage Loan (as defined below) during
such Due Period, the net Liquidation Proceeds (as defined in the Prospectus)
related thereto and allocated to principal may be less than the Principal
Balance of the related Mortgage Loan; the amount of any such insufficiency is a
"Liquidated Loan Loss." A "Liquidated Mortgage Loan" is, in general, a
defaulted Mortgage Loan as to which the Master Servicer has determined that all
amounts that it expects to recover on such Mortgage Loan have been recovered
(exclusive of any possibility of a deficiency judgment). In addition, the
Pooling and Servicing Agreement provides that the principal balance of any
Mortgage Loan after it becomes a Liquidated Mortgage Loan shall equal zero.
The Pooling and Servicing Agreement does not contain any rule which requires
that the amount of any Liquidated Loan Loss be distributed to the Holders of
the related Class A Certificates on the Distribution Date which immediately
follows the event of loss; in other words, the Pooling and Servicing Agreement
does not require the current recovery of losses. However, the occurrence of a
Liquidated Loan Loss will reduce the Subordinated Amount, which, to the extent
that such reduction causes the Subordinated Amount to be less than the related
Required Subordinated Amount applicable to the related Distribution Date, will
require the payment of a Subordination Increase Amount on such Distribution
Date (or, if insufficient funds are available on such Distribution Date, on
subsequent Distribution Dates, until the Subordinated Amount equals the related
Required Subordinated Amount). The effect of the foregoing is to allocate
losses to the Holders of the related Group I or Group II Subordinate
Certificates by reducing, or eliminating entirely, payments of Net Monthly
Excess Cashflow and of Subordination Reduction Amounts which such Holders would
otherwise receive.

Overcollateralization and the Certificate Insurance Policies. The
Pooling and Servicing Agreement defines a "Subordination Deficit' with respect
to a Distribution Date to be the amount, if any, by which (x) the aggregate
Certificate Principal Balance of the related Class A Certificates as of such

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Distribution Date, and following the making of all distributions to be made on
such Distribution Date (except for any payment to be made as to principal from
proceeds of the related Certificate Insurance Policy), exceeds (y) the
aggregate Principal Balances of the Mortgage Loans in the related Loan Group as
of the close of business on the preceding Due Date and the amount of funds in
the related Pre-Funding Account on such Distribution Date. The Pooling and
Servicing Agreement requires the Trustee to make a claim for an Insured Payment
under the related Certificate Insurance Policy not later than the second
Business Day prior to any Distribution Date as to which the Trustee has
determined that a Subordination Deficit will occur with respect to a Loan Group
for the purpose of applying the proceeds of such Insured Payment as a payment
of principal to the Holders of the related Class A Certificates on such
Distribution Date. Investors in the Class A Certificates should realize that,
under extreme loss or delinquency scenarios, they may temporarily receive no
distributions of principal.

Cross-Collateralization Feature. In the event that on any
Distribution Date after giving effect to distributions pertaining to a
particular Loan Group and its related Certificates (except for any payment to
be made as principal from proceeds of the related Certificate Insurance
Policy), either a Reimbursement Amount exists with respect to either Loan Group
or a Subordination Deficit exists with respect to Loan Group II or the
Subordinated Amount with respect to Loan Group II would be less than the
related Required Subordinated Amount (such difference, a "Cross-Collateralized
Subordination Shortfall"), the Class A-2 Certificates or the Certificate
Insurer, as the case may be, will be entitled to receive an additional payment
(a "Cross-Collateralization Payment") in respect of principal to the extent of
such Subordination Deficit or Cross-Collateralized Subordination Shortfall or
as reimbursement of the Reimbursement Amount, as the case may be, out of funds
then on deposit in the Certificate Account for the other Loan Group that are
otherwise payable on such Distribution Date to the Subordinate Certificates
related to such other Loan Group.

PRIORITY OF PAYMENT

On each Distribution Date, the Trustee shall make the following
distributions, to the extent of funds on deposit in the related Certificate
Account with respect to each Loan Group and the amount of Insured Payments and
Cross-Collateralization Payments (if applicable) to be made on such
Distribution Date, as distributed separately with respect to the Group I and
Group II Certificates:

(a) to the Certificate Insurer, the Premium Amount (as
defined herein) with respect to such Loan Group;

(b) to the Trustee, an amount equal to the Trustee's Fees
then due to it with respect to such Loan Group;

(c) to the Certificate Insurer the lesser of (x) an
amount equal to (i) the amount then on deposit in the
related Certificate Account remaining after the
foregoing distributions minus (ii) the Insured
Distribution Amount for such Distribution Date and
(y) the amount of all Insured Payments and other
payments made by the Certificate Insurer pursuant to
the related Certificate Insurance Policy (together
with interest thereon at the Pass-Through Rate for
the related Class A Certificates) which have not been
previously repaid (the "Reimbursement Amount") as of
such Distribution Date;

(d) from amounts then on deposit in the related
Certificate Account (including any Insured Payments),
to the related Class A Certificateholders an amount
equal to

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the related Class A Interest Distribution Amount (as
described below), distributed on a pro rata basis to
the related Class A Certificateholders as described
below;

(e) from amounts then on deposit in the related
Certificate Account (including any related Insured
Payments), to the related Class A Certificateholders
an amount equal to the related Class A Principal
Distribution Amount (as described below) to the
extent not covered by payments to be made pursuant to
clause (f) below with respect to a Subordination
Deficit allocated as described below;

(f) from amounts then on deposit in the Certificate
Account related to the Group I Loans, to the Class
A-2 Certificateholders, an amount equal to the
Cross-Collateralization Payments required to be made
on such Certificates on such Distribution Date;

(g) from amounts then on deposit in the Certificate
Accounts related to the Group I Loans and the Group
II Loans, to the Certificate Insurer, an amount equal
to the Cross-Collateralization Payments required to
be made to the Certificate Insurer from such
Certificate Account on such Distribution Date, to the
extent the Certificate Insurer has not been
reimbursed pursuant to clause (c) above;

(h) to the Class A-1 Certificates, an amount equal to the
lesser of (i) any amount then remaining in the
related Certificate Account after the applications
described in clauses (a) through (g) above and (ii)
the aggregate Group I Class A Available Funds Cap
Carry-Forward Amount for such Distribution Date shall
be paid to the Class A-1 Certificateholders on
account of the Group I Class A Available Funds Cap
Carry-Forward Amount, if any; and

(i) from amounts then on deposit in the related
Certificate Account, to the Holders of the related
Group I or Group II Subordinate Certificates, the
amount remaining on such Distribution Date, if any.

CLASS A INTEREST DISTRIBUTION AMOUNTS

On each Distribution Date, holders of each class of Class A
Certificates will be entitled to receive interest distributions in an amount
equal to the sum of (a) interest accrued for the related Accrual Period (as
defined below) on the related Certificate Principal Balance thereof immediately
prior to such Distribution Date at the then-applicable related Pass-Through
Rate (to the extent of the amounts remaining for distributions after payments
under clauses (a) through (c) under "--Priority of Payment" above), as reduced
by shortfalls caused by the Relief Act (as defined in the Prospectus) or the
failure of the Master Servicer to cover Prepayment Interest Shortfalls to the
extent described herein, with all such reductions allocated among the related
Class A Certificates in proportion to their respective amounts of related Class
A Interest Distribution Amount (as defined below) which would have resulted
absent such reductions and (b) the Group I Class A Carry-Forward Amount or
Group II Class A Carry-Forward Amount, as applicable, allocable to interest.
The aggregate amount of interest allocable to the Class A-1 Certificates and
Class A-2 Certificates as determined separately (the related "Class A Interest
Distribution Amount") will be allocable to the related Class A Certificates on
a pro rata basis in proportion to the amount of interest payable thereon. The
Class A Interest Distribution Amount with respect to the Class A-1 Certificates
is calculated on the basis of a 360-day year and the actual number of days
elapsed, provided that, for any Distribution Date for which clause (ii) of the
related definition of Pass-Through Rate is

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applicable, the Class A Interest Distribution Amount will be calculated on the
basis of a 30-day month. The Class A Interest Distribution Amount with respect
to the Class A-2 Certificates is calculated on the basis of a 360-day year and
a 30-day month.

With respect to any Distribution Date and the Class A-1 Certificates
and Class A-2 Certificates, the sum of the related Class A Interest
Distribution Amount and the amount of the related Subordination Deficit, if
any, with respect to such Distribution Date is the related "Insured
Distribution Amount" for such Distribution Date.

For each Distribution Date, (i) with respect to the Class A-1
Certificates, the "Accrual Period" is the period commencing on the Distribution
Date immediately preceding the month on which such Distribution Date occurs and
ending on the calendar day immediately preceding such Distribution Date, except
with respect to the first Distribution Date, which has an accrual period from
____________, 199_ to ___________, 199_ and (ii) with respect to the Class A-2
Certificates, the "Accrual Period" is the previous calendar month.

With respect to the Class A-1 Certificates, the "Group I Class A
Carry-Forward Amount" as of any Distribution Date equals the sum of (a) the
amount, if any, by which (i) the related Insured Distribution Amount for the
immediately preceding Distribution Date exceeded (ii) the amount actually
distributed to the Holders of the Class A-1 Certificates on such Distribution
Date in respect thereof (including, without Imitation, amounts paid under a
Certificate Insurance Policy) and (b) 30 days' interest on such amount at the
Pass-Through Rate applicable to the Class A-1 Certificates for such
Distribution Date. The Group I Class A Carry-Forward Amount does not include
any Group I Class A Available Funds Cap Carry-Forward Amount.

The "Class A-1 Formula Pass-Through Rate" for a Distribution-Date is
the lesser of (x) the rate determined by clause (i) of the definition of
Pass-Through Rate for the Class A-1 Certificates on such Distribution Date and
(y) the weighted average of Net Lifetime Rate Caps of the Group I Loans. The
Net Lifetime Rate Cap on each Group I Loan is equal to the related Lifetime
Rate Cap minus the sum of the Servicing Fee Rate and the rates per annum at
which the Trustee's Fee and the Premium Amount accrue.

The Pooling and Servicing Agreement provides that if the Pass-Through
Rate on the Class A-1 Certificates is less than the Class A-1 Formula
Pass-Through Rate and any resulting shortfall in interest is not paid on such
Distribution Date from any available Net Monthly Excess Cashflow, as described
below, then the amount of any such shortfall will be carried forward and be
paid to the extent of available funds, as described herein, to the Holders of
the Class A-1 Certificates on future Distribution Dates and shall accrue
interest at the applicable Class A-1 Formula Pass-Through Rate, until paid
(such shortfall, together with such accrued interest, the "Group I Class A
Available Funds Cap Carry-Forward Amount"). The Certificate Insurance Policy
does not cover the Group I Class A Available Funds Cap Carry-Forward Amount,
nor do the ratings assigned to the Class A-1 Certificates address the payment
of the Group I Class A Available Funds Cap Carry-Forward Amount.

With respect to the Class A-2 Certificates, the "Group II Class A
Carry-Forward Amount" as of any Distribution Date equals the sum of (a) the
amount, if any, by which (i) the related Insured Distribution Amount for the
immediately preceding Distribution Date exceeded (ii) the amount actually
distributed to the Holders of the Class A-2 Certificates on such Distribution
Date in respect thereof (including, without limitation, amounts paid under a
Certificate Insurance Policy) and (b) 30 days' interest

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on such amount at the Pass-Through Rate applicable to the Class A-2
Certificates for such Distribution Date.

The "Prepayment Interest Shortfall" for any Distribution Date is equal
to the aggregate shortfalls if any, in collections of interest (minus the
related Servicing Fee) resulting from Mortgagor prepayments on the Mortgage
Loans during the preceding calendar month. Such shortfalls will result because
interest on prepayments in full is distributed only to the date of prepayment,
and because no interest is distributed on prepayments in part, as such
prepayments in part are applied to reduce the outstanding principal balance of
the related Mortgage Loans as of the Due Date in the month of prepayment.
However, with respect to any Distribution Date, any Prepayment Interest
Shortfalls resulting from full or partial prepayments during the preceding
calendar month will be offset by the Master Servicer, but only to the extent
such Prepayment Interest Shortfalls do not exceed an amount equal to the
Servicing Fee payable to the Master Servicer in respect of its servicing
activities with respect to such Distribution Date. See "Servicing of Mortgage
Loans--Servicing Compensation and Payment of Expenses" herein. An amount equal
to the Class A Certificates' pro rata share, based on the amount of interest
payable on each such class, of any Prepayment Interest Shortfalls not so
covered by the Master Servicer will be made available by the Certificate
Insurer for distribution to the Class A Certificateholders.

The Pass-Through Rate on the Class A-1 Certificates is adjustable and
is calculated as follows: beginning on the Distribution Date in ___________
199_, and on each Distribution Date thereafter, the Pass-Through Rate on the
Class A-1 Certificates will be adjusted to equal the lesser of (i) (a) with
respect to any Distribution Date which occurs on or prior to the date on which
the aggregate Principal Balance of the Mortgage Loans is less than ___% of the
sum of the aggregate Principal Balance of the Mortgage Loans as of the Cut-off
Date and the Original Pre-Funded Amounts, One-Month LIBOR (as defined in
"Description of the Certificates--Calculation of One-Month LIBOR" below) plus
____% or (b) with respect to any Distribution Date thereafter, One-Month LIBOR
plus ____% and (ii) the Group I Class A Available Funds Pass-Through Rate.

The "Group I Class A Available Funds Pass-Through Rate," as of any
Distribution Date, is equal to (i) the weighted average of the Mortgage Rates
of the Group I Loans, minus (ii) the sum of the Servicing Fee Rate and the
rates per annum at which the Trustee's Fee and Premium Amount accrue and minus
(iii) commencing on the seventh Distribution Date, ____% per annum.

The Pass-Through Rate with respect to the Class A-2 Certificates is
equal to (i) with respect to any Distribution Date which occurs on or prior to
the date on which the aggregate Principal Balance of the Mortgage Loans is less
than ___% of the sum of the aggregate Principal Balance of the Mortgage Loans
as of the Cut-off Date and the Original Pre-Funded Amounts, ___% per annum, and
(ii) with respect to any Distribution Date thereafter, _____% per annum.

As described herein, the Class A Interest Distribution Amounts
allocable to the Class A Certificates is based on the Certificate Principal
Balances thereof immediately prior to the related Distribution Date. The
Certificate Principal Balance of any Class A Certificate as of any date of
determination is equal to the initial Certificate Principal Balance thereof,
reduced as described herein with respect to such Certificate.

On any Distribution Date, the amount of the premium (the "Premium
Amount") payable to the Certificate Insurer is equal to one-twelfth of the
product of a percentage specified in an exhibit to the Pooling and Servicing
Agreement and the Certificate Principal Balance of the Class A Certificates.

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CALCULATION OF ONE-MONTH LIBOR

With respect to the first Distribution Date, on the Delivery Date,
and, with respect to each Distribution Date thereafter, on the second LIBOR
Business Day preceding such Distribution Date (each such date, an "Interest
Determination Date"), One-Month LIBOR shall be established by the Trustee and
as to any Accrual Period, One-Month LIBOR with respect to the Class A-1
Certificates will equal the rate for United States dollar deposits for one
month which appears on the Telerate Screen Page 3750 as of 11:00 A.M., London
time, on such Interest Determination Date. "Telerate Screen Page 3750" means
the display designated as page 3750 on the Telerate Service (or such other page
as may replace page 3750 on that service for the purpose of displaying London
interbank offered rates of major banks). If such rate does not appear on such
page (or such other page as may replace that page on that service, or if such
service is no longer offered, such other service for displaying One-Month LIBOR
or comparable rates as may be selected by the Trustee), the rate will be the
Reference Bank Rate. The "Reference Bank Rate" will be determined on the basis
of the rates at which deposits in U.S. Dollars are offered by the reference
banks (which shall be three major banks that are engaged in transactions in the
London interbank market, selected by the Trustee) as of 11:00 A.M., London
time, on the Interest Determination Date, to prime banks in the London
interbank market for a period of one month in amounts approximately equal to
the aggregate Certificate Principal Balance of the Class A-1 Certificates. The
Trustee will request the principal London office of each of the reference banks
to provide a quotation of its rate. If at least two such quotations are
provided, the rate will be the arithmetic mean of the quotations. If on such
date fewer than two quotations are provided as requested, the rate will be the
arithmetic mean of the rates quoted by one or more major banks in New York
City, selected by the Trustee, as of 11:00 A.M., New York City time, on the
Interest Determination Date, for loans in U.S. Dollars to leading European
banks for a period of one month in amounts approximately equal to the aggregate
Certificate Principal Balance of the Class A-1 Certificates. If no such
quotations can be obtained, the rate will be One-Month LIBOR for the prior
Distribution Date. "LIBOR Business Day" means any day other than (i) a
Saturday or a Sunday or (ii) a day on which banking institutions in the city of
London, England are required or authorized by law to be closed.

The establishment of One-Month LIBOR on each Interest Determination
Date by the Trustee and the Trustee's calculation of the rate of interest
applicable to the Class A-1 Certificates for the related Accrual Period shall
(in the absence of manifest error) be final and binding.

CLASS A PRINCIPAL DISTRIBUTION AMOUNT

Holders of the Class A Certificates will be entitled to receive on
each Distribution Date, to the extent of the portion of the amounts remaining
for distribution after payments under clauses (a) through (d) under "--Priority
of Payment" above, an amount (as determined separately for the Class A-1
Certificates and Class A-2 Certificates, the related "Class A Principal
Distribution Amount"), in reduction of the Certificate Principal Balance
thereof as described below, which equals the sum of (i) the portion of any
Group I Class A Carry-Forward Amount or Group II Class A Carry-Forward Amount,
as applicable, which relates to a shortfall in a distribution of a related
Subordination Deficit, (ii) all scheduled installments of principal in respect
of the Mortgage Loans in the related Loan Group received or advanced during the
related Due Period, together with all unscheduled recoveries of principal on
such Mortgage Loan received by the Master Servicer during the prior calendar
month, (iii) the Principal Balance of each Mortgage Loan in the related Loan
Group that was repurchased by either the Seller or by the Depositor, (iv) any
amounts delivered by the Depositor on the Master Servicer Remittance Date (as
defined herein) in connection with a substitution of a Mortgage Loan in the
related Loan Group, (v) the net Liquidation Proceeds (as defined in the
Prospectus) collected by the Master Servicer of all

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Mortgage Loans in the related Loan Group during the prior calendar month (to
the extent such net Liquidation Proceeds are related to principal), (vi) the
amount of any related Subordination Deficit for such Distribution Date, (vii)
the proceeds received by the Trustee of any termination of the related Loan
Group (to the extent such proceeds are related to principal), (viii) the amount
of any related Subordination Increase Amount (as defined herein) for such
Distribution Date, and (ix) with respect to the Class A-1 Certificates and
Class A-2 Certificates, with respect to the Distribution Date occurring in
_______ 199_, any amounts in the related Pre-Funding Account after giving
effect to any purchase of related Subsequent Mortgage Loans; minus (x) the
amount of any related Subordination Reduction Amount (as defined herein) for
such Distribution Date.

In no event will the Class A Principal Distribution Amount with
respect to any Distribution Date be (x) less than zero or (y) greater than the
then outstanding Certificate Principal Balance of the Class A Certificates.

Distributions of the Class A Principal Distribution Amount with
respect to the Class A-1 Certificates will be allocated to the Class A-1
Certificates in reduction of the Certificate Principal Balance thereof, until
such Certificate Principal Balance has been reduced to zero. Distributions of
the Class A Principal Distribution Amount with respect to the Class A-2
Certificates will be allocated to the Class A-2 Certificates in reduction of
the Certificate Principal Balance thereof, until such Certificate Principal
Balance has been reduced to zero.

The "Master Servicer Remittance Date" with respect to any Distribution
Date is the 18th day of the month in which such Distribution Date occurs, or if
such 18th day is not a business day, the business day immediately preceding
such 18th day.

The "Principal Balance" of any Mortgage Loan as of any date of
determination is the principal balance of such Mortgage Loan as of the Due Date
preceding such date of determination, as such principal balance is specified
for such Due Date in the amortization schedule, (before any adjustment to such
amortization schedule by reason of any bankruptcy (other than Deficient
Valuations (as defined in the Prospectus)) or similar proceeding or any
moratorium or similar waiver or grace period) after giving effect to
prepayments received prior to such Due Date, Deficient Valuations incurred
prior to such Due Date, and to the payment of principal due on such Due Date
and irrespective of any delinquency in payment by the related Mortgagor. The
Principal Balance of a Mortgage Loan which becomes a Liquidated Mortgage Loan
(as defined herein) on or prior to such Due Date shall be zero.

See "Summary--Special Prepayment Considerations" and "--Special Yield
Considerations" and "Yield and Prepayment Considerations" herein.

ADVANCES

Prior to each Distribution Date, the Master Servicer is required to
make Advances with respect to any payments of principal and interest (net of
the related servicing fees) which were due on the Mortgage Loans on the
immediately preceding Due Date and have not been received as of the business
day immediately preceding the related Master Servicer Remittance Date. Such
Advances are required to be made by the Master Servicer only to the extent they
are deemed by the Master Servicer to be recoverable from related late
collections, insurance proceeds or liquidation proceeds. The purpose of making
such Advances is to maintain a regular cash flow to the Certificateholders, to
maintain a specified level of overcollateralization and to pay the premium due
the Certificate Insurer and to pay the Trustee, rather than to guarantee or
insure against losses. The Master Servicer will not be required to make any

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Advances with respect to reductions in the amount of the monthly payments on
the Mortgage Loans due to application of the Relief Act. Any failure by the
Master Servicer to make an Advance as required under the Pooling and Servicing
Agreement will constitute an Event of Default thereunder, in which case the
Trustee, as successor servicer, will be obligated to make any such Advance, in
accordance with the terms of the Pooling and Servicing Agreement.

All Advances will be reimbursable to the Master Servicer making the
Advance subject to certain conditions and restrictions from late collections,
insurance proceeds and liquidation proceeds from the Mortgage Loan as to which
such unreimbursed Advance was made.

CERTIFICATE GUARANTY INSURANCE POLICIES

The following information regarding the Certificate Insurance Policies
has been supplied by the Certificate Insurer for inclusion in this Prospectus
Supplement.

The Certificate Insurer, in consideration of the payment of the
premium and subject to the terms of the Certificate Insurance Policies, thereby
unconditionally and irrevocably guarantees to any Owner (as defined below) that
an amount equal to each full and complete Insured Payment (as defined below)
will be received by the Trustee, or its successor as Trustee for the Owners, on
behalf of the Owners from the Certificate Insurer, for distribution by the
Trustee to each Owner of each Owner's proportionate share of the Insured
Payment. The Certificate Insurer's obligations under the Certificate Insurance
Policies with respect to a particular Insured Payment shall be discharged to
the extent funds, equal to the applicable Insured Payment are received by the
Trustee, whether or not such funds are properly applied by the Trustee.
Insured Payments shall be made only at the time set forth in the Certificate
Insurance Policies, and no accelerated Insured Payments shall be made
regardless of any acceleration of the Class A Certificates, unless such
acceleration is at the sole option of the Certificate Insurer.

Notwithstanding the foregoing paragraph, the Certificate Insurance
Policies do not cover shortfalls, if any, attributable to the liability of the
Trust Fund, the REMIC or the Trustee for withholding taxes, if any (including
interest and penalties in respect of any such liability).

The Certificate Insurer will pay any Insured Payment that is a
Preference Amount (as described below) on the Business Day following receipt on
a Business Day by the Fiscal Agent (as described below) of (i) a certified copy
of the order requiring the return of a preference payment, (ii) an opinion of
counsel satisfactory to the Certificate Insurer that such order is final and
not subject to appeal, (iii) an assignment in such form as is reasonably
required by the Certificate Insurer, irrevocably assigning to the Certificate
Insurer all rights and claims of the Owner relating to or arising under the
Class A Certificates against the debtor which made such preference payment or
otherwise with respect to such preference payment and (iv) appropriate
instruments to effect the appointment of the Certificate Insurer as agent for
such Owner in any legal proceeding related to such preference payment, such
instruments being in a form satisfactory to the Certificate Insurer, provided
that if such documents are received after 12:00 noon New York City time on such
Business Day, they will be deemed to be received on the following Business Day.
Such payments shall be disbursed to the receiver or trustee in bankruptcy named
in the final order of the court exercising jurisdiction on behalf of the Owner
and not to any Owner directly unless such Owner has returned principal or
interest paid on the Class A Certificates to such receiver or trustee in
bankruptcy, in which case such payment shall be disbursed to such Owner.

The Certificate Insurer will pay any other amount payable under the
Certificate Insurance Policies no later than 12:00 noon, New York City time, on
the later of the Distribution Date on which the related

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Insured Payment is due or the Business Day following receipt in New York, New
York on a Business Day by ____________________________, as the Certificate
Insurer's Fiscal Agent or any successor fiscal agent appointed by the
Certificate Insurer (the "Certificate Insurer's Fiscal Agent") of a Notice (as
described below); provided that if such Notice is received after 12:00 noon, New
York City time, on such Business Day, it will be deemed to be received on the
following Business Day. If any such Notice received by the Certificate
Insurer's Fiscal Agent is not in proper form or is otherwise insufficient for
the purpose of making a claim under any Certificate Insurance Policy it shall be
deemed not to have been received by the Certificate Insurer's Fiscal Agent for
purposes of this paragraph, and the Certificate Insurer or the Certificate
Insurer's Fiscal Agent, as the case may be, shall promptly so advise the Trustee
and the Trustee may submit an amended Notice.

Insured Payments due under the Certificate Insurance Policies, unless
otherwise stated therein, will be disbursed by the Certificate Insurer's Fiscal
Agent to the Trustee on behalf of the Owners by wire transfer of immediately
available funds in the amount of the Insured Payment less, in respect of
Insured Payments related to Preference Amounts, any amount held by the Trustee
for the payment of such Insured Payment and legally available therefor.

The Certificate Insurer's Fiscal Agent is the agent of the Certificate
Insurer only and the Certificate Insurer's Fiscal Agent shall in no event be
liable to Owners for any acts of the Certificate Insurer's Fiscal Agent or any
failure of the Certificate Insurer to deposit, or cause to be deposited,
sufficient funds to make payments due under the Certificate Insurance Policies.

As used in the Certificate Insurance Policies, the following terms
shall have the following meanings:

"Business Day" means any day other than a Saturday, a Sunday
or a day on which banking institutions in New York City or in the city
in which the corporate trust office of the Trustee under the Pooling
and Servicing Agreement is located are authorized or obligated by law
or executive order to close.

"Insured Payment" means (i) as of any Distribution Date, an
amount equal to the sum of (a) the related Class A Interest
Distribution Amount minus the related Available Funds and (b) the
related Subordination Deficit (to the extent not covered, with respect
to the Class A-2 Certificates, by Cross-Collateralization Payments)
and (ii) the related unpaid Preference Amount.

"Notice" means the telephonic or telegraphic notice, promptly
confirmed in writing by telecopy substantially in the form of Exhibit
A attached to each Certificate Insurance Policy, the original of which
is subsequently delivered by registered or certified mail, from the
Trustee specifying the Insured Payment which shall be due and owing on
the applicable Distribution Date.

"Owner" means each related Class A Certificateholder (as
defined in the Pooling and Servicing Agreement) who, on the applicable
Distribution Date, is entitled under the terms of the applicable Class
A Certificate, to payment under the related Certificate Insurance
Policy.

"Preference Amount" means any amount previously distributed to
an Owner on the related Class A Certificates that is recoverable and
sought to be recovered as a voidable preference by a trustee in
bankruptcy pursuant to the United States Bankruptcy Code (11 U.S.C.),
as amended from time to time in accordance with a final nonappealable
order of a court having competent jurisdiction.

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Capitalized terms used in the Certificate Insurance Policies and not
otherwise defined in the Certificate Insurance Policies shall have the
respective meanings set forth in the Pooling and Servicing Agreement as of the
date of execution of the Certificate Insurance Policies, without giving effect
to any subsequent amendment or modification to the Pooling and Servicing
Agreement unless such amendment or modification has been approved in writing by
the Certificate Insurer.

Any notice under the Certificate Insurance Policies or service of
process on the Certificate Insurer's Fiscal Agent may be made at the address
listed below for the Certificate Insurer's Fiscal Agent or such other address
as the Certificate Insurer shall specify in writing to the Trustee.

The notice address of the Certificate Insurer's Fiscal Agent is
________________, Attention: _________________________, or such other address
as the Certificate Insurer's Fiscal Agent shall specify to the Trustee in
writing.

The Certificate Insurance Policies are being issued under and pursuant
to, and shall be construed under, the laws of the State of New York, without
giving effect to the conflict of laws principles thereof.

The insurance provided by the Certificate Insurance Policies is not
covered by the Property/Casualty Insurance Security Fund specified in Article
76 of the New York Insurance Law.

The Certificate Insurance Policies are not cancelable for any reason.
The premium on each of the Certificate Insurance Policies is not refundable for
any reason including payment, or provision being made for payment, prior to
maturity of the Class A Certificates.

MANDATORY PREPAYMENTS ON CLASS A-1 CERTIFICATES AND CLASS A-2 CERTIFICATES

The Class A-1 Certificates and Class A-2 Certificates will be prepaid
on the ___________ 199_ Distribution Date to the extent that any amount remains
on deposit in the related Pre-Funding Account on such Distribution Date.
Although no assurance can be given, it is anticipated by the Depositor that the
principal amount of Subsequent Mortgage Loans sold to the Trust Fund will
require the application of substantially all of the related Original Pre-Funded
Amount and that there should be no material amount of principal prepaid to the
Class A-1 Certificateholders and Class A-2 Certificateholders from the
Pre-Funding Accounts. However, it is unlikely that the Depositor will be able
to deliver Subsequent Mortgage Loans for Loan Group I and Loan Group II with an
aggregate principal balance identical to the related Original Pre-Funded
Amount.

INTEREST COVERAGE ACCOUNT

The Depositor will establish for the benefit of Class A-1
Certificateholders and Class A-2 Certificateholders two trust accounts (the
"Group I Interest Coverage Account" and the "Group II Interest Coverage
Account"; and together the "Interest Coverage Accounts"). On the Delivery
Date, the Depositor will deposit in each such account a cash amount as required
by the Certificate Insurer and specified in the Pooling and Servicing
Agreement. On each Distribution Date during the Funding Period and on the
Distribution Date immediately following, funds on deposit in the Interest
Coverage Accounts will be applied by the Trustee to cover shortfalls in the
Group I and Group II Class A Interest Distribution Amount attributable to the
pre-funding feature during the related Funding Period. Such shortfall
initially will exist during the Funding Period because while the Class A-1
Certificateholders and Class A-2 Certificateholders are entitled to receive
interest accruing on the Certificate Principal Balance of the Class A-1
Certificates and Class A-2 Certificates, the Certificate Principal Balance of
the Class A

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Certificates during the Funding Period will be greater than the aggregate
principal balance of the related Mortgage Loans on the Delivery Date. On the
first business day following the first Distribution Date following the
termination of the related Funding Period, funds on deposit in the related
Interest Coverage Account will be released by the Trustee to the Depositor.

[NAME OF INSURER]

The following information about this Certificate Insurer has been
supplied by the Certificate Insurer for inclusion in this Prospectus
Supplement: ________________.

The Certificate Insurer does not accept any responsibility for the
accuracy or completeness of this Prospectus Supplement or any information or
disclosure contained herein, or omitted herefrom, other than with respect to
the accuracy of the information regarding the Certificate Insurance Policies
and the Certificate Insurer set forth under the heading "Description of the
Certificates--Certificate Guaranty Insurance Policies" and "[Name of Insurer]."
The Certificate Insurer makes no additional representations regarding the Class
A Certificates or the advisability of investing in the Class A Certificates.

______________ rates the claims paying ability of the Certificate
Insurer "___."

Each rating of the Certificate Insurer should be evaluated
independently. The ratings reflect the respective rating agency's current
assessment of the creditworthiness of the Certificate Insurer and its ability
to pay claims on its policies of insurance. Any further explanation as to the
significance of the above ratings may be obtained only from the applicable
rating agency.

The above ratings are not recommendations to buy, sell or hold the
Class A Certificates and such ratings may be subject to revision or withdrawal
at any time by the rating agencies. Any downward revision or withdrawal of any
of the above ratings may have an adverse effect on the market price of the
Class A Certificates. The Certificate Insurer does not guaranty the market
price of the Class A Certificates nor does it guaranty that the ratings on the
Class A Certificates will not be reversed or withdrawn.

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YIELD AND PREPAYMENT CONSIDERATIONS

The yield to maturity and the aggregate amount of distributions on the
Class A Certificates will be affected by the rate and timing of principal
payments on the Mortgage Loans in the related Loan Group and the amount, if
any, distributed from the related Pre-Funding Account at the end of the related
Funding Period. Such yield may be adversely affected by a higher or lower than
anticipated rate of principal payments on the Mortgage Loans in the related
Loan Group. The rate of principal payments on such Mortgage Loans will in turn
be affected by the amortization schedules of the Mortgage Loans, the rate and
timing of principal prepayments thereon by the Mortgagors, liquidations of
defaulted Mortgage Loans and purchases of Mortgage Loans in the related Loan
Group due to certain breaches of representations or warranties. The timing of
changes in the rate of prepayments, liquidations and purchases of the Mortgage
Loans in the related Loan Group may, and the timing of losses on the Mortgage
Loans in the related Loan Group will, significantly affect the yield on the
related Class A Certificates to an investor, even if the average rate of
principal payments experienced over time is consistent with an investor's
expectation. Since the rate and timing of principal payments on the Mortgage
Loans in the related Loan Group will depend on future events and on a variety
of factors (as described herein and in the Prospectus under "Yield and
Prepayment Considerations"), no assurance can be given as to such rate or the
timing of principal payments on the related Class A Certificates.

The Mortgage Loans may be prepaid by the mortgagors at any time;
[however, a majority of the Mortgage Loans in each Loan Group are subject to a
prepayment charge for prepayments.] See "The Mortgage Pool" herein. In
addition, the Mortgage Loans contain a provision that may result in the
acceleration of the payment of the Mortgage Loan in the event of the transfer
or sale of the related Mortgaged Property. Prepayments, liquidations and
purchases of the Mortgage Loans in the related Loan Group will result in
distributions to holders of the related Class A Certificates of principal
amounts which would otherwise be distributed over the remaining terms of the
Mortgage Loans in the related Loan Group. Factors affecting prepayment
(including defaults and liquidations) of mortgage loans include changes in
mortgagors' housing needs, job transfers, unemployment, mortgagors' net equity
in the mortgaged properties, changes in the value of the mortgaged properties,
mortgage market interest rates, solicitations and servicing decisions. In
addition, if prevailing mortgage rates fell significantly below the Mortgage
Rates on the Mortgage Loans, the rate of prepayments (including refinancings)
would be expected to increase. Conversely, if prevailing mortgage rates rose
significantly above the Mortgage Rates on the Mortgage Loans, the rate of
prepayments on the Mortgage Loans would be expected to decrease.

In addition, the yield to maturity on the Class A Certificates will
depend on, among other things, the price paid by the holders of the Class A
Certificates and the related Pass-Through Rate. The extent to which the yield
to maturity of a Class A Certificate is sensitive to prepayments will depend,
in part, upon the degree to which it is purchased at a discount or premium. In
general, if a class of Class A Certificates is purchased at a premium and
principal distributions thereon occur at a rate faster than anticipated at the
time of purchase, the investor's actual yield to maturity will be lower than
that assumed at the time of purchase. Conversely, if a class of Class A
Certificates is purchased at a discount and principal distributions thereon
occur at a rate slower than that assumed at the time of purchase, the
investor's actual yield to maturity will be lower than that assumed at the time
of purchase. For additional considerations relating to the yield on the
Certificates, see "Yield and Prepayment Considerations" in the Prospectus.

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The rate of defaults on the Mortgage Loans will also affect the rate
and timing of principal payments on the Mortgage Loans. In general, defaults
on mortgage loans are expected to occur with greater frequency in their early
years. The rate of default on Mortgage Loans which are refinance or limited
documentation mortgage loans, and on Mortgage Loans with high Loan-to-Value
Ratios, may be higher than for other types of Mortgage Loans. Furthermore, the
rate and timing of prepayments, defaults and liquidations on the Mortgage Loans
will be affected by the general economic condition of the region of the country
in which the related Mortgaged Properties are located. The risk of
delinquencies and loss is greater and prepayments are less likely in regions
where a weak or deteriorating economy exists, as may be evidenced by, among
other factors, increasing unemployment or falling property values. See "Yield
and Prepayment Considerations" in the Prospectus.

To the extent that the Original Pre-Funded Amounts have not been fully
applied to the purchase of Subsequent Mortgage Loans by the Trust Fund by the
end of the Funding Period, the Holders of the related Class A-1 Certificates
and Class A-2 Certificates will receive on the first Distribution Date
following the termination of the Funding Period a prepayment of principal in an
amount equal to the lesser of (i) the related Pre-Funded Amount remaining in
the related Pre-Funding Account and (ii) the outstanding Certificate Principal
Balance of the related Class A Certificates. Although no assurance can be
given, it is anticipated by the Depositor that the principal amount of
Subsequent Mortgage Loans sold to the Trust Fund will require the application
of substantially all amounts on deposit in the Pre-Funding Accounts and that
there will be no material amount of principal prepaid to the Class A-1
Certificateholders and Class A-2 Certificateholders. However, it is unlikely
that the Depositor will be able to deliver Subsequent Mortgage Loans with an
aggregate principal balance identical to the related Pre-Funded Amounts.

The following discussion assumes the characteristics set forth in the
tables below. The Final Scheduled Maturity Date for the Class A Certificates
is as follows: Class A-1 Certificates, ____________, 20__; Class A-2
Certificates, _________, 20__. Such Final Scheduled Maturity Dates (i) with
respect to the Class A-1 Certificates is based on a _____ CPR and (ii) with
respect to the Class A-2 Certificates is based on a _____ Prepayment
Assumption, in each case with no Net Monthly Excess Cashflow used to make
accelerated payments of principal on such classes of Class A Certificates and
in each case assuming that a subsequent Mortgage Loan in the related Loan Group
has a first Due Date of __________, 199_, and amortizes according to its fully
amortizing term of ___ months, plus twelve months. The weighted average life
of the Class A Certificates is likely to be shorter than would be the case if
payments actually made on the Mortgage Loans conformed to the foregoing
assumption, and the final Distribution Date with respect to the Class A
Certificates could occur significantly earlier than the Final Scheduled
Maturity Date because (i) prepayments (including, for this purpose, prepayments
attributable to foreclosure, liquidation, repurchase and the like) on Mortgage
Loans are likely to occur, (ii) in the case of the Class A-1 Certificates and
the Class A-2 Certificates, twelve months have been added to obtain the Final
Scheduled Maturity Date above, and (iii) the holder of a majority interest in
the Class R Certificates or the Master Servicer may cause a liquidation of the
Mortgage Loans when the aggregate outstanding principal amount of the Mortgage
Loans is less than 10% (5% with respect to the Master Servicer (or the
Certificate Insurer, if _______ is removed as Master Servicer)) of the sum of
the aggregate principal balance of the Mortgage Loans as of the Cut-off Date
and the aggregate principal balance of the Subsequent Mortgage Loans as of the
related Subsequent Cut-off Date.

"Weighted average life" refers to the average amount of time that will
elapse from the date of issuance of a security until each dollar of principal
of such security is scheduled to be repaid to an investor (assuming no losses).
The weighted average life of the Class A Certificates will be influenced by the
rate at which principal of the Mortgage Loans is paid, which may be in the form
of scheduled

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amortization or prepayments (for this purpose, the term "prepayment" includes
liquidations due to default). Prepayments on mortgage loans are commonly
measured relative to a prepayment standard or model. The model used in this
Prospectus Supplement with respect to the Class A-1 Certificates is a constant
prepayment assumption ("CPR"), which represents an assumed constant rate of
prepayment, each month relative to the then outstanding principal balance of
the pool of mortgage loans for the life of such mortgage loans. The model used
in this Prospectus Supplement with respect to the Class A-2 Certificates is a
prepayment assumption (the "Prepayment Assumption"), which represents an
assumed rate of prepayment each month relative to the then outstanding
principal balance of the pool of mortgage loans for the life of such mortgage
loans. A 100% Prepayment Assumption assumes a conditional prepayment rate of
____% per annum of the outstanding principal balance of such mortgage loans in
the first month of the life of the mortgage loans and an additional approximate
____% (precisely ______) (expressed as a percentage per annum) in each month
thereafter until the twelfth month; beginning in the twelfth month and in each
month thereafter during the life of the mortgage loans, a conditional
prepayment rate of ____% per annum each month is assumed. As used in the table
below, a ____% CPR or a ____% Prepayment Assumption assumes a prepayment rate
equal to ____% CPR or ____% of the Prepayment Assumption, i.e., no prepayments.
Correspondingly, ____% Prepayment Assumption assumes prepayment rates equal to
____% of the Prepayment Assumption, and so forth. Neither CPR nor the
Prepayment Assumption purports to be a historical description of prepayment
experience or a prediction of the anticipated rate of prepayment of any pool of
mortgage loans, including the Mortgage Loans.

The following tables have been prepared assuming that Loan Group I and
Loan Group II are comprised of Mortgage Loans having the following
characteristics (dollar amounts are approximate):

Loan Group I

(i) the 1st through __th hypothetical Mortgage Loans set forth below
comprise the Initial Group I Loans included in Loan Group I and the __th
hypothetical Mortgage Loan set forth below comprises the Subsequent Mortgage
Loans included in Loan Group I:

<TABLE>
<CAPTION>
ORIGINAL
TERMS TO MONTHS TO REMAINING
NET MATURITY NEXT RATE TERM TO GROSS GROSS GROSS
PRINCIPAL MORTGAGE MORTGAGE (IN ADJUSTMENT MATURITY GROSS LIFETIME LIFETIME PERIODIC
BALANCE RATE RATE MONTHS) DATE (IN MONTHS) MARGIN CAP FLOOR CAP
------- ---- ---- ------- ---- --------- ------ --- ----- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>

</TABLE>

(ii) the __th hypothetical Mortgage Loan set forth above has an
initial Due Date of _________, 199_; however, on the Delivery Date, an amount
equal to interest at ____% per annum on the principal balance of the Mortgage
Loan will be deposited into the related Certificate Account and will be
available for the Distribution Date occurring in __________ 199_.

Loan Group II

(i) the 1st through _th and the _th hypothetical Mortgage Loans set
forth below comprise the Initial Group II Loans included in Loan Group II and
the _th hypothetical Mortgage Loan set forth below comprises the Subsequent
Mortgage Loans included in Loan Group II:

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<TABLE>
<CAPTION>
REMAINING ORIGINAL
TERM TO TERM TO
PRINCIPAL MATURITY MATURITY
BALANCE MORTGAGE RATE NET MORTGAGE RATE (IN MONTHS) (IN MONTHS)
------- ------------- ----------------- ----------- -----------
<S> <C> <C> <C> <C>

</TABLE>

(ii) the _th hypothetical Mortgage Loan set forth above has an
initial Due Date of ________, 199_; however, on the Delivery Date an amount
equal to the interest at ____% per annum on the principal balance of the
Mortgage Loan will be deposited into the related Certificate Account and will
be available for the Distribution Date occurring in __________ 199; [(iii) the
__th hypothetical Mortgage Loan is a balloon Mortgage Loan with a Balloon
Payment on the ____th month.]

In addition, the following tables have been prepared assuming that the Mortgage
Loans in each Loan Group have the following characteristics: (i) with respect
to the Group I Loans and Group II Loans, the Subsequent Mortgage Loans are
purchased by _____________, 199_, resulting in no mandatory prepayment from the
Pre-Funding Accounts on the Distribution Date in _________ 199_; (ii) all
calculations for the Mortgage Loans are done on the basis of a 360-day year
consisting of twelve 30-day months; (iii) with respect to the Class A
Certificates, all weighted average lives are calculated on the basis of a
360-day year and a 30-day month; (iv) Due Dates on each Mortgage Loan are the
first day of the month; (v) all scheduled monthly payments on the Mortgage
Loans are made in a timely fashion on the first day of each month, commencing
in __________ 199_, and prepayments are assumed to be received on the last day
of each month, commencing in ___________ 199_; (vi) the Mortgage Rate for the
Group I Loans is adjusted on its next Adjustment Date and on subsequent
Adjustment Dates as necessary to a rate equal to the sum of the Index and the
related Gross Margin, subject to the related Periodic Rate Cap, Lifetime Rate
Cap and Lifetime Rate Floor; (vii) there are no Prepayment Interest Shortfalls;
(viii) distributions on the Class A Certificates are made on the 25th day of
each month, commencing in _____________ 199_; (ix) the Delivery Date is
__________, 199_; (x) the Index is [Six-Month LIBOR and remains constant at
____% per annum and One-Month LIBOR remains constant at ____% per annum]; (xi)
the Required Subordinated Amounts will be set as provided in the Pooling and
Servicing Agreement; (xii) the Mortgage Loans will prepay at the indicated
assumed percentages of CPR or the Prepayment Assumption in the corresponding
order set forth below; and (xiii) and with regard to the weighted average lives
neither the holder of a majority percentage interest of the Class R
Certificates or the Master Servicer (or the Certificate Insurer, if
______________ is removed as Master Servicer) exercises its option to terminate
the Trust Fund when the aggregate principal balance of the Mortgage Loans is
reduced to less than 10% (or 5% in the case of the Master Servicer or the
Certificate Insurer) of the aggregate Principal Balance of the Mortgage Loans
as of the Cut-off Date and the aggregate Principal Balance of the Subsequent
Mortgage Loans as of the related Subsequent Cut-off Date.

Based upon the foregoing assumptions, certain of which may not reflect
actual experience, the following tables indicate the projected weighted average
life of each class of Class A Certificates and the percentages of the initial
Certificate Principal Balance of each such class that would be outstanding
after each of the dates shown at various percentages of CPR and the Prepayment
Assumption which will occur simultaneously for both Loan Groups. Investors in
the Class A Certificates should note that, irrespective of the assumptions
above, including the assumption of no losses on the Mortgage Loans, the
following tables show both CPR with respect to Loan Group I and the Prepayment
Assumption with respect to Loan Group II because Cross-Collateralization
Payments will occur with respect to distributions on Loan Group I being paid to
the Group II Certificates.

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PERCENTAGE OF INITIAL CERTIFICATE PRINCIPAL BALANCE
OUTSTANDING AT THE FOLLOWING PERCENTAGES OF THE PREPAYMENT ASSUMPTION AND CPR

<TABLE>
<CAPTION>
CLASS A-1 CERTIFICATES
-----------------------------------------------------------------------------
GROUP I (CPR) 0% 15% 18% 20% 25% 30% 35% 40%
GROUP II (PPA) ------- ------- ------ ------ -------- -------- -------- --------
DISTRIBUTION DATE 0% 50% 75% 100% 115% 125% 150% 200%
----------------- ------- ------- ------ ------ -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>

</TABLE>

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

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

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PERCENTAGE OF INITIAL CERTIFICATE PRINCIPAL BALANCE
OUTSTANDING AT THE FOLLOWING PERCENTAGES OF CPR AND THE PREPAYMENT ASSUMPTION

<TABLE>
<CAPTION>
CLASS A-2 CERTIFICATES
-----------------------------------------------------------------------------
GROUP I (CPR) 0% 15% 18% 20% 25% 30% 35% 40%
GROUP II (PPA) ------- ------- ------ ------ -------- -------- -------- --------
DISTRIBUTION DATE 0% 50% 75% 100% 115% 125% 150% 200%
----------------- ------- ------- ------ ------ -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>

</TABLE>

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

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

The actual characteristics and performance of the Mortgage Loans will
differ from the assumptions used in constructing the table set forth above,
which is hypothetical in nature and is provided only to give a general sense of
how the principal cash flows might behave under varying prepayment scenarios.
For example, it is very unlikely that the Mortgage Loans will prepay at the
given levels of CPR or the Prepayment Assumption until maturity or that all of
the Mortgage Loans will prepay at the same level of CPR or the Prepayment
Assumption. Moreover, the diverse remaining terms to maturity of the Mortgage
Loans could produce slower or faster principal distributions than indicated in
the table at the various percentages of CPR or the Prepayment Assumption
specified, even if the weighted average remaining term to maturity of the
Mortgage Loans is as assumed. Any difference between such assumptions and the
actual characteristics and performance of the Mortgage Loans, or actual
prepayment or loss experience, will affect the percentages of initial
Certificate Principal Balances outstanding over time and the weighted average
lives of the Class A Certificates.

SERVICING OF MORTGAGE LOANS

GENERAL

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Loans. [As of the Closing Date, the Master Servicer will service the Mortgage
Loans without subservicing arrangements.]

The information set forth in the following section through and
including the section captioned "Delinquency Status as of _____________, 199_"
has been provided by the Master Servicer. No representation is made by the
Depositor or any of its affiliates as to the accuracy or completeness of any
such information.

THE MASTER SERVICER

[____________] will act as the Master Servicer of the Mortgage Loans
pursuant to the Pooling and Servicing Agreement.

As of __________, 199_, the Master Servicer provided servicing for
approximately $__________ [million] in mortgage loans.

The principal executive offices of the Master Servicer are located at
____________________________. Its telephone number is (___) ___-____.

LOAN SERVICING

COLLECTION PROCEDURES

When a mortgagor fails to make a payment on a mortgage loan, the
Master Servicer attempts to cause the deficiency to be cured by corresponding
with the mortgagor. In most cases, deficiencies are cured promptly. Pursuant
to the Master Servicer's servicing procedures, the Master Servicer generally
mails to the mortgagor a notice of intent to foreclose after the loan becomes
31 days past due (two payments due but not received) and, within 60 days
thereafter, if the loan remains delinquent, institutes appropriate legal action
to foreclose on the mortgaged property. Foreclosure proceedings may be
terminated if the delinquency is cured. Mortgage loans to borrowers in
bankruptcy proceedings may be restructured in accordance with law and with a
view to maximizing recovery of such loans, including any deficiencies.

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After foreclosure, the Master Servicer may liquidate the mortgaged
property and charge-off the loan balance which was not recovered through
liquidation proceeds. If foreclosed, the mortgaged property is sold at a
public or private sale and may be purchased by the Master Servicer.

FORECLOSURE AND DELINQUENCY EXPERIENCE

<TABLE>
<CAPTION>
Delinquency Status as of _________, 199_

Dollars Percent Units Percent
<S> <C> <C> <C> <C>
Current $________ _____% _____ _____%

30-59 Days $________ _____% _____ _____%

60-89 Days $________ _____% _____ _____%

90+ Days $________ _____% _____ _____%

Total $________ _____% _____ _____%
</TABLE>

This table does not include ________ mortgage loans with principal
balances aggregating $_____________ that were sold, but were being serviced on
an interim basis pending transfer of servicing, as of ___________, 199_. As of
the date hereof, servicing with respect to such mortgage loans has been
transferred.

[Over the last several years, there has been a general deterioration
of the real estate market and weakening economy in many regions of the country,
including __________. The general deterioration of the real estate market has
been reflected in increases in delinquencies of loans secured by real estate,
slower absorption rates of real estate into the market and lower sales prices
for real estate. The general weakening of the economy has been reflected in
decreases in the financial strength of borrowers and

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decreases in the value of collateral serving as security for loans. If the
real estate market and economy continue to decline, the Master Servicer may
experience an increase in delinquencies on the loans it services and higher net
losses on liquidated mortgage loans.]

SERVICING COMPENSATION AND PAYMENT OF EXPENSES

ADJUSTMENT TO MASTER SERVICING FEE IN CONNECTION WITH CERTAIN PREPAID MORTGAGE
LOANS

When a borrower prepays a Mortgage Loan between Due Dates, the
borrower is required to pay interest on the amount prepaid only to the date of
prepayment and not thereafter. Except with respect to the month of the Cut-off
Date, principal prepayments by borrowers received by the Master Servicer from
the first day through the fifteenth day of a calendar month will be distributed
to Certificateholders on the Distribution Date in the same month in which such
prepayments are received and, accordingly, no shortfall in the amount of
interest to be distributed to Certificateholders with respect to the prepaid
Mortgage Loans results. Conversely, principal prepayments by borrowers
received by the Master Servicer from the sixteenth day (or, in the case of the
first Distribution Date, from the Cut-off Date) through the last day of a
calendar month will be distributed to Certificateholders on the Distribution
Date in the month following the month of receipt and, accordingly, a shortfall
in the amount of interest to be distributed to Certificateholders with respect
to such prepaid Mortgage Loans would result. Pursuant to the Pooling and
Servicing Agreement, the Master Servicing Fee for any month will be reduced,
[but not by more than one-half of such Master Servicing Fee,] by an amount
sufficient to pass through to Certificateholders the full amount of interest to
which they would be entitled in respect of each such prepaid Mortgage Loan on
the related Distribution Date. If shortfalls in interest as a result of
prepayments in any Prepayment Period exceed an amount equal to [one-half of]
the Master Servicing Fee otherwise payable on the related Distribution Date,
the amount of interest available to be distributed to Certificateholders will
be reduced by the amount of such excess. See "Description of the
Certificates--Class A Interest Distribution Amounts" herein.

TERMINATION

The Pooling and Servicing Agreement will terminate upon notice to the
Trustee of either: (a) the later of the distribution to Certificateholders of
the final payment or collection with respect to the last Mortgage Loan (or
Advances of same by the Master Servicer), or the disposition of all funds with
respect to the last Mortgage Loan and the remittance of all funds due under the
Pooling and Servicing Agreement

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and the payment of all amounts due and payable to the Certificate Insurer and
the Trustee or (b) mutual consent of the Master Servicer, the Certificate
Insurer and all Certificateholders in writing; provided, however, that in no
event will the Trust Fund established by the Pooling and Servicing Agreement
terminate later than twenty-one years after the death of the last surviving
lineal descendant of the person named in the Pooling and Servicing Agreement.

Subject to provisions in the Pooling and Servicing Agreement, the
holder of a majority percentage interest of the Class R Certificates or the
Master Servicer (or the Certificate Insurer, if ________ is removed as Master
Servicer) may, at its option and at its sole cost and expense, on any
Distribution Date when the aggregate Principal Balance of the Mortgage Loans is
less than ___% (___% with respect to the exercise of this option by the Master
Servicer or the Certificate Insurer) of the sum of the aggregate principal
balance of the Mortgage Loans as of the Cut-off Date and the aggregate
principal balance of the Subsequent Mortgage Loans as of the related Subsequent
Cut-off Date, purchase from the Trust Fund all of the outstanding Mortgage
Loans at a price equal to the sum of (a) 100% of the Principal Balance of each
outstanding Mortgage Loan, (b) the aggregate amount of accrued and unpaid
interest on the Mortgage Loans through the related Due Period and 30 days'
accrued interest thereon at a rate equal to the Mortgage Rate (net of the
Servicing Fee Rate in the case of such a purchase by the Master Servicer), (c)
any unreimbursed amounts due to the Certificate Insurer under the Pooling and
Servicing Agreement or the Insurance Agreement (as defined in the Pooling and
Servicing Agreement), (d) any excess of the actual stated principal balance of
each such Mortgage Loan over the Principal Balance thereof, the aggregate
amount of accrued and unpaid interest on such excess through the related due
period and 30 days' interest on such excess at a rate equal to the related
Mortgage Interest Rate with respect to each related Mortgage Loan and (e) any
other unpaid or unreimbursed amounts owed to the Master Servicer and not
included in clauses (a) through (d) above. Any such purchase shall be
accomplished by deposit into the related Certificate Account of the purchase
price specified above. From the amount so deposited, the Trustee shall
reimburse the Master Servicer for the amount of any unpaid Servicing Fees,
unreimbursed Advances and unreimbursed servicing advances. No such termination
is permitted without the prior written consent of the Certificate Insurer if it
would result in a draw on the related Certificate Insurance Policy. See "The
Agreements--Termination; Optional Termination" in the Prospectus.

FEDERAL INCOME TAX CONSEQUENCES

Upon the issuance of the Class A Certificates, _______________,
counsel to the Depositor, will deliver its opinion generally to the effect
that, assuming compliance with all provisions of the Pooling and Servicing
Agreement, for federal income tax purposes, the Trust Fund (exclusive of the
Interest Coverage Accounts and the Pre-Funding Accounts) will qualify as a
REMIC under the Code.

For federal income tax purposes, the Class A Certificates and the
Subordinate Certificates will represent ownership of "regular interests" in the
REMIC and will generally be treated as representing ownership of debt
instruments issued by the REMIC and the Class R Certificates will constitute
the sole class of "residual interests" in the REMIC. See "Federal Income Tax
Consequences--Taxation of the REMICs and its Holders" in the Prospectus.

For federal income tax reporting purposes, the Class A Certificates
will not be treated as having been issued with original issue discount. The
prepayment assumption that will be used with respect to the Class A-1
Certificates and the Class A-2 Certificates in determining the rate of accrual
of original issue discount, market discount and premium, if any, for federal
income tax purposes will be based on the assumption that, subsequent to the
date of any determination the Mortgage Loans will prepay at a rate

S-73
<PAGE> 262
equal to a ___% CPR and a ___% Prepayment Assumption, respectively. No
representation is made that the Mortgage Loans will prepay at this rate or at
any other rate. See "Federal Income Tax Consequences--General--Interest and
Acquisition Discount" in the Prospectus.

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

A reasonable method of reporting original issue discount with respect
to the Class A Certificates if the IRS determines such Certificates are issued
with original issue discount generally would be to report all income with
respect to such Certificates as original issue discount for each period,
computing such original issue discount (i) by assuming that the value of the
applicable index will remain constant for purposes of determining the original
yield to maturity of, and projecting future distributions on, each Class of
such Certificates, thereby treating such Certificates as fixed rate instruments
to which the original issue discount computation rules described in the
Prospectus can be applied, and (ii) by accounting for any positive or negative
variation in the actual value of the applicable index in any period from its
assumed value as a current adjustment to original issue discount with respect
to such period. See "Federal Income Tax Consequences--General--Interest and
Acquisition Discount" in the Prospectus.

In certain circumstances the OID Regulations permit the holder of a
debt instrument to recognize original issue discount under a method that
differs from that used by the issuer. Accordingly, it is possible that the
holder of a Certificate may be able to select a method for recognizing original
issue discount that differs from that used in preparing reports to the
Certificateholders and the IRS.

The Class A Certificates may be treated for federal income tax
purposes as having been issued at a premium. Whether any holder of a Class A
Certificate will be treated as holding a certificate with amortizable bond
premium will depend on such Certificateholder's purchase price and the
distributions remaining to be made on such Certificate at the time of its
acquisition by such Certificateholder. Holders of the Class A Certificates
should consult their tax advisors regarding the possibility of making an
election to amortize such premium. See "Federal Income Tax
Consequences--General-Premium" in the Prospectus.

The Class A Certificates will be treated as assets described in
Section 7701(a)(19)(C) of the Code and "real estate assets" under Section
856(c)(5)(A) of the Code generally in the same proportion that the assets of
the Trust Fund would be so treated. In addition, interest on the Class A
Certificates will be treated as "interest on obligations secured by mortgages
on real property" under Section 856(c)(3)(B) of the Code generally to the
extent that such Class A Certificates are treated as "real estate assets" under
Section 856(c)(5)(A) of the Code. To the extent the manufactured housing loans
meet the requirements

S-74
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of Section 25(e)(10) of the Code, the Class A Certificates will be treated as
assets described in the foregoing sections of the Code. Moreover, the Class A
Certificates will be "qualified mortgages" within the meaning of Section
860G(a)(3) of the Code. See "Servicing the Mortgage Loans--Termination" herein
and "Federal Income Tax Consequences-General-Taxation of Debt Securities Status
as Real Property Loans" in the Prospectus.

For further information regarding federal income tax consequences of
investing in the Class A Certificates, see "Federal Income Tax Consequences" in
the Prospectus.

UNDERWRITING

The Depositor has been advised by the Underwriter that it proposes
initially to offer the Certificates to the public in Europe and the United
States and to certain dealers at such price less a discount not in excess of
____% of the Certificate denominations. The Underwriter may allow and such
dealers may reallow a discount not in excess of _____% of the Certificate
denominations to certain other dealers. After the initial public offering, the
public offering price, such concessions and such discounts may be changed.

The Underwriting Agreement provides that the Depositor will indemnify
the Underwriter against certain civil liabilities, including liabilities under
the Act.

LEGAL MATTERS

The validity of the Certificates, including certain federal income tax
consequences with respect thereto, will be passed upon for the Depositor by
__________________. ______________ will pass upon certain legal matters on
behalf of the Underwriter.

RATINGS

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<PAGE> 264
It is a condition to the issuance of the Class A Certificates that
they be rated "___" by _______ ("____"), "___" by _______ ("____") and "___" by
_______ ("____" and, together with ____ and ______, the "Rating Agencies").

The ratings assigned by the Rating Agencies to mortgage pass-through
certificates address the likelihood of the receipt of all distributions on the
mortgage loans by the related certificateholders under the agreements pursuant
to which such certificates are issued. The Rating Agencies' ratings take into
consideration the credit quality of the related mortgage pool, including any
credit support providers, structural and legal aspects associated with such
certificates, and the extent to which the payment stream on the mortgage pool
is adequate to make the payments required by such certificates. The Rating
Agencies' ratings on such certificates do not, however, constitute a statement
regarding frequency of payments of the mortgage loans.

The ratings of the Rating Agencies do not address the possibility
that, as a result of principal prepayments, Certificateholders may receive a
lower than anticipated yield.

The Depositor has not requested a rating of the Certificates by any
rating agency other than the Rating Agencies; there can be no assurance,
however, as to whether any other rating agency will rate the Certificates or,
if it does, what rating would be assigned by such other rating agency. The
rating assigned by such other rating agency to the Certificates could be lower
than the respective ratings assigned by the Rating Agencies.

LEGAL INVESTMENT

The Class A-1 Certificates will constitute "mortgage related
securities" for purposes of the Secondary Mortgage Market Enhancement Act of
1984 ("SMMEA") for so long as they are rated in at least the second highest
rating category by one or more nationally recognized statistical rating
agencies, and, as such, are legal investments for certain entities to the
extent provided in SMMEA. SMMEA provides, however, that states could override
its provision on legal investment and restrict or condition investment in
mortgage related securities by taking statutory action on or prior to October
3, 1991. The Class A-2 Certificates will not constitute "mortgage related
securities" for purposes of SMMEA because the Group II Loans include Mortgage
Loans that are secured by subordinate liens on the related Mortgaged
Properties.

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

See "Legal Investment" in the Prospectus.

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ERISA CONSIDERATIONS

The Employee Retirement Income Security Act of 1974, as
amended ("ERISA") and the Code impose certain requirements on employee benefit
plans and certain other retirement plans and arrangements (including, but not
limited to, individual retirement accounts and annuities), as well as on
collective investment funds and certain separate and general accounts in which
such plans or arrangements are invested (all of which are hereinafter referred
to as a "Plan") and on persons who are fiduciaries with respect to such Plans.
Any Plan fiduciary which proposes to cause a Plan to acquire any of the Class A
Certificates should determine whether such an investment is permitted under the
governing Plan instruments and is prudent and appropriate for the Plan in view
of its overall investment policy and the composition and diversification of its
portfolio. In addition, ERISA and the Code prohibit certain transactions
involving the assets of a Plan and "disqualified persons" (within the meaning
of the Code) and "parties in interest" (within the meaning of ERISA) who have
certain specified relationships to the Plan. Therefore, a Plan fiduciary or
any other person using the assets of a Plan considering an investment in the
Class A Certificates should also consider whether such an investment might
constitute or give rise to a prohibited transaction under ERISA or the Code.
Any Plan fiduciary which proposes to cause a Plan to acquire any of the Class A
Certificates or any other person proposing to use the assets of a Plan to
acquire any of the Class A Certificates should consult with its counsel with
respect to the potential consequences under ERISA and the Code of the
acquisition and ownership of such Certificates.

The U.S. Department of Labor ("DOL") has granted to Morgan
Stanley an administrative exemption (Prohibited Transaction Exemption 90-24, 55
Fed. Reg. 20,548 (1990) (the "Exemption") from certain of the prohibited
transaction rules of ERISA and the related excise tax provisions of Section
4975 of the Code with respect to the initial purchase, the holding and the
subsequent resale by Plans of certificates in pass-through trusts that consist
of certain receivables, loans, and other obligations that meet the conditions
and requirements of the Exemption.

Among the conditions that must be satisfied for the Exemption
to apply are the following:

(1) the acquisition of the Class A Certificates
by a Plan is on terms (including the price for such
Certificates) that are at least as favorable to the Plan as
they would be in an arm's length transaction with an unrelated
party;

(2) the rights and interests evidenced by the
Class A Certificates acquired by the Plan are not subordinated
to the rights and interests evidenced by other certificates of
the Trust Fund;

(3) the Class A Certificates acquired by the Plan
have received a rating at the time of such acquisition that is
one of the three highest generic rating categories from either
S&P, Moody's, DCR or Fitch Investors Service, L.P. ("Fitch");

(4) the Trustee must not be an affiliate of any
other member of the Restricted Group (as defined below);

(5) the sum of all payments made to and retained
by the Underwriter in connection with the distribution of the
Class A Certificates represents not more than reasonable
compensation for underwriting such Certificates; the sum of
all payments made to and retained by the Depositor pursuant to
the assignment of the Mortgage Loans

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to the Trust Fund represents not more than the fair market
value of such Mortgage Loans; the sum of all payments made to
and retained by the Master Servicer and any other servicer
represents not more than reasonable compensation for such
person's services under the Pooling and Servicing Agreement
and reimbursements of such person's reasonable expenses in
connection therewith; and

(6) the Plan investing in the Class A
Certificates is an "accredited investor" as defined in Rule
501(a)(1) of Regulation D of the Securities and Exchange
Commission under the Securities Act of 1933.

The Trust Fund must also meet the following requirements:

(i) the corpus of the Trust Fund must consists
solely of assets of the type that have been included-in other
investment pools;

(ii) certificates evidencing interests in such
other investment pools must have been rated in one of the
three highest rating categories of S&P, Moody's, Fitch or DCR
for at least one year prior to the Plan's acquisition of the
Class A Certificates; and

(iii) certificates evidencing interests in such
other investment pools must have been purchased by investors
other than Plans for at least one year prior to any Plan's
acquisition of the Class A Certificates.

Moreover, the Exemption provides relief from certain
self-dealing/conflict of interest prohibited transactions that may occur when
any person who has discretionary authority or renders investment advice with
respect to the investment of Plan Assets causes a Plan to acquire certificates
in a trust, provided that, among other requirements: (i) such person (or its
affiliate) is an obligor with respect to five percent or less of the fair
market value of the obligations or receivables contained in the trust; (ii) the
Plan is not a plan with respect to which any member of the Restricted Group (as
defined below) is the plan sponsor (as defined in Section 3(16)(B) of ERISA);
(iii) in the case of an acquisition in connection with the initial issuance of
certificates, at least fifty percent of each class of certificates in which
Plans have invested is acquired by persons independent of the Restricted Group
(as defined below) and at least fifty percent of the aggregate interest in the
trust fund is acquired by persons independent of the Restricted Group; (iv) the
Plan's investment in certificates of any class does not exceed twenty-five
percent of all of the certificates of that class outstanding at the time of the
acquisition; and (v) immediately after the acquisition, no more than
twenty-five percent of the assets of the Plan with respect to which such person
has discretionary authority or renders investment advice are invested in
certificates representing an interest in one or more trusts containing assets
sold or serviced by the same entity. The Exemption does not apply to Plans
sponsored by the Seller, the Depositor, the Underwriter, the Trustee, the
Master Servicer, the Certificate Insurer, any obligor with respect to Mortgage
Loans included in the Trust Fund constituting more than five percent of the
aggregate unamortized principal balance of the assets in the Trust Fund, or any
affiliate of such parties (the "Restricted Group").

The Exemption may apply to the acquisition, holding and
transfer of the Class A Certificates by Plans if all of the conditions of the
Exemption are met, including those within the control of the investor.
Notwithstanding any of the foregoing, the Exemption will not apply with respect
to any Class A Certificates until such time as the balance of the related
Pre-Funding Account is reduced to zero. Accordingly, until such time, the Class
A Certificates may not be purchased by Plans. As of the date

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hereof, there is no single Mortgage Loan included in the Trust Fund that
constitutes more than five percent of the aggregate unamortized principal
balance of the assets of the Trust Fund.

Prospective Plan investors should consult with their legal
advisors concerning the impact of ERISA and the Code, the applicability of the
Exemption and any of the prohibited transaction class exemptions issued by the
DOL and the potential consequences in their specific circumstances, prior to
making an investment in the Class A Certificates. Moreover, each Plan
fiduciary should determine whether under the general fiduciary standards of
investment procedure and diversification an investment in the Class A
Certificates is appropriate for the Plan, taking into account the overall
investment policy of the Plan and the composition of the Plan's investment
portfolio. In particular, purchasers that are insurance companies should
consult with their legal advisors with respect to the applicability of
Prohibited Transaction Class Exemption ("PTCE") 95-60, regarding transactions
by insurance company general accounts. In addition to any exemption that may
be available under PTCE 95-60 for the purchase and holding of Certificates by
an insurance company general account, the Small Business Job Protection Act of
1996 added a new Section 401(c) to ERISA, which provides certain exemptive
relief from the provisions of Part 4 of Title I of ERISA and Section 4975 of
the Code, including the prohibited transaction restrictions imposed by ERISA
and the related excise taxes imposed by the Code, for transactions involving an
insurance company general account. Pursuant to Section 401(c) of ERISA, the
DOL is required to issue final regulations ("401(c) Regulations") no later than
December 31, 1997 which are to provide guidance for the purpose of determining,
in cases where insurance policies supported by an insurer's general account are
issued to or for the benefit of a Plan on or before December 31, 1998, which
general account assets constitute Plan Assets. Section 401(c) of ERISA
generally provides that, until the date which is 18 months after the 401(c)
Regulations become final, no person shall be subject to liability under Part 4
of Title I of ERISA and Section 4975 of the Code on the basis of a claim that
the assets of an insurance company general account constitute Plan Assets,
unless (i) as otherwise provided by the Secretary of Labor in the 401(c)
Regulations to prevent avoidance of the regulations or (ii) an action is
brought by the Secretary of Labor for certain breaches of fiduciary duty which
would also constitute a violation of federal or state criminal law. Any assets
of an insurance company general account which support insurance policies issued
to a Plan after December 31, 1998 or issued to Plans on or before December 31,
1998 for which the insurance company does not comply with the 401(c)
Regulations may be treated as Plan Assets. In addition, because Section 401(c)
does not relate to insurance company separate accounts, separate account assets
are still treated as Plan Assets of any Plan invested in such separate account.
Insurance companies contemplating the investment of general account assets in
the Certificates should consult with their legal counsel with respect to the
applicability of Section 401(c) of ERISA, including the general account's
ability to continue to hold the Certificates after the date which is 18 months
after the date the 401(c) Regulations become final. See "ERISA Considerations"
in the Prospectus.

EXPERTS

The consolidated financial statements of the Certificate
Insurer and its subsidiaries as of _________________, 199__ and
_________________, 199__ and for the three years ended _________________,
199__, incorporated by reference into this Prospectus Supplement, have been
audited by _________________, independent accountants, as set forth in their
report thereon incorporated by reference herein in reliance upon the authority
of such firm as experts in accounting and auditing.

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INDEX OF DEFINED TERMS

<TABLE>
<CAPTION>
Term Page
- ---- ----
<S> <C>
401(c) Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-79
Accrual Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-56
Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-75
Adjustment Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-10,31
Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-20
Available Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-52
Beneficial owner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-51
Book Entry Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-7,51
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-61
CEDE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-51
Cedel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-8
Certificate Insurance Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1,13
Certificate Insurer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1,13
Certificate Insurer's Fiscal Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-61
Certificate Owner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-8
Certificateholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-51
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1,50
Citibank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-8
Class A Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1,50
Class A Interest Distribution Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-16,55
Class A Principal Distribution Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-16,58
Class A-1 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-50
Class A-1 Formula Pass Through Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-14
Class A-2 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-50
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-23
CPR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-66
Cross-Colalteralized Subordination Shortfall . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-19
Cross-Collateralization Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-54
Cross-Collateralized Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-19
Cross-Collateralized Subordination Shortfall . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-54
Definitive Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-8,51
Delinquent Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-9
Depositor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3,7
Depository . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-51
Distribution Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-4,51
DTC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3,51
Due Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-53
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-23,77
Euroclear . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-8
Excess Subordinated Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-53
Exemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-77
Fitch . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-77
Funding Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-48
</TABLE>

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<TABLE>
<S> <C>
Funds Cap Carry Forward Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-15
Gross Margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-31
Group I Class A Available Funds Pass-Through Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-14
Group I Class A Available Funds
Cap Carry Forward Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-15
Group I Class A Carry-Forward Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-56
Group I Interest Coverage Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-62
Group I Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3,8,30
Group I Original Pre-Funded Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-11
Group I Subordinate Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1,50
Group I Subsequent Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-11
Group II Class A Carry-Forward Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-56
Group II Interest Coverage Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-62
Group II Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3,8
Group II Original Pre-Funded Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-11,12
Group II Subordinate Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1,50
Group II Subsequent Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-11
Group II Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-30
Initial Group I Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-29
Initial Group II Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-29
Insured Distribution Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-56
Insured Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-19,61
Interest Coverage Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-62
IRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-74
LIBOR Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-58
Lifetime Rate Caps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-31
Lifetime Rate Floors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-31
Liquidated Loan Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-53
Liquidated Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-53
Loan Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3,8,31
Loan Group I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-31
Loan Group II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-31
Master Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-7
Master Servicer Remittance Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-59
Morgan Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-8
Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3,8
Mortgage Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Mortgaged Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-9
Net Monthly Excess Cashflow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-52
Non-conforming credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-26
Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-61
OID Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-74
One Year CMT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3,12,31
Original Group I Pre-Funded Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-48
Original Group II Pre-Funded Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-48
Owner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-61
Pass-Through Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-14,57
Periodic Rate Cap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-31
Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-77
</TABLE>

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<TABLE>
<S> <C>
Pooling of Servicing Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-13
Pre-Funded Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-48
Pre-Funding Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-48
Preference Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-61
Premium Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-57
Prepayment Assumption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-66
Prepayment Interest Excess . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-72
Prepayment Interest Shortfall . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-57
Principal Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-59
PTCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-79
Rating Agencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-76
Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-51
Reimbursement Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-54
REMIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3,22
Required Subordinated Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-52
Residual Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1,50
Residual Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-23
Restricted Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-78
Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3,7,26
Servicing Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-72
Six-Month LIBOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3,12,31
SMMEA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-24,76
Subordinate Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1,50
Subordinated Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-52
Subordination Deficit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-53
Subordination Increase Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-52
Subordination Reduction Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-53
Subsequent Cut-off Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-48
Subsequent Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-29,48
Subsequent Transfer Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-48
Subsequent Transfer Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-48
Telerate Screen Page 3750 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-58
Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3,13
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-7
Underwriter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-2
Underwriting Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-75
Weighted average life . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-65
</TABLE>

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APPENDIX A

UNDERWRITING GUIDELINES APPLICABLE TO THE MORTGAGE LOANS
[Description will depend on the Seller and the particulars of the
Mortgage Loans]

The Mortgage Loans were originated by the Seller under its "Standard
Non-Conforming Program" applicable to residential loans which, for credit
reasons, do not conform to FNMA or FHLMC underwriting guidelines.

THE STANDARD NON-CONFORMING PROGRAM

The Mortgage Loans underwritten under the Standard Non-Conforming Program were
underwritten in accordance with the underwriting criteria of the Seller.

The Seller's underwriting standards under the Standard Non-Conforming Program
are primarily intended to assess creditworthiness of the mortgagor, the value
of the mortgaged property and to evaluate the adequacy of such property as
collateral for the mortgage loan. While their primary consideration in
underwriting a mortgage loan is the mortgagor's employment stability and
debt-to-income ratio, the value of the mortgaged property relative to the
amount of the mortgage loan is another critical factor. In addition, they also
consider, among other things, a mortgagor's credit history and repayment
ability, as well as the type and use of the mortgaged property. All of the
Mortgage Loans underwritten under this program are adjustable rate loans, and
generally bear higher rates of interest than mortgage loans that are originated
in accordance with FNMA and FHLMC standards.

The Mortgage Loans underwritten under the Standard Non-Conforming Program were
underwritten pursuant to the "Non-Conforming Full Documentation,"
"Non-Conforming Alternative Documentation" and "Non-Conforming No-Income
Qualifier" residential loan programs. Under each of these programs, the Seller
reviews the loan applicant's source of income, calculates the amount of income
from sources indicated on the loan application or similar documentation,
reviews the credit history of the applicant, calculates the debt
service-to-income ratio to determine the applicant's ability to repay the loan,
reviews the type and use of the property being financed and reviews the
property for compliance with their standards. In determining the ability of
the applicant to repay the Mortgage Loan, the Seller uses a rate (the
"Qualifying Rate") which generally is a rate equal to the Mortgage Rate at
origination plus the amount of the Periodic Cap. The Seller's underwriting
standards are applied in a standardized procedure which complies with
applicable federal and state laws and regulations.

The Seller's criteria require it to verify the income of each borrower and the
source of funds (if any) required to be deposited by the applicant into escrow
under its various programs. Borrowers are generally required to submit written
verification of income signed by the employer covering the most recent two-year
period, together with a current paystub and two years' W-2 forms. Under the
Non-Conforming Alternative Documentation program, borrowers are generally
required to submit two years' W-2 Forms and the most recent paystub showing
year-to-date earnings. A telephone confirmation of employment is made
regardless of the origination program. Under the Non-Conforming No-Income
Qualifier program, borrowers may be qualified based upon monthly income as
stated on the mortgage loan application, without verification; however,
self-employed borrowers are required to submit a business license, one year's
bank statements and a current profit and loss statement. A business credit
report, if applicable, is obtained. Verification of the source of funds (if
any) required to be deposited by the applicant into

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<PAGE> 272
escrow is generally required under all documentation programs in the form of a
standard verification of deposit or two months' consecutive bank statements or
other acceptable documentation. Twelve months' mortgage payment or rental
history must be verified by lender or landlord. If appropriate compensating
factors exist, the Seller may waive certain documentation requirements for
individual borrowers. All documentation must be no more than 90 days old at
underwriting and no more than 120 days old at the time of the funding of the
related loan.

The Seller uses the following categories and characteristics as guidelines to
grade the potential likelihood that the mortgagor will satisfy the repayment
conditions of a mortgage loan:

"A-" Risk. Under the "A-" risk category, the prospective mortgagor must have
generally repaid installment or revolving debt according to its terms with a
maximum of three 30-day late payments within the last 12 months or five 30-day
late payments or two 60-day late payments within the last 24 months. Within
this 24 month period, however, a maximum of one 30-day late payment, and no
60-day late payments are acceptable in the last 12 months, or a maximum of two
30-day late payments, and no 60-day late payments, within the last 24 months
are acceptable on an existing mortgage loan on the subject property. The
existing mortgage obligation must be current. Minor derogatory items are
allowed as to non-mortgage credit. No collection accounts or charge-offs or
judgments over $_____ within the last five years are allowed. No bankruptcy or
notice of default filings by the borrower may have occurred during the
preceding five years. A maximum Loan-to-Value Ratio of up to ___% (or ___% for
mortgage loans originated under the Non-Conforming No-Income Qualifier program,
but ___% if the borrower is self-employed) is permitted for a mortgage loan on
a single family owner-occupied property. A maximum Loan-to-Value Ratio of ___%
(or ___% for mortgage loans originated under the Non-Conforming No-Income
Qualifier program but ___% if the borrower is self-employed) is permitted for a
mortgage loan on a non-owner occupied property or a second home property. The
debt service-to-income ratio generally is ___% or less based on the Qualifying
Rate. The maximum loan amount is $________ for single-family owner-occupied
properties, regardless of the documentation program. Exceptions to the maximum
loan amount for single-family, owner occupied properties are considered by the
Seller on a limited basis. The maximum loan amount is $________ (or $________
for mortgage loans originated under the Non-Conforming No-Income Qualifier
Program) for mortgage loans on single-family non-owner-occupied properties or
second homes.

"A" Risk. Under the "A" risk category, the prospective mortgagor must have
generally repaid installment or revolving debt according to its terms with a
maximum of five 30-day late payments or two 60-day late payments on such
obligations within the last 12 months. A maximum of two 30-day payments, and
no 60-day late payments, within the last 12 months is acceptable on an existing
mortgage loan on the subject property. The existing mortgage obligation must
be current. Minor derogatory items are allowed as to non-mortgage credit. No
unpaid collection accounts, charge-offs or judgments over $_____ within the
last two years are allowed. No bankruptcy or notice of default filings by the
borrower may have occurred during the preceding two years. A maximum
Loan-to-Value Ratio of up to ___% (or ___% for mortgage loans originated under
the Non-Conforming No-Income Qualifier program, but ___% if the borrower is
self-employed) is permitted for a mortgage loan on a single family
owner-occupied property. A maximum Loan-to-Value Ratio of up to ___% (or ___%
for mortgage loans originated under the Non-Conforming No-Income Qualifier
program) is permitted for a mortgage loan on a non-owner occupied property or a
second home. The debt service-to-income ratio generally is ___% or less based
on the Qualifying Rate. The maximum loan amount is $_________ for
single-family owner-occupied properties, under the Non-Conforming Full
Documentation Program. Exceptions to the maximum loan amount for

A-2
<PAGE> 273
single-family, owner occupied properties are considered by the Seller on a
limited basis. The maximum loan amount is $_________ for mortgage loans on
single-family owner-occupied properties under the Non-Conforming No-Income
Qualifier Program. The maximum loan amount is $_________ (or $_________ for
mortgage loans originated under the Non-Conforming No-income Qualifier Program)
for mortgage loans on a single-family non-owner-occupied properties or second
homes. Loan applicants with less favorable credit ratings generally are
offered loans with higher interests rates and lower Loan-to-Value ratios than
applicants with more favorable ratings.

"B" Risk. Under the "B" risk category, the prospective mortgagor must have
generally repaid consumer debt according to its terms, with a maximum of eight
30-day late payments or four 60-day late payments or two 90-day late payments
on such obligations within the last 12 months. A maximum of four 30-day late
payment, or three 30-day late payments and one 60-day late payment, within the
last 12 months is acceptable on an existing mortgage loan on the subject
property. The existing mortgage obligation must be current. As to
non-mortgage credit, some prior defaults may have occurred. Isolated and
insignificant collections and/or charge-offs and judgments within the last 18
months, totalling less than $_________ are acceptable. No bankruptcy or notice
of default filings by the borrower may have occurred during the preceding 18
months. A maximum Loan-to-Value Ratio of ___% (or ___% for mortgage loans
originated under the Non-Conforming No-Income Qualifier program, but ___% if
the borrower is self-employed) is permitted for a mortgage loan on a single
family, owner-occupied property. A maximum Loan-to-Value Ratio of ___% (or
___% for mortgage loans originated under the NonConforming No-Income Qualifier
Program) is permitted for a mortgage loan on a non-owner occupied property or a
second home. The debt service-to-income ratio generally is ___% or less based
on the Qualifying Rate. The maximum loan amount is $_________ for
single-family owner-occupied properties, under the Non-Conforming Full
Documentation Program. The maximum loan amount is $_________ (or $_________
for mortgage loans originated under the Non-Conforming No-Income Qualifier
Program) for mortgage loans on a non-owner-occupied property or a second home.

"C" Risk. Under the "C" risk category, the prospective mortgagor may have
experienced significant credit problems in the past. A maximum of twelve
30-day late payments or six 60-day late payments, or four 90-day late payments,
on consumer debt within the last twelve months is acceptable. A maximum of
five 30-day late payments or three 30-day late payments and two 60-day late
payments or three 30-day late payments and one 90-day late payment, within the
last 12 months is acceptable on an existing mortgage loan on the subject
property. The existing mortgage obligation can be up to 40 days past due at
the funding of the loan. As to non-mortgage credit, significant prior defaults
may have occurred. There may be open collections or charge-offs not to exceed
$_________ and up to $_________ in isolated circumstances. No bankruptcy or
notice of default filings by the borrower may have occurred during the
preceding year. A maximum Loan-to-Value Ratio of ___% (or ___% for mortgage
loans originated under the Non-Conforming No-Income Qualifier Program, but ___%
if the borrower is self-employed) is permitted for a mortgage loan on a
single-family owner-occupied property. A maximum Loan-to-Value Ratio of ___%
(or ___% for mortgage loans originated under the Non-Conforming No-Income
Qualifier Program, but ___% if the borrower is self-employed) is permitted for
a mortgage loan on a non-owner-occupied property or a second home. The debt
service-to-income ratio is generally ___% or less based on the Qualifying Rate.
The maximum loan amount is $_________ (or $_________ for mortgage loans
originated under the Non-Conforming No-Income Qualifier Program) for mortgage
loans on single-family owner-occupied properties. The maximum loan amount is
$_________ (or $_________ for mortgage loans originated under the
Non-Conforming No-Income Qualifier Program) for mortgage loans on
nonowner-occupied properties or second homes.

A-3
<PAGE> 274
"CX" Risk. Under the "CX" risk category, the prospective mortgagor may have
experienced significant credit problems in the past. As to non-mortgage
credit, significant prior defaults may have occurred. The borrower is sporadic
in some or all areas with a disregard for timely payment or credit standing.
With respect to an existing mortgage loan on the subject property, no payment
can be more than 90 days past due. Such existing mortgage loan is not required
to be current at the time the application is submitted. The borrower may have
open collections, charge-offs and judgments, all of which must be paid prior to
the funding of the loan, but such items must be paid through the loan proceeds.
No bankruptcy or notice of default filings by the borrower may have occurred
during the preceding six months. A maximum Loan-to-Value Ratio of ___% (or
___% or ___% for mortgage loans originated under the Non-Conforming No-Income
Qualifier Program, depending on whether the borrower is self-employed) is
permitted for a mortgage loan on a single-family owner-occupied property. No
mortgage loans on non-owner-occupied property or second homes are made in the
"CX" risk category. The maximum loan amount is $_________ under the
Non-Conforming Full Documentation Program or $_________ (or $_________ in the
case of borrowers who are self-employed) under the Non-Conforming No-Income
Qualifier Program. The debt service-to-income ratio generally is ___% or less
based on the Qualifying Rate.

"D" Risk. Under the "D" risk category, the prospective mortgagor may have
experienced significant credit problems in the past. As to non-mortgage
credit, significant prior defaults may have occurred. The borrower is sporadic
in some or all areas with a general disregard for timely payment or credit
standing. With respect to an existing mortgage loan on the subject property,
no payment can be more than 120 days past due. Such existing mortgage loan is
not required to be current at the time the application is submitted. The
borrower may have open collections, charge-offs and judgments, all of which
must be paid simultaneously with the funding of the loan. No current
bankruptcy filings by the borrower are allowed. Borrowers who are in
foreclosure are considered. A maximum Loan-to-Value Ratio of ___% (or ___% for
mortgage loans originated under the Non-Conforming No-Income Qualifier Program,
but ___% if the borrower is self-employed) is permitted for a mortgage loan in
a single-family owner-occupied property. No mortgage loans on a
non-owner-occupied property or a second home are made in the "D" risk category.
The maximum loan amount is $_________ under the Non-Conforming NoIncome
Qualifier Program, but $_________ if the borrower is self-employed) for
mortgage loans on a nonowner-occupied property or a second home. The debt
service-to-income ratio is ___% or less based on the Qualifying Rate.

Exceptions. As described above, the Seller uses the foregoing categories and
characteristics as underwriting guidelines only. On a case-by-case basis, it
may determine that the prospective mortgagor warrants a risk category upgrade,
a debt service-to-income ratio exception, a pricing exception, a loan-to-value
exception or an exception from certain requirements of a particular risk
category (collectively called an "upgrade" or an "exception"). An upgrade or
exception may generally be allowed if the application reflects certain
compensating factors, among others: low loan-to-value ratio; pride of
ownership; a maximum of one 30-day late payment on all mortgage loans during
the last 12 months; stable employment, and the length of residence in the
subject property. Accordingly, they may classify certain mortgage loan
applications in a more favorable risk category than other mortgage loan
applications that, in the absence of such compensating factors, would satisfy
only the criteria of a less favorable risk category.

A-4
<PAGE> 275
SUBJECT TO COMPLETION, DATED JANUARY 14, 1997

PROSPECTUS

MORGAN STANLEY ABS CAPITAL I INC.

DEPOSITOR
$1,000,000

(AGGREGATE AMOUNT)

ASSET BACKED SECURITIES
(ISSUABLE IN SERIES)

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

This Prospectus relates to the issuance of Asset Backed Certificates
(the "Certificates") and Asset Backed Notes (the "Notes" and, together with the
Certificates, the "Securities"), which may be sold from time to time in one or
more series (each, a "Series") by Morgan Stanley ABS Capital I Inc. (the
"Depositor") or by a Trust Fund (as defined below) on terms determined at the
time of sale and described in this Prospectus and the related Prospectus
Supplement. The Securities of a Series will consist of Certificates which
evidence beneficial ownership of a trust established by the Depositor (each, a
"Trust Fund"), and/or Notes secured by the assets of a Trust Fund. As specified
in the related Prospectus Supplement, the Trust Fund for a Series of Securities
will include certain assets (the "Trust Fund Assets") which will primarily
consist of: (a) single family mortgage loans (the "Loans"), including (i)
mortgage loans secured by first, second and/or more subordinate liens on one- to
four-family residential properties, (ii) closed-end and/or more revolving home
equity loans (the "Home Equity Loans") secured by first, second and/or more
subordinate liens on one- to four-family residential properties, (iii) home
improvement installment sale contracts and installment loan agreements (the
"Home Improvement Contracts") that are either unsecured or secured by first,
second and/or more subordinate liens on one- to four-family residential
properties, or by purchase money security interests in the home improvements
financed thereby (the "Home Improvements"), including loans insured under the
FHA Title I Credit Insurance program administered pursuant to the National
Housing Act of 1934, and (iv) manufactured housing installment sales contracts
and installment loan agreements (the "Manufactured Housing Contracts," and
together with the Home Improvement Contracts, the "Contracts") secured by first,
second and/or more subordinate liens on Manufactured Homes (as defined herein)
or by mortgages on real estate on which the related Manufactured Homes are
located; (b) mortgage-backed securities issued or guaranteed by the Government
National Mortgage Association ("GNMA"), the Federal National Mortgage
Association ("FNMA") or the Federal Home Loan Mortgage Corporation ("FHLMC")
(the "Agency Securities"); (c) privately issued mortgage-backed securities
("Private Mortgage-Backed Securities" or "PMBS"); and (d) all monies due
thereunder net, if and as provided in the related Prospectus Supplement, of
certain amounts payable to the servicer of the Loans, Agency Securities or
Private Mortgage-Backed Securities. The Trust Fund Assets will be acquired by
the Depositor, either directly or indirectly, from one or more institutions
(each, a "Seller"), which may be affiliates of the Depositor, and conveyed by
the Depositor to the related Trust Fund. A Trust Fund also may include insurance
policies, surety bonds, cash accounts, reinvestment income, guaranties or
letters of credit to the extent described in the related Prospectus Supplement.
See "Index of Defined Terms" on page 135 of this Prospectus for the location of
the definitions of certain capitalized terms.

(cover continued on next page)
<PAGE> 276

FOR A DISCUSSION OF CERTAIN RISKS ASSOCIATED WITH AN INVESTMENT IN THE
SECURITIES, SEE THE INFORMATION UNDER "RISK FACTORS" ON PAGE 21.

THE CERTIFICATES OF A GIVEN SERIES WILL REPRESENT BENEFICIAL INTERESTS IN,
AND THE NOTES OF A GIVEN SERIES WILL REPRESENT OBLIGATIONS OF, THE
RELATED TRUST FUND ONLY AND WILL NOT REPRESENT INTERESTS IN OR
OBLIGATIONS OF THE DEPOSITOR, MORGAN STANLEY & CO. INCOR-
PORATED, THE MASTER SERVICER, ANY SELLER OR ANY AFFILIATES
THEREOF, EXCEPT TO THE EXTENT DESCRIBED IN THE RELATED
PROSPECTUS SUPPLEMENT. THE SECURITIES AND THE LOANS
WILL NOT BE INSURED OR GUARANTEED BY ANY GOVERN-
MENTAL AGENCY OR INSTRUMENTALITY OR BY THE
DEPOSITOR OR ANY OTHER PERSON OR ENTITY,
EXCEPT IN EACH CASE TO THE EXTENT
DESCRIBED IN THE RELATED
PROSPECTUS SUPPLEMENT.

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

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

Prior to issuance there will have been no market for the Securities of
any Series and there can be no assurance that a secondary market for any
Securities will develop, or if it does develop, that it will continue or provide
Securityholders with a sufficient level of liquidity of investment.

The Securities offered by this Prospectus and by the related Prospectus
Supplement are offered by Morgan Stanley & Co. Incorporated ("Morgan Stanley")
and the other underwriters set forth in the related Prospectus Supplement, if
any, subject to prior sale, to withdrawal, cancellation or modification of the
offer without notice to, delivery to and acceptance by Morgan Stanley and the
other underwriters, if any, and certain further conditions. Retain this
Prospectus for future reference. This Prospectus may not be used to consummate
sales of the Securities offered hereby unless accompanied by a Prospectus
Supplement.

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

MORGAN STANLEY & CO.
Incorporated

, 199

<PAGE> 277

Distributions to Securityholders will be made monthly, quarterly,
semi-annually or at such other intervals and on the dates specified in the
related Prospectus Supplement. Distributions on the Securities of a Series will
be made from the related Trust Fund Assets or proceeds thereof pledged for the
benefit of the Securityholders as specified in the related Prospectus
Supplement.

The related Prospectus Supplement will describe any insurance or
guarantee provided with respect to the related Series of Securities including,
without limitation, any insurance or guarantee provided by the Department of
Housing and Urban Development, the United States Department of Veterans' Affairs
or any private insurer or guarantor. Unless otherwise specified in the related
Prospectus Supplement, the only obligations of the Depositor with respect to a
Series of Securities will be to obtain certain representations and warranties
from each Seller and to assign to the Trustee for the related Series of
Securities the Depositor's rights with respect to such representations and
warranties. The principal obligations of the Master Servicer named in the
related Prospectus Supplement with respect to the related Series of Securities
will be limited to obligations pursuant to certain representations and
warranties and to its contractual servicing obligations, including any
obligation it may have to advance delinquent payments on the related Trust Fund
Assets.

The yield on each class of Securities of a Series will be affected by,
among other things, the rate of payments of principal (including prepayments) on
the related Trust Fund Assets and the timing of receipt of such payments as
described under "Risk Factors--Prepayment and Yield Considerations" and "Yield
and Prepayment Considerations" herein and in the related Prospectus Supplement.
A Trust Fund may be subject to early termination under the circumstances
described under "The Agreements--Termination; Optional Termination" herein and
in the related Prospectus Supplement.

If specified in the related Prospectus Supplement, one or more
elections may be made to treat a Trust Fund or specified portions
thereof as a "real estate mortgage investment conduit" ("REMIC") for federal
income tax purposes. See "Federal Income Tax Consequences."

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

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

<PAGE> 278

PROSPECTUS SUPPLEMENT OR CURRENT REPORT ON FORM 8-K

The Prospectus Supplement or Current Report on Form 8-K relating to the
Securities of each Series to be offered hereunder will, among other things, set
forth with respect to such Securities, as appropriate: (i) the aggregate
principal amount, interest rate and authorized denominations of each class of
such Series of Securities; (ii) information as to the assets comprising the
Trust Fund, including the general characteristics of the related Trust Fund
Assets included therein and, if applicable, the insurance policies, surety
bonds, guaranties, letters of credit or other instruments or agreements included
in the Trust Fund or otherwise, and the amount and source of any reserve account
or other cash account; (iii) the circumstances, if any, under which the Trust
Fund may be subject to early termination; (iv) the circumstances, if any, under
which the Notes of such Series are subject to redemption; (v) the method used to
calculate the amount of principal to be distributed or paid with respect to each
class of Securities; (vi) the order of application of distributions or payments
to each of the classes within such Series, whether sequential, pro rata, or
otherwise; (vii) the Distribution Dates with respect to such Series; (viii)
additional information with respect to the method of distribution of such
Securities; (ix) whether one or more REMIC elections will be made with respect
to the Trust Fund and, if so, the designation of the regular interests and the
residual interests; (x) the aggregate original percentage ownership interest in
the Trust Fund to be evidenced by each class of Certificates; (xi) the stated
maturity of each class of Notes of such Series; (xii) information as to the
nature and extent of subordination with respect to any class of Securities that
is subordinate in right of payment to any other class; and (xiii) information as
to the Seller, the Master Servicer and the Trustee.

AVAILABLE INFORMATION

The Depositor has filed with the Securities and Exchange Commission
(the "Commission") a Registration Statement under the Securities Act of 1933, as
amended, with respect to the Securities. This Prospectus, which forms a part of
the Registration Statement, and the Prospectus Supplement relating to each
Series of Securities contain descriptions of the material terms of the documents
referred to herein and therein, but do not contain all of the information set
forth in the Registration Statement pursuant to the Rules and Regulations of the
Commission. For further information, reference is made to such Registration
Statement and the exhibits thereto. Such Registration Statement and exhibits can
be inspected and copied at prescribed rates at the public reference facilities
maintained by the Commission at its Public Reference Section, 450 Fifth Street,
N.W., Washington, D.C. 20549, and at its Regional Offices located as follows:
Midwest Regional Office, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661; and Northeast Regional Office, Seven World Trade Center, Suite 1300, New
York, New York 10048. The Commission also maintains a Web site at
http://www.sec.gov from which such Registration Statement and exhibits may be
obtained.

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND ANY PROSPECTUS
SUPPLEMENT WITH RESPECT HERETO AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON. THIS PROSPECTUS AND ANY PROSPECTUS
SUPPLEMENT WITH RESPECT HERETO DO NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES OFFERED
HEREBY AND THEREBY NOR AN OFFER OF THE SECURITIES TO ANY PERSON IN ANY STATE OR
OTHER JURISDICTION IN WHICH SUCH OFFER WOULD BE UNLAWFUL. THE DELIVERY OF THIS
PROSPECTUS AT ANY TIME DOES NOT IMPLY THAT INFORMATION HEREIN IS CORRECT AS OF
ANY TIME SUBSEQUENT TO ITS DATE.

<PAGE> 279

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

All documents subsequently filed by or on behalf of the Trust Fund
referred to in the accompanying Prospectus Supplement with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), after the date of this Prospectus and
prior to the termination of any offering of the Securities issued by such Trust
Fund shall be deemed to be incorporated by reference in this Prospectus and to
be a part of this Prospectus from the date of the filing of such documents. Any
statement contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for all purposes
of this Prospectus to the extent that a statement contained herein (or in the
accompanying Prospectus Supplement) or in any other subsequently filed document
which also is or is deemed to be incorporated by reference modifies or replaces
such statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus. Neither the Depositor nor the Master Servicer for any Series intends
to file with the Commission periodic reports with respect to the related Trust
Fund following completion of the reporting period required by Rule 15d-1 or
Regulation 15D under the Exchange Act.

The Trustee or such other entity specified in the related Prospectus
Supplement on behalf of any Trust Fund will provide without charge to each
person to whom this Prospectus is delivered, on the written or oral request of
such person, a copy of any or all of the documents referred to above that have
been or may be incorporated by reference in this Prospectus (not including
exhibits to the information that is incorporated by reference unless such
exhibits are specifically incorporated by reference into the information that
this Prospectus incorporates). Such requests should be directed to the Corporate
Trust Office of the Trustee or the address of such other entity specified in the
accompanying Prospectus Supplement. Included in the accompanying Prospectus
Supplement is the name, address, telephone number and, if available, facsimile
number of the office or contact person at the Corporate Trust Office of the
Trustee or such other entity.

Requests to the Depositor should be directed in writing to Morgan
Stanley ABS Capital I Inc., c/o Morgan Stanley & Co. Incorporated, 1585
Broadway, 2nd Floor, New York, New York 10036, Attention: President, or by
telephone at (212) 761-4000. The Depositor has determined that its financial
statements are not material to the offering of any class of Securities.

REPORTS TO SECURITYHOLDERS

Periodic and annual reports concerning the related Trust Fund for a
Series of Securities will be forwarded to Securityholders. However, such reports
will neither be examined nor reported on by an independent public accountant.
See "Description of the Securities--Reports to Securityholders."

<PAGE> 280

SUMMARY OF TERMS

This summary is qualified in its entirety by reference to the detailed
information appearing elsewhere in this Prospectus and in the related Prospectus
Supplement with respect to the Series of Securities offered thereby and to the
related Agreement (as such term is defined below) which will be prepared in
connection with each Series of Securities. Unless otherwise specified,
capitalized terms used and not defined in this Summary of Terms have the
meanings given to them in this Prospectus and in the related Prospectus
Supplement. See "Index of Defined Terms" on Page 21 of this Prospectus for the
location of the definitions of certain capitalized terms.

<TABLE>
<S> <C>
TITLE OF SECURITIES............... Asset Backed Certificates (the "Certificates") and Asset Backed
Notes (the "Notes" and, together with the Certificates, the
"Securities"), which are issuable in Series.

DEPOSITOR......................... Morgan Stanley ABS Capital I Inc., a wholly-owned subsidiary of
Morgan Stanley Group Inc. None of Morgan Stanley, Morgan
Stanley Group Inc. or any other affiliate of the Depositor, the
Master Servicer, the Trustee or the Seller has guaranteed or is
otherwise obligated with respect to the Securities of any
Series. See "The Depositor."

TRUSTEE........................... The trustee(s) (the "Trustee") for each Series of Securities
will be specified in the related Prospectus Supplement. See
"The Agreements" herein for a description of the Trustee's
rights and obligations.

MASTER SERVICER................... The entity or entities named as Master Servicer (the "Master
Servicer") in the related Prospectus Supplement. See "The
Agreements--Certain Matters Regarding the Master Servicer and
the Depositor."

TRUST FUND ASSETS................. Assets of the Trust Fund for a Series of Securities will
include certain assets (the "Trust Fund Assets") which will
consist of Loans, Agency Securities and/or Private
Mortgage-Backed Securities, together with payments in respect
of such Trust Fund Assets, as specified in the related
Prospectus Supplement. At the time of issuance of Securities
of a Series, the Depositor will cause Loans, Agency Securities
and/or Private Mortgage-Backed Securities comprising the
related Trust Fund to be assigned to the Trustee, without
recourse. The Loans, Agency Securities and/or Private
Mortgage-Backed Securities will be collected in a pool (each, a
"Pool") as of the first day of the month of the issuance of the
related Series of Securities or such other date specified in
the related Prospectus Supplement (the "Cut-off Date"). Trust
Fund Assets also may include

</TABLE>
6

<PAGE> 281

<TABLE>
<S> <C>
insurance policies, surety bonds, cash accounts, spread
accounts, reinvestment income, guaranties, letters of credit,
interest rate cap agreements, interest rate swap agreements or
other similar arrangements to the extent described in the
related Prospectus Supplement. See "Credit Enhancement." In
addition, if the related Prospectus Supplement so provides, the
related Trust Funds Asset will include the funds on deposit in
an account (a "Pre-Funding Account") which will be used to
purchase additional Loans during the period specified in such
Prospectus Supplement. See "The Agreements--Pre-Funding
Account."

A. Loans......................... The Loans will consist of (i) mortgage loans secured by first,
second and/or more subordinate liens on one-to four-family
residential properties or security interests in shares issued
by cooperative housing corporations (each, a "Mortgage Loan"),
(ii) closed-end loans (the "Closed-End Loans") and/or revolving
home equity loans or certain balances thereof (the "Revolving
Credit Line Loans," together with the Closed-End Loans, the
"Home Equity Loans") secured by first, second and/or more
subordinate liens on one- to four-family residential
properties, (iii) home improvement installment sales contracts
and installment loan agreements (the "Home Improvement
Contracts") that are either unsecured or secured by first,
second and/or more subordinate liens on one- to four-family
residential properties, or by security interests in the home
improvements financed thereby (the "Home Improvements"),
including loans insured under the FHA Title I Credit Insurance
program administered pursuant to the National Housing Act of
1934, and (iv) manufactured housing installment sales contracts
and installment loan agreements (the "Manufactured Housing
Contracts" and together with the Home Improvement Contracts,
the "Contracts") secured by first, second and/or more
subordinate liens on Manufactured Homes (as defined herein) or
by mortgages on real estate on which the related Manufactured
Homes are located. All Loans, Agency Securities and Private
Mortgage-Backed Securities will have been purchased by the
Depositor, either directly or through an affiliate, from one or
more Sellers.

.................................. As specified in the related Prospectus Supplement, the Home
Equity Loans will, and the Contracts may, be secured by
mortgages or deeds of trust or other similar security
instruments creating a lien on a Mortgaged

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Property, which may be subordinated to one or more senior liens
on the Mortgaged Property, as described in the related
Prospectus Supplement. As specified in the related Prospectus
Supplement, Contracts may be unsecured or secured by purchase
money security interests in the Home Improvements or
Manufactured Homes financed thereby. The Mortgaged Properties,
Home Improvements and Manufactured Homes are collectively
referred to herein as the "Properties."

B. Agency Securities.............. The Agency Securities will consist of (i) fully modified
pass-through mortgage-backed certificates guaranteed as to
timely payment of principal and interest by the Government
National Mortgage Association ("GNMA Certificates"), (ii)
guaranteed mortgage pass-through certificates issued and
guaranteed as to timely payment of principal and interest by
the Federal National Mortgage Association ("FNMA
Certificates"), (iii) mortgage participation certificates
issued and guaranteed as to timely payment of interest and,
unless otherwise specified in the related Prospectus
Supplement, ultimate payment of principal by the Federal Home
Loan Mortgage Corporation ("FHLMC Certificates"), (iv) stripped
mortgage-backed securities representing an undivided interest
in all or a part of either the principal distributions (but not
the interest distributions) or the interest distributions (but
not the principal distributions) or in some specified portion
of the principal and interest distributions (but not all of
such distributions) on certain GNMA, FNMA, FHLMC or other
government agency or government- sponsored agency certificates
and, unless otherwise specified in the related Prospectus
Supplement, guaranteed to the same extent as the underlying
securities, (v) another type of guaranteed pass-through
certificate issued or guaranteed by GNMA, FNMA, FHLMC or other
government agency or government-sponsored agency and described
in the related Prospectus Supplement, or (vi) a combination of
such Agency Securities. All GNMA Certificates will be backed
by the full faith and credit of the United States. No FNMA or
FHLMC Certificates will be backed, directly or indirectly, by
the full faith and credit of the United States. The Agency
Securities may consist of pass-through securities issued under
the GNMA I Program, the GNMA II Program, FHLMC's Cash or
Guarantor Program or another program specified in the
Prospectus Supplement. The payment characteristics of the
Mortgage Loans underlying the

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Agency Securities will be described in the related Prospectus
Supplement. See "The Trust Fund--Agency Securities."

C. Private Mortgage-Backed
Securities................... Private Mortgage-Backed Securities may include (i) mortgage
participations or pass-through certificates representing
beneficial interests in certain mortgage loans or (ii)
collateralized mortgage obligations ("CMOs") secured by such
mortgage loans. Although mortgage loans underlying a Private
Mortgage-Backed Security may be insured or guaranteed by the
United States or an agency or instrumentality thereof, they
need not be, and the Private Mortgage-Backed Securities
themselves will not be, so insured or guaranteed. Unless
otherwise specified in the Prospectus Supplement relating to a
Series of Securities, payments on the Private Mortgage-Backed
Securities will be distributed directly to the Trustee as
registered owner of such Private Mortgage-Backed Securities.
The Prospectus Supplement for each Series of Securities will
specify, with respect to any Private Mortgage-Backed Securities
owned by the related Trust: (i) the aggregate approximate
principal amount and type of Private Mortgage-Backed
Securities; (ii) certain characteristics of the mortgage loans
underlying the Private Mortgage-Backed Securities, including
(A) the payment features of such mortgage loans, (B) the
approximate aggregate principal amount, if known, of the
underlying mortgage loans which are insured or guaranteed by a
governmental entity, (C) the servicing fee or range of
servicing fees with respect to such mortgage loans, and (D) the
minimum and maximum stated maturities of the mortgage loans at
origination; (iii) the maximum original term-to-stated maturity
of the Private Mortgage-Backed Securities; (iv) the weighted
average term- to-stated maturity of the Private Mortgage-Backed
Securities; (v) the pass-through or certificate rate or ranges
thereof for the Private Mortgage-Backed Securities; (vi) the
weighted average pass-through or certificate rate of the
Private Mortgage-Backed Securities; (vii) the issuer of the
Private Mortgage-Backed Securities (the "PMBS Issuer"), the
servicer of the Private Mortgage-Backed Securities (the "PMBS
Servicer") and the trustee of the Private Mortgage-Backed
Securities (the "PMBS Trustee"); (viii) certain characteristics
of credit support, if any, such as reserve funds, insurance
policies, letters of credit, financial guaranty insurance
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policies or third party guarantees, relating to the mortgage
loans underlying the Private Mortgage-Backed Securities, or to
such Private Mortgage-Backed Securities themselves; (ix) the
terms on which underlying mortgage loans for such Private
Mortgage-Backed Securities may, or are required to, be
repurchased prior to stated maturity; and (x) the terms on
which substitute mortgage loans may be delivered to replace
those initially deposited with the PMBS Trustee. See "The
Trust Fund--Private Mortgage-Backed Securities."

DESCRIPTION OF
THE SECURITIES.................. Each Security will represent a beneficial ownership interest
in, or be secured by the assets of, a Trust Fund created by the
Depositor pursuant to an Agreement among the Depositor, the
Master Servicer and the Trustee for the related Series. The
Securities of any Series may be issued in one or more classes
as specified in the related Prospectus Supplement. A Series of
Securities may include one or more classes of senior Securities
(collectively, the "Senior Securities") and one or more classes
of subordinate Securities (collectively, the "Subordinated
Securities"). Certain Series or classes of Securities may be
covered by insurance policies or other forms of credit
enhancement, in each case as described under "Credit
Enhancement" herein and in the related Prospectus Supplement.

One or more classes of Securities of each Series (i) may be
entitled to receive distributions allocable only to principal,
only to interest or to any combination thereof; (ii) may be
entitled to receive distributions only of prepayments of
principal throughout the lives of the Securities or during
specified periods; (iii) may be subordinated in the right to
receive distributions of scheduled payments of principal,
prepayments of principal, interest or any combination thereof
to one or more other classes of Securities of such Series
throughout the lives of the Securities or during specified
periods or may be subordinated with respect to certain losses
and delinquencies; (iv) may be entitled to receive such
distributions only after the occurrence of events specified in
the related Prospectus Supplement; (v) may be entitled to
receive distributions in accordance with a schedule or formula
or on the basis of collections from designated portions of the
related Trust Fund Assets; (vi) as to Securities entitled

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to distributions allocable to interest, may be entitled to
receive interest at a rate per annum specified, or calculated
in the method described, in the related Prospectus Supplement;
and (vii) as to Securities entitled to distributions allocable
to interest, may be entitled to distributions allocable to
interest only after the occurrence of events specified in the
related Prospectus Supplement and may accrue interest until
such events occur, in each case as specified in the related
Prospectus Supplement. The timing and amounts of such
distributions may vary among classes or over time, as specified
in the related Prospectus Supplement.

DISTRIBUTIONS ON
THE SECURITIES.................. Distributions on the Securities entitled thereto will be made
monthly, quarterly, semi-annually or at such other intervals
and on the dates specified in the related Prospectus Supplement
(each, a "Distribution Date") out of the payments received in
respect of the assets of the related Trust Fund or Funds or
other assets pledged for the benefit of the Securities as
described under "Credit Enhancement" herein to the extent
specified in the related Prospectus Supplement. The amount
allocable to payments of principal and interest on any
Distribution Date will be determined as specified in the
related Prospectus Supplement. The Prospectus Supplement for a
Series of Securities will describe the method of allocating
distributions among Securities of different classes as well as
the method for allocating distributions among Securities for
any particular class.

Unless otherwise specified in the related Prospectus
Supplement, the aggregate original principal balance of the
Securities will not exceed the aggregate distributions
allocable to principal that such Securities will be entitled to
receive. If specified in the related Prospectus Supplement,
the Securities will have an aggregate original principal
balance equal to the aggregate unpaid principal balance of the
Trust Fund Assets as of the related Cut-off Date and will bear
interest in the aggregate at a rate equal to the interest rate
borne by the underlying Loans (the "Loan Rate") net of the
aggregate servicing fees and any other amounts specified in the
related Prospectus Supplement (the "Pass-Through Rate") or at
such other interest rate as may be specified in such Prospectus
Supplement. If specified in the related Prospectus Supplement,
the aggregate original principal balance of the Securities

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and interest rates on the classes of Securities will be
determined based on the cash flow on the Trust Fund Assets.

The rate at which interest will be passed through or paid to
holders of each class of Securities entitled thereto may be a
fixed rate or a rate that is subject to change from time to
time from the time and for the periods, in each case, as
specified in the related Prospectus Supplement. Any such rate
may be calculated on a loan-by-loan, weighted average or
notional amount, as applicable, in each case as described in
the related Prospectus Supplement.

CREDIT ENHANCEMENT................ The assets in a Trust Fund or the Securities of one or more
classes in the related Series may have the benefit of one or
more types of credit enhancement as described in the related
Prospectus Supplement. The protection against losses afforded
by any such credit support may be limited. The type,
characteristics and amount of credit enhancement will be
determined based on the characteristics of the Trust Fund
Assets and other factors and will be established on the basis
of requirements of each Rating Agency rating the Securities of
such Series. See "Credit Enhancement."

A. Subordination................. A Series of Securities may consist of one or more classes of
Senior Securities and one or more classes of Subordinated
Securities. The rights of the holders of the Subordinated
Securities of a Series to receive distributions with respect to
the assets in the related Trust Fund will be subordinated to
such rights of the holders of the Senior Securities of the same
Series to the extent described in the related Prospectus
Supplement. This subordination is intended to enhance the
likelihood of regular receipt by holders of Senior Securities
of the full amount of monthly payments of principal and
interest due them. The protection afforded to the holders of
Senior Securities of a Series by means of the subordination
feature will be accomplished by (i) the preferential right of
such holders to receive, prior to any distribution being made
in respect of the related Subordinated Securities, the amounts
of interest and/or principal due them on each Distribution Date
out of the funds available for distribution on such date in the
related Security Account and, to the extent described in the
related Prospectus Supplement, by the right of such holders to
receive future distributions on the assets in the related

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Trust Fund that would otherwise have been payable to the
holders of Subordinated Securities; (ii) reducing the
ownership interest (if applicable) of the related Subordinated
Securities; (iii) a combination of clauses (i) and (ii) above;
or (iv) as otherwise described in the related Prospectus
Supplement. If so specified in the related Prospectus
Supplement, subordination may apply only in the event of
certain types of losses not covered by other forms of credit
support, such as hazard losses not covered by standard hazard
insurance policies or losses due to the bankruptcy or fraud of
the borrower. The related Prospectus Supplement will set forth
information concerning, among other things, the amount of
subordination of a class or classes of Subordinated Securities
in a Series, the circumstances in which such subordination
will be applicable, and the manner, if any, in which the
amount of subordination will decrease over time.

B. Reserve Account............... One or more reserve accounts or other cash accounts (each, a
"Reserve Account") may be established and maintained for each
Series of Securities. The related Prospectus Supplement will
specify whether or not such Reserve Accounts will be included
in the corpus of the Trust Fund for such Series and will also
specify the manner of funding such Reserve Accounts and the
conditions under which the amounts in any such Reserve Accounts
will be used to make distributions to holders of Securities of
a particular class or released from such Reserve Accounts.

C. Letter of Credit.............. If so specified in the related Prospectus Supplement, credit
support may be provided by one or more letters of credit. A
letter of credit may provide limited protection against certain
losses in addition to or in lieu of other credit support, such
as, in the case of Loans, losses resulting from delinquent
payments, losses from risks not covered by standard hazard
insurance policies, losses due to bankruptcy of a borrower and
application of certain provisions of the federal Bankruptcy
Code, and losses due to denial of insurance coverage due to
misrepresentations made in connection with the origination or
sale of a Loan. The issuer of the letter of credit (the "L/C
Bank") will be obligated to honor demands with respect to such
letter of credit, to the extent of the amount available
thereunder to provide funds under the circumstances and subject
to such conditions as are specified in the related Prospectus
Supplement. The liability of the L/C Bank under its

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letter of credit will be reduced by the amount of unreimbursed
payments thereunder.

The maximum liability of a L/C Bank under its letter of credit
will be an amount equal to a percentage specified in the
related Prospectus Supplement of the initial aggregate
outstanding principal balance of the Loans in the related Trust
Fund or one or more Classes of Securities of the related Series
(the "L/C Percentage"). The maximum amount available at any
time to be paid under a letter of credit will be determined in
the manner specified therein and in the related Prospectus
Supplement.

D. Insurance Policies; Surety Bonds
and Guarantees....................... If so specified in the related Prospectus Supplement, credit
support for a Series may be provided by an insurance policy
and/or a surety bond issued by one or more insurance companies
or sureties. Such certificate guarantee insurance or surety
bond will guarantee timely distributions of interest and/or
full distributions of principal on the basis of a schedule of
principal distributions set forth in or determined in the
manner specified in the related Prospectus Supplement. If
specified in the related Prospectus Supplement, one or more
bankruptcy bonds, special hazard insurance policies, other
insurance or third-party guarantees may be used to provide
coverage for the risks of default or types of losses set forth
in such Prospectus Supplement.

E. Over-Collateralization............... If so provided in the Prospectus Supplement for a Series of
Securities, a portion of the interest payment on each Loan may
be applied as an additional distribution in respect of
principal to reduce the principal balance of a certain class or
classes of Securities and, thus, accelerate the rate of payment
of principal on such class or classes of Securities.

F. Loan Pool

Insurance Policy.................... A mortgage pool insurance policy or policies may be obtained
and maintained for Loans relating to any Series of Securities,
which shall be limited in scope, covering defaults on the
related Loans in an initial amount equal to a specified
percentage of the aggregate principal balance of all Loans
included in the Pool as of the related Cut-off Date.

G. FHA Insurance........................ If specified in the related Prospectus Supplement, all or a
portion of the Loans relating to any Series of

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Securities may be (i) insured by the Federal Housing
Administration (the "FHA") and/or (ii) partially guaranteed by
the Department of Veterans' Affairs (the "VA"). See "Certain
Legal Aspects of the Loans--The Title I Program."

H. Cross-Collateralization....... If specified in the related Prospectus Supplement, separate
classes of a Series of Securities may evidence the beneficial
ownership of, or be secured by, separate groups of assets
included in a Trust Fund. In such case, credit support may be
provided by a cross- collateralization feature which requires
that distributions be made with respect to Securities
evidencing a beneficial ownership interest in, or secured by,
one or more asset groups prior to distributions to Subordinated
Securities evidencing a beneficial ownership interest in, or
secured by, other asset groups within the same Trust Fund. See
"Credit Enhancement--Cross-Collateralization."

If specified in the related Prospectus Supplement, the coverage
provided by one or more forms of credit support may apply
concurrently to two or more separate Trust Funds. If
applicable, the related Prospectus Supplement will identify the
Trust Funds to which such credit support relates and the manner
of determining the amount of the coverage provided to such
Trust Funds thereby and of the application of such coverage to
the identified Trust Funds. See "Credit
Enhancement--Cross-Collateralization."

I. Other Arrangements............ Other arrangements as described in the related Prospectus
Supplement including, but not limited to, one or more
bankruptcy bonds, special hazard insurance policies, other
insurance or third-party guarantees, interest rate swap
agreements, interest rate cap agreements or other similar
arrangements will be described in the related Prospectus
Supplement.

ADVANCES........................... The Master Servicer and, if applicable, each mortgage servicing
institution that services a Loan in a Pool on behalf of the
Master Servicer (each, a "Sub-Servicer") may be obligated to
advance amounts (each, an "Advance") corresponding to
delinquent interest and/or principal payments on such Loan
(including, in the case of Cooperative Loans, unpaid
maintenance fees or other charges under the related proprietary
lease), net of the Servicing Fee if so specified in the related
Prospectus Supplement, until the date, as specified in
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the related Prospectus Supplement, following the date on which
the related Property is sold at a foreclosure sale or the
related Loan is otherwise liquidated. Any obligation to make
Advances may be subject to limitations as specified in the
related Prospectus Supplement. If so specified in the related
Prospectus Supplement, Advances may be drawn from a cash
account available for such purpose as described in such
Prospectus Supplement. Advances will be reimbursable to the
extent described under "Description of the
Securities--Advances" herein and in the related Prospectus
Supplement.

In the event the Master Servicer or Sub-Servicer fails to make
a required Advance, the Trustee may be obligated to advance
such amounts otherwise required to be advanced by the Master
Servicer or Sub-Servicer. See "Description of the
Securities--Advances."

OPTIONAL TERMINATION............... The Master Servicer or the party specified in the
related Prospectus Supplement, including the holder
of the residual interest in a REMIC, may have the
option to effect early retirement of a Series of
Securities through the purchase of the Trust Fund
Assets. The Master Servicer will deposit the proceeds
of any such purchase in the Security Account for each
Trust Fund as described under "The
Agreements--Payments on Loans; Deposits to Security
Account." Any such purchase of Trust Fund Assets and
property acquired in respect of Trust Fund Assets
evidenced by a Series of Securities will be made at
the option of the Master Servicer, such other person
or, if applicable, such holder of the REMIC residual
interest, at a price specified in the related
Prospectus Supplement. The exercise of such right
will effect early retirement of the Securities of
that Series, but the right of the Master Servicer,
such other person, or, if applicable, such holder of
the REMIC residual interest, to so purchase is
subject to the principal balance of the related Trust
Fund Assets being less than the percentage specified
in the related Prospectus Supplement of the aggregate
principal balance of the Trust Fund Assets at the
Cut-off Date for the Series. The foregoing is subject
to the provision that if a REMIC election is made
with respect to a Trust Fund, any repurchase pursuant
to clause (ii) above will be made only in connection
with a "qualified liquidation" within the meaning of
Section 860F(g)(4) of the Code.

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LEGAL INVESTMENT................... The Prospectus Supplement for each series of Securities will
specify which, if any, of the classes of Securities offered
thereby constitute "mortgage related securities" for purposes
of the Secondary Mortgage Market Enhancement Act of 1984
("SMMEA"). Classes of Securities that qualify as "mortgage
related securities" will be legal investments for certain types
of institutional investors to the extent provided in SMMEA,
subject, in any case, to any other regulations which may govern
investments by such institutional investors. Institutions
whose investment activities are subject to review by federal or
state authorities should consult with their counsel or the
applicable authorities to determine whether an investment in a
particular class of Securities (whether or not such class
constitutes a "mortgage related security") complies with
applicable guidelines, policy statements or restrictions. See
"Legal Investment."

FEDERAL INCOME TAX
CONSEQUENCES....................... The federal income tax consequences to Securityholders will
vary depending on whether one or more elections are made to
treat the Trust Fund or specified portions thereof as a REMIC
under the provisions of the Internal Revenue Code of 1986, as
amended (the "Code"). The Prospectus Supplement for each
Series of Securities will specify whether such an election will
be made. If a REMIC election is made, Securities representing
regular interests in a REMIC will generally be taxable to
holders in the same manner as evidences of indebtedness issued
by the REMIC. Stated interest on such regular interests will
be taxable as ordinary income and taken into account using the
accrual method of accounting, regardless of the holder's normal
accounting method. If no REMIC election is made, interest
(other than original issue discount ("OID")) on Securities that
are characterized as indebtedness for federal income tax
purposes will be includible in income by holders thereof in
accordance with their usual method of accounting. Certain
classes of Securities may be issued with OID. A holder should
be aware that the Code and the Treasury regulations promulgated
thereunder do not adequately address certain issues relevant to
prepayable securities, such as the Securities. Holders that
will be required to report income with respect to the related
Securities under the accrual method of accounting will do so
without giving effect to delays and reductions in distributions
attributable to a default or delinquency on the Loans,
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except possibly to the extent that it can be established that
such amounts are uncollectible. As a result, the amount of
income (including OID) reported by a holder of a Security in
any period could significantly exceed the amount of cash
distributed to such holder in that period. In the opinion of
Latham & Watkins, if a REMIC election is made with respect to a
Series of Securities, then the arrangement by which such
Securities are issued will be treated as a REMIC as long as all
of the provisions of the applicable Agreement are complied with
and the statutory and regulatory requirements are satisfied.
Securities will be designated as "regular interests" or
"residual interests" in a REMIC. A REMIC will not be subject
to entity-level tax. Rather, the taxable income or net loss of
a REMIC will be taken into account by the holders of residual
interests. Such holders will report their proportionate share
of the taxable income of the REMIC whether or not they receive
cash distributions from the REMIC attributable to such income.
The portion of the REMIC taxable income consisting of "excess
inclusions" may not be offset against other deductions or
losses of the holder, including the net operating losses. In
the opinion of Latham & Watkins, if a REMIC or a partnership
election is not made with respect to a Series of Securities,
then the arrangement by which such Securities are issued will
be classified as a grantor trust under Subpart E, Part I of
Subchapter J of the Code and not as an association taxable as a
corporation. If so provided in the Prospectus Supplement for a
Series of Securities representing interests in Loans, there
will be no separation of the principal and interest payments on
the Loans. In such circumstances, the holder will be
considered to have purchased a pro rata undivided interest in
each of the Loans. In other cases, sale of the Securities will
produce a separation in the ownership of all or a portion of
the principal payments from all or a portion of the interest
payments on the Loans. In the opinion of Latham & Watkins, if
a partnership election is made, the Trust Fund will not be
treated as an association or a publicly traded partnership
taxable as a corporation as long as all of the provisions of
the applicable Agreement are complied with and the statutory
and regulatory requirements are satisfied. If Notes are issued
by such Trust Fund, such Notes will be treated as indebtedness
for federal income tax purposes. The holders of the
Certificates issued by such Trust Fund, if any, will agree to
treat the
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Certificates as equity interests in a partnership. The
Securities will be treated as assets described in Section
7701(a)(19)(C) of the Code and as real estate assets described
in Section 856(c) of the Code. Generally, gain or loss will be
recognized on a sale of Securities in the amount equal to the
difference between the amount realized and the seller's tax
basis in the Securities sold. The material federal income tax
consequences for investors associated with the purchase,
ownership and disposition of the Securities are set forth
herein under "Federal Income Tax Consequences." The material
federal income tax consequences for investors associated with
the purchase, ownership and disposition of Securities of any
particular Series will be set forth under the heading "Federal
Income Tax Consequences" in the related Prospectus Supplement.
See "Federal Income Tax Consequences."

ERISA CONSIDERATIONS................ A fiduciary of any employee benefit plan or other retirement
plan or arrangement subject to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or the Code should
carefully review with its legal advisors whether the purchase
or holding of Securities could give rise to a transaction
prohibited or not otherwise permissible under ERISA or the
Code. See "ERISA Considerations." Certain classes of
Securities may not be transferred unless the Trustee and the
Depositor are furnished with a letter of representation or an
opinion of counsel to the effect that such transfer will not
result in a violation of the prohibited transaction provisions
of ERISA and the Code and will not subject the Trustee, the
Depositor or the Master Servicer to additional obligations.
See "Description of the Securities--General" and "ERISA
Considerations."

RATING.............................. It will be a requirement for issuance of any Series that the
Securities offered by this Prospectus and the related
Prospectus Supplement be rated by at least one Rating Agency in
one of its four highest applicable rating categories. The
rating or ratings applicable to Securities of each Series
offered hereby and by the related Prospectus Supplement will be
as set forth in the related Prospectus Supplement. A
securities rating should be evaluated independently of similar
ratings on different types of securities. A securities rating
does not address the effect that the rate of prepayments on
Loans for a Series may have on the yield to investors
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in the Securities of such Series. See "Risk Factors--Rating of
the Securities."

RISK FACTORS........................ For a discussion of certain risks associated with an investment
in the Securities, see "Risk Factors" on page 21 herein and in
the related Prospectus Supplement.

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RISK FACTORS

Investors should consider the following factors in connection with the
purchase of the Securities.

LIMITED LIQUIDITY

There will be no market for the Securities of any Series prior to the
issuance thereof, and there can be no assurance that a secondary market will
develop or, if it does develop, that it will provide Securityholders with
liquidity of investment or will continue for the life of the Securities of such
Series. Morgan Stanley & Co. Incorporated, through one or more of its
affiliates, and the other underwriters, if any, specified in the related
Prospectus Supplement, presently expect to make a secondary market in
securities, but have no obligation to do so.

LIMITED SOURCES OF PAYMENTS--NO RECOURSE TO SELLERS, DEPOSITOR OR MASTER
SERVICER

The Depositor does not have, nor is it expected to have, any
significant assets. Unless otherwise specified in the related Prospectus
Supplement, the Securities of a Series will be payable solely from the Trust
Fund for such Securities and will not have any claim against or security
interest in the Trust Fund for any other Series. There will be no recourse to
the Depositor or any other person for any failure to receive distributions on
the Securities. Further, at the times set forth in the related Prospectus
Supplement, certain Trust Fund Assets and/or any balance remaining in the
Security Account immediately after making all payments due on the Securities of
such Series, after making adequate provision for future payments on certain
classes of Securities and after making any other payments specified in the
related Prospectus Supplement, may be promptly released or remitted to the
Depositor, the Master Servicer, any credit enhancement provider or any other
person entitled thereto and will no longer be available for making payments to
Securityholders. Consequently, holders of Securities of each Series must rely
solely upon payments with respect to the Trust Fund Assets and the other assets
constituting the Trust Fund for a Series of Securities, including, if
applicable, any amounts available pursuant to any credit enhancement for such
Series, for the payment of principal of and interest on the Securities of such
Series.

The Securities will not represent an interest in or obligation of the
Depositor, the Master Servicer, any Seller or any of their respective
affiliates. The only obligations, if any, of the Depositor with respect to the
Trust Fund Assets or the Securities of any Series will be pursuant to certain
representations and warranties. The Depositor does not have, and is not expected
in the future to have, any significant assets with which to meet any obligation
to repurchase Trust Fund Assets with respect to which there has been a breach of
any representation or warranty. If, for example, the Depositor were required to
repurchase a Loan, its only sources of funds to make such repurchase would be
from funds obtained (i) from the enforcement of a corresponding obligation, if
any, on the part of the related Seller or originator of such Loan, or (ii) to
the extent provided in the related Prospectus Supplement, from a Reserve Account
or similar credit enhancement established to provide funds for such repurchases.
The only obligations of the Master Servicer, other than its master servicing
obligations, with respect to the Trust Fund Assets or the Securities of any
Series will be pursuant to certain representations and warranties. The Master
Servicer may be required to repurchase or substitute for any Trust Fund Asset
with respect to which such representations and warranties are breached. There is
no assurance, however, that the Master Servicer will have the financial ability
to effect any such repurchase or substitution.

The only obligations of any Seller with respect to Trust Fund Assets or
the Securities of any Series will be pursuant to certain representations and
warranties and certain document delivery requirements. A Seller may be required
to repurchase or substitute for any Trust Fund Asset with respect

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to which such representations and warranties or document delivery requirements
are breached. There is no assurance, however, that such Seller will have the
financial ability to effect such repurchase or substitution.

CREDIT ENHANCEMENT

Limitation Regarding Types of Losses Covered. Although credit
enhancement is intended to reduce the risk of delinquent payments or losses to
holders of Securities entitled to the benefit thereof, the amount of such credit
enhancement will be limited, as set forth in the related Prospectus Supplement,
and may be subject to periodic reduction in accordance with a schedule or
formula or otherwise decline, and could be depleted under certain circumstances
prior to the payment in full of the related Series of Securities, and as a
result Securityholders of the related Series may suffer losses. Moreover, such
credit enhancement may not cover all potential losses or risks. For example,
credit enhancement may or may not cover fraud or negligence by a loan originator
or other parties. In addition, the Trustee will generally be permitted to
reduce, terminate or substitute all or a portion of the credit enhancement for
any Series of Securities, provided the applicable Rating Agency indicates that
the then-current rating of the Securities of such Series will not be adversely
affected. See "Credit Enhancement."

Disproportionate Benefits to Certain Classes and Series. A Series of
Securities may include one or more classes of Subordinated Securities, if
provided in the related Prospectus Supplement. Although subordination is
intended to reduce the likelihood of temporary shortfalls and ultimate losses to
holders of the related Senior Securities, the amount of subordination will be
limited and may decline under certain circumstances. In addition, if principal
payments on one or more classes of Securities of a Series are made in a
specified order of priority, any related credit enhancement may be exhausted
before the principal of the later paid classes of Securities of such Series has
been repaid in full. As a result, the impact of losses and shortfalls
experienced with respect to the Trust Fund Assets may fall primarily upon those
classes of Securities having a latter right of payments. Moreover, if a form of
credit enhancement covers the Securities of more than one Series and losses on
the related Trust Fund Assets exceed the amount of such credit enhancement, it
is possible that the holders of Securities of one (or more) such Series will be
disproportionately benefited by such credit enhancement to the detriment of the
holders of Securities of one (or more) other such Series. The amount of any
applicable credit enhancement supporting one or more other classes of Securities
will be determined on the basis of criteria established by each Rating Agency
rating such classes of Securities as described below under "--Rating of the
Securities."

Limitations on FHA Insurance for Title I Loans. The related Prospectus
Supplement will specify the number and percentage of Title I Loans, if any,
included in the related Trust Fund that are partially insured by the FHA
pursuant to the Title I Program. Since the FHA insurance amount for the Title I
Loans is limited as described herein under "Certain Legal Aspects of the
Loans--The Title I Program" and in the related Prospectus Supplement, and since
the adequacy of such FHA insurance is dependent upon future events, including
reductions for the payment of FHA claims, no assurance can be given that the FHA
insurance is or will be adequate to cover 90% of all potential losses on the
Title I Loans included in the related Trust Fund. If the FHA insurance for the
Title I Loans is reduced to zero, such Loans will be effectively uninsured from
and after the date of such reduction. Under the Title I Program, until a claim
for insurance reimbursement is submitted to the FHA, the FHA does not review or
approve for qualification for insurance the individual Title I Loan insured
thereunder (as is typically the case with other federal loan insurance
programs). Consequently, the FHA has not acknowledged that any of the Title I
Loans are eligible for FHA insurance, nor has the FHA reviewed or approved the
underwriting

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and qualification by the originating lenders of any individual Title I Loan. See
"Certain Legal Aspects of the Loans--The Title I Program."

The availability of FHA reimbursement following a default on a Title I
Loan is subject to a number of conditions, including strict compliance by the
originating lender of such loan, the Seller, the FHA claims administrator, the
Master Servicer and any subservicer with the FHA regulations in originating and
servicing such Title I Loan, and limits on the aggregate insurance coverage
available in the lender's insurance company reserve account. For example, the
FHA Regulations provide that, prior to originating a Title I Loan, a Title I
lender must exercise prudence and diligence in determining whether the borrower
and any co-maker or co-signer is solvent and an acceptable credit risk with a
reasonable ability to make payments on the loan. Although the related Seller
will represent and warrant that the Title I Loans have been originated and
serviced in compliance with all FHA regulations, these regulations are
susceptible to substantial interpretation. Failure to comply with all FHA
regulations may result in a denial of FHA claims, and there can be no assurance
that the FHA's enforcement of the FHA regulations will not become more strict in
the future. See "Certain Legal Aspects of the Loans--The Title I Program."

BASIS RISK

The Trust Fund Assets may accrue interest at variable rates based on
changes in specified indexes (as set forth in the related Prospectus Supplement)
which may adjust monthly, quarterly, annually or otherwise. The Securities,
however, may accrue interest at interest rates based on different indexes and
may adjust on different periods. As a result, there may be periods during which
the weighted average rate at which the Trust Fund Assets are accruing interest
do not reflect the then current spread between the rates on the Trust Fund
Assets and the interest rates on the Securities. The difference between the
interest rates on the Trust Fund Assets and the interest rates on the Securities
may limit the interest rates on the Securities accordingly.

PREPAYMENT AND YIELD CONSIDERATIONS

The timing of principal payments of the Securities of a Series will be
affected by a number of factors, including the following: (i) the extent of
prepayments (including for this purpose prepayments resulting from refinancing
or liquidations of the Loans due to defaults, casualties, condemnations and
repurchases by the Depositor or the Master Servicer) of the Loans comprising the
Trust Fund, which prepayments may be influenced by a variety of factors,
including general economic conditions, prevailing interest rate levels, the
availability of alternative financing and homeowner mobility, (ii) the manner of
allocating principal and/or payments among the classes of Securities of a Series
as specified in the related Prospectus Supplement, (iii) the exercise by the
party entitled thereto of any right of optional termination and (iv) the rate
and timing of payment defaults and losses incurred with respect to the Trust
Fund Assets. The repurchase of Loans by the Depositor or the Master Servicer may
result from repurchases of Trust Fund Assets due to material breaches of the
Depositor's or the Master Servicer's representations and warranties, as
applicable. The yields to maturity and weighted average lives of the Securities
will be affected primarily by the rate and timing of prepayment of the Loans
comprising the Trust Fund Assets. In addition, the yields to maturity and
weighted average lives of the Securities will be affected by the distribution of
amounts remaining in any Pre-Funding Account following the end of the related
Funding Period. Any reinvestment risks resulting from a faster or slower
incidence of prepayment of Loans held by a Trust Fund will be borne entirely by
the holders of one or more classes of the related Series of Securities. See
"Yield and Prepayment Considerations" and "The Agreements--Pre-Funding Account."

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Interest payable on the Securities of a Series on a Distribution Date
will include all interest accrued during the period specified in the related
Prospectus Supplement. In the event interest accrues over a period ending two or
more days prior to a Distribution Date, the effective yield to Securityholders
will be reduced from the yield that would otherwise be obtainable if interest
payable on the Securities were to accrue through the day immediately preceding
each Distribution Date, and the effective yield (at par) to Securityholders will
be less than the indicated coupon rate. See "Description of the
Securities--Distributions on Securities--Distributions of Interest."

GEOGRAPHIC CONCENTRATION

Certain geographic regions of the United States from time to time will
experience weaker regional economic conditions and housing markets, and,
consequently, will experience higher rates of loss and delinquency on loans
generally. Any concentration of the Loans relating to any Series of Securities
in any such region may present risk considerations in addition to those
generally present for similar loan-backed securities without such concentration.
See "The Mortgage Pool" in the related Prospectus Supplement for further
information regarding the geographic concentration of the Loans underlying the
Securities of any Series.

NATURE OF SECURITY

Low Credit Quality Borrowers. Certain of the Loans underlying a Series
of Securities may have been made to lower credit quality borrowers who have
marginal credit and fall into one of two categories: customers with moderate
income, limited assets and other income characteristics which cause difficulty
in borrowing from banks and other traditional lending sources, and customers
with a derogatory credit report, including a history of irregular employment,
previous bankruptcy filings, repossession of property, charged-off loans and
garnishment of wages. The average Loan Rate on those Loans made to these types
of borrowers is generally higher than that charged by lenders that typically
impose more stringent credit requirements. The payment experience on loans made
to these types of borrowers is likely to be different from that on loans made to
borrowers with higher credit quality, and is likely to be more sensitive to
changes in the economic climate in the areas in which such borrowers reside.

Balloon Payments. Certain of the Loans as of the related Cut-off Date
may not be fully amortizing over their terms to maturity and, thus, will require
substantial principal payments (i.e., balloon payments) at their stated
maturity. Loans with balloon payments involve a greater degree of risk because
the ability of a borrower to make a balloon payment typically will depend upon
its ability either to timely refinance the loan or to timely sell the related
Property. The ability of a borrower to accomplish either of these goals will be
affected by a number of factors, including the level of available mortgage rates
at the time of sale or refinancing, the borrower's equity in the related
Property, the financial condition of the borrower and tax laws. Losses on such
Loans that are not otherwise covered by the credit enhancement described in the
applicable Prospectus Supplement will be borne by the holders of one or more
classes of Securities of the related Series.

Property Values. There are several factors that could adversely affect
the value of Properties such that the outstanding balance of the related Loans,
together with any senior financing on the Properties, if applicable, would equal
or exceed the value of the Properties. Among the factors that could adversely
affect the value of the Properties are an overall decline in the residential
real estate market in the areas in which the Properties are located or a decline
in the general condition of the Properties as a result of failure of borrowers
to maintain adequately the Properties or of natural disasters that are not
necessarily covered by insurance, such as earthquakes and floods. In the case of
Home Equity Loans, such decline

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could extinguish the value of the interest of a junior mortgagee in the Property
before having any effect on the interest of the related senior mortgagee. If
such a decline occurs, the actual rates of delinquencies, foreclosures and
losses on all Loans could be higher than those currently experienced in the
mortgage lending industry in general. Losses on such Loans that are not
otherwise covered by the credit enhancement described in the applicable
Prospectus Supplement will be borne by the holders of one or more classes of
Securities of the related Series.

Delays Due to Litigation. Even assuming that the Properties provide
adequate security for the Loans, substantial delays could be encountered in
connection with the liquidation of defaulted Loans and corresponding delays in
the receipt of related proceeds by Securityholders could occur. An action to
foreclose on a Property securing a Loan is regulated by state statutes and rules
and is subject to many of the delays and expenses of other lawsuits if defenses
or counterclaims are interposed, sometimes requiring several years to complete.
Furthermore, in some states an action to obtain a deficiency judgment is not
permitted following a nonjudicial sale of a Property. In the event of a default
by a borrower, these restrictions, among other things, may impede the ability of
the Master Servicer to foreclose on or sell the Property or to obtain
liquidation proceeds sufficient to repay all amounts due on the related Loan. In
addition, the Master Servicer will be entitled to deduct from related
liquidation proceeds all expenses reasonably incurred in attempting to recover
amounts due on defaulted Loans and not yet repaid, including payments to senior
lienholders, legal fees and costs of legal action, real estate taxes and
maintenance and preservation expenses.

Disproportionate Effect of Liquidation Expenses. Liquidation expenses
with respect to defaulted loans do not vary directly with the outstanding
principal balance of the loan at the time of default. Therefore, assuming that a
servicer took the same steps in realizing upon a defaulted loan having a small
remaining principal balance as it would in the case of a defaulted loan having a
large remaining principal balance, the amount realized after expenses of
liquidation would be smaller as a percentage of the outstanding principal
balance of the small loan than would be the case with the defaulted loan having
a large remaining principal balance.

Home Equity Loans; Junior Loans. Since the mortgages and deeds of trust
securing the Home Equity Loans will be primarily junior liens subordinate to the
rights of the mortgagee under the related senior mortgage(s) or deed(s) of
trust, the proceeds from any liquidation, insurance or condemnation proceeds
will be available to satisfy the outstanding balance of such junior lien only to
the extent that the claims of such senior mortgagees have been satisfied in
full, including any related foreclosure costs. In addition, a junior mortgagee
may not foreclose on the property securing a junior mortgage unless it
forecloses subject to any senior mortgage, in which case it must either pay the
entire amount due on any senior mortgage to the related senior mortgagee at or
prior to the foreclosure sale or undertake the obligation to make payments on
any such senior mortgage in the event the mortgagor is in default thereunder.
The Trust Fund will not have any source of funds to satisfy any senior mortgages
or make payments due to any senior mortgagees and may therefore be prevented
from foreclosing on the related property.

Consumer Protection Laws. Applicable state laws generally regulate
interest rates and other charges, require certain disclosures, and require
licensing of certain originators and servicers of Loans. In addition, most
states have other laws, public policy and general principles of equity relating
to the protection of consumers, unfair and deceptive practices and practices
which may apply to the origination, servicing and collection of the Loans.
Depending on the provisions of the applicable law and the specific facts and
circumstances involved, violations of these laws, policies and principles may
limit the ability of the Master Servicer to collect all or part of the principal
of or interest on the Loans, may entitle the

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borrower to a refund of amounts previously paid and, in addition, could subject
the Master Servicer to damages and administrative sanctions. See "Certain Legal
Aspects of the Loans."

ENVIRONMENTAL RISKS

Real property pledged as security to a lender may be subject to certain
environmental risks. Under the laws of certain states, contamination of a
property may give rise to a lien on the property to assure the costs of cleanup.
In several states, such a lien has priority over the lien of an existing
mortgage against such property. In addition under the laws of some states and
under the federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980 ("CERCLA"), a lender may be liable, as an "owner" or
"operator," for costs of addressing releases or threatened releases of hazardous
substances that require remedy at a property, if agents or employees of the
lender have become sufficiently involved in the operations of the borrower,
regardless of whether the environmental damage or threat was caused by a prior
owner. A lender also risks such liability on foreclosure of the related
property. See "Certain Legal Aspects of the Loans--Environmental Risks."

RISKS ASSOCIATED WITH CERTAIN LOAN ASSETS

Contracts Secured by Home Improvements or Manufactured Homes. Certain
Contracts may be secured by security interests in Home Improvements or
Manufactured Homes that are not considered to be real property because they are
not permanently affixed to real estate. Perfection of security interests in such
Home Improvements or Manufactured Homes and enforcement of rights to realize
upon the value of such Home Improvements or Manufactured Homes as collateral for
the Contracts are subject to a number of Federal and state laws, including the
Uniform Commercial Code as adopted in each state and each state's certificate of
title statutes. The steps necessary to perfect the security interest in Home
Improvements or a Manufactured Home will vary from state to state. Because of
the expense and administrative inconvenience involved, the Master Servicer of a
Contract will not amend any certificate of title to change the lienholder
specified therein from such Master Servicer to the applicable Trustee and will
not deliver any certificate of title to such Trustee or note thereon such
Trustee's interest. Consequently, in some states, in the absence of such an
amendment, the assignment to such Trustee of the security interest in the Home
Improvements or a Manufactured Home may not be effective or such security
interest may not be perfected and, in the absence of such notation or delivery
to such Trustee, the assignment of the security interest in the Home
Improvements or Manufactured Home may not be effective against creditors of the
Master Servicer or a trustee in bankruptcy of the Master Servicer. If any
related credit enhancement is exhausted and a Contract is in default, then
recovery of amounts due on such Contracts is dependent on repossession and
resale of the Home Improvements or Manufactured Home securing such Contract.
Certain other factors may limit the ability of the Master Servicer to realize
upon the Home Improvements or Manufactured Homes or may limit the amount
realized to less than the amount due.

Manufactured Homes, unlike Mortgaged Properties, and Home Improvement,
generally depreciate in value. Consequently, at any time after origination it is
possible, especially in the case of Contracts with high Loan-to-Value Ratios at
origination, that the market value of a Manufactured Home or Home Improvement
may be lower than the principal amount outstanding under the related Contract.

Unsecured Contracts. The obligations of the borrower under certain
Contracts included as part of the related Trust Fund Assets may not be secured
by an interest in the related real estate or otherwise, and the related Trust
Fund, as the owner of such Loan, will be a general unsecured creditor as to such
obligations. As a consequence, in the event of a default under an unsecured
Contract, the related Trust

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Fund will have recourse only against the borrower's assets generally, along with
all other general unsecured creditors of the borrower. In a bankruptcy or
insolvency proceeding relating to a borrower on an unsecured Contract, the
obligations of the borrower under such Contract may be discharged in their
entirety, notwithstanding the fact that the portion of such borrower's assets
made available to the related Trust Fund as a general unsecured creditor to pay
amounts due and owing thereunder are insufficient to pay all such amounts. A
borrower on an unsecured Contract may not demonstrate the same degree of concern
over performance of its obligations under such Contract as if such obligations
were secured by a family residence owned by such borrower.

CERTAIN OTHER LEGAL CONSIDERATIONS REGARDING THE LOANS

Consumer Protection Laws. The Loans may also be subject to federal
laws, including:

(i) the Federal Truth in Lending Act and Regulation Z
promulgated thereunder, which require certain disclosures to the
borrowers regarding the terms of the Loans;

(ii) the Equal Credit Opportunity Act and Regulation B
promulgated thereunder, which prohibit discrimination on the basis of
age, race, color, sex, religion, marital status, national origin,
receipt of public assistance or the exercise of any right under the
Consumer Credit Protection Act, in the extension of credit;

(iii) the Fair Credit Reporting Act, which regulates the
use and reporting of information related to the borrower's credit
experience; and

(iv) for Loans that were originated or closed after
November 7, 1989, the Home Equity Loan Consumer Protection Act of
1988, which requires additional application disclosures, limits
changes that may be made to the loan documents without the borrower's
consent and restricts a lender's ability to declare a default or to
suspend or reduce a borrower's credit limit to certain enumerated
events.

The Riegle Act. Certain mortgage loans may be subject to the Riegle
Community Development and Regulatory Improvement Act of 1994 (the "Riegle Act")
which incorporates the Home Ownership and Equity Protection Act of 1994. These
provisions impose additional disclosure and other requirements on creditors with
respect to non-purchase money mortgage loans with high interest rates or high
up-front fees and charges. The provisions of the Riegle Act apply on a mandatory
basis to all mortgage loans originated on or after October 1, 1995. These
provisions can impose specific statutory liabilities upon creditors who fail to
comply with their provisions and may affect the enforceability of the related
loans. In addition, any assignee of the creditor would generally be subject to
all claims and defenses that the consumer could assert against the creditor,
including, without limitation, the right to rescind the mortgage loan.

Holder in Due Course Rules. The Contracts are also subject to the
Preservation of Consumers' Claims and Defenses regulations of the Federal Trade
Commission and other similar federal and state statutes and regulations
(collectively, the "Holder in Due Course Rules"), which protect the homeowner
from defective craftsmanship or incomplete work by a contractor. These laws
permit the obligor to withhold payment if the work does not meet the quality and
durability standards agreed to by the homeowner and the contractor. The Holder
in Due Course Rules have the effect of subjecting any assignee of the seller in
a consumer credit transaction to all claims and defenses which the obligor in
the credit sale transaction could assert against the seller of the goods.

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Violations of certain provisions of these federal laws may limit the
ability of the Master Servicer to collect all or part of the principal of or
interest on the Loans and in addition could subject the Trust Fund to damages
and administrative enforcement. Losses on such Loans that are not otherwise
covered by the credit enhancement described in the related Prospectus Supplement
will be borne by the holders of one or more classes of Securities of the related
Series. See "Certain Legal Aspects of the Loans."

RATING OF THE SECURITIES

It will be a condition to the issuance of a class of Securities offered
hereby that they be rated in one of the four highest rating categories by the
Rating Agency identified in the related Prospectus Supplement. Any such rating
would be based on, among other things, the adequacy of the value of the related
Trust Fund Assets and any credit enhancement with respect to such class and will
represent such Rating Agency's assessment solely of the likelihood that holders
of such class of Securities will receive payments to which such Securityholders
are entitled under the related Agreement. Such rating will not constitute an
assessment of the likelihood that principal prepayments on the related Loans
will be made, the degree to which the rate of such prepayments might differ from
that originally anticipated or the likelihood of early optional termination of
the Series of Securities. Such rating shall not be deemed a recommendation to
purchase, hold or sell Securities, inasmuch as it does not address market price
or suitability for a particular investor. Such rating will not address the
possibility that prepayment at higher or lower rates than anticipated by an
investor may cause such investor to experience a lower than anticipated yield or
that an investor purchasing a Security at a significant premium might fail to
recoup its initial investment under certain prepayment scenarios.

There is also no assurance that any such rating will remain in effect
for any given period of time or that it may not be lowered or withdrawn entirely
by the Rating Agency in the future if in its judgment circumstances in the
future so warrant. In addition to being lowered or withdrawn due to any erosion
in the adequacy of the value of the Trust Fund Assets or any credit enhancement
with respect to a Series of Securities, such rating might also be lowered or
withdrawn because of, among other reasons, an adverse change in the financial or
other condition of a credit enhancement provider or a change in the rating of
such credit enhancement provider's long term debt.

The amount, type and nature of credit enhancement, if any, established
with respect to a class of Securities will be determined on the basis of
criteria established by each Rating Agency rating classes of such Series. Such
criteria are sometimes based upon an actuarial analysis of the behavior of
similar loans in a larger group. Such analysis is often the basis upon which
each Rating Agency determines the amount of credit enhancement required with
respect to each such class. There can be no assurance that the historical data
supporting any such actuarial analysis will accurately reflect future experience
nor any assurance that the data derived from a large pool of similar loans
accurately predicts the delinquency, foreclosure or loss experience of any
particular pool of Loans. No assurance can be given that the values of any
Properties have remained or will remain at their levels on the respective dates
of origination of the related Loans. If the residential real estate markets
should experience an overall decline in property values such that the
outstanding principal balances of the Loans in a particular Trust Fund and any
secondary financing on the related Properties become equal to or greater than
the value of the Properties, the rates of delinquencies, foreclosures and losses
could be higher than those now generally experienced in the mortgage lending
industry. In addition, adverse economic conditions (which may or may not affect
real property values) may affect the timely payment by mortgagors of scheduled
payments of principal and interest on the Loans and, accordingly, the rates of
delinquencies, foreclosures and losses with respect to any Trust Fund. To the
extent that such losses are not covered by credit enhancement, such

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losses will be borne, at least in part, by the holders of one or more classes of
Securities of the related Series. See "Rating."

BOOK-ENTRY REGISTRATION

If issued in book-entry form, such registration may reduce the
liquidity of the Securities in the secondary trading market since investors may
be unwilling to purchase Securities for which they cannot obtain physical
certificates. Since transactions in book-entry Securities can be effected only
through the Depository Trust Company ("DTC"), participating organizations,
Financial Intermediaries and certain banks, the ability of a Securityholder to
pledge a book-entry Security to persons or entities that do not participate in
the DTC system may be limited due to lack of a physical certificate representing
such Securities. Security Owners will not be recognized as Securityholders, as
such term is used in the related Agreement, and Security Owners will be
permitted to exercise the rights of Securityholders only indirectly through DTC
and its Participants.

In addition, Securityholders may experience some delay in their receipt
of distributions of interest and principal on book-entry Securities since
distributions are required to be forwarded by the Trustee to DTC and DTC will
then be required to credit such distributions to the accounts of Depository
participants which thereafter will be required to credit them to the accounts of
Securityholders either directly or indirectly through Financial Intermediaries.
See "Description of the Securities--Book-Entry Registration of Securities."

PRE-FUNDING ACCOUNTS

If so provided in the related Prospectus Supplement, on the related
Closing Date the Depositor will deposit cash in an amount (the "Pre-Funded
Amount") specified in such Prospectus Supplement into an account (the
"Pre-Funding Account"). In no event shall the Pre-Funded Amount exceed 25% of
the initial aggregate principal amount of the Certificates and/or Notes of the
related Series of Securities. The Pre-Funded Amount will be used to purchase
Loans ("Subsequent Loans") in a period from the related Closing Date to a date
not more than three months after such Closing Date (such period, the "Funding
Period") from the Depositor (which, in turn, will acquire such Subsequent Loans
from the Seller or Sellers specified in the related Prospectus Supplement). The
Pre-Funding Account will be maintained with the Trustee for the related Series
of Securities and is designed solely to hold funds to be applied by such Trustee
during the Funding Period to pay to the Depositor the purchase price for
Subsequent Loans. Monies on deposit in the Pre-Funding Account will not be
available to cover losses on or in respect of the related Loans. To the extent
that the entire Pre-Funded Amount has not been applied to the purchase of
Subsequent Loans by the end of the related Funding Period, any amounts remaining
in the Pre-Funding Account will be distributed as a prepayment of principal to
Certificateholders and/or Noteholders on the Distribution Date immediately
following the end of the Funding Period, in the amounts and pursuant to the
priorities set forth in the related Prospectus Supplement. Any reinvestment risk
resulting from such prepayment will be borne entirely by the holders of one or
more classes of the related Series of Certificates.

BANKRUPTCY AND INSOLVENCY RISKS

The Seller and the Depositor will treat the transfer of the Loans by
the Seller to the Depositor as a sale for accounting purposes. The Depositor and
the Trust Fund will treat the transfer of Loans from the Depositor to the Trust
Fund as a sale for accounting purposes. As a sale of the Loans by the Seller to
the Depositor, the Loans would not be part of the Seller's bankruptcy estate and
would not be available

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to the Depositor's creditors. However, in the event of the insolvency of the
Depositor, it is possible that the bankruptcy trustee or a creditor of the
Depositor may attempt to recharacterize the sale of the Loans as a borrowing by
the Depositor, secured by a pledge of the Loans. In either case, this position,
if argued before or accepted by a court, could prevent timely payments of
amounts due on the Securities and result in a reduction of payments due on the
Securities.

In the event of a bankruptcy or insolvency of the Master Servicer, the
bankruptcy trustee or receiver may have the power to prevent the Trustee or the
Securityholders from appointing a successor Master Servicer.

The time period during which cash collections may be commingled with
the Master Servicer's own funds prior to each Distribution Date will be
specified in the related Prospectus Supplement. In the event of the insolvency
of the Master Servicer and if such cash collections are commingled with the
Master Servicer's own funds for at least ten days, the Trust Fund will likely
not have a perfected interest in such collections since such collections would
not have been deposited in a segregated account within ten days after the
collection thereof, and the inclusion thereof in the bankruptcy estate of the
Master Servicer may result in delays in payment and failure to pay amounts due
on the Securities of the related Series.

In addition, federal and state statutory provisions, including the
federal bankruptcy laws and state laws affording relief to debtors, may
interfere with or affect the ability of the secured mortgage lender to realize
upon its security. For example, in a proceeding under the federal Bankruptcy
Code, a lender may not foreclose on a mortgaged property without the permission
of the bankruptcy court. The rehabilitation plan proposed by the debtor may
provide, if the mortgaged property is not the debtor's principal residence and
the court determines that the value of the mortgaged property is less than the
principal balance for the mortgage loan, for the reduction of the secured
indebtedness to the value of the mortgaged property as of the date of the
commencement of the bankruptcy, rendering the lender a general unsecured
creditor for the difference, and also may reduce the monthly payments due under
such mortgage loan, change the rate of interest and alter the mortgage loan
repayment schedule. The effect of any such proceedings under the federal
Bankruptcy Code, including but not limited to any automatic stay, could result
in delays in receiving payments on the Loans underlying a Series of Securities
and possible reductions in the aggregate amount of such payments.

CONSEQUENCES OF OWNING ORIGINAL ISSUE DISCOUNT SECURITIES

Debt Securities that are Compound Interest Securities will be, and
certain of the other Debt Securities may be, issued with original discount for
federal income tax purposes. A holder of Debt Securities issued with original
issue discount will be required to include original issue discount in ordinary
gross income for federal income tax purposes as it accrues, in advance of
receipt of the cash attributable to such income. Accrued but unpaid interest on
the Debt Securities that are Compound Interest Securities generally will be
treated as original issue discount for this purpose. See "Federal Income Tax
Consequences--General--Interest and Acquisition Discount" and "--Market
Discount" herein.

VALUE OF TRUST FUND ASSETS

There is no assurance that the market value of the Trust Fund Assets or
any other assets relating to a Series of Securities described under "Credit
Enhancement" herein will at any time be equal to or greater than the principal
amount of the Securities of such Series then outstanding, plus accrued interest
thereon. Moreover, upon an event of default under the Agreement for a Series of
Securities and a sale

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of the related Trust Fund Assets or upon a sale of the assets of a Trust Fund
for a Series of Securities, the Trustee, the Master Servicer, the credit
enhancer, if any, and any other service provider specified in the related
Prospectus Supplement generally will be entitled to receive the proceeds of any
such sale to the extent of unpaid fees and other amounts owing to such persons
under the related Agreement prior to distributions to Securityholders. Upon any
such sale, the proceeds thereof may be insufficient to pay in full the principal
of and interest on the Securities of such Series.

RISKS RELATING TO INDEXED SECURITIES

An investment in Securities indexed, as to principal, premium and/or
interest, to one or more values of currencies (including exchange rates and swap
indices between currencies), commodities, interest rates or other indices
entails significant risks that are not associated with similar investments in a
conventional fixed-rate debt security. If the interest rate of such a Security
is so indexed, it may result in an interest rate that is less than that payable
on a conventional fixed-rate debt security issued at the same time, including
the possibility that no interest will be paid, and, if the principal amount of
such a Security is so indexed, the principal amount payable on the related final
Distribution Date may be less than the original purchase price of such Security
if allowed pursuant to the terms of such Security, including the possibility
that no principal will be paid. The secondary market for such Securities will be
affected by a number of factors, independent of the characteristics of the Trust
Fund Assets, structure of the cash flows and the value of the applicable
currency commodity, interest rate or other index, including the volatility of
the applicable currency, commodity, interest rate or other index, the time
remaining to the maturity of such Securities, the amount outstanding of such
Securities and market interest rates. The value of the applicable currency,
commodity, interest rate or other index depends on a number of interrelated
factors, including economic, financial and political events. Additionally, if
the formula used to determine the principal amount, premium, if any, or interest
payable with respect to such Securities contains a multiple or leverage factor,
the effect of any change in the applicable currency, commodity, interest rate or
other index may be increased. The historical experience of the relevant
currencies, commodities, interest rates or other indices should not be taken as
an indication of future performance of such currencies, commodities, interest
rates or other indices during the term of any Security. The credit ratings
assigned to any Series or class of Securities, in no way, are reflective of the
potential impact of the factors discussed above, or any other factors, on the
market value of the Securities. Accordingly, prospective investors should
consult their own financial and legal advisors as to the risks entailed by an
investment in such Securities and the suitability of such Securities in light of
their particular circumstances.

THE TRUST FUND

GENERAL

The Securities of each Series will represent interests in the assets of
the related Trust Fund, and the Notes of each Series will be secured by the
pledge of the assets of the related Trust Fund. The Trust Fund for each Series
will be held by the Trustee for the benefit of the related Securityholders. Each
Trust Fund will consist of certain assets (the "Trust Fund Assets") consisting
of a pool (each, a "Pool") comprised of Loans, Agency Securities and/or Private
Mortgage-Backed Securities as specified in the related Prospectus Supplement,
together with payments in respect of such Loans, and certain other

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accounts, obligations or agreements, in each case, as specified in the related
Prospectus Supplement.* The Pool will be created on the first day of the month
of the issuance of the related Series of Securities or such other date specified
in the related Prospectus Supplement (the "Cut-off Date"). The Securities will
be entitled to payment from the assets of the related Trust Fund or Funds or
other assets pledged for the benefit of the Securityholders, as specified in the
related Prospectus Supplement, and will not be entitled to payments in respect
of the assets of any other trust fund established by the Depositor.

The Trust Fund Assets will be acquired by the Depositor, either
directly or through affiliates, from originators or sellers (the "Sellers"). The
Sellers may be affiliates of the Depositor. Loans acquired by the Depositor will
have been originated in accordance with the underwriting criteria described in
the related Prospectus Supplement. The Depositor will cause the Trust Fund
Assets to be assigned without recourse to the Trustee named in the related
Prospectus Supplement for the benefit of the holders of the Securities of the
related Series. The Master Servicer named in the related Prospectus Supplement
will service the Trust Fund Assets, either directly or through other servicing
institutions ("Sub-Servicers"), pursuant to a Pooling and Servicing Agreement
among the Depositor, the Master Servicer and the Trustee with respect to a
Series consisting of Certificates, or a master servicing agreement (each, a
"Master Servicing Agreement") between the Trustee and the Master Servicer with
respect to a Series consisting of Certificates and Notes, and will receive a fee
for such services. See "The Agreements." With respect to Loans serviced by the
Master Servicer through a Sub-Servicer, the Master Servicer will remain liable
for its servicing obligations under the related Agreement as if the Master
Servicer alone were servicing such Loans.

As used herein, "Agreement" means, with respect to a Series consisting
of Certificates, the Pooling and Servicing Agreement, and with respect to a
Series consisting of Certificates and Notes, the Trust Agreement, the Indenture
and the Master Servicing Agreement, as the context requires.

If so specified in the related Prospectus Supplement, a Trust Fund
relating to a Series of Securities may be a business trust formed under the laws
of the state specified in the related Prospectus Supplement pursuant to a trust
agreement (each, a "Trust Agreement") between the Depositor and the trustee of
such Trust Fund.

With respect to each Trust Fund, prior to the initial offering of the
related Series of Securities, the Trust Fund will have no assets or liabilities.
No Trust Fund is expected to engage in any activities other than acquiring,
managing and holding of the related Trust Fund Assets and other assets
contemplated herein specified and in the related Prospectus Supplement and the
proceeds thereof, issuing Securities and making payments and distributions
thereon and certain related activities. No Trust Fund is expected to have any
source of capital other than its assets and any related credit enhancement.

Unless otherwise specified in the related Prospectus Supplement, the
only obligations of the Depositor with respect to a Series of Securities will be
to obtain certain representations and warranties

- --------
* Whenever the terms "Pool," "Certificates," "Notes" and "Securities" are
used in this Prospectus, such terms will be deemed to apply, unless the
context indicates otherwise, to one specific Pool and the Securities of
one Series including the Certificates representing certain undivided
interests in, and/or Notes secured by the assets of, a single Trust
Fund consisting primarily of the Loans, Agency Securities or Private
Mortgage-Backed Securities in such Pool. Similarly, the term
"Pass-Through Rate" will refer to the Pass-Through Rate borne by the
Certificates and the term "interest rate" will refer to the interest
rate borne by the Notes of one specific Series, as applicable, and the
term "Trust Fund" will refer to one specific Trust Fund.

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from the Sellers and to assign to the Trustee for such Series the Depositor's
rights with respect to such representations and warranties. See "The
Agreements--Assignment of the Trust Fund Assets." The obligations of the Master
Servicer with respect to the Loans will consist principally of its contractual
servicing obligations under the related Agreement (including its obligation to
enforce the obligations of the Sub-Servicers or Sellers, or both, as more fully
described herein under "The Trust Fund--Representations by Sellers; Repurchases"
and "The Agreements--Sub-Servicing By Sellers" and "--Assignment of the Trust
Fund Assets") and its obligation, if any, to make certain cash advances in the
event of delinquencies in payments on or with respect to the Loans in the
amounts described herein under "Description of the Securities--Advances." The
obligations of the Master Servicer to make advances may be subject to
limitations, to the extent provided herein and in the related Prospectus
Supplement.

The following is a brief description of the assets expected to be
included in the Trust Funds. If specific information respecting the Trust Fund
Assets is not known at the time the related Series of Securities initially is
offered, more general information of the nature described below will be provided
in the related Prospectus Supplement, and specific information will be set forth
in a report on Form 8-K to be filed with the Securities and Exchange Commission
within fifteen days after the initial issuance of such Securities (the "Detailed
Description"). A copy of the Agreement with respect to each Series of Securities
will be attached to the Form 8-K and will be available for inspection at the
corporate trust office of the Trustee specified in the related Prospectus
Supplement. A schedule of the Loans, Agency Securities and/or Private
Mortgage-Backed Securities relating to such Series will be attached to the
Agreement delivered to the Trustee upon delivery of the Securities.

THE LOANS

General. Unless otherwise specified in the related Prospectus
Supplement, Loans will consist of mortgage loans or deeds of trust secured by
first or subordinated liens on one- to four-family residential properties, Home
Equity Loans, Home Improvement Contracts or Manufactured Housing Contracts. For
purposes hereof, "Home Equity Loans" includes "Closed-End Loans" and "Revolving
Credit Line Loans." If so specified, the Loans may include cooperative apartment
loans ("Cooperative Loans") secured by security interests in shares issued by
private, non-profit, cooperative housing corporations ("Cooperatives") and in
the related proprietary leases or occupancy agreements granting exclusive rights
to occupy specific dwelling units in such Cooperatives' buildings. As more fully
described in the related Prospectus Supplement, the Loans may be "conventional"
loans or loans that are insured or guaranteed by a governmental agency such as
the FHA or VA. The Loans will have been originated in accordance with the
underwriting criteria specified in the related Prospectus Supplement.

Unless otherwise specified in the related Prospectus Supplement, all of
the Loans in a Pool will have monthly payments due on the first day of each
month. The payment terms of the Loans to be included in a Trust Fund will be
described in the related Prospectus Supplement and may include any of the
following features (or combination thereof), all as described below or in the
related Prospectus Supplement:

(a) Interest may be payable at a fixed rate, a rate adjustable
from time to time in relation to an index (which will be specified in
the related Prospectus Supplement), a rate that is fixed for a period
of time or under certain circumstances and is followed by an adjustable
rate, a rate that otherwise varies from time to time, or a rate that is
convertible from an adjustable rate to a fixed rate. Changes to an
adjustable rate may be subject to periodic limitations, maximum rates,
minimum rates or a combination of such limitations. As specified in the
related Prospectus Supplement, the Loans will provide either for
payments in level monthly installments (except in

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the case of Loans with balloon payments) consisting of interest equal
to one-twelfth of the specified interest rate borne by such Loan (the
"Loan Rate") times the unpaid principal balance, with the remainder of
such payment applied to principal, for payments that are allocated to
principal and interest according to the daily simple interest method,
or for payments that are allocated to principal and interest according
to the "sum of the digits" or "Rule of 78s" methods. Accrued interest
may be deferred and added to the principal of a Loan for such periods
and under such circumstances as may be specified in the related
Prospectus Supplement. Loans may provide for the payment of interest at
a rate lower than the Loan Rate for a period of time or for the life of
the Loan, and the amount of any difference may be contributed from
funds supplied by the seller of the Property or another source.

(b) Principal may be payable on a level debt service basis to
fully amortize the Loan over its term, may be calculated on the basis
of an assumed amortization schedule that is significantly longer than
the original term to maturity or on an interest rate that is different
from the Loan Rate or may not be amortized during all or a portion of
the original term. Payment of all or a substantial portion of the
principal may be due on maturity ("balloon payment"). Principal may
include interest that has been deferred and added to the principal
balance of the Loan.

(c) Monthly payments of principal and interest may be fixed
for the life of the Loan, may increase over a specified period of time
or may change from period to period. Loans may include limits on
periodic increases or decreases in the amount of monthly payments and
may include maximum or minimum amounts of monthly payments.

(d) Prepayments of principal may be subject to a prepayment
fee, which may be fixed for the life of the Loan or may decline over
time, and may be prohibited for the life of the Loan or for certain
periods ("lockout periods"). Certain Loans may permit prepayments after
expiration of the applicable lockout period and may require the payment
of a prepayment fee in connection with any such subsequent prepayment.
Other Loans may permit prepayments without payment of a fee unless the
prepayment occurs during specified time periods. The Loans may include
"due on sale" clauses which permit the mortgagee to demand payment of
the entire Loan in connection with the sale or certain transfers of the
related Property. Other Loans may be assumable by persons meeting the
then applicable underwriting standards of the related Seller.

A Trust Fund may contain certain Loans ("Buydown Loans") that include
provisions whereby a third party partially subsidizes the monthly payments of
the borrowers on such Loans during the early years of such Loans, the difference
to be made up from a fund (a "Buydown Fund") contributed by such third party at
the time of origination of the Loan. A Buydown Fund will be in an amount equal
either to the discounted value or full aggregate amount of future payment
subsidies. The underlying assumption of buydown plans is that the income of the
borrower will increase during the buydown period as a result of normal increases
in compensation and inflation, so that the borrower will be able to meet the
full loan payments at the end of the buydown period. To the extent that this
assumption as to increased income is not fulfilled, the possibility of defaults
on Buydown Loans is increased. The related Prospectus Supplement will contain
information with respect to any Buydown Loan concerning limitations on the
interest rate paid by the borrower initially, on annual increases in the
interest rate and on the length of the buydown period.

The real property which secures repayment of the Loans is referred to
as the "Mortgaged Properties." Home Improvement Contracts and Manufactured
Housing Contracts may, and the other

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Loans will, be secured by mortgages or deeds of trust or other similar security
instruments creating a lien on a Mortgaged Property. In the case of Home Equity
Loans, such liens generally will be subordinated to one or more senior liens on
the related Mortgaged Properties as described in the related Prospectus
Supplement. As specified in the related Prospectus Supplement, Home Improvement
Contracts and Manufactured Housing Contracts may be unsecured or secured by
purchase money security interests in the Home Improvements and Manufactured
Homes financed thereby. The Mortgaged Properties, and the Home Improvements and
the Manufactured Homes are collectively referred to herein as the "Properties."
The Properties relating to Loans will consist primarily of detached or
semi-detached one- to four-family dwelling units, townhouses, rowhouses,
individual condominium units, individual units in planned unit developments, and
certain other dwelling units ("Single Family Properties") or mixed used
properties which consist of structures of not more than three stories which
include one- to four-family residential dwelling units and space used for
retail, professional or other commercial uses. Such Properties may include
vacation and second homes, investment properties and leasehold interests. In the
case of leasehold interests, the term of the leasehold will exceed the scheduled
maturity of the Loan by at least five years, unless otherwise specified in the
related Prospectus Supplement. The Properties may be located in any one of the
fifty states, the District of Columbia, Guam, Puerto Rico or any other territory
of the United States.

Loans with certain Loan-to-Value Ratios and/or certain principal
balances may be covered wholly or partially by primary mortgage guaranty
insurance policies (each, a "Primary Mortgage Insurance Policy"). The existence,
extent and duration of any such coverage will be described in the applicable
Prospectus Supplement.

The aggregate principal balance of Loans secured by Properties that are
owner-occupied will be disclosed in the related Prospectus Supplement. Unless
otherwise specified in the related Prospectus Supplement, the sole basis for a
representation that a given percentage of the Loans is secured by Single Family
Properties that are owner-occupied will be either (i) the making of a
representation by the borrower at origination of the Loan either that the
underlying Property will be used by the borrower for a period of at least six
months every year or that the borrower intends to use the Property as a primary
residence or (ii) a finding that the address of the underlying Property is the
borrower's mailing address.

Home Equity Loans. As more fully described in the related Prospectus
Supplement, interest on each Revolving Credit Line Loan, excluding introduction
rates offered from time to time during promotional periods, is computed and
payable monthly on the average daily outstanding principal balance of such Loan.
Principal amounts on a Revolving Credit Line Loan may be drawn down (up to a
maximum amount as set forth in the related Prospectus Supplement) or repaid
under each Revolving Credit Line Loan from time to time, but may be subject to a
minimum periodic payment. Except to the extent provided in the related
Prospectus Supplement, the Trust Fund will not include any amounts borrowed
under a Revolving Credit Line Loan after the Cut-off Date. The full amount of a
Closed-End Loan is advanced at the inception of the Loan and generally is
repayable in equal (or substantially equal) installments of an amount to fully
amortize such Loan at its stated maturity. Except to the extent provided in the
related Prospectus Supplement, the original terms to stated maturity of
Closed-End Loans will not exceed 360 months. Under certain circumstances, under
either a Revolving Credit Line Loan or a Closed-End Loan, a borrower may choose
an interest only payment option and is obligated to pay only the amount of
interest which accrues on the Loan during the billing cycle. An interest only
payment option may be available for a specified period before the borrower must
begin paying at least the minimum monthly payment of a specified percentage of
the average outstanding balance of the Loan.

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Home Improvement Contracts. The Trust Fund Assets for a Series of
Securities may consist, in whole or in part, of Home Improvement Contracts
originated by a home improvement contractor, a thrift or a commercial mortgage
banker in the ordinary course of business. The Home Improvements securing the
Home Improvement Contracts may include, but are not limited to, replacement
windows, house siding, new roofs, swimming pools, satellite dishes, kitchen and
bathroom remodeling goods and solar heating panels. As specified in the related
Prospectus Supplement, the Home Improvement Contracts will either be unsecured
or secured by mortgages on Single Family Properties which are generally
subordinate to other mortgages on the same Property, or secured by purchase
money security interests in the Home Improvements financed thereby. Except as
otherwise specified in the related Prospectus Supplement, the Home Improvement
Contracts will be fully amortizing and may have fixed interest rates or
adjustable interest rates and may provide for other payment characteristics as
described below and in the related Prospectus Supplement. The initial
Loan-to-Value Ratio of a Home Improvement Contract is computed in the manner
described in the related Prospectus Supplement.

Manufactured Housing Contracts. The Trust Fund Assets for a Series may
consist, in whole or part, of conventional manufactured housing installment
sales contracts and installment loan agreements (the "Manufactured Housing
Contracts" and together with the Home Improvement Contracts, the "Contracts"),
originated by a manufactured housing dealer in the ordinary course of business.
As specified in the related Prospectus Supplement, the Manufactured Housing
Contracts will be secured by either Manufactured Homes (as defined below),
located in any of the fifty states or the District of Columbia or by Mortgages
on the real estate on which the Manufactured Homes are located.

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

Manufactured Homes, unlike Mortgaged Properties, and Home Improvements,
generally depreciate in value. Consequently, at any time after origination it is
possible, especially in the case of Contracts with high Loan-to-Value Ratios at
origination, that the market value of a Manufactured Home or Home Improvement
may be lower than the principal amount outstanding under the related Contract.

Additional Information. Each Prospectus Supplement will contain
information, as of the date of such Prospectus Supplement and to the extent then
specifically known to the Depositor, with respect to the Loans contained in the
related Pool, including (i) the aggregate outstanding principal balance and the
average outstanding principal balance of the Loans as of the applicable Cut-off
Date, (ii) the type of property securing the Loan (e.g., single family
residences, individual units in condominium apartment buildings, two- to
four-family dwelling units, other real property, Home Improvements or
Manufactured Homes), (iii) the original terms to maturity of the Loans, (iv) the
largest principal balance and the smallest principal balance of any of the
Loans, (v) the earliest origination date and latest maturity date of any of the
Loans, (vi) the Loan-to-Value Ratios or Combined Loan-to-Value Ratios, as
applicable, of

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the Loans, (vii) the Loan Rates or annual percentage rates ("APR") or range of
Loan Rates or APR's borne by the Loans, (viii) the maximum and minimum per annum
Loan Rates, and (ix) the geographical location of the Loans. If specific
information respecting the Loans is not known to the Depositor at the time the
related Securities are initially offered, more general information of the nature
described above will be provided in the related Prospectus Supplement, and
specific information will be set forth in the Detailed Description.

The "Loan-to-Value Ratio" of a Loan at any given time is the fraction,
expressed as a percentage, the numerator of which is the original principal
balance of the related Loan and the denominator of which is the Collateral Value
of the related Property. Except as otherwise specified in the related Prospectus
Supplement, the "Combined Loan-to-Value Ratio" of a Loan at any given time is
the ratio, expressed as a percentage, of (i) the sum of (a) the original
principal balance of the Loan (or, in the case of a Revolving Credit Line Loan,
the maximum amount thereof available) and (b) the outstanding principal balance
at the date of origination of the Loan of any senior mortgage loan(s) or, in the
case of any open-ended senior mortgage loan, the maximum available line of
credit with respect to such mortgage loan, regardless of any lesser amount
actually outstanding at the date of origination of the Loan, to (ii) the
Collateral Value of the related Property. Except as otherwise specified in the
related Prospectus Supplement, the "Collateral Value" of the Property, other
than with respect to certain Loans the proceeds of which were used to refinance
an existing mortgage loan (each, a "Refinance Loan"), is the lesser of (a) the
appraised value determined in an appraisal obtained by the originator at
origination of such Loan and (b) the sales price for such Property. In the case
of Refinance Loans, the "Collateral Value" of the related Property is the
appraised value thereof determined in an appraisal obtained at the time of
refinancing.

No assurance can be given that values of the Properties have remained
or will remain at their levels on the dates of origination of the related Loans.
If the residential real estate market should experience an overall decline in
property values such that the sum of the outstanding principal balances of the
Loans and any primary or secondary financing on the Properties, as applicable,
in a particular Pool become equal to or greater than the value of the
Properties, the actual rates of delinquencies, foreclosures and losses could be
higher than those now generally experienced in the mortgage lending industry. In
addition, adverse economic conditions and other factors (which may or may not
affect real property values) may affect the timely payment by borrowers of
scheduled payments of principal and interest on the Loans and, accordingly, the
actual rates of delinquencies, foreclosures and losses with respect to any Pool.
To the extent that such losses are not covered by subordination provisions or
alternative arrangements, such losses will be borne, at least in part, by the
holders of the Securities of the related Series.

AGENCY SECURITIES

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

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

GNMA Certificates. Each GNMA Certificate held in a Trust Fund (which
may be a GNMA I Certificate or a GNMA II Certificate) will be a "fully modified
pass-through" mortgaged-backed certificate issued and serviced by a mortgage
banking company or other financial concern ("GNMA Issuer") approved by GNMA or
approved by FNMA as a seller-servicer of FHA Loans and/or VA Loans. The mortgage
loans underlying the GNMA Certificates held in a Trust Fund will consist of FHA
Loans and/or VA Loans. Each such mortgage loan is secured by a one- to
four-family residential property or a manufactured home. GNMA will approve the
issuance of each such GNMA Certificate in accordance with a guaranty agreement
(a "Guaranty Agreement") between GNMA and the GNMA Issuer. Pursuant to its
Guaranty Agreement, a GNMA Issuer will be required to advance its own funds in
order to make timely payments of all amounts due on each such GNMA Certificate,
even if the payments received by the GNMA Issuer on the FHA Loans or VA Loans
underlying each such GNMA Certificate are less than the amounts due on each such
GNMA Certificate.

The full and timely payment of principal of and interest on each GNMA
Certificate will be guaranteed by GNMA, which obligation is backed by the full
faith and credit of the United States. Each such GNMA Certificate will have an
original maturity of not more than 40 years (but may have original maturities of
substantially less than 40 years). Each such GNMA Certificate will provide for
the payment by or on behalf of the GNMA Issuer to the registered holder of such
GNMA Certificate of scheduled monthly payments of principal and interest equal
to the registered holder's proportionate interest in the aggregate amount of the
monthly principal and interest payment on each FHA Loan or VA Loan underlying
such GNMA Certificate, less the applicable servicing and guarantee fee which
together equal the difference between the interest on the FHA Loans or VA Loans
and the pass-through rate on the GNMA Certificate. In addition, each payment
will include proportionate pass-through payments of any prepayments of principal
on the FHA Loans or VA Loans underlying such GNMA Certificate and liquidation
proceeds in the event of a foreclosure or other disposition of any such FHA
Loans or VA Loans.

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

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

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

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

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

GNMA also guarantees the timely payment of principal of and interest on
"fully modified pass-through" mortgage-backed securities issued and serviced by
certain mortgage banking companies and other financial concerns ("FNMA Project
Issuers") based upon and backed by pools of multi-family residential mortgage
loans coinsured by FHA and GNMA Project Issuers under the Housing Act ("GNMA
Project Certificates"). The Prospectus Supplement for a Series of Certificates
that includes GNMA Project Certificates will set forth additional information
regarding the GNMA guaranty program, servicing of the mortgage pool, the payment
of principal and interest on GNMA Project Certificates and other matters with
respect to multi-family residential mortgage loans that qualify for the GNMA
guaranty.

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

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

FNMA Certificates. FNMA Certificates are either Guaranteed Mortgage
Pass-Through Certificates ("FNMA MBS") or Stripped Mortgage-Backed Securities
("FNMA SMBS"). The following discussion of FNMA Certificates applies equally to
both FNMA MBS and FNMA SMBS, except as otherwise indicated. Each FNMA
Certificate included in the Trust for a Series will represent a fractional
undivided interest in a pool of mortgage loans formed by FNMA. Each such pool
will consist of mortgage loans of one of the following types: (i) fixed-rate
level installment conventional mortgage loans; (ii) fixed-rate level installment
mortgage loans that are insured by FHA or partially guaranteed by the VA; (iii)
adjustable rate conventional mortgage loans; or (iv) adjustable rate mortgage
loans that are insured by the FHA or partially guaranteed by the VA. Each
mortgage loan must meet the applicable standards set forth under the FNMA
purchase program. Each such mortgage loan will be secured by a first lien on a
one- to four-family residential property. Each such FNMA Certificate will be
issued pursuant to a trust indenture. Original maturities of substantially all
of the conventional, level payment mortgage loans underlying a FNMA Certificate
are expected to be between either 8 to 15 years or 20 to 40 years. The original
maturities of substantially all of the fixed rate level payment FHA Loans or VA
Loans are expected to be 30 years.

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

FNMA guarantees to each registered holder of a FNMA Certificate that it
will distribute on a timely basis amounts representing such holder's
proportionate share of scheduled principal and interest payments at the
applicable pass-through rate provided for by such FNMA Certificate on the
underlying mortgage loans, whether or not received, and such holder's
proportionate share of the full principal amount of any foreclosed or other
finally liquidated mortgage loan, whether or not such principal amount is
actually recovered. The obligations of FNMA under its guarantees are obligations
solely of FNMA and are not backed by, nor entitled to, the full faith and credit
of the United States. If FNMA were unable to satisfy its obligations,
distributions to holders of FNMA Certificates would consist solely of payments
and other recoveries on the underlying mortgage loans and, accordingly, monthly
distributions to holders of FNMA Certificates would be affected by delinquent
payments and defaults on such mortgage loans.

FNMA SMBS are issued in series of two or more classes, with each class
representing a specified undivided fractional interest in principal
distributions and interest distributions (adjusted to the series

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pass-through rate) on the underlying pool of mortgage loans. The fractional
interests of each class in principal and interest distributions are not
identical, but the classes in the aggregate represent 100% of the principal
distributions and interest distributions (adjusted to the series pass-through
rate) on the respective pool. Because of such difference between the fractional
interests in principal and interest of each class, the effective rate of
interest on the principal of each class of FNMA SMBS may be significantly higher
or lower than the series pass-through rate and/or the weighted average interest
rate of the underlying mortgage loans.

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

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

FHLMC Certificates. Each FHLMC Certificate represents an undivided
interest in a pool of mortgage loans that may consist of first lien conventional
loans, FHA Loans or VA Loans (a "FHLMC Certificate Group"). FHLMC Certificates
are sold under the terms of a Mortgage Participation Certificate Agreement. A
FHLMC Certificate may be issued under either FHLMC's Cash Program or Guarantor
Program. Unless otherwise described in the Prospectus Supplement, Mortgage loans
underlying the FHLMC Certificates held by a Trust Fund will consist of mortgage
loans with original terms to maturity of between 10 and 40 years. Each such
mortgage loan must meet the applicable standards set forth in the FHLMC Act. A
FHLMC Certificate Group may include whole loans, participation interests in
whole loans and undivided interests in whole loans and/or participations
comprising another FHLMC Certificate Group. Under the Guarantor Program, any
such FHLMC Certificate Group may include only whole loans or participation
interests in whole loans.

FHLMC guarantees to each registered holder of a FHLMC Certificate the
timely payment of interest on the underlying mortgage loans to the extent of the
applicable Certificate rate on the registered holder's pro rata share of the
unpaid principal balance outstanding on the underlying mortgage loans in the
FHLMC Certificate Group represented by such FHLMC Certificate, whether or not
received. FHLMC also guarantees to each registered holder of a FHLMC Certificate
ultimate receipt by such holder of all principal on the underlying mortgage
loans, without any offset or deduction, to the extent of such holder's pro rata
share thereof, but does not, except if and to the extent specified in the

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Prospectus Supplement for a Series of Certificates, guarantee the timely payment
of scheduled principal. Under FHLMC's Gold PC Program, FHLMC guarantees the
timely payment of principal based on the difference between the pool factor
published in the month preceding the month of distribution and the pool factor
published in such month of distribution. Pursuant to its guarantees, FHLMC
indemnifies holders of FHLMC Certificates against any diminution in principal by
reason of charges for property repairs, maintenance and foreclosure. FHLMC may
remit the amount due on account of its guarantee of collection of principal at
any time after default on an underlying mortgage loan, but not later than (i) 30
days following foreclosure sale, (ii) 30 days following payment of the claim by
any mortgage insurer, or (iii) 30 days following the expiration of any right of
redemption, whichever occurs later, but in any event no later than one year
after demand has been made upon the mortgagor for accelerated payment of
principal. In taking actions regarding the collection of principal after default
on the mortgage loans underlying FHLMC Certificates, including the timing of
demand for acceleration, FHLMC reserves the right to exercise its judgment with
respect to the mortgage loans in the same manner as for mortgage loans which it
has purchased but not sold. The length of time necessary for FHLMC to determine
that a mortgage loan should be accelerated varies with the particular
circumstances of each mortgagor, and FHLMC has not adopted standards which
require that the demand be made within any specified period.

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

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

Under FHLMC's Cash Program, with respect to pools formed prior to June
1, 1987, there is no limitation on the amount by which interest rates on the
mortgage loans underlying a FHLMC Certificate may exceed the pass-through rate
on the FHLMC Certificate. With respect to FHLMC Certificates issued on or after
June 1, 1987, the maximum interest rate on the mortgage loans underlying such
FHLMC Certificates may exceed the pass through rate of the FHLMC Certificates by
50 to 100 basis points. Under such program, FHLMC purchases groups of whole
mortgage loans from sellers at specified percentages of their unpaid principal
balances, adjusted for accrued or prepaid interest, which when applied to the
interest rate of the mortgage loans and participations purchased, results in the
yield (expressed as a percentage) required by FHLMC. The required yield, which
includes a minimum servicing fee retained by the servicer, is calculated using
the outstanding principal balance. The range of interest rates on the mortgage
loans and participations in a FHLMC Certificate group under the Cash Program
will vary since mortgage loans and participations are purchased and assigned to
a FHLMC Certificate group based upon their yield to FHLMC rather than on the
interest rate on the underlying mortgage loans.

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Under FHLMC's Guarantor Program, the pass-through rate on a FHLMC
Certificate is established based upon the lowest interest rate on the underlying
mortgage loans, minus a minimum servicing fee and the amount of FHLMC's
management and guaranty income as agreed upon between the seller and FHLMC. For
FHLMC Certificate Groups formed under the Guarantor Program with certificate
numbers beginning with 18-012, the range between the lowest and the highest
annual interest rates on the mortgage loans in a FHLMC Certificate group may not
exceed two percentage points.

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

FHLMC also issues mortgage participation certificates representing an
undivided interest in a group of multi-family residential mortgage loans or
participations in multi-family residential mortgage loans purchased by FHLMC
("FHLMC Project Certificates"). The Prospectus Supplement for a Series of
Securities issued by a Trust that includes FHLMC Project Certificates will set
forth additional information regarding multi-family residential mortgage loans
that qualify for purchase by FHLMC.

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

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

PRIVATE MORTGAGE-BACKED SECURITIES

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

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

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

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

Underlying Loans. The mortgage loans underlying the Private Mortgage-
Backed Securities may consist of fixed rate, level payment, fully amortizing or
graduated payment mortgage loans, buydown loans, adjustable rate mortgage loans,
or loans having balloon or other special payment features. Such mortgage loans
may be Single Family Loans, Multifamily Loans, Cooperative Loans or Contracts
secured by Manufactured Homes. As specified in the related Prospectus
Supplement, (i) no mortgage loan underlying the Private Mortgage-Backed
Securities will have had a Combined Loan-to-Value Ratio at origination in excess
of the percentage set forth in the related Prospectus Supplement, (ii) each
underlying mortgage loan will have had an original term to stated maturity of
not less than 5 years and not more than 40 years, (iii) each underlying mortgage
loan (other than Cooperative Loans) will be required to be covered by a standard
hazard insurance policy (which may be a blanket policy), and (iv) each mortgage
loan (other than Cooperative Loans or Contracts secured by a Manufactured Home)
will be covered by a title insurance policy.

Credit Support Relating to Private Mortgage-Backed Securities. Credit
support in the form of subordination of other private mortgage certificates
issued under the PMBS Agreement, reserve funds, insurance policies, letters of
credit, financial guaranty insurance policies, guarantees or other types of
credit support may be provided with respect to the mortgage loans underlying the
Private Mortgage-Backed Securities or with respect to the Private
Mortgage-Backed Securities themselves.

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

REPRESENTATIONS BY SELLERS; REPURCHASES

Each Seller will have made representations and warranties in respect of
the Loans sold by such Seller and evidenced by all, or a part, of a Series of
Securities. Except as otherwise specified in the related Prospectus Supplement,
such representations and warranties include, among other things: (i) that title
insurance (or in the case of Properties located in areas where such policies are
generally not available, an attorney's certificate of title) and any required
hazard insurance policy were effective at origination of each Loan, other than a
Cooperative Loan, and that each policy (or certificate of title as applicable)
remained in effect on the date of purchase of the Loan from the Seller by or on
behalf of the Depositor; (ii) that the Seller had good title to each such Loan
and such Loan was subject to no offsets, defenses, counterclaims or rights of
rescission except to the extent that any buydown agreement may forgive certain
indebtedness of a borrower; (iii) that each Loan constituted a valid lien on, or
a perfected security interest with respect to, the Property (subject only to
permissible liens disclosed, if applicable, title insurance exceptions, if
applicable, and certain other exceptions described in the Agreement) and that
the Property was free from damage and was in acceptable condition; (iv) that
there were no delinquent tax or assessment liens against the Property; (v) that
no required payment on a Loan was delinquent more than the number of days
specified in the related Prospectus Supplement; and (vi) that each Loan was made
in compliance with, and is enforceable under, all applicable local, state and
federal laws and regulations in all material respects.

If so specified in the related Prospectus Supplement, the
representations and warranties of a Seller in respect of a Loan will be made not
as of the Cut-off Date but as of the date on which such Seller sold the Loan to
the Depositor or one of its affiliates. Under such circumstances, a substantial
period of time may have elapsed between the sale date and the date of initial
issuance of the Series of Securities evidencing an interest in such Loan. Since
the representations and warranties of a Seller do not address events that may
occur following the sale of a Loan by such Seller, its repurchase obligation
described below will not arise if the relevant event that would otherwise have
given rise to such an obligation with respect to a Loan occurs after the date of
sale of such Loan by such Seller to the Depositor or its

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affiliates. However, the Depositor will not include any Loan in the Trust Fund
for any Series of Securities if anything has come to the Depositor's attention
that would cause it to believe that the representations and warranties of a
Seller will not be accurate and complete in all material respects in respect of
such Loan as of the date of initial issuance of the related Series of
Securities. If the Master Servicer is also a Seller of Loans with respect to a
particular Series of Securities, such representations will be in addition to the
representations and warranties made by the Master Servicer in its capacity as a
Master Servicer.

The Master Servicer or the Trustee, if the Master Servicer is the
Seller, will promptly notify the relevant Seller of any breach of any
representation or warranty made by it in respect of a Loan which materially and
adversely affects the interests of the Securityholders in such Loan. Unless
otherwise specified in the related Prospectus Supplement, if such Seller cannot
cure such breach within 90 days following notice from the Master Servicer or the
Trustee, as the case may be, then such Seller will be obligated either (i) to
repurchase such Loan from the Trust Fund at a price (the "Purchase Price") equal
to 100% of the unpaid principal balance thereof as of the date of the repurchase
plus accrued interest thereon to the first day of the month following the month
of repurchase at the Loan Rate (less any Advances or amount payable as related
servicing compensation if the Seller is the Master Servicer) or (ii) substitute
for such Loan a replacement loan that satisfies the criteria specified in the
related Prospectus Supplement. If a REMIC election is to be made with respect to
a Trust Fund, unless otherwise specified in the related Prospectus Supplement,
the Master Servicer or a holder of the related residual certificate generally
will be obligated to pay any prohibited transaction tax which may arise in
connection with any such repurchase or substitution and the Trustee must have
received a satisfactory opinion of counsel that such repurchase or substitution
will not cause the Trust Fund to lose its status as a REMIC or otherwise subject
the Trust Fund to a prohibited transaction tax. The Master Servicer may be
entitled to reimbursement for any such payment from the assets of the related
Trust Fund or from any holder of the related residual certificate. See
"Description of the Securities--General." Except in those cases in which the
Master Servicer is the Seller, the Master Servicer will be required under the
applicable Agreement to enforce this obligation for the benefit of the Trustee
and the holders of the Securities, following the practices it would employ in
its good faith business judgment were it the owner of such Loan. This repurchase
or substitution obligation will constitute the sole remedy available to holders
of Securities or the Trustee for a breach of representation by a Seller.

Neither the Depositor nor the Master Servicer (unless the Master
Servicer is the Seller) will be obligated to purchase or substitute a Loan if a
Seller defaults on its obligation to do so, and no assurance can be given that
Sellers will carry out their respective repurchase or substitution obligations
with respect to Loans. However, to the extent that a breach of a representation
and warranty of a Seller may also constitute a breach of a representation made
by the Master Servicer, the Master Servicer may have a repurchase or
substitution obligation as described below under "The Agreements--Assignment of
Trust Fund Assets."

SUBSTITUTION OF TRUST FUND ASSETS

Substitution of Trust Fund Assets will be permitted in the event of
breaches of representations and warranties with respect to any original Trust
Fund Asset or in the event the documentation with respect to any Trust Fund
Asset is determined by the Trustee to be incomplete. The period during which
such substitution will be permitted generally will be indicated in the related
Prospectus Supplement. The related Prospectus Supplement will describe any other
conditions upon which Trust Fund Assets may be substituted for Trust Fund Assets
initially included in the Trust Fund.

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USE OF PROCEEDS

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

THE DEPOSITOR

Morgan Stanley ABS Capital I Inc., the Depositor, is a direct,
wholly-owned subsidiary of Morgan Stanley Group Inc. and was incorporated in the
State of Delaware on January 7, 1997. The principal executive offices of the
Depositor are located at 1585 Broadway, 2nd Floor, New York, New York 10036. Its
telephone number is (212) 761-4000. The Depositor does not have, nor is it
expected in the future to have, any significant assets.

Neither the Depositor nor any of the Depositor's affiliates will insure
or guarantee distributions on the Securities of any Series.

DESCRIPTION OF THE SECURITIES

Each Series of Certificates will be issued pursuant to separate
agreements (each, a "Pooling and Servicing Agreement" or a "Trust Agreement")
among the Depositor, the Master Servicer and the Trustee. A form of Pooling and
Servicing Agreement and Trust Agreement has been filed as an exhibit to the
Registration Statement of which this Prospectus forms a part. Each Series of
Notes will be issued pursuant to an indenture (the "Indenture") between the
related Trust Fund and the entity named in the related Prospectus Supplement as
trustee (the "Trustee") with respect to such Series, and the related Loans will
be serviced by the Master Servicer pursuant to a Master Servicing Agreement. A
form of Indenture and Master Servicing Agreement has been filed as an exhibit to
the Registration Statement of which this Prospectus forms a part. A Series of
Securities may consist of both Notes and Certificates. Each Agreement, dated as
of the related Cut-off Date, will be among the Depositor, the Master Servicer
and the Trustee for the benefit of the holders of the Securities of such Series.
The provisions of each Agreement will vary depending upon the nature of the
Securities to be issued thereunder and the nature of the related Trust Fund. The
following are descriptions of the material provisions which may appear in each
Agreement. The Prospectus Supplement for a Series of Securities will describe
any provision of the Agreement relating to such Series that mainly differs from
the description thereof contained in this Prospectus. The descriptions are
subject to, and are qualified in their entirety by reference to, all of the
provisions of the Agreement for each Series of Securities and the applicable
Prospectus Supplement.

GENERAL

Unless otherwise specified in the related Prospectus Supplement, the
Securities of each Series will be issued in book-entry or fully registered form,
in the authorized denominations specified in the related Prospectus Supplement,
will, in the case of Certificates, evidence specified beneficial ownership
interests in, and in the case of Notes, be secured by, the assets of the related
Trust Fund created pursuant to each Agreement and will not be entitled to
payments in respect of the assets included in any other Trust Fund established
by the Depositor. Unless otherwise specified in the related Prospectus
Supplement, the Securities will not represent obligations of the Depositor or
any affiliate of the Depositor. Certain of the Loans may be guaranteed or
insured as set forth in the related Prospectus Supplement. Each Trust Fund

<PAGE> 322

will consist of, to the extent provided in the related Agreement, (i) the Trust
Fund Assets, as from time to time are subject to the related Agreement
(exclusive of any amounts specified in the related Prospectus Supplement
("Retained Interest")), including all payments of interest and principal
received with respect to the Loans after the Cut-off Date (to the extent not
applied in computing the principal balance of such Loans as of the Cut-off Date
(the "Cut-off Date Principal Balance")); (ii) such assets as from time to time
are required to be deposited in the related Security Account, as described below
under "The Agreements--Payments on Loans; Deposits to Security Account"; (iii)
property which secured a Loan and which is acquired on behalf of the
Securityholders by foreclosure or deed in lieu of foreclosure and (iv) any
insurance policies or other forms of credit enhancement required to be
maintained pursuant to the related Agreement. If so specified in the related
Prospectus Supplement, a Trust Fund may also include one or more of the
following: reinvestment income on payments received on the Trust Fund Assets, a
Reserve Account, a mortgage pool insurance policy, a special hazard insurance
policy, a bankruptcy bond, one or more letters of credit, a surety bond,
guaranties or similar instruments or other agreements.

Each Series of Securities will be issued in one or more classes. Each
class of Certificates of a Series will evidence beneficial ownership of a
specified percentage (which may be 0%) or portion of future interest payments
and a specified percentage (which may be 0%) or portion of future principal
payments on, and each class of Notes of a Series will be secured by, the related
Trust Fund Assets. A Series of Securities may include one or more classes that
are senior in right to payment to one or more other classes of Securities of
such Series. Certain Series or classes of Securities may be covered by insurance
policies, surety bonds or other forms of credit enhancement, in each case as
described under "Credit Enhancement" herein and in the related Prospectus
Supplement. One or more classes of Securities of a Series may be entitled to
receive distributions of principal, interest or any combination thereof.
Distributions on one or more classes of a Series of Securities may be made prior
to one or more other classes, after the occurrence of specified events, in
accordance with a schedule or formula or on the basis of collections from
designated portions of the related Trust Fund Assets, in each case as specified
in the related Prospectus Supplement. The timing and amounts of such
distributions may vary among classes or over time as specified in the related
Prospectus Supplement.

Distributions of principal and interest (or, where applicable, of
principal only or interest only) on the related Securities will be made by the
Trustee on each Distribution Date (i.e., monthly, quarterly, semi-annually or at
such other intervals and on the dates as are specified in the related Prospectus
Supplement) in proportion to the percentages specified in the related Prospectus
Supplement. Distributions will be made to the persons in whose names the
Securities are registered at the close of business on the dates specified in the
related Prospectus Supplement (each, a "Record Date"). Distributions will be
made in the manner specified in the related Prospectus Supplement to the persons
entitled thereto at the address appearing in the register maintained for holders
of Securities (the "Security Register"); provided, however, that the final
distribution in retirement of the Securities will be made only upon presentation
and surrender of the Securities at the office or agency of the Trustee or other
person specified in the notice to Securityholders of such final distribution.

The Securities will be freely transferable and exchangeable at the
Corporate Trust Office of the Trustee as set forth in the related Prospectus
Supplement. No service charge will be made for any registration of exchange or
transfer of Securities of any Series, but the Trustee may require payment of a
sum sufficient to cover any related tax or other governmental charge.

Under current law the purchase and holding of a class of Securities
entitled only to a specified percentage of payments of either interest or
principal or a notional amount of either interest or principal on the related
Loans or a class of Securities entitled to receive payments of interest and
principal on the

<PAGE> 323

Loans only after payments to other classes or after the occurrence of certain
specified events by or on behalf of any employee benefit plan or other
retirement arrangement (including individual retirement accounts and annuities,
Keogh plans and collective investment funds in which such plans, accounts or
arrangements are invested) subject to provisions of ERISA or the Code, may
result in prohibited transactions, within the meaning of ERISA and the Code. See
"ERISA Considerations." Unless otherwise specified in the related Prospectus
Supplement, the transfer of Securities of such a class will not be registered
unless the transferee (i) represents that it is not, and is not purchasing on
behalf of, any such plan, account or arrangement or (ii) provides an opinion of
counsel satisfactory to the Trustee and the Depositor that the purchase of
Securities of such a class by or on behalf of such plan, account or arrangement
is permissible under applicable law and will not subject the Trustee, the Master
Servicer or the Depositor to any obligation or liability in addition to those
undertaken in the Agreements.

As to each Series, an election may be made to treat the related Trust
Fund or designated portions thereof as a "real estate mortgage investment
conduit" or "REMIC" as defined in the Code. The related Prospectus Supplement
will specify whether a REMIC election is to be made. Alternatively, the
Agreement for a Series may provide that a REMIC election may be made at the
discretion of the Depositor or the Master Servicer and may only be made if
certain conditions are satisfied. As to any such Series, the terms and
provisions applicable to the making of a REMIC election will be set forth in the
related Prospectus Supplement. If such an election is made with respect to a
Series, one of the classes will be designated as evidencing the sole class of
"residual interests" in the related REMIC, as defined in the Code. All other
classes of Securities in such a Series will constitute "regular interests" in
the related REMIC, as defined in the Code. As to each Series with respect to
which a REMIC election is to be made, the Trustee, the Master Servicer or a
holder of the related residual certificate will be obligated to take all actions
required in order to comply with applicable laws and regulations and will be
obligated to pay any prohibited transaction taxes. The Trustee or the Master
Servicer, unless otherwise provided in the related Prospectus Supplement, will
be entitled to reimbursement for any such payment from the assets of the Trust
Fund or from any holder of the related residual certificate.

INDEXED SECURITIES

To the extent specified in any Prospectus Supplement, any class of
Securities of a given Series may consist of Securities ("Indexed Securities") in
which the principal amount payable at the final scheduled payment date (the
"Indexed Principal Amount") is determined by reference to a measure (the
"Index") which will be related to (i) the difference in the rate of exchange
between United States dollars and a currency or composite currency (the "Indexed
Currency") specified in the applicable Prospectus Supplement (such Indexed
Securities, "Currency Indexed Securities"); (ii) the difference in the price of
a specified commodity (the "Indexed Commodity") on specified dates (such Indexed
Securities, "Commodity Indexed Securities"); (iii) the difference in the level
of a specified stock index (the "Stock Index"), which may be based on U.S. or
foreign stocks, on specified dates (such Indexed Securities, "Stock Indexed
Securities"); or (iv) such other objective price or economic measures as are
described in the applicable Prospectus Supplement. The manner of determining the
Indexed Currency, the Indexed Commodity, the Stock Index or other price or
economic measures used in such determination will be set forth in the applicable
Prospectus Supplement, together with information concerning tax consequences to
the holders of such Indexed Securities.

If the determination of the Indexed Principal Amount of an Indexed
Security is based on an Index calculated or announced by a third party and such
third party either suspends the calculation or announcement of such Index or
changes the basis upon which such Index is calculated (other than changes
consistent with policies in effect at the time such Indexed Security was issued
and permitted changes

<PAGE> 324

described in the applicable Prospectus Supplement), then such Index shall be
calculated for purposes of such Indexed Security by an independent calculation
agent named in the applicable Prospectus Supplement on the same basis, and
subject to the same conditions and controls, as applied to the original third
party. If for any reason such Index cannot be calculated on the same basis and
subject to the same conditions and controls as applied to the original third
party, then the Indexed Principal Amount of such Indexed Security will be
calculated in the manner set forth in the applicable Prospectus Supplement. Any
determination of such independent calculation agent will in the absence of
manifest error be binding on all parties.

Interest on an Indexed Security will be payable based on the amount
designated in the applicable Prospectus Supplement (the "Face Amount"). The
applicable Prospectus Supplement will describe whether the principal amount of
the related Indexed Security, if any, that would be payable upon redemption or
repayment prior to the applicable final scheduled Distribution Date will be the
Face Amount of the Indexed Security, the Indexed Principal Amount of such
Indexed Security at the time of redemption or repayment, or another amount
described in such Prospectus Supplement.

DISTRIBUTIONS ON SECURITIES

General. In general, the method of determining the amount of
distributions on a particular Series of Securities will depend on the type of
credit support, if any, that is used with respect to such Series. See "Credit
Enhancement." Set forth below are descriptions of various methods that may be
used to determine the amount of distributions on the Securities of a particular
Series. The Prospectus Supplement for each Series of Securities will describe
the method to be used in determining the amount of distributions on the
Securities of such Series.

Distributions allocable to principal and interest on the Securities
will be made by the Trustee out of, and only to the extent of, funds in the
related Security Account, including any funds transferred from any Reserve
Account (a "Reserve Account"). As between Securities of different classes and as
between distributions of principal (and, if applicable, between distributions of
Principal Prepayments, as defined below, and scheduled payments of principal)
and interest, distributions made on any Distribution Date will be applied as
specified in the related Prospectus Supplement. The Prospectus Supplement will
also describe the method for allocating the distributions among Securities of a
particular class.

Available Funds. All distributions on the Securities of each Series on
each Distribution Date will be made from the Available Funds described below, in
accordance with the terms described in the related Prospectus Supplement and
specified in the Agreement. "Available Funds" for each Distribution Date will
generally equal the amount on deposit in the related Security Account on such
Distribution Date (net of related fees and expenses payable by the related Trust
Fund) other than amounts to be held therein for distribution on future
Distribution Dates.

Distributions of Interest. Interest will accrue on the aggregate
principal balance of the Securities (or, in the case of Securities entitled only
to distributions allocable to interest, the aggregate notional amount) of each
class of Securities (the "Class Security Balance") entitled to interest from the
date, at the Pass-Through Rate or interest rate, as applicable (which in either
case may be a rate per annum specified, or calculated in the method described,
in such Prospectus Supplement), and for the periods specified in such Prospectus
Supplement. To the extent funds are available therefor, interest accrued during
each such specified period on each class of Securities entitled to interest
(other than a class of Securities that provides for interest that accrues, but
is not currently payable, referred to hereafter as "Accrual Securities") will be
distributable on the Distribution Dates specified in the related Prospectus

<PAGE> 325

Supplement until the aggregate Class Security Balance of the Securities of such
class has been distributed in full or, in the case of Securities entitled only
to distributions allocable to interest, until the aggregate notional amount of
such Securities is reduced to zero or for the period of time designated in the
related Prospectus Supplement. The original Class Security Balance of each
Security will equal the aggregate distributions allocable to principal to which
such Security is entitled. Distributions allocable to interest on each Security
that is not entitled to distributions allocable to principal will be calculated
based on the notional amount of such Security. The notional amount of a Security
will not evidence an interest in or entitlement to distributions allocable to
principal but will be used solely for convenience in expressing the calculation
of interest and for certain other purposes.

Interest payable on the Securities of a Series on a Distribution Date
will include all interest accrued during the period specified in the related
Prospectus Supplement. In the event interest accrues over a period ending two or
more days prior to a Distribution Date, the effective yield to Securityholders
will be reduced from the yield that would otherwise be obtainable if interest
payable on the Security were to accrue through the day immediately preceding
such Distribution Date, and the effective yield (at par) to Securityholders will
be less than the indicated coupon rate.

With respect to any class of Accrual Securities, if specified in the
related Prospectus Supplement, any interest that has accrued but is not paid on
a given Distribution Date will be added to the aggregate Class Security Balance
of such class of Securities on that Distribution Date. Distributions of interest
on any class of Accrual Securities will commence only after the occurrence of
the events specified in such Prospectus Supplement. Prior to such time, the
beneficial ownership interest in the Trust Fund or the principal balance, as
applicable, of such class of Accrued Securities, as reflected in the aggregate
Class Security Balance of such class of Accrual Securities, will increase on
each Distribution Date by the amount of interest that accrued on such class of
Accrual Securities during the preceding interest accrual period but that was not
required to be distributed to such class on such Distribution Date. Any such
class of Accrual Securities will thereafter accrue interest on its outstanding
Class Security Balance as so adjusted.

Distributions of Principal. The related Prospectus Supplement will
specify the method by which the amount of principal to be distributed on the
Securities on each Distribution Date will be calculated and the manner in which
such amount will be allocated among the classes of Securities entitled to
distributions of principal. The aggregate Class Security Balance of any class of
Securities entitled to distributions of principal generally will be the
aggregate original Class Security Balance of such class of Securities specified
in such Prospectus Supplement, reduced by all distributions reported to the
holders of such Securities as allocable to principal and, (i) in the case of
Accrual Securities, unless otherwise specified in the related Prospectus
Supplement, increased by all interest accrued but not then distributable on such
Accrual Securities and (ii) in the case of adjustable rate Securities, subject
to the effect of negative amortization, if applicable.

If so provided in the related Prospectus Supplement, one or more
classes of Securities will be entitled to receive all or a disproportionate
percentage of the payments of principal which are received from borrowers,
including payments received in advance of their scheduled due dates and are not
accompanied by amounts representing scheduled interest due after the month of
such payments ("Principal Prepayments") in the percentages and under the
circumstances or for the periods specified in such Prospectus Supplement. Any
such allocation of principal payments to such class or classes of Securities
will have the effect of accelerating the amortization of such Securities while
increasing the interests evidenced by one or more other classes of Securities in
the Trust Fund. Increasing the interests of the

<PAGE> 326

other classes of Securities relative to that of certain Securities is intended
to preserve the availability of the subordination provided by such other
Securities. See "Credit Enhancement--Subordination."

Unscheduled Distributions. If specified in the related Prospectus
Supplement, the Securities will be subject to receipt of distributions before
the next scheduled Distribution Date under the circumstances and in the manner
described below and in such Prospectus Supplement. If applicable, the Trustee
will be required to make such unscheduled distributions on the day and in the
amount specified in the related Prospectus Supplement if, due to substantial
payments of principal (including Principal Prepayments) on the Trust Fund
Assets, the Trustee or the Master Servicer determines that the funds available
or anticipated to be available from the Security Account and, if applicable, any
Reserve Account, may be insufficient to make required distributions on the
Securities on such Distribution Date. Unless otherwise specified in the related
Prospectus Supplement, the amount of any such unscheduled distribution that is
allocable to principal will not exceed the amount that would otherwise have been
required to be distributed as principal on the Securities on the next
Distribution Date. Unless otherwise specified in the related Prospectus
Supplement, the unscheduled distributions will include interest at the
applicable Pass-Through Rate (if any) or interest rate (if any) on the amount of
the unscheduled distribution allocable to principal for the period and to the
date specified in such Prospectus Supplement.

ADVANCES

To the extent provided in the related Prospectus Supplement, the Master
Servicer will be required to advance on or before each Distribution Date (from
its own funds, funds advanced by Sub-Servicers or funds held in the Security
Account for future distributions to the holders of Securities of the related
Series), an amount equal to the aggregate of payments of interest and/or
principal that were delinquent on the related Determination Date (as such term
is defined in the related Prospectus Supplement) and were not advanced by any
Sub-Servicer, net of the Servicing Fee if so specified in the related Prospectus
Supplement, subject to the Master Servicer's determination that such advances
may be recoverable out of late payments by borrowers, Liquidation Proceeds,
Insurance Proceeds or otherwise. In the case of Cooperative Loans, the Master
Servicer also may be required to advance any unpaid maintenance fees and other
charges under the related proprietary leases as specified in the related
Prospectus Supplement. In addition, to the extent provided in the related
Prospectus Supplement, a cash account may be established to provide for Advances
to be made in the event of certain Trust Fund Assets payment defaults or
collection shortfalls.

In making Advances, the Master Servicer will endeavor to maintain a
regular flow of scheduled interest and principal payments to holders of the
Securities, rather than to guarantee or insure against losses. If Advances are
made by the Master Servicer from cash being held for future distribution to
Securityholders, the Master Servicer will replace such funds on or before any
future Distribution Date to the extent that funds in the applicable Security
Account on such Distribution Date would be less than the amount required to be
available for distributions to Securityholders on such date. Any Master Servicer
funds advanced will be reimbursable to the Master Servicer out of recoveries on
the specific Loans with respect to which such Advances were made (e.g., late
payments made by the related borrower, any related Insurance Proceeds,
Liquidation Proceeds or proceeds of any Loan purchased by the Depositor, a
Sub-Servicer or a Seller pursuant to the related Agreement). Advances by the
Master Servicer (and any advances by a Sub-Servicer) also will be reimbursable
to the Master Servicer (or Sub-Servicer) from cash otherwise distributable to
Securityholders (including the holders of Senior Securities) to the extent that
the Master Servicer determines that any such Advances previously made are not
ultimately recoverable as described above. To the extent provided in the related
Prospectus Supplement, the Master Servicer also will be obligated to make
Advances, to the extent recoverable out

<PAGE> 327

of Insurance Proceeds, Liquidation Proceeds or otherwise, in respect of certain
taxes and insurance premiums not paid by borrowers on a timely basis. Funds so
advanced are reimbursable to the Master Servicer to the extent permitted by the
related Agreement. The obligations of the Master Servicer to make advances may
be supported by a cash advance reserve fund, a surety bond or other arrangement,
in each case as described in the related Prospectus Supplement.

Unless otherwise specified in the related Prospectus Supplement, in the
event the Master Servicer or a Sub-Servicer fails to make a required Advance,
the Trustee will be obligated to make such Advance in its capacity as successor
servicer. If the Trustee makes such an Advance, it will be entitled to be
reimbursed for such Advance to the same extent and degree as the Master Servicer
or a Sub-Servicer is entitled to be reimbursed for Advances. See
"--Distributions on Securities" above.

REPORTS TO SECURITYHOLDERS

Prior to or concurrently with each distribution on a Distribution Date,
the Master Servicer or the Trustee will furnish to each Securityholder of record
of the related Series a statement setting forth, to the extent applicable to
such Series of Securities, among other things:

(i) the amount of such distribution allocable to principal,
separately identifying the aggregate amount of any Principal
Prepayments and if so specified in the related Prospectus Supplement,
any applicable prepayment penalties included therein;

(ii) the amount of such distribution allocable to interest;

(iii) the amount of any Advance;

(iv) the aggregate amount (a) otherwise allocable to the
Subordinated Securityholders on such Distribution Date, and (b)
withdrawn from the Reserve Account, if any, that is included in the
amounts distributed to the Senior Securityholders;

(v) the outstanding principal balance or notional amount of
each class of the related Series after giving effect to the
distribution of principal on such Distribution Date;

(vi) the percentage of principal payments on the Loans
(excluding prepayments), if any, which each such class will be entitled
to receive on the following Distribution Date;

(vii) the percentage of Principal Prepayments on the Loans,
if any, which each such class will be entitled to receive on the
following Distribution Date;

(viii) the related amount of the servicing compensation
retained or withdrawn from the Security Account by the Master Servicer,
and the amount of additional servicing compensation received by the
Master Servicer attributable to penalties, fees, excess Liquidation
Proceeds and other similar charges and items;

(ix) the number and aggregate principal balances of Loans
(A) delinquent (exclusive of Loans in foreclosure) (1) 1 to 30 days,
(2) 31 to 60 days, (3) 61 to 90 days and (4) 91 or more days and (B) in
foreclosure and delinquent (1) 1 to 30 days, (2) 31 to 60 days, (3) 61
to 90 days and (4) 91 or more days, as of the close of business on the
last day of the calendar month preceding such Distribution Date;

<PAGE> 328

(x) the book value of any real estate acquired through
foreclosure or grant of a deed in lieu of foreclosure;

(xi) the Pass-Through Rate or interest rate, as
applicable, if adjusted from the date of the last statement, of any
such class expected to be applicable to the next distribution to such
class;

(xii) if applicable, the amount remaining in any Reserve
Account at the close of business on the Distribution Date;

(xiii) the Pass-Through Rate or interest rate, as
applicable, as of the day prior to the immediately preceding
Distribution Date; and

(xiv) any amounts remaining under letters of credit, pool
policies or other forms of credit enhancement.

Where applicable, any amount set forth above may be expressed as a
dollar amount per single Security of the relevant class having the Percentage
Interest specified in the related Prospectus Supplement. The report to
Securityholders for any Series of Securities may include additional or other
information of a similar nature to that specified above.

In addition, within a reasonable period of time after the end of each
calendar year, the Master Servicer or the Trustee will mail to each
Securityholder of record at any time during such calendar year a report (a) as
to the aggregate of amounts reported pursuant to (i) and (ii) above for such
calendar year or, in the event such person was a Securityholder of record during
a portion of such calendar year, for the applicable portion of such year and (b)
such other customary information as may be deemed necessary or desirable for
Securityholders to prepare their tax returns.

CATEGORIES OF CLASSES OF SECURITIES

The Securities of any Series may be comprised of one or more classes.
Such classes, in general, fall into different categories. The following chart
identifies and generally defines certain of the more typical categories. The
Prospectus Supplement for a series of Securities may identify the classes which
comprise such Series by reference to the following categories.

<TABLE>
<CAPTION>
CATEGORIES OF CLASSES DEFINITION
- --------------------- ----------

Principal Types
- ---------------
<S> <C>
Accretion Directed................................... A class that receives principal payments from the accreted
interest from specified Accrual classes. An Accretion
Directed class also may receive principal payments from
principal paid on the underlying Trust Fund Assets for the
related Series.

Component Securities................................. A class consisting of "Components." The Components of a class
of Component Securities may have different principal and/or
interest payment characteristics but together constitute a
single class. Each Component of

</TABLE>
54

<PAGE> 329

<TABLE>
<S> <C>
a class of Component Securities may be identified as falling
into one or more of the categories in this chart.

Notional Amount Securities........................... A class having no principal balance and bearing interest on the
related notional amount. The notional amount is used for
purposes of the determination of interest distributions.

Planned Principal Class
(also sometimes
referred to as "PACs")............................... A class that is designed to receive principal payments using a
predetermined principal balance schedule derived by assuming
two constant prepayment rates for the underlying Trust Fund
Assets. These two rates are the endpoints for the "structuring
range" for the Planned Principal Class. The Planned Principal
Classes in any Series of Securities may be subdivided into
different categories (e.g., Primary Planned Principal Classes,
Secondary Planned Principal Classes and so forth) having
different effective structuring ranges and different principal
payment priorities. The structuring range for the Secondary
Planned Principal Class of a Series of Securities will be
narrower than that for the Primary Planned Principal Class of
such Series.

Scheduled Principal Class............................ A class that is designed to receive principal payments using a
predetermined principal balance schedule but is not designated
as a Planned Principal Class or Targeted Principal Class. In
many cases, the schedule is derived by assuming two constant
prepayment rates for the underlying Trust Fund Assets. These
two rates are the endpoints for the "structuring range" for the
Scheduled Principal Class.

Sequential Pay Class................................. Classes that receive principal payments in a prescribed
sequence, that do not have predetermined principal balance
schedules and that under all circumstances receive payments of
principal continuously from the first Distribution Date on
which they receive principal until they are retired. A single
class that receives principal payments before or after all
other classes in the same Series of Securities may be
identified as a Sequential Pay Class.

Strip ............................................... A class that receives a constant proportion, or "strip," of the
principal payments on the underlying Trust Fund Assets.

</TABLE>

<PAGE> 330

<TABLE>
<S> <C>
Support Class (also
sometimes referred to
as "companion classes").............................. A class that receives principal payments on any Distribution
Date only if scheduled payments have been made on specified
Planned Principal Classes, Targeted Principal Classes and/or
Scheduled Principal Classes on such Distribution Date.

Targeted Principal Class
(also sometimes
referred to as "TACs")............................... A class that is designed to receive principal payments using a
predetermined principal balance schedule derived by assuming a
single constant prepayment rate for the underlying Trust Fund
Assets.

Interest Types
- --------------

Fixed Rate ................................... A class with an interest rate that is fixed throughout the life
of the class.

Floating Rate ................................... A class with an interest rate that resets periodically based
upon a designated index and that varies directly with changes
in such index as specified in the related Prospectus
Supplement. Interest payable to a Floating Rate class on a
Distribution Date may be subject to a cap based on the amount
of funds available to pay interest on such Distribution Date.

Inverse Floating Rate................................ A class with an interest rate that resets periodically based
upon a designated index as specified in the related Prospectus
Supplement and that varies inversely with changes in such
index.

Variable Rate ................................... A class with an interest rate that resets periodically and is
calculated by reference to the rate or rates of interest
applicable to specified assets or instruments (e.g., the Loan
Rates borne by the underlying Loans).

Auction Rate ................................... A class with an interest rate that resets periodically to an
auction rate that is calculated on the basis of auction
procedures described in the related Prospectus Supplement.

Interest Only ................................... A class that receives some or all of the interest payments made
on the underlying Trust Fund Assets or other assets of the
Trust Fund and little or no principal. Interest Only classes
have either a nominal principal balance or a notional amount.
A nominal principal balance represents actual principal that
will be paid on

</TABLE>

<PAGE> 331

<TABLE>
<S> <C>
the class. It is referred to as nominal since it is extremely
small compared to other classes. A notional amount is the
amount used as a reference to calculate the amount of interest
due on an Interest Only class that is not entitled to any
distributions in respect of principal.

Principal Only ................................... A class that does not bear interest and is entitled to receive
only distributions in respect of principal.

Partial Accrual ................................... A class that accretes a portion of the amount of accrued
interest thereon, which amount will be added to the principal
balance of such class on each applicable Distribution Date,
with the remainder of such accrued interest to be distributed
currently as interest on such class. Such accretion may
continue until a specified event has occurred or until such
Partial Accrual class is retired.

Accrual ........................................... A class that accretes the amount of accrued interest otherwise
distributable on such class, which amount will be added as
principal to the principal balance of such class on each
applicable Distribution Date. Such accretion may continue
until some specified event has occurred or until such Accrual
Class is retired.
</TABLE>

INDICES APPLICABLE TO FLOATING RATE AND INVERSE FLOATING RATE CLASSES

Unless otherwise specified in the related Prospectus Supplement, the
indices applicable to Floating Rate and Inverse Floating Rate Classes either
will be LIBOR, the Eleventh District Cost of Funds Index, the Treasury Index or
the Prime Rate, in each case calculated as described below.

LIBOR

Unless otherwise specified in the related Prospectus Supplement, on the
LIBOR Determination Date (as such term is defined in the related Prospectus
Supplement) for each class of Securities of a Series as to which the applicable
interest rate is determined by reference to an index denominated as LIBOR, the
Person designated in the related Agreement (the "Calculation Agent") will
determine LIBOR by reference to the quotations, as set forth on the Reuters
Screen LIBO Page (as defined in the International Swap Dealers Association, Inc.
Code of Standard Wording, Assumptions and Provisions for Swaps, 1986 Edition),
offered by the principal London office of each of the designated reference banks
meeting the criteria set forth below (the "Reference Banks") for making
one-month United States dollar deposits in leading banks in the London Interbank
market, as of 11:00 a.m. (London time) on such LIBOR Determination Date. In lieu
of relying on the quotations for those Reference Banks that appear at such time
on the Reuters Screen LIBO Page, the Calculation Agent will request each of the
Reference Banks to provide such offered quotations at such time.

LIBOR will be established by the Calculation Agent on each LIBOR
Determination Date as follows:

<PAGE> 332

(a) If on any LIBOR Determination Date two or more Reference
Banks provide such offered quotations, LIBOR for the next Interest
Accrual Period (as such term is defined in the related Prospectus
Supplement) shall be the arithmetic mean of such offered quotations
(rounded upwards if necessary to the nearest whole multiple of 1/32%).

(b) If on any LIBOR Determination Date only one or none of the
Reference Banks provides such offered quotations, LIBOR for the next
Interest Accrual Period shall be whichever is the higher of (i) LIBOR
as determined on the previous LIBOR Determination Date or (ii) the
Reserve Interest Rate. The "Reserve Interest Rate" shall be the rate
per annum which the Calculation Agent determines to be either (i) the
arithmetic mean (rounded upwards if necessary to the nearest whole
multiple of 1/32%) of the one-month United States dollar lending rates
that New York City banks selected by the Calculation Agent are quoting,
on the relevant LIBOR Determination Date, to the principal London
offices of at least two of the Reference Banks to which such quotations
are, in the opinion of the Calculation Agent, being so made, or (ii) in
the event that the Calculation Agent can determine no such arithmetic
mean, the lowest one-month United States dollar lending rate which New
York City banks selected by the Calculation Agent are quoting on such
LIBOR Determination Date to leading European banks.

(c) If on any LIBOR Determination Date for a class specified
in the related Prospectus Supplement, the Calculation Agent is required
but is unable to determine the Reserve Interest Rate in the manner
provided in paragraph (b) above, LIBOR for the next Interest Accrual
Period shall be LIBOR as determined on the preceding LIBOR
Determination Date, or, in the case of the first LIBOR Determination
Date, LIBOR shall be deemed to be the per annum rate specified as such
in the related Prospectus Supplement.

Each Reference Bank (i) shall be a leading bank engaged in transactions
in Eurodollar deposits in the international Eurocurrency market; (ii) shall not
control, be controlled by, or be under common control with the Calculation
Agent; and (iii) shall have an established place of business in London. If any
such Reference Bank should be unwilling or unable to act as such or if
appointment of any such Reference Bank is terminated, another leading bank
meeting the criteria specified above will be appointed.

The establishment of LIBOR on each LIBOR Determination Date by the
Calculation Agent and its calculation of the rate of interest for the applicable
classes for the related Interest Accrual Period shall (in the absence of
manifest error) be final and binding.

COFI

The Eleventh District Cost of Funds Index is designed to represent the
monthly weighted average cost of funds for savings institutions in Arizona,
California and Nevada that are member institutions of the Eleventh Federal Home
Loan Bank District (the "Eleventh District"). The Eleventh District Cost of
Funds Index for a particular month reflects the interest costs paid on all types
of funds held by Eleventh District member institutions and is calculated by
dividing the cost of funds by the average of the total amount of those funds
outstanding at the end of that month and of the prior month and annualizing and
adjusting the result to reflect the actual number of days in the particular
month. If necessary, before these calculations are made, the component figures
are adjusted by the Federal Home Loan Bank of San Francisco ("FHLBSF") to
neutralize the effect of events such as member institutions leaving the Eleventh
District or acquiring institutions outside the Eleventh District. The Eleventh
District Cost of Funds Index is weighted to reflect the relative amount of each
type of funds held at the end of the relevant month. The major components of
funds of Eleventh District member institutions are: (i) savings deposits, (ii)
time

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deposits, (iii) FHLBSF advances, (iv) repurchase agreements and (v) all other
borrowings. Because the component funds represent a variety of maturities whose
costs may react in different ways to changing conditions, the Eleventh District
Cost of Funds Index does not necessarily reflect current market rates.

A number of factors affect the performance of the Eleventh District
Cost of Funds Index, which may cause it to move in a manner different from
indices tied to specific interest rates, such as United States Treasury bills or
LIBOR. Because the liabilities upon which the Eleventh District Cost of Funds
Index is based were issued at various times under various market conditions and
with various maturities, the Eleventh District Cost of Funds Index may not
necessarily reflect the prevailing market interest rates on new liabilities of
similar maturities. Moreover, as stated above, the Eleventh District Cost of
Funds Index is designed to represent the average cost of funds for Eleventh
District savings institutions for the month prior to the month in which it is
due to be published. Additionally, the Eleventh District Cost of Funds Index may
not necessarily move in the same direction as market interest rates at all
times, since as longer term deposits or borrowings mature and are renewed at
prevailing market interest rates, the Eleventh District Cost of Funds Index is
influenced by the differential between the prior and the new rates on those
deposits or borrowings. In addition, movements of the Eleventh District Cost of
Funds Index, as compared to other indices tied to specific interest rates, may
be affected by changes instituted by the FHLBSF in the method used to calculate
the Eleventh District Cost of Funds Index.

The FHLBSF publishes the Eleventh District Cost of Funds Index in its
monthly Information Bulletin. Any individual may request regular receipt by mail
of Information Bulletins by writing the Federal Home Loan Bank of San Francisco,
P.O. Box 7948, 600 California Street, San Francisco, California 94120, or by
calling (415) 616-1000. The Eleventh District Cost of Funds Index may also be
obtained by calling the FHLBSF at (415) 616-2600.

The FHLBSF has stated in its Information Bulletin that the Eleventh
District Cost of Funds Index for a month "will be announced on or near the last
working day" of the following month and also has stated that it "cannot
guarantee the announcement" of such index on an exact date. So long as such
index for a month is announced on or before the tenth day of the second
following month, the interest rate for each class of Securities of a Series as
to which the applicable interest rate is determined by reference to an index
denominated as COFI (each, a class of "COFI Securities") for the Interest
Accrual Period commencing in such second following month will be based on the
Eleventh District Cost of Funds Index for the second preceding month. If
publication is delayed beyond such tenth day, such interest rate will be based
on the Eleventh District Cost of Funds Index for the third preceding month.

Unless otherwise specified in the related Prospectus Supplement, if on
the tenth day of the month in which any Interest Accrual Period commences for a
class of COFI Securities the most recently published Eleventh District Cost of
Funds Index relates to a month prior to the third preceding month, the index for
such current Interest Accrual Period and for each succeeding Interest Accrual
Period will, except as described in the next to last sentence of this paragraph,
be based on the National Monthly Median Cost of Funds Ratio to SAIF-Insured
Institutions (the "National Cost of Funds Index") published by the Office of
Thrift Supervision (the "OTS") for the third preceding month (or the fourth
preceding month if the National Cost of Funds Index for the third preceding
month has not been published on such tenth day of an Interest Accrual Period).
Information on the National Cost of Funds Index may be obtained by writing the
OTS at 1700 G Street, N.W., Washington, D.C. 20552 or calling (202) 906-6677,
and the current National Cost of Funds Index may be obtained by calling (202)
906-6988. If on any such tenth day of the month in which an Interest Accrual
Period commences the most recently published National Cost of Funds Index
relates to a month prior to the fourth preceding month, the applicable index for
such Interest Accrual Period and each succeeding Interest Accrual Period will be

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based on LIBOR, as determined by the Calculation Agent in accordance with the
Agreement relating to such Series of Securities. A change of index from the
Eleventh District Cost of Funds Index to an alternative index will result in a
change in the index level, and, particularly if LIBOR is the alternative index,
could increase its volatility.

The establishment of COFI by the Calculation Agent and its calculation
of the rates of interest for the applicable classes for the related Interest
Accrual Period shall (in the absence of manifest error) be final and binding.

Treasury Index

Unless otherwise specified in the related Prospectus Supplement, on the
Treasury Index Determination Date (as such term is defined in the related
Prospectus Supplement) for each class of Securities of a Series as to which the
applicable interest rate is determined by reference to an index denominated as a
Treasury Index, the Calculation Agent will ascertain the Treasury Index for
Treasury securities of the maturity and for the period (or, if applicable, date)
specified in the related Prospectus Supplement. Unless otherwise specified in
the related Prospectus Supplement, the Treasury Index for any period means the
average of the yield for each business day during the period specified therein
(and for any date means the yield for such date), expressed as a per annum
percentage rate, on (i) U.S. Treasury securities adjusted to the "constant
maturity" (as further described below) specified in such Prospectus Supplement
or (ii) if no "constant maturity" is so specified, U.S. Treasury securities
trading on the secondary market having the maturity specified in such Prospectus
Supplement, in each case as published by the Federal Reserve Board in its
Statistical Release No. H.15(519). Statistical Release No. H.15(519) is
published on Monday or Tuesday of each week and may be obtained by writing or
calling the Publications Department at the Board of Governors of the Federal
Reserve System, 21st and C Streets, Washington, D.C. 20551 (202) 452-3244. If
the Calculation Agent has not yet received Statistical Release No. H.15(519) for
such week, then it will use such Statistical Release from the immediately
preceding week.

Yields on U.S. Treasury securities at "constant maturity" are derived
from the U.S. Treasury's daily yield curve. This curve, which relates the yield
on a security to its time to maturity, is based on the closing market bid yields
on actively traded Treasury securities in the over-the-counter market. These
market yields are calculated from composites of quotations reported by five
leading U.S. Government securities dealers to the Federal Reserve Bank of New
York. This method provides a yield for a given maturity even if no security with
that exact maturity is outstanding. In the event that the Treasury Index is no
longer published, a new index based upon comparable data and methodology will be
designated in accordance with the Agreement relating to the particular Series of
Securities. The Calculation Agent's determination of the Treasury Index, and its
calculation of the rates of interest for the applicable classes for the related
Interest Accrual Period, shall (in the absence of manifest error) be final and
binding.

Prime Rate

Unless otherwise specified in the related Prospectus Supplement, on the
Prime Rate Determination Date (as such term is defined in the related Prospectus
Supplement) for each class of Securities of a Series as to which the applicable
interest rate is determined by reference to an index denominated as the Prime
Rate, the Calculation Agent will ascertain the Prime Rate for the related
Interest Accrual Period. Unless otherwise specified in the related Prospectus
Supplement, the Prime Rate for an Interest Accrual Period will be the "Prime
Rate" as published in the "Money Rates" section of The Wall Street Journal (or
if not so published, the "Prime Rate" as published in a newspaper of general
circulation selected by the

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Calculation Agent in its sole discretion) on the related Prime Rate
Determination Date. If a prime rate range is given, then the average of such
range will be used. In the event that the Prime Rate is no longer published, a
new index based upon comparable data and methodology will be designated in
accordance with the Agreement relating to the particular Series of Securities.
The Calculation Agent's determination of the Prime Rate and its calculation of
the rates of interest for the related Interest Accrual Period shall (in the
absence of manifest error) be final and binding.

BOOK-ENTRY REGISTRATION OF SECURITIES

As described in the related Prospectus Supplement, if not issued in
fully registered form, each class of Securities will be registered as book-entry
certificates (the "Book-Entry Securities"). Persons acquiring beneficial
ownership interests in the Securities ("Security Owners") will hold their
Securities through the Depository Trust Company ("DTC") in the United States, or
CEDEL or Euroclear (in Europe) if they are participants of such systems, or
indirectly through organizations which are participants in such systems. The
Book-Entry Securities will be issued in one or more certificates which equal the
aggregate principal balance of the Securities and will initially be registered
in the name of Cede & Co., the nominee of DTC. CEDEL and Euroclear will hold
omnibus positions on behalf of their participants through customers' securities
accounts in CEDEL's and Euroclear's names on the books of their respective
depositaries which in turn will hold such positions in customers' securities
accounts in the depositaries' names on the books of DTC. Citibank, N.A., will
act as depositary for CEDEL and The Chase Manhattan Bank will act as depositary
for Euroclear (in such capacities, individually the "Relevant Depositary" and
collectively the "European Depositaries"). Except as described below, no person
acquiring a Book-Entry Security (each, a "beneficial owner") will be entitled to
receive a physical certificate representing such Security (a "Definitive
Security"). Unless and until Definitive Securities are issued, it is anticipated
that the only "Securityholders" of the Securities will be Cede & Co., as nominee
of DTC. Security Owners are only permitted to exercise their rights indirectly
through Participants and DTC.

The beneficial owner's ownership of a Book-Entry Security will be
recorded on the records of the brokerage firm, bank, thrift institution or other
financial intermediary (each, a "Financial Intermediary") that maintains the
beneficial owner's account for such purpose. In turn, the Financial
Intermediary's ownership of such Book-Entry Security will be recorded on the
records of DTC (or of a participating firm that acts as agent for the Financial
Intermediary, whose interest will in turn be recorded on the records of DTC, if
the beneficial owner's Financial Intermediary is not a DTC participant, and on
the records of CEDEL or Euroclear, as appropriate).

Security Owners will receive all distributions of principal of, and
interest on, the Securities from the Trustee through DTC and DTC participants.
While the Securities are outstanding (except under the circumstances described
below), under the rules, regulations and procedures creating and affecting DTC
and its operations (the "Rules"), DTC is required to make book-entry transfers
among Participants on whose behalf it acts with respect to the Securities and is
required to receive and transmit distributions of principal of, and interest on,
the Securities. Participants and indirect participants with whom Security Owners
have accounts with respect to Securities are similarly required to make
book-entry transfers and receive and transmit such distributions on behalf of
their respective Security Owners. Accordingly, although Security Owners will not
possess certificates, the Rules provide a mechanism by which Security Owners
will receive distributions and will be able to transfer their interest.

Security Owners will not receive or be entitled to receive certificates
representing their respective interests in the Securities, except under the
limited circumstances described below. Unless and until

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Definitive Securities are issued, Security Owners who are not Participants may
transfer ownership of Securities only through Participants and indirect
participants by instructing such Participants and indirect participants to
transfer Securities, by book-entry transfer, through DTC for the account of the
purchasers of such Securities, which account is maintained with their respective
Participants. Under the Rules and in accordance with DTC's normal procedures,
transfers of ownership of Securities will be executed through DTC and the
accounts of the respective Participants at DTC will be debited and credited.
Similarly, the Participants and indirect participants will make debits or
credits, as the case may be, on their records on behalf of the selling and
purchasing Security Owners.

Because of time zone differences, credits of securities received in
CEDEL or Euroclear as a result of a transaction with a Participant will be made
during subsequent securities settlement processing and dated the business day
following the DTC settlement date. Such credits or any transactions in such
securities settled during such processing will be reported to the relevant
Euroclear or CEDEL Participants on such business day. Cash received in CEDEL or
Euroclear as a result of sales of securities by or through a CEDEL Participant
(as defined herein) or Euroclear Participant (as defined herein) to a DTC
Participant will be received with value on the DTC settlement date but will be
available in the relevant CEDEL or Euroclear cash account only as of the
business day following settlement in DTC.

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

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Euroclear was created in 1968 to hold securities for its participants
("Euroclear Participants") and to clear and settle transactions between
Euroclear Participants through simultaneous electronic book-entry delivery
against payment, thereby eliminating the need for physical movement of
certificates and any risk from lack of simultaneous transfers of securities and
cash. Transactions may be settled in any of 32 currencies, including United
States dollars. Euroclear includes various other services, including securities
lending and borrowing and interfaces with domestic markets in several countries
generally similar to the arrangements for cross-market transfers with DTC
described above. Euroclear is operated by the Brussels, Belgium office of Morgan
Guaranty Trust Company of New York ("Morgan" and in such capacity, the
"Euroclear Operator"), under contract with Euroclear Clearance Systems S.C., a
Belgian cooperative corporation (the "Belgian Cooperative"). All operations are
conducted by Morgan, and all Euroclear securities clearance accounts and
Euroclear cash accounts are accounts with the Euroclear Operator, not the
Belgian Cooperative. The Belgian Cooperative establishes policy for Euroclear on
behalf of Euroclear Participants. Euroclear Participants include banks
(including central banks), securities brokers and dealers and other professional
financial intermediaries. Indirect access to Euroclear is also available to
other firms that clear through or maintain a custodial relationship with a
Euroclear Participant, either directly or indirectly.

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

Securities clearance accounts and cash accounts with Morgan are
governed by the Terms and Conditions Governing Use of Euroclear and the related
Operating Procedures of the Euroclear System and applicable Belgian law
(collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within Euroclear, withdrawals of securities and
cash from Euroclear, and receipts of payments with respect to securities in
Euroclear. All securities in Euroclear are held on a fungible basis without
attribution of specific certificates to specific securities clearance accounts.
The Euroclear Operator acts under the Terms and Conditions only on behalf of
Euroclear Participants, and has no record of or relationship with persons
holding through Euroclear Participants.

Under a book-entry format, beneficial owners of the Book-Entry
Securities may experience some delay in their receipt of payments, since such
payments will be forwarded by the Trustee to Cede & Co., as nominee of DTC.
Distributions with respect to Securities held through CEDEL or Euroclear will be
credited to the cash accounts of CEDEL Participants or Euroclear Participants in
accordance with the relevant system's rules and procedures, to the extent
received by the Relevant Depositary. Such distributions will be subject to tax
reporting in accordance with relevant United States tax laws and regulations.
See "Federal Income Tax Consequences--Tax Treatment of Foreign Investors" and
"--Tax Consequences to Holders of the Notes--Backup Withholding." Because DTC
can only act on behalf of Financial Intermediaries, the ability of a beneficial
owner to pledge Book-Entry Securities to persons or entities that do not
participate in the Depository system, may be limited due to the lack of physical
certificates for such Book-Entry Securities. In addition, issuance of the
Book-Entry Securities in book-entry form may reduce the liquidity of such
Securities in the secondary market since certain potential investors may be
unwilling to purchase Securities for which they cannot obtain physical
certificates.

Monthly and annual reports on the Trust Fund will be provided to Cede &
Co., as nominee of DTC, and may be made available by Cede & Co. to beneficial
owners upon request, in accordance with

<PAGE> 338

the rules, regulations and procedures creating and affecting the Depository, and
to the Financial Intermediaries to whose DTC accounts the Book-Entry Securities
of such beneficial owners are credited.

DTC has advised the Trustee that, unless and until Definitive
Securities are issued, DTC will take any action permitted to be taken by the
holders of the Book-Entry Securities under the applicable Agreement only at the
direction of one or more Financial Intermediaries to whose DTC accounts the
Book-Entry Securities are credited, to the extent that such actions are taken on
behalf of Financial Intermediaries whose holdings include such Book-Entry
Securities. CEDEL or the Euroclear Operator, as the case may be, will take any
other action permitted to be taken by a Securityholder under the Agreement on
behalf of a CEDEL Participant or Euroclear Participant only in accordance with
its relevant rules and procedures and subject to the ability of the Relevant
Depositary to effect such actions on its behalf through DTC. DTC may take
actions, at the direction of the related Participants, with respect to some
Securities which conflict with actions taken with respect to other Securities.

Upon the occurrence of any of the events described in the immediately
preceding paragraph, the Trustee will be required to notify all beneficial
owners of the occurrence of such event and the availability through DTC of
Definitive Securities. Upon surrender by DTC of the global certificate or
certificates representing the Book-Entry Securities and instructions for
re-registration, the Trustee will issue Definitive Securities, and thereafter
the Trustee will recognize the holders of such Definitive Securities as
Securityholders under the applicable Agreement.

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

None of the Master Servicer, the Depositor or the Trustee will have any
responsibility for any aspect of the records relating to or payments made on
account of beneficial ownership interests of the Book-Entry Securities held by
Cede & Co., as nominee of DTC, or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.

CREDIT ENHANCEMENT

GENERAL

Credit enhancement may be provided with respect to one or more classes
of a Series of Securities or with respect to the related Trust Fund Assets.
Credit enhancement may be in the form of a limited financial guaranty policy
issued by an entity named in the related Prospectus Supplement, the
subordination of one or more classes of the Securities of such Series, the
establishment of one or more Reserve Accounts, the use of a
cross-collateralization feature, use of a mortgage pool insurance policy, FHA
Insurance, VA Guarantee, bankruptcy bond, special hazard insurance policy,
surety bond, letter of credit, guaranteed investment contract,
overcollateralization, interest rate swap agreement, interest rate cap agreement
or another method of credit enhancement contemplated herein and described in the
related Prospectus Supplement, or any combination of the foregoing. Unless
otherwise specified in the related Prospectus Supplement, credit enhancement
will not provide protection against all risks of loss and will not guarantee
repayment of the entire principal balance of the Securities and interest
thereon. If losses occur which exceed the amount covered by credit enhancement
or which are not covered by the credit enhancement, Securityholders will bear
their allocable share of any deficiencies.

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SUBORDINATION

If so specified in the related Prospectus Supplement, protection
afforded to holders of one or more classes of Securities of a Series by means of
the subordination feature may be accomplished by the preferential right of
holders of one or more other classes of such Series (the "Senior Securities") to
distributions in respect of scheduled principal, Principal Prepayments, interest
or any combination thereof that otherwise would have been payable to holders of
one or more classes of subordinate Securities (the "Subordinate Securities")
under the circumstances and to the extent specified in the related Prospectus
Supplement. Protection may also be afforded to the holders of Senior Securities
of a Series by: (i) reducing the ownership interest (if applicable) of the
related Subordinated Securities; (ii) a combination of the immediately preceding
sentence and clause (i) above; or (iii) as otherwise described in the related
Prospectus Supplement. If so specified in the related Prospectus Supplement,
delays in receipt of scheduled payments on the Loans and losses on defaulted
Loans may be borne first by the various classes of Subordinated Securities and
thereafter by the various classes of Senior Securities, in each case under the
circumstances and subject to the limitations specified in such Prospectus
Supplement. The aggregate distributions in respect of delinquent payments on the
Loans over the lives of the Securities or at any time, the aggregate losses in
respect of defaulted Loans which must be borne by the Subordinated Securities by
virtue of subordination and the amount of the distributions otherwise
distributable to the Subordinated Securityholders that will be distributable to
Senior Securityholders on any Distribution Date may be limited as specified in
the related Prospectus Supplement. If aggregate distributions in respect of
delinquent payments on the Loans or aggregate losses in respect of such Loans
were to exceed an amount specified in the related Prospectus Supplement, holders
of Senior Securities would experience losses on the Securities.

In addition to or in lieu of the foregoing, if so specified in the
related Prospectus Supplement, all or any portion of distributions otherwise
payable to holders of Subordinated Securities on any Distribution Date may
instead be deposited into one or more Reserve Accounts established with the
Trustee or distributed to holders of Senior Securities. Such deposits may be
made on each Distribution Date, for specified periods or until the balance in
the Reserve Account has reached a specified amount and, following payments from
the Reserve Account to holders of Senior Securities or otherwise, thereafter to
the extent necessary to restore the balance in the Reserve Account to required
levels, in each case as specified in the related Prospectus Supplement. Amounts
on deposit in the Reserve Account may be released to the holders of certain
classes of Securities at the times and under the circumstances specified in such
Prospectus Supplement.

If specified in the related Prospectus Supplement, various classes of
Senior Securities and Subordinated Securities may themselves be subordinate in
their right to receive certain distributions to other classes of Senior and
Subordinated Securities, respectively, through a cross-collateralization
mechanism or otherwise.

As between classes of Senior Securities and as between classes of
Subordinated Securities, distributions may be allocated among such classes (i)
in the order of their scheduled final distribution dates, (ii) in accordance
with a schedule or formula, (iii) in relation to the occurrence of events, or
(iv) otherwise, in each case as specified in the related Prospectus Supplement.
As between classes of Subordinated Securities, payments to holders of Senior
Securities on account of delinquencies or losses and payments to any Reserve
Account will be allocated as specified in the related Prospectus Supplement.

LETTER OF CREDIT

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The letter of credit, if any, with respect to a Series of Securities
will be issued by the bank or financial institution specified in the related
Prospectus Supplement (the "L/C Bank"). Under the letter of credit, the L/C Bank
will be obligated to honor drawings thereunder in an aggregate fixed dollar
amount, net of unreimbursed payments thereunder, equal to the percentage
specified in the related Prospectus Supplement of the aggregate principal
balance of the Loans on the related Cut-off Date or of one or more Classes of
Securities (the "L/C Percentage"). If so specified in the related Prospectus
Supplement, the letter of credit may permit drawings in the event of losses not
covered by insurance policies or other credit support, such as losses arising
from damage not covered by standard hazard insurance policies, losses resulting
from the bankruptcy of a borrower and the application of certain provisions of
the federal Bankruptcy Code, or losses resulting from denial of insurance
coverage due to misrepresentations in connection with the origination of a Loan.
The amount available under the letter of credit will, in all cases, be reduced
to the extent of the unreimbursed payments thereunder. The obligations of the
L/C Bank under the letter of credit for each Series of Securities will expire at
the earlier of the date specified in the related Prospectus Supplement or the
termination of the Trust Fund. See "The Agreements--Termination; Optional
Termination." A copy of the letter of credit for a Series, if any, will be filed
with the Commission as an exhibit to a Current Report on Form 8-K to be filed
within 15 days of issuance of the Securities of the related Series.

INSURANCE POLICIES, SURETY BONDS AND GUARANTIES

If so provided in the Prospectus Supplement for a Series of Securities,
deficiencies in amounts otherwise payable on such Securities or certain classes
thereof will be covered by insurance policies and/or surety bonds provided by
one or more insurance companies or sureties. Such instruments may cover, with
respect to one or more classes of Securities of the related Series, timely
distributions of interest and/or full distributions of principal on the basis of
a schedule of principal distributions set forth in or determined in the manner
specified in the related Prospectus Supplement. In addition, if specified in the
related Prospectus Supplement, a Trust Fund may also include bankruptcy bonds,
special hazard insurance policies, other insurance or guaranties for the purpose
of (i) maintaining timely payments or providing additional protection against
losses on the assets included in such Trust Fund, (ii) paying administrative
expenses or (iii) establishing a minimum reinvestment rate on the payments made
in respect of such assets or principal payment rate on such assets. Such
arrangements may include agreements under which Securityholders are entitled to
receive amounts deposited in various accounts held by the Trustee upon the terms
specified in such Prospectus Supplement. A copy of any such instrument for a
Series will be filed with the Commission as an exhibit to a Current Report on
Form 8-K to be filed with the Commission within 15 days of issuance of the
Securities of the related Series.

OVER-COLLATERALIZATION

If so provided in the Prospectus Supplement for a Series of Securities,
a portion of the interest payment on each Loan may be applied as an additional
distribution in respect of principal to reduce the principal balance of a
certain class or classes of Securities and, thus, accelerate the rate of payment
of principal on such class or classes of Securities.

RESERVE ACCOUNTS

If specified in the related Prospectus Supplement, credit support with
respect to a Series of Securities will be provided by the establishment and
maintenance with the Trustee for such Series of Securities, in trust, of one or
more Reserve Accounts for such Series. The related Prospectus Supplement will
specify whether or not any such Reserve Accounts will be included in the Trust
Fund for such Series.

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The Reserve Account for a Series will be funded (i) by the deposit
therein of cash, United States Treasury securities, instruments evidencing
ownership of principal or interest payments thereon, letters of credit, demand
notes, certificates of deposit or a combination thereof in the aggregate amount
specified in the related Prospectus Supplement, (ii) by the deposit therein from
time to time of certain amounts, as specified in the related Prospectus
Supplement to which the Subordinate Securityholders, if any, would otherwise be
entitled or (iii) in such other manner as may be specified in the related
Prospectus Supplement.

Any amounts on deposit in the Reserve Account and the proceeds of any
other instrument upon maturity will be held in cash or will be invested in
"Permitted Investments" which may include (i) obligations of the United States
or any agency thereof, provided such obligations are backed by the full faith
and credit of the United States; (ii) general obligations of or obligations
guaranteed by any state of the United States or the District of Columbia
receiving the highest long-term debt rating of each Rating Agency rating the
related Series of Securities, or such lower rating as will not result in the
downgrading or withdrawal of the ratings then assigned to such Securities by
each such Rating Agency; (iii) commercial or finance company paper which is then
receiving the highest commercial or finance company paper rating of each such
Rating Agency, or such lower rating as will not result in the downgrading or
withdrawal of the ratings then assigned to such Securities by each such Rating
Agency; (iv) certificates of deposit, demand or time deposits, or bankers'
acceptances issued by any depository institution or trust company incorporated
under the laws of the United States or of any state thereof and subject to
supervision and examination by federal and/or state banking authorities,
provided that the commercial paper and/or long term unsecured debt obligations
of such depository institution or trust company (or in the case of the principal
depository institution in a holding company system, the commercial paper or
long-term unsecured debt obligations of such holding company, but only if
Moody's Investors Service, Inc. ("Moody's") is not a Rating Agency) are then
rated in one of the two highest long-term and the highest short-term ratings of
each such Rating Agency for such securities, or such lower ratings as will not
result in the downgrading or withdrawal of the rating then assigned to such
Securities by any such rating Agency; (iv) demand or time deposits or
certificates of deposit issued by any bank or trust company or savings
institution to the extent that such deposits are fully insured by the FDIC; (v)
guaranteed reinvestment agreements issued by any bank, insurance company or
other corporation containing, at the time of the issuance of such agreements,
such terms and conditions as will not result in the downgrading or withdrawal of
the rating then assigned to such Securities by any such Rating Agency; (vi)
repurchase obligations with respect to any security described in clauses (i) and
(ii) above, in either case entered into with a depository institution or trust
company (acting as principal) described in clause (iv) above; (vii) securities
(other than stripped bonds, stripped coupons or instruments sold at a purchase
price in excess of 115% of the face amount thereof) bearing interest or sold at
a discount and issued by any corporation incorporated under the laws of the
United States or any state thereof which, at the time of such investment, have
one of the two highest ratings of each Rating Agency (except that if the Rating
Agency is Moody's, such rating shall be the highest commercial paper rating of
Moody's for any such securities), or such lower rating as will not result in the
downgrading or withdrawal of the rating then assigned to such Securities by any
such Rating Agency; (viii) interests in any money market fund which at the date
of acquisition of the interests in such fund and throughout the time such
interests are held in such fund has the highest applicable rating by each such
Rating Agency or such lower rating as will not result in the downgrading or
withdrawal of the ratings then assigned to such Securities by each such Rating
Agency; (ix) short term investment funds sponsored by any trust company or
national banking association incorporated under the laws of the United States or
any state thereof which on the date of acquisition has been rated by each such
Rating Agency in their respective highest applicable rating category or such
lower rating as will not result in the downgrading or withdrawal of the ratings
then assigned to such Securities by each such Rating Agency; and (x) such other
investments having a specified

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stated maturity and bearing interest or sold at a discount acceptable to each
Rating Agency as will not result in the downgrading or withdrawal of the rating
then assigned to such Securities by any such Rating Agency; provided, that no
such instrument shall be a Permitted Investment if such instrument evidences the
right to receive interest only payments with respect to the obligations
underlying such instrument; and provided, further, that no investment specified
in clause (x) or clause (xi) above shall be a Permitted Investment for any
Pre-Funding Account or any related Capitalized Interest Account. If a letter of
credit is deposited with the Trustee, such letter of credit will be irrevocable.
Unless otherwise specified in the related Prospectus Supplement, any instrument
deposited therein will name the Trustee, in its capacity as trustee for the
holders of the Securities, as beneficiary and will be issued by an entity
acceptable to each Rating Agency that rates the Securities of the related
Series. Additional information with respect to such instruments deposited in the
Reserve Accounts will be set forth in the related Prospectus Supplement.

Any amounts so deposited and payments on instruments so deposited will
be available for withdrawal from the Reserve Account for distribution to the
holders of Securities of the related Series for the purposes, in the manner and
at the times specified in the related Prospectus Supplement.

POOL INSURANCE POLICIES

If specified in the related Prospectus Supplement, a separate pool
insurance policy ("Pool Insurance Policy") will be obtained for the Pool and
issued by the insurer (the "Pool Insurer") named in such Prospectus Supplement.

Each Pool Insurance Policy will, subject to the limitations described
below, cover loss by reason of default in payment on Loans in the Pool in an
amount equal to a percentage specified in such Prospectus Supplement of the
aggregate principal balance of such Loans on the Cut-off Date which are not
covered as to their entire outstanding principal balances by Primary Mortgage
Insurance Policies. As more fully described below, the Master Servicer will
present claims thereunder to the Pool Insurer on behalf of itself, the Trustee
and the holders of the Securities of the related Series. The Pool Insurance
Policies, however, are not blanket policies against loss, since claims
thereunder may only be made respecting particular defaulted Loans and only upon
satisfaction of certain conditions precedent described below. Unless otherwise
specified in the related Prospectus Supplement, the Pool Insurance Policies will
not cover losses due to a failure to pay or denial of a claim under a Primary
Mortgage Insurance Policy.

Unless otherwise specified in the related Prospectus Supplement, the
Pool Insurance Policy will provide that no claims may be validly presented
unless (i) any required Primary Mortgage Insurance Policy is in effect for the
defaulted Loan and a claim thereunder has been submitted and settled; (ii)
hazard insurance on the related Property has been kept in force and real estate
taxes and other protection and preservation expenses have been paid; (iii) if
there has been physical loss or damage to the Property, it has been restored to
its physical condition (reasonable wear and tear excepted) at the time of
issuance of the policy; and (iv) the insured has acquired good and merchantable
title to the Property free and clear of liens except certain permitted
encumbrances. Upon satisfaction of these conditions, the Pool Insurer will have
the option either (a) to purchase the property securing the defaulted Loan at a
price equal to the principal balance thereof plus accrued and unpaid interest at
the Loan Rate to the date of such purchase and certain expenses incurred by the
Master Servicer on behalf of the Trustee and Securityholders, or (b) to pay the
amount by which the sum of the principal balance of the defaulted Loan plus
accrued and unpaid interest at the Loan Rate to the date of payment of the claim
and the aforementioned expenses exceeds the proceeds received from an approved
sale of the Property, in either case net of certain amounts paid or assumed to
have been paid under the related Primary Mortgage

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Insurance Policy. If any Property securing a defaulted Loan is damaged and
proceeds, if any, from the related hazard insurance policy or the applicable
special hazard insurance policy are insufficient to restore the damaged Property
to a condition sufficient to permit recovery under the Pool Insurance Policy,
the Master Servicer will not be required to expend its own funds to restore the
damaged Property unless it determines that (i) such restoration will increase
the proceeds to Securityholders on liquidation of the Loan after reimbursement
of the Master Servicer for its expenses and (ii) such expenses will be
recoverable by it through proceeds of the sale of the Property or proceeds of
the related Pool Insurance Policy or any related Primary Mortgage Insurance
Policy.

Unless otherwise specified in the related Prospectus Supplement, the
Pool Insurance Policy will not insure (and many Primary Mortgage Insurance
Policies do not insure) against loss sustained by reason of a default arising
from, among other things, (i) fraud or negligence in the origination or
servicing of a Loan, including misrepresentation by the borrower, the originator
or persons involved in the origination thereof, or (ii) failure to construct a
Property in accordance with plans and specifications. A failure of coverage
attributable to one of the foregoing events might result in a breach of the
related Seller's representations described above, and, in such events might give
rise to an obligation on the part of such Seller to repurchase the defaulted
Loan if the breach cannot be cured by such Seller. No Pool Insurance Policy will
cover (and many Primary Mortgage Insurance Policies do not cover) a claim in
respect of a defaulted Loan occurring when the servicer of such Loan, at the
time of default or thereafter, was not approved by the applicable insurer.

Unless otherwise specified in the related Prospectus Supplement, the
original amount of coverage under each Pool Insurance Policy will be reduced
over the life of the related Securities by the aggregate dollar amount of claims
paid less the aggregate of the net amounts realized by the Pool Insurer upon
disposition of all foreclosed properties. The amount of claims paid will include
certain expenses incurred by the Master Servicer as well as accrued interest on
delinquent Loans to the date of payment of the claim, unless otherwise specified
in the related Prospectus Supplement. Accordingly, if aggregate net claims paid
under any Pool Insurance Policy reach the original policy limit, coverage under
that Pool Insurance Policy will be exhausted and any further losses will be
borne by the related Securityholders.

CROSS-COLLATERALIZATION

If specified in the related Prospectus Supplement, the beneficial
ownership of separate groups of assets included in a Trust Fund may be evidenced
by separate classes of the related Series of Securities. In such case, credit
support may be provided by a cross-collateralization feature which requires that
distributions be made with respect to Securities evidencing a beneficial
ownership interest in, or secured by, one or more asset groups within the same
Trust Fund prior to distributions to Subordinated Securities evidencing a
beneficial ownership interest in, or secured by, one or more other asset groups
within such Trust Fund. Cross-collateralization may be provided by (i) the
allocation of certain excess amounts generated by one or more asset groups
within the same Trust Fund to one or more other asset groups within the same
Trust Fund or (ii) the allocation of losses with respect to one or more asset
groups to one or more other asset groups within the same Trust Fund. Such excess
amounts will be applied and/or such losses will be allocated to the class or
classes of Subordinated Securities of the related Series then outstanding having
the lowest rating assigned by any Rating Agency or the lowest payment priority,
in each case to the extent and in the manner more specifically described in the
related Prospectus Supplement. The Prospectus Supplement for a Series which
includes a cross-collateralization feature will describe the manner and
conditions for applying such cross-collateralization feature.

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If specified in the related Prospectus Supplement, the coverage
provided by one or more forms of credit support described in this Prospectus may
apply concurrently to two or more related Trust Funds. If applicable, the
related Prospectus Supplement will identify the Trust Funds to which such credit
support relates and the manner of determining the amount of the coverage
provided thereby and of the application of such coverage to the identified Trust
Funds.

OTHER INSURANCE, SURETY BONDS, GUARANTIES, LETTERS OF CREDIT AND SIMILAR
INSTRUMENTS OR AGREEMENTS

If specified in the related Prospectus Supplement, a Trust Fund may
also include bankruptcy bonds, special hazard insurance policies, other
insurance, guaranties, or similar arrangements for the purpose of (i)
maintaining timely payments or providing additional protection against losses on
the assets included in such Trust Fund, (ii) paying administrative expenses or
(iii) establishing a minimum reinvestment rate on the payments made in respect
of such assets or principal payment rate on such assets. Such arrangements may
include agreements under which Securityholders are entitled to receive amounts
deposited in various accounts held by the Trustee upon the terms specified in
such Prospectus Supplement. If specified in the related Prospectus Supplement,
the Trust Fund may also include interest rate swap agreements, interest rate cap
agreements, or other similar arrangements that will be described in the related
Prospectus Supplement.

YIELD AND PREPAYMENT CONSIDERATIONS

The yields to maturity and weighted average lives of the Securities
will be affected primarily by the amount and timing of principal payments
received on or in respect of the Trust Fund Assets included in the related Trust
Fund. The original terms to maturity of the Loans in a given Pool will vary
depending upon the type of Loans included therein. Each Prospectus Supplement
will contain information with respect to the type and maturities of the Loans in
the related Pool. The related Prospectus Supplement will specify the
circumstances, if any, under which the related Loans will be subject to
prepayment penalties. The prepayment experience on the Loans in a Pool will
affect the weighted average life of the related Series of Securities.

The rate of prepayment on the Loans cannot be predicted. Home equity
loans and home improvement contracts have been originated in significant volume
only during the past few years and the Depositor is not aware of any publicly
available studies or statistics on the rate of prepayment of such loans.
Generally, home equity loans and home improvement contracts are not viewed by
borrowers as permanent financing. Accordingly, the Loans may experience a higher
rate of prepayment than traditional first mortgage loans. On the other hand,
because home equity loans such as the Revolving Credit Line Loans generally are
not fully amortizing, the absence of voluntary borrower prepayments could cause
rates of principal payments lower than, or similar to, those of traditional
fully-amortizing first mortgage loans. The prepayment experience of the related
Trust Fund may be affected by a wide variety of factors, including general
economic conditions, prevailing interest rate levels, the availability of
alternative financing, homeowner mobility and the frequency and amount of any
future draws on any Revolving Credit Line Loans. Other factors that might be
expected to affect the prepayment rate of a pool of home equity mortgage loans
or home improvement contracts include the amounts of, and interest rates on, the
underlying senior mortgage loans, and the use of first mortgage loans as
long-term financing for home purchase and subordinate mortgage loans as
shorter-term financing for a variety of purposes, including home improvement,
education expenses and purchases of consumer durables such as automobiles.
Accordingly, the Loans may experience a higher rate of prepayment than
traditional fixed-rate mortgage loans. In addition, any future limitations on
the right of borrowers to deduct interest

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payments on home equity loans for federal income tax purposes may further
increase the rate of prepayments of the Loans. The enforcement of a
"due-on-sale" provision (as described below) will have the same effect as a
prepayment of the related Loan. See "Certain Legal Aspects of the
Loans--Due-on-Sale Clauses." The yield to an investor who purchases Securities
in the secondary market at a price other than par will vary from the anticipated
yield if the rate of prepayment on the Loans is actually different than the rate
anticipated by such investor at the time such Securities were purchased.

Collections on Revolving Credit Line Loans may vary because, among
other things, borrowers may (i) make payments during any month as low as the
minimum monthly payment for such month or, during the interest-only period for
certain Revolving Credit Line Loans and, in more limited circumstances,
Closed-End Loans, with respect to which an interest-only payment option has been
selected, the interest and the fees and charges for such month or (ii) make
payments as high as the entire outstanding principal balance plus accrued
interest and the fees and charges thereon. It is possible that borrowers may
fail to make the required periodic payments. In addition, collections on the
Loans may vary due to seasonal purchasing and the payment habits of borrowers.

Unless otherwise specified in the related Prospectus Supplement, all
conventional Loans will contain due-on-sale provisions permitting the mortgagee
to accelerate the maturity of the loan upon sale or certain transfers by the
borrower of the related Property. Loans insured by the FHA, and Single Family
Loans partially guaranteed by the VA, are assumable with the consent of the FHA
and the VA, respectively. Thus, the rate of prepayments on such Loans may be
lower than that of conventional Loans bearing comparable interest rates. Unless
otherwise specified in the related Prospectus Supplement, the Master Servicer
generally will enforce any due-on-sale or due-on-encumbrance clause, to the
extent it has knowledge of the conveyance or further encumbrance or the proposed
conveyance or proposed further encumbrance of the Property and reasonably
believes that it is entitled to do so under applicable law; provided, however,
that the Master Servicer will not take any enforcement action that would impair
or threaten to impair any recovery under any related insurance policy. See "The
Agreements--Collection Procedures" and "Certain Legal Aspects of the Loans" for
a description of certain provisions of each Agreement and certain legal
developments that may affect the prepayment experience on the Loans.

The rate of prepayments with respect to conventional mortgage loans has
fluctuated significantly in recent years. In general, if prevailing rates fall
significantly below the Loan Rates borne by the Loans, such Loans are more
likely to be subject to higher prepayment rates than if prevailing interest
rates remain at or above such Loan Rates. Conversely, if prevailing interest
rates rise appreciably above the Loan Rates borne by the Loans, such Loans are
more likely to experience a lower prepayment rate than if prevailing rates
remain at or below such Loan Rates. However, there can be no assurance that such
will be the case.

When a full prepayment is made on a Loan, the borrower is charged
interest on the principal amount of the Loan so prepaid only for the number of
days in the month actually elapsed up to the date of the prepayment, rather than
for a full month. Unless otherwise provided in the related Prospectus
Supplement, the effect of prepayments in full will be to reduce the amount of
interest passed through or paid in the following month to holders of Securities
because interest on the principal amount of any Loan so prepaid generally will
be paid only to the date of prepayment. Partial prepayments in a given month may
be applied to the outstanding principal balances of the Loans so prepaid on the
first day of the month of receipt or the month following receipt. In the latter
case, partial prepayments will not reduce the amount of interest passed through
or paid in such month. Unless otherwise specified in the related Prospectus
Supplement, neither full nor partial prepayments will be passed through or paid
until the month following receipt.

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Even assuming that the Properties provide adequate security for the
Loans, substantial delays could be encountered in connection with the
liquidation of defaulted Loans and corresponding delays in the receipt of
related proceeds by Securityholders could occur. An action to foreclose on a
Property securing a Loan is regulated by state statutes and rules and is subject
to many of the delays and expenses of other lawsuits if defenses or
counterclaims are interposed, sometimes requiring several years to complete.
Furthermore, in some states an action to obtain a deficiency judgment is not
permitted following a nonjudicial sale of a property. In the event of a default
by a borrower, these restrictions among other things, may impede the ability of
the Master Servicer to foreclose on or sell the Property or to obtain
liquidation proceeds sufficient to repay all amounts due on the related Loan. In
addition, the Master Servicer will be entitled to deduct from related
liquidation proceeds all expenses reasonably incurred in attempting to recover
amounts due on defaulted Loans and not yet repaid, including payments to senior
lienholders, legal fees and costs of legal action, real estate taxes and
maintenance and preservation expenses.

Liquidation expenses with respect to defaulted mortgage loans do not
vary directly with the outstanding principal balance of the loan at the time of
default. Therefore, assuming that a servicer took the same steps in realizing
upon a defaulted mortgage loan having a small remaining principal balance as it
would in the case of a defaulted mortgage loan having a large remaining
principal balance, the amount realized after expenses of liquidation would be
smaller as a percentage of the remaining principal balance of the small mortgage
loan than would be the case with the other defaulted mortgage loan having a
large remaining principal balance.

Applicable state laws generally regulate interest rates and other
charges, require certain disclosures, and require licensing of certain
originators and servicers of Loans. In addition, most have other laws, public
policy and general principles of equity relating to the protection of consumers,
unfair and deceptive practices and practices which may apply to the origination,
servicing and collection of the Loans. Depending on the provisions of the
applicable law and the specific facts and circumstances involved, violations of
these laws, policies and principles may limit the ability of the Master Servicer
to collect all or part of the principal of or interest on the Loans, may entitle
the borrower to a refund of amounts previously paid and, in addition, could
subject the Master Servicer to damages and administrative sanctions.

If the rate at which interest is passed through or paid to the holders
of Securities of a Series is calculated on a Loan-by-Loan basis,
disproportionate principal prepayments among Loans with different Loan Rates
will affect the yield on such Securities. In most cases, the effective yield to
Securityholders will be lower than the yield otherwise produced by the
applicable Pass-Through Rate or interest rate and purchase price, because while
interest will accrue on each Loan from the first day of the month (unless
otherwise specified in the related Prospectus Supplement), the distribution of
such interest will not be made earlier than the month following the month of
accrual.

Under certain circumstances, the Master Servicer, the holders of the
residual interests in a REMIC or any person specified in the related
Prospectus Supplement may have the option to purchase the assets of a Trust
Fund thereby effecting earlier retirement of the related Series of Securities.
See "The Agreements--Termination; Optional Termination."

The relative contribution of the various factors affecting prepayment
may also vary from time to time. There can be no assurance as to the rate of
payment of principal of the Trust Fund Assets at any time or over the lives of
the Securities.

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The Prospectus Supplement relating to a Series of Securities will
discuss in greater detail the effect of the rate and timing of principal
payments (including prepayments), delinquencies and losses on the yield,
weighted average lives and maturities of such Securities.

THE AGREEMENTS

Set forth below is a description of the material provisions of each
Agreement which are not described elsewhere in this Prospectus. The description
is subject to, and qualified in its entirety by reference to, the provisions of
each Agreement. Where particular provisions or terms used in the Agreements are
referred to, such provisions or terms are as specified in the Agreements.

ASSIGNMENT OF THE TRUST FUND ASSETS

Assignment of the Loans. At the time of issuance of the Securities of a
Series, and except as otherwise specified in the related Prospectus Supplement,
the Depositor will cause the Loans comprising the related Trust Fund to be
assigned to the Trustee, without recourse, together with all principal and
interest received by or on behalf of the Depositor on or with respect to such
Loans after the Cut-off Date, other than principal and interest due on or before
the Cut-off Date and other than any Retained Interest specified in the related
Prospectus Supplement. The Trustee will, concurrently with such assignment,
deliver such Securities to the Depositor in exchange for the Loans. Each Loan
will be identified in a schedule appearing as an exhibit to the related
Agreement. Such schedule will include information as to the outstanding
principal balance of each Loan after application of payments due on or before
the Cut-off Date, as well as information regarding the Loan Rate or APR, the
maturity of the Loan, the Loan-to-Value Ratios or Combined Loan-to-Value Ratios,
as applicable, at origination and certain other information.

Unless otherwise specified in the related Prospectus Supplement, the
Agreement will require that, within the time period specified therein, the
Depositor will also deliver or cause to be delivered to the Trustee (or to the
custodian hereinafter referred to) as to each Mortgage Loan or Home Equity Loan,
among other things, (i) the mortgage note or contract endorsed without recourse
in blank or to the order of the Trustee, (ii) the mortgage, deed of trust or
similar instrument (a "Mortgage") with evidence of recording indicated thereon
(except for any Mortgage not returned from the public recording office, in which
case the Depositor will deliver or cause to be delivered a copy of such Mortgage
together with a certificate that the original of such Mortgage was delivered to
such recording office), (iii) an assignment of the Mortgage to the Trustee,
which assignment will be in recordable form in the case of a Mortgage
assignment, and (iv) such other security documents, including those relating to
any senior interests in the Property, as may be specified in the related
Prospectus Supplement or the related Agreement. Unless otherwise specified in
the related Prospectus Supplement, the Depositor will promptly cause the
assignments of the related Loans to be recorded in the appropriate public office
for real property records, except in states in which, in the opinion of counsel
acceptable to the Trustee, such recording is not required to protect the
Trustee's interest in such Loans against the claim of any subsequent transferee
or any successor to or creditor of the Depositor or the originator of such
Loans.

With respect to any Loans that are Cooperative Loans, the Depositor
will cause to be delivered to the Trustee the related original cooperative note
endorsed without recourse in blank or to the order of the Trustee, the original
security agreement, the proprietary lease or occupancy agreement, the
recognition agreement, an executed financing agreement and the relevant stock
certificate, related blank stock powers and any other document specified in the
related Prospectus Supplement. The Depositor will

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cause to be filed in the appropriate office an assignment and a financing
statement evidencing the Trustee's security interest in each Cooperative Loan.

Unless otherwise specified in the related Prospectus Supplement, the
Depositor will as to each Contract, deliver or cause to be delivered to the
Trustee the original Contract and copies of documents and instruments related to
each Contract and, other than in the case of unsecured Contracts, the security
interest in the Property securing such Contract. In order to give notice of the
right, title and interest of Securityholders to the Contracts, the Depositor
will cause a UCC-1 financing statement to be executed by the Depositor or the
Seller identifying the Trustee as the secured party and identifying all
Contracts as collateral. Unless otherwise specified in the related Prospectus
Supplement, the Contracts will not be stamped or otherwise marked to reflect
their assignment to the Trustee. Therefore, if, through negligence, fraud or
otherwise, a subsequent purchaser were able to take physical possession of the
Contracts without notice of such assignment, the interest of Securityholders in
the Contracts could be defeated. See "Certain Legal Aspects of the Loans--The
Contracts."

The Trustee (or the custodian hereinafter referred to) will review such
Loan documents within the time period specified in the related Prospectus
Supplement after receipt thereof, and the Trustee will hold such documents in
trust for the benefit of the related Securityholders. Unless otherwise specified
in the related Prospectus Supplement, if any such document is found to be
missing or defective in any material respect, the Trustee (or such custodian)
will notify the Master Servicer and the Depositor, and the Master Servicer will
notify the related Seller.

If such Seller cannot cure the omission or defect within the time
period specified in the related Prospectus Supplement after receipt of such
notice, such Seller will be obligated to either (i) purchase the related Loan
from the Trust Fund at the Purchase Price or (ii) if so specified in the related
Prospectus Supplement, remove such Loan from the Trust Fund and substitute in
its place one or more other Loans that meets certain requirements set forth
therein. There can be no assurance that a Seller will fulfill this purchase or
substitution obligation. Although the Master Servicer may be obligated to
enforce such obligation to the extent described above under "The Trust
Fund--Representations by Sellers; Repurchases," neither the Master Servicer nor
the Depositor will be obligated to purchase or replace such Loan if the Seller
defaults on its obligation, unless such breach also constitutes a breach of the
representations or warranties of the Master Servicer or the Depositor, as the
case may be. Unless otherwise specified in the related Prospectus Supplement,
this obligation to cure, purchase or substitute constitutes the sole remedy
available to the Securityholders or the Trustee for omission of, or a material
defect in, a constituent document.

The Trustee will be authorized to appoint a custodian pursuant to a
custodial agreement to maintain possession of and, if applicable, to review the
documents relating to the Loans as agent of the Trustee.

The Master Servicer will make certain representations and warranties
regarding its authority to enter into, and its ability to perform its
obligations under, the Agreement. Upon a breach of any such representation of
the Master Servicer which materially and adversely affects the interests of the
Securityholders in a Loan, the Master Servicer will be obligated either to cure
the breach in all material respects or to purchase (at the Purchase Price) or if
so specified in the related Prospectus Supplement, replace the Loan. Unless
otherwise specified in the related Prospectus Supplement, this obligation to
cure, purchase or substitute constitutes the sole remedy available to the
Securityholders or the Trustee for such a breach of representation by the Master
Servicer.

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Notwithstanding the foregoing provisions, with respect to a Trust Fund
for which a REMIC election is to be made, no purchase or substitution of a Loan
will be made if such purchase or substitution would result in a prohibited
transaction tax under the Code.

NO RECOURSE TO SELLERS; DEPOSITOR OR MASTER SERVICER

As described above under "--Assignment of the Trust Fund Assets," the
Depositor will cause the Loans comprising the related Trust Fund to be assigned
to the Trustee, without recourse. However, each Seller will be obligated to
repurchase or substitute for any Loan as to which certain representations and
warranties are breached or for failure to deliver certain documents relating to
the Loans as described above under "--Assignment of the Trust Fund Assets" and
under "The Trust Fund--Representations by Sellers; Repurchases." These
obligations to purchase or substitute constitute the sole remedy available to
the Securityholders or the Trustee for a breach of any such representation or
failure to deliver a constituent document.

PAYMENTS ON LOANS; DEPOSITS TO SECURITY ACCOUNT

The Master Servicer will establish and maintain or cause to be
established and maintained with respect to the related Trust Fund a separate
account or accounts for the collection of payments on the related Trust Fund
Assets in the Trust Fund (the "Security Account") which, unless otherwise
specified in the related Prospectus Supplement, must be either (i) maintained
with a depository institution the debt obligations of which (or in the case of a
depository institution that is the principal subsidiary of a holding company,
the obligations of which) are rated in one of the two highest rating categories
by the Rating Agency or Rating Agencies that rated one or more classes of the
related Series of Securities, (ii) an account or accounts the deposits in which
are fully insured by either the Bank Insurance Fund (the "BIF") of the FDIC or
the Savings Association Insurance Fund (as successor to the Federal Savings and
Loan Insurance Corporation ("SAIF")), (iii) an account or accounts the deposits
in which are insured by the BIF or SAIF (to the limits established by the FDIC),
and the uninsured deposits in which are otherwise secured such that, as
evidenced by an opinion of counsel, the Securityholders have a claim with
respect to the funds in the Security Account or a perfected first priority
security interest against any collateral securing such funds that is superior to
the claims of any other depositors or general creditors of the depository
institution with which the Security Account is maintained, or (iv) an account or
accounts otherwise acceptable to each Rating Agency. The collateral eligible to
secure amounts in the Security Account is limited to Permitted Investments. A
Security Account may be maintained as an interest bearing account or the funds
held therein may be invested pending each succeeding Distribution Date in
Permitted Investments. Unless otherwise specified in the related Prospectus
Supplement, the Master Servicer or its designee will be entitled to receive any
such interest or other income earned on funds in the Security Account as
additional compensation and will be obligated to deposit in the Security Account
the amount of any loss immediately as realized. The Security Account may be
maintained with the Master Servicer or with a depository institution that is an
affiliate of the Master Servicer, provided it meets the standards set forth
above.

The Master Servicer will deposit or cause to be deposited in the
Security Account for each Trust Fund, to the extent applicable and unless
otherwise specified in the related Prospectus Supplement and provided in the
Agreement, the following payments and collections received or advances made by
or on behalf of it subsequent to the Cut-off Date (other than payments due on or
before the Cut-off Date and exclusive of any amounts representing Retained
Interest):

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(i) all payments on account of principal, including
Principal Prepayments and, if specified in the related Prospectus
Supplement, any applicable prepayment penalties, on the Loans;

(ii) all payments on account of interest on the Loans,
net of applicable servicing compensation;

(iii) all proceeds (net of unreimbursed payments of
property taxes, insurance premiums and similar items ("Insured
Expenses") incurred, and unreimbursed Advances made, by the Master
Servicer, if any) of the hazard insurance policies and any Primary
Mortgage Insurance Policies, to the extent such proceeds are not
applied to the restoration of the property or released to the
Mortgagor in accordance with the Master Servicer's normal servicing
procedures (collectively, "Insurance Proceeds") and all other cash
amounts (net of unreimbursed expenses incurred in connection with
liquidation or foreclosure ("Liquidation Expenses") and unreimbursed
Advances made, by the Master Servicer, if any) received and retained
in connection with the liquidation of defaulted Loans, by foreclosure
or otherwise ("Liquidation Proceeds"), together with any net proceeds
received on a monthly basis with respect to any properties acquired on
behalf of the Securityholders by foreclosure or deed in lieu of
foreclosure;

(iv) all proceeds of any Loan or property in respect
thereof purchased by the Master Servicer, the Depositor or any
Seller as described under "The Trust Funds--Representations by
Sellers; Repurchases" or under "--Assignment of Trust Fund Assets"
above and all proceeds of any Loan repurchased as described under
"--Termination; Optional Termination" below;

(v) all payments required to be deposited in the Security
Account with respect to any deductible clause in any blanket insurance
policy described under "--Hazard Insurance" below;

(vi) any amount required to be deposited by the Master
Servicer in connection with losses realized on investments for the
benefit of the Master Servicer of funds held in the Security Account
and, to the extent specified in the related Prospectus Supplement, any
payments required to be made by the Master Servicer in connection with
prepayment interest shortfalls; and

(vii) all other amounts required to be deposited in the
Security Account pursuant to the Agreement.

The Master Servicer (or the Depositor, as applicable) may from time to
time direct the institution that maintains the Security Account to withdraw
funds from the Security Account for the following purposes:

(i) to pay to the Master Servicer the servicing fees
described in the related Prospectus Supplement, the master
servicing fees (subject to reduction) and, as additional servicing
compensation, earnings on or investment income with respect to funds
in the amounts in the Security Account credited thereto;

(ii) to reimburse the Master Servicer for Advances, such
right of reimbursement with respect to any Loan being limited
to amounts received that represent late recoveries of payments of
principal and/or interest on such Loan (or Insurance Proceeds or
Liquidation Proceeds with respect thereto) with respect to which such
Advance was made;

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(iii) to reimburse the Master Servicer for any Advances
previously made which the Master Servicer has determined to be
nonrecoverable;

(iv) to reimburse the Master Servicer from Insurance
Proceeds for expenses incurred by the Master Servicer and covered by
the related insurance policies;

(v) to reimburse the Master Servicer for unpaid master
servicing fees and unreimbursed out-of-pocket costs and expenses
incurred by the Master Servicer in the performance of its servicing
obligations, such right of reimbursement being limited to amounts
received representing late recoveries of the payments for which such
advances were made;

(vi) to pay to the Master Servicer, with respect to each
Loan or property acquired in respect thereof that has been
purchased by the Master Servicer pursuant to the Agreement, all
amounts received thereon and not taken into account in determining the
principal balance of such repurchased Loan;

(vii) to reimburse the Master Servicer or the Depositor
for expenses incurred and reimbursable pursuant to the Agreement;

(viii) to withdraw any amount deposited in the Security
Account and not required to be deposited therein; and

(ix) to clear and terminate the Security Account upon
termination of the Agreement.

In addition, unless otherwise specified in the related Prospectus
Supplement, on or prior to the business day immediately preceding each
Distribution Date, the Master Servicer shall withdraw from the Security Account
the amount of Available Funds, to the extent on deposit, for deposit in an
account maintained by the Trustee for the related Series of Securities.

PRE-FUNDING ACCOUNT

If so provided in the related Prospectus Supplement, the Master
Servicer will establish and maintain a Pre-Funding Account, in the name of the
related Trustee on behalf of the related Securityholders, into which the
Depositor will deposit cash in an amount equal to the Pre-Funded Amount on the
related Closing Date. The Pre-Funded Amount will not exceed 50% of the initial
aggregate principal amount of the Certificates and Notes of the related Series.
The Pre-Funding Account will be maintained with the Trustee for the related
Series of Securities and is designed solely to hold funds to be applied by such
Trustee during the Funding Period to pay to the Depositor the purchase price for
Subsequent Loans. Monies on deposit in the Pre-Funding Account will not be
available to cover losses on or in respect of the related Loans. The Pre-Funded
Amount will be used by the related Trustee to purchase Subsequent Loans from the
Depositor from time to time during the Funding Period. The Funding Period, if
any, for a Trust Fund will begin on the related Closing Date and will end on the
date specified in the related Prospectus Supplement, which in no event will be
later than the date that is one year after the related Closing Date. Monies on
deposit in the Pre-Funding Account may be invested in Permitted Investments
under the circumstances and in the manner described in the related Agreement.
Earnings on investment of funds in the Pre-Funding Account will be deposited
into the related Security Account or such other trust account as is specified in
the related Prospectus Supplement and losses will be charged against the funds
on deposit in the Pre-Funding Account. Any amounts remaining in the Pre-Funding
Account at the end of the Funding Period will be distributed to the related
Securityholders

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in the manner and priority specified in the related Prospectus Supplement, as a
prepayment of principal of the related Securities.

In addition, if so provided in the related Prospectus Supplement, on
the related Closing Date the Depositor will deposit in an account (the
"Capitalized Interest Account") cash in such amount as is necessary to cover
shortfalls in interest on the related Series of Securities that may arise as a
result of utilization of the Pre-Funding Account as described above. The
Capitalized Interest Account shall be maintained with the Trustee for the
related Series of Securities and is designed solely to cover the above-mentioned
interest shortfalls. Monies on deposit in the Capitalized Interest Account will
not be available to cover losses on or in respect of the related Loans. To the
extent that the entire amount on deposit in the Capitalized Interest Account has
not been applied to cover shortfalls in interest on the related Series of
Securities by the end of the Funding Period, any amounts remaining in the
Capitalized Interest Account will be paid to the Depositor.

SUB-SERVICING BY SELLERS

Each Seller of a Loan or any other servicing entity may act as the
Sub-Servicer for such Loan pursuant to an agreement (each, a "Sub-Servicing
Agreement"), which will not contain any terms inconsistent with the related
Agreement. While each Sub-Servicing Agreement will be a contract solely between
the Master Servicer and the Sub-Servicer, the Agreement pursuant to which a
Series of Securities is issued will provide that, if for any reason the Master
Servicer for such Series of Securities is no longer the Master Servicer of the
related Loans, the Trustee or any successor Master Servicer may assume the
Master Servicer's rights and obligations under such Sub-Servicing Agreement.
Notwithstanding any such subservicing arrangement, unless otherwise provided in
the related Prospectus Supplement, the Master Servicer will remain liable for
its servicing duties and obligations under the Master Servicing Agreement as if
the Master Servicer alone were servicing the Loans.

COLLECTION PROCEDURES

The Master Servicer, directly or through one or more Sub-Servicers,
will make reasonable efforts to collect all payments called for under the Loans
and will, consistent with each Agreement and any Pool Insurance Policy, Primary
Mortgage Insurance Policy, FHA Insurance, VA Guaranty, bankruptcy bond or
alternative arrangements, follow such collection procedures as are customary
with respect to loans that are comparable to the Loans. Consistent with the
above, the Master Servicer may, in its discretion, unless otherwise specified in
the related Prospectus Supplement (i) waive any assumption fee, late payment or
other charge in connection with a Loan and (ii) to the extent not inconsistent
with the coverage of such Loan by a Pool Insurance Policy, Primary Mortgage
Insurance Policy, FHA Insurance, VA Guaranty, bankruptcy bond or alternative
arrangements, if applicable, arrange with a borrower a schedule for the
liquidation of delinquencies running for no more than 125 days after the
applicable due date for each payment. To the extent the Master Servicer is
obligated to make or cause to be made Advances, such obligation will remain
during any period of such an arrangement.

Unless otherwise specified in the related Prospectus Supplement, in any
case in which property securing a Loan has been, or is about to be, conveyed by
the mortgagor or obligor, the Master Servicer will, to the extent it has
knowledge of such conveyance or proposed conveyance, exercise or cause to be
exercised its rights to accelerate the maturity of such Loan under any
due-on-sale clause applicable thereto, but only if the exercise of such rights
is permitted by applicable law and will not impair or threaten to impair any
recovery under any Primary Mortgage Insurance Policy. If these conditions are
not met or if the Master Servicer reasonably believes it is unable under
applicable law to enforce such

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due-on-sale clause or if such Loan is a mortgage loan insured by the FHA or
partially guaranteed by the VA, the Master Servicer will enter into or cause to
be entered into an assumption and modification agreement with the person to whom
such property has been or is about to be conveyed, pursuant to which such person
becomes liable for repayment of the Loan and, to the extent permitted by
applicable law, the mortgagor remains liable thereon. Any fee collected by or on
behalf of the Master Servicer for entering into an assumption agreement will be
retained by or on behalf of the Master Servicer as additional servicing
compensation. See "Certain Legal Aspects of the Loans--Due-on-Sale Clauses." In
connection with any such assumption, the terms of the related Loan may not be
changed.

With respect to Cooperative Loans, any prospective purchaser will
generally have to obtain the approval of the board of directors of the relevant
Cooperative before purchasing the shares and acquiring rights under the related
proprietary lease or occupancy agreement. See "Certain Legal Aspects of the
Loans." This approval is usually based on the purchaser's income and net worth
and numerous other factors. Although the Cooperative's approval is unlikely to
be unreasonably withheld or delayed, the necessity of acquiring such approval
could limit the number of potential purchasers for those shares and otherwise
limit the Trust Fund's ability to sell and realize the value of those shares.

In general, a "tenant-stockholder" (as defined in Code Section
216(b)(2)) of a corporation that qualifies as a "cooperative housing
corporation" within the meaning of Code Section 216(b)(1) is allowed a deduction
for amounts paid or accrued within his taxable year to the corporation
representing his proportionate share of certain interest expenses and certain
real estate taxes allowable as a deduction under Code Section 216(a) to the
corporation under Code Sections 163 and 164. In order for a corporation to
qualify under Code Section 216(b)(1) for its taxable year in which such items
are allowable as a deduction to the corporation, such Section requires, among
other things, that at least 80% of the gross income of the corporation be
derived from its tenant-stockholders (as defined in Code Section 216(b)(2)). By
virtue of this requirement, the status of a corporation for purposes of Code
Section 216(b)(1) must be determined on a year-to-year basis. Consequently,
there can be no assurance that Cooperatives relating to the Cooperative Loans
will qualify under such Section for any particular year. In the event that such
a Cooperative fails to qualify for one or more years, the value of the
collateral securing any related Cooperative Loans could be significantly
impaired because no deduction would be allowable to tenant-stockholders under
Code Section 216(a) with respect to those years. In view of the significance of
the tax benefits accorded tenant-stockholders of a corporation that qualifies
under Code Section 216(b)(1), the likelihood that such a failure would be
permitted to continue over a period of years appears remote.

HAZARD INSURANCE

Except as otherwise specified in the related Prospectus Supplement, the
Master Servicer will require the mortgagor or obligor on each Loan to maintain a
hazard insurance policy providing for no less than the coverage of the standard
form of fire insurance policy with extended coverage customary for the type of
Property in the state in which such Property is located. Such coverage will be
in an amount that is at least equal to the lesser of (i) the maximum insurable
value of the improvements securing such Loan or (ii) the greater of (y) the
outstanding principal balance of the Loan and (z) an amount such that the
proceeds of such policy shall be sufficient to prevent the mortgagor and/or the
mortgagee from becoming a co-insurer. All amounts collected by the Master
Servicer under any hazard policy (except for amounts to be applied to the
restoration or repair of the Property or released to the mortgagor or obligor in
accordance with the Master Servicer's normal servicing procedures) will be
deposited in the related Security Account. In the event that the Master Servicer
maintains a blanket policy insuring against hazard losses on all the Loans
comprising part of a Trust Fund, it will

<PAGE> 354

conclusively be deemed to have satisfied its obligation relating to the
maintenance of hazard insurance. Such blanket policy may contain a deductible
clause, in which case the Master Servicer will be required to deposit from its
own funds into the related Security Account the amounts which would have been
deposited therein but for such clause.

In general, the standard form of fire and extended coverage policy
covers physical damage to or destruction of the improvements securing a Loan by
fire, lightning, explosion, smoke, windstorm and hail, riot, strike and civil
commotion, subject to the conditions and exclusions particularized in each
policy. Although the policies relating to the Loans may have been underwritten
by different insurers under different state laws in accordance with different
applicable forms and therefore may not contain identical terms and conditions,
the basic terms thereof are dictated by respective state laws, and most such
policies typically do not cover any physical damage resulting from the
following: war, revolution, governmental actions, floods and other water-related
causes, earth movement (including earthquakes, landslides and mud flows),
nuclear reactions, wet or dry rot, vermin, rodents, insects or domestic animals,
theft and, in certain cases, vandalism. The foregoing list is merely indicative
of certain kinds of uninsured risks and is not intended to be all inclusive. If
the Property securing a Loan is located in a federally designated special flood
area at the time of origination, the Master Servicer will require the mortgagor
or obligor to obtain and maintain flood insurance.

The hazard insurance policies covering properties securing the Loans
typically contain a clause which in effect requires the insured at all time to
carry insurance of a specified percentage of a specified percentage (generally
80% to 90%) of the full replacement value of the insured property in order to
recover the full amount of any partial loss. If the insured's coverage falls
below this specified percentage, then the insurer's liability in the event of
partial loss will not exceed the larger of (i) the actual cash value (generally
defined as replacement cost at the time and place of loss, less physical
depreciation) of the improvements damaged or destroyed or (ii) such proportion
of the loss as the amount of insurance carried bears to the specified percentage
of the full replacement cost of such improvements. Since the amount of hazard
insurance the Master Servicer may cause to be maintained on the improvements
securing the Loans declines as the principal balances owing thereon decrease,
and since improved real estate generally has appreciated in value over time in
the past, the effect of this requirement in the event of partial loss may be
that hazard insurance proceeds will be insufficient to restore fully the damaged
property. If specified in the related Prospectus Supplement, a special hazard
insurance policy will be obtained to insure against certain of the uninsured
risks described above. See "Credit Enhancement."

Unless otherwise specified in the related Prospectus Supplement, the
Master Servicer will not require that a standard hazard or flood insurance
policy be maintained on the cooperative dwelling relating to any Cooperative
Loan. Generally, the Cooperative itself is responsible for maintenance of hazard
insurance for the property owned by the Cooperative and the tenant-stockholders
of that Cooperative do not maintain individual hazard insurance policies. To the
extent, however, that a Cooperative and the related borrower on a Cooperative
Loan do not maintain such insurance or do not maintain adequate coverage or any
insurance proceeds are not applied to the restoration of damaged property, any
damage to such borrower's cooperative dwelling or such Cooperative's building
could significantly reduce the value of the collateral securing such Cooperative
Loan to the extent not covered by other credit support.

If the Property securing a defaulted Loan is damaged and proceeds, if
any, from the related hazard insurance policy are insufficient to restore the
damaged Property, the Master Servicer is not required to expend its own funds to
restore the damaged Property unless it determines (i) that such

<PAGE> 355

restoration will increase the proceeds to Securityholders on liquidation of the
Loan after reimbursement of the Master Servicer for its expenses and (ii) that
such expenses will be recoverable by it from related Insurance Proceeds or
Liquidation Proceeds.

If recovery on a defaulted Loan under any related Insurance Policy is
not available for the reasons set forth in the preceding paragraph, or if the
defaulted Loan is not covered by an Insurance Policy, the Master Servicer will
be obligated to follow or cause to be followed such normal practices and
procedures as it deems necessary or advisable to realize upon the defaulted
Loan. If the proceeds of any liquidation of the Property securing the defaulted
Loan are less than the principal balance of such Loan plus interest accrued
thereon that is payable to Securityholders, the Trust Fund will realize a loss
in the amount of such difference plus the aggregate of expenses incurred by the
Master Servicer in connection with such proceedings and which are reimbursable
under the Agreement. In the unlikely event that any such proceedings result in a
total recovery which is, after reimbursement to the Master Servicer of its
expenses, in excess of the principal balance of such Loan plus interest accrued
thereon that is payable to Securityholders, the Master Servicer will be entitled
to withdraw or retain from the Security Account amounts representing its normal
servicing compensation with respect to such Loan and, unless otherwise specified
in the related Prospectus Supplement, amounts representing the balance of such
excess, exclusive of any amount required by law to be forwarded to the related
borrower, as additional servicing compensation.

Unless otherwise specified in the related Prospectus Supplement, if the
Master Servicer or its designee recovers Insurance Proceeds which, when added to
any related Liquidation Proceeds and after deduction of certain expenses
reimbursable to the Master Servicer, exceed the principal balance of such Loan
plus interest accrued thereon that is payable to Securityholders, the Master
Servicer will be entitled to withdraw or retain from the Security Account
amounts representing its normal servicing compensation with respect to such
Loan. In the event that the Master Servicer has expended its own funds to
restore the damaged Property and such funds have not been reimbursed under the
related hazard insurance policy, it will be entitled to withdraw from the
Security Account out of related Liquidation Proceeds or Insurance Proceeds an
amount equal to such expenses incurred by it, in which event the Trust Fund may
realize a loss up to the amount so charged. Since Insurance Proceeds cannot
exceed deficiency claims and certain expenses incurred by the Master Servicer,
no such payment or recovery will result in a recovery to the Trust Fund which
exceeds the principal balance of the defaulted Loan together with accrued
interest thereon. See "Credit Enhancement."

Unless otherwise specified in the related Prospectus Supplement or the
related Agreement, the proceeds from any liquidation of a Loan will be applied
in the following order of priority: first, to reimburse the Master Servicer for
any unreimbursed expenses incurred by it to restore the related Property and any
unreimbursed servicing compensation payable to the Master Servicer with respect
to such Loan; second, to reimburse the Master Servicer for any unreimbursed
Advances with respect to such Loan; third, to accrued and unpaid interest (to
the extent no Advance has been made for such amount) on such Loan; and fourth,
as a recovery of principal of such Loan.

REALIZATION UPON DEFAULTED LOANS

Primary Mortgage Insurance Policies. If so specified in the related
Prospectus Supplement, the Master Servicer will maintain or cause to be
maintained, as the case may be, in full force and effect, a Primary Mortgage
Insurance Policy with regard to each Loan for which such coverage is required.
Primary Mortgage Insurance Policies reimburse certain losses sustained by reason
of defaults in payments by borrowers. The Master Servicer will not cancel or
refuse to renew any such Primary Mortgage

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Insurance Policy in effect at the time of the initial issuance of a Series of
Securities that is required to be kept in force under the applicable Agreement
unless the replacement Primary Mortgage Insurance Policy for such cancelled or
nonrenewed policy is maintained with an insurer whose claims-paying ability is
sufficient to maintain the current rating of the classes of Securities of such
Series that have been rated.

FHA Insurance; VA Guaranties. Loans designated in the related
Prospectus Supplement as insured by the FHA will be insured by the FHA as
authorized under the United States Housing Act of 1937, as amended. In addition
to the Title I Program of the FHA, see "Certain Legal Aspects of the Loans--The
Title I Program," certain Loans will be insured under various FHA programs
including the standard FHA 203(b) program to finance the acquisition of one- to
four-family housing units and the FHA 245 graduated payment mortgage program.
These programs generally limit the principal amount and interest rates of the
mortgage loans insured. Loans insured by FHA generally require a minimum down
payment of approximately 5% of the original principal amount of the loan. No
FHA-insured Loans relating to a Series may have an interest rate or original
principal amount exceeding the applicable FHA limits at the time of origination
of such loan.

Loans designated in the related Prospectus Supplement as guaranteed by
the VA will be partially guaranteed by the VA under the Serviceman's
Readjustment Act of 1944, as amended (a "VA Guaranty"). The Serviceman's
Readjustment Act of 1944, as amended, permits a veteran (or in certain instances
the spouse of a veteran) to obtain a mortgage loan guaranty by the VA covering
mortgage financing of the purchase of a one- to four-family dwelling unit at
interest rates permitted by the VA. The program has no mortgage loan limits,
requires no down payment from the purchaser and permits the guaranty of mortgage
loans of up to 30 years' duration. However, no Loan guaranteed by the VA will
have an original principal amount greater than five times the partial VA
guaranty for such Loan. The maximum guaranty that may be issued by the VA under
a VA guaranteed mortgage loan depends upon the original principal amount of the
mortgage loan, as further described in 38 United States Code Section 1803(a), as
amended.

SERVICING AND OTHER COMPENSATION AND PAYMENT OF EXPENSES

The principal servicing compensation to be paid to the Master Servicer
in respect of its master servicing activities for each Series of Securities will
be equal to the percentage per annum described in the related Prospectus
Supplement (which may vary under certain circumstances) of the outstanding
principal balance of each Loan, and such compensation will be retained by it
from collections of interest on such Loan in the related Trust Fund (the "Master
Servicing Fee"). Unless otherwise specified in the related Prospectus
Supplement, as compensation for its servicing duties, a Sub-Servicer or, if
there is no Sub-Servicer, the Master Servicer will be entitled to a monthly
servicing fee as described in the related Prospectus Supplement. In addition,
unless otherwise specified in the related Prospectus Supplement, the Master
Servicer or Sub-Servicer will retain all prepayment charges, assumption fees and
late payment charges, to the extent collected from borrowers, and any benefit
that may accrue as a result of the investment of funds in the applicable
Security Account (unless otherwise specified in the related Prospectus
Supplement).

The Master Servicer will pay or cause to be paid certain ongoing
expenses associated with each Trust Fund and incurred by it in connection with
its responsibilities under the related Agreement, including, without limitation,
payment of any fee or other amount payable in respect of any credit enhancement
arrangements, payment of the fees and disbursements of the Trustee, any
custodian appointed by the Trustee, the certificate registrar and any paying
agent, and payment of expenses incurred in enforcing the obligations of
Sub-Servicers and Sellers. The Master Servicer will be entitled to

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reimbursement of expenses incurred in enforcing the obligations of Sub-Servicers
and Sellers under certain limited circumstances.

EVIDENCE AS TO COMPLIANCE

Each Agreement will provide that on or before a specified date in each
year, a firm of independent public accountants will furnish a statement to the
Trustee to the effect that, on the basis of the examination by such firm
conducted substantially in compliance with the Uniform Single Attestation
Program for Mortgage Bankers or the Audit Program for Mortgages serviced for
FHLMC, the servicing by or on behalf of the Master Servicer of mortgage loans or
private asset backed securities, or under pooling and servicing agreements
substantially similar to each other (including the related Agreement), was
conducted in compliance with such agreements except for any significant
exceptions or errors in records that, in the opinion of the firm, the Audit
Program for Mortgages serviced for FHLMC, or the Uniform Single Attestation
Program for Mortgage Bankers, it is required to report. In rendering its
statement such firm may rely, as to matters relating to the direct servicing of
Loans by Sub-Servicers, upon comparable statements for examinations conducted
substantially in compliance with the Uniform Single Attestation Program for
Mortgage Bankers or the Audit Program for Mortgages serviced for FHLMC (rendered
within one year of such statement) of firms of independent public accountants
with respect to the related Sub-Servicer.

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

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

CERTAIN MATTERS REGARDING THE MASTER SERVICER AND THE DEPOSITOR

The Master Servicer under each Pooling and Servicing Agreement or
Master Servicing Agreement, as applicable, will be named in the related
Prospectus Supplement. Each Agreement will provide that the Master Servicer may
not resign from its obligations and duties under the Agreement except upon a
determination that its duties thereunder are no longer permissible under
applicable law. The Master Servicer may, however, be removed from its
obligations and duties as set forth in the Agreement. No such resignation will
become effective until the Trustee or a successor servicer has assumed the
Master Servicer's obligations and duties under the Agreement.

Each Agreement will further provide that neither the Master Servicer,
the Depositor nor any director, officer, employee, or agent of the Master
Servicer or the Depositor will be under any liability to the related Trust Fund
or Securityholders for any action taken or for refraining from the taking of any
action in good faith pursuant to the Agreement, or for errors in judgment;
provided, however, that neither the Master Servicer, the Depositor nor any such
person will be protected against any liability which would otherwise be imposed
by reason of wilful misfeasance, bad faith or gross negligence in the
performance of duties thereunder or by reason of reckless disregard of
obligations and duties thereunder. Each Agreement will further provide that the
Master Servicer, the Depositor and any director, officer, employee or agent of
the Master Servicer or the Depositor will be entitled to indemnification by the
related Trust Fund and will be held harmless against any loss, liability or
expense incurred in connection with any legal action relating to the Agreement
or the Securities, other than any loss, liability or expense

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related to any specific Loan or Loans (except any such loss, liability or
expense otherwise reimbursable pursuant to the Agreement) and any loss,
liability or expense incurred by reason of willful misfeasance, bad faith or
gross negligence in the performance of duties thereunder or by reason of
reckless disregard of obligations and duties thereunder. In addition, each
Agreement will provide that neither the Master Servicer nor the Depositor will
be under any obligation to appear in, prosecute or defend any legal action which
is not incidental to its respective responsibilities under the Agreement and
which in its opinion may involve it in any expense or liability. The Master
Servicer or the Depositor may, however, in its discretion undertake any such
action which it may deem necessary or desirable with respect to the Agreement
and the rights and duties of the parties thereto and the interests of the
Securityholders thereunder. In such event, the legal expenses and costs of such
action and any liability resulting therefrom will be expenses, costs and
liabilities of the Trust Fund and the Master Servicer or the Depositor, as the
case may be, will be entitled to be reimbursed therefor out of funds otherwise
distributable to Securityholders.

Except as otherwise specified in the related Prospectus Supplement, any
person into which the Master Servicer may be merged or consolidated, or any
person resulting from any merger or consolidation to which the Master Servicer
is a party, or any person succeeding to the business of the Master Servicer,
will be the successor of the Master Servicer under each Agreement, provided that
such person is qualified to sell mortgage loans to, and service mortgage loans
on behalf of, FNMA or FHLMC and further provided that such merger, consolidation
or succession does not adversely affect the then current rating or ratings of
the class or classes of Securities of such Series that have been rated.

EVENTS OF DEFAULT; RIGHTS UPON EVENT OF DEFAULT

Pooling and Servicing Agreement; Master Servicing Agreement. Except as
otherwise specified in the related Prospectus Supplement, Events of Default
under each Agreement will consist of (i) any failure by the Master Servicer to
distribute or cause to be distributed to Securityholders of any class any
required payment (other than an Advance) which continues unremedied for five
days after the giving of written notice of such failure to the Master Servicer
by the Trustee or the Depositor, or to the Master Servicer, the Depositor and
the Trustee by the holders of Securities of such class evidencing not less than
25% of the total distributions allocated to such class ("Percentage Interests");
(ii) any failure by the Master Servicer to make an Advance as required under the
Agreement, unless cured as specified therein; (iii) any failure by the Master
Servicer duly to observe or perform in any material respect any of its other
covenants or agreements in the Agreement which continues unremedied for thirty
days after the giving of written notice of such failure to the Master Servicer
by the Trustee or the Depositor, or to the Master Servicer, the Depositor and
the Trustee by the holders of Securities of any class evidencing not less than
25% of the aggregate Percentage Interests constituting such class; and (iv)
certain events of insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceeding and certain actions by or on behalf of the
Master Servicer indicating its insolvency, reorganization or inability to pay
its obligations.

If specified in the related Prospectus Supplement, the Agreement will
permit the Trustee to sell the Trust Fund Assets and the other assets of the
Trust Fund described under "Credit Enhancement" herein in the event that
payments in respect thereto are insufficient to make payments required in the
Agreement. The assets of the Trust Fund will be sold only under the
circumstances and in the manner specified in the related Prospectus Supplement.

Unless otherwise specified in the related Prospectus Supplement, so
long as an Event of Default under an Agreement remains unremedied, the Depositor
or the Trustee may, and at the direction of

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holders of Securities of any class evidencing not less than 25% of the aggregate
Percentage Interests constituting such class and under such other circumstances
as may be specified in such Agreement, the Trustee shall terminate all of the
rights and obligations of the Master Servicer under the Agreement relating to
such Trust Fund and in and to the related Trust Fund Assets, whereupon the
Trustee will succeed to all of the responsibilities, duties and liabilities of
the Master Servicer under the Agreement, including, if specified in the related
Prospectus Supplement, the obligation to make Advances, and will be entitled to
similar compensation arrangements. In the event that the Trustee is unwilling or
unable so to act, it may appoint, or petition a court of competent jurisdiction
for the appointment of, a mortgage loan servicing institution with a net worth
of a least $10,000,000 to act as successor to the Master Servicer under the
Agreement. Pending such appointment, the Trustee is obligated to act in such
capacity. The Trustee and any such successor may agree upon the servicing
compensation to be paid, which in no event may be greater than the compensation
payable to the Master Servicer under the Agreement.

Unless otherwise specified in the related Prospectus Supplement, no
Securityholder, solely by virtue of such holder's status as a Securityholder,
will have any right under any Agreement to institute any proceeding with respect
to such Agreement, unless such holder previously has given to the Trustee
written notice of default and unless the holders of Securities of any class of
such Series evidencing not less than 25% of the aggregate Percentage Interests
constituting such class have made written request upon the Trustee to institute
such proceeding in its own name as Trustee thereunder and have offered to the
Trustee reasonable indemnity, and the Trustee for 60 days has neglected or
refused to institute any such proceeding.

Indenture. Except as otherwise specified in the related Prospectus
Supplement, Events of Default under the Indenture for each Series of Notes
include: (i) a default in the payment of any principal of or interest on any
Note of such Series which continues unremedied for five days after the giving of
written notice of such default is given as specified in the related Prospectus
Supplement; (ii) failure to perform in any material respect any other covenant
of the Depositor or the Trust Fund in the Indenture which continues for a period
of thirty (30) days after notice thereof is given in accordance with the
procedures described in the related Prospectus Supplement; (iii) certain events
of bankruptcy, insolvency, receivership or liquidation of the Depositor or the
Trust Fund; or (iv) any other Event of Default provided with respect to Notes of
that Series including but not limited to certain defaults on the part of the
issuer, if any, of a credit enhancement instrument supporting such Notes.

If an Event of Default with respect to the Notes of any Series at the
time outstanding occurs and is continuing, either the Trustee or the holders of
a majority of the then aggregate outstanding amount of the Notes of such Series
may declare the principal amount (or, if the Notes of that Series have an
interest rate of 0%, such portion of the principal amount as may be specified in
the terms of that Series, as provided in the related Prospectus Supplement) of
all the Notes of such Series to be due and payable immediately. Such declaration
may, under certain circumstances, be rescinded and annulled by the holders of
more than 50% of the Percentage Interests of the Notes of such Series.

If, following an Event of Default with respect to any Series of Notes,
the Notes of such Series have been declared to be due and payable, the Trustee
may, in its discretion, notwithstanding such acceleration, elect to maintain
possession of the collateral securing the Notes of such Series and to continue
to apply distributions on such collateral as if there had been no declaration of
acceleration if such collateral continues to provide sufficient funds for the
payment of principal of and interest on the Notes of such Series as they would
have become due if there had not been such a declaration. In addition, the
Trustee may not sell or otherwise liquidate the collateral securing the Notes of
a Series following an

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Event of Default, other than a default in the payment of any principal or
interest on any Note of such Series for five days or more, unless (a) the
holders of 100% of the Percentage Interests of the Notes of such Series consent
to such sale, (b) the proceeds of such sale or liquidation are sufficient to pay
in full the principal of and accrued interest, due and unpaid, on the
outstanding Notes of such Series at the date of such sale or (c) the Trustee
determines that such collateral would not be sufficient on an ongoing basis to
make all payments on such Notes as such payments would have become due if such
Notes had not been declared due and payable, and the Trustee obtains the consent
of the holders of 66-2/3% of the Percentage Interests of the Notes of such
Series.

In the event that the Trustee liquidates the collateral in connection
with an Event of Default involving a default for five days or more in the
payment of principal of or interest on the Notes of a Series, the Indenture
provides that the Trustee will have a prior lien on the proceeds of any such
liquidation for unpaid fees and expenses. As a result, upon the occurrence of
such an Event of Default, the amount available for distribution to the
Noteholders would be less than would otherwise be the case. However, the Trustee
may not institute a proceeding for the enforcement of its lien except in
connection with a proceeding for the enforcement of the lien of the Indenture
for the benefit of the Noteholders after the occurrence of such an Event of
Default.

Except as otherwise specified in the related Prospectus Supplement, in
the event the principal of the Notes of a Series is declared due and payable, as
described above, the holders of any such Notes issued at a discount from par may
be entitled to receive no more than an amount equal to the unpaid principal
amount thereof less the amount of such discount which is unamortized.

Subject to the provisions of the Indenture relating to the duties of
the Trustee, in case an Event of Default shall occur and be continuing with
respect to a Series of Notes, the Trustee shall be under no obligation to
exercise any of the rights or powers under the Indenture at the request or
direction of any of the holders of Notes of such Series, unless such holders
offered to the Trustee security or indemnity satisfactory to it against the
costs, expenses and liabilities which might be incurred by it in complying with
such request or direction. Subject to such provisions for indemnification and
certain limitations contained in the Indenture, the holders of a majority of the
then aggregate outstanding amount of the Notes of such Series shall have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee or exercising any trust or power conferred on
the Trustee with respect to the Notes of such Series, and the holders of a
majority of the then aggregate outstanding amount of the Notes of such Series
may, in certain cases, waive any default with respect thereto, except a default
in the payment of principal or interest or a default in respect of a covenant or
provision of the Indenture that cannot be modified without the waiver or consent
of all the holders of the outstanding Notes of such Series affected thereby.

AMENDMENT

Except as otherwise specified in the related Prospectus Supplement,
each Agreement may be amended by the Depositor, the Master Servicer and the
Trustee, without the consent of any of the Securityholders, (i) to cure any
ambiguity; (ii) to correct or supplement any provision therein which may be
defective or inconsistent with any other provision therein; or (iii) to make any
other revisions with respect to matters or questions arising under the Agreement
which are not inconsistent with the provisions thereof, provided that such
action will not adversely affect in any material respect the interests of any
Securityholder. An amendment will be deemed not to adversely affect in any
material respect the interests of the Securityholders if the person requesting
such amendment obtains a letter from each Rating Agency requested to rate the
class or classes of Securities of such Series stating that such amendment will

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not result in the downgrading or withdrawal of the respective ratings then
assigned to such Securities. In addition, to the extent provided in the related
Agreement, an Agreement may be amended without the consent of any of the
Securityholders, to change the manner in which the Security Account is
maintained, provided that any such change does not adversely affect the then
current rating on the class or classes of Securities of such Series that have
been rated. In addition, if a REMIC election is made with respect to a Trust
Fund, the related Agreement may be amended to modify, eliminate or add to any of
its provisions to such extent as may be necessary to maintain the qualification
of the related Trust Fund as a REMIC, provided that the Trustee has received an
opinion of counsel to the effect that such action is necessary or helpful to
maintain such qualification. Except as otherwise specified in the related
Prospectus Supplement, each Agreement may also be amended by the Depositor, the
Master Servicer and the Trustee with consent of holders of Securities of such
Series evidencing not less than 66% of the aggregate Percentage Interests of
each class affected thereby for the purpose of adding any provisions to or
changing in an manner or eliminating any of the provisions of the Agreement or
of modifying in any manner the rights of the holders of the related Securities;
provided, however, that no such amendment may (i) reduce in any manner the
amount of or delay the timing of, payments received on Loans which are required
to be distributed on any Security without the consent of the holder of such
Security, or (ii) reduce the aforesaid percentage of Securities of any class the
holders of which are required to consent to any such amendment without the
consent of the holders of all Securities of such class covered by such Agreement
then outstanding. If a REMIC election is made with respect to a Trust Fund, the
Trustee will not be entitled to consent to an amendment to the related Agreement
without having first received an opinion of counsel to the effect that such
amendment will not cause such Trust Fund to fail to qualify as a REMIC.

TERMINATION; OPTIONAL TERMINATION

Pooling and Servicing Agreement; Trust Agreement. Unless otherwise
specified in the related Agreement, the obligations created by each Pooling and
Servicing Agreement and Trust Agreement for each Series of Securities will
terminate upon the payment to the related Securityholders of all amounts held in
the Security Account or by the Master Servicer and required to be paid to them
pursuant to such Agreement following the later of (i) the final payment of or
other liquidation of the last of the Trust Fund Assets subject thereto or the
disposition of all property acquired upon foreclosure of any such Trust Fund
Assets remaining in the Trust Fund and (ii) the purchase by the Master Servicer
or, if REMIC treatment has been elected and if specified in the related
Prospectus Supplement, by the holder of the residual interest in the REMIC (see
"Federal Income Tax Consequences"), from the related Trust Fund of all of the
remaining Trust Fund Assets and all property acquired in respect of such Trust
Fund Assets.

Unless otherwise specified by the related Prospectus Supplement, any
such purchase of Trust Fund Assets and property acquired in respect of Trust
Fund Assets evidenced by a Series of Securities will be made at the option of
the Master Servicer, such other person or, if applicable, such holder of the
REMIC residual interest, at a price specified in the related Prospectus
Supplement. The exercise of such right will effect early retirement of the
Securities of that Series, but the right of the Master Servicer, such other
person or, if applicable, such holder of the REMIC residual interest, to so
purchase is subject to the principal balance of the related Trust Fund Assets
being less than the percentage specified in the related Prospectus Supplement of
the aggregate principal balance of the Trust Fund Assets at the Cut-off Date for
the Series. The foregoing is subject to the provision that if a REMIC election
is made with respect to a Trust Fund, any repurchase pursuant to clause (ii)
above will be made only in connection with a "qualified liquidation" of the
REMIC within the meaning of Section 860F(g)(4) of the Code.

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Indenture. The Indenture will be discharged with respect to a Series of
Notes (except with respect to certain continuing rights specified in the
Indenture) upon the delivery to the Trustee for cancellation of all the Notes of
such Series or, with certain limitations, upon deposit with the Trustee of funds
sufficient for the payment in full of all of the Notes of such Series.

In addition to such discharge with certain limitations, the Indenture
will provide that, if so specified with respect to the Notes of any Series, the
related Trust Fund will be discharged from any and all obligations in respect of
the Notes of such Series (except for certain obligations relating to temporary
Notes and exchange of Notes, to register the transfer of or exchange Notes of
such Series, to replace stolen, lost or mutilated Notes of such Series, to
maintain paying agencies and to hold monies for payment in trust) upon the
deposit with the Trustee, in trust, of money and/or direct obligations of or
obligations guaranteed by the United States of America which through the payment
of interest and principal in respect thereof in accordance with their terms will
provide money in an amount sufficient to pay the principal of and each
installment of interest on the Notes of such Series on the last scheduled
Distribution Date for such Notes and any installment of interest on such Notes
in accordance with the terms of the Indenture and the Notes of such Series. In
the event of any such defeasance and discharge of Notes of such Series, holders
of Notes of such Series would be able to look only to such money and/or direct
obligations for payment of principal and interest, if any, on their Notes until
maturity.

THE TRUSTEE

The Trustee under each Agreement will be named in the applicable
Prospectus Supplement. The commercial bank or trust company serving as Trustee
may have normal banking relationships with the Depositor, the Master Servicer
and any of their respective affiliates.

CERTAIN LEGAL ASPECTS OF THE LOANS

The following discussion contains summaries, which are general in
nature, of certain legal matters relating to the Loans. Because such legal
aspects are governed primarily by applicable state law (which laws may differ
substantially), the descriptions do not, except as expressly provided below,
reflect the laws of any particular state, nor to encompass the laws of all
states in which the security for the Loans is situated. The descriptions are
qualified in their entirety by reference to the applicable federal laws and the
appropriate laws of the states in which Loans may be originated.

GENERAL

The Loans for a Series may be secured by deeds of trust, mortgages,
security deeds or deeds to secure debt, depending upon the prevailing practice
in the state in which the property subject to the loan is located. Deeds of
trust are used almost exclusively in California instead of mortgages. A mortgage
creates a lien upon the real property encumbered by the mortgage, which lien is
generally not prior to the lien for real estate taxes and assessments. Priority
between mortgages depends on their terms and generally on the order of recording
with a state or county office. There are two parties to a mortgage, the
mortgagor, who is the borrower and owner of the mortgaged property, and the
mortgagee, who is the lender. Under the mortgage instrument, the mortgagor
delivers to the mortgagee a note or bond and the mortgage. Although a deed of
trust is similar to a mortgage, a deed of trust formally has three parties, the
borrower-property owner called the trustor (similar to a mortgagor), a lender
(similar to a mortgagee) called the beneficiary, and a third-party grantee
called the trustee. Under a deed of trust, the borrower grants the property,
irrevocably until the debt is paid, in trust, generally with a power of sale,

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to the trustee to secure payment of the obligation. A security deed and a deed
to secure debt are special types of deeds which indicate on their face that they
are granted to secure an underlying debt. By executing a security deed or deed
to secure debt, the grantor conveys title to, as opposed to merely creating a
lien upon, the subject property to the grantee until such time as the underlying
debt is repaid. The trustee's authority under a deed of trust, the mortgagee's
authority under a mortgage and the grantee's authority under a security deed or
deed to secure debt are governed by law and, with respect to some deeds of
trust, the directions of the beneficiary.

Cooperatives. Certain of Loans may be Cooperative Loans. The
Cooperative owns all the real property that comprises the project, including the
land, separate dwelling units and all common areas. The Cooperative is directly
responsible for project management and, in most cases, payment of real estate
taxes and hazard and liability insurance. If there is a blanket mortgage on the
Cooperative and/or underlying land, as is generally the case, the Cooperative,
as project mortgagor, is also responsible for meeting these mortgage
obligations. A blanket mortgage is ordinarily incurred by the Cooperative in
connection with the construction or purchase of the Cooperative's apartment
building. The interest of the occupant under proprietary leases or occupancy
agreements to which that Cooperative is a party are generally subordinate to the
interest of the holder of the blanket mortgage in that building. If the
Cooperative is unable to meet the payment obligations arising under its blanket
mortgage, the mortgagee holding the blanket mortgage could foreclose on that
mortgage and terminate all subordinate proprietary leases and occupancy
agreements. In addition, the blanket mortgage on a Cooperative may provide
financing in the form of a mortgage that does not fully amortize with a
significant portion of principal being due in one lump sum at final maturity.
The inability of the Cooperative to refinance this mortgage and its consequent
inability to make such final payment could lead to foreclosure by the mortgagee
providing the financing. A foreclosure in either event by the holder of the
blanket mortgage could eliminate or significantly diminish the value of any
collateral held by the lender who financed the purchase by an individual
tenant-stockholder of Cooperative shares or, in the case of a Trust Fund
including Cooperative Loans, the collateral securing the Cooperative Loans.

The Cooperative is owned by tenant-stockholders who, through ownership
of stock, shares or membership certificates in the corporation, receive
proprietary leases or occupancy agreements which confer exclusive rights to
occupy specific units. Generally, a tenant-stockholder of a Cooperative must
make a monthly payment to the Cooperative representing such tenant-stockholder's
pro rata share of the Cooperative's payments for its blanket mortgage, real
property taxes, maintenance expenses and other capital or ordinary expenses. An
ownership interest in a Cooperative and accompanying rights is financed through
a Cooperative share loan evidenced by a promissory note and secured by a
security interest in the occupancy agreement or proprietary lease and in the
related Cooperative shares. The lender takes possession of the share certificate
and a counterpart of the proprietary lease or occupancy agreement, and a
financing statement covering the proprietary lease or occupancy agreement and
the Cooperative shares is filed in the appropriate state and local offices to
perfect the lender's interest in its collateral. Subject to the limitations
discussed below, upon default of the tenant-stockholder, the lender may sue for
judgment on the promissory note, dispose of the collateral at a public or
private sale or otherwise proceed against the collateral or tenant-stockholder
as an individual as provided in the security agreement covering the assignment
of the proprietary lease or occupancy agreement and the pledge of Cooperative
shares.

FORECLOSURE/REPOSSESSION

Deed of Trust. Foreclosure of a deed of trust is generally
accomplished by a non-judicial sale under a specific provision in the deed of
trust which authorizes the trustee to sell the property at public

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auction upon any default by the borrower under the terms of the note or deed of
trust. In certain states, such foreclosure also may be accomplished by judicial
action in the manner provided for foreclosure of mortgages. In addition to any
notice requirements contained in a deed of trust, in some states (such as
California), the trustee must record a notice of default and send a copy to the
borrower-trustor, to any person who has recorded a request for a copy of any
notice of default and notice of sale, to any successor in interest to the
borrower-trustor, to the beneficiary of any junior deed of trust and to certain
other persons. In some states (including California), the borrower-trustor has
the right to reinstate the loan at any time following default until shortly
before the trustee's sale. In general, the borrower, or any other person having
a junior encumbrance on the real estate, may, during a statutorily prescribed
reinstatement period, cure a monetary default by paying the entire amount in
arrears plus other designated costs and expenses incurred in enforcing the
obligation. Generally, state law controls the amount of foreclosure expenses and
costs, including attorney's fees, which may be recovered by a lender. After the
reinstatement period has expired without the default having been cured, the
borrower or junior lienholder no longer has the right to reinstate the loan and
must pay the loan in full to prevent the scheduled foreclosure sale. If the deed
of trust is not reinstated within any applicable cure period, a notice of sale
must be posted in a public place and, in most states (including California),
published for a specific period of time in one or more newspapers. In addition,
some state laws require that a copy of the notice of sale be posted on the
property and sent to all parties having an interest of record in the real
property. In California, the entire process from recording a notice of default
to a non-judicial sale usually takes four to five months.

Mortgages. Foreclosure of a mortgage is generally accomplished by
judicial action. The action is initiated by the service of legal pleadings upon
all parties having an interest in the real property. Delays in completion of the
foreclosure may occasionally result from difficulties in locating necessary
parties. Judicial foreclosure proceedings are often not contested by any of the
parties. When the mortgagee's right to foreclosure is contested, the legal
proceedings necessary to resolve the issue can be time consuming. After the
completion of a judicial foreclosure proceeding, the court generally issues a
judgment of foreclosure and appoints a referee or other court officer to conduct
the sale of the property. In some states, mortgages may also be foreclosed by
advertisement, pursuant to a power of sale provided in the mortgage.

Although foreclosure sales are typically public sales, frequently no
third party purchaser bids in excess of the lender's lien because of the
difficulty of determining the exact status of title to the property, the
possible deterioration of the property during the foreclosure proceedings and a
requirement that the purchaser pay for the property in cash or by cashier's
check. Thus the foreclosing lender often purchases the property from the trustee
or referee for an amount equal to the principal amount outstanding under the
loan, accrued and unpaid interest and the expenses of foreclosure in which event
the mortgagor's debt will be extinguished or the lender may purchase for a
lesser amount in order to preserve its right against a borrower to seek a
deficiency judgment in states where such judgment is available. Thereafter,
subject to the right of the borrower in some states to remain in possession
during the redemption period, the lender will assume the burden of ownership,
including obtaining hazard insurance and making such repairs at its own expense
as are necessary to render the property suitable for sale. The lender will
commonly obtain the services of a real estate broker and pay the broker's
commission in connection with the sale of the property. Depending upon market
conditions, the ultimate proceeds of the sale of the property may not equal the
lender's investment in the property. Any loss may be reduced by the receipt of
any mortgage guaranty insurance proceeds.

Courts have imposed general equitable principles upon foreclosure,
which are generally designed to mitigate the legal consequences to the borrower
of the borrower's defaults under the loan documents.

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Some courts have been faced with the issue of whether federal or state
constitutional provisions reflecting due process concerns for fair notice
require that borrowers under deeds of trust receive notice longer than that
prescribed by statute. For the most part, these cases have upheld the notice
provisions as being reasonable or have found that the sale by a trustee under a
deed of trust does not involve sufficient state action to afford constitutional
protection to the borrower.

When the beneficiary under a junior mortgage or deed of trust cures the
default and reinstates or redeems by paying the full amount of the senior
mortgage or deed of trust, the amount paid by the beneficiary so to cure or
redeem becomes a part of the indebtedness secured by the junior mortgage or deed
of trust. See "--Junior Mortgages; Rights of Senior Mortgagees" below.

Cooperative Loans. The Cooperative shares owned by the
tenant-stockholder and pledged to the lender are, in almost all cases, subject
to restrictions on transfer as set forth in the Cooperative's certificate of
incorporation and bylaws, as well as the proprietary lease or occupancy
agreement, and may be cancelled by the Cooperative for failure by the
tenant-stockholder to pay rent or other obligations or charges owed by such
tenant- stockholder, including mechanics' liens against the cooperative
apartment building incurred by such tenant-stockholder. The proprietary lease or
occupancy agreement generally permits the Cooperative to terminate such lease or
agreement in the event an obligor fails to make payments or defaults in the
performance of covenants required thereunder. Typically, the lender and the
Cooperative enter into a recognition agreement which establishes the rights and
obligations of both parties in the event of a default by the tenant-stockholder
on its obligations under the proprietary lease or occupancy agreement. A default
by the tenant-stockholder under the proprietary lease or occupancy agreement
will usually constitute a default under the security agreement between the
lender and the tenant-stockholder.

The recognition agreement generally provides that, in the event that
the tenant-stockholder has defaulted under the proprietary lease or occupancy
agreement, the Cooperative will take no action to terminate such lease or
agreement until the lender has been provided with an opportunity to cure the
default. The recognition agreement typically provides that if the proprietary
lease or occupancy agreement is terminated, the Cooperative will recognize the
lender's lien against proceeds form the sale of the Cooperative apartment,
subject, however, to the Cooperative's right to sums due under such proprietary
lease or occupancy agreement. The total amount owed to the Cooperative by the
tenant-stockholder, which the lender generally cannot restrict and does not
monitor, could reduce the value of the collateral below the outstanding
principal balance of the Cooperative Loan and accrued and unpaid interest
thereon.

Recognition agreements also provide that in the event of a foreclosure
on a Cooperative Loan, the lender must obtain the approval or consent of the
Cooperative as required by the proprietary lease before transferring the
Cooperative shares or assigning the proprietary lease. Generally, the lender is
not limited in any rights it may have to dispossess the tenant-stockholders.

In some states, foreclosure on the Cooperative shares is accomplished
by a sale in accordance with the provisions of Article 9 of the Uniform
Commercial Code (the "UCC") and the security agreement relating to those shares.
Article 9 of the UCC requires that a sale be conducted in a "commercially
reasonable" manner. Whether a foreclosure sale has been conducted in a
"commercially reasonable" manner will depend on the facts in each case. In
determining commercial reasonableness, a court will look to the notice given the
debtor and the method, manner, time, place and terms of the foreclosure.
Generally, a sale conducted according to the usual practice of banks selling
similar collateral will be considered reasonably conducted.

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Article 9 of the UCC provides that the proceeds of the sale will be
applied first to pay the costs and expenses of the sale and then to satisfy the
indebtedness secured by the lender's security interest. The recognition
agreement, however, generally provides that the lender's right to reimbursement
is subject to the right of the Cooperative to receive sums due under the
proprietary lease or occupancy agreement. If there are proceeds remaining, the
lender must account to the tenant-stockholder for the surplus. Conversely, if a
portion of the indebtedness remains unpaid, the tenant-stockholder is generally
responsible for the deficiency. See "--Anti-Deficiency Legislation and Other
Limitations on Lenders" below.

In the case of foreclosure on a building which was converted from a
rental building to a building owned by a Cooperative under a non-eviction plan,
some states require that a purchaser at a foreclosure sale take the property
subject to rent control and rent stabilization laws which apply to certain
tenants who elected to remain in the building but who did not purchase shares in
the Cooperative when the building was so converted.

ENVIRONMENTAL RISKS

Real property pledged as security to a lender may be subject to
unforeseen environmental risks. Under the laws of certain states, contamination
of a property may give risks to a lien on the property to assure the payment of
the costs of clean-up. In several states such a lien has priority over the lien
of an existing mortgage against such property. In addition, under the federal
Comprehensive Environmental Response, Compensation and Liability Act of 1980
("CERCLA"), the United States Environmental Protection Agency ("EPA") may impose
a lien on property where EPA has incurred clean-up costs. However, a CERCLA lien
is subordinate to pre-existing, perfected security interests.

Under the laws of some states, and under CERCLA, it is conceivable that
a secured lender may be held liable as an "owner" or "operator" for the costs of
addressing releases or threatened releases of hazardous substances at a
Property, even though the environmental damage or threat was caused by a prior
or current owner or operator. CERCLA imposes liability for such costs on any and
all "responsible parties," including owners or operators. However, CERCLA
excludes from the definition of "owner or operator" a secured creditor who holds
indicia of ownership primarily to protect its security interest (the "secured
creditor exclusion") but without "participating in the management" of the
Property. Thus, if a lender's activities begin to encroach on the actual
management of a contaminated facility or property, the lender may incur
liability as an "owner or operator" under CERCLA. Similarly, if a lender
forecloses and takes title to a contaminated facility or property, the lender
may incur CERCLA liability in various circumstances, including, but not limited
to, when it holds the facility or property as an investment (including leasing
the facility or property to third party), or fails to market the property in a
timely fashion.

Whether actions taken by a lender would constitute participation in the
management of a mortgaged property, or the business of a borrower, so as to
render the secured creditor exemption unavailable to a lender has been a matter
of judicial interpretation of the statutory language, and court decisions have
been inconsistent. In 1990, the Court of Appeals for the Eleventh Circuit
suggested that the mere capacity of the lender to influence a borrower's
decisions regarding disposal of hazardous substances was sufficient
participation in the management of the borrower's business to deny the
protection of the secured creditor exemption to the lender.

This ambiguity appears to have been resolved by the enactment of the
Asset Conservation, Lender Liability and Deposit Insurance Protection Act of
1996, which was signed into law by President Clinton

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on September 30, 1996. The new legislation provides that in order to be deemed
to have participated in the management of a mortgaged property, a lender must
actually participate in the operational affairs of the property or the borrower.
The legislation also provides that participation in the management of the
property does not include "merely having the capacity to influence, or
unexercised right to control" operations. Rather, a lender will lose the
protection of the secured creditor exemption only if it exercises
decision-making control over the borrower's environmental compliance and
hazardous substance handling and disposal practices, or assumes day-to-day
management of all operational functions of the mortgaged property.

If a lender is or becomes liable, it can bring an action for
contribution against any other "responsible parties," including a previous owner
or operator, who created the environmental hazard, but those persons or entities
may be bankrupt or otherwise judgment proof. The costs associated with
environmental cleanup may be substantial. It is conceivable that such costs
arising from the circumstances set forth above would result in a loss to
Certificateholders.

CERCLA does not apply to petroleum products, and the secured creditor
exclusion does not govern liability for cleanup costs under federal laws other
than CERCLA, in particular Subtitle I of the federal Resource Conservation and
Recovery Act ("RCRA"), which regulates underground petroleum storage tanks
(except heating oil tanks). The EPA has adopted a lender liability rule for
underground storage tanks under Subtitle I of RCRA. Under such rule, a holder of
a security interest in an underground storage tank or real property containing
an underground storage tank is not considered an operator of the underground
storage tank as long as petroleum is not added to, stored in or dispensed from
the tank. In addition, under the Asset Conservation, Lender Liability and
Deposit Insurance Protection Act of 1996, the protections accorded to lenders
under CERCLA are also accorded to the holders of security interests in
underground storage tanks. It should be noted, however, that liability for
cleanup of petroleum contamination may be governed by state law, which may not
provide for any specific protection for secured creditors.

Except as otherwise specified in the related Prospectus Supplement, at
the time the Loans were originated, no environmental assessment or a very
limited environmental assessment of the Properties was conducted.

RIGHTS OF REDEMPTION

In some states, after sale pursuant to a deed of trust or foreclosure
of a mortgage, the borrower and foreclosed junior lienors are given a statutory
period in which to redeem the property from the foreclosure sale. In certain
other states (including California), this right of redemption applies only to
sales following judicial foreclosure, and not to sales pursuant to a
non-judicial power of sale. In most states where the right of redemption is
available, statutory redemption may occur upon payment of the foreclosure
purchase price, accrued interest and taxes. In other states, redemption may be
authorized if the former borrower pays only a portion of the sums due. The
effect of a statutory right of redemption is to diminish the ability of the
lender to sell the foreclosed property. The exercise of a right of redemption
would defeat the title of any purchaser from the lender subsequent to
foreclosure or sale under a deed of trust. Consequently, the practical effect of
the redemption right is to force the lender to retain the property and pay the
expenses of ownership until the redemption period has run. In some states, there
is no right to redeem property after a trustee's sale under a deed of trust.

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ANTI-DEFICIENCY LEGISLATION AND OTHER LIMITATIONS ON LENDERS

Certain states have imposed statutory and judicial restrictions that
limit the remedies of a beneficiary under a deed of trust or a mortgagee under a
mortgage. In some states, including California, statutes and case law limit the
right of the beneficiary or mortgagee to obtain a deficiency judgment against
borrowers financing the purchase of their residence or following sale under a
deed of trust or certain other foreclosure proceedings. A deficiency judgment is
a personal judgment against the borrower equal in most cases to the difference
between the amount due to the lender and the fair market value of the real
property at the time of the foreclosure sale. As a result of these prohibitions,
it is anticipated that in most instances the Master Servicer will utilize the
non-judicial foreclosure remedy and will not seek deficiency judgments against
defaulting borrowers.

Some state statutes require the beneficiary or mortgagee to exhaust the
security afforded under a deed of trust or mortgage by foreclosure in an attempt
to satisfy the full debt before bringing a personal action against the borrower.
In certain other states, the lender has the option of bringing a personal action
against the borrower on the debt without first exhausting such security;
however, in some of these states, the lender, following judgment on such
personal action, may be deemed to have elected a remedy and may be precluded
from exercising remedies with respect to the security. Consequently, the
practical effect of the election requirement, when applicable, is that lenders
will usually proceed first against the security rather than bringing a personal
action against the borrower. In some states, exceptions to the anti-deficiency
statutes are provided for in certain instances where the value of the lender's
security has been impaired by acts or omissions of the borrower, for example, in
the event of waste of the property. Finally, other statutory provisions limit
any deficiency judgment against the former borrower following a foreclosure sale
to the excess of the outstanding debt over the fair market value of the property
at the time of the public sale. The purpose of these statutes is generally to
prevent a beneficiary or a mortgagee from obtaining a large deficiency judgment
against the former borrower as a result of low or no bids at the foreclosure
sale.

Generally, Article 9 of the UCC governs foreclosure on Cooperative
shares and the related proprietary lease or occupancy agreement. Some courts
have interpreted section 9-504 of the UCC to prohibit a deficiency award unless
the creditor establishes that the sale of the collateral (which, in the case of
a Cooperative Loan, would be the shares of the Cooperative and the related
proprietary lease or occupancy agreement) was conducted in a commercially
reasonable manner.

In addition to anti-deficiency and related legislation, numerous other
federal and state statutory provisions, including the federal bankruptcy laws
and state laws affording relief to debtors, may interfere with or affect the
ability of the secured mortgage lender to realize upon its security. For
example, in a proceeding under the federal Bankruptcy Code, a lender may not
foreclose on a mortgaged property without the permission of the bankruptcy
court. The rehabilitation plan proposed by the debtor may provide, if the
mortgaged property is not the debtor's principal residence and the court
determines that the value of the mortgaged property is less than the principal
balance of the mortgage loan, for the reduction of the secured indebtedness to
the value of the mortgaged property as of the date of the commencement of the
bankruptcy, rendering the lender a general unsecured creditor for the
difference, and also may reduce the monthly payments due under such mortgage
loan, change the rate of interest and alter the mortgage loan repayment
schedule. The effect of any such proceedings under the federal Bankruptcy Code,
including but not limited to any automatic stay, could result in delays in
receiving payments on the Loans underlying a Series of Securities and possible
reductions in the aggregate amount of such payments.

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The federal tax laws provide priority to certain tax liens over the
lien of a mortgage or secured party.

DUE-ON-SALE CLAUSES

Unless otherwise specified in the related Prospectus Supplement, each
conventional Loan will contain a due-on-sale clause which will generally provide
that if the mortgagor or obligor sells, transfers or conveys the Property, the
loan or contract may be accelerated by the mortgagee or secured party. Court
decisions and legislative actions have placed substantial restriction on the
right of lenders to enforce such clauses in many states. For instance, the
California Supreme Court in August 1978 held that due-on-sale clauses were
generally unenforceable. However, the Garn-St Germain Depository Institutions
Act of 1982 (the "Garn-St Germain Act"), subject to certain exceptions, preempts
state constitutional, statutory and case law prohibiting the enforcement of
due-on-sale clauses. As a result, due-on-sale clauses have become generally
enforceable except in those states whose legislatures exercised their authority
to regulate the enforceability of such clauses with respect to mortgage loans
that were (i) originated or assumed during the "window period" under the Garn-St
Germain Act which ended in all cases not later than October 15, 1982, and (ii)
originated by lenders other than national banks, federal savings institutions
and federal credit unions. FHLMC has taken the position in its published
mortgage servicing standards that, out of a total of eleven "window period
states," five states (Arizona, Michigan, Minnesota, New Mexico and Utah) have
enacted statutes extending, on various terms and for varying periods, the
prohibition on enforcement of due-on-sale clauses with respect to certain
categories of window period loans. Also, the Garn-St Germain Act does
"encourage" lenders to permit assumption of loans at the original rate of
interest or at some other rate less than the average of the original rate and
the market rate.

As to loans secured by an owner-occupied residence, the Garn-St Germain
Act sets forth nine specific instances in which a mortgagee covered by the Act
may not exercise its rights under a due-on-sale clause, notwithstanding the fact
that a transfer of the property may have occurred. The inability to enforce a
due-on-sale clause may result in transfer of the related Property to an
uncreditworthy person, which could increase the likelihood of default or may
result in a mortgage bearing an interest rate below the current market rate
being assumed by a new home buyer, which may affect the average life of the
Loans and the number of Loans which may extend to maturity.

In addition, under federal bankruptcy law, due-on-sale clauses may not
be enforceable in bankruptcy proceedings and may, under certain circumstances,
be eliminated in any modified mortgage resulting from such bankruptcy
proceeding.

ENFORCEABILITY OF PREPAYMENT AND LATE PAYMENT FEES

Forms of notes, mortgages and deeds of trust used by lenders may
contain provisions obligating the borrower to pay a late charge if payments are
not timely made, and in some circumstances may provide for prepayment fees or
penalties if the obligation is paid prior to maturity. In certain states, there
are or may be specific limitations upon the late charges which a lender may
collect from a borrower for delinquent payments. Certain states also limit the
amounts that a lender may collect from a borrower as an additional charge if the
loan is prepaid. Under certain state laws, prepayment charges may not be imposed
after a certain period of time following the origination of mortgage loans with
respect to prepayments on loans secured by liens encumbering owner-occupied
residential properties. Since many of the Properties will be owner-occupied, it
is anticipated that prepayment charges may not be imposed with respect to many
of the Loans. The absence of such a restraint on prepayment, particularly with

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respect to fixed rate Loans having higher Loan Rates, may increase the
likelihood of refinancing or other early retirement of such loans or contracts.
Late charges and prepayment fees are typically retained by servicers as
additional servicing compensation.

APPLICABILITY OF USURY LAWS

Title V of the Depository Institutions Deregulation and Monetary
Control Act of 1980, enacted in March 1980 ("Title V") provides that state usury
limitations shall not apply to certain types of residential first mortgage loans
originated by certain lenders after March 31, 1980. The Office of Thrift
Supervision, as successor to the Federal Home Loan Bank Board, is authorized to
issue rules and regulations and to publish interpretations governing
implementation of Title V. The statute authorized the states to reimpose
interest rate limits by adopting, before April 1, 1983, a law or constitutional
provision which expressly rejects an application of the federal law. Fifteen
states adopted such a law prior to the April 1, 1983 deadline. In addition, even
where Title V is not so rejected, any state is authorized by the law to adopt a
provision limiting discount points or other charges on mortgage loans covered by
Title V. Certain states have taken action to reimpose interest rate limits
and/or to limit discount points or other charges.

THE CONTRACTS

General. The Contracts, other than those Contracts that are unsecured
or secured by mortgages on real estate (such Contracts are hereinafter referred
to in this section as "contracts") generally are "chattel paper" or constitute
"purchase money security interests" each as defined in the UCC. Pursuant to the
UCC, the sale of chattel paper is treated in a manner similar to perfection of a
security interest in chattel paper. Under the related Agreement, the Depositor
will transfer physical possession of the contracts to the Trustee or a
designated custodian or may retain possession of the contracts as custodian for
the Trustee. In addition, the Depositor will make an appropriate filing of a
UCC-1 financing statement in the appropriate states to, among other things, give
notice of the Trust Fund's ownership of the contracts. Unless otherwise
specified in the related Prospectus Supplement, the contracts will not be
stamped or otherwise marked to reflect their assignment from the Depositor to
the Trustee. Therefore, if through negligence, fraud or otherwise, a subsequent
purchaser were able to take physical possession of the contracts without notice
of such assignment, the Trust Fund's interest in the contracts could be
defeated.

Security Interests in Home Improvements. The contracts that are secured
by the Home Improvements financed thereby grant to the originator of such
contracts a purchase money security interest in such Home Improvements to secure
all or part of the purchase price of such Home Improvements and related
services. A financing statement generally is not required to be filed to perfect
a purchase money security interest in consumer goods. Such purchase money
security interests are assignable. In general, a purchase money security
interest grants to the holder a security interest that has priority over a
conflicting security interest in the same collateral and the proceeds of such
collateral. However, to the extent that the collateral subject to a purchase
money security interest becomes a fixture, in order for the related purchase
money security interest to take priority over a conflicting interest in the
fixture, the holder's interest in such Home Improvement must generally be
perfected by a timely fixture filing. In general, a security interest does not
exist under the UCC in ordinary building material incorporated into an
improvement on land. Home Improvement Contracts that finance lumber, bricks,
other types of ordinary building material or other goods that are deemed to lose
such characterization upon incorporation of such materials into the related
property, will not be secured by a purchase money security interest in the Home
Improvement being financed.

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Enforcement of Security Interest in Home Improvements. So long as the
Home Improvement has not become subject to the real estate law, a creditor can
repossess a Home Improvement securing a contract by voluntary surrender, by
"self-help" repossession that is "peaceful" (i.e., without breach of the peace)
or, in the absence of voluntary surrender and the ability to repossess without
breach of the peace, by judicial process. The holder of a contract must give the
debtor a number of days' notice, which varies from 10 to 30 days depending on
the state, prior to commencement of any repossession. The UCC and consumer
protection laws in most states place restrictions on repossession sales,
including requiring prior notice to the debtor and commercial reasonableness in
effecting such a sale. The law in most states also requires that the debtor be
given notice of any sale prior to resale of the unit that the debtor may redeem
at or before such resale.

Under the laws applicable in most states, a creditor is entitled to
obtain a deficiency judgment from a debtor for any deficiency on repossession
and resale of the property securing the debtor's loan. However, some states
impose prohibitions or limitations on deficiency judgments, and in many cases
the defaulting borrower would have no assets with which to pay a judgment.

Certain other statutory provisions, including federal and state
bankruptcy and insolvency laws and general equitable principles, may limit or
delay the ability of a lender to repossess and resell collateral or enforce a
deficiency judgment.

Security Interests in the Manufactured Homes. The Manufactured Homes
securing the Manufactured Housing Contracts may be located in all 50 states and
the District of Columbia. Security interests in manufactured homes may be
perfected either by notation of the secured party's lien on the certificate of
title or by delivery of the required documents and payment of a fee to the state
motor vehicle authority, depending on state law. In some nontitle states,
perfection pursuant to the provisions of the UCC is required. As manufactured
homes have become large and often have been attached to their sites without any
apparent intention to move them, courts in many states have held that
manufactured homes, under certain circumstances, may become subject to real
estate title and recording laws. As a result, a security interest in a
manufactured home could be rendered subordinate to the interests of other
parties claiming an interest in the manufactured home under applicable state
real estate law. In order to perfect a security interest in a manufactured home
under real estate laws, the secured party must file either a "fixture filing"
under the provisions of the UCC or a real estate mortgage under the real estate
laws of the state where the home is located. These filings must be made in the
real estate records office of the county where the manufactured home is located.
If so specified in the related Prospectus Supplement, the Manufactured Housing
Contracts may contain provisions prohibiting the borrower from permanently
attaching the Manufactured Home to its site. So long as the borrower does not
violate this agreement, a security interest in the Manufactured Home will be
governed by the certificate of title laws or the UCC, and the notation of the
security interest on the certificate of title or the filing of a UCC financing
statement will be effective to maintain the priority of the security interest in
the Manufactured Home. If, however, a Manufactured Home is permanently attached
to its site, the related lender may be required to perfect a security interest
in the Manufactured Home under applicable real estate laws.

In the event that the owner of a Manufactured Home moves it to a state
other than the state in which such Manufactured Home initially is registered,
under the laws of most states the perfected security interest in the
Manufactured Home would continue for four months after such relocation and
thereafter only if and after the owner re-registers the Manufactured Home in
such state. If the owner were to relocate a Manufactured Home to another state
and not re-register a security interest in such state, the security interest in
the Manufactured Home would cease to be perfected. A majority of states
generally require surrender of a certificate of title to re-register a
Manufactured Home; accordingly, the secured

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party must surrender possession if it holds the certificate of title to such
Manufactured Home or, in the case of Manufactured Homes registered in states
which provide for notation of lien on the certificate of title, notice of
surrender would be given to the secured party noted on the certificate of title.
In states which do not require a certificate of title for registration of a
manufactured home, re-registration could defeat perfection.

Under the laws of most states, liens for repairs performed on a
Manufactured Home and liens for personal property taxes take priority over a
perfected security interest in the Manufactured Home.

Consumer Protection Laws. The so-called "Holder-in-Due Course" rule of
the Federal Trade Commission is intended to defeat the ability of the transferor
of a consumer credit contract which is the seller of goods which gave rise to
the transaction (and certain related lenders and assignees) to transfer such
contract free of notice of claims by the debtor thereunder. The effect of this
rule is to subject the assignee of such a contract to all claims and defenses
which the debtor could assert against the seller of goods. Liability under this
rule is limited to amounts paid under a contract; however, the obligor also may
be able to assert the rule to set off remaining amounts due as a defense against
a claim brought by the Trustee against such obligor. Numerous other federal and
state consumer protection laws impose requirements applicable to the origination
and lending pursuant to the contracts, including the Truth in Lending Act, the
Federal Trade Commission Act, the Fair Credit Billing Act, the Fair Credit
Reporting Act, the Equal Credit Opportunity Act, the Fair Debt Collection
Practices Act and the Uniform Consumer Credit Code. In the case of some of these
laws, the failure to comply with their provisions may affect the enforceability
of the related contract.

Applicability of Usury Laws. Title V of the Depository Institutions
Deregulation and Monetary Control Act of 1980, as amended ("Title V"), provides
that, subject to the following conditions, state usury limitations shall not
apply to any contract which is secured by a first lien on certain kinds of
consumer goods. The contracts would be covered if they satisfy certain
conditions governing, among other things, the terms of any prepayments, late
charges and deferral fees and requiring a 30-day notice period prior to
instituting any action leading to repossession of the related unit.

Title V authorized any state to reimpose limitations on interest rates
and finance charges by adopting before April 1, 1983 a law or constitutional
provision which expressly rejects application of the federal law. Fifteen states
adopted such a law prior to the April 1, 1983 deadline. In addition, even where
Title V was not so rejected, any state is authorized by the law to adopt a
provision limiting discount points or other charges on loans covered by Title V.

INSTALLMENT CONTRACTS

The Loans may also consist of installment contracts. Under an
installment contract ("Installment Contract") the seller (hereinafter referred
to in this section as the "lender") retains legal title to the property and
enters into an agreement with the purchaser hereinafter referred to in this
section as the "borrower") for the payment of the purchase price, plus interest,
over the term of such contract. Only after full performance by the borrower of
the contract is the lender obligated to convey title to the property to the
purchaser. As with mortgage or deed of trust financing, during the effective
period of the Installment Contract, the borrower is generally responsible for
maintaining the property in good condition and for paying real estate taxes,
assessments and hazard insurance premiums associated with the property.

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The method of enforcing the rights of the lender under an Installment
Contract varies on a state-by-state basis depending upon the extent to which
state courts are willing, or able pursuant to state statute, to enforce the
contract strictly according to its terms. The terms of Installment Contracts
generally provide that upon a default by the borrower, the borrower loses his or
her right to occupy the property, the entire indebtedness is accelerated, and
the buyer's equitable interest in the property is forfeited. The lender in such
a situation does not have to foreclose in order to obtain title to the property,
although in some cases a quiet title action is in order if the borrower has
filed the Installment Contract in local land records and an ejectment action may
be necessary to recover possession. In a few states, particularly in cases of
borrower default during the early years of an Installment Contract, the courts
will permit ejectment of the buyer and a forfeiture of his or her interest in
the property. However, most state legislatures have enacted provisions by
analogy to mortgage law protecting borrowers under Installment Contracts from
the harsh consequences of forfeiture. Under such statutes, a judicial or
nonjudicial foreclosure may be required, the lender may be required to give
notice of default and the borrower may be granted some grace period during which
the Installment Contract may be reinstated upon full payment of the default
amount and the borrower may have a post-foreclosure statutory redemption right.
In other states, courts in equity may permit a borrower with significant
investment in the property under an Installment Contract for the sale of real
estate to share in the proceeds of sale of the property after the indebtedness
is repaid or may otherwise refuse to enforce the forfeiture clause.
Nevertheless, generally speaking, the lender's procedures for obtaining
possession and clear title under an Installment Contract in a given state are
simpler and less time-consuming and costly than are the procedures for
foreclosing and obtaining clear title to a property subject to one or more
liens.

SOLDIERS' AND SAILORS' CIVIL RELIEF ACT

Generally, under the terms of the Soldiers' and Sailors' Civil Relief
Act of 1940, as amended (the "Relief Act"), a borrower who enters military
service after the origination of such borrower's Loan (including a borrower who
is a member of the National Guard or is in reserve status at the time of the
origination of the Loan and is later called to active duty) may not be charged
interest above an annual rate of 6% during the period of such borrower's active
duty status, unless a court orders otherwise upon application of the lender. It
is possible that such interest rate limitation could have an effect, for an
indeterminate period of time, on the ability of the Master Servicer to collect
full amounts of interest on certain of the Loans. Unless otherwise provided in
the related Prospectus Supplement, any shortfall in interest collections
resulting from the application of the Relief Act could result in losses to
Securityholders. The Relief Act also imposes limitations which would impair the
ability of the Master Servicer to foreclose on an affected Loan during the
borrower's period of active duty status. Moreover, the Relief Act permits the
extension of a Loan's maturity and the re-adjustment of its payment schedule
beyond the completion of military service. Thus, in the event that such a Loan
goes into default, there may be delays and losses occasioned by the inability to
realize upon the Property in a timely fashion.

JUNIOR MORTGAGES; RIGHTS OF SENIOR MORTGAGEES

To the extent that the Loans comprising the Trust Fund for a Series are
secured by mortgages which are junior to other mortgages held by other lenders
or institutional investors, the rights of the Trust Fund (and therefore the
Securityholders), as mortgagee under any such junior mortgage, are subordinate
to those of any mortgagee under any senior mortgage. The senior mortgagee has
the right to receive hazard insurance and condemnation proceeds and to cause the
property securing the Loan to be sold upon default of the mortgagor, thereby
extinguishing the junior mortgagee's lien unless the junior mortgagee asserts
its subordinate interest in the property in foreclosure litigation and,
possibly, satisfies the defaulted senior mortgage. A junior mortgagee may
satisfy a defaulted senior loan in full and, in some states, may

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cure a default and bring the senior loan current, in either event adding the
amounts expended to the balance due on the junior loan. In most states, absent a
provision in the mortgage or deed of trust, no notice of default is required to
be given to a junior mortgagee.

The standard form of the mortgage used by most institutional lenders
confers on the mortgagee the right both to receive all proceeds collected under
any hazard insurance policy and all awards made in connection with condemnation
proceedings, and to apply such proceeds and awards to any indebtedness secured
by the mortgage, in such order as the mortgagee may determine. Thus, in the
event improvements on the property are damaged or destroyed by fire or other
casualty, or in the event the property is taken by condemnation, the mortgagee
or beneficiary under senior mortgages will have the prior right to collect any
insurance proceeds payable under a hazard insurance policy and any award of
damages in connection with the condemnation and to apply the same to the
indebtedness secured by the senior mortgages. Proceeds in excess of the amount
of senior mortgage indebtedness, in most cases, may be applied to the
indebtedness of a junior mortgage.

Another provision sometimes found in the form of the mortgage or deed
of trust used by institutional lenders obligates the mortgagor to pay before
delinquency all taxes and assessments on the property and, when due, all
encumbrances, charges and liens on the property which appear prior to the
mortgage or deed of trust, to provide and maintain fire insurance on the
property, to maintain and repair the property and not to commit or permit any
waste thereof, and to appear in and defend any action or proceeding purporting
to affect the property or the rights of the mortgagee under the mortgage. Upon a
failure of the mortgagor to perform any of these obligations, the mortgagee is
given the right under certain mortgages to perform the obligation itself, at its
election, with the mortgagor agreeing to reimburse the mortgagee for any sums
expended by the mortgagee on behalf of the mortgagor. All sums so expended by
the mortgagee become part of the indebtedness secured by the mortgage.

The form of credit line trust deed or mortgage generally used by most
institutional lenders which make Revolving Credit Line Loans typically contains
a "future advance" clause, which provides, in essence, that additional amounts
advanced to or on behalf of the borrower by the beneficiary or lender are to be
secured by the deed of trust or mortgage. Any amounts so advanced after the
Cut-off Date with respect to any Mortgage will not be included in the Trust
Fund. The priority of the lien securing any advance made under the clause may
depend in most states on whether the deed of trust or mortgage is called and
recorded as a credit line deed of trust or mortgage. If the beneficiary or
lender advances additional amounts, the advance is entitled to receive the same
priority as amounts initially advanced under the trust deed or mortgage,
notwithstanding the fact that there may be junior trust deeds or mortgages and
other liens which intervene between the date of recording of the trust deed or
mortgage and the date of the future advance, and notwithstanding that the
beneficiary or lender had actual knowledge of such intervening junior trust
deeds or mortgages and other liens at the time of the advance. In most states,
the trust deed or mortgage lien securing mortgage loans of the type which
includes home equity credit lines applies retroactively to the date of the
original recording of the trust deed or mortgage, provided that the total amount
of advances under the home equity credit line does not exceed the maximum
specified principal amount of the recorded trust deed or mortgage, except as to
advances made after receipt by the lender of a written notice of lien from a
judgment lien creditor of the trustor.

THE TITLE I PROGRAM

General. Certain of the Loans contained in a Trust Fund may be loans
insured under the FHA Title I Credit Insurance program created pursuant to
Sections 1 and 2(a) of the National Housing Act of 1934 (the "Title I Program").
Under the Title I Program, the FHA is authorized and empowered to

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insure qualified lending institutions against losses on eligible loans. The
Title I Program operates as a coinsurance program in which the FHA insures up to
90% of certain losses incurred on an individual insured loan, including the
unpaid principal balance of the loan, but only to the extent of the insurance
coverage available in the lender's FHA insurance coverage reserve account. The
owner of the loan bears the uninsured loss on each loan.

The types of loans which are eligible for insurance by the FHA under
the Title I Program include property improvement loans ("Property Improvement
Loans" or "Title I Loans"). A Property Improvement Loan or Title I Loan means a
loan made to finance actions or items that substantially protect or improve the
basic livability or utility of a property and includes single family improvement
loans.

There are two basic methods of lending or originating such loans which
include a "direct loan" or a "dealer loan." With respect to a direct loan, the
borrower makes application directly to a lender without any assistance from a
dealer, which application may be filled out by the borrower or by a person
acting at the direction of the borrower who does not have a financial interest
in the loan transaction, and the lender may disburse the loan proceeds solely to
the borrower or jointly to the borrower and other parties to the transaction.
With respect to a dealer loan, the dealer, who has a direct or indirect
financial interest in the loan transaction, assists the borrower in preparing
the loan application or otherwise assists the borrower in obtaining the loan
from lender and the lender may distribute proceeds solely to the dealer or the
borrower or jointly to the borrower and the dealer or other parties. With
respect to a dealer Title I Loan, a dealer may include a seller, a contractor or
supplier of goods or services.

Loans insured under the Title I Program are required to have fixed
interest rates and, generally, provide for equal installment payments due
weekly, biweekly, semi-monthly or monthly, except that a loan may be payable
quarterly or semi-annually in order to correspond with the borrower's irregular
flow of income. The first or last payments (or both) may vary in amount but may
not exceed 150% of the regular installment payment, and the first payment may be
due no later than two months from the date of the loan. The note must contain a
provision permitting full or partial prepayment of the loan. The interest rate
may be established by the lender and must be fixed for the term of the loan and
recited in the note. Interest on an insured loan must accrue from the date of
the loan and be calculated according to the actuarial method. The lender must
assure that the note and all other documents evidencing the loan are in
compliance with applicable federal, state and local laws.

Each insured lender is required to use prudent lending standards in
underwriting individual loans and to satisfy the applicable loan underwriting
requirements under the Title I Program prior to its approval of the loan and
disbursement of loan proceeds. Generally, the lender must exercise prudence and
diligence to determine whether the borrower and any co-maker is solvent and an
acceptable credit risk, with a reasonable ability to make payments on the loan
obligation. The lender's credit application and review must determine whether
the borrower's income will be adequate to meet the periodic payments required by
the loan, as well as the borrower's other housing and recurring expenses, which
determination must be made in accordance with the expense-to-income ratios
published by the Secretary of HUD.

Under the Title I Program, the FHA does not review or approve for
qualification for insurance the individual loans insured thereunder at the time
of approval by the lending institution (as is typically the case with other
federal loan programs). If, after a loan has been made and reported for
insurance under the Title I Program, the lender discovers any material
misstatement of fact or that the loan proceeds have been misused by the
borrower, dealer or any other party, it shall promptly report this to the FHA.
In such case, provided that the validity of any lien on the property has not
been impaired, the insurance

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of the loan under the Title I Program will not be affected unless such material
misstatements of fact or misuse of loan proceeds was caused by (or was knowingly
sanctioned by) the lender or its employees.

Requirements for Title I Loans. The maximum principal amount for Title
I Loans must not exceed the actual cost of the project plus any applicable fees
and charges allowed under the Title I Program; provided that such maximum amount
does not exceed $25,000 (or the current applicable amount) for a single family
property improvement loan. Generally, the term of a Title I Loan may not be less
than six months nor greater than 20 years and 32 days. A borrower may obtain
multiple Title I Loans with respect to multiple properties, and a borrower may
obtain more than one Title I Loan with respect to a single property, in each
case as long as the total outstanding balance of all Title I Loans in the same
property does not exceed the maximum loan amount for the type of Title I Loan
thereon having the highest permissible loan amount.

Borrower eligibility for a Title I Loan requires that the borrower have
at least a one-half interest in either fee simple title to the real property, a
lease thereof for a term expiring at least six months after the final maturity
of the Title I Loan or a recorded land installment contract for the purchase of
the real property, and that the borrower have equity in the property being
improved at least equal to the amount of the Title I Loan if such loan amount
exceeds $15,000. Any Title I Loan in excess of $7,500 must be secured by a
recorded lien on the improved property which is evidenced by a mortgage or deed
of trust executed by the borrower and all other owners in fee simple.

The proceeds from a Title I Loan may be used only to finance property
improvements which substantially protect or improve the basic livability or
utility of the property as disclosed in the loan application. The Secretary of
HUD has published a list of items and activities which cannot be financed with
proceeds from any Title I Loan and from time to time the Secretary of HUD may
amend such list of items and activities. With respect to any dealer Title I
Loan, before the lender may disburse funds, the lender must have in its
possession a completion certificate on a HUD approved form, signed by the
borrower and the dealer. With respect to any direct Title I Loan, the lender is
required to obtain, promptly upon completion of the improvements but not later
than six months after disbursement of the loan proceeds with one six month
extension if necessary, a completion certificate, signed by the borrower. The
lender is required to conduct an on-site inspection on any Title I Loan where
the principal obligation is $7,500 or more, and on any direct Title I Loan where
the borrower fails to submit a completion certificate.

FHA Insurance Coverage. Under the Title I Program, the FHA establishes
an insurance coverage reserve account for each lender which has been granted a
Title I insurance contract. The amount of insurance coverage in this account is
10% of the amount disbursed, advanced or expended by the lender in originating
or purchasing eligible loans registered with FHA for Title I insurance, with
certain adjustments. The balance in the insurance coverage reserve account is
the maximum amount of insurance claims the FHA is required to pay. Loans to be
insured under the Title I Program will be registered for insurance by the FHA
and the insurance coverage attributable to such loans will be included in the
insurance coverage reserve account for the originating or purchasing lender
following the receipt and acknowledgment by the FHA of a loan report on the
prescribed form pursuant to the Title I regulations. The FHA charges a fee of
0.50% per annum of the net proceeds (the original balance) of any eligible loan
so reported and acknowledged for insurance by the originating lender. The FHA
bills the lender for the insurance premium on each insured loan annually, on
approximately the anniversary date of the loan's origination. If an insured loan
is prepaid during the year, FHA will not refund or abate the insurance premium.

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Under the Title I Program the FHA will reduce the insurance coverage
available in the lender's FHA insurance coverage reserve account with respect to
loans insured under the lender's contract of insurance by (i) the amount of the
FHA insurance claims approved for payment relating to such insured loans and
(ii) the amount of insurance coverage attributable to insured loans sold by the
lender, and such insurance coverage may be reduced for any FHA insurance claims
rejected by the FHA. The balance of the lender's FHA insurance coverage reserve
account will be further adjusted as required under Title I or by the FHA, and
the insurance coverage therein may be earmarked with respect to each or any
eligible loans insured thereunder, if a determination is made by the Secretary
of HUD that it is in its interest to do so. Originations and acquisitions of new
eligible loans will continue to increase a lender's insurance coverage reserve
account balance by 10% of the amount disbursed, advanced or expended in
originating or acquiring such eligible loans registered with the FHA for
insurance under the Title I Program. The Secretary of HUD may transfer insurance
coverage between insurance coverage reserve accounts with earmarking with
respect to a particular insured loan or group of insured loans when a
determination is made that it is in the Secretary's interest to do so.

The lender may transfer (except as collateral in a bona fide
transaction) insured loans and loans reported for insurance only to another
qualified lender under a valid Title I contract of insurance. Unless an insured
loan is transferred with recourse or with a guaranty or repurchase agreement,
the FHA, upon receipt of written notification of the transfer of such loan in
accordance with the Title I regulations, will transfer from the transferor's
insurance coverage reserve account to the transferee's insurance coverage
reserve account an amount, if available, equal to 10% of the actual purchase
price or the net unpaid principal balance of such loan (whichever is less).
However, under the Title I Program not more than $5,000 in insurance coverage
shall be transferred to or from a lender's insurance coverage reserve account
during any October 1 to September 30 period without the prior approval of the
Secretary of HUD.

Claims Procedures Under Title I. Under the Title I Program the lender
may accelerate an insured loan following a default on such loan only after the
lender or its agent has contacted the borrower in a face-to-face meeting or by
telephone to discuss the reasons for the default and to seek its cure. If the
borrower does not cure the default or agree to a modification agreement or
repayment plan, the lender will notify the borrower in writing that, unless
within 30 days the default is cured or the borrower enters into a modification
agreement or repayment plan, the loan will be accelerated and that, if the
default persists, the lender will report the default to an appropriate credit
agency. The lender may rescind the acceleration of maturity after full payment
is due and reinstate the loan only if the borrower brings the loan current,
executes a modification agreement or agrees to an acceptable repayment plan.

Following acceleration of maturity upon a secured Title I Loan, the
lender may either (a) proceed against the property under any security
instrument, or (b) make a claim under the lender's contract of insurance. If the
lender chooses to proceed against the property under a security instrument (or
if it accepts a voluntary conveyance or surrender of the property), the lender
may file an insurance claim only with the prior approval of the Secretary of
HUD.

When a lender files an insurance claim with the FHA under the Title I
Program, the FHA reviews the claim, the complete loan file and documentation of
the lender's efforts to obtain recourse against any dealer who has agreed
thereto, certification of compliance with applicable state and local laws in
carrying out any foreclosure or repossession, and evidence that the lender has
properly filed proofs of claims, where the borrower is bankrupt or deceased.
Generally, a claim for reimbursement for loss on any Title I Loan must be filed
with the FHA no later than nine months after the date of default of such loan.
Concurrently with filing the insurance claim, the lender shall assign to the
United States of America the

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lender's entire interest in the loan note (or a judgment in lieu of the note),
in any security held and in any claim filed in any legal proceedings. If, at the
time the note is assigned to the United States, the Secretary has reason to
believe that the note is not valid or enforceable against the borrower, the FHA
may deny the claim and reassign the note to the lender. If either such defect is
discovered after the FHA has paid a claim, the FHA may require the lender to
repurchase the paid claim and to accept a reassignment of the loan note. If the
lender subsequently obtains a valid and enforceable judgment against the
borrower, the lender may resubmit a new insurance claim with an assignment of
the judgment. The FHA may contest any insurance claim and make a demand for
repurchase of the loan at any time up to two years from the date the claim was
certified for payment and may do so thereafter in the event of fraud or
misrepresentation on the part of the lender.

Under the Title I Program the amount of an FHA insurance claim payment,
when made, is equal to the Claimable Amount, up to the amount of insurance
coverage in the lender's insurance coverage reserve account. For the purposes
hereof, the "Claimable Amount" means an amount equal to 90% of the sum of: (a)
the unpaid loan obligation (net unpaid principal and the uncollected interest
earned to the date of default) with adjustments thereto if the lender has
proceeded against property securing such loan; (b) the interest on the unpaid
amount of the loan obligation from the date of default to the date of the
claim's initial submission for payment plus 15 calendar days (but not to exceed
9 months from the date of default), calculated at the rate of 7% per annum; (c)
the uncollected court costs; (d) the attorney's fees not to exceed $500; and (e)
the expenses for recording the assignment of the security to the United States.

CONSUMER PROTECTION LAWS

Numerous federal and state consumer protection laws impose substantive
requirements upon mortgage lenders in connection with the origination, servicing
and enforcement of loans secured by Single Family Properties. These laws include
the federal Truth-in-Lending Act and Regulation Z promulgated thereunder, Real
Estate Settlement Procedures Act and Regulation B promulgated thereunder, Equal
Credit Opportunity Act, Fair Credit Billing Act, Fair Credit Reporting Act and
related statutes and regulations. In particular, Regulation Z requires certain
disclosures to the borrowers regarding the terms of the Loans; the Equal Credit
Opportunity Act and Regulation B promulgated thereunder prohibit discrimination
on the basis of age, race, color, sex, religion, marital status, national
origin, receipt of public assistance or the exercise of any right under the
Consumer Credit Protection Act, in the extension of credit; and the Fair Credit
Reporting Act regulates the use and reporting of information related to the
borrower's credit experience. Certain provisions of these laws impose specific
statutory liabilities upon lenders who fail to comply therewith. In addition,
violations of such laws may limit the ability of the Sellers to collect all or
part of the principal of or interest on the Loans and could subject the Sellers
and in some case their assignees to damages and administrative enforcement.

FEDERAL INCOME TAX CONSEQUENCES

GENERAL

The following is a summary of certain anticipated federal income tax
consequences of the purchase, ownership, and disposition of the Securities and
is based on advice of Latham & Watkins, special counsel to the Depositor. The
summary is based upon the provisions of the Code, the regulations promulgated
thereunder, including, where applicable, proposed regulations, and the judicial
and administrative rulings and decisions now in effect, all of which are subject
to change or possible differing

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interpretations. The statutory provisions, regulations, and interpretations on
which this interpretation is based are subject to change, and such a change
could apply retroactively.

The summary does not purport to deal with all aspects of federal income
taxation that may affect particular investors in light of their individual
circumstances, nor with certain types of investors subject to special treatment
under the federal income tax laws. This summary focuses primarily upon investors
who will hold Securities as "capital assets" (generally, property held for
investment) within the meaning of Section 1221 of the Code, but much of the
discussion is applicable to other investors as well. Prospective investors are
advised to consult their own tax advisers concerning the federal, state, local
and any other tax consequences to them of the purchase, ownership and
disposition of the Securities.

The federal income tax consequences to Holders will vary depending on
whether (i) the Securities of a Series are classified as indebtedness; (ii) an
election is made to treat the Trust Fund relating to a particular Series of
Securities as a real estate mortgage investment conduit ("REMIC") under the
Internal Revenue Code of 1986, as amended (the "Code"); (iii) the Securities
represent an ownership interest in some or all of the assets included in the
Trust Fund for a Series; or (iv) an election is made to treat the Trust Fund
relating to a particular Series of Certificates as a partnership. The Prospectus
Supplement for each Series of Securities will specify how the Securities will be
treated for federal income tax purposes and will discuss whether a REMIC
election, if any, will be made with respect to such Series. Prior to issuance of
each Series of Securities, the Depositor shall file with the Commission a Form
8-K on behalf of the related Trust Fund containing an opinion of Latham &
Watkins with respect to the validity of the information set forth under "Federal
Income Tax Consequences" herein and in the related Prospectus Supplement.

Taxation of Debt Securities Status as Real Property Loans. Except to
the extent otherwise provided in the related Prospectus Supplement, Latham &
Watkins will have advised the Depositor that: (i) Securities held by a domestic
building and loan association will constitute "loans... secured by an interest
in real property" within the meaning of Code section 7701(a)(19)(C)(v); (ii)
Securities held by a real estate investment trust will constitute "real estate
assets" within the meaning of Code section 856(c)(5)(A) and interest on
Securities will be considered "interest on obligations secured by mortgages on
real property or on interests in real property" within the meaning of Code
section 856(c)(3)(B) and (iii) Securities representing interests in obligations
secured by manufactured housing treated as single family residences under Code
Section 25(e)(10) will be considered interests in "qualified mortgages" as
defined in Code Section 860G(a)(3).

The Small Business Job Protection Act of 1996, as part of the repeal of
the bad debt reserve method for thrift institutions, repealed the application of
Code Section 593(d) to any taxable year beginning after December 31, 1995.

Interest and Acquisition Discount. Securities representing regular
interests in a REMIC ("Regular Interest Securities") are generally taxable to
holders in the same manner as evidences of indebtedness issued by the REMIC.
Stated interest on the Regular Interest Securities will be taxable as ordinary
income and taken into account using the accrual method of accounting, regardless
of the Holder's normal accounting method. Interest (other than original issue
discount) on Securities (other than Regular Interest Securities) that are
characterized as indebtedness for federal income tax purposes will be includible
in income by holders thereof in accordance with their usual methods of
accounting. Securities characterized as debt for federal income tax purposes and
Regular Interest Securities will be referred to hereinafter collectively as
"Debt Securities."

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Debt Securities that are Compound Interest Securities will, and certain
of the other Debt Securities may, be issued with "original issue discount"
("OID"). The following discussion is based in part on the rules governing OID
which are set forth in Sections 1271-1275 of the Code and the Treasury
regulations issued thereunder on February 2, 1994 (the "OID Regulations"). A
Holder should be aware, however, that the OID Regulations do not adequately
address certain issues relevant to prepayable securities, such as the Debt
Securities.

In general, OID, if any, will equal the difference between the stated
redemption price at maturity of a Debt Security and its issue price. A holder of
a Debt Security must include such OID in gross income as ordinary interest
income as it accrues under a method taking into account an economic accrual of
the discount. In general, OID must be included in income in advance of the
receipt of the cash representing that income. The amount of OID on a Debt
Security will be considered to be zero if it is less than a de minimis amount
determined under the Code.

The issue price of a Debt Security is the first price at which a
substantial amount of Debt Securities of that class are sold to the public
(excluding bond houses, brokers, underwriters or wholesalers). If less than a
substantial amount of a particular class of Debt Securities is sold for cash on
or prior to the related Closing Date, the issue price for such class will be
treated as the fair market value of such class on such Closing Date. The issue
price of a Debt Security also includes the amount paid by an initial Debt
Security holder for accrued interest that relates to a period prior to the issue
date of the Debt Security. The stated redemption price at maturity of a Debt
Security includes the original principal amount of the Debt Security, but
generally will not include distributions of interest if such distributions
constitute "qualified stated interest."

Under the OID Regulations, qualified stated interest generally means
interest payable at a single fixed rate or qualified variable rate (as described
below) provided that such interest payments are unconditionally payable at
intervals of one year or less during the entire term of the Debt Security. The
OID Regulations state that interest payments are unconditionally payable only if
a late payment or nonpayment is expected to be penalized or reasonable remedies
exist to compel payment. Certain Debt Securities may provide for default
remedies in the event of late payment or nonpayment of interest. The interest on
such Debt Securities will be unconditionally payable and constitute qualified
stated interest, not OID. However, absent clarification of the OID Regulations,
where Debt Securities do not provide for default remedies, the interest payments
will be included in the Debt Security's stated redemption price at maturity and
taxed as OID. Interest is payable at a single fixed rate only if the rate
appropriately takes into account the length of the interval between payments.
Distributions of interest on Debt Securities with respect to which deferred
interest will accrue, will not constitute qualified stated interest payments, in
which case the stated redemption price at maturity of such Debt Securities
includes all distributions of interest as well as principal thereon. Where the
interval between the issue date and the first Distribution Date on a Debt
Security is either longer or shorter than the interval between subsequent
Distribution Dates, all or part of the interest foregone, in the case of the
longer interval, and all of the additional interest, in the case of the shorter
interval, will be included in the stated redemption price at maturity and tested
under the de minimis rule described below. In the case of a Debt Security with a
long first period which has non-de minimis OID, all stated interest in excess of
interest payable at the effective interest rate for the long first period will
be included in the stated redemption price at maturity and the Debt Security
will generally have OID. Holders of Debt Securities should consult their own tax
advisors to determine the issue price and stated redemption price at maturity of
a Debt Security.

Under the de minimis rule, OID on a Debt Security will be considered to
be zero if such OID is less than 0.25% of the stated redemption price at
maturity of the Debt Security multiplied by the

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weighted average maturity of the Debt Security. For this purpose, the weighted
average maturity of the Debt Security is computed as the sum of the amounts
determined by multiplying the number of full years (i.e., rounding down partial
years) from the issue date until each distribution in reduction of stated
redemption price at maturity is scheduled to be made by a fraction, the
numerator of which is the amount of each distribution included in the stated
redemption price at maturity of the Debt Security and the denominator of which
is the stated redemption price at maturity of the Debt Security. Holders
generally must report de minimis OID pro rata as principal payments are
received, and such income will be capital gain if the Debt Security is held as a
capital asset. However, accrual method holders may elect to accrue all de
minimis OID as well as market discount under a constant interest method.

Debt Securities may provide for interest based on a qualified variable
rate. Under the OID Regulations, interest is treated as payable at a qualified
variable rate and not as contingent interest if, generally, (i) such interest is
unconditionally payable at least annually, (ii) the issue price of the debt
instrument does not exceed the total noncontingent principal payments and (iii)
interest is based on a "qualified floating rate," an "objective rate," or a
combination of "qualified floating rates" that do not operate in a manner that
significantly accelerates or defers interest payments on such Debt Security. In
the case of Compound Interest Securities, certain Interest Weighted Securities
(as defined herein), and certain of the other Debt Securities, none of the
payments under the instrument will be considered qualified stated interest, and
thus the aggregate amount of all payments will be included in the stated
redemption price.

The Internal Revenue Services (the "IRS") recently issued final
regulations (the "Contingent Regulations") governing the calculation of OID on
instruments having contingent interest payments. The Contingent Regulations
specifically do not apply for purposes of calculating OID on debt instruments
subject to Code Section 1272(a)(6), such as the Debt Security. Additionally, the
OID Regulations do not contain provisions specifically interpreting Code Section
1272(a)(6). Until the Treasury issues guidance to the contrary, the Trustee
intends to base its computation on Code Section 1272(a)(6) and the OID
Regulations as described in this Prospectus. However, because no regulatory
guidance currently exists under Code Section 1272(a)(6), there can be no
assurance that such methodology represents the correct manner of calculating
OID.

The holder of a Debt Security issued with OID must include in gross
income, for all days during its taxable year on which it holds such Debt
Security, the sum of the "daily portions" of such original issue discount. The
amount of OID includible in income by a holder will be computed by allocating to
each day during a taxable year a pro rata portion of the original issue discount
that accrued during the relevant accrual period. In the case of a Debt Security
that is not a Regular Interest Security and the principal payments on which are
not subject to acceleration resulting from prepayments on the Loans, the amount
of OID includible in income of a Holder for an accrual period (generally the
period over which interest accrues on the debt instrument) will equal the
product of the yield to maturity of the Debt Security and the adjusted issue
price of the Debt Security, reduced by any payments of qualified stated
interest. The adjusted issue price is the sum of its issue price plus prior
accruals or OID, reduced by the total payments made with respect to such Debt
Security in all prior periods, other than qualified stated interest payments.

The amount of OID to be included in income by a holder of a debt
instrument, such as certain Classes of the Debt Securities, that is subject to
acceleration due to prepayments on other debt obligations securing such
instruments (a "Pay-Through Security"), is computed by taking into account the
anticipated rate of prepayments assumed in pricing the debt instrument (the
"Prepayment Assumption"). The amount of OID that will accrue during an accrual
period on a Pay-Through Security is the excess (if any) of the

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sum of (a) the present value of all payments remaining to be made on the
Pay-Through Security as of the close of the accrual period and (b) the payments
during the accrual period of amounts included in the stated redemption price of
the Pay-Through Security, over the adjusted issue price of the Pay-Through
Security at the beginning of the accrual period. The present value of the
remaining payments is to be determined on the basis of three factors: (i) the
original yield to maturity of the Pay-Through Security (determined on the basis
of compounding at the end of each accrual period and properly adjusted for the
length of the accrual period), (ii) events which have occurred before the end of
the accrual period and (iii) the assumption that the remaining payments will be
made in accordance with the original Prepayment Assumption. The effect of this
method is to increase the portions of OID required to be included in income by a
Holder to take into account prepayments with respect to the Loans at a rate that
exceeds the Prepayment Assumption, and to decrease (but not below zero for any
period) the portions of original issue discount required to be included in
income by a Holder of a Pay-Through Security to take into account prepayments
with respect to the Loans at a rate that is slower than the Prepayment
Assumption. Although original issue discount will be reported to Holders of
Pay-Through Securities based on the Prepayment Assumption, no representation is
made to Holders that Loans will be prepaid at that rate or at any other rate.

The Depositor may adjust the accrual of OID on a Class of Regular
Interest Securities (or other regular interests in a REMIC) in a manner that it
believes to be appropriate, to take account of realized losses on the Loans,
although the OID Regulations do not provide for such adjustments. If the IRS
were to require that OID be accrued without such adjustments, the rate of
accrual of OID for a Class of Regular Interest Securities could increase.

Certain classes of Regular Interest Securities may represent more than
one class of REMIC regular interests. Unless otherwise provided in the related
Prospectus Supplement, the Trustee intends, based on the OID Regulations, to
calculate OID on such Securities as if, solely for the purposes of computing
OID, the separate regular interests were a single debt instrument.

A subsequent holder of a Debt Security will also be required to include
OID in gross income, but such a holder who purchases such Debt Security for an
amount that exceeds its adjusted issue price will be entitled (as will an
initial holder who pays more than a Debt Security's issue price) to offset such
OID by comparable economic accruals of portions of such excess.

Effects of Defaults and Delinquencies. Holders will be required to
report income with respect to the related Securities under an accrual method
without giving effect to delays and reductions in distributions attributable to
a default or delinquency on the Loans, except possibly to the extent that it can
be established that such amounts are uncollectible. As a result, the amount of
income (including OID) reported by a holder of such a Security in any period
could significantly exceed the amount of cash distributed to such holder in that
period. The holder will eventually be allowed a loss (or will be allowed to
report a lesser amount of income) to the extent that the aggregate amount of
distributions on the Securities is deducted as a result of a Loan default.
However, the timing and character of such losses or reductions in income are
uncertain and, accordingly, holders of Securities should consult their own tax
advisors on this point.

Interest Weighted Securities. It is not clear how income should be
accrued with respect to Regular Interest Securities or Stripped Securities (as
defined under "--Tax Status as a Grantor Trust--General" herein) the payments on
which consist solely or primarily of a specified portion of the interest
payments on qualified mortgages held by the REMIC or on Loans underlying
Pass-Through Securities ("Interest Weighted Securities"). The Issuer intends to
take the position that all of the income derived

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from an Interest Weighted Security should be treated as OID and that the amount
and rate of accrual of such OID should be calculated by treating the Interest
Weighted Security as a Compound Interest Security. However, in the case of
Interest Weighted Securities that are entitled to some payments of principal and
that are Regular Interest Securities the Internal Revenue Service could assert
that income derived from an Interest Weighted Security should be calculated as
if the Security were a security purchased at a premium equal to the excess of
the price paid by such holder for such Security over its stated principal
amount, if any. Under this approach, a holder would be entitled to amortize such
premium only if it has in effect an election under Section 171 of the Code with
respect to all taxable debt instruments held by such holder, as described below.
Alternatively, the Internal Revenue Service could assert that an Interest
Weighted Security should be taxable under the rules governing bonds issued with
contingent payments. Such treatment may be more likely in the case of Interest
Weighted Securities that are Stripped Securities as described below. See "--Tax
Status as a Grantor Trust--Discount or Premium on Pass-Through Securities."

Variable Rate Debt Securities. In the case of Debt Securities bearing
interest at a rate that varies directly, according to a fixed formula, with an
objective index, it appears that (i) the yield to maturity of such Debt
Securities and (ii) in the case of Pay-Through Securities, the present value of
all payments remaining to be made on such Debt Securities, should be calculated
as if the interest index remained at its value as of the issue date of such
Securities. Because the proper method of adjusting accruals of OID on a variable
rate Debt Security is uncertain, holders of variable rate Debt Securities should
consult their own tax advisers regarding the appropriate treatment of such
Securities for federal income tax purposes.

Market Discount. A purchaser of a Security may be subject to the market
discount rules of Sections 1276-1278 of the Code. A Holder that acquires a Debt
Security with more than a prescribed de minimis amount of "market discount"
(generally, the excess of the principal amount of the Debt Security over the
purchaser's purchase price) will be required to include accrued market discount
in income as ordinary income in each month, but limited to an amount not
exceeding the principal payments on the Debt Security received in that month
and, if the Securities are sold, the gain realized. Such market discount would
accrue in a manner to be provided in Treasury regulations but, until such
regulations are issued, such market discount would in general accrue either (i)
on the basis of a constant yield (in the case of a Pay-Through Security, taking
into account a prepayment assumption) or (ii) in the ratio of (a) in the case of
Securities (or in the case of a Pass-Through Security (as defined herein), as
set forth below, the Loans underlying such Security) not originally issued with
original issue discount, stated interest payable in the relevant period to total
stated interest remaining to be paid at the beginning of the period or (b) in
the case of Securities (or, in the case of a Pass-Through Security, as described
below, the Loans underlying such Security) originally issued at a discount, OID
in the relevant period to total OID remaining to be paid.

Section 1277 of the Code provides that, regardless of the origination
date of the Debt Security (or, in the case of a Pass-Through Security, the
Loans), the excess of interest paid or accrued to purchase or carry a Security
(or, in the case of a Pass-Through Security, as described below, the underlying
Loans) with market discount over interest received on such Security is allowed
as a current deduction only to the extent such excess is greater than the market
discount that accrued during the taxable year in which such interest expense was
incurred. In general, the deferred portion of any interest expense will be
deductible when such market discount is included in income, including upon the
sale, disposition, or repayment of the Security (or in the case of a
Pass-Through Security, an underlying Loan). A holder may elect to include market
discount in income currently as it accrues, on all market discount obligations
acquired by such holder during the taxable year such election is made and
thereafter, in which case the interest deferral rule will not apply.

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Premium. A holder who purchases a Debt Security (other than an Interest
Weighted Security to the extent described above) at a cost greater than its
stated redemption price at maturity, generally will be considered to have
purchased the Security at a premium, which it may elect to amortize as an offset
to interest income on such Security (and not as a separate deduction item) on a
constant yield method. Although no regulations addressing the computation of
premium accrual on securities similar to the Securities have been issued, the
legislative history of the 1986 Act indicates that premium is to be accrued in
the same manner as market discount. Accordingly, it appears that the accrual of
premium on a Class of Pay-Through Securities will be calculated using the
prepayment assumption used in pricing such Class. If a holder makes an election
to amortize premium on a Debt Security, such election will apply to all taxable
debt instruments (including all REMIC regular interests and all pass-through
certificates representing ownership interests in a trust holding debt
obligations) held by the holder at the beginning of the taxable year in which
the election is made, and to all taxable debt instruments acquired thereafter by
such holder, and will be irrevocable without the consent of the IRS. Purchasers
who pay a premium for the Securities should consult their tax advisers regarding
the election to amortize premium and the method to be employed.

On June 27, 1996 the IRS issued proposed regulations (the "Amortizable
Bond Premium Regulations") dealing with amortizable bond premium. These
regulations specifically do not apply to prepayable debt instruments subject to
Code Section 1272(a)(6) such as the Securities. Absent further guidance from the
IRS, the Trustee intends to account for amortizable bond premium in the manner
described above. Prospective purchasers of the Securities should consult their
tax advisors regarding the possible application of the Amortizable Bond Premium
Regulations.

Election to Treat All Interest as Original Issue Discount. The OID
Regulations permit a holder of a Debt Security to elect to accrue all interest,
discount (including de minimis market or original issue discount) and premium in
income as interest, based on a constant yield method for Debt Securities
acquired on or after April 4, 1994. If such an election were to be made with
respect to a Debt Security with market discount, the holder of the Debt Security
would be deemed to have made an election to include in income currently market
discount with respect to all other debt instruments having market discount that
such holder of the Debt Security acquires during the year of the election or
thereafter. Similarly, a holder of a Debt Security that makes this election for
a Debt Security that is acquired at a premium will be deemed to have made an
election to amortize bond premium with respect to all debt instruments having
amortizable bond premium that such holder owns or acquires. The election to
accrue interest, discount and premium on a constant yield method with respect to
a Debt Security is irrevocable.

TAXATION OF THE REMIC AND ITS HOLDERS

General. In the opinion of Latham & Watkins, special counsel to the
Depositor, if a REMIC election is made with respect to a Series of Securities,
then the arrangement by which the Securities of that Series are issued will be
treated as a REMIC as long as all of the provisions of the applicable Agreement
are complied with and the statutory and regulatory requirements are satisfied.
Securities will be designated as "Regular Interests" or "Residual Interests" in
a REMIC, as specified in the related Prospectus Supplement.

Except to the extent specified otherwise in a Prospectus Supplement, if
a REMIC election is made with respect to a Series of Securities, (i) Securities
held by a domestic building and loan association will constitute "a regular or a
residual interest in a REMIC" within the meaning of Code Section
7701(a)(19)(C)(xi) (assuming that at least 95% of the REMIC's assets consist of
cash, government securities, "loans secured by an interest in real property,"
and other types of assets described in Code

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Section 7701(a)(19)(C)); and (ii) Securities held by a real estate investment
trust will constitute "real estate assets" within the meaning of Code Section
856(c)(6)(B), and income with respect to the Securities will be considered
"interest on obligations secured by mortgages on real property or on interests
in real property" within the meaning of Code Section 856(c)(3)(B) (assuming, for
both purposes, that at least 95% of the REMIC's assets are qualifying assets).
If less than 95% of the REMIC's assets consist of assets described in (i) or
(ii) above, then a Security will qualify for the tax treatment described in (i)
or in the proportion that such REMIC assets are qualifying assets.

Status of Manufactured Housing Contracts. The REMIC Regulations provide
that obligations secured by interests in manufactured housing that qualify as
"single family residences" within the meaning of Code Section 25(e)(10) may be
treated as "qualified mortgages" of the REMIC.

Under Section 25(e)(10), the term "single family residence" includes
any manufactured home which has a minimum of 400 square feet of living space and
a minimum width in excess of 102 inches and which is a kind of customarily used
at a fixed location.

The Small Business Job Protection Act of 1996, as part of the repeal of
the bad debt reserve method for thrift institutions, repealed the application of
Code section 593(d) to any taxable year beginning after December 31, 1995.

REMIC EXPENSES; SINGLE CLASS REMICS

As a general rule, all of the expenses of a REMIC will be taken into
account by holders of the Residual Interest Securities. In the case of a "single
class REMIC," however, the expenses will be allocated, under Treasury
regulations, among the holders of the Regular Interest Securities and the
holders of the Residual Interest Securities (as defined herein) on a daily basis
in proportion to the relative amounts of income accruing to each Holder on that
day. In the case of a holder of a Regular Interest Security who is an individual
or a "pass-through interest holder" (including certain pass-through entities but
not including real estate investment trusts), such expenses will be deductible
only to the extent that such expenses, plus other "miscellaneous itemized
deductions" of the Holder, exceed 2% of such Holder's adjusted gross income. In
addition, for taxable years beginning after December 31, 1990, the amount of
itemized deductions otherwise allowable for the taxable year for an individual
whose adjusted gross income exceeds the applicable amount (which amount will be
adjusted for inflation for taxable years beginning after 1990) will be reduced
by the lesser of (i) 3% of the excess of adjusted gross income over the
applicable amount, or (ii) 80% of the amount of itemized deductions otherwise
allowable for such taxable year. The reduction or disallowance of this deduction
may have a significant impact on the yield of the Regular Interest Security to
such a Holder. In general terms, a single class REMIC is one that either (i)
would qualify, under existing Treasury regulations, as a grantor trust if it
were not a REMIC (treating all interests as ownership interests, even if they
would be classified as debt for federal income tax purposes) or (ii) is similar
to such a trust and which is structured with the principal purpose of avoiding
the single class REMIC rules. Unless otherwise specified in the related
Prospectus Supplement, the expenses of the REMIC will be allocated to holders of
the related residual interest securities.

TAXATION OF THE REMIC

General. Although a REMIC is a separate entity for federal income tax
purposes, a REMIC is not generally subject to entity-level tax. Rather, the
taxable income or net loss of a REMIC is taken into account by the holders of
residual interests. As described above, the regular interests are generally
taxable as debt of the REMIC.

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Calculation of REMIC Income. The taxable income or net loss of a REMIC
is determined under an accrual method of accounting and in the same manner as in
the case of an individual, with certain adjustments. In general, the taxable
income or net loss will be the difference between (i) the gross income produced
by the REMIC's assets, including stated interest and any original issue discount
or market discount on loans and other assets, and (ii) deductions, including
stated interest and original issue discount accrued on Regular Interest
Securities, amortization of any premium with respect to Loans, and servicing
fees and other expenses of the REMIC. A holder of a Residual Interest Security
that is an individual or a "pass-through interest holder" (including certain
pass-through entities, but not including real estate investment trusts) will be
unable to deduct servicing fees payable on the loans or other administrative
expenses of the REMIC for a given taxable year, to the extent that such
expenses, when aggregated with such holder's other miscellaneous itemized
deductions for that year, do not exceed two percent of such holder's adjusted
gross income.

For purposes of computing its taxable income or net loss, the REMIC
should have an initial aggregate tax basis in its assets equal to the aggregate
fair market value of the regular interests and the residual interests on the
Startup Day (generally, the day that the interests are issued). That aggregate
basis will be allocated among the assets of the REMIC in proportion to their
respective fair market values.

The OID provisions of the Code apply to loans of individuals originated
on or after March 2, 1984, and the market discount provisions apply to loans
originated after July 18, 1984. Subject to possible application of the de
minimis rules, the method of accrual by the REMIC of OID income on such loans
will be equivalent to the method under which holders of Pay-Through Securities
accrue original issue discount (i.e., under the constant yield method taking
into account the Prepayment Assumption). The REMIC will deduct OID on the
Regular Interest Securities in the same manner that the holders of the Regular
Interest Securities include such discount in income, but without regard to the
de minimis rules. See "Federal Income Tax Consequences--General" above. However,
a REMIC that acquires loans at a market discount must include such market
discount in income currently, as it accrues, on a constant interest basis.

To the extent that the REMIC's basis allocable to loans that it holds
exceeds their principal amounts, the resulting premium, if attributable to
mortgages originated after September 27, 1985, will be amortized over the life
of the loans (taking into account the Prepayment Assumption) on a constant yield
method. Although the law is somewhat unclear regarding recovery of premium
attributable to loans originated on or before such date, it is possible that
such premium may be recovered in proportion to payments of loan principal.

Prohibited Transactions and Contributions Tax. The REMIC will be
subject to a 100% tax on any net income derived from a "prohibited transaction."
For this purpose, net income will be calculated without taking into account any
losses from prohibited transactions or any deductions attributable to any
prohibited transaction that resulted in a loss. In general, prohibited
transactions include: (i) subject to limited exceptions, the sale or other
disposition of any qualified mortgage transferred to the REMIC; (ii) subject to
a limited exception, the sale or other disposition of a cash flow investment;
(iii) the receipt of any income from assets not permitted to be held by the
REMIC pursuant to the Code; or (iv) the receipt of any fees or other
compensation for services rendered by the REMIC. It is anticipated that a REMIC
will not engage in any prohibited transactions in which it would recognize a
material amount of net income. In addition, subject to a number of exceptions, a
tax is imposed at the rate of 100% on amounts contributed to a REMIC after the
close of the three-month period beginning on the Startup Day. The holders of
Residual Interest Securities will generally be responsible for the payment of
any such taxes

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imposed on the REMIC. To the extent not paid by such holders or otherwise,
however, such taxes will be paid out of the Trust Fund and will be allocated pro
rata to all outstanding classes of Securities of such REMIC.

TAXATION OF HOLDERS OF RESIDUAL INTEREST SECURITIES

The holder of a Security representing a residual interest (a "Residual
Interest Security") will take into account the "daily portion" of the taxable
income or net loss of the REMIC for each day during the taxable year on which
such holder held the Residual Interest Security. The daily portion is determined
by allocating to each day in any calendar quarter its ratable portion of the
taxable income or net loss of the REMIC for such quarter, and by allocating that
amount among the holders (on such day) of the Residual Interest Securities in
proportion to their respective holdings on such day.

The holder of a Residual Interest Security must report its
proportionate share of the taxable income of the REMIC whether or not it
receives cash distributions from the REMIC attributable to such income or loss.
The reporting of taxable income without corresponding distributions could occur,
for example, in certain REMIC issues in which the loans held by the REMIC were
issued or acquired at a discount, since mortgage prepayments cause recognition
of discount income, while the corresponding portion of the prepayment could be
used in whole or in part to make principal payments on REMIC Regular Interests
issued without any discount or at an insubstantial discount (if this occurs, it
is likely that cash distributions will exceed taxable income in later years).
Taxable income may also be greater in earlier years of certain REMIC issues as a
result of the fact that interest expense deductions, as a percentage of
outstanding principal on REMIC Regular Interest Securities, will typically
increase over time as lower yielding Securities are paid, whereas interest
income with respect to loans will generally remain constant over time as a
percentage of loan principal.

In any event, because the holder of a residual interest is taxed on the
net income of the REMIC, the taxable income derived from a Residual Interest
Security in a given taxable year will not be equal to the taxable income
associated with investment in a corporate bond or stripped instrument having
similar cash flow characteristics and pretax yield. Therefore, the after-tax
yield on the Residual Interest Security may be less than that of such a bond or
instrument.

Limitation on Losses. The amount of the REMIC's net loss that a holder
may take into account currently is limited to the holder's adjusted basis at the
end of the calendar quarter in which such loss arises. A holder's basis in a
Residual Interest Security will initially equal such holder's purchase price,
and will subsequently be increased by the amount of the REMIC's taxable income
allocated to the holder, and decreased (but not below zero) by the amount of
distributions made and the amount of the REMIC's net loss allocated to the
holder. Any disallowed loss may be carried forward indefinitely, but may be used
only to offset income of the REMIC generated by the same REMIC. The ability of
holders of Residual Interest Securities to deduct net losses may be subject to
additional limitations under the Code, as to which such holders should consult
their tax advisers.

Distributions. Distributions on a Residual Interest Security (whether
at their scheduled times or as a result of prepayments) will generally not
result in any additional taxable income or loss to a holder of a Residual
Interest Security. If the amount of such payment exceeds a holder's adjusted
basis in the Residual Interest Security, however, the holder will recognize gain
(treated as gain from the sale of the Residual Interest Security) to the extent
of such excess.

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Sale or Exchange. A holder of a Residual Interest Security will
recognize gain or loss on the sale or exchange of a Residual Interest Security
equal to the difference, if any, between the amount realized and such holder's
adjusted basis in the Residual Interest Security at the time of such sale or
exchange. Except to the extent provided in regulations, which have not yet been
issued, any loss upon disposition of a Residual Interest Security will be
disallowed if the selling holder acquires any residual interest in a REMIC or
similar mortgage pool within six months before or after such disposition.

Excess Inclusions. The portion of the REMIC taxable income of a holder
of a Residual Interest Security consisting of "excess inclusion" income may not
be offset by other deductions or losses, including net operating losses, on such
holder's federal income tax return. Further, if the holder of a Residual
Interest Security is an organization subject to the tax on unrelated business
income imposed by Code Section 511, such holder's excess inclusion income will
be treated as unrelated business taxable income of such holder. In addition,
under Treasury regulations yet to be issued, if a real estate investment trust,
a regulated investment company, a common trust fund, or certain cooperatives
were to own a Residual Interest Security, a portion of dividends (or other
distributions) paid by the real estate investment trust (or other entity) would
be treated as excess inclusion income. If a Residual Security is owned by a
foreign person excess inclusion income is subject to tax at a rate of 30% which
may not be reduced by treaty, is not eligible for treatment as "portfolio
interest" and is subject to certain additional limitations. See "--Tax Treatment
of Foreign Investors." The Small Business Job Protection Act of 1996 has
eliminated the special rule permitting Section 593 institutions ("thrift
institutions") to use net operating losses and other allowable deductions to
offset their excess inclusion income from REMIC residual certificates that have
"significant value" within the meaning of the REMIC Regulations, effective for
taxable years beginning after December 31, 1995, except with respect to residual
certificates continuously held by a thrift institution since November 1, 1995.

In addition, the Small Business Job Protection Act of 1996 provides
three rules for determining the effect on excess inclusions on the alternative
minimum taxable income of a residual holder. First, alternative minimum taxable
income for such residual holder is determined without regard to the special rule
that taxable income cannot be less than excess inclusions. Second, a residual
holder's alternative minimum taxable income for a tax year cannot be less than
excess inclusions for the year. Third, the amount of any alternative minimum tax
net operating loss deductions must be computed without regard to any excess
inclusions. These rules are effective for tax years beginning after December 31,
1995, unless a residual holder elects to have such rules apply only to tax years
beginning after August 20, 1996.

The excess inclusion portion of a REMIC's income is generally equal to
the excess, if any, of REMIC taxable income for the quarterly period allocable
to a Residual Interest Security, over the daily accruals for such quarterly
period of (i) 120% of the long term applicable federal rate on the Startup Day
multiplied by (ii) the adjusted issue price of such Residual Interest Security
at the beginning of such quarterly period. The adjusted issue price of a
Residual Interest at the beginning of each calendar quarter will equal its issue
price (calculated in a manner analogous to the determination of the issue price
of a Regular Interest), increased by the aggregate of the daily accruals for
prior calendar quarters, and decreased (but not below zero) by the amount of
loss allocated to a holder and the amount of distributions made on the Residual
Interest Security before the beginning of the quarter. The long-term federal
rate, which is announced monthly by the Treasury Department, is an interest rate
that is based on the average market yield of outstanding marketable obligations
of the United States government having remaining maturities in excess of nine
years.

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Under the REMIC Regulations, in certain circumstances, transfers of
Residual Securities may be disregarded. See "--Restrictions on Ownership and
Transfer of Residual Interest Securities" and "--Tax Treatment of Foreign
Investors" below.

Restrictions on Ownership and Transfer of Residual Interest Securities.
As a condition to qualification as a REMIC, reasonable arrangements must be made
to prevent the ownership of a REMIC residual interest by any "Disqualified
Organization." Disqualified Organizations include the United States, any State
or political subdivision thereof, any foreign government, any international
organization, or any agency or instrumentality of any of the foregoing, a rural
electric or telephone cooperative described in Section 1381(a)(2)(C) of the
Code, or any entity exempt from the tax imposed by Sections 1-1399 of the Code,
if such entity is not subject to tax on its unrelated business income.
Accordingly, the applicable Pooling and Servicing Agreement will prohibit
Disqualified Organizations from owning a Residual Interest Security. In
addition, no transfer of a Residual Interest Security will be permitted unless
the proposed transferee shall have furnished to the Trustee an affidavit
representing and warranting that it is neither a Disqualified Organization nor
an agent or nominee acting on behalf of a Disqualified Organization.

If a Residual Interest Security is transferred to a Disqualified
Organization after March 31, 1988 (in violation of the restrictions set forth
above), a substantial tax will be imposed on the transferor of such Residual
Interest Security at the time of the transfer. In addition, if a Disqualified
Organization holds an interest in a pass-through entity after March 31, 1988
(including, among others, a partnership, trust, real estate investment trust,
regulated investment company, or any person holding as nominee), that owns a
Residual Interest Security, the pass-through entity will be required to pay an
annual tax on its allocable share of the excess inclusion income of the REMIC.

Under the REMIC Regulations, if a Residual Interest Security is a
"noneconomic residual interest," as described below, a transfer of a Residual
Interest Security to a United States person will be disregarded for all Federal
tax purposes unless no significant purpose of the transfer was to impede the
assessment or collection of tax. A Residual Interest Security is a "noneconomic
residual interest" unless, at the time of the transfer (i) the present value of
the expected future distributions on the Residual Interest Security at least
equals the product of the present value of the anticipated excess inclusions and
the highest rate of tax for the year in which the transfer occurs, and (ii) the
transferor reasonably expects that the transferee will receive distributions
from the REMIC at or after the time at which the taxes accrue on the anticipated
excess inclusions in an amount sufficient to satisfy the accrued taxes. If a
transfer of a Residual Interest is disregarded, the transferor would be liable
for any Federal income tax imposed upon taxable income derived by the transferee
from the REMIC. The REMIC Regulations provide no guidance as to how to determine
if a significant purpose of a transfer is to impede the assessment or collection
of tax. A similar type of limitation exists with respect to certain transfers of
residual interests by foreign persons to United States persons. See "--Tax
Treatment of Foreign Investors."

Mark to Market Rules. Prospective purchasers of a REMIC Residual
Interest Security should be aware that the IRS recently released proposed
regulations (the "Proposed Mark-to-Market Regulations") which provide that a
REMIC Residual Interest Security acquired after January 3, 1995 cannot be
marked-to-market. The Proposed Mark-to-Market Regulations replace the temporary
regulations which allowed a REMIC Residual Interest Security to be
marked-to-market provided that it was not a negative value residual interest and
did not have the same economic effect as a negative value residual interest. The
IRS could issue subsequent regulations, which could apply retroactively,
providing additional or different requirements with respect to such deemed
negative value residual interests. Prospective

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purchasers of a REMIC Residual Interest Security should consult their tax
advisors regarding the possible application of the Proposed Mark-to-Market
Regulations.

ADMINISTRATIVE MATTERS

The REMIC's books must be maintained on a calendar year basis and the
REMIC must file an annual federal income tax return. The REMIC will also be
subject to the procedural and administrative rules of the Code applicable to
partnerships, including the determination of any adjustments to, among other
things, items of REMIC income, gain, loss, deduction, or credit, by the IRS in a
unified administrative proceeding.

TAX STATUS AS A GRANTOR TRUST

General. As specified in the related Prospectus Supplement if a REMIC
or partnership election is not made, in the opinion of Latham & Watkins, special
counsel to the Depositor, the Trust Fund relating to a Series of Securities will
be classified for federal income tax purposes as a grantor trust under Subpart
E, Part I of Subchapter J of the Code and not as an association taxable as a
corporation (the Securities of such Series, "Pass-Through Securities"). In some
Series there will be no separation of the principal and interest payments on the
Loans. In such circumstances, a Holder will be considered to have purchased a
pro rata undivided interest in each of the Loans. In other cases ("Stripped
Securities"), sale of the Securities will produce a separation in the ownership
of all or a portion of the principal payments from all or a portion of the
interest payments on the Loans.

Each Holder must report on its federal income tax return its share of
the gross income derived from the Loans (not reduced by the amount payable as
fees to the Trustee and the Servicer and similar fees (collectively, the
"Servicing Fee")), at the same time and in the same manner as such items would
have been reported under the Holder's tax accounting method had it held its
interest in the Loans directly, received directly its share of the amounts
received with respect to the Loans, and paid directly its share of the Servicing
Fees. In the case of Pass-Through Securities other than Stripped Securities,
such income will consist of a pro rata share of all of the income derived from
all of the Loans and, in the case of Stripped Securities, such income will
consist of a pro rata share of the income derived from each stripped bond or
stripped coupon in which the Holder owns an interest. The holder of a Security
will generally be entitled to deduct such Servicing Fees under Section 162 or
Section 212 of the Code to the extent that such Servicing Fees represent
"reasonable" compensation for the services rendered by the Trustee and the
Servicer (or third parties that are compensated for the performance of
services). In the case of a noncorporate holder, however, Servicing Fees (to the
extent not otherwise disallowed, e.g., because they exceed reasonable
compensation) will be deductible in computing such holder's regular tax
liability only to the extent that such fees, when added to other miscellaneous
itemized deductions, exceed 2% of adjusted gross income and may not be
deductible to any extent in computing such holder's alternative minimum tax
liability. In addition, for taxable years beginning after December 31, 1990, the
amount of itemized deductions otherwise allowable for the taxable year for an
individual whose adjusted gross income exceeds the applicable amount (which
amount will be adjusted for inflation in taxable years beginning after 1990)
will be reduced by the lesser of (i) 3% of the excess of adjusted gross income
over the applicable amount or (ii) 80% of the amount of itemized deductions
otherwise allowable for such taxable year.

Discount or Premium on Pass-Through Securities. The holder's purchase
price of a Pass-Through Security is to be allocated among the Loans in
proportion to their fair market values, determined as of the time of purchase of
the Securities. In the typical case, the Trustee (to the extent necessary to
fulfill

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its reporting obligations) will treat each Loan as having a fair market value
proportional to the share of the aggregate principal balances of all of the
Loans that it represents, since the Securities, unless otherwise specified in
the related Prospectus Supplement, will have a relatively uniform interest rate
and other common characteristics. To the extent that the portion of the purchase
price of a Pass-Through Security allocated to a Loan (other than to a right to
receive any accrued interest thereon and any undistributed principal payments)
is less than or greater than the portion of the principal balance of the Loan
allocable to the Security, the interest in the Loan allocable to the
Pass-Through Security will be deemed to have been acquired at a discount or
premium, respectively.

The treatment of any discount will depend on whether the discount
represents OID or market discount. In the case of a Loan with OID in excess of a
prescribed de minimis amount or a Stripped Security, a holder of a Security will
be required to report as interest income in each taxable year its share of the
amount of OID that accrues during that year in the manner described above. OID
with respect to a Loan could arise, for example, by virtue of the financing of
points by the originator of the Loan, or by virtue of the charging of points by
the originator of the Loan in an amount greater than a statutory de minimis
exception, in circumstances under which the points are not currently deductible
pursuant to applicable Code provisions. Any market discount or premium on a Loan
will be includible in income, generally in the manner described above, except
that in the case of Pass-Through Securities, market discount is calculated with
respect to the Loans underlying the Certificate, rather than with respect to the
Security. A Holder that acquires an interest in a Loan originated after July 18,
1984 with more than a de minimis amount of market discount (generally, the
excess of the principal amount of the Loan over the purchaser's allocable
purchase price) will be required to include accrued market discount in income in
the manner set forth above. See "--General; Market Discount" and "--Premium"
above.

In the case of market discount on a Pass-Through Security attributable
to Loans originated on or before July 18, 1984, the holder generally will be
required to allocate the portion of such discount that is allocable to a loan
among the principal payments on the Loan and to include the discount allocable
to each principal payment in ordinary income at the time such principal payment
is made. Such treatment would generally result in discount being included in
income at a slower rate than discount would be required to be included in income
using the method described in the preceding paragraph.

Stripped Securities. A Stripped Security may represent a right to
receive only a portion of the interest payments on the Loans, a right to receive
only principal payments on the Loans, or a right to receive certain payments of
both interest and principal. Certain Stripped Securities ("Ratio Strip
Securities") may represent a right to receive differing percentages of both the
interest and principal on each Loan. Pursuant to Section 1286 of the Code, the
separation of ownership of the right to receive some or all of the interest
payments on an obligation from ownership of the right to receive some or all of
the principal payments results in the creation of "stripped bonds" with respect
to principal payments and "stripped coupons" with respect to interest payments.
Section 1286 of the Code applies the OID rules to stripped bonds and stripped
coupons. For purposes of computing original issue discount, a stripped bond or a
stripped coupon is treated as a debt instrument issued on the date that such
stripped interest is purchased with an issue price equal to its purchase price
or, if more than one stripped interest is purchased, the ratable share of the
purchase price allocable to such stripped interest.

Servicing fees in excess of reasonable servicing fees ("excess
servicing") will be treated under the stripped bond rules. If the excess
servicing fee is less than 100 basis points (i.e., 1% interest on the Loan
principal balance) or the Securities are initially sold with a de minimis
discount (assuming no prepayment assumption is required), any non-de minimis
discount arising from a subsequent transfer of the Securities should be treated
as market discount. The IRS appears to require that reasonable servicing

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fees be calculated on a Loan by Loan basis, which could result in some Loans
being treated as having more than 100 basis points of interest stripped off.

The Code, OID Regulations and judicial decisions provide no direct
guidance as to how the interest and original issue discount rules are to apply
to Stripped Securities and other Pass-Through Securities. Under the method
described above for Pay-Through Securities (the "Cash Flow Bond Method"), a
prepayment assumption is used and periodic recalculations are made which take
into account with respect to each accrual period the effect of prepayments
during such period. However, the 1986 Act does not, absent Treasury regulations,
appear specifically to cover instruments such as the Stripped Securities which
technically represent ownership interests in the underlying Loans, rather than
being debt instruments "secured by" those loans. Nevertheless, it is believed
that the Cash Flow Bond Method is a reasonable method of reporting income for
such Securities, and it is expected that OID will be reported on that basis
unless otherwise specified in the related Prospectus Supplement. In applying the
calculation to Pass-Through Securities, the Trustee will treat all payments to
be received by a holder with respect to the underlying Loans as payments on a
single installment obligation. The IRS could, however, assert that original
issue discount must be calculated separately for each Loan underlying a
Security.

Under certain circumstances, if the Loans prepay at a rate faster than
the Prepayment Assumption, the use of the Cash Flow Bond Method may accelerate a
Holder's recognition of income. If, however, the Loans prepay at a rate slower
than the Prepayment Assumption, in some circumstances the use of this method may
decelerate a Holder's recognition of income.

In the case of a Stripped Security that is an Interest Weighted
Security, the Trustee intends, absent contrary authority, to report income to
Security holders as OID, in the manner described above for Interest Weighted
Securities.

Possible Alternative Characterizations. The characterizations of the
Stripped Securities described above are not the only possible interpretations of
the applicable Code provisions. Among other possibilities, the IRS could contend
that (i) in certain Series, each non-Interest Weighted Security is composed of
an unstripped undivided ownership interest in Loans and an installment
obligation consisting of stripped principal payments; (ii) the non-Interest
Weighted Securities are subject to the contingent payment provisions of the
Contingent Regulations; or (iii) each Interest Weighted Stripped Security is
composed of an unstripped undivided ownership interest in Loans and an
installment obligation consisting of stripped interest payments.

Given the variety of alternatives for treatment of the Stripped
Securities and the different federal income tax consequences that result from
each alternative, potential purchasers are urged to consult their own tax
advisers regarding the proper treatment of the Securities for federal income tax
purposes.

Character as Qualifying Loans. In the case of Stripped Securities,
there is no specific legal authority existing regarding whether the character of
the Securities, for federal income tax purposes, will be the same as the Loans.
The IRS could take the position that the Loans character is not carried over to
the Securities in such circumstances. Pass-Through Securities will be, and,
although the matter is not free from doubt, Stripped Securities should be
considered to represent "real estate assets" within the meaning of Section
856(c)(6)(B) of the Code, and "loans secured by an interest in real property"
within the meaning of Section 7701(a)(19)(C)(v) of the Code; and interest income
attributable to the Securities should be considered to represent "interest on
obligations secured by mortgages on real property or on interests in real
property" within the meaning of Section 856(c)(3)(B) of the Code. Reserves or
funds

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underlying the Securities may cause a proportionate reduction in the
above-described qualifying status categories of Securities.

SALE OR EXCHANGE

Subject to the discussion below with respect to Trust Funds as to which
a partnership election is made, a Holder's tax basis in its Security is the
price such holder pays for a Security, plus amounts of original issue or market
discount included in income and reduced by any payments received (other than
qualified stated interest payments) and any amortized premium. Gain or loss
recognized on a sale, exchange, or redemption of a Security, measured by the
difference between the amount realized and the Security's basis as so adjusted,
will generally be capital gain or loss, assuming that the Security is held as a
capital asset. In the case of a Security held by a bank, thrift, or similar
institution described in Section 582 of the Code, however, gain or loss realized
on the sale or exchange of a Regular Interest Security will be taxable as
ordinary income or loss. In addition, gain from the disposition of a Regular
Interest Security that might otherwise be capital gain will be treated as
ordinary income to the extent of the excess, if any, of (i) the amount that
would have been includible in the holder's income if the yield on such Regular
Interest Security had equaled 110% of the applicable federal rate as of the
beginning of such holder's holding period, over the amount of ordinary income
actually recognized by the holder with respect to such Regular Interest
Security. For taxable years beginning after December 31, 1993, the maximum tax
rate on ordinary income for individual taxpayers is 39.6% and the maximum tax
rate on long-term capital gains reported after December 31, 1990 for such
taxpayers is 28%. The maximum tax rate on both ordinary income and long-term
capital gains of corporate taxpayers is 35%.

MISCELLANEOUS TAX ASPECTS

Backup Withholding. Subject to the discussion below with respect to
Trust Funds as to which a partnership election is made, a Holder, other than a
holder of a REMIC Residual Security, may, under certain circumstances, be
subject to "backup withholding" at a rate of 31% with respect to distributions
or the proceeds of a sale of certificates to or through brokers that represent
interest or original issue discount on the Securities. This withholding
generally applies if the holder of a Security (i) fails to furnish the Trustee
with its taxpayer identification number ("TIN"); (ii) furnishes the Trustee an
incorrect TIN; (iii) fails to report properly interest, dividends or other
"reportable payments" as defined in the Code; or (iv) under certain
circumstances, fails to provide the Trustee or such holder's securities broker
with a certified statement, signed under penalty of perjury, that the TIN
provided is its correct number and that the holder is not subject to backup
withholding. Backup withholding will not apply, however, with respect to certain
payments made to Holders, including payments to certain exempt recipients (such
as exempt organizations) and to certain Nonresidents (as defined below). Holders
should consult their tax advisers as to their qualification for exemption from
backup withholding and the procedure for obtaining the exemption.

The Trustee will report to the Holders and to the Servicer for each
calendar year the amount of any "reportable payments" during such year and the
amount of tax withheld, if any, with respect to payments on the Securities.

TAX TREATMENT OF FOREIGN INVESTORS

Subject to the discussion below with respect to Trust Funds as to which
a partnership election is made, under the Code, unless interest (including OID)
paid on a Security (other than a Residual Interest Security) is considered to be
"effectively connected" with a trade or business conducted in the United

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States by a nonresident alien individual, foreign partnership or foreign
corporation ("Nonresidents"), such interest will normally qualify as portfolio
interest (except where (i) the recipient is a holder, directly or by
attribution, of 10% or more of the capital or profits interest in the issuer, or
(ii) the recipient is a controlled foreign corporation to which the issuer is a
related person) and will be exempt from federal income tax. Upon receipt of
appropriate ownership statements, the issuer normally will be relieved of
obligations to withhold tax from such interest payments. These provisions
supersede the generally applicable provisions of United States law that would
otherwise require the issuer to withhold at a 30% rate (unless such rate were
reduced or eliminated by an applicable tax treaty) on, among other things,
interest and other fixed or determinable, annual or periodic income paid to
Nonresidents. Holders of Pass-Through Securities and Stripped Securities,
including Ratio Strip Securities, however, may be subject to withholding to the
extent that the Loans were originated on or before July 18, 1984.

Interest and OID of Holders who are foreign persons are not subject to
withholding if they are effectively connected with a United States business
conducted by the Holder. They will, however, generally be subject to the regular
United States income tax.

Payments to holders of Residual Interest Securities who are foreign
persons will generally be treated as interest for purposes of the 30% (or lower
treaty rate) United States withholding tax. Holders should assume that such
income does not qualify for exemption from United States withholding tax as
"portfolio interest." It is clear that, to the extent that a payment represents
a portion of REMIC taxable income that constitutes excess inclusion income, a
holder of a Residual Interest Security will not be entitled to an exemption from
or reduction of the 30% (or lower treaty rate) withholding tax rule. If the
payments are subject to United States withholding tax, they generally will be
taken into account for withholding tax purposes only when paid or distributed
(or when the Residual Interest Security is disposed of). The Treasury has
statutory authority, however, to promulgate regulations which would require such
amounts to be taken into account at an earlier time in order to prevent the
avoidance of tax. Such regulations could, for example, require withholding prior
to the distribution of cash in the case of Residual Interest Securities that do
not have significant value. Under the REMIC Regulations, if a Residual Interest
Security has tax avoidance potential, a transfer of a Residual Interest Security
to a Nonresident will be disregarded for all federal tax purposes. A Residual
Interest Security has tax avoidance potential unless, at the time of the
transfer the transferor reasonably expects that the REMIC will distribute to the
transferee residual interest holder amounts that will equal at least 30% of each
excess inclusion, and that such amounts will be distributed at or after the time
at which the excess inclusions accrue and not later than the calendar year
following the calendar year of accrual. If a Nonresident transfers a Residual
Interest Security to a United States person, and if the transfer has the effect
of allowing the transferor to avoid tax on accrued excess inclusions, then the
transfer is disregarded and the transferor continues to be treated as the owner
of the Residual Interest Security for purposes of the withholding tax provisions
of the Code. See "--Taxation of Holders of Residual Interest Securities--Excess
Inclusions."

Tax Characterization of the Trust Fund as a Partnership. Latham &
Watkins, special counsel to the Depositor, will deliver its opinion that a Trust
Fund for which a partnership election is made will not be an association (or
publicly traded partnership) taxable as a corporation for federal income tax
purposes. This opinion will be based on the assumption that the terms of the
Trust Agreement and related documents will be complied with, and on counsel's
conclusions that (1) the Trust Fund will not have certain characteristics
necessary for a business trust to be classified as an association taxable as a
corporation and (2) the nature of the income of the Trust Fund will exempt it
from the rule that certain publicly traded partnerships are taxable as
corporations or the issuance of the Securities has been

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structured as a private placement under an IRS safe harbor, so that the Trust
Fund will not be characterized as a publicly traded partnership taxable as a
corporation.

If the Trust Fund were taxable as a corporation for federal income tax
purposes, the Trust Fund would be subject to corporate income tax on its taxable
income. The Trust Fund's taxable income would include all its income, possibly
reduced by its interest expense on the Notes. Any such corporate income tax
could materially reduce cash available to make payments on the Notes and
distributions on the Certificates, and Certificateholders could be liable for
any such tax that is unpaid by the Trust Fund.

TAX CONSEQUENCES TO HOLDERS OF THE NOTES

Treatment of the Notes as Indebtedness. The Trust Fund will agree, and
the Noteholders will agree by their purchase of Notes, to treat the Notes as
debt for federal income tax purposes. Special counsel to the Depositor will,
except as otherwise provided in the related Prospectus Supplement, advise the
Depositor that the Notes will be classified as debt for federal income tax
purposes. The discussion below assumes this characterization of the Notes is
correct.

OID, Indexed Securities, etc. The discussion below assumes that all
payments on the Notes are denominated in U.S. dollars, and that the Notes are
not Indexed Securities or Strip Notes. Moreover, the discussion assumes that the
interest formula for the Notes meets the requirements for "qualified stated
interest" under the OID regulations, and that any OID on the Notes (i.e., any
excess of the principal amount of the Notes over their issue price) does not
exceed a de minimis amount (i.e., 0.25% of their principal amount multiplied by
the number of full years included in their term), all within the meaning of the
OID regulations. If these conditions are not satisfied with respect to any given
series of Notes, additional tax considerations with respect to such Notes will
be disclosed in the applicable Prospectus Supplement.

Interest Income on the Notes. Based on the above assumptions, except as
discussed in the following paragraph, the Notes will not be considered issued
with OID. The stated interest thereon will be taxable to a Noteholder as
ordinary interest income when received or accrued in accordance with such
Noteholder's method of tax accounting. Under the OID regulations, a holder of a
Note issued with a de minimis amount of OID must include such OID in income, on
a pro rata basis, as principal payments are made on the Note. It is believed
that any prepayment premium paid as a result of a mandatory redemption will be
taxable as contingent interest when it becomes fixed and unconditionally
payable. A purchaser who buys a Note for more or less than its principal amount
will generally be subject, respectively, to the premium amortization or market
discount rules of the Code.

A holder of a Note that has a fixed maturity date of not more than one
year from the issue date of such Note (a "Short-Term Note") may be subject to
special rules. An accrual basis holder of a Short-Term Note (and certain cash
method holders, including regulated investment companies, as set forth in
Section 1281 of the Code) generally would be required to report interest income
as interest accrues on a straight-line basis over the term of each interest
period. Other cash basis holders of a Short-Term Note would, in general, be
required to report interest income as interest is paid (or, if earlier, upon the
taxable disposition of the Short-Term Note). However, a cash basis holder of a
Short-Term Note reporting interest income as it is paid may be required to defer
a portion of any interest expense otherwise deductible on indebtedness incurred
to purchase or carry the Short-Term Note until the taxable disposition of the
Short-Term Note. A cash basis taxpayer may elect under Section 1281 of the Code
to accrue interest income on all nongovernment debt obligations with a term of
one year or less, in which case the taxpayer would include interest on the
Short-Term Note in income as it accrues, but would not be subject

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to the interest expense deferral rule referred to in the preceding sentence.
Certain special rules apply if a Short-Term Note is purchased for more or less
than its principal amount.

Sale or Other Disposition. If a Noteholder sells a Note, the holder
will recognize gain or loss in an amount equal to the difference between the
amount realized on the sale and the holder's adjusted tax basis in the Note. The
adjusted tax basis of a Note to a particular Noteholder will equal the holder's
cost for the Note, increased by any market discount, acquisition discount, OID
and gain previously included by such Noteholder in income with respect to the
Note and decreased by the amount of bond premium (if any) previously amortized
and by the amount of principal payments previously received by such Noteholder
with respect to such Note. Any such gain or loss will be capital gain or loss if
the Note was held as a capital asset, except for gain representing accrued
interest and accrued market discount not previously included in income. Capital
losses generally may be used only to offset capital gains.

Foreign Holders. Interest payments made (or accrued) to a Noteholder
who is a nonresident alien, foreign corporation or other non-United States
person (a "foreign person") generally will be considered "portfolio interest,"
and generally will not be subject to United States federal income tax and
withholding tax, if the interest is not effectively connected with the conduct
of a trade or business within the United States by the foreign person and the
foreign person (i) is not actually or constructively a "10 percent shareholder"
of the Trust Fund or the Seller (including a holder of 10% of the outstanding
Certificates) or a "controlled foreign corporation" with respect to which the
Trust Fund or the Seller is a "related person" within the meaning of the Code
and (ii) provides the Owner Trustee or other person who is otherwise required to
withhold U.S. tax with respect to the Notes with an appropriate statement (on
Form W-8 or a similar form), signed under penalties of perjury, certifying that
the beneficial owner of the Note is a foreign person and providing the foreign
person's name and address. If a Note is held through a securities clearing
organization or certain other financial institutions, the organization or
institution may provide the relevant signed statement to the withholding agent;
in that case, however, the signed statement must be accompanied by a Form W-8 or
substitute form provided by the foreign person that owns the Note. If such
interest is not portfolio interest, then it will be subject to United States
federal income and withholding tax at a rate of 30 percent, unless reduced or
eliminated pursuant to an applicable tax treaty.

Any capital gain realized on the sale, redemption, retirement or other
taxable disposition of a Note by a foreign person will be exempt from United
States federal income and withholding tax, provided that (i) such gain is not
effectively connected with the conduct of a trade or business in the United
States by the foreign person and (ii) in the case of an individual foreign
person, the foreign person is not present in the United States for 183 days or
more in the taxable year.

Backup Withholding. Each holder of a Note (other than an exempt holder
such as a corporation, tax-exempt organization, qualified pension and
profit-sharing trust, individual retirement account or nonresident alien who
provides certification as to status as a nonresident) will be required to
provide, under penalties of perjury, a certificate containing the holder's name,
address, correct federal taxpayer identification number and a statement that the
holder is not subject to backup withholding. Should a nonexempt Noteholder fail
to provide the required certification, the Trust Fund will be required to
withhold 31 percent of the amount otherwise payable to the holder, and remit the
withheld amount to the IRS as a credit against the holder's federal income tax
liability.

Possible Alternative Treatments of the Notes. If, contrary to the
opinion of special counsel to the Company, the IRS successfully asserted that
one or more of the Notes did not represent debt for federal income tax purposes,
the Notes might be treated as equity interests in the Trust Fund. If so treated,
the

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Trust Fund might be taxable as a corporation with the adverse consequences
described above (and the taxable corporation would not be able to reduce its
taxable income by deductions for interest expense on Notes recharacterized as
equity). Alternatively, and most likely in the view of special counsel to the
Depositor, the Trust Fund might be treated as a publicly traded partnership that
would not be taxable as a corporation because it would meet certain qualifying
income tests. Nonetheless, treatment of the Notes as equity interests in such a
publicly traded partnership could have adverse tax consequences to certain
holders. For example, income to certain tax-exempt entities (including pension
funds) would be "unrelated business taxable income," income to foreign holders
generally would be subject to U.S. tax and U.S. tax return filing and
withholding requirements, and individual holders might be subject to certain
limitations on their ability to deduct their share of the Trust Fund's expenses.

TAX CONSEQUENCES TO HOLDERS OF THE CERTIFICATES

Treatment of the Trust Fund as a Partnership. The Trust Fund and the
Servicer will agree, and the Certificateholders will agree by their purchase of
Certificates, to treat the Trust Fund as a partnership for purposes of federal
and state income tax, franchise tax and any other tax measured in whole or in
part by income, with the assets of the partnership being the assets held by the
Trust Fund, the partners of the partnership being the Certificateholders, and
the Notes being debt of the partnership. However, the proper characterization of
the arrangement involving the Trust Fund, the Certificates, the Notes, the Trust
Fund and the Servicer is not clear because there is no authority on transactions
closely comparable to that contemplated herein.

A variety of alternative characterizations are possible. For example,
because the Certificates have certain features characteristic of debt, the
Certificates might be considered debt of the Trust Fund. Any such
characterization would not result in materially adverse tax consequences to
Certificateholders as compared to the consequences from treatment of the
Certificates as equity in a partnership, described below. The following
discussion assumes that the Certificates represent equity interests in a
partnership.

Indexed Securities, etc. The following discussion assumes that all
payments on the Certificates are denominated in U.S. dollars, none of the
Certificates are Indexed Securities or Strip Certificates, and that a Series of
Securities includes a single class of Certificates. If these conditions are not
satisfied with respect to any given Series of Certificates, additional tax
considerations with respect to such Certificates will be disclosed in the
applicable Prospectus Supplement.

Partnership Taxation. As a partnership, the Trust Fund will not be
subject to federal income tax. Rather, each Certificateholder will be required
to separately take into account such holder's allocated share of income, gains,
losses, deductions and credits of the Trust Fund. The Trust Fund's income will
consist primarily of interest and finance charges earned on the Loans (including
appropriate adjustments for market discount, OID and bond premium) and any gain
upon collection or disposition of Loans. The Trust Fund's deductions will
consist primarily of interest accruing with respect to the Notes, servicing and
other fees, and losses or deductions upon collection or disposition of Loans.

The tax items of a partnership are allocable to the partners in
accordance with the Code, Treasury regulations and the partnership agreement
(here, the Trust Agreement and related documents). The Trust Agreement will
provide, in general, that the Certificateholders will be allocated taxable
income of the Trust Fund for each month equal to the sum of (i) the interest
that accrues on the Certificates in accordance with their terms for such month,
including interest accruing at the Pass-Through Rate for such month and interest
on amounts previously due on the Certificates but not yet distributed; (ii) any
Trust Fund income attributable to discount on the Loans that corresponds to any
excess of the principal amount

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of the Certificates over their initial issue price (iii) prepayment premium
payable to the Certificateholders for such month; and (iv) any other amounts of
income payable to the Certificateholders for such month. Such allocation will be
reduced by any amortization by the Trust Fund of premium on Loans that
corresponds to any excess of the issue price of Certificates over their
principal amount. All remaining taxable income of the Trust Fund will be
allocated to the Company. Based on the economic arrangement of the parties, this
approach for allocating Trust Fund income should be permissible under applicable
Treasury regulations, although no assurance can be given that the IRS would not
require a greater amount of income to be allocated to Certificateholders.
Moreover, even under the foregoing method of allocation, Certificateholders may
be allocated income equal to the entire Pass-Through Rate plus the other items
described above even though the Trust Fund might not have sufficient cash to
make current cash distributions of such amount. Thus, cash basis holders will in
effect be required to report income from the Certificates on the accrual basis
and Certificateholders may become liable for taxes on Trust Fund income even if
they have not received cash from the Trust Fund to pay such taxes. In addition,
because tax allocations and tax reporting will be done on a uniform basis for
all Certificateholders but Certificateholders may be purchasing Certificates at
different times and at different prices, Certificateholders may be required to
report on their tax returns taxable income that is greater or less than the
amount reported to them by the Trust Fund.

All of the taxable income allocated to a Certificateholder that is a
pension, profit sharing or employee benefit plan or other tax-exempt entity
(including an individual retirement account) will constitute "unrelated business
taxable income" generally taxable to such a holder under the Code.

An individual taxpayer's share of expenses of the Trust Fund (including
fees to the Servicer but not interest expense) would be miscellaneous itemized
deductions. Such deductions might be disallowed to the individual in whole or in
part and might result in such holder being taxed on an amount of income that
exceeds the amount of cash actually distributed to such holder over the life of
the Trust Fund.

The Trust Fund intends to make all tax calculations relating to income
and allocations to Certificateholders on an aggregate basis. If the IRS were to
require that such calculations be made separately for each Loan, the Trust Fund
might be required to incur additional expense but it is believed that there
would not be a material adverse effect on Certificateholders.

Discount and Premium. It is believed that the Loans were not issued
with OID, and, therefore, the Trust Fund should not have OID income. However,
the purchase price paid by the Trust Fund for the Loans may be greater or less
than the remaining principal balance of the Loans at the time of purchase. If
so, the Loan will have been acquired at a premium or discount, as the case may
be. (As indicated above, the Trust Fund will make this calculation on an
aggregate basis, but might be required to recompute it on a Loan by Loan basis.)

If the Trust Fund acquires the Loans at a market discount or premium,
the Trust Fund will elect to include any such discount in income currently as it
accrues over the life of the Loans or to offset any such premium against
interest income on the Loans. As indicated above, a portion of such market
discount income or premium deduction may be allocated to Certificateholders.

Section 708 Termination. Under Section 708 of the Code, the Trust Fund
will be deemed to terminate for federal income tax purposes if 50% or more of
the capital and profits interests in the Trust Fund are sold or exchanged within
a 12-month period. If such a termination occurs, the Trust Fund will be
considered to distribute its assets to the partners, who would then be treated
as recontributing those assets to the Trust Fund as a new partnership. The Trust
Fund will not comply with certain technical

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requirements that might apply when such a constructive termination occurs. As a
result, the Trust Fund may be subject to certain tax penalties and may incur
additional expenses if it is required to comply with those requirements.
Furthermore, the Trust Fund might not be able to comply due to lack of data.

Disposition of Certificates. Generally, capital gain or loss will be
recognized on a sale of Certificates in an amount equal to the difference
between the amount realized and the seller's tax basis in the Certificates sold.
A Certificateholder's tax basis in a Certificate will generally equal the
holder's cost increased by the holder's share of Trust Fund income (includible
in income) and decreased by any distributions received with respect to such
Certificate. In addition, both the tax basis in the Certificates and the amount
realized on a sale of a Certificate would include the holder's share of the
Notes and other liabilities of the Trust Fund. A holder acquiring Certificates
at different prices may be required to maintain a single aggregate adjusted tax
basis in such Certificates, and, upon sale or other disposition of some of the
Certificates, allocate a portion of such aggregate tax basis to the Certificates
sold (rather than maintaining a separate tax basis in each Certificate for
purposes of computing gain or loss on a sale of that Certificate).

Any gain on the sale of a Certificate attributable to the holder's
share of unrecognized accrued market discount on the Loans would generally be
treated as ordinary income to the holder and would give rise to special tax
reporting requirements. The Trust Fund does not expect to have any other assets
that would give rise to such special reporting requirements. Thus, to avoid
those special reporting requirements, the Trust Fund will elect to include
market discount in income as it accrues.

If a Certificateholder is required to recognize an aggregate amount of
income (not including income attributable to disallowed itemized deductions
described above) over the life of the Certificates that exceeds the aggregate
cash distributions with respect thereto, such excess will generally give rise to
a capital loss upon the retirement of the Certificates.

Allocations Between Transferors and Transferees. In general, the Trust
Fund's taxable income and losses will be determined monthly and the tax items
for a particular calendar month will be apportioned among the Certificateholders
in proportion to the principal amount of Certificates owned by them as of the
close of the last day of such month. As a result, a holder purchasing
Certificates may be allocated tax items (which will affect its tax liability and
tax basis) attributable to periods before the actual transaction.

The use of such a monthly convention may not be permitted by existing
regulations. If a monthly convention is not allowed (or only applies to
transfers of less than all of the partner's interest), taxable income or losses
of the Trust Fund might be reallocated among the Certificateholders. The Trust
Fund's method of allocation between transferors and transferees may be revised
to conform to a method permitted by future regulations.

Section 754 Election. In the event that a Certificateholder sells its
Certificates at a profit (loss), the purchasing Certificateholder will have a
higher (lower) basis in the Certificates than the selling Certificateholder had.
The tax basis of the Trust Fund's assets will not be adjusted to reflect that
higher (or lower) basis unless the Trust Fund were to file an election under
Section 754 of the Code. In order to avoid the administrative complexities that
would be involved in keeping accurate accounting records, as well as potentially
onerous information reporting requirements, the Trust Fund will not make such
election. As a result, Certificateholders might be allocated a greater or lesser
amount of Trust Fund income than would be appropriate based on their own
purchase price for Certificates.

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Administrative Matters. The Owner Trustee is required to keep or have
kept complete and accurate books of the Trust Fund. Such books will be
maintained for financial reporting and tax purposes on an accrual basis and the
fiscal year of the Trust Fund will be the calendar year. The Trustee will file a
partnership information return (IRS Form 1065) with the IRS for each taxable
year of the Trust Fund and will report each Certificateholder's allocable share
of items of Trust Fund income and expense to holders and the IRS on Schedule
K-1. The Trust Fund will provide the Schedule K-l information to nominees that
fail to provide the Trust Fund with the information statement described below
and such nominees will be required to forward such information to the beneficial
owners of the Certificates. Generally, holders must file tax returns that are
consistent with the information return filed by the Trust Fund or be subject to
penalties unless the holder notifies the IRS of all such inconsistencies .

Under Section 6031 of the Code, any person that holds Certificates as a
nominee at any time during a calendar year is required to furnish the Trust Fund
with a statement containing certain information on the nominee, the beneficial
owners and the Certificates so held. Such information includes (i) the name,
address and taxpayer identification number of the nominee and (ii) as to each
beneficial owner (x) the name, address and identification number of such person,
(y) whether such person is a United States person, a tax-exempt entity or a
foreign government, an international organization, or any wholly owned agency or
instrumentality of either of the foregoing, and (z) certain information on
Certificates that were held, bought or sold on behalf of such person throughout
the year. In addition, brokers and financial institutions that hold Certificates
through a nominee are required to furnish directly to the Trust Fund information
as to themselves and their ownership of Certificates. A clearing agency
registered under Section 17A of the Exchange Act is not required to furnish any
such information statement to the Trust Fund. The information referred to above
for any calendar year must be furnished to the Trust Fund on or before the
following January 31. Nominees, brokers and financial institutions that fail to
provide the Trust Fund with the information described above may be subject to
penalties.

The Depositor will be designated as the tax matters partner in the
related Trust Agreement and, as such, will be responsible for representing the
Certificateholders in any dispute with the IRS. The Code provides for
administrative examination of a partnership as if the partnership were a
separate and distinct taxpayer. Generally, the statute of limitations for
partnership items does not expire before three years after the date on which the
partnership information return is filed. Any adverse determination following an
audit of the return of the Trust Fund by the appropriate taxing authorities
could result in an adjustment of the returns of the Certificateholders, and,
under certain circumstances, a Certificateholder may be precluded from
separately litigating a proposed adjustment to the items of the Trust Fund. An
adjustment could also result in an audit of a Certificateholder's returns and
adjustments of items not related to the income and losses of the Trust Fund.

Tax Consequences to Foreign Certificateholders. It is not clear whether
the Trust Fund would be considered to be engaged in a trade or business in the
United States for purposes of federal withholding taxes with respect to non-U.S.
persons because there is no clear authority dealing with that issue under facts
substantially similar to those described herein. Although it is not expected
that the Trust Fund would be engaged in a trade or business in the United States
for such purposes, the Trust Fund will withhold as if it were so engaged in
order to protect the Trust Fund from possible adverse consequences of a failure
to withhold. The Trust Fund expects to withhold on the portion of its taxable
income that is allocable to foreign Certificateholders pursuant to Section 1446
of the Code, as if such income were effectively connected to a U.S. trade or
business, at a rate of 35% for foreign holders that are taxable as corporations
and 39.6% for all other foreign holders. Subsequent adoption of Treasury
regulations or the issuance of other administrative pronouncements may require
the Trust Fund to change its withholding procedures. In determining a holder's
withholding status, the Trust Fund may rely on IRS

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Form W-8, IRS Form W-9 or the holder's certification of nonforeign status signed
under penalties of perjury.

The term "U.S. Person" means a citizen or resident of the United
States, a corporation, partnership or other entity created or organized in or
under the laws of the United States or any political subdivision thereof, or an
estate whose income is subject to U.S. federal income tax regardless of its
source of income, or a trust if a court within the United States is able to
exercise primary supervision of the administration of the trust and one or more
United States fiduciaries have the authority to control all substantial
decisions of the trust.

Each foreign holder might be required to file a U.S. individual or
corporate income tax return (including, in the case of a corporation, the branch
profits tax) on its share of the Trust Fund's income. Each foreign holder must
obtain a taxpayer identification number from the IRS and submit that number to
the Trust Fund on Form W-8 in order to assure appropriate crediting of the taxes
withheld. A foreign holder generally would be entitled to file with the IRS a
claim for refund with respect to taxes withheld by the Trust Fund taking the
position that no taxes were due because the Trust Fund was not engaged in a U.S.
trade or business. However, interest payments made (or accrued) to a
Certificateholder who is a foreign person generally will be considered
guaranteed payments to the extent such payments are determined without regard to
the income of the Trust Fund. If these interest payments are properly
characterized as guaranteed payments, then the interest will not be considered
"portfolio interest." As a result, Certificateholders will be subject to United
States federal income tax and withholding tax at a rate of 30 percent, unless
reduced or eliminated pursuant to an applicable treaty. In such case, a foreign
holder would only be entitled to claim a refund for that portion of the taxes in
excess of the taxes that should be withheld with respect to the guaranteed
payments.

Backup Withholding. Distributions made on the Certificates and proceeds
from the sale of the Certificates will be subject to a "backup" withholding tax
of 31% if, in general, the Certificateholder fails to comply with certain
identification procedures, unless the holder is an exempt recipient under
applicable provisions of the Code.

STATE TAX CONSIDERATIONS

In addition to the federal income tax consequences described in
"Federal Income Tax Consequences," potential investors should consider the state
and local income tax consequences of the acquisition, ownership, and disposition
of the Securities. State and local income tax law may differ substantially from
the corresponding federal law, and this discussion does not purport to describe
any aspect of the income tax laws of any state or locality. Therefore, potential
investors should consult their own tax advisors with respect to the various
state and local tax consequences of an investment in the Securities.

ERISA CONSIDERATIONS

The following describes certain considerations under ERISA and the
Code, which apply only to Securities of a Series that are not divided into
subclasses. If Securities are divided into subclasses the related Prospectus
Supplement will contain information concerning considerations relating to ERISA
and the Code that are applicable to such Securities.

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ERISA imposes requirements on employee benefit plans (and on certain
other retirement plans and arrangements, including individual retirement
accounts and annuities, Keogh plans and collective investment funds and separate
accounts in which such plans, accounts or arrangements are invested)
(collectively "Plans") subject to ERISA and on persons who are fiduciaries with
respect to such Plans. Generally, ERISA applies to investments made by Plans.
Among other things, ERISA requires that the assets of Plans be held in trust and
that the trustee, or other duly authorized fiduciary, have exclusive authority
and discretion to manage and control the assets of such Plans. ERISA also
imposes certain duties on persons who are fiduciaries of Plans. Under ERISA, any
person who exercises any authority or control respecting the management or
disposition of the assets of a Plan is considered to be a fiduciary of such Plan
(subject to certain exceptions not here relevant). Certain employee benefit
plans, such as governmental plans (as defined in ERISA Section 3(32)) and, if no
election has been made under Section 410(d) of the Code, church plans (as
defined in ERISA Section 3(33)), are not subject to ERISA requirements.
Accordingly, assets of such plans may be invested in Securities without regard
to the ERISA considerations described above and below, subject to the provisions
of applicable state law. Any such plan which is qualified and exempt from
taxation under Code Sections 401(a) and 501(a), however, is subject to the
prohibited transaction rules set forth in Code Section 503.

On November 13, 1986, the United States Department of Labor (the "DOL")
issued final regulations concerning the definition of what constitutes the
assets of a Plan. (Labor Reg. Section 2510.3-101) Under this regulation, the
underlying assets and properties of corporations, partnerships and certain other
entities in which a Plan makes an "equity" investment could be deemed for
purposes of ERISA to be assets of the investing Plan in certain circumstances.
However, the regulation provides that, generally, the assets of a corporation or
partnership in which a Plan invests will not be deemed for purposes of ERISA to
be assets of such Plan if the equity interest acquired by the investing Plan is
a publicly-offered security. A publicly-offered security, as defined in the
Labor Reg. Section 2510.3-101, is a security that is widely held, freely
transferable and registered under the Securities Exchange Act of 1934, as
amended.

In addition to the imposition of general fiduciary standards of
investment prudence and diversification, ERISA prohibits a broad range of
transactions involving Plan assets and persons ("Parties in Interest") having
certain specified relationships to a Plan and imposes additional prohibitions
where Parties in Interest are fiduciaries with respect to such Plan. Because the
Loans may be deemed Plan assets of each Plan that purchases Securities, an
investment in the Securities by a Plan might be a prohibited transaction under
ERISA Sections 406 and 407 and subject to an excise tax under Code Section 4975
unless a statutory or administrative exemption applies.

In Prohibited Transaction Exemption 83-1 ("PTE 83-1"), which amended
Prohibited Transaction Exemption 81-7, the DOL exempted from ERISA's prohibited
transaction rules certain transactions relating to the operation of residential
mortgage pool investment trusts and the purchase, sale and holding of "mortgage
pool pass-through certificates" in the initial issuance of such certificates.
PTE 83-1 permits, subject to certain conditions, transactions which might
otherwise be prohibited between Plans and Parties in Interest with respect to
those Plans related to the origination, maintenance and termination of mortgage
pools consisting of mortgage loans secured by first or second mortgages or deeds
of trust on single-family residential property, and the acquisition and holding
of certain mortgage pool pass-through certificates representing an interest in
such mortgage pools by Plans. If the general conditions (discussed below) of PTE
83-1 are satisfied, investments by a Plan in Securities that represent interests
in a Pool consisting of Loans ("Single Family Securities") will be exempt from
the prohibitions of ERISA Sections 406(a) and 407 (relating generally to
transactions with Parties in Interest who are not fiduciaries) if the Plan
purchases the Single Family Securities at no more than fair market value and
will be exempt from the

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prohibitions of ERISA Sections 406(b)(1) and (2) (relating generally to
transactions with fiduciaries) if, in addition, the purchase is approved by an
independent fiduciary, no sales commission is paid to the pool sponsor, the Plan
does not purchase more than 25% of all Single Family Securities, and at least
50% of all Single Family Securities are purchased by persons independent of the
pool sponsor or pool trustee. PTE 83-1 does not provide an exemption for
transactions involving Subordinate Securities. Accordingly, unless otherwise
provided in the related Prospectus Supplement, no transfer of a Subordinate
Security or a Security which is not a Single Family Security may be made to a
Plan.

The discussion in this and the next succeeding paragraph applies only
to Single Family Securities. The Depositor believes that, for purposes of PTE
83-1, the term "mortgage pool pass-through certificate" would include: (i)
Securities issued in a Series consisting of only a single class of Securities;
and (ii) Securities issued in a Series in which there is only one class of such
Securities; provided that the Securities in the case of clause (i), or the
Securities in the case of clause (ii), evidence the beneficial ownership of both
a specified percentage of future interest payments (greater than 0%) and a
specified percentage (greater than 0%) of future principal payments on the
Loans. It is not clear whether a class of Securities that evidences the
beneficial ownership in a Trust Fund divided into Loan groups, beneficial
ownership of a specified percentage of interest payments only or principal
payments only, or a notional amount of either principal or interest payments, or
a class of Securities entitled to receive payments of interest and principal on
the Loans only after payments to other classes or after the occurrence of
certain specified events would be a "mortgage pass-through certificate" for
purposes of PTE 83-1.

PTE 83-1 sets forth three general conditions which must be satisfied
for any transaction to be eligible for exemption: (i) the maintenance of a
system of insurance or other protection for the pooled mortgage loans and
property securing such loans, and for indemnifying Securityholders against
reductions in pass-through payments due to property damage or defaults in loan
payments in an amount not less than the greater of one percent of the aggregate
principal balance of all covered pooled mortgage loans or the principal balance
of the largest covered pooled mortgage loan; (ii) the existence of a pool
trustee who is not an affiliate of the pool sponsor; and (iii) a limitation on
the amount of the payment retained by the pool sponsor, together with other
funds inuring to its benefit, to not more than adequate consideration for
selling the mortgage loans plus reasonable compensation for services provided by
the pool sponsor to the Pool. The Depositor believes that the first general
condition referred to above will be satisfied with respect to the Securities in
a Series issued without a subordination feature, or the Securities only in a
Series issued with a subordination feature, provided that the subordination and
Reserve Account, subordination by shifting of interests, the pool insurance or
other form of credit enhancement described under "Credit Enhancement" herein
(such subordination, pool insurance or other form of credit enhancement being
the system of insurance or other protection referred to above) with respect to a
Series of Securities is maintained in an amount not less than the greater of one
percent of the aggregate principal balance of the Loans or the principal balance
of the largest Loan. See "Description of the Securities" herein. In the absence
of a ruling that the system of insurance or other protection with respect to a
Series of Securities satisfies the first general condition referred to above,
there can be no assurance that these features will be so viewed by the DOL. The
Trustee will not be affiliated with the Depositor.

Each Plan fiduciary who is responsible for making the investment
decisions whether to purchase or commit to purchase and to hold Single Family
Securities must make its own determination as to whether the first and third
general conditions, and the specific conditions described briefly in the
preceding paragraph, of PTE 83-1 have been satisfied, or as to the availability
of any other prohibited transaction exemptions. Each Plan fiduciary should also
determine whether, under the general fiduciary standards of investment prudence
and diversification, an investment in the Securities is appropriate for

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<PAGE> 404

the Plan, taking into account the overall investment policy of the Plan and the
composition of the Plan's investment portfolio.

Availability of Underwriter's Exemption for Certificates. The DOL has
granted to Morgan Stanley & Co. Incorporated Prohibited Transaction Exemption
90-24, Exemption Application No. D-8019, 55 Fed. Reg. 20,548 (1990) (the
"Exemption") which exempts from the application of certain of the prohibited
transaction rules transactions relating to: (1) the acquisition, sale and
holding by Plans of certain certificates representing an undivided interest in
certain asset-backed pass-through trusts, with respect to which Morgan Stanley
or any of its affiliates is the sole underwriter or the manager or co-manager of
the underwriting syndicate; and (2) the servicing, operation and management of
such asset-backed pass-through trusts, provided that the general conditions and
certain other conditions set forth in the Exemption are satisfied.

(1) The acquisition of the Certificates by a Plan is on
terms (including the price for such Certificates) that are at
least as favorable to the investing Plan as they would be in an arm's
length transaction with an unrelated party;

(2) The rights and interests evidenced by the
Certificates acquired by the Plan are not subordinated to the rights
and interests evidenced by other certificates of the Trust;

(3) The Certificates acquired by the Plan have received
a rating at the time of such acquisition that is in one of the three
highest generic ratings categories from any of Duff & Phelps Inc.,
Fitch Investors Service, Inc., Moody's Investors Service, Inc. and
Standard & Poor's Ratings Group;

(4) The Trustee is not an affiliate of the Depositor, any
Underwriter, the Seller, the Master Servicer, any insurer of the
Mortgage Loans, any borrower whose obligations under one or more
Mortgage Loans constitute more than 5% of the aggregate unamortized
principal balance of the assets in the Trust Fund (determined on the
date of initial issuance of Certificates of the Trust Fund), or any of
their respective affiliates (the "Restricted Group");

(5) The sum of all payments made to and retained by the
Underwriter in connection with the distribution of the Certificates
represents not more than reasonable compensation for underwriting such
Certificates; the sum of all payments made to and retained by the
Seller pursuant to the sale of the Mortgage Loans to the Trust Fund
represents not more than the fair market value of such Mortgage Loans;
the sum of all payments made to and retained by the Master Servicer
represent not more than reasonable compensation for the Master
Servicer's services under the Agreement and reimbursement of the Master
Servicer's reasonable expenses in connection therewith; and

(6) The Plan investing in the Certificates is an
"accredited investor" as defined in Rule 501(a)(1) of Regulation D of
the Securities and Exchange Commission under the Securities Act of
1933 as amended.

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<PAGE> 405

The Prospectus Supplement for each Series of Securities will indicate
the classes of Securities, if any, offered thereby as to which it is expected
that the Exemption will apply.

Any Plan fiduciary which proposes to cause a Plan to purchase
Securities should consult with their counsel concerning the impact of ERISA and
the Code, the applicability of PTE 83-1 and the Exemption, and the potential
consequences in their specific circumstances, prior to making such investment.
Moreover, each Plan fiduciary should determine whether under the general
fiduciary standards of investment procedure and diversification an investment in
the Securities is appropriate for the Plan, taking into account the overall
investment policy of the Plan and the composition of the Plan's investment
portfolio.

LEGAL INVESTMENT

The Prospectus Supplement for each series of Securities will specify
which, if any, of the classes of Securities offered thereby constitute "mortgage
related securities" for purposes of the Secondary Mortgage Market Enhancement
Act of 1984 ("SMMEA"). Classes of Securities that qualify as "mortgage related
securities" will be legal investments for persons, trusts, corporations,
partnerships, associations, business trusts, and business entities (including
depository institutions, life insurance companies and pension funds) created
pursuant to or existing under the laws of the United States or of any state
(including the District of Columbia and Puerto Rico) whose authorized
investments are subject to state regulations to the same extent as, under
applicable law, obligations issued by or guaranteed as to principal and interest
by the United States or any such entities. Under SMMEA, if a state enacts
legislation prior to October 4, 1991 specifically limiting the legal investment
authority of any such entities with respect to "mortgage related securities,"
securities will constitute legal investments for entities subject to such
legislation only to the extent provided therein. Approximately twenty-one states
adopted such legislation prior to the October 4, 1991 deadline. SMMEA provides,
however, that in no event will the enactment of any such legislation affect the
validity of any contractual commitment to purchase, hold or invest in
securities, or require the sale or other disposition of securities, so long as
such contractual commitment was made or such securities were acquired prior to
the enactment of such legislation.

SMMEA also amended the legal investment authority of
federally-chartered depository institutions as follows: federal savings and loan
associations and federal savings banks may invest in, sell or otherwise deal in
Securities without limitations as to the percentage of their assets represented
thereby, federal credit unions may invest in mortgage related securities, and
national banks may purchase securities for their own account without regard to
the limitations generally applicable to investment securities set forth in 12
U.S.C. 24 (Seventh), subject in each case to such regulations as the applicable
federal authority may prescribe. In this connection, federal credit unions
should review the National Credit Union Administration ("NCUA") Letter to Credit
Unions No. 96, as modified by Letter to Credit Unions No. 108, which includes
guidelines to assist federal credit unions in making investment decisions for
mortgage related securities and the NCUA's regulation "Investment and Deposit
Activities" (12 C.F.R. Part 703), which sets forth certain restrictions on
investment by federal credit unions in mortgage related securities (in each case
whether or not the class of Securities under consideration for purchase
constituted a "mortgage related security").

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All depository institutions considering an investment in the Securities
(whether or not the class of Securities under consideration for purchase
constitutes a "mortgage related security") should review the Federal Financial
Institutions Examination Council's Supervisory Policy Statement on the
Securities Activities (to the extent adopted by their respective regulators)
(the "Policy Statement") setting forth, in relevant part, certain securities
trading and sales practices deemed unsuitable for an institution's investment
portfolio, and guidelines for (and restrictions on) investing in mortgage
derivative products, including "mortgage related securities," which are
"high-risk mortgage securities" as defined in the Policy Statement. According to
the Policy Statement, such "high-risk mortgage securities" include securities
such as Securities not entitled to distributions allocated to principal or
interest, or Subordinated Securities. Under the Policy Statement, it is the
responsibility of each depository institution to determine, prior to purchase
(and at stated intervals thereafter), whether a particular mortgage derivative
product is a "high-risk mortgage security," and whether the purchase (or
retention) of such a product would be consistent with the Policy Statement.

The foregoing does not take into consideration the applicability of
statutes, rules, regulations, orders guidelines or agreements generally
governing investments made by a particular investor, including, but not limited
to "prudent investor" provisions which may restrict or prohibit investment in
securities which are not "interest bearing" or "income paying."

There may be other restrictions on the ability of certain investors,
including depository institutions, either to purchase Securities or to purchase
Securities representing more than a specified percentage of the investor's
assets. Investors should consult their own legal advisors in determining whether
and to what extent the Securities constitute legal investments for such
investors.

METHOD OF DISTRIBUTION

The Securities offered hereby and by the related Prospectus Supplement
will be offered in Series. The distribution of the Securities may be effected
from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices to be
determined at the time of sale or at the time of commitment therefor. If so
specified in the related Prospectus Supplement, the Securities will be
distributed in a firm commitment underwriting, subject to the terms and
conditions of the underwriting agreement, by Morgan Stanley & Co. Incorporated
("Morgan Stanley") acting as underwriter with other underwriters, if any, named
therein. In such event, the Prospectus Supplement may also specify that the
underwriters will not be obligated to pay for any Securities agreed to be
purchased by purchasers pursuant to purchase agreements acceptable to the
Depositor. In connection with the sale of Securities, underwriters may receive
compensation from the Depositor or from purchasers of Securities in the form of
discounts, concessions or commissions. The Prospectus Supplement will describe
any such compensation paid by the Depositor.

Alternatively, the Prospectus Supplement may specify that Securities
will be distributed by Morgan Stanley acting as agent or in some cases as
principal with respect to Securities that it has previously purchased or agreed
to purchase. If Morgan Stanley acts agent in the sale of Securities, Morgan
Stanley will receive a selling commission with respect to such Securities,
depending on market conditions, expressed as a percentage of the aggregate
principal balance or notional amount of such Securities as of the Cut-off Date.
The exact percentage for each Series of Securities will be disclosed in the
related Prospectus Supplement. To the extent that Morgan Stanley elects to
purchase Securities as principal, Morgan Stanley may realize losses or profits
based upon the difference between its purchase price and the sales price. The
Prospectus Supplement with respect to any Series offered other than

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<PAGE> 407

through underwriters will contain information regarding the nature of such
offering and any agreements to be entered into between the Depositor and
purchasers of Securities of such Series.

The Depositor will indemnify Morgan Stanley and any underwriters
against certain civil liabilities, including liabilities under the Securities
Act of 1933, or will contribute to payments Morgan Stanley and any underwriters
may be required to make in respect thereof.

In the ordinary course of business, Morgan Stanley and the Depositor
may engage in various securities and financing transactions, including
repurchase agreements to provide interim financing of the Depositor's mortgage
loans pending the sale of such mortgage loans or interests therein, including
the Securities.

Securities will be sold primarily to institutional investors. Purchaser
of Securities, including dealers, may, depending on the facts and circumstances
of such purchases, be deemed to be "underwriters" within the meaning of the
Securities Act of 1933 in connection with reoffers and sales by them of
Securities. Certificateholders should consult with their legal advisors in this
regard prior to any such reoffer or sale.

As to each Series of Securities, only those classes rated in an
investment grade rating category by any Rating Agency will be offered hereby.
Any non-investment grade class may be initially retained by the Depositor, and
may be sold by the Depositor at any time in private transactions.

LEGAL MATTERS

The validity of the Securities of each Series, including certain
federal income tax consequences with respect thereto, will be passed upon for
the Depositor by Latham & Watkins.

FINANCIAL INFORMATION

A new Trust Fund will be formed with respect to each Series of
Securities and no Trust Fund will engage in any business activities or have any
assets or obligations prior to the issuance of the related Series of Securities.
Accordingly, no financial statements with respect to any Trust Fund will be
included in this Prospectus or in the related Prospectus Supplement.

RATING

It is a condition to the issuance of the Securities of each Series
offered hereby and by the Prospectus Supplement that they shall have been rated
in one of the four highest rating categories by the nationally recognized
statistical rating agency or agencies (each, a "Rating Agency") specified in the
related Prospectus Supplement.

Any such rating would be based on, among other things, the adequacy of
the value of the Trust Fund Assets and any credit enhancement with respect to
such class and will reflect such Rating Agency's assessment solely of the
likelihood that holders of a class of Securities of such class will receive
payments to which such Securityholders are entitled under the related Agreement.
Such rating will not constitute an assessment of the likelihood that principal
prepayments on the related Loans will be made, the degree

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to which the rate of such prepayments might differ from that originally
anticipated or the likelihood of early optional termination of the Series of
Securities. Such rating should not be deemed a recommendation to purchase, hold
or sell Securities, inasmuch as it does not address market price or suitability
for a particular investor. Each security rating should be evaluated
independently of any other security rating. Such rating will not address the
possibility that prepayment at higher or lower rates than anticipated by an
investor may cause such investor to experience a lower than anticipated yield or
that an investor purchasing a Security at a significant premium might fail to
recoup its initial investment under certain prepayment scenarios.

There is also no assurance that any such rating will remain in effect
for any given period of time or that it may not be lowered or withdrawn entirely
by the Rating Agency in the future if in its judgment circumstances in the
future so warrant. In addition to being lowered or withdrawn due to any erosion
in the adequacy of the value of the Trust Fund Assets or any credit enhancement
with respect to a Series, such rating might also be lowered or withdrawn among
other reasons, because of an adverse change in the financial or other condition
of a credit enhancement provider or a change in the rating of such credit
enhancement provider's long term debt.

The amount, type and nature of credit enhancement, if any, established
with respect to a Series of Securities will be determined on the basis of
criteria established by each Rating Agency rating classes of such Series. Such
criteria are sometimes based upon an actuarial analysis of the behavior of
mortgage loans in a larger group. Such analysis is often the basis upon which
each Rating Agency determines the amount of credit enhancement required with
respect to each such class. There can be no assurance that the historical data
supporting any such actuarial analysis will accurately reflect future experience
nor any assurance that the data derived from a large pool of mortgage loans
accurately predicts the delinquency, foreclosure or loss experience of any
particular pool of Loans. No assurance can be given that values of any
Properties have remained or will remain at their levels on the respective dates
of origination of the related Loans. If the residential real estate markets
should experience an overall decline in property values such that the
outstanding principal balances of the Loans in a particular Trust Fund and any
secondary financing on the related Properties become equal to or greater than
the value of the Properties, the rates of delinquencies, foreclosures and losses
could be higher than those now generally experienced in the mortgage lending
industry. In additional, adverse economic conditions (which may or may not
affect real property values) may affect the timely payment by mortgagors of
scheduled payments of principal and interest on the Loans and, accordingly, the
rates of delinquencies, foreclosures and losses with respect to any Trust Fund.
To the extent that such losses are not covered by credit enhancement, such
losses will be borne, at least in part, by the holders of one or more classes of
the Securities of the related Series.

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INDEX OF DEFINED TERMS

<TABLE>
<CAPTION>
Term Page
- ---- ----
<S> <C>
Accretion Directed ......................................54
Accrual Securities ......................................50
Advance .................................................15
Agency Securities.........................................1
Agreement................................................32
Amortizable Bond Premium Regulations ...................110
APR .....................................................37
Available Funds .........................................50
Balloon payment .........................................34
Belgian Cooperative .....................................63
beneficial owner ........................................61
BIF .....................................................75
Book-Entry Securities ...................................61
borrower ................................................98
Buydown Fund ............................................34
Buydown Loans ...........................................34
Calculation Agent .......................................57
Capitalized Interest Account.............................78
Cash Flow Bond Method ..................................118
CEDEL Participants ......................................62
CERCLA ..............................................26, 92
Certificates ..........................................1, 6
Charter Act..............................................39
Claimable Amount........................................104
Class Security Balance ..................................50
Closed-End Loans......................................... 7
CMO...................................................9, 43
Code ...............................................17, 105
COFI Securities..........................................59
Collateral Value.........................................37
Combined Loan-to-Value Ratio.............................37
Commission ...............................................4
Commodity Indexed Securities.............................49
companion classes .......................................56
Component Securities ....................................54
Components...............................................54
Contingent Regulations .................................107
contracts................................................96
Contracts .........................................1, 7, 36
Cooperative Loans .......................................33
Cooperatives ............................................33
Currency Indexed Securities..............................49
Cut-off Date Principal Balance ..........................48
</TABLE>

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<TABLE>
<S> <C>
Cut-off Date .........................................6, 32
Debt Securities ........................................105
Definitive Security .....................................61
Depositor .............................................1, 6
Detailed Description ....................................33
Distribution Date .......................................11
DOL ....................................................128
DTC .................................................29, 61
Eleventh District........................................58
EPA .....................................................92
ERISA ...................................................19
Euroclear Operator ......................................63
Euroclear Participants ..................................62
European Depositaries ...................................61
excess servicing .......................................117
Exchange Act .............................................4
Exemption...............................................130
Face Amount..............................................50
FDIC ....................................................67
FHA Loans................................................37
FHA .....................................................15
FHLBSF ..................................................58
FHLMC ................................................1, 41
FHLMC Certificates........................................8
FHLMC Act................................................41
FHLMC Certificate Group..................................41
FHLMC Project Certificates...............................43
Financial Intermediary ..................................61
FNMA Certificates.........................................8
FNMA SMBS................................................40
FNMA MBS.................................................40
FNMA Project Issuers ....................................39
FNMA................................................. 1, 39
Foreign person .........................................122
Funding Period ..........................................29
Garn-St Germain Act .....................................95
GNMA Certificates.........................................8
GNMA Project Certificates................................39
GNMA......................................................1
GNMA Issuer..............................................38
Guaranty Agreement ......................................38
Holder in Due Course Rules ..............................27
Home Improvement Contracts ............................1, 7
Home Improvements .....................................1, 7
Home Equity Loans .................................1, 7, 33
Housing Act..............................................37
HUD................................................. 37, 44
Indenture ...............................................47
Index....................................................49
</TABLE>

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<TABLE>
<S> <C>
Indexed Currency.........................................49
Indexed Principal Amount.................................49
Indexed Securities.......................................49
Indexed Commodity........................................49
Installment Contract ....................................98
Insurance Proceeds ......................................76
Insured Expenses ........................................76
Interest Weighted Securities ...........................108
IRS ....................................................107
L/C Percentage ......................................14, 66
L/C Bank............................................ 13, 65
lender ..................................................98
Liquidation Expenses ....................................76
Liquidation Proceeds ....................................76
Loan Rate ...........................................11, 34
Loan-to-Value Ratio......................................37
Loans ....................................................1
Lockout periods .........................................34
Manufactured Housing Contract......................1, 7, 36
Manufactured Homes...................................... 36
Master Servicer ..........................................6
Master Servicing Fee ....................................82
Master Servicing Agreement ..............................32
Moody's .................................................67
Morgan ..................................................63
Mortgage Loan.............................................7
Mortgage ................................................73
Mortgaged Properties ....................................34
National Cost of Funds Index.............................59
NCUA ...................................................131
Nonresidents ...........................................120
Notes .................................................1, 6
Notional Amount Securities ..............................55
OID Regulations ........................................106
OID ................................................17, 106
OTS .....................................................59
PACs ....................................................55
Parties in Interest ....................................128
Pass-Through Securities.................................116
Pass-Through Rate .......................................11
Pay-Through Security ...................................107
Percentage Interests ....................................84
Permitted Investments ...................................67
Planned Principal Class .................................55
Plans ..................................................128
PMBS Agreement...........................................43
PMBS......................................................1
PMBS Servicer.............................................9
PMBS Issuer...............................................9
</TABLE>

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<TABLE>
<S> <C>
PMBS Trustee..............................................9
Policy Statement........................................132
Pool Insurance Policy ...................................68
Pool Insurer ............................................68
Pool .................................................6, 31
Pooling and Servicing Agreement .........................47
Pre-Funded Amount .......................................29
Pre-Funding Account ..................................7, 29
Prepayment Assumption ..................................107
Primary Mortgage Insurance Policy .......................35
Prime Rate...............................................60
Principal Prepayments ...................................51
Private Mortgage-Backed Securities........................1
Properties ..........................................8, 35
Property Improvement Loans .............................101
Proposed Mark-to-Market Regulations ....................115
PTE 83-1 ...............................................128
Purchase Price ..........................................46
Rating Agency ..........................................133
Ratio Strip Securities .................................117
RCRA ....................................................93
Record Date .............................................48
Reference Banks..........................................57
Refinance Loan ..........................................37
Regular Interest Securities ............................105
Relevant Depository......................................61
Relief Act ..............................................99
REMIC ...........................................1, 49, 105
Reserve Account .....................................13, 50
Reserve Interest Rate....................................58
Residual Interest Security..............................113
Restricted Group .......................................130
Retained Interest .......................................48
Revolving Credit Line Loans ..............................7
Riegle Act ..............................................27
Rules ...................................................61
SAIF ....................................................75
Securities ............................................1, 6
Security Owners .........................................61
Security Account ........................................75
Security Register .......................................48
Securityholders .........................................61
Seller ...................................................1
Sellers .................................................32
Senior Securities....................................10, 64
Series ...................................................1
Servicing Fee ..........................................116
Short-Term Note ........................................121
Single Family Properties ................................35
</TABLE>

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<TABLE>
<S> <C>
Single Family Securities ..............................128
SMMEA .............................................17, 131
Stock Indexed Securities................................49
Stock Index.............................................49
Strip ..................................................55
Stripped Securities ...................................116
Sub-Servicing Agreement ................................78
Sub-Servicer....................................... 15, 32
Subordinated Securities ............................10, 65
Subsequent Loans .......................................29
Support Class ..........................................55
TACs ...................................................55
Targeted Principal Class ...............................55
Terms and Conditions ...................................63
TIN ...................................................119
Title V ............................................96, 98
Title I Loans .........................................101
Title I Program .......................................100
Trust Fund Assets ................................1, 6, 31
Trust Fund ..............................................1
Trust Agreement ....................................23, 47
Trustee .............................................6, 47
U.S. Person............................................127
UCC ....................................................91
VA Loans ...............................................37
VA .....................................................15
VA Guaranty ............................................82
</TABLE>

139

<PAGE> 414
PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION*

The following table sets forth the estimated expenses in connection
with the issuance and distribution of the Securities being registered under this
Registration Statement, other than underwriting discounts and commissions:

<TABLE>
<S> <C>
SEC Registration Fee....................... $ 303.03
Printing and Engraving Expenses............ $ 35,000.00
Legal Fees and Expenses.................... $ 65,000.00
Trustee Fees and Expenses.................. $ 15,000.00
Accounting Fees and Expenses............... $ 25,000.00
Blue Sky Fees and Expenses................. $ 5,000.00
Rating Agency Fees......................... $ 125,000.00
Miscellaneous ............................. $ 5,000.00
----------

Total ............................. $ 275,303.03
==========
</TABLE>

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

* All amounts except the SEC Registration Fee are estimates of expenses
incurred in connection with the issuance and distribution of a Series
of Securities in an aggregate principal amount assumed for these
purposes to be equal to $250,000,000 of Securities registered hereby.

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 145 of the General Corporation Law of Delaware empowers a
corporation to indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of the corporation), by reason of the fact that he or she is
or was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise. Depending on the character of the proceeding, a corporation may
indemnify against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred in connection with
such action, suit or proceeding if the person indemnified acted in good faith
and in a manner he or she reasonably believed to be in or not opposed to the
best interests of the corporation, and, with respect to any criminal action or
proceeding, had no cause to believe his or her conduct was unlawful. In the case
of an action by or in the right of the corporation, no indemnification may be
made in respect to any claim, issue or matter as to which such person shall have
been adjudged to be liable to the corporation unless and only to the extent that
the Court of Chancery or the court in which such action or suit was brought
shall determine that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the court shall deem proper. Section 145
further provides that to the extent a director or officer of a corporation has
been successful in the defense of any action, suit or proceeding referred to
above or in the defense of any claim, issue or matter therein, he or she shall
be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him or her in connection therewith.

II-1

<PAGE> 415

The Certificate of Incorporation and Bylaws of the Registrant provide,
in effect, that, to the extent and under the circumstances permitted by Section
145 of the General Corporation Law of Delaware, the Registrant shall indemnify
any person who was or is a party or is threatened to be made a party to any
action, suit or proceeding of the type described above by reason of the fact
that he or she is or was a director, officer, employee or agent of the
Registrant.

ITEM 16. EXHIBITS.

<S> <C>
1.1 Form of Underwriting Agreement.*
3.1 Certificate of Incorporation of the Registrant.*
3.2 By-laws of the Registrant.*
4.1 Form of Pooling and Servicing Agreement relating to Home
Equity Loan Asset-Backed Certificates.*
4.2 Form of Pooling and Servicing Agreement relating to Mortgage
Loan Asset-Backed Pass-Through Certificates.*
4.3 Form of Pooling and Servicing Agreement relating to Mortgage
Loan Asset-Backed Pass-Through Certificates.*
4.4 Form of Trust Agreement.*
4.5 Form of Indenture.*
4.6 Form of Master Servicing Agreement.*
5.1 Opinion of Latham & Watkins as to legality of the Securities.*
8.1 Opinion of Latham & Watkins as to certain tax matters
(included in Exhibit 5.1).*
10.1 Form of Loan Purchase Agreement.*
23.1 Consent of Latham & Watkins (included in Exhibits 5.1 and 8.1
hereof).*
24.1 Power of Attorney (included on signature page).
</TABLE>

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

* To be filed by amendment.

ITEM 17. UNDERTAKINGS.

(a) The undersigned Registrant hereby undertakes:

(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this Registration
Statement;

(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act of 1933, as amended
(the "Act");

(ii) To reflect in the prospectus any facts or
events arising after the effective date of this Registration
Statement (or the most recent post-effective amendment hereof)
which, individually or in the aggregate, represent a
fundamental change in the information set forth in this
Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high
and of the estimated maximum offering range may be reflected
in the form of prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than 20 percent change in the maximum

II-2

<PAGE> 416

aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective Registration
Statement;

(iii) To include any material information with
respect to the plan of distribution not previously disclosed
in this Registration Statement or any material change to such
information in this Registration Statement;

provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in this Registration
Statement.

(2) That, for the purpose of determining any liability
under the Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.

(3) To remove from registration by means of a
post-effective amendment any of the securities being registered
which remain unsold at the termination of the offering.

(b) The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Act, each filing of a
Trust Fund's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

(c) Insofar as indemnification for liabilities arising under the
Act may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.

(d) The undersigned Registrant hereby undertakes to file an
application for the purpose of determining the eligibility of the
trustee to act under subsection (a) of Section 310 of the Trust Indenture Act
of 1939 in accordance with the rules and regulations prescribed by the
Commission under Section 305(b)(2) of the Trust Indenture Act of 1939.

II-3

<PAGE> 417

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that (i) it reasonably believes that the security
rating requirement of Transaction Requirement B.5 of Form S-3 will be met by the
time of sale of each Series of Securities to which this Registration Statement
relates and (ii) it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, State of New York, on the 14th day of
January, 1997.

Morgan Stanley ABS Capital I Inc.

By /s/ James Fadel
------------------------
Name: James Fadel
Title: Vice President

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints James Fadel, and each of them, his true
and lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him in his name, place and stead, in any and all capacities,
to sign any or all amendments (including post-effective amendments) to the
Registration Statement, and to file the same, with all exhibits thereto, and all
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the foregoing, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.

Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on the dates indicated.

SIGNATURES TITLE DATE

/s/ Craig S. Phillips President and Director January 14, 1997
- ------------------------ (Principal Executive Officer)
Craig S. Phillips

/s/ James Fadel Vice President January 14, 1997
- ------------------------
James Fadel

/s/ Eileen K. Murray Treasurer January 14, 1997
- ------------------------ (Principal Financial Officer and
Eileen K. Murray Principal Accounting Officer)

/s/ David R. Warren Director January 14, 1997
- ------------------------
David R. Warren

/s/ Gail P. McDonnell Director January 14, 1997
- ------------------------
Gail P. McDonnell

II-4

<PAGE> 418

EXHIBIT INDEX

<TABLE>
<CAPTION>
Exhibit
No. Description of Exhibit
- ------- ----------------------
<S> <C>
1.1 -- Form of Underwriting Agreement.*

3.1 -- Certificate of Incorporation of the Registrant.*

3.2 -- By-laws of the Registrant.*

4.1 -- Form of Pooling and Servicing Agreement relating to Home
Equity Loan Asset Backed Certificates.*

4.2 -- Form of Pooling and Servicing Agreement relating to
Mortgage Loan Asset-Backed Pass-Through Certificates.*

4.3 -- Form of Pooling and Servicing Agreement relating to
Mortgage Loan Asset-Backed Pass-Through Certificates.*

4.4 -- Form of Trust Agreement.*

4.5 -- Form of Indenture.*

4.6 -- Form of Master Servicing Agreement.*

5.1 -- Opinion of Latham & Watkins as to legality of the
Securities.*

8.1 -- Opinion of Latham & Watkins as to certain tax matters
(included in Exhibit 5.1).*

10.1 -- Form of Loan Purchase Agreement.*

23.1 -- Consent of Latham & Watkins (included in Exhibits 5.1
and 8.1).*

24.1 -- Power of Attorney (included on signature page).
</TABLE>

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

* To be filed by amendment.

II-5