BENEFICIAL MORTGAGE SERVICES INC
8-K, 1997-09-26
ASSET-BACKED SECURITIES
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                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549


                                    FORM 8-K

                                 CURRENT REPORT


                     Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934


      Date of Report (date of earliest event reported): September 16, 1997


                       BENEFICIAL MORTGAGE SERVICES, INC.
                                   (Depositor)


                    BENEFICIAL HOME EQUITY LOAN TRUST 1997-2
             (Exact name of registrant as specified in its charter)


                                New York (Issuer)
         (State or other jurisdiction of incorporation or organization)


             333-2151 (Issuer)                      Pending
         (Commission File Number)     (IRS Employer Identification No. )



                             301 North Walnut Street
                              Wilmington, DE 19801
              (Address of principal executive offices and zip code)


       Registrant's telephone number, including area code: (302) 425-2500


                                 Not applicable
          (Former name or former address, if changed since last report)


<PAGE>


Item 5.   Other Events.

Filing of Pooling and Servicing Agreement

                  On September 16, 1997, Beneficial Mortgage Services, Inc. (the
         "Depositor") entered into a Pooling and Servicing  Agreement,  dated as
         of September 1, 1997 (the  "Pooling and Servicing  Agreement"),  by and
         among  the  Depositor,   Beneficial  Mortgage  Corporation,  as  master
         servicer, The Chase Manhattan Bank, as trustee, and Texas Commerce Bank
         National  Association,   as  co-trustee.   The  Pooling  and  Servicing
         Agreement is annexed hereto as Exhibit 99.

Item 7.   Financial Statements and Exhibits.

           (c)  Exhibits

         The following is filed herewith.  The exhibit number  corresponds  with
item 601(b) of the Regulation S-K.

          Exhibit No.                   Description
          ----------                    ------------
          99                            Pooling and  Servicing  Agreement  among
                                        Beneficial   Mortgage  Services,   Inc.,
                                        Beneficial  Mortgage  Corporation,   The
                                        Chase  Manhattan  Bank,  as trustee  and
                                        Texas     Commerce     Bank     National
                                        Association, as co-trustee,  dated as of
                                        September 1, 1997



<PAGE>


SIGNATURES
- ----------

     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
Registrant has duly caused this report to be signed on behalf of Beneficial Home
Equity Loan Trust 1997-2 by the undersigned, thereunto duly authorized.


                                        BENEFICIAL HOME EQUITY LOAN TRUST 1997-2
                                        ----------------------------------------
                                                       Registrant


                                        By:   BENEFICIAL MORTGAGE SERVICES, INC.
                                                       (Depositor)


                                              By:/s/ Charles D. Brown
                                                 -------------------------------
                                                 Name: Charles D. Brown
                                                 Its: Vice President



Dated: September __, 1997


<PAGE>


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

                       BENEFICIAL MORTGAGE SERVICES, INC.,

                                  as Depositor,

                        BENEFICIAL MORTGAGE CORPORATION,

                               as Master Servicer,



                            THE CHASE MANHATTAN BANK,

                                   as Trustee

                                       and

                    TEXAS COMMERCE BANK NATIONAL ASSOCIATION,

                                  as Co-Trustee




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



                         POOLING AND SERVICING AGREEMENT

                          Dated as of September 1, 1997



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


            HOME EQUITY LOAN ASSET BACKED CERTIFICATES, SERIES 1997-2





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

<PAGE>


                                TABLE OF CONTENTS
<TABLE>
<CAPTION>

                                                                                                               Page

                                    ARTICLE I
<S>                        <C>                                                                          <C>

                                           DEFINITIONS.................................................  1
Section 1.01.              Definitions.................................................................  1
Section 1.02.              Interest Calculations....................................................... 26
Section 1.03.              Usage of Terms.............................................................. 26

                          ARTICLE II

                  SALE OF HOME EQUITY LOANS; ORIGINAL ISSUANCE OF CERTIFICATES......................... 26
Section 2.01.              Sale of Home Equity Loans................................................... 26
Section 2.02.              Acceptance by Trustee; Repurchase
                           Obligations; Substitution of Eligible
                           Substitute Home Equity Loans................................................ 31
Section 2.03.              Representations and Warranties Regarding
                           the Master Servicer......................................................... 35
Section 2.04.              Representations and Warranties Regarding
                           the Home Equity Loans; Repurchase of
                           Defective Home Equity Loans................................................. 36
Section 2.05.              Execution and Authentication of
                           Certificates; Designation of "Regular
                           Interests" and "Residual Interests"
                           under REMIC................................................................. 40
Section 2.06.              Designation of Start-up Day and Final
                           Maturity Date............................................................... 40
Section 2.07.              Certain Activities.......................................................... 40
Section 2.08.              Representation and Warranty of the
                           Depositor................................................................... 41

                          ARTICLE III

                        ADMINISTRATION AND SERVICING OF HOME EQUITY LOANS.............................. 41
Section 3.01.              The Master Servicer......................................................... 41
Section 3.02.              Collection of Certain Home Equity Loan
                           Payments; Home Equity Loan Payment
                           Record...................................................................... 44
Section 3.03.              Permitted Debits to the Home Equity Loan
                           Payment Record.............................................................. 46
Section 3.04.              Maintenance of Hazard Insurance;
                           Property Protection Expenses................................................ 46
Section 3.05.              Assumption and Modification Agreements...................................... 48
Section 3.06.              Realization upon Defaulted Home Equity
                           Loans....................................................................... 48
Section 3.07.              Trustee to Cooperate........................................................ 49
Section 3.08.              Servicing Compensation; Payment of
                           Certain Expenses by Master Servicer......................................... 50
Section 3.09.              Annual Statement as to Compliance........................................... 50

                                      - i -

<PAGE>


                                                                                                               Page

Section 3.10.              Annual Independent Public Accountants'
                           Servicing Report............................................................ 50
Section 3.11.              Access to Certain Documentation and
                           Information Regarding the Home Equity
                           Loans....................................................................... 51
Section 3.12.              Maintenance of Certain Servicing
                           Policies.................................................................... 51

                          ARTICLE IV

                       SERVICING CERTIFICATE; CERTIFICATE ACCOUNTS DEPOSIT............................. 51
Section 4.01.              Servicing Certificate....................................................... 51
Section 4.02.              Certificate Accounts........................................................ 54
Section 4.03.              Servicer LOC................................................................ 54
Section 4.04.              Distributions on the Uncertificated
                           Lower-Tier Interests........................................................ 55

                           ARTICLE V

                          PAYMENTS AND STATEMENTS TO CERTIFICATEHOLDERS................................ 56
Section 5.01.              Distributions from Upper-Tier
                           Certificate Account; Writedowns............................................. 56
Section 5.02.              Statements to Certificateholders............................................ 59

                          ARTICLE VI

                                        THE CERTIFICATES............................................... 61
Section 6.01.              The Certificates............................................................ 61
Section 6.02.              Registration of Transfer and Exchange of
                           Certificates................................................................ 62
Section 6.03.              Mutilated, Destroyed, Lost or Stolen
                           Certificates................................................................ 64
Section 6.04.              Persons Deemed Owners....................................................... 65
Section 6.05.              Appointment of Paying Agent................................................. 65
Section 6.06.              Restrictions on Transfer of Class M and
                           Class B Certificates........................................................ 66
Section 6.07.              Restrictions on Transfer of Class C and
                           Class R Certificates........................................................ 66
Section 6.08.              Actions of Certificateholder................................................ 70

                          ARTICLE VII

                              THE MASTER SERVICER AND THE DEPOSITOR.................................... 71
Section 7.01.              Liability of the Master Servicer and the
                           Depositor................................................................... 71
Section 7.02.              Merger or Consolidation of, or
                           Assumption of the Obligations of, the
                           Master Servicer and Depositor............................................... 71
Section 7.03.              Limitation on Liability of the Master
                           Servicer and Others......................................................... 71
Section 7.04.              Master Servicer Not to Resign............................................... 72

                                     - ii -

<PAGE>


                                                                                                      Page

Section 7.05.              Delegation of Duties........................................................ 73

                         ARTICLE VIII

                                             DEFAULT................................................... 73
Section 8.01.              Events of Default........................................................... 73
Section 8.02.              Trustee to Act; Appointment of
                           Successor................................................................... 75
Section 8.03.              Notification to Certificateholders.......................................... 76
Section 8.04.              Waiver of Past Events of Default............................................ 76

                          ARTICLE IX

                                           THE TRUSTEE................................................. 77
Section 9.01.              Duties of Trustee........................................................... 77
Section 9.02.              Certain Matters Affecting the Trustee....................................... 78
Section 9.03.              Trustee Not Liable for Certificates or
                           Home Equity Loan............................................................ 80
Section 9.04.              Trustee May Own Certificates................................................ 81
Section 9.05.              Master Servicer to Pay Trustee's Fees
                           and Expenses................................................................ 81
Section 9.06.              Eligibility Requirements for Trustee........................................ 82
Section 9.07.              Resignation or Removal of Trustee........................................... 82
Section 9.08.              Successor Trustee........................................................... 83
Section 9.09.              Merger or Consolidation of Trustee.......................................... 84
Section 9.10.              Appointment of Co-Trustee or Separate
                           Trustee..................................................................... 84
Section 9.11.              Tax Returns................................................................. 86
Section 9.12.              Trustee May Enforce Claims Without
                           Possession of Certificates.................................................. 86
Section 9.13.              Suits for Enforcement....................................................... 86

                           ARTICLE X

                                           TERMINATION................................................. 86
Section 10.01.             Termination Upon Purchase by the Master
                           Servicer or Liquidation of All Home
                           Equity Loans................................................................ 86
Section 10.02.             Additional Termination Requirements......................................... 89

                          ARTICLE XI

                                    MISCELLANEOUS PROVISIONS........................................... 90
Section 11.01.             Amendment................................................................... 90
Section 11.02.             Recordation of Agreement.................................................... 92
Section 11.03.             Limitation on Rights of
                           Certificateholders.......................................................... 92
Section 11.04.             GOVERNING LAW............................................................... 93
Section 11.05.             Notices..................................................................... 93
Section 11.06.             Severability of Provisions.................................................. 94
Section 11.07.             Assignment.................................................................. 94

                                     - iii -

<PAGE>


                                                                                                               Page

Section 11.08.             Certificates Nonassessable and Fully
                           Paid........................................................................ 94
Section 11.09.             Counterparts................................................................ 94

</TABLE>

EXHIBIT A - Form of Class A Certificate  EXHIBIT B - Form of Class M Certificate
EXHIBIT C - Form of Class B Certificate  EXHIBIT D - Form of Class C Certificate
EXHIBIT E - Form of Class R Certificate EXHIBIT F - Form of Notice of Payment in
Full EXHIBIT G - Form of File Request


                                     - iv -

<PAGE>

         This Pooling and  Servicing  Agreement,  dated as of September 1, 1997,
among  Beneficial  Mortgage  Services,  Inc.,  as depositor  (together  with its
permitted  successors  and  assigns,   the  "Depositor"),   Beneficial  Mortgage
Corporation,  as master  servicer (the "Master  Servicer"),  The Chase Manhattan
Bank, as trustee (the  "Trustee") and Texas Commerce Bank National  Association,
as co-trustee (the "Co-Trustee").

                                WITNESSETH THAT:

         In consideration of the mutual agreements herein contained, the parties
hereto agree as follows.

                                    ARTICLE I

                                   DEFINITIONS

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

         Accrual Period: As to any Distribution Date (the "current  Distribution
Date"), the period beginning on the preceding  Distribution Date (or the Closing
Date,  in the  case  of the  first  Distribution  Date)  and  ending  on the day
preceding the current Distribution Date.

         Additional Balance:  As to any Home Equity Loan and any day,
the Loan Balance less the Trust Balance.

         Affiliate:  With respect to any Person,  any other Person  controlling,
controlled  by or under common  control  with such Person.  For purposes of this
definition, "control" means the power to direct the management and policies of a
Person, directly or indirectly,  whether through ownership of voting securities,
by contract or otherwise, and "controlling" and "controlled" shall have meanings
correlative to the foregoing.

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

         Amount Available for Class A Interest: As to any Distribution Date, the
lesser  of (a) the  Interest  Remittance  Amount  and (b) the  Class A  Interest
Requirement.

         Amount  Available  for  Lower-Tier A Interest:  As to any  Distribution
Date, the lesser of (a) the Interest Remittance Amount, and (b) interest accrued
during the

<PAGE>


related  Collection  Period  at  the  Weighted  Average  Net  Loan  Rate  on the
Lower-Tier B Balance as of the beginning of the related  Collection  Period, and
(b) the excess of (i) the  Interest  Remittance  Amount over (ii) the sum of the
Amount  Available  for  Lower-Tier  A  Interest  and the  Amount  Available  for
Lower-Tier M Interest.

         Amount  Available  for  Lower-Tier M Interest:  As to any  Distribution
Date, the lesser of (a) interest accrued during the related Collection Period at
the  Weighted  Average  Net Loan  Rate on the  Lower-Tier  M  Balance  as of the
beginning  of the  related  Collection  Period,  and (b) the  excess  of (i) the
Interest  Remittance  Amount over (ii) the Amount  Available  for  Lower-Tier  A
Interest.

         Applied  Liquidated Loan Loss Amount: As of any Distribution  Date, the
excess of (x) the Certificate Principal Balance on such Distribution Date (after
taking into account the  distribution  of the Principal  Distribution  Amount on
such Distribution  Date, but prior to the application of the Applied  Liquidated
Loan Loss Amount, if any, on such Distribution Date) and (y) the Pool Balance as
of the last day of the related Collection Period.

         Appraised Value: As to any Mortgaged  Property and any time referred to
herein,  the appraised value of such Mortgaged Property based upon the appraisal
made  by or  on  behalf  of  the  related  Originator  in  connection  with  the
origination of the related Home Equity Loan.

         Available Servicer LOC Amount: As of any Distribution Date upon which a
Servicer LOC is maintained  pursuant to Section  3.02(c),  the maximum amount of
coverage available thereunder in accordance with the terms thereof.

         Beneficial: Beneficial Mortgage Corporation, a Delaware corporation.

         BIF:  The Bank  Insurance  Fund,  as from time to time  constituted  or
created under the Financial Institution, Reform, Recovery and Enhancement Act of
1989,  or if at any  time  after  the  execution  of this  instrument  the  Bank
Insurance  Fund is not  existing and  performing  duties now assigned to it, the
body performing such duties on such date.

         Book-Entry  Certificate:  Any Class A,  Class M or Class B  Certificate
registered in the name of the Depository or its nominee,  the ownership of which
is  reflected  on the  books  of the  Depository  or on the  books  of a  Person
maintaining  an  account  with  such  Depository  (directly  or as  an  indirect
participant in accordance with the rules of such Depository).

         Business Day:  Any day other than (i) a Saturday or a Sunday
or (ii) a day on which banking institutions in the State of New

                                      - 2 -

<PAGE>



York or the State of New Jersey are required or authorized by law to be closed.

         Certificate:  Any  Class  A,  Class  M,  Class  B,  Class C or  Class R
Certificate.

         Certificate  Account:  The  Lower-Tier   Certificate  Account  and  the
Upper-Tier Certificate Account.

         Certificate  Owner:  With respect to any  Book-Entry  Certificate,  the
Person who is the beneficial owner of such Book-Entry Certificate.

         Certificate  Principal  Balance:  The sum of the  Class  A  Certificate
Balance, the Class M Certificate Balance and the Class B Certificate Balance.

         Certificate Register and Certificate Registrar: The register maintained
and the registrar appointed pursuant to Section 6.02.

         Certificateholder  or Holder: The Person in whose name a Certificate is
registered in the Certificate  Register,  except that, solely for the purpose of
giving any consent pursuant to this Agreement, any Certificate registered in the
name of the Depositor or the Master  Servicer or any Person  actually known to a
Responsible  Officer of the Trustee to be an affiliate  of the  Depositor or the
Master  Servicer  shall  be  deemed  not to be  outstanding  and the  Percentage
Interest  evidenced  thereby  shall not be taken  into  account  in  determining
whether the  requisite  amount of Percentage  Interests  necessary to effect any
such consent has been obtained.

         Class: All  Certificates  whose form is identical except for variations
in Percentage Interest.

         Class A Certificate:  Any of the Certificates signed by the Trustee and
countersigned by the Trustee or the Certificate Registrar,  substantially in the
form set forth in Exhibit A hereto.

         Class A Certificate  Balance: As of any Distribution Date, the Original
Class A Certificate  Balance less all amounts previously  distributed to Holders
of the Class A  Certificates  on all previous  Distribution  Dates on account of
principal, but in no event less than zero.

         Class A Interest  Requirement:  As to any Distribution Date, the sum of
(a)  interest  accrued  during  the  related  Accrual  Period  at  the  Class  A
Pass-Through  Rate on the Class A  Certificate  Balance,  (b)  interest  accrued
during the related Accrual Period at the Class A Pass-Through  Rate on any Class
A Unpaid Interest  Shortfall (to the extent legally permitted) and (c) any Class
A Unpaid Interest Shortfall.

                                      - 3 -


<PAGE>


         Class A Interest Shortfall: As to any Distribution Date, the amount, if
any,  by which  distributions  in respect of  interest to Holders of the Class A
Certificates  on such  Distribution  Date are less than the sum of (a)  interest
accrued during the related  Accrual  Period at the Class A Pass-Through  Rate on
the Class A  Certificate  Balance and (b) any interest due on such  Distribution
Date on any Class A Unpaid Interest Shortfall (to the extent legally permitted).

         Class A Pass-Through  Rate: As to the initial Accrual Period,  5.77625%
per annum and, as to any Accrual Period thereafter, the lesser of (a) LIBOR plus
0.12% and (b) the Weighted Average Net Loan Rate.

         Class A Principal  Distribution  Amount: As of any Distribution Date on
or after the Stepdown Date and as long as a Trigger Event is not in effect,  the
excess  of (x)  the  Class  A  Certificate  Balance  immediately  prior  to such
Distribution  Date over (y) the lesser of (A) the product of (i) 74.75% and (ii)
the Pool Balance as of the last day of the related Collection Period and (B) the
Pool  Balance  as of the  last  day  of  the  related  Collection  Period  minus
$4,000,088.

         Class A Principal Factor: As to any Distribution  Date, the percentage,
carried  to seven  places  (rounded  down),  obtained  by  dividing  the Class A
Certificate  Balance as of such  Distribution  Date (after  giving effect to all
payments of principal  made on such  Distribution  Date) by the Original Class A
Certificate Balance.

         Class A Unpaid Interest  Shortfall:  As to any  Distribution  Date, the
amount, if any, by which the aggregate of Class A Interest  Shortfalls for prior
Distribution  Dates exceeds the aggregate of amounts  distributed  in respect of
Class A Interest  Shortfalls on prior Distribution Dates to Holders of the Class
A Certificates.  For purposes of determining  whether amounts  distributable  in
respect of Class A Unpaid Interest  Shortfalls were actually  distributed on any
particular  Distribution Date,  distributions on such Distribution Date shall be
allocated, first, to the amount specified in clause (a) of the definition "Class
A  Interest  Requirement,"  second,  to any  interest  due on any Class A Unpaid
Interest Shortfall, and, third, to any Class A Unpaid Interest Shortfall.

         Class B Applied  Liquidated  Loan Loss Amount:  As of any  Distribution
Date,  the lesser of (x) the Class B  Certificate  Balance  (after  taking  into
account the distribution of the related  Principal  Distribution  Amount on such
Distribution  Date,  but  prior  to the  application  of  the  Class  B  Applied
Liquidated  Loan Loss  Amount,  if any, on such  Distribution  Date) and (y) the
Applied Liquidated Loan Loss Amount as of such Distribution Date.

         Class B Certificate:  Any of the Certificates signed by the Trustee and
countersigned by the Trustee or the Certificate

                                      - 4 -


<PAGE>



Registrar, substantially in the form set forth in Exhibit C hereto.

         Class B Certificate  Balance: As to any Distribution Date, the Original
Class  B  Certificate  Balance  less  the  sum of  (x)  all  amounts  previously
distributed to Class B Certificateholders  on all previous Distribution Dates on
account of principal  and (y) the  aggregate,  cumulative  amount of the Class B
Applied Liquidated Loan Loss Amounts on all previous  Distribution Dates, but in
no event less than zero.

         Class B Current  Interest:  With respect to any Distribution  Date, the
amount of interest accrued on the Class B Certificate  Balance immediately prior
to such  Distribution  Date  during the  related  Accrual  Period at the Class B
Pass-Through Rate.

         Class B Interest Shortfall:  As to any Distribution Date, any amount by
which the amount of interest distributed to Class B  Certificateholders  on such
Distribution  Date is less  than  the sum of (a)  interest  accrued  during  the
related  Accrual  Period  at the  Class  B  Pass-Through  Rate  on the  Class  B
Certificate  Balance and (b) any interest due on such  Distribution  Date on any
Class B Unpaid Interest Shortfall (to the extent legally permitted).

         Class B Liquidated  Loan Loss  Amortization  Amount:  As to the Class B
Certificates  and as of any  Distribution  Date,  the  lesser of (x) the Class B
Unpaid  Liquidated  Loan Loss  Amount as of such  Distribution  Date and (y) the
excess of (i) the Monthly Excess  Cashflow Amount over (ii) the sum of the Class
A Unpaid Interest Shortfall,  the Extra Principal Distribution Amount, the Class
M Unpaid  Interest  Shortfall,  the Class M  Liquidated  Loan Loss  Amortization
Amount  and the  Class B  Unpaid  Interest  Shortfall,  in each  case  for  such
Distribution Date.

         Class B Pass-Through  Rate: As to the initial Accrual Period,  6.01625%
per annum and, as to any Accrual Period thereafter, the lesser of (a) LIBOR plus
0.36% and (b) the Weighted Average Net Loan Rate.

         Class B Principal  Distribution  Amount: As of any Distribution Date on
or after the Stepdown Date and as long as a Trigger Event is not in effect,  the
excess of (x) the sum of (i) the Class A Certificate  Balance (after taking into
account any payments in respect of the Class A Principal  Distribution Amount on
such Distribution Date), (ii) the Class M Certificate Balance (after taking into
account any payments in respect of the Class M Principal  Distribution Amount on
such Distribution  Date), and (iii) the Class B Certificate  Balance immediately
prior to such  Distribution  Date over (y) the lesser of (A) the  product of (i)
94.75% and (ii) the Pool  Balance as of the last day of the  related  Collection
Period  and (B) the Pool  Balance as of the last day of the  related  Collection
Period minus $4,000,088.


                                      - 5 -


<PAGE>



         Class B Principal Factor:  As to any Distribution  Date, the percentage
(carried  to seven  places,  rounded  down)  obtained  by  dividing  the Class B
Certificate  Balance as of such  Distribution  Date (after  giving effect to all
payments of principal  made on such  Distribution  Date) by the Original Class B
Certificate Balance.

         Class B Unpaid Interest  Shortfall:  As to any  Distribution  Date, the
amount, if any, by which the aggregate of Class B Interest  Shortfalls for prior
Distribution  Dates  exceeds the aggregate of the amounts  distributed  on prior
Distribution  Dates to Holders of the Class B Certificates in respect of Class B
Interest Shortfalls.  For purposes of determining whether amounts  distributable
in respect of Class B Unpaid Interest  Shortfalls  were actually  distributed on
any particular  Distribution  Date, the distribution on such  Distribution  Date
shall  be  allocated,  first,  to the  amount  specified  in  clause  (a) of the
definition of "Class B Interest Requirement", second, to any interest due on any
Class B Unpaid  Interest  Shortfall,  and, third, to any Class B Unpaid Interest
Shortfall.

         Class C Certificate:  Any of the Certificates signed by the Trustee and
countersigned by the Trustee or the Certificate Registrar,  substantially in the
form set forth in Exhibit D hereto.  The Class C Certificates shall be deemed to
consist of the Class C-1  Component,  the Class C-2 Component and the Class C- 3
Component.  Each of the Class C Components  shall  represent a class of "regular
interests" in the Upper-Tier REMIC.

         Class C Component:  Any of the Class C-1 Component, Class
C-2 Component or Class C-3 Component.

         Class C Current  Interest:  With respect to any Distribution  Date, the
sum of the Class C-1 Component Current Interest, the Class C-2 Component Current
Interest and the Class C-3 Component Current Interest.

         Class C-1 Component Current Interest:  As to any Distribution Date, the
excess of (x)  interest  accrued  during the  related  Collection  Period at the
Weighted  Average Net Loan Rate on the  Lower-Tier A Balance as of the beginning
of the related  Collection  Period over (y) interest  accrued during the related
Accrual Period at the Class A  Pass-Through  Rate on the Lower-Tier A Balance as
of the end of the related Collection Period.

         Class C-2 Component Current Interest:  As to any Distribution Date, the
excess of (x)  interest  accrued  during the  related  Collection  Period at the
Weighted  Average Net Loan Rate on the  Lower-Tier M Balance as of the beginning
of the related  Collection  Period over (y) interest  accrued during the related
Accrual Period at the Class M  Pass-Through  Rate on the Lower-Tier M Balance as
of the end of the related Collection Period.


                                      - 6 -


<PAGE>



         Class C-3 Component Current Interest:  As to any Distribution Date, the
excess of (x)  interest  accrued  during the  related  Collection  Period at the
Weighted  Average Net Loan Rate on the  Lower-Tier B Balance as of the beginning
of the related  Collection  Period over (y) interest  accrued during the related
Accrual Period at the Class B  Pass-Through  Rate on the Lower-Tier B Balance as
of the end of the related Collection Period.

         Class C Distribution  Amount:  As to any Distribution  Date, the sum of
(a) the Class C Current Interest and (b) any Class C Unpaid Interest Shortfall.

         Class C Interest Shortfall: As to any Distribution Date, the amount, if
any,  by which  distributions  in respect of  interest to Holders of the Class C
Certificates  on such  Distribution  Date are  less  than  the  Class C  Current
Interest.

         Class C Unpaid Interest  Shortfall:  As to any  Distribution  Date, the
amount, if any, by which the aggregate of Class C Interest  Shortfalls for prior
Distribution  Dates exceeds the aggregate of amounts  distributed  in respect of
Class C Interest  Shortfalls on prior Distribution Dates to Holders of the Class
C Certificates.  For purposes of determining  whether amounts  distributable  in
respect of Class C Unpaid Interest  Shortfalls were actually  distributed on any
particular  Distribution Date,  distributions on such Distribution Date shall be
allocated,  first, to the Class C Current Interest,  and, second, to any Class C
Unpaid Interest Shortfall.

         Class M Applied  Liquidated  Loan Loss Amount:  As of any  Distribution
Date,  the lesser of (x) the Class M  Certificate  Balance  (after  taking  into
account the distribution of the related  Principal  Distribution  Amount on such
Distribution  Date,  but  prior  to the  application  of  the  Class  M  Applied
Liquidated  Loan Loss  Amount,  if any, on such  Distribution  Date) and (y) the
excess,  if any,  of (i) the  Applied  Liquidated  Loan  Loss  Amount as of such
Distribution  Date over (ii) the Class B Applied  Liquidated Loan Loss Amount as
of such Distribution Date.

         Class M Certificate:  Any of the Certificates signed by the Trustee and
countersigned by the Trustee or the Certificate Registrar,  substantially in the
form set forth in Exhibit B hereto.

         Class M Certificate  Balance: As to any Distribution Date, the Original
Class  M  Certificate  Balance  less  the  sum of  (x)  all  amounts  previously
distributed to Class M Certificateholders  on all previous Distribution Dates on
account of principal  and (y) the  aggregate,  cumulative  amount of the Class M
Applied Liquidated Loan Loss Amounts on all previous  Distribution Dates, but in
no event less than zero.

         Class M Current  Interest:  With respect to any Distribution  Date, the
amount of interest accrued on the Class M Certificate

                                      - 7 -


<PAGE>



Balance  immediately  prior to such Distribution Date during the related Accrual
Period at the Class M Pass-Through Rate.

         Class M Interest Shortfall:  As to any Distribution Date, any amount by
which the amount of interest distributed to Class M  Certificateholders  on such
Distribution  Date is less  than  the sum of (a)  interest  accrued  during  the
related  Accrual  Period  at the  Class  M  Pass-Through  Rate  on the  Class  M
Certificate  Balance and (b) any interest due on such  Distribution  Date on any
Class M Unpaid Interest Shortfall.

         Class M Liquidated  Loan Loss  Amortization  Amount:  As to the Class M
Certificates  and as of any  Distribution  Date,  the  lesser of (x) the Class M
Unpaid  Liquidated  Loan Loss  Amount as of such  Distribution  Date and (y) the
excess of (i) the Monthly Excess  Cashflow Amount over (ii) the sum of the Class
A Unpaid Interest  Shortfall,  the Extra Principal  Distribution  Amount and the
Class M Unpaid Interest Shortfall, in each case for such Distribution Date.

         Class M Pass-Through  Rate: As to the initial Accrual Period,  5.90625%
per annum and, as to any Accrual Period thereafter, the lesser of (a) LIBOR plus
0.25% and (b) the Weighted Average Net Loan Rate.

         Class M Principal  Distribution  Amount: As of any Distribution Date on
or after the Stepdown Date and as long as a Trigger Event is not in effect,  the
excess of (x) the sum of (i) the Class A Certificate  Balance (after taking into
account any payments in respect of the Class A Principal  Distribution Amount on
such  Distribution  Date) and (ii) the Class M Certificate  Balance  immediately
prior to such  Distribution  Date over (y) the lesser of (A) the  product of (i)
86.0% and (ii) the Pool  Balance  as of the last day of the  related  Collection
Period  and (B) the Pool  Balance as of the last day of the  related  Collection
Period minus $4,000,088.

         Class M Principal Factor:  As to any Distribution  Date, the percentage
(carried  to seven  places,  rounded  down)  obtained  by  dividing  the Class M
Certificate  Balance as of such  Distribution  Date (after  giving effect to all
payments of principal  made on such  Distribution  Date) by the Original Class M
Certificate Balance.

         Class M Unpaid Interest  Shortfall:  As to any  Distribution  Date, the
amount if any, by which the aggregate of Class M Interest  Shortfalls  for prior
Distribution  Dates  exceeds the aggregate of the amounts  distributed  on prior
Distribution  Dates to Holders of the Class M Certificates in respect of Class M
Interest Shortfalls.  For purposes of determining whether amounts  distributable
in respect of Class M Unpaid Interest  Shortfalls  were actually  distributed on
any particular  Distribution  Date, the distribution on such  Distribution  Date
shall  be  allocated,  first,  to the  amount  specified  in  clause  (a) of the
definition of

                                      - 8 -


<PAGE>



"Class M  Interest  Requirement",  second,  to any  interest  due on any Class M
Unpaid Interest Shortfall and, third, to any Class M Unpaid Interest Shortfall.

         Class R Certificate:  Any of the Certificates signed by the Trustee and
countersigned by the Trustee or the Certificate Registrar,  substantially in the
form set forth in Exhibit E hereto. The Class R Certificates shall evidence both
the interest  designated as the "residual  interest" in the Lower-Tier REMIC and
the interest  designated as the "residual  interest" in the Upper-Tier REMIC for
purposes of the REMIC Provisions.

         Class R Certificate  Balance: As of any Distribution Date, the Original
Class R Certificate Balance less all distribution,  on all previous Distribution
Dates in respect of the Class R Distribution  Amount,  but in no event less than
zero.

         Closing Date:  September 16, 1997.

         Code:  The Internal Revenue Code of 1986, as amended from
time to time.

         Collection  Period:  As to any Home  Equity  Loan and any  Distribution
Date,  the  one-month  period  ending  on the  related  Cycle  Date in the month
preceding the month of such Distribution Date; provided, however, that the first
such period for each Home Equity Loan shall commence on the Cut-off Date and end
on the Cycle Date for such Home Equity Loan occurring in August 1997.  When used
with  respect to all the Home Equity  Loans and a  Distribution  Date,  the term
"Collection Period" shall mean, collectively,  the respective Collection Periods
applicable  to each of the  Home  Equity  Loans  that  commenced  in the  second
preceding  calendar month (or, in the case of the first Collection  Period,  the
Cut-off Date) and ended in the calendar month immediately preceding the month of
such  Distribution  Date,  and  shall be  referred  to  herein  as a  "preceding
Collection   Period"  or  "related   Collection  Period"  with  reference  to  a
Distribution Date.

         Combined  Loan-to-Value  Ratio:  As to any Home  Equity  Loan as of any
date, the fraction, expressed as a percentage, the numerator of which is the sum
of (i) the  Credit  Limit  and  (ii) the  greater  of (x) the  aggregate  unpaid
principal balance of all loans secured by all senior or pari passu related deeds
of trust or  mortgages,  if any, as of such date and (y) the  aggregate  maximum
credit limit of such loans,  and the denominator of which is the Appraised Value
of the related  Mortgaged  Property as of the date of  execution  of the related
Loan Agreement.

         Corporate  Trust  Office:  The  principal  office of the Trustee in New
York, New York, at which at any particular time its corporate  business shall be
administered,  which office at the date of the  execution of this  instrument is
located at 450 West

                                      - 9 -


<PAGE>



33rd  Street,  10th Floor,  New York,  New York 10001,  Attention:  Global Trust
Services.

         Co-Trustee:  Texas Commerce Bank, or any successor co-trustee appointed
to succeed  Texas  Commerce  Bank in  accordance  with this  Agreement  that has
accepted such appointment in accordance herewith.

         Credit  Limit:  As to any Home Equity  Loan,  the maximum  Loan Balance
permitted under the terms of the related Loan Agreement.

         Cut-off Date: The close of business on July 31, 1997.

         Cut-off  Date Pool  Balance:  The  aggregate  of the Cut-off Date Trust
Balances of the Home Equity Loans.

         Cut-off  Date Trust  Balance:  As to any Home Equity  Loan,  the unpaid
principal balance thereof as of the close of business on the Cut-off Date.

         Cycle Date:  As to any Home Equity Loan,  the day of the month on which
the related billing cycle for such Home Equity Loan ends.

         Defective  Home Equity Loan: Any Home Equity Loan with respect to which
the Depositor or the Master Servicer is required to repurchase the Trust Balance
or substitute for such Trust Balance one or more Eligible Substitute Home Equity
Loans pursuant to Section 2.02 or 2.04.

         Definitive Certificates:  As defined in Section 6.02(c).

         Delinquency Amount: As of any date of determination, the sum of:

         (a) the product of (i) the  aggregate  Trust Balance of all Home Equity
         Loans (other than  Foreclosure,  Foreclosed or  Liquidated  Home Equity
         Loans) which are between 30 and 59 days  delinquent  (on a  contractual
         basis) and (ii) 11.00%;

         (b) the product of (i) the  aggregate  Trust Balance of all Home Equity
         Loans (other than  Foreclosure,  Foreclosed or  Liquidated  Home Equity
         Loans) which are  delinquent  between 60 and 89 days (on a  contractual
         basis) and (ii) 22.00%; and

         (c) the product of (i) the  aggregate  Trust Balance of all Home Equity
         Loans (other than Liquidated  Home Equity Loans)  delinquent 90 days or
         more, and (ii) 44.00%.

         Depositor:  Beneficial Mortgage Services, Inc., a Delaware corporation,
and its successors in interest.

         Depository:  The  initial  Depository  shall  be The  Depository  Trust
Company, the nominee of which is Cede & Co., as the

                                     - 10 -


<PAGE>



registered Holder of Book-Entry  Certificates evidencing $736,017,000 in initial
aggregate  principal  amount of the Class A  Certificates,  $36,000,000  initial
aggregate  principal amount of the Class M Certificates and $28,000,000  initial
aggregate principal amount of the Class B Certificates.  The Depository shall at
all times be a  "clearing  corporation"  as defined in Section  8-102(3)  of the
Uniform Commercial Code of the State of New York.

         Depository  Participant:  A  broker,  dealer,  bank or other  financial
institution  or other  Person  for whom from time to time a  Depository  effects
book-entry transfers and pledges of securities deposited with the Depository.

         Determination Date: As to any Distribution Date, the fifth Business Day
preceding such Distribution Date.

         Disqualified  Organization:  A disqualified  organization as defined in
section 860E(e)(5) of the Code (or any successor statute thereto).

         Distribution  Date: The 28th day of each calendar month or, if such day
is not a Business Day, the next succeeding  Business Day, beginning in September
1997.

         Electronic Ledger: As to each Originator,  the electronic master record
of home equity credit line accounts maintained by it.

         Eligible  Account:  An account that is (a) maintained with a depository
institution the long-term  deposits or the long-term  unsecured debt obligations
of which have been rated by each Rating Agency in its highest  rating  category,
or (b) an account or accounts the deposits in which are fully  insured by either
the BIF or the SAIF,  or (c) a  segregated  trust  account  maintained  with the
Trustee in its fiduciary  capacity in its  corporate  trust  department,  or (d)
otherwise  acceptable to each Rating Agency,  as evidenced by a letter from such
Rating Agency to the Trustee.

         Eligible  Substitute  Home  Equity  Loan:  A Home  Equity Loan or Loans
substituted by the Depositor or the Master  Servicer for a Defective Home Equity
Loan, which must on the date of such  substitution (a) have an outstanding Trust
Balance (or in the case of a substitution  of more than one Home Equity Loan for
a Defective Home Equity Loan, an aggregate  Trust Balance) not in excess of, and
not  substantially  less than,  the Trust Balance of such  Defective Home Equity
Loan;  (b) have a Loan Rate of not less than the Loan Rate of the Defective Home
Equity  Loan and not more than 1% in  excess of the Loan Rate of such  Defective
Home Equity Loan; (c) have a remaining term to maturity not more than six months
earlier or later than the remaining  term of the Defective Home Equity Loan; (d)
comply with each  representation,  warranty and  obligation set forth in Section
2.04 (except that each such  representation  and warranty  shall be deemed to be
made as of the

                                     - 11 -


<PAGE>



date of  substitution);  (e) have an original Combined  Loan-to-Value  Ratio not
greater than that of the Defective  Home Equity Loan; and (f) have a Mortgage of
the same or higher level of priority as the Mortgage  relating to the  Defective
Home Equity Loan.

         ERISA: The Employee Retirement Income Security Act of 1974, as amended.

         Event of Default:  As defined in Section 8.01.

         Extra Principal  Distribution  Amount: As of any Distribution Date, the
lesser of (x) the Monthly Excess Interest Amount for such  Distribution Date and
(y) the Overcollateralization Deficiency for such Distribution Date.

         Final Auction:  As defined in Section 10.01(b).

         Fitch: Fitch Investors Service, L.P. or its successor in interest.

         Foreclosed  Home  Equity  Loan:  Any  Home  Equity  Loan  that is not a
Liquidated  Home Equity Loan and as to which the related  Mortgaged  Property is
held by the Trust Fund upon the foreclosure or comparable conversion thereof.

         Foreclosure  Home Equity Loan: A Home Equity Loan with respect to which
the Master Servicer or a Subservicer has commenced foreclosure proceedings.

         Home Equity Loan  Losses:  For any  Distribution  Date,  the sum of the
aggregate of  Liquidated  Home Equity Loan Losses for all Home Equity Loans that
became Liquidated Home Equity Loans as of such Distribution Date.

         Home Equity Loan Payment  Record:  With respect to the Trust Fund,  the
record maintained by the Master Servicer pursuant to Section 3.02(b).

         Home Equity Loan Schedule:  As of any date, the schedule of Home Equity
Loans  included  in the Trust Fund on such date.  The  initial  schedule of Home
Equity  Loans as of the  Cut-off  Date is the  magnetic  tape  delivered  to the
Trustee by the  Depositor  on the  Closing  Date  setting  forth as to each Home
Equity Loan (a) the Cut-off Date Trust  Balance,  (b) the Credit Limit,  (c) the
dates upon which any outstanding Loan Balance is due and payable pursuant to the
amortization  schedule  in effect at the Closing  Date,  (d) the margin over the
related  index that is  applicable  to the  setting  of the Loan  Rate,  (e) the
applicable  maximum  Loan Rate and minimum  Loan Rate,  if any,  (f) the monthly
billing  cycle for such Home Equity Loan and (g) the billing name and address of
the Mortgagor.


                                     - 12 -


<PAGE>



         Home Equity Loans:  Such of the home equity loans the Trust Balances of
which have been sold and  assigned  to the Trustee  pursuant to Section  2.01 as
from time to time are held as a part of the Trust Fund,  the Home  Equity  Loans
originally so held being identified in the Home Equity Loan Schedule.  When used
in respect of any  Distribution  Date, the term Home Equity Loans shall mean all
Home  Equity  Loans  (including  those in  respect  of which the Trust  Fund has
acquired the related Mortgaged  Property) that (a) have not been prepaid in full
prior to the  related  Collection  Period,  (b) did not become  Liquidated  Home
Equity  Loans  prior  to  such  related  Collection  Period  and  (c)  were  not
repurchased by the Master Servicer prior to such related Collection Period.

         Insurance  Proceeds:  As to any Home Equity Loan and Collection Period,
proceeds paid by any insurer pursuant to any insurance policy covering such Home
Equity Loan (net of any component  thereof covering any expenses  incurred by or
on behalf of the Master Servicer) or by the Master Servicer  pursuant to Section
3.04 during such Collection Period, that (a) are not Liquidation  Proceeds,  (b)
are not applied to the restoration or repair of the related  Mortgaged  Property
or released to the related  Mortgagor in  accordance  with the normal  servicing
procedures of the Master Servicer and (c) will be applied by the Master Servicer
in reduction of the Loan Balance of such Home Equity Loan.

         Interest  Remittance  Amount:  As of any  Distribution  Date,  the sum,
without duplication, of (i) all interest collected during the related Collection
Period on the Home Equity  Loans (less the Monthly  Servicing  Fee) and (ii) the
portion of any Substitution Adjustment Amount relating to interest.

         LIBOR: As to any Accrual Period,  the per annum rate established by the
Trustee with respect to such  Accrual  Period (a) based on the London  interbank
offered rate for one-month  United  States  dollar  deposits that appears on the
Telerate  Page  3750  as of  11:00  a.m.,  London  time,  on the  related  LIBOR
Determination  Date, or (b) if on such date no such rate appears on the Telerate
Page 3750, based on the arithmetic mean (rounded upwards,  if necessary,  to the
nearest  1/100 of one  percent)  of the  rates at which  one-month  U.S.  dollar
deposits are offered at  approximately  11:00 a.m.,  London time,  on such LIBOR
Determination  Date by  four  Reference  Banks  to  prime  banks  in the  London
interbank  market  commencing  on the  second  LIBOR  Business  Day  immediately
following such LIBOR Determination Date or (c) if fewer than two Reference Banks
provide such offered  quotations,  the greater of (i) LIBOR as determined on the
preceding LIBOR Determination Date and (ii) the Reserve Interest Rate.

         LIBOR Business Day: A day on which banking  institutions in The City of
New York and the City of  London,  England  are  open  for  dealing  in  foreign
currency and exchange.


                                     - 13 -


<PAGE>



         LIBOR Determination Date: With respect to any Accrual Period other than
the initial Accrual Period, the second LIBOR Business Day prior to the beginning
of such Accrual Period.

         Liquidated  Home Equity Loan:  As to any  Distribution  Date,  any Home
Equity  Loan (other than a  Defective  Home  Equity  Loan that is  purchased  or
substituted  pursuant  to  Section  2.02 or 2.04) in respect of which the Master
Servicer has determined as of the end of the calendar month  preceding the month
of such  Distribution  Date that all  Liquidation  Proceeds  that it  expects to
recover have been recovered.

         Liquidated  Home Equity  Loan Loss:  As to any  Liquidated  Home Equity
Loan, the amount,  if any, by which (a) the sum of (i) the Trust Balance of such
Liquidated Home Equity Loan and (ii) accrued and unpaid interest  thereon at the
applicable  Net Loan Rate from time to time  applicable  through  the end of the
Collection  Period ending in the month  preceding the month of the  Distribution
Date upon which such Home  Equity  Loan became a  Liquidated  Home Equity  Loan,
exceeds  (b) the Trust  Liquidation  Proceeds  received in  connection  with the
liquidation thereof. For purposes hereof, a Foreclosed Home Equity Loan shall be
deemed to have continued to accrue interest at the Net Loan Rate that would have
been applicable from time to time to the accrual of interest on the related Home
Equity Loan.

         Liquidated Loan Loss Amortization  Amount:  The Class B Liquidated Loan
Loss  Amortization  Amount or the  Class M  Liquidated  Loan  Loss  Amortization
Amount.

         Liquidation Expenses: As to any Home Equity Loan, unreimbursed expenses
that are incurred by the Master  Servicer in connection  with the liquidation of
such Home  Equity  Loan and not  recovered  under  any  insurance  policy,  such
expenses  to  include,   without  limitation,   legal  fees  and  expenses,  any
unreimbursed  amount  expended by the Master  Servicer  pursuant to Section 3.06
(including,  without limitation,  amounts advanced to correct defaults under any
deed of trust or mortgage  that is prior to such Home Equity Loan) in respect of
such Home Equity Loan and any related  and  unreimbursed  expenditures  for real
estate property taxes or for property restoration or preservation.

         Liquidation  Period:  The period  beginning  on the date of adoption by
holders of the Class R  Certificates  of a plan of complete  liquidation  of the
Trust  Fund and  ending  on the day that is 90 days  after the date such plan is
adopted.

         Liquidation  Proceeds:  As to any Home  Equity  Loan,  cash (other than
Insurance Proceeds and if such Home Equity Loan is a Defective Home Equity Loan,
the Purchase  Price of such Home Equity Loan)  received in  connection  with the
liquidation  of  such  Home  Equity  Loan,   whether  through   trustee's  sale,
foreclosure sale or otherwise,  including without limitation rentals on acquired
Mortgaged Properties; provided, however, that in no

                                     - 14 -


<PAGE>



event shall Liquidation Proceeds with respect to any Home Equity Loan exceed (x)
the sum  described in clause (a) of the  definition of  "Liquidated  Home Equity
Loan Loss" and (y) any related Liquidation Expenses.

         Loan  Agreement:  As to any Home Equity Loan,  the related  credit line
agreement  executed  by  the  Mortgagor  and  the  related  Originator  and  any
amendments or modifications thereto.

         Loan  Balance:  As to any Home Equity Loan and any day,  the  principal
balance of such Home Equity Loan at the close of business on such day.

         Loan Rate:  As to any Home Equity Loan and any day,  the per annum rate
of interest  applicable  to the  calculation  of  interest  on the related  Loan
Balance for such day as set forth in the related Loan Agreement.

         Lower-Tier A Balance:  As of any Distribution  Date, an amount equal to
the Original Class A Certificate Balance less all amounts previously distributed
on Lower-Tier  Interest A on all previous  Distribution Dates from the Principal
Collected Amount, but in no event less than zero.

         Lower-Tier B Balance:  As of any Distribution  Date, an amount equal to
the  Original  Class B  Certificate  Balance  less  the  sum of (x) all  amounts
previously  distributed  on Lower-Tier  Interest B on all previous  Distribution
Dates from the  Principal  Collected  Amount and (y) the  aggregate,  cumulative
amount of the Class B Applied  Liquidated  Loan  Loss  Amounts  on all  previous
Distribution Dates, but in no event less than zero.

         Lower-Tier  Certificate  Account:  The  custodial  account or  accounts
created and maintained with the Trustee pursuant to Section 4.02 and included in
the Lower-Tier REMIC.

         Lower Tier Distribution Amount:  As defined in Section 4.04.

         Lower-Tier  Interest:  Any of the Lower-Tier Interest A, the Lower-Tier
Interest M, the Lower-Tier Interest B or the Lower- Tier Interest R.

         Lower-Tier  Interest  A:  An  uncertificated  regular  interest  in the
Lower-Tier  REMIC  which is held as an asset of the  Upper-  Tier  REMIC  and is
entitled to monthly distributions as provided in Section 4.04.

         Lower-Tier  Interest  B:  An  uncertificated  regular  interest  in the
Lower-Tier  REMIC  which is held as an asset of the  Upper-  Tier  REMIC  and is
entitled to monthly distributions as provided in Section 4.04.

         Lower-Tier  Interest  M:  An  uncertificated  regular  interest  in the
Lower-Tier REMIC which is held as an asset of the

                                     - 15 -


<PAGE>



Upper-Tier REMIC and is entitled to monthly distributions as provided in Section
4.04.

         Lower-Tier  Interest  R:  A  certificated   residual  interest  in  the
Lower-Tier REMIC evidenced by the Class R Certificates.

         Lower-Tier M Balance:  As of any Distribution  Date, an amount equal to
the  Original  Class M  Certificate  Balance  less  the  sum of (x) all  amounts
previously  distributed  on Lower-Tier  Interest M on all previous  Distribution
Dates from the  Principal  Collected  Amount and (y) the  aggregate,  cumulative
amount of the Class M Applied  Liquidated  Loan  Loss  Amounts  on all  previous
Distribution Dates, but in no event less than zero.

         Lower-Tier REMIC: One of the two separate REMICs  established  pursuant
to Section  2.05,  the assets of which shall consist of the  segregated  pool of
assets  referred to as the Trust  Fund,  other than the  Upper-Tier  Certificate
Account.

         Master Servicer:  Beneficial Mortgage  Corporation,  in its capacity as
master  servicer  hereunder,  or its  successor  in  interest  or any  successor
servicer appointed as provided herein.

         Monthly Excess Cashflow Amount: As to any Distribution Date, the sum of
the Monthly Excess Interest Amount and the Overcollateralization Release Amount.

         Monthly  Excess  Interest  Amount:  As to any  Distribution  Date,  the
greater of (a) the amount equal to (i) the Interest  Remittance Amount less (ii)
the aggregate amount of interest required to be distributed  pursuant to Section
5.01(a)(i), and (b) zero.

         Monthly  Servicing  Fee: As to any Home  Equity  Loan and any date,  an
amount equal to one-twelfth of the product of (a) the Servicing Fee Rate and (b)
the Trust Balance of such Home Equity Loan.

         Moody's: Moody's Investors Service, Inc. or its successor in interest.

         Mortgage:  As to any  Home  Equity  Loan,  the  deed of  trust or other
instrument  creating a first or second lien on an estate in fee simple  interest
in real property securing such Home Equity Loan.

         Mortgage  File:  As to any Home Equity  Loan,  the  mortgage  documents
listed in Section 2.01  pertaining  to such Home Equity Loan and any  additional
documents  required to be added to the Mortgage File pursuant to this Agreement,
which  documents may be physical  documents or, pursuant to the terms of Section
2.01, optical images or other representations thereof.


                                     - 16 -


<PAGE>



         Mortgaged  Property:  As  to  any  Home  Equity  Loan,  the  underlying
property,  including real property and any improvements  thereon,  securing such
Home Equity Loan.

         Mortgagor:  The obligor or obligors under a Loan Agreement.

         Net  Liquidation  Proceeds:  As to any  Liquidated  Home  Equity  Loan,
Liquidation Proceeds net of Liquidation Expenses.

         Net Loan Rate:  As to any Home Equity  Loan and any day,  the Loan Rate
less the Servicing Fee Rate.

         Officer's Certificate:  A certificate signed by the President, a Senior
Vice President or a Vice President of the Depositor or the Master  Servicer,  as
the case may be, and delivered to the Trustee.

         Opinion of  Counsel:  A written  opinion of  counsel  delivered  to the
Trustee,  who may be counsel  employed by the Master  Servicer or the Depositor,
except that any opinion of counsel  relating to the  qualification  of the Trust
Fund as a REMIC or compliance with or taxation  pursuant to the REMIC Provisions
must be an opinion of independent counsel experienced in matters relating to the
subject of such opinion.

         Original Class A Certificate Balance:  $ 736,017,000.00

         Original Class B Certificate Balance:  $ 36,000,000.00

         Original Class M Certificate Balance:  $ 28,000,000.00

         Original Class R Certificate Balance:  $        590.57

         Originator:  Each of the  Master  Servicer,  Beneficial  Arizona  Inc.,
Beneficial  California Inc.,  Beneficial  Consumer Discount Company,  Beneficial
Delaware Inc.,  Beneficial  Discount Co. of Virginia,  Beneficial  Florida Inc.,
Beneficial Homeowner Service Corporation,  Beneficial Illinois Inc.,  Beneficial
Indiana Inc., Beneficial Kentucky Inc., Beneficial Loan & Thrift Co., Beneficial
Maine Inc.,  Beneficial Michigan Inc.,  Beneficial  Mississippi Inc., Beneficial
Montana  Inc.,  Beneficial  Mortgage  Co. of  Arizona,  Beneficial  Mortgage  of
Colorado,  Beneficial  Mortgage Co. of Connecticut,  Beneficial  Mortgage Co. of
Georgia,  Beneficial Mortgage Co. of Idaho,  Beneficial Mortgage Co. of Indiana,
Beneficial  Mortgage  Co. of  Kansas,  Beneficial  Mortgage  Co.  of  Louisiana,
Beneficial  Mortgage Co. of Maryland,  Beneficial Mortgage Co. of Massachusetts,
Beneficial  Mortgage Co. of  Mississippi,  Beneficial  Mortgage Co. of Missouri,
Beneficial  Mortgage Co. of Nevada,  Beneficial  Mortgage Co. of New  Hampshire,
Beneficial Mortgage Co. of North Carolina,  Beneficial Mortgage Co. of Oklahoma,
Beneficial  Mortgage  Co.  of Rhode  Island,  Beneficial  Mortgage  Co. of South
Carolina,  Beneficial Mortgage Co. of Utah, Beneficial Nebraska Inc., Beneficial
New Jersey Inc., Beneficial New Mexico Inc., Beneficial Ohio Inc.,

                                     - 17 -


<PAGE>



Beneficial Oregon Inc.,  Beneficial Tennessee Inc.,  Beneficial Washington Inc.,
Beneficial West Virginia, Inc. and Beneficial Wisconsin, Inc.

         Overcollateralization   Amount:   As  of  any  Distribution   Date  the
difference  between  (x) the Pool  Balance  as of the  last  day of the  related
Collection  Period and (y) the Certificate  Principal Balance (after taking into
account all distributions of principal on such Distribution Date).

         Overcollateralization  Deficiency:  As of any  Distribution  Date,  the
excess,  if any,  of (x) the  Targeted  Overcollateralization  Amount  for  such
Distribution   Date  over  (y)  the   Overcollateralization   Amount   for  such
Distribution  Date,  calculated  for this purpose  after taking into account the
reduction  on  such  Distribution  Date  of the  Certificate  Principal  Balance
resulting from the  distribution of the Principal  Distribution  Amount (but not
the Extra Principal Distribution Amount) on such Distribution Date, but prior to
taking  into  account any related  Applied  Liquidated  Loan Loss Amount on such
Distribution Date.

         Overcollateralization  Release Amount: As of any Distribution Date, the
lesser of (x) the Principal  Collected Amount for such Distribution Date and (y)
the  excess,  if  any,  of  (i)  the   Overcollateralization   Amount  for  such
Distribution  Date,  assuming  that 100% of the  Principal  Collected  Amount is
applied on such  Distribution  Date to the payment of  principal on the Class A,
Class M and Class B  Certificates  over (ii) the Targeted  Overcollateralization
Amount for such Distribution Date.

         Overdue Trust  Percentage:  As to any Collection Period and any payment
received in respect of a Home Equity Loan that was due in a previous  Collection
Period, the percentage (carried to four places) obtained by dividing the average
daily Trust  Balance  for all  consecutive  prior  Collection  Periods  from and
including the  Collection  Period in which such payment was due to and including
the Collection  Period in which such payment was received in full by the average
daily Loan Balance for such consecutive  prior Collection  Periods.  The Overdue
Trust  Percentage  shall only be applied to payments  received  in a  Collection
Period that were due in a previous Collection Period or Periods.

         Ownership  Interest:  With  respect to any Class M, Class B, Class C or
Class R Certificate,  any ownership or security interest therein,  including any
interest therein as the Holder thereof and any other interest  therein,  whether
direct or indirect, legal or beneficial, as owner or as pledgee.

         Paying  Agent:  Any Person  appointed  by the Trustee as  permitted  by
Section 6.05.


                                     - 18 -


<PAGE>



         Percentage  Interest:  As to any Certificate,  the percentage  interest
evidenced thereby in distributions  required to be made thereon, such percentage
interest being equal, in the case of a Certificate other than a Class C or Class
R  Certificate,  to the percentage  obtained by dividing the original  principal
denomination  of such  Certificate  by the  aggregate of the original  principal
denominations of all Certificates of the same Class, and, in the case of a Class
C or Class R Certificate, to the percentage set forth on the face thereof.

         Permitted Investments:  One or more of the following:

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

                             (b) repurchase  agreements on obligations specified
         in clause  (a)  maturing  not more than three  months  from the date of
         acquisition  thereof,  provided  that  the  unsecured  short-term  debt
         obligations of the party agreeing to repurchase such obligations are at
         the  time  rated  by  each  Rating  Agency  in  its  highest  unsecured
         short-term rating category;

                             (c)  certificates  of deposit,  time  deposits  and
         bankers'  acceptances (which, if Moody's is a Rating Agency, shall each
         have an original  maturity of not more than 90 days and, in the case of
         bankers'  acceptances,  shall in no event have an original  maturity of
         more than 365 days) of any U.S. depository institution or trust company
         incorporated  under the laws of the United States or any State provided
         that  either (i) such  investments  are fully  insured  by the  Federal
         Deposit  Insurance  Corporation  or (ii) the debt  obligations  of such
         depository  institution  or trust company (or if Standard & Poor's is a
         Rating Agency in the case of the principal depository  institution in a
         depository  institution holding company,  the unsecured short-term debt
         obligations of the depository  institution holding company) at the date
         of  acquisition  thereof  have been rated by each Rating  Agency in its
         highest unsecured short-term debt rating category;

                             (d) commercial paper (having original maturities of
         not more than 270 days) of any corporation  incorporated under the laws
         of the  United  States  or any  state  thereof  which  on the  date  of
         acquisition  has  been  rated  by each  Rating  Agency  in its  highest
         short-term rating category;

                             (e) money market funds rated by each Rating  Agency
         in its highest category;


                                     - 19 -


<PAGE>



                             (f) money market mutual funds,  including,  without
         limitation,  the VISTA Money  Market  Funds or any other fund for which
         the  Trustee or an  Affiliate  of the Trustee  serves as an  investment
         advisor, administrator,  shareholder,  servicing agent and/or custodian
         or  subcustodian  (provided  that any such fund is rated in the highest
         rating   category   by  each  of   Standard  &  Poor's  and   Moody's),
         notwithstanding  that (i) the  Trustee or an  Affiliate  of the Trustee
         charges and  collects  fees and  expenses  from such funds for services
         rendered,  (ii) the Trustee  charges and collects fees and expenses for
         services  rendered  pursuant  to this  Agreement,  and  (iii)  services
         performed for such funds and pursuant to this Agreement may converge at
         any time; and

                             (g)  other   obligations  or  securities  that  are
         acceptable  to each Rating Agency as a Permitted  Investment  hereunder
         and will not result in a reduction,  withdrawal  or  suspension  of the
         then-current  rating of any Class of  Certificates,  as  evidenced by a
         letter to such effect from such Rating Agency.

         With respect to clause (f) above, the Depositor and the Master Servicer
specifically  authorize the Trustee or an Affiliate of the Trustee to charge and
collect  all fees and  expenses  from such funds for  services  rendered to such
funds,  in addition to any fees and  expenses the Trustee may charge and collect
for services rendered pursuant to this Agreement.

         In no event  shall an  instrument  be a  Permitted  Investment  if such
instrument  evidences (x) a right to receive only interest payments with respect
to the obligations underlying such instrument or (y) both principal and interest
payments  derived from obligations  underlying such instrument,  if the interest
and  principal  payments  with  respect  to such  instrument  provide a yield to
maturity at the date of investment of greater than 120% of the yield to maturity
at par of such underlying obligations.

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

         Pool Balance:  As to any Distribution  Date, the aggregate of the Trust
Balances of all Home Equity Loans as of the beginning of the related  Collection
Period;  and as to any  other  time of  reference,  the  aggregate  of the Trust
Balances of the Home Equity Loans as of the specified date.

         Pool Purchase Price:  As defined in Section 10.01(b).

         Principal Collected Amount: As of any Distribution Date, the sum of (a)
the  aggregate  of all Trust  Principal  Payments  received  during the  related
Collection  Period,  (b) the aggregate of all Trust Insurance  Proceeds received
during the related Collection Period, (c) the aggregate of Trust Liquidation

                                     - 20 -


<PAGE>



Proceeds  received as of the end of the calendar  month  preceding  the month of
such Distribution  Date, (d) the aggregate  Purchase Price of any Defective Home
Equity  Loans  repurchased  by the  Depositor or the Master  Servicer  since the
preceding Distribution Date and (e) the Substitution Adjustment Amount deposited
in the Collection Account during the preceding Collection Period.

         Principal  Distribution Amount: As of any Distribution Date, the sum of
(i) the Principal  Collected Amount minus,  for Distribution  Dates occurring on
and after the Stepdown Date, the  Overcollateralization  Release Amount, if any,
and (ii) the Extra Principal Distribution Amount, if any.

         Principal  Payment:  As to any  Home  Equity  Loan  and any  Collection
Period,  all amounts  (excluding  Insurance  Proceeds and Liquidation  Proceeds)
received  by the  Master  Servicer  from or on behalf of the  related  Mortgagor
during such Collection Period that were applied in reduction of the Loan Balance
of such Home Equity Loan.

         Purchase Price: With respect to any Defective Home Equity Loan required
to be  repurchased on any date pursuant to Section 2.02 or 2.04, an amount equal
to the sum of (a) the  Trust  Balance  thereof  as of the end of the  Collection
Period  preceding  the date of  repurchase  and (b) accrued and unpaid  interest
thereon to the end of such  Collection  Period at the Net Loan Rate from time to
time applicable to such Trust Balance.

         Rating Agency:  Any statistical credit rating agency, or its successor,
that rated any Class of Certificates at the request of the Depositor at the time
of the initial issuance of the Certificates. If such agency or a successor is no
longer in existence,  "Rating  Agency" shall be such  statistical  credit rating
agency, or other comparable Person, designated by the Master Servicer, notice of
which  designation  shall be  given to the  Trustee.  References  herein  to the
highest rating category of a Rating Agency shall mean AAA, AAAm, AAAm-G or A-1+,
in the case of Standard & Poor's, AAA, or F-1+, in the case of Fitch, and Aaa or
P-1 +, in the case of Moody's,  and in the case of any other Rating Agency shall
mean an equivalent rating.

         Record Date:  As to any  Book-Entry  Certificate  and any  Distribution
Date, the day  immediately  preceding such  Distribution  Date or, if Definitive
Certificates  are issued  pursuant to Section 6.01, the last day of the calendar
month  preceding  the month in which such  Distribution  Date occurs.  As to any
Class R Certificate and any Distribution  Date, the fifth Business Day preceding
such Distribution Date.

         Reference  Banks:  Banks designated by the Trustee (a) that are engaged
in transactions in Eurodollar deposits in the international Eurocurrency market,
(b) with an established place

                                     - 21 -


<PAGE>



of business in London,  and (c) that,  to the  knowledge of the Trustee,  do not
control, are not controlled by, and are not under common control with the Master
Servicer or the Depositor.

         REMIC:  As defined in Section 3.01.

         REMIC  Change  of  Law:  Any  proposed,  temporary  or  final  statute,
regulation,  revenue ruling, revenue procedure or other official announcement or
interpretation  relating  to REMICs and the REMIC  Provisions  issued  after the
Closing Date.

         REMIC Provisions:  Provisions of the federal income tax law relating to
REMICs,  which appear at sections 860A through 860G of Subchapter M of Chapter 1
of the Code, and related provisions and regulations promulgated  thereunder,  as
the foregoing may be in effect from time to time.

         Reserve  Interest  Rate:  With respect to any Accrual  Period,  the per
annum rate that the  Trustee  determines  to be either (a) the  arithmetic  mean
(rounded  upwards if  necessary  to the nearest  whole  multiple of 1/100 of one
percent) of the one-month U.S.  dollar lending rates which at least two New York
City  banks   selected  by  the  Trustee  are  quoting  on  the  relevant  LIBOR
Determination  Date to the  principal  London  offices of  leading  banks in the
London  interbank  market or (b) in the event that the Trustee can  determine no
such  arithmetic  mean, the lowest  one-month U.S.  dollar lending rate which at
least two New York City banks  selected by the Trustee are quoting on such LIBOR
Determination Date.

         Responsible Officer: When used with respect to the Trustee, any officer
within  the  Corporate  Trust  Office  including  any Vice  President,  Managing
Director, Assistant Vice President,  Secretary, Assistant Secretary or any other
officer  of the  Trustee  customarily  performing  functions  similar  to  those
performed by any of the above  designated  officers and also,  with respect to a
particular  matter, any other officer to whom such matter is referred because of
such officer's knowledge and familiarity with the particular subject.

         Sale Agreement: The Loan Sale Agreement, dated as of September 1, 1997,
between the  Originators,  as  sellers,  and the  Depositor,  as  purchaser,  as
amended, supplemented or otherwise modified from time to time.

         SAIF:  The Savings  Association  Insurance  Fund,  as from time to time
constituted,  created  under the  Financial  Institutions  Reform,  Recovery and
Enhancement  Act  of  1989,  or if at any  time  after  the  execution  of  this
instrument the Savings Association  Insurance Fund is not existing or performing
duties now assigned to it, the body performing such duties on such date.


                                     - 22 -


<PAGE>



         Securities Act:  The Securities Act of 1933, as amended.

         Senior  Enhancement  Percentage:  For  any  Distribution  Date  is  the
percentage  obtained by dividing  (x) the sum of (i) the  aggregate  Certificate
Principal    Balance   of   the   Subordinate    Certificates   and   (ii)   the
Overcollateralization  Amount,  in each case prior to taking  into  account  the
distribution of the Principal  Distribution  Amount on such Distribution Date by
(y) the Pool Balance as of the last day of the related  Collection  Period.  The
Class C Certificates will have no Certificate Balance.

         Servicer  LOC:  Any  letter  of  credit,  surety or  similar  agreement
obtained by the Master Servicer pursuant to Section 3.02(c).

         Servicer  LOC  Issuer:  At  any  time  as  to  any  Servicer  LOC,  the
institution that is then obligated under such Servicer LOC.

         Servicing  Certificate:  A  certificate  completed  by and  executed on
behalf of the Master Servicer in accordance with Section 4.01.

         Servicing Fee Rate:  1.0% per annum.

         Servicing  Officer:  Any officer of the Master Servicer involved in, or
responsible for, the administration and servicing of the Home Equity Loans whose
name  appears on a list of servicing  officers  furnished on the Closing Date to
the  Trustee by the Master  Servicer,  as such list may be amended  from time to
time.

         Standard  &  Poor's:  Standard  &  Poor's  Debt  Ratings  Group  or its
successor in interest.

         Stepdown   Date:   The  later  to  occur  of  (x)  the  September  2000
Distribution  Date  and (y) the  first  Distribution  Date on which  the  Senior
Enhancement Percentage is greater than or equal to 25.25%.

         Subordinate  Certificates:  The Class M,  Class B,  Class C and Class R
Certificates.

         Subservicer:  Each Originator,  in its capacity as servicer of the Home
Equity  Loans  originated  by it and  sold  by  the  Depositor  to  the  Trustee
hereunder, and any other subservicer appointed as such by the Master Servicer.

         Substitution  Adjustment  Amount:  As defined in the fourth sentence of
Section 2.02(b).


                                     - 23 -


<PAGE>



         Targeted Overcollateralization Amount: As of any Distribution Date, (x)
prior to the  Stepdown  Date,  2.10% of the Cut-off Date Pool Balance and (y) on
and after the Stepdown  Date, the greater of (i) 5.25% of the Pool Balance as of
the last day of the  related  Collection  Period  and  (ii) an  amount  equal to
$4,000,088.

         Tax Matters Person Residual Interest: A 0.000001% interest in the Class
R  Certificates,  which  shall  be  issued  to and held by the  Master  Servicer
throughout the term hereof.

         Telerate Page 3750: The display designated as page 3750 on the Telerate
Service  (or such other page as may  replace  page 3750 on that  service or such
other  service  or  services  as  may  be  nominated  by  the  British  Bankers'
Association  for the purpose of displaying  London  interbank  offered rates for
U.S. dollar deposits).

         Termination   Date:  The   Distribution   Date  upon  which  the  final
distribution is made to Certificateholders.

         Texas  Commerce  Bank:  Texas  Commerce  Bank National  Association,  a
national banking association, and its successors and assigns.

         Total Expected Losses: As of any date of determination,  the sum of (a)
the aggregate amount of Liquidated Home Equity Loan Losses occurring on or prior
to such date and (b) the Delinquency Amount.

         Transfer: Any direct or indirect transfer, sale, pledge,  hypothecation
or other form of  assignment  of any  Ownership  Interest in a Class M, Class B,
Class C or Class R Certificate.

         Transferee:  Any Person who is  acquiring  by  Transfer  any  Ownership
Interest in a Class M, Class B, Class C or Class R Certificate.

         Trigger Event:  Has occurred with respect to any  Distribution  Date if
the percentage  obtained by dividing (x) the aggregate  Trust Balance of 60 plus
day delinquent Home Equity Loans, including any Foreclosure Home Equity Loans or
Foreclosed  Home Equity Loans, by (y) the Pool Balance as of the last day of the
related Collection Period,  equals or exceeds one-half of the Senior Enhancement
Percentage for such Distribution Date.

         Trust Balance: As to any Home Equity Loan and any day, the Cut-off Date
Trust  Balance  less (a) all Trust  Principal  Payments  received  and  credited
against  the Trust  Balance  since the Cutoff  Date and (b) any Trust  Insurance
Proceeds  received  since the Cut-off  Date in respect of such Home Equity Loan.
For purposes hereof, a Foreclosed Home Equity Loan shall be deemed to have a

                                     - 24 -


<PAGE>



Trust  Balance  equal to the Trust  Balance  of the  related  Home  Equity  Loan
immediately prior to the foreclosure or comparable conversion,  and a Liquidated
Home  Equity  Loan  shall be deemed to have a Trust  Balance  equal to the Trust
Balance of the related Home Equity Loan immediately  prior to the final recovery
of the related Liquidation Proceeds.

         Trust  Fund:  The  corpus  of the  trust  created  by  this  Agreement,
consisting of, to the extent  described  herein,  the Trust Balance of each Home
Equity Loan, such assets as shall from time to time be identified as credited to
the Home Equity Loan Payment Record or deposited in the Certificate  Accounts in
accordance with this Agreement,  any Insurance  Proceeds,  any Servicer LOC, and
any  property  that  secured a Home  Equity  Loan and that has been  acquired by
foreclosure or deed in lieu of foreclosure.

         Trust Insurance Proceeds: As to any Home Equity Loan and any Collection
Period,  the product of (a) the Trust Percentage and (b) Insurance Proceeds with
respect to such Home Equity Loan received during such Collection Period.

         Trust  Interest:  As to any payment on a Home Equity Loan made by or on
behalf of the  related  Mortgagor  that is due (a) in the  Collection  Period in
which it is received,  the product of (i) the portion of such payment  allocable
to interest at the Net Loan Rate for the related  Collection Period and (ii) the
Trust  Percentage  for the related  Collection  Period,  or (b) in a  Collection
Period prior to the Collection  Period in which it was received,  the product of
(i) the portion of such  payment  allocable  to interest at the Net Loan Rate at
the beginning of the initial Collection Period in which such payment was due and
(ii) the  Overdue  Trust  Percentage  for the  Collection  Period in which  such
payment is received.

         Trust Liquidation  Proceeds: As to any Liquidated Home Equity Loan, the
product of the Trust Percentage and Net Liquidation Proceeds.

         Trust Percentage: As to any Home Equity Loan and any Collection Period,
the percentage  (carried to four places)  obtained by dividing the average daily
Trust Balance for the second  preceding  Collection  Period by the average daily
Loan Balance for such second preceding Collection Period; provided, that for any
Foreclosed Home Equity Loan, the Trust  Percentage shall be the Trust Percentage
in effect for the  Collection  Period in which such Home  Equity  Loan  became a
Foreclosed  Home Equity Loan.  As of the Cut-off Date,  the Trust  Percentage of
each Home Equity Loan shall be 100%.

         Trust Principal  Payment:  As to any payment made on a Home Equity Loan
by or on behalf of the related Mortgagor (other than

                                     - 25 -


<PAGE>



Trust  Insurance  Proceeds),  (a) that is either a prepayment  or was due in the
Collection  Period in which it was  received,  the product of (i) the portion of
such payment applicable to the reduction of the Loan Balance of such Home Equity
Loan and (ii) the Trust  Percentage for the related  Collection  Period,  or (b)
that was due in a Collection  Period prior to the Collection  Period in which it
was received,  the product of (x) the portion of such payment  applicable to the
reduction of the Loan Balance of such Home Equity Loan and (y) the Overdue Trust
Percentage  for the  Collection  Period  in which  such  payment  was  received;
provided,  however,  that such amount  shall not exceed the amount  necessary to
reduce the related Trust Balance to zero.

         Trustee:  The Chase Manhattan Bank, or any successor  trustee appointed
in  accordance  with  this  Agreement  that has  accepted  such  appointment  in
accordance herewith.

         Unpaid  Liquidated  Loan  Loss  Amount:  For  the  Class  M or  Class B
Certificates,  as applicable, and as to any Distribution Date, the excess of (x)
the aggregate, cumulative amount of related Applied Liquidated Loan Loss Amounts
with  respect  to such  Class  for all  prior  Distribution  Dates  over (y) the
aggregate,  cumulative  amount of  related  Liquidated  Loan  Loss  Amortization
Amounts with respect to such Class for all prior Distribution Dates.

         Upper-Tier  Certificate  Account:  The  custodial  account or  accounts
created and maintained with the Trustee pursuant to Section 4.02 and included in
the Upper-Tier REMIC.

         Upper-Tier REMIC: One of the two separate REMICs  established  pursuant
to Section 2.05, the assets of which shall consist of the Lower-Tier  Interests,
the  right to  receive  distributions  thereon  and the  Upper-Tier  Certificate
Account.

         Weighted  Average  Net Loan  Rate:  As to any  Distribution  Date,  the
average of the Net Loan Rates of all the Home Equity Loans in effect  during the
applicable  monthly  billing cycles ending in the calendar month  preceding such
Distribution  Date (adjusted to an effective rate  reflecting  accrued  interest
calculated  on the basis of the  actual  number of days in the  related  Accrual
Period and a year assumed to consist of 360 days, and weighted by the respective
Trust Balances thereof).

         Section  1.02.  Interest  Calculations.  All  calculations  of interest
hereunder shall be made on the basis of the actual number of days in the Accrual
Period and a year assumed to consist of 360 days. The  establishment of LIBOR on
each LIBOR  Determination  Date by the Trustee and the Trustee's  calculation of
the rate of interest  applicable  to the  Certificates  for the related  Accrual
Period shall (in the absence of manifest error) be final and binding.

                                     - 26 -


<PAGE>




         Section  1.03.  Usage  of  Terms.  With  respect  to all  terms in this
Agreement,  the singular includes the plural and the plural the singular;  words
importing any gender include the other genders;  references to "writing" include
typing, lithography, facsimile and other means of reproducing words in a visible
form;  references to agreements and other  contractual  instruments  include all
subsequent amendments thereto or changes therein entered into in accordance with
their  respective  terms and not  prohibited  by this  Agreement;  references to
Persons include their permitted successors and assigns; and the term "including"
means "including without limitation".

                                   ARTICLE II

          SALE OF HOME EQUITY LOANS; ORIGINAL ISSUANCE OF CERTIFICATES

         Section 2.01.  Sale of Home Equity Loans.  The Depositor,  concurrently
with the execution and delivery of this Agreement, does hereby sell, assign, set
over and  otherwise  convey  (a) to the  Trustee,  without  recourse  (except as
provided  herein)  all of its  right,  title  and  interest  in and to the Trust
Balance  of each Home  Equity  Loan  secured  by a lien on  property  located in
California  and New Jersey,  including  the Trust  Percentage  or Overdue  Trust
Percentage,  as  applicable,  of all  interest  and  principal  received  by the
Depositor  or any  Originator  on or with  respect to each such Home Equity Loan
after the  Cut-off  Date  (other  than any  payment of  principal  and  interest
allocable to any Additional  Balance  related  thereto as herein  provided,  any
premium  accompanying  the  prepayment  of all or a portion  of a  related  Loan
Balance,  and any  related  fees,  charges  or amounts  held for the  account of
Mortgagors  as described in Section  3.02(b)),  together  with all of its right,
title and interest in and to the proceeds of any related insurance  policies (to
the extent of the related  Trust  Balances)  and its rights with respect to each
such Home  Equity  Loan  under  the Sale  Agreement  and (b) to the  Co-Trustee,
without  recourse  (except  as  provided  herein)  all of its  right,  title and
interest in and to the Trust  Balance of each Home Equity Loan secured by a lien
on property  located  outside of California and New Jersey,  including the Trust
Percentage  or Overdue  Trust  Percentage,  as  applicable,  of all interest and
principal received by the Depositor or any Originator on or with respect to each
such Home  Equity  Loan  after the  Cut-off  Date  (other  than any  payment  of
principal and interest  allocable to any Additional  Balance  related thereto as
herein provided,  any premium accompanying the prepayment of all or a portion of
a related Loan Balance,  and any related  fees,  charges or amounts held for the
account of Mortgagors as described in Section 3.02(b)), together with all of its
right,  title and  interest  in and to the  proceeds  of any  related  insurance
policies  (to the extent of the  related  Trust  Balances)  and its rights  with
respect to each such Home Equity Loan under the Sale  Agreement.  In  connection
with such conveyances, the

                                     - 27 -


<PAGE>



Master  Servicer  does hereby  agree to enter into the Home Equity Loan  Payment
Record on the Closing  Date the initial  deposit to the  Lower-Tier  Certificate
Account described in Section 4.02(a) and thereafter to effect the deposit to the
Lower-Tier Certificate Account required pursuant to such Section.

         In connection  with such sale and  assignment,  the  Depositor  will as
promptly  as  practicable,  but in no event  later  than 90 days  following  the
Closing Date, file in the appropriate office in the State in which its principal
place  of  business  is  located  UCC-1  financing  statements  executed  by the
Depositor as debtor,  naming the Trustee or the Co-Trustee , as  applicable,  as
secured party and listing as  collateral  the  respective  Home Equity Loans the
Trust  Balances  of  which  are  conveyed  by  the  Depositor   hereunder.   The
characterization  of the Depositor as debtor and the Trustee or the  Co-Trustee,
as applicable,  as secured party in any such  financing  statement is solely for
protective  purposes and shall in no way be  construed as being  contrary to the
intent of the parties that this  transaction be treated as a sale to the Trustee
or the Co-Trustee,  as applicable,  of the Depositor's  entire right,  title and
interest in the Trust Balances of the Home Equity Loans. In connection with such
filing, the Master Servicer agrees that it shall cause to be filed all necessary
continuation  statements  and to take or cause to be taken such  actions  and to
execute   such   documents   as  are   necessary  to  perfect  and  protect  the
Certificateholders' interests in the Trust Balance of each such Home Equity Loan
and the  proceeds  thereof  allocable  thereto.  In the event a Servicer  LOC is
obtained pursuant to Section 3.02(c), the Master Servicer promptly shall deliver
to the Trustee such Servicer LOC.

         In  connection  with such sale and  assignment  by the  Depositor,  the
Master  Servicer  acknowledges  that it is  holding  (or that it will  cause the
related  Originators to hold on the Master  Servicer's  behalf) as custodian for
the Trustee and the  Co-Trustee  the  following  documents or  instruments  with
respect to each Home Equity Loan the Trust Balance of which is being so sold and
assigned:

                             (i)  The  related  Loan  Agreement  (including  any
         related assumption,  modification and substitution agreements), and any
         evidence  of  indebtedness   executed  by  the  related   Mortgagor  in
         connection therewith;

                            (ii) any related amendments to the Loan Agreement or
         Mortgage,  any related  modification  or  assumption  agreement and any
         related previous assignments of the Home Equity Loan;


                                     - 28 -


<PAGE>



                           (iii) the related Mortgage with evidence of recording
         indicated thereon; and

                            (iv)  with  respect  to each  Home  Equity  Loan the
         original  Credit Limit of which was $10,000 or more,  evidence of title
         insurance or foreclosure impairment insurance, as the case may be;

provided,  however,  that as to any Home  Equity  Loan in respect  of which,  as
evidenced  by an  Opinion  of  Counsel  delivered  to and in form and  substance
satisfactory to the Trustee, (x) an optical image or other representation of the
related  documents  specified in clauses (i) through (iii) above are enforceable
in the relevant jurisdiction to the same extent as the original of such document
and (y) such optical image or other  representation  does not impair the ability
of an owner of such Home  Equity  Loan to  transfer  its  interest  in such Home
Equity  Loan,  such  optical  image or other  representation  may be held by the
Master  Servicer  (or by the related  Originator  acting on behalf of the Master
Servicer) as custodian in lieu of the physical documents specified above.

         Except as hereinafter provided,  the Master Servicer (or any Originator
acting on behalf of the Master  Servicer) as  custodian  of the Mortgage  Files,
shall be entitled to maintain  possession of all of the foregoing  documents and
instruments  and shall not be  required to deliver any of them to the Trustee or
the Co- Trustee.

         The right of Beneficial,  as Master Servicer,  or any Originator acting
on behalf  of the  Master  Servicer  to  maintain  possession  of the  documents
enumerated  above shall continue so long as (x) Beneficial (or such  Originator)
remains an affiliate of Beneficial  Corporation and the long-term unsecured debt
of  Beneficial  Corporation  is  assigned  ratings of at least A- by  Standard &
Poor's  and Fitch and A3 by Moody's or (y)  Beneficial  has not been  removed as
Master  Servicer  following the  occurrence  of an Event of Default.  The Master
Servicer  shall  notify  in  writing  each  Originator  and the  Trustee  if the
long-term  unsecured debt of Beneficial  Corporation  does not satisfy either of
such ratings. At such time, as promptly as practicable but in no event more than
90 days in the case of clause  (i) below and 60 days in the case of clause  (ii)
below  following the  occurrence of such event,  Beneficial,  at its own expense
shall (or shall  cause the  related  Originator  to) (i)  either  (x) submit for
recording an assignment  of Mortgage in favor of the Trustee or the  Co-Trustee,
as  applicable  (which may be a blanket  assignment,  if permitted by law in the
applicable  jurisdiction as evidenced by an Opinion of Counsel  delivered to the
Trustee)  with  respect  to  each  of  the  related  Home  Equity  Loans  in the
appropriate  real  property  or other  records or (y) deliver to the Trustee the
fully executed and prepared assignment of mortgage in favor of the Trustee in

                                     - 29 -


<PAGE>



form for  recordation,  together  with an Opinion of Counsel to the effect  that
neither the  recording  of an  assignment  nor the taking of any other action is
required  to protect  the  Trustee's  right,  title and  interest  in and to the
related  Mortgage  and the  related  Home  Equity  Loan or,  if a court  were to
recharacterize  the sale of the Home Equity Loans as a  financing,  to perfect a
first  priority  security  interest in favor of the Trustee in such Mortgage and
Home Equity Loan and (ii) deliver the related  Mortgage  Files to the Trustee to
be held by the Trustee in trust,  upon the terms  herein set forth,  for the use
and benefit of all present and future Certificateholders,  and the Trustee shall
retain  possession   thereof  except  to  the  extent  the  Master  Servicer  or
Subservicers  require any Mortgage Files for normal servicing as contemplated by
Section 3.07.

         The  Trustee and the  Co-Trustee  shall have no duty or  obligation  to
review any Mortgage  File until such  Mortgage  File is delivered to the Trustee
pursuant to clause (ii) of the immediately  preceding paragraph.  Within 60 days
following the first  delivery of the Mortgage  Files to the Trustee  pursuant to
clause (ii) of the immediately preceding paragraph, the Trustee will review each
Mortgage File delivered to it to ascertain that all required documents set forth
in this Section 2.01 have been  executed and received,  and that such  documents
relate to the Home Equity Loans identified on the Home Equity Loan Schedule.  In
so doing the Trustee may  conclusively  rely on the  purported due execution and
genuineness of any signature  thereon.  If within such 60-day period the Trustee
finds  any  document  constituting  a part of a  Mortgage  File not to have been
executed or received or to be unrelated to the Home Equity Loans  identified  in
such Home Equity Loan Schedule,  the Trustee shall promptly  notify  Beneficial,
which shall have a period of 30 days after  receipt of such notice  within which
to correct or cure, or to cause the related  Originator to correct or cure,  any
such defect. Each original recorded assignment of Mortgage shall be delivered to
the Trustee  within 10 Business Days  following the date on which it is returned
to Beneficial or the related Originator by the office with which such assignment
was filed for recording and within 10 days  following  receipt by the Trustee of
the recorded  assignment or the  assignment in recordable  form, as the case may
be,  the  Trustee  shall  review  such  assignment  to confirm  the  information
specified  above with respect to the documents  constituting  the Mortgage File.
Upon  receipt by the Trustee of the recorded  assignment  or the  assignment  in
recordable  form, as the case may be, such recorded  assignment or assignment in
recordable form shall become part of the Mortgage File. The Trustee shall notify
Beneficial  of any defect in such  assignment  based on such review.  Beneficial
shall have a period of 30 days  following  receipt of such  notice to correct or
cure, or to cause the related Originator to correct or cure, such defect. In the
event that  Beneficial  fails to record,  or to cause the related  Originator to
record, an assignment of a Home Equity Loan as

                                     - 30 -


<PAGE>



herein  provided  within such 30-day  period,  the Trustee  shall,  upon written
instructions  from  Beneficial,  prepare and, if required  hereunder,  file such
assignment for recordation in the appropriate real property or other records and
Beneficial  shall deliver  within five Business Days of the Closing Date a power
of  attorney  of  each  Originator,  which  shall  appoint  the  Trustee  as its
attorney-in-fact  with  full  power  and  authority  to act in its stead for the
purpose of such preparation,  execution and filing.  Any expense incurred by the
Trustee  not  otherwise  paid for by  Beneficial  or the related  Originator  as
required  hereunder  in  connection  with the  preparation  and  filing  of such
assignments shall be reimbursed to the Trustee from amounts that would otherwise
be distributable to holders of the Class R Certificates.

         The Trustee  shall have no  responsibility  for  reviewing any Mortgage
File except as  expressly  provided  in this  Section  2.01.  In  reviewing  any
Mortgage File pursuant to this Section, the Trustee shall have no responsibility
for determining  whether any document is valid and binding,  whether the text of
any  assignment  or  endorsement  is in proper or recordable  form  (except,  if
applicable,  to determine if the Trustee is the assignee or  endorsee),  whether
any  document  has been  recorded in  accordance  with the  requirements  of any
applicable  jurisdiction,  or whether a blanket  assignment  is permitted in any
applicable  jurisdiction,  but shall only be  required  to  determine  whether a
document  appears to have been executed,  that it appears to be what it purports
to be and, where applicable,  that it purports to be recorded,  but shall not be
required to determine  whether any Person  executing any document was authorized
to do so or whether any signature thereon is genuine.

         The Depositor further confirms to the Trustee that each Originator have
caused the  portions  of their  Electronic  Ledgers  relating to the Home Equity
Loans to be clearly and unambiguously  marked to indicate that the Trust Balance
of each Home Equity Loan  transferred  and  assigned by such  Originator  to the
Depositor,  and  thereafter by the  Depositor to the Trustee and the  Co-Trustee
hereunder, has been sold to the Trustee and the Co- Trustee and constitutes part
of the Trust Fund in accordance with the terms of the trust created hereunder.

         The parties  hereto agree that Texas  Commerce Bank is appointed as the
initial  Co-Trustee in accordance  with Section 9.10 hereof,  and Texas Commerce
Bank accepts such  appointment.  The sole  purpose of Texas  Commerce  Bank as a
Co-Trustee  is to hold title to the Trust  Balances of Home Equity Loans secured
by liens on  Mortgaged  Properties  that are not located in  California  and New
Jersey. With respect to such Trust Balances and Home Equity Loans, any reference
to the Trustee in respect thereof shall be deemed to include the Co-Trustee only
insofar as such reference relates to the holder of the title thereto. The Co-

                                     - 31 -


<PAGE>



Trustee has no  obligations  hereunder  except to hold such title and follow the
instructions  of the  Trustee,  in each  case  subject  to the  limitations  and
protections set forth in Section 9.10.

         Section   2.02.   Acceptance   by  Trustee;   Repurchase   Obligations;
Substitution  of  Eligible   Substitute  Home  Equity  Loans.  (a)  The  Trustee
acknowledges  the  assignment  and sale of the Trust Balance of each Home Equity
Loan to it, and declares  that the Trustee holds and will hold the Trust Fund in
trust,  upon the terms herein set forth,  for the use and benefit of all present
and  future  Certificateholders.  If the time to cure any  defect  of which  the
Trustee has notified the Master Servicer  following the Trustee's  review of the
Mortgage  Files  pursuant to Section 2.01 has expired or if any loss is suffered
by the  Trustee,  on behalf of the  Certificateholders,  in  respect of any Home
Equity Loan as a result of (i) a material defect in any document  constituting a
part of a  Mortgage  File or (ii) the  related  Originator's  retention  of such
Mortgage File or an  assignment of a Home Equity Loan not having been  recorded,
the Master Servicer shall, on the Business Day preceding the  Distribution  Date
in the  month  following  the  Collection  Period in which the time to cure such
defect expired or such loss occurred, either (i) repurchase the Trust Balance of
the related Home Equity Loan (including any property acquired in respect thereof
and any insurance  policy or insurance  proceeds with respect  thereto) from the
Trust Fund at a price equal to the Purchase  Price,  which shall be accomplished
by deposit by the Master Servicer in the Lower-Tier Certificate Account pursuant
to  Section  4.02  on  such  preceding  Business  Day,  or  (ii) so long as such
Distribution Date occurs within two years following the Closing Date, substitute
for the Trust Balance of such Home Equity Loan one or more  Eligible  Substitute
Home  Equity  Loans and  remit any  Substitution  Adjustment  Amount in  respect
thereof to the Lower-Tier  Certificate  Account pursuant to Section 4.02 on such
preceding  Business  Day. The Master  Servicer may first  request of the related
Originator  that it  effect  the  repurchase  or  substitution  of any  Eligible
Substitute  Home Equity Loan  described in the  preceding  sentence,  but in the
event  any  such   Originator   shall  not  have  effected  such  repurchase  or
substitution  in the  time  provided  therefor,  the  Master  Servicer  shall be
obligated to deposit the related Purchase Price into the Lower-Tier  Certificate
Account in immediately available funds not later than such Distribution Date and
thereby be deemed to have  purchased  the Trust Balance of such Home Equity Loan
in lieu of such  Originator.  Such  purchase  by the Master  Servicer  shall not
relieve the related  Originator  of any  liability to the Master  Servicer  with
respect  to the Trust  Balance of the Home  Equity  Loan so  purchased,  and the
Master  Servicer  shall be entitled to require the related  Originator to pay to
the Master  Servicer the related  Purchase Price and thereby  purchase the Trust
Balance of such Home Equity Loan from the Master  Servicer.  Upon receipt by the
Trustee of (i) in the case of a repurchase, written

                                     - 32 -


<PAGE>



notification signed by a Servicing Officer to the effect that the Purchase Price
for any such  Defective Home Equity Loan has been so deposited in the Lower-Tier
Certificate Account or (ii) in the case of a substitution,  written notification
signed by a  Servicing  Officer to the effect that the  Substitution  Adjustment
Amount, if any, has been so deposited in the Lower-Tier Certificate Account and,
if required at such time,  that the related  Mortgage File has been delivered to
the Trustee and the  assignment  referred to in Section 2.01 has been  recorded,
the Trustee shall execute and deliver such  instrument of transfer or assignment
presented  to  it by  the  Master  Servicer,  in  each  case  without  recourse,
representation or warranty, as shall be necessary to vest in the Master Servicer
or the related Originator, as the case may be, legal and beneficial ownership of
such purchased  Defective Home Equity Loan  (including any property  acquired in
respect thereof and proceeds of any insurance policy with respect  thereto).  It
is  understood  and  agreed  that  the  obligation  of the  Master  Servicer  to
repurchase or substitute for any Home Equity Loan as to which a material  defect
in a  Mortgage  File or any  constituent  document  thereof  continues  to exist
following  the  cure  period  as  described  in the  preceding  paragraph  shall
constitute   the   sole   remedy    respecting   such   defect    available   to
Certificateholders  or the Trustee on behalf of  Certificateholders  against the
Master  Servicer,  and such  obligation on the part of the Master Servicer shall
survive any resignation or termination of the Master Servicer  hereunder.  It is
further  understood  and agreed  that any such  repurchase  obligation  shall be
solely that of the original Master Servicer and shall survive any resignation or
termination of such Master Servicer hereunder, and the Trustee shall in no event
be obligated to repurchase any Home Equity Loan hereunder.

         Notwithstanding  the  foregoing,  in  the  case  of any  repurchase  or
substitution  that would result in the  realization of a gain by the Trust Fund,
the Master  Servicer  shall not be required to so repurchase or replace any Home
Equity Loan unless it is a Defective Home Equity Loan and the Trustee shall have
received  (i) in the case of a  repurchase,  either an Opinion of Counsel to the
effect  that such  repurchase  shall not be  subject to tax as a result of being
deemed a "prohibited  transaction"  under  section  860F(a)(2) of the Code or an
Officer's  Certificate to the effect that such repurchase shall not give rise to
net income taxable under section 860F(a)(1) of the Code and (ii) in either case,
an Opinion of Counsel that such repurchase or substitution  will not be deemed a
contribution  to the REMIC after the "start-up  day" that would give rise to the
tax  specified  under  section  860G(d)(1)  of the  Code.  Any such  opinion  or
certificate  shall be provided solely at the expense of the Master Servicer.  In
the absence of such opinion or  certificate,  the Master  Servicer  shall not be
required to  repurchase or replace any Home Equity Loan unless it is a Defective
Home Equity Loan and there is an actual

                                     - 33 -


<PAGE>



or imminent default with respect thereto or unless such breach adversely affects
the enforceability of such Home Equity Loan.

         (b) As to any Eligible Substitute Home Equity Loan, the Master Servicer
shall  deliver,  or cause the related  Originator to deliver,  to the Trustee an
acknowledgment  that the Depositor  (or the related  Originator on behalf of the
Depositor)  is  holding  as  custodian  for  the  Trustee  such   documents  and
agreements, if any, as are permitted to be held by the Depositor (or the related
Originator) in accordance  with Section 2.01. An assignment of Mortgage in favor
of the Trustee with  respect to any such  Eligible  Substitute  Home Equity Loan
shall be  required  to be recorded  in the  appropriate  real  property or other
records or delivered  to the Trustee with the Opinion of Counsel  referred to in
Section 2.01 under the same circumstances that all other assignments of Mortgage
are required to be recorded  hereunder.  For any Collection  Period during which
the Master  Servicer  substitutes  one or more Eligible  Substitute  Home Equity
Loans for one or more  Defective  Home Equity Loans,  the Master  Servicer shall
determine the amount,  if any, by which the sum of the aggregate  Trust Balances
of all such Eligible  Substitute Home Equity Loans at the end of such Collection
Period is less than the aggregate  Trust Balances at the end of such  Collection
Period of the related Home Equity Loans being  removed from the Trust Fund.  The
amount of any such  shortfall  for a  Collection  Period  computed by the Master
Servicer,  together with any accrued and unpaid interest on the Trust Balance of
the  Home  Equity  Loan  being  replaced  at the  related  Net  Loan  Rate  (the
"Substitution  Adjustment Amount"), shall be deposited by the Master Servicer in
the  Lower-Tier  Certificate  Account on the  Business  Day next  preceding  the
Distribution  Date in the month  following  the  Collection  Period in which the
circumstances  giving rise to such  substitution  occur. All amounts received in
respect of any  Eligible  Substitute  Home Equity  Loans  during the  Collection
Period in which the circumstances  giving rise to a substitution occur shall not
be a part of the Trust Fund and shall not be  credited  to the Home  Equity Loan
Payment Record or deposited by the Master Servicer in the Lower-Tier Certificate
Account.  All amounts  received  by the Master  Servicer  during the  Collection
Period in which the  circumstances  giving  rise to such  substitution  occur in
respect of the Trust  Balance of any Home Equity Loan so removed  from the Trust
Fund shall be deposited  by the Master  Servicer in the  Lower-Tier  Certificate
Account.  The Master  Servicer  shall  amend the Home  Equity  Loan  Schedule to
reflect  the removal of the Trust  Balances  of any Home  Equity  Loans from the
Trust Fund and the substitution of the Trust Balances of any Eligible Substitute
Home Equity  Loans.  Upon such  substitution,  the Trust Balance of any Eligible
Substitute  Home  Equity Loan shall  constitute  a portion of the Trust Fund and
shall  be  subject  to the  terms of this  Agreement  in all  respects,  and the
Depositor  shall be  deemed  to have  made  with  respect  to any such  Eligible
Substitute Home Equity Loan, as of the date of

                                     - 34 -


<PAGE>



substitution,  the covenants,  representations,  warranties and  obligations set
forth in Section 2.04. The Trustee shall upon satisfaction of the conditions set
forth in Section  2.02(a)  promptly  effect the  reconveyance of any Home Equity
Loan so removed from the Trust Fund to the Master Servicer (or, if so instructed
by the Master Servicer,  to the related Originator),  in the manner set forth in
Section 2.02(a). The procedures applied by the Master Servicer in selecting each
Eligible  Substitute  Home Equity Loan shall not be adverse to the  interests of
the Trustee and the  Certificateholders and shall be comparable to the selection
procedures applicable to the Home Equity Loans originally conveyed hereunder.

         (c) As of the Closing Date, the Trustee  certifies that (i) it acquired
the Trust  Balances  of the Home  Equity  Loans in good  faith,  for value,  and
without notice or knowledge or any adverse claim, lien,  change,  encumbrance or
security  interest  (including  without  limitation,  federal tax liens or liens
arising under ERISA),  (ii) except as permitted herein, it has not and will not,
in any capacity, assert any claim or interest in the Home Equity Loans and (iii)
it has not  encumbered or transferred  its right,  title or interest in the Home
Equity Loans. The  representation  and warranty made in clause (i) above is made
by the Trustee without any  independent  investigation  and without  recourse or
warranty, except that the Trustee believes such representation to be true.

         Section  2.03.  Representations  and  Warranties  Regarding  the Master
Servicer.  The Master  Servicer  represents  and warrants to the Trustee and the
Certificateholders as of the Closing Date that:

                             (i)  The  Master  Servicer  is a  corporation  duly
         organized,  validly existing and in good standing under the laws of the
         State of Delaware and has the corporate  power to own its assets and to
         transact  the  business in which it is  currently  engaged.  The Master
         Servicer is duly qualified to do business as a foreign  corporation and
         is in good standing in each  jurisdiction in which the character of the
         business  transacted by it or  properties  owned or leased by it or the
         performance of its obligations  hereunder  requires such  qualification
         and in which the  failure so to qualify  would have a material  adverse
         effect on the business,  properties, assets, or condition (financial or
         other) of the Master  Servicer or the  performance  of its  obligations
         hereunder;

                            (ii) The Master Servicer has the power and authority
         to make,  execute,  deliver  and  perform  its  obligations  under this
         Agreement  and  all  of  the  transactions   contemplated   under  this
         Agreement,  and has taken all necessary  corporate  action to authorize
         the execution and delivery of this Agreement and the  performance by it
         of its obligations

                                     - 35 -


<PAGE>



         hereunder.  When executed and delivered, this Agreement will constitute
         the  legal,  valid  and  binding  obligation  of  the  Master  Servicer
         enforceable in accordance with its terms, except as enforcement of such
         terms  may  be  limited  by  bankruptcy,  insolvency  or  similar  laws
         affecting the  enforcement  of creditors'  rights  generally and by the
         availability of equitable remedies;

                           (iii) The Master  Servicer is not  required to obtain
         the consent of any other  party or any  consent,  license,  approval or
         authorization   from,  or   registration   or  declaration   with,  any
         governmental  authority,  bureau  or  agency  in  connection  with  the
         execution,  delivery,  performance,  validity or enforceability of this
         Agreement,  except such as have been obtained or filed, as the case may
         be,  prior to the  Closing  Date;  provided,  however,  that the Master
         Servicer  makes no  representations  or warranties  with respect to any
         requirements under the Blue Sky laws of any State;

                            (iv) The execution, delivery and performance of this
         Agreement by the Master  Servicer will not violate any provision of any
         existing  law or  regulation  or  any  order  or  decree  of any  court
         applicable to the Master  Servicer or any provision of the  Certificate
         of  Incorporation  or Bylaws of the Master  Servicer,  or  constitute a
         material breach of any mortgage, indenture, contract or other agreement
         to which the Master Servicer is a party or by which the Master Servicer
         may be bound; and

                             (v) No litigation or  administrative  proceeding of
         or  before  any  court,  tribunal  or  governmental  body is  currently
         pending, or to the knowledge of the Master Servicer threatened, against
         the Master  Servicer or any of its  properties  or with respect to this
         Agreement  or the  Certificates  which  in the  opinion  of the  Master
         Servicer has a reasonable likelihood of resulting in a material adverse
         effect on the transactions contemplated by this Agreement.

It is understood and agreed that the representations and warranties set forth in
this Section 2.03 shall survive the sale and assignment of the Trust Balances of
the Home Equity Loans to the Trustee.  Upon  discovery of a breach of any of the
foregoing  representations and warranties which materially and adversely affects
the interests of the Certificateholders, the party discovering such breach shall
give prompt written notice to the other parties. Within 60 days of its discovery
or its receipt of notice of breach,  the Master  Servicer shall cure such breach
in all material respects.

         Section 2.04.  Representations and Warranties Regarding the Home Equity
Loans; Repurchase of Defective Home Equity Loans.

                                     - 36 -


<PAGE>



The  Originators,  in their capacity as sellers in the Sale Agreement,  made the
following representations and warranties to the Depositor, and the Depositor, as
seller  of the  Trust  Balances  of the  Home  Equity  Loans  hereunder,  hereby
represents  and  warrants to the Trustee  and the  Certificateholders  as of the
Closing Date (except as otherwise expressly stated) that, as to each Home Equity
Loan the Trust Balance of which is conveyed to the Trust Fund by it:

                             (i) The  information  set forth on the Home  Equity
         Loan Schedule was true and correct in all material respects at the date
         or dates respecting which such information is furnished;

                            (ii) As of the  Closing  Date,  each  Mortgage  is a
         valid lien on the related  Mortgaged  Property  subject only to (a) the
         lien of the related  first deed of trust or  mortgage,  if any, (b) the
         lien of current real property  taxes and  assessments,  (c)  covenants,
         conditions and restrictions, rights of way, easements and other matters
         of public  record as of the date of  recording of such  Mortgage,  such
         exceptions  appearing of record being  acceptable  to mortgage  lending
         institutions  generally in the area wherein the  Mortgaged  Property is
         located  or  specifically   reflected  in  the  appraisal  obtained  in
         connection with the origination of the related Home Equity Loan and (d)
         other matters to which like  properties  are commonly  subject which do
         not materially  interfere with the benefits of the security intended to
         be provided by such Mortgage;

                           (iii) Immediately prior to the sale and assignment by
         the  Originators  to the Depositor,  each  Originator had good title to
         each Home Equity Loan the Trust  Balance of which was sold and assigned
         by it, and the Depositor has transferred all right,  title and interest
         in the Trust Balance of each Home Equity Loan to the Trustee;

                            (iv) As of the last Cycle Date immediately preceding
         the Cut-off  Date, no payment of principal or interest on or in respect
         of any Home Equity Loan is more than 30 days past due;

                             (v) The Depositor and, if  applicable,  the related
         Originator from whom the Depositor purchased each Home Equity Loan, was
         properly  licensed or otherwise  authorized,  to the extent required by
         applicable  law, to originate or purchase  such Home Equity Loan;  each
         Home  Equity  Loan at the time it was  made  complied  in all  material
         respects with  applicable  state and federal laws,  including,  without
         limitation,  usury,  equal credit  opportunity and disclosure laws, and
         the consummation of the transactions  herein  contemplated,  including,
         without limitation, the receipt of

                                     - 37 -


<PAGE>



         interest by Certificateholders, and the ownership of the Trust Balances
         of the Home  Equity  Loans by the Trustee as trustee of the Trust Fund,
         will not involve the violation of such laws;

                            (vi) As to each Home  Equity Loan having an original
         Credit Limit of $10,000 or more, a lender's title  insurance  policy or
         binder,  foreclosure impairment insurance,  or other assurance of title
         customary in the relevant jurisdiction therefor, was issued on or as of
         the date of the recording of the related Mortgage, and each such policy
         or binder is valid and remains in full force and effect;

                           (vii) As of the Closing  Date,  neither the Depositor
         nor the related  Originator has received a written notice of default of
         any first lien loan related to a Mortgaged  Property  that has not been
         cured by a party other than the Depositor or the related Originator;

                          (viii) Each Loan  Agreement  is in  substantially  the
         form  previously  provided  to  the  Trustee  by or on  behalf  of  the
         Depositor;

                            (ix) Except in the case of one Home Equity Loan (the
         Combined  Loan-to-Value  Ratio of which was not in excess of 115%),  at
         the  date  of  the  execution  of  any  Loan  Agreement,  the  Combined
         Loan-to-Value  Ratio for the related Home Equity Loan was not in excess
         of 100%;

                             (x) No selection  procedure  reasonably believed by
         the Depositor or the  Originators to be adverse to the interests of the
         Certificateholders was utilized in selecting the Home Equity Loans;

                            (xi) To the best of the  Depositor's  knowledge,  an
         independent interior and exterior appraisal in accordance with industry
         standards  was made in  connection  with the  origination  of each Home
         Equity Loan with a Credit Limit in excess of $10,000;

                           (xii) The fair market value of the  "interest in real
         property" as defined in Treas. Reg. ss.  1.860G-2(a)(4) and Treas. Reg.
         ss. 1.856-3(c)  securing each Home Equity Loan reduced by the amount of
         any lien on the interest in real  property  that is senior to such Home
         Equity Loan, and further reduced by a proportionate  amount of any lien
         on the  interest  in real  property  that is in  parity  with such Home
         Equity Loan,  was at least equal to 80% of the adjusted  issue price of
         the Home Equity Loan on the date of the  execution  of the related Loan
         Agreement  (provided  the Home Equity  Loan has not been  significantly
         modified as defined in the REMIC  Provisions)  or on the Closing  Date;
         and

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<PAGE>




                          (xiii) Each Home Equity Loan is a "qualified  mortgage
         loan" in accordance with the REMIC Provisions.

         The representations and warranties set forth in this Section 2.04 shall
survive the sale and assignment of the respective Mortgage Files to the Trustee.
Upon discovery by the related  Originator,  the Master Servicer or a Responsible
Officer of the Trustee of a breach of any of the foregoing  representations  and
warranties, without regard to any limitation set forth in such representation or
warranty  regarding  the  knowledge  of the  Depositor  as to the  facts  stated
therein,   which   materially  and  adversely   affects  the  interests  of  the
Certificateholders  in the related Home Equity Loan, the party  discovering such
breach shall give prompt written notice to the other parties.  Within 60 days of
its discovery or its receipt of notice of breach,  the  Depositor  shall use all
reasonable efforts to cure such breach in all material  respects,  or Beneficial
shall,  not later than the Business Day next  preceding  the  Distribution  Date
applicable  to the  Collection  Period in which any such  cure  period  expired,
either (i) repurchase the Trust Balance of such Home Equity Loan  (including any
property  acquired in respect  thereof  and any  insurance  policy or  insurance
proceeds with respect thereto) from the Trustee at a price equal to the Purchase
Price or (ii) following  removal of such Home Equity Loan from the Trust Fund by
the  Depositor,  substitute  in its place one or more Eligible  Substitute  Home
Equity Loans, in the same manner and subject to the same conditions as set forth
in Section 2.02.  Any such  repurchase or  substitution  by Beneficial  shall be
accomplished  in the  manner  set  forth in  Section  2.02 with  respect  to the
repurchase or substitution of Home Equity Loans under that Section.  Upon making
any such repurchase or substitution,  Beneficial shall be entitled to receive an
instrument  of assignment or transfer from the Trustee to the same extent as set
forth in Section 2.02 with respect to the  repurchase  or  substitution  of Home
Equity Loans under that Section.  The  obligation of Beneficial to repurchase or
replace  any such Home  Equity Loan (or  property  acquired in respect  thereof)
shall   constitute  the  sole  remedy   respecting  such  breach   available  to
Certificateholders  or the  Trustee  on behalf of  Certificateholders  and shall
survive  any  resignation  or  termination  of  Beneficial  as  Master  Servicer
hereunder.

         The Master  Servicer  shall be  obligated  either to  repurchase  or to
replace with one or more Eligible  Substitute Home Equity Loans each Home Equity
Loan as to which any of the  following  conditions  shall have existed as of the
Closing Date, which condition  materially and adversely affects the interests of
the Certificateholders in the related Home Equity Loan:

                           (i) Any mechanics'  lien or claim for work,  labor or
         material affecting the related Mortgaged Property that is or

                                     - 39 -


<PAGE>



         may be a lien prior to, or equal or  coordinate  with,  the lien of the
         related Mortgage;

                           (ii) Any  delinquent  tax or assessment  lien against
         the related Mortgaged Property;

                           (iii) Any valid offset,  defense or  counterclaim  to
         any Loan Agreement or Mortgage;

                            (iv) Any physical damage or lack of good repair with
         respect to the related Mortgaged Property; or

                             (v) Any  related  first  deed of trust or  mortgage
         containing a future advance provision.

Any such repurchase or substitution  shall be effected prior to the Distribution
Date applicable to the Collection  Period at the end of which any such condition
shall have been  discovered and shall be accomplished in the manner set forth in
Section 2.02 with respect to the repurchase or substitution of Home Equity Loans
thereunder,  and such repurchase or substitution obligation shall constitute the
sole  remedy   respecting   any  of  the  foregoing   conditions   available  to
Certificateholders,  or the Trustee on behalf of  Certificateholders,  and shall
survive  any  resignation  or  termination  of  Beneficial  as  Master  Servicer
hereunder.  It is understood and agreed that any such repurchase or substitution
obligation  shall be solely that of  Beneficial,  and the  Trustee  shall not be
obligated to repurchase or replace any Home Equity Loan hereunder.

         Section 2.05. Execution and Authentication of Certificates; Designation
of "Regular Interests" and "Residual Interests" under REMIC. (a) The Trustee has
caused to be executed (not in its individual  capacity,  but solely as Trustee),
countersigned  and delivered to or upon the written order of the  Depositor,  in
exchange for the Trust Balances of the Home Equity Loans,  concurrently with the
sale and  assignment  to the  Trustee of the Trust  Balances  of the Home Equity
Loans,  Certificates in authorized denominations evidencing the entire ownership
of the Trust Fund.

         (b) Beneficial  ownership in the Lower-Tier  REMIC shall be represented
by interests  designated as the Lower-Tier  Interest A,  Lower-Tier  Interest M,
Lower-Tier Interest B and Lower-Tier Interest R. The Lower-Tier Interests, other
than the Lower-Tier Interest R, shall be issued as uncertificated interests. The
Depositor hereby  designates  Lower-Tier  Interest A, Lower-Tier  Interest M and
Lower-Tier  Interest B as "regular  interests",  and the  Lower-Tier  Interest R
evidenced  by  the  Class  R  Certificates  as the  single  class  of  "residual
interests", in the Lower-Tier REMIC for purposes of the REMIC Provisions.


                                     - 40 -


<PAGE>



         (c) The Depositor  hereby  designates  each of the Class A, Class M and
Class B  Certificates  and the Class C-1,  Class C-2 and Class C-3 Components as
"regular  interests",  and the  Class R  Certificates  as the  single  class  of
"residual  interests",  in the  Upper-Tier  REMIC  for  purposes  of  the  REMIC
Provisions.

         Section 2.06.  Designation of Start-up Day and Final Maturity Date. The
Closing Date is hereby  designated as the "start-up day" of the Lower-Tier REMIC
and the Upper-Tier  REMIC within the meaning of section  860G(a)(9) of the Code.
The "final  maturity  date" for federal  income tax  purposes  of all  interests
created hereby will be the September 2037 Distribution Date.

         Section  2.07.  Certain  Activities.  The  Trust  will  not:  (i) issue
securities (except for the  Certificates);  (ii) borrow money; (iii) make loans;
(iv) invest in securities for the purpose of exercising control;  (v) underwrite
securities;  (vi) except as provided in this  Agreement,  engage in the purchase
and sale (or turnover) of  investments;  (vii) offer  securities in exchange for
property (except  Certificates for the Trust Balances of the Home Equity Loans);
or (viii) repurchase or otherwise reacquire its securities.

         Section  2.08.  Representation  and  Warranty  of  the  Depositor.  The
Depositor  represents  and warrants  that it has  transferred  all of its right,
title and interest in the Trust Balance of each Home Equity Loan  transferred to
it by the  Originators  to the  Trustee on the  Closing  Date free of any liens,
claims,  charges or other  encumbrances  created by the  Depositor and there has
been no other sale or assignment thereof by the Depositor.

                                   ARTICLE III

                ADMINISTRATION AND SERVICING OF HOME EQUITY LOANS

         Section 3.01. The Master  Servicer.  Beneficial is hereby  appointed as
Master  Servicer  hereunder.  The  parties  intend  that the Trust  Fund  formed
hereunder  shall  constitute,  and that the  affairs  of the Trust Fund shall be
conducted and this Agreement  shall be construed so as to qualify the Trust Fund
as, a "real estate mortgage investment conduit" (a "REMIC") as defined in and in
accordance  with the REMIC  Provisions.  In furtherance of such  intention,  the
Master Servicer  covenants and agrees that it shall, to the extent  permitted by
applicable law, act as agent (and the Master Servicer is hereby appointed to act
as  agent)  on  behalf of the  Trust  Fund and in that  capacity  it shall:  (a)
prepare, sign and file, or cause to be prepared,  signed and filed, all required
federal tax returns for each of the REMICs using a calendar  year as the taxable
year for the Trust Fund when and as required by the REMIC  Provisions  and other
applicable  federal  income  tax laws;  (b) cause the  Lower-Tier  REMIC and the
Upper-Tier REMIC each to elect to be treated as a REMIC on the

                                     - 41 -


<PAGE>



federal  partnership  information  tax  returns  of the Trust Fund for its first
taxable year in accordance with the REMIC  Provisions and to report all expenses
of the Trust Fund as expenses of the Lower-Tier  REMIC; (c) prepare and forward,
or cause to be prepared and forwarded, to the Certificateholders all information
reports as and when required to be provided to them in accordance with the REMIC
Provisions;  (d)  conduct  the  affairs  of the Trust Fund at all times that any
Certificates  are outstanding so as to maintain the status of the Lower-Tier and
Upper-Tier  REMICs as REMICs under the REMIC  Provisions;  (e) not  knowingly or
intentionally  take any action or omit to take any action  that would  cause the
termination of the REMIC status of the Lower-Tier  and  Upper-Tier  REMICs;  (f)
serve as tax matters person pursuant to Treasury Regulations ss. 1.860F-4(d) and
Temporary  Treasury  regulation  ss.  301.6231(a)(7)-1T  for the  Lower-Tier and
Upper-Tier  REMICs;  and (g) if not otherwise paid from amounts  available to be
distributed  to  Holders  of the  Class R  Certificates,  pay the  amount of any
federal income tax, including  prohibited  transaction penalty taxes, imposed on
the  Trust  Fund  when  and as the  same  shall  be due and  payable  (but  such
obligation shall not prevent the Master Servicer or any other appropriate Person
from  contesting any such tax in appropriate  proceedings  and shall not prevent
the Master Servicer from  withholding  payment of such tax, if permitted by law,
pending  the  outcome  of  such  proceedings).  If the  Master  Servicer  is not
permitted,  by  applicable  law, to fulfill any of its duties  described in this
Section 3.01 (as evidenced by an Opinion of Counsel to such effect  delivered to
the Trustee),  the Trustee shall, at the expense of the Master  Servicer,  carry
out such duties pursuant to the written instructions of the Master Servicer,  in
which  event the  Trustee  shall  have no  liability  to  Certificateholders  in
connection  with the  carrying  out of such  duties  other than  pursuant to the
standard of care set forth in Section  9.01 with respect to acts or omissions of
the Trustee generally.

         The Master Servicer  shall, or shall cause the related  Subservicer to,
service  and  administer  the Home  Equity  Loans and shall  have full power and
authority, acting alone or through such Subservicer, to do any and all things in
connection with such servicing and administration  that it may deem necessary or
desirable.  Any amounts  received by any Subservicer in respect of a Home Equity
Loan shall be deemed to have been received by the Master Servicer whether or not
actually  received by it. Without limiting the generality of the foregoing,  the
Master  Servicer shall continue,  and is hereby  authorized and empowered by the
Trustee, to execute and deliver on behalf of itself, the  Certificateholders and
the  Trustee  or any of  them,  any  and  all  instruments  of  satisfaction  or
cancellation,  or of  partial  or  full  release  or  discharge  and  all  other
comparable  instruments,  with respect to the Home Equity Loans and with respect
to the  Mortgaged  Properties.  The Trustee  shall,  upon  written  request of a
Servicing Officer, furnish the Master Servicer with any powers

                                     - 42 -


<PAGE>



of attorney and other  documents as are  reasonably  necessary or appropriate to
enable the Master Servicer to carry out its servicing and administrative  duties
hereunder.

         In connection with the servicing and  administration of the Home Equity
Loans,  the Master  Servicer shall not, and shall not permit any Subservicer to,
consent to an  increase  in the Credit  Limit  specified  in any Loan  Agreement
unless (i) the Master Servicer or such Subservicer and such Mortgagor  execute a
new Loan Agreement providing for such increase and (ii) the Master Servicer, not
later than (x) the Business Day  immediately  preceding  the  Distribution  Date
applicable  to the  Collection  Period  during  which a new Loan  Agreement  was
executed or (y) in the event the Master  Servicer is not  entitled to retain and
commingle with its own funds amounts referred to in Section  3.02(c),  not later
than the second Business Day following the date on which such new Loan Agreement
was executed, deposit in the Lower-Tier Certificate Account the amount necessary
(including  any accrued and unpaid  interest) to prepay in full on behalf of the
Mortgagor  the Trust  Balance of the related Home Equity  Loan.  Upon making any
such deposit the Master  Servicer  shall be entitled to receive an instrument of
assignment  or  transfer  from the  Trustee  to the same  extent as set forth in
Section  2.02.  The Master  Servicer  and each  Subservicer  may  consent to the
placing  of a lien  or  liens  junior  to that of the  Mortgage  on the  related
Mortgaged  Property so long as the total of the  principal  amounts of any first
lien loan, the Credit Limit and the combined  principal  balances secured by any
such junior lien loan or loans does not exceed 75%, if such Mortgage is a second
deed of trust or mortgage, and 80%, if such Mortgage is a first deed of trust or
mortgage,  of the Appraised  Value of the Mortgaged  Property as specified in an
appraisal  made by or on behalf  of the  Master  Servicer  at the time of and in
connection with such consent.  The Master Servicer and each Subservicer may also
consent to the placing of a lien or liens  senior to that of the Mortgage on the
Mortgaged  Property  so long as the  Combined  Loan-to-Value  Ratio of such Home
Equity Loan  following  the  placement of such lien or liens is equal to or less
than the Combined Loan-to-Value Ratio of such Home Equity Loan at origination.

         The  Master  Servicer  and each  Subservicer  may also  consent  to any
modification  of the  terms of any Loan  Agreement  or  Mortgage  not  expressly
prohibited  hereby  if (i) the  effect of any such  modification  will not be to
materially and adversely affect the security afforded by the Mortgaged  Property
or decrease or slow (other than as permitted by clause (ii) of Section  3.02(a))
the  timing  of  receipt  of  any  payments  required   thereunder,   (ii)  such
modification  will not cause  each of the  Lower-Tier  REMIC and the  Upper-Tier
REMIC to fail to qualify as a REMIC under the REMIC Provisions, (iii) after such
modification for the Loan Agreement or Mortgage, the related Home Equity Loan is
a "qualified

                                     - 43 -


<PAGE>



mortgage" as defined in the REMIC Provisions, and (iv) the modification does not
cause the Trust Fund to owe additional tax to any state or federal  governmental
agency.

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

         In the event that any tax is imposed on "prohibited  transactions"  (as
defined in section 860F(a)(2) of the Code) of either the Lower-Tier REMIC or the
Upper-Tier   REMIC,   such  tax  shall  be  charged  against  amounts  otherwise
distributable  to Holders of the Class R Certificates to the extent  hereinafter
provided.  In the event  that any such tax shall be due and owing at a time when
amounts  otherwise  distributable to Holders of the Class R Certificates are not
available and the  negligence of the Master  Servicer  caused the  imposition of
such tax,  the Master  Servicer  shall pay such tax from its own funds.  In such
event, the Master Servicer is hereby authorized to retain from amounts otherwise
distributable  to  Holders  of  the  Class  R  Certificates  on  any  subsequent
Distribution  Date  sufficient  funds to reimburse  the Master  Servicer for the
payment  of such  tax (to the  extent  that  the  Master  Servicer  has not been
previously  reimbursed or  indemnified  therefor).  The obligation of the Master
Servicer to pay any such tax from its own funds in the event  amounts  otherwise
distributable to Holders of the Class R Certificates are not sufficient shall be
solely  that of the  Master  Servicer  and  shall  survive  any  resignation  or
termination  of the Master  Servicer  hereunder;  provided,  however,  that such
obligation  shall be solely that of the original  Master Servicer in the case of
"prohibited  transactions"  caused by, or stemming  from any act or omission of,
such original Master Servicer,  including, but not limited to, the repurchase of
a  Defective  Home  Equity  Loan,  and in  such  case  shall  survive  any  such
resignation or termination of the original Master Servicer hereunder.

         Section  3.02.  Collection of Certain Home Equity Loan  Payments;  Home
Equity Loan Payment Record.  (a) The Master Servicer and each Subservicer  shall
follow such  collection  procedures as it follows from time to time with respect
to home equity loans in its  servicing  portfolio  comparable to the Home Equity
Loans.  Consistent  with  the  foregoing,  the  Master  Servicer  and  any  such
Subservicer  may in its  discretion  (i)  waive any late  payment  charge or any
prepayment  or other  fees  that may be  collected  in the  ordinary  course  of
servicing  such Home Equity Loans and (ii) if a Mortgagor is in default or about
to be in  default  under a Home  Equity  Loan,  arrange  with such  Mortgagor  a
schedule for the payment of interest due and unpaid;  provided such  arrangement
is consistent with the Master Servicer's or such

                                     - 44 -


<PAGE>



Subservicer's  policies  with  respect  to the  home  equity  loans  it  owns or
services.

         (b) The Master Servicer shall establish and maintain for the Trust Fund
a Home  Equity  Loan  Payment  Record in which  the  following  payments  on and
collections  in respect of each Home Equity  Loan shall be  credited  within two
Business Days of receipt  thereof by the Master  Servicer for the account of the
Certificateholders:

                             (i) all Trust Interest;

                            (ii) Trust Principal  Payments,  including,  without
         limitation,  Trust  Principal  Payments made by the Master  Servicer on
         behalf of  Mortgagors  in  connection  with the execution of a new Loan
         Agreement providing for an increased Credit Limit;

                           (iii)  the  Purchase   Price  of  any  Trust  Balance
         repurchased  by the Master  Servicer  or by an  Originator  pursuant to
         Sections 2.02 and 2.04;

                            (iv) the Substitution  Adjustment  Amount in respect
         of any Home Equity Loan replaced by an Eligible  Substitute Home Equity
         Loan pursuant to Section 2.02 or 2.04;

                             (v) all Trust Liquidation Proceeds; and

                            (vi) all Trust Insurance  Proceeds  (including,  for
         this  purpose,  any  amounts  required  to be  credited  by the  Master
         Servicer pursuant to the penultimate sentence of Section 3.04).

The foregoing  requirements  respecting  credits to the Home Equity Loan Payment
Record are exclusive,  it being understood that, without limiting the generality
of the  foregoing,  the Master  Servicer  need not enter in the Home Equity Loan
Payment Record amounts  representing  fees (including  annual fees),  prepayment
premiums or late charge penalties payable by Mortgagors,  or amounts received by
the Master  Servicer for the account of Mortgagors for  application  towards the
payment of taxes, insurance premiums, assessments and similar items. All amounts
credited by the Master  Servicer to the Home Equity Loan Payment Record shall be
held by the  Master  Servicer  in trust for the  Certificateholders  until  such
amounts are disbursed in  accordance  with Section 4.02 or debited in accordance
with this Section 3.03.

         (c) Until the  Business  Day prior to each  Distribution  Date on which
amounts are  required to be  deposited  in the Lower- Tier  Certificate  Account
pursuant to Section  4.02,  the Master  Servicer may retain and  commingle  such
amounts with its own funds

                                     - 45 -


<PAGE>



so long as (i) no Event of Default  shall have  occurred and be  continuing  and
(ii)  either  (x)  the  Master  Servicer  remains  an  affiliate  of  Beneficial
Corporation  and the short-term debt  obligations of Beneficial  Corporation are
rated at least A-1 by  Standard & Poor's,  F-1 by Fitch and P-1 by  Moody's  (or
such lower rating as each such  organization  may otherwise agree to in writing)
or (y) the Master Servicer  arranges for and maintains a Servicer LOC acceptable
in form and  substance  to each  Rating  Agency  (which  acceptability  shall be
confirmed in writing);  provided, however, that amounts permitted to be retained
and  commingled  pursuant to this  subclause  (y) shall not exceed the Available
Servicer LOC Amount.  In the event the Master Servicer is entitled to retain and
commingle  the  amounts  referred  to in the  preceding  sentence,  it  shall be
entitled to retain for its own account any investment  income  thereon,  and any
such  investment  income  shall not be  subject  to any claim of the  Trustee or
Certificateholders.  Any amounts  retained and commingled by the Master Servicer
pursuant  to this  Section  3.02(c)  shall  be held by the  Master  Servicer  in
constructive  trust for the  benefit  of the Trust  Fund.  In the event that the
Master  Servicer is not permitted to retain and commingle  such amounts with its
own funds,  it shall,  any  provisions  herein to the contrary  notwithstanding,
deposit such amounts not later than the second Business Day following receipt in
the Lower-Tier  Certificate  Account created and maintained  pursuant to Section
4.02, subject to withdrawal to the same extent as debits to the Home Equity Loan
Payment Record are permitted pursuant to Section 3.03.

         (d) The Home Equity Loan  Payment  Record shall be made  available  for
inspection  during normal  business hours of the Master Servicer upon request of
the  Trustee,  any Servicer  LOC Issuer or the firm of  independent  accountants
acting pursuant to Section 3.10.

         Section 3.03.  Permitted Debits to the Home Equity Loan Payment Record.
The Master  Servicer may, from time to time, make debits to the Home Equity Loan
Payment  Record to  reflect  (i) the  making  of  deposits  into the  Lower-Tier
Certificate  Account  pursuant to Section 4.02 and (ii) the payment to itself of
any  portion of the  Monthly  Servicing  Fee  initially  deposited  by it in the
Lower-Tier  Certificate  Account  and not  retained  by it pursuant to the first
sentence of Section 3.08. In addition,  if the Master  Servicer  deposits in the
Certificate  Accounts  or credits to the Home  Equity  Loan  Payment  Record any
amount not required to be deposited therein or credited thereto or any amount in
respect of payments  by  Mortgagors  made by checks  subsequently  returned  for
insufficient  funds or other reason for  non-payment it may at any time withdraw
such  amount  from the  Certificate  Accounts  or debit such  amount in the Home
Equity   Loan   Payment   Record,   any   provision   herein  to  the   contrary
notwithstanding.

                                     - 46 -


<PAGE>




         All  funds  deposited  or  credited  by  the  Master  Servicer  in  the
Certificate Accounts or the Home Equity Loan Payment Record, respectively, shall
be held by the Trustee or the Master Servicer,  as the case may be, in trust for
the  Certificateholders  until  disbursed  in  accordance  with  Section 5.01 or
withdrawn or debited in accordance with this Section 3.03.

         Section 3.04.  Maintenance  of Hazard  Insurance;  Property  Protection
Expenses.  The Master  Servicer  shall cause to be maintained for each Mortgaged
Property hazard insurance with an appropriate endorsement in favor of the Master
Servicer or the related  Subservicer and extended  coverage in an amount that is
at  least  equal  to the  lesser  of (i)  the  maximum  insurable  value  of the
improvements securing the related Home Equity Loan from time to time or (ii) the
sum of the Loan Balance of such Home Equity Loan and the  outstanding  principal
balance of any mortgage  loan senior to such Home Equity Loan from time to time,
but in no event  shall such  amount be less than is  necessary  to  prevent  the
Mortgagor from becoming a coinsurer  thereunder.  The Master Servicer shall also
maintain  on  property  acquired  upon  foreclosure,  or  by  deed  in  lieu  of
foreclosure,  hazard  insurance with an appropriate  endorsement in favor of the
Master Servicer or the related  Subservicer with extended  coverage in an amount
which is at least  equal to the lesser of (i) the maximum  insurable  value from
time to time of the  improvements  that are a part of such  property or (ii) the
sum of the Loan Balance of such Home Equity Loan and the  outstanding  principal
balance of any mortgage loan senior to such Home Equity Loan at the time of such
foreclosure  or deed  in  lieu of  foreclosure  plus  accrued  interest  and the
good-faith estimate of the Master Servicer of related Liquidation Expenses to be
incurred in connection therewith. Amounts collected by the Master Servicer under
any such policies  shall be credited to the Home Equity Loan Payment  Record and
deposited  in the  Lower-Tier  Certificate  Account in  accordance  with Section
3.02(b) to the extent that they constitute Trust  Liquidation  Proceeds or Trust
Insurance Proceeds.

         In cases in which any  Mortgaged  Property  is located  in a  federally
designated  flood area, the hazard insurance to be maintained for such Mortgaged
Property shall include flood insurance (to the extent available). All such flood
insurance shall be in such amounts as are required under  applicable  guidelines
of the Federal National Mortgage Association. The Master Servicer shall be under
no  obligation  to  require  that any  Mortgagor  maintain  earthquake  or other
additional  insurance  and shall be under no  obligation  itself to maintain any
such additional insurance on property acquired in respect of a Home Equity Loan,
other than pursuant to such applicable laws and regulations as shall at any time
be in force  and as shall  require  such  additional  insurance.  If the  Master
Servicer  shall  obtain  and  maintain  a blanket  policy  issued by an  insurer
acceptable to the Rating Agencies insuring against hazard losses on all of the

                                     - 47 -


<PAGE>



Home  Equity  Loans,  it shall  conclusively  be  deemed to have  satisfied  its
obligations  as set forth in the first  sentence of this Section  3.04, it being
understood and agreed that such policy may contain a deductible clause, in which
case the Master  Servicer  shall,  in the event  that there  shall not have been
maintained on the related  Mortgaged  Property a policy complying with the first
sentence of this Section 3.04, and there shall have been a loss which would have
been covered by such policy,  credit to the Home Equity Loan Payment  Record and
deposit in the Lower-Tier Certificate Account the applicable Trust Percentage of
the  amount not  otherwise  payable  under the  blanket  policy  because of such
deductible  clause.  The Trust  Percentage  of any  amounts  paid under any such
policy shall be credited to the Home Equity Loan Payment Record and deposited in
the Lower-Tier Certificate Account in accordance with Section 3.02(b).

         Section 3.05.  Assumption and Modification  Agreements.  In any case in
which a Mortgaged Property has been or is about to be conveyed by the Mortgagor,
the Master Servicer and each Subservicer  shall exercise its right to accelerate
the  maturity of the related  Home Equity Loan and require that the Loan Balance
thereof be paid in full on or prior to such  conveyance by the  Mortgagor  under
any "due-on-sale"  clause applicable thereto.  If such "due-on-sale"  clause, by
its terms, is not operable or the Master  Servicer is prevented,  as provided in
the following  paragraph of this Section 3.05,  from  enforcing any such clause,
the  Master  Servicer  is  authorized  to take or enter into an  assumption  and
modification agreement from or with the Person to whom such property has been or
is about to be conveyed,  pursuant to which such Person becomes liable under the
Loan Agreement and the Mortgagor remains liable thereon.  In connection with any
such agreement, the provisions for the adjustment of the Loan Rate thereon shall
not be modified to increase or decrease the Loan Rate. Any such agreement shall,
for all  purposes,  be considered  part of the related  Mortgage  File.  Any fee
collected by the Master  Servicer for entering into any such  agreement  will be
retained by the Master Servicer as additional servicing compensation.

         Notwithstanding  the  foregoing  paragraph  of this Section 3.05 or any
other provision of this Agreement, the Master Servicer shall not be deemed to be
in default, breach or any other violation of its obligations hereunder by reason
of any  assumption of a Home Equity Loan, or transfer of any Mortgaged  Property
without  the  assumption  thereof,  by  operation  of law or any  assumption  or
transfer which the Master Servicer  reasonably  believes it may be restricted by
law from preventing, for any reason whatsoever.

         Section 3.06.  Realization upon Defaulted Home Equity Loans. The Master
Servicer shall, or shall cause the applicable  Subservicer to, foreclose upon or
otherwise comparably convert to

                                     - 48 -


<PAGE>



ownership  Mortgaged  Properties  securing such of the Home Equity Loans as come
into and continue in default  when,  in the opinion of the Master  Servicer,  no
satisfactory  arrangements  can be made for  collection of  delinquent  payments
pursuant  to  Section  3.02.  In  connection  with  such  foreclosure  or  other
conversion,  the Master Servicer or such Subservicer shall follow such practices
(including,  in the case of any  default on a related  prior deed of trust,  the
advancing of funds to correct  such  default)  and  procedures  as it shall deem
necessary or advisable and as shall be normal and usual from time to time in its
general mortgage servicing activities.  In determining whether to foreclose upon
or  otherwise  comparably  convert the  ownership of a Mortgaged  Property,  the
Master Servicer and each  Subservicer  shall take into account (and shall not be
required to  foreclose  or otherwise  convert the  ownership  of such  Mortgaged
Property in the case of) the  existence of any hazardous  substances,  hazardous
wastes  or  solid  wastes,  as  such  terms  are  defined  in the  Comprehensive
Environmental Response Compensation and Liability Act, the Resource Conservation
and  Recovery  Act of 1976,  or  other  federal,  state  or local  environmental
legislation, on such Mortgaged Property. The foregoing is subject to the proviso
that neither the Master Servicer nor any Subservicer shall be required to expend
its own funds in connection with any foreclosure or other  conversion or towards
the correction of any default on a related prior mortgage loan or restoration of
any property  unless it shall  determine  that such  foreclosure,  correction or
restoration will increase Trust Liquidation Proceeds.

         In the event that the Trust Fund  acquires  any  Mortgaged  Property by
foreclosure or by deed in lieu of foreclosure,  such Mortgaged Property shall be
disposed  of by or on behalf  of the  Trust  Fund  within  two  years  after its
acquisition  by the Trust Fund unless the Trustee shall have received an Opinion
of Counsel to the effect  that the  holding by the Trust Fund of such  Mortgaged
Property  subsequent to two years after its  acquisition  will not result in the
imposition of taxes on "prohibited  transactions" (as defined in section 860F of
the Code) of the Trust  Fund or cause the  Trust  Fund to fail to  qualify  as a
REMIC at any time that any Certificates are outstanding.

         Section 3.07. Trustee to Cooperate. (a) Upon the payment in full of the
Loan Balance of any Home Equity Loan, the Master  Servicer will promptly  notify
the Trustee by a certification  substantially in the form of Exhibit E hereto of
a Servicing Officer. Such notification shall be made each month at the time that
the Master Servicer  delivers the Servicing  Certificate to the Trustee pursuant
to  Section  4.01.  Upon any  such  payment  in full,  the  Master  Servicer  is
authorized to execute,  pursuant to the authorization contained in Section 3.01,
an instrument of satisfaction  regarding the related Mortgage,  which instrument
of  satisfaction  shall be  recorded  by the  Master  Servicer  if  required  by
applicable law and be delivered to the Person entitled

                                     - 49 -


<PAGE>



thereto,  it being understood and agreed that no expenses incurred in connection
with such  instrument of  satisfaction  shall be reimbursed  from amounts at the
time credited to the Home Equity Loan Payment Record.

         (b) If the Trustee is holding the Mortgage Files, from time to time and
as  appropriate  for the servicing or  foreclosure  of any Home Equity Loan, the
Trustee shall, within three Business Days of receipt by the Trustee of a written
request  substantially  in the  form of  Exhibit  G  hereto,  accompanied  by an
Officer's  Certificate  certifying  as to the  accuracy  of the  facts set forth
therein,  transmitted  by the Master  Servicer to the Trustee or made in writing
signed by a  Servicing  Officer  and  delivered  to the  Trustee as  provided in
Section  11.05,  deliver the related  Mortgage  File to the Master  Servicer and
shall execute such documents,  in the forms provided by the Master Servicer,  as
shall be certified by a Servicing  Officer to be necessary to the prosecution of
any such proceedings.  The Master Servicer shall return the Mortgage File to the
Trustee when the need  therefor by the Master  Servicer no longer  exists unless
the Home  Equity  Loan shall be  liquidated,  in which case the Master  Servicer
shall deliver a certificate of a Servicing  Officer similar to that  hereinabove
specified,  and the Master  Servicer  shall be entitled  to retain the  Mortgage
File.

         Section 3.08.  Servicing  Compensation;  Payment of Certain Expenses by
Master  Servicer.  The Master Servicer shall be entitled to retain,  out of each
payment  that is  allocable  to interest  on the Trust  Balance of a Home Equity
Loan, as servicing  compensation for the related  Collection Period, the Monthly
Servicing Fee.  Additional  servicing  compensation  in the form of late payment
charges or other  receipts  not  required to be credited to the Home Equity Loan
Payment  Record (or in respect to which a debit may be made  pursuant to Section
3.03) shall be retained by the Master  Servicer.  The Master  Servicer  shall be
required to pay all expenses  incurred by it in connection  with its  activities
hereunder  (including  payment of Trustee fees,  and all other fees and expenses
not expressly stated hereunder to be for the account of the  Certificateholders)
and shall not be  entitled  to  reimbursement  therefor  except as  specifically
provided herein.

         Section 3.09.  Annual  Statement as to Compliance.  The Master Servicer
will deliver to the Trustee, on or before April 30 of each year,  beginning with
April  30,  1998,  an  Officer's  Certificate  stating  that (i) a review of the
activities of the Master Servicer during the preceding  calendar year and of its
performance under this Agreement has been made under such officer's  supervision
and (ii) to the best of such  officer's  knowledge,  based on such  review,  the
Master Servicer has fulfilled all its material  obligations under this Agreement
throughout such year, or, if there has been a default in the

                                     - 50 -


<PAGE>



fulfillment of any such  obligation,  specifying each such default known to such
officer and the nature and status thereof.

         Section 3.10. Annual Independent Public Accountants'  Servicing Report.
On or before April 30 of each year,  beginning  with April 30, 1998,  the Master
Servicer at its expense  shall cause a firm of  independent  public  accountants
(who may also render other services to the Master  Servicer) to furnish a report
to the Trustee to the effect that such firm has examined  certain  documents and
records  relating to the servicing of home equity loans under this Agreement and
pooling and servicing agreements  substantially  similar to this Agreement,  and
that such examination, which has been conducted substantially in compliance with
the Uniform  Single Audit  Program for Mortgage  Bankers (to the extent that the
procedures in such audit guide are applicable to the servicing  obligations  set
forth in such  agreements),  has  disclosed no items of  noncompliance  with the
provisions of this Agreement  which,  in the opinion of such firm, are material,
except for such items of noncompliance as shall be set forth in such report.

         Section 3.11. Access to Certain Documentation and Information Regarding
the Home Equity Loans.  (a) The Master  Servicer or the Trustee,  as applicable,
shall  provide  to   Certificateholders   that  are  federally  insured  savings
associations,  the Office of Thrift  Supervision,  the Federal Deposit Insurance
Corporation  and the  supervisory  agents and  examiners of such office and such
corporation access to the documentation regarding the Home Equity Loans required
by applicable regulations of the Office of Thrift Supervision, such access being
afforded  without  charge but only upon  reasonable  request  and during  normal
business  hours at the offices of the Master  Servicer.  Nothing in this Section
3.11 shall derogate from the obligation of the Master Servicer or the Trustee to
observe any applicable law prohibiting  disclosure of information  regarding the
Mortgagors  and the  failure of the Master  Servicer  or the  Trustee to provide
access as provided in this Section 3.11 as a result of such obligation shall not
constitute a breach of this Section 3.11.

         (b) The Master Servicer shall supply such supplemental information,  in
such form as the Trustee shall reasonably  request,  to the Paying Agent and the
Trustee,  on or before the start of the third Business Day preceding the related
Distribution Date, as is required in the Trustee's reasonable judgment to enable
the  Paying  Agent  or the  Trustee,  as the  case  may  be,  to  make  required
distributions and to furnish the required reports to Certificateholders.

         Section 3.12.  Maintenance of Certain  Servicing  Policies.  The Master
Servicer  shall  during the term of its service as master  servicer  maintain in
force (i) a policy or policies of

                                     - 51 -


<PAGE>



insurance covering errors and omissions in the performance of its obligations as
master  servicer  hereunder and (ii) a fidelity bond in respect of its officers,
employees  or agents.  Each such  policy or policies  and bond shall,  together,
comply with the requirements  from time to time of the Federal National Mortgage
Association  for Persons  performing  servicing for mortgage loans  purchased by
such Association.

                                   ARTICLE IV

               SERVICING CERTIFICATE; CERTIFICATE ACCOUNTS DEPOSIT

         Section 4.01. Servicing Certificate.  Not later than each Determination
Date,  the Master  Servicer  shall  deliver to the Trustee,  Moody's,  Fitch and
Standard & Poor's a Servicing  Certificate  identifying  the related  Collection
Period,  the  Certificates,  the  date of  this  Agreement,  and  the  following
information (in the case of information furnished pursuant to clauses (viii) and
(ix) below,  the amounts will be expressed  as a dollar  amount per  Certificate
with a $1,000 denomination) with respect to the following Distribution Date:

                             (i) the aggregate of all Trust Interest received
         during the related Collection Period;

                            (ii) the aggregate of all Trust  Principal  Payments
         received during the related Collection Period;

                           (iii) the aggregate of all Trust  Insurance  Proceeds
         received during the related Collection Period;

                            (iv) the aggregate of the Trust Liquidation Proceeds
         received  during  the  calendar  month  preceding  the  month  of  such
         Determination Date;

                             (v) the number and  aggregate  Trust Balance of any
         Home Equity Loans that were  identified as Defective  Home Equity Loans
         pursuant to Section 2.02 or Section 2.04 during the related  Collection
         Period and (A) the aggregate  Purchase Price of any such Defective Home
         Equity Loans that will be repurchased by the related  Originator or the
         Master  Servicer prior to the following  Distribution  Date and (B) the
         Substitution  Adjustment  Amount,  if  any,  to  be  deposited  in  the
         Collection  Account prior to such  Distribution  Date in respect of any
         such  Defective  Home Equity Loans for which the related  Originator or
         the Master Servicer  substituted  one or more Eligible  Substitute Home
         Equity Loans;

                            (vi) the Monthly Servicing Fee;


                                     - 52 -


<PAGE>



                           (vii) the sum of the  amounts  specified  pursuant to
         clauses  (i)-(v),  inclusive,  above,  net of the amount  specified  in
         clause (vi) above;

                          (viii)  the  amount  that will be  distributed  to the
         Class  A   Certificateholders,   with  interest  and  principal  stated
         separately;  the Class A Interest  Requirement;  the Class A  Principal
         Distribution  Amount;  and the Class A Pass-Through  Rate applicable to
         such Distribution Date;

                            (ix) the  amount  that  will be  distributed  to the
         Class M and Class B  Certificateholders,  with  interest and  principal
         stated separately;  the Class M Principal Distribution Amount and Class
         B Principal Distribution Amount;  together with the Class M and Class B
         Pass-Through Rates applicable to such Distribution Date; and the amount
         that will be distributed to the Class C Certificateholders;

                             (x)  the Amount Available for Class A Interest, the
         Class M Current Interest and the Class B Current Interest;

                            (xi)  the  Class  A  Certificate  Balance,  Class  M
         Certificate  Balance  and Class B  Certificate  Balance  as well as the
         Class  A  Principal  Factor,  Class  M  Principal  Factor  and  Class B
         Principal  Factor,  each after giving effect to the  distribution to be
         made on such Distribution Date;

                           (xii) the amount of any  Liquidated  Home Equity Loan
         Losses,  the  applicable  Applied  Liquidated  Loan  Loss  Amount,  the
         applicable  Liquidated  Loan Loss  Amortization  Amounts and the Unpaid
         Liquidated  Loan Loss  Amounts for such  Distribution  Date,  including
         cumulative losses up to such date;

                          (xiii)  in the  event  the  Servicer  LOC is  then  in
         effect,  the  Available  Servicer LOC Amount after giving effect to all
         drawings  made under the Servicer LOC to and including the date of such
         statement;

                           (xiv) the book value (within the meaning of 12 C.F.R.
         ss. 571.13 or comparable provision) of the Trust Percentage of any real
         estate  acquired  through  foreclosure  or  grant  of a deed in lieu of
         foreclosure  and  held  by the  Trust  Fund as of the  last  day of the
         related Collection Period;

                            (xv) the number and aggregate Trust Balances of Home
         Equity  Loans  delinquent  (a) 30 to 59 days  and (b) 60 days or  more,
         respectively, as of the end of the related Collection Period;

                           (xvi) the Pool Balance for the following Distribution
         Date;

                                     - 53 -


<PAGE>




                          (xvii) the Principal  Distribution Amount,  separately
         stating  the Extra  Principal  Distribution  Amount,  if any,  for such
         Distribution Date;

                         (xviii) the Overcollateralization Amount for such
         Distribution Date;

                           (xix) the Overcollateralization Release Amount for
         such Distribution Date;

                            (xx) the Monthly Excess Cashflow Amount for such
         Distribution Date; and

                           (xxi) the Senior Enhancement Percentage for such
         Distribution Date.

         Section 4.02.  Certificate Accounts. (a) On or before the Closing Date,
the Master Servicer shall establish,  and thereafter maintain in the name of the
Trustee,  two separate  accounts (the "Lower-Tier  Certificate  Account" and the
"Upper-Tier  Certificate  Account"),  each of which shall be an Eligible Account
held by the  Trustee  in trust for the  benefit of the  Certificateholders.  The
Master Servicer shall deposit to the Lower-Tier  Certificate Account in same day
funds all funds received by it constituting the Interest  Remittance  Amount and
Principal  Collected  Amount not later than 11:00 A.M.  New York time on (i) the
Business  Day  preceding  each  Distribution  Date,  if the Master  Servicer  is
entitled to retain and  commingle  funds  pursuant  to Section  3.02 or (ii) the
second  Business Day  following  receipt of such amounts in the event the Master
Servicer is not so entitled to retain and commingle funds. The amounts deposited
in the Lower-Tier  Certificate Account shall be net of the Monthly Servicing Fee
and are subject to  withdrawal to the same extent that debits to the Home Equity
Loan Payment Record are permitted.  On each Distribution Date, the Trustee shall
transfer all funds on deposit in the Lower-Tier  Certificate Account,  including
the Lower-Tier  Distribution Amount, from the Lower-Tier  Certificate Account to
the Upper-Tier Certificate Account.

         (b) The  Master  Servicer  may cause the  institution  maintaining  the
Lower-Tier Certificate Account to invest in the name of the Trustee any funds in
the Lower-Tier  Certificate Account,  which funds shall be invested in Permitted
Investments  designated in writing by the Master  Servicer in its discretion and
which shall mature not later than the Business Day  preceding  the  Distribution
Date  following the date of such  investment  (except that any  investment in an
obligation of an institution  with which the Lower-Tier  Certificate  Account is
maintained,  and which  institution is rated A-1+ by Standard & Poor's and Fitch
and P-1 by Moody's,  may mature not later than 11:00 A.M.  New York time on such
Distribution Date) and shall not be sold or disposed of prior to their maturity.
All income and gain realized from

                                     - 54 -


<PAGE>



any such investment shall be for the benefit of the Master Servicer and shall be
subject to its  withdrawal or order from time to time.  The amount of any losses
incurred in respect of any such investments shall be deposited in the Lower-Tier
Certificate  Account by the Master Servicer out of its own funds  immediately as
realized.

         Section 4.03. Servicer LOC. If at any time the Master Servicer shall be
commingling  with its own funds  proceeds of the Home Equity  Loans  pursuant to
Section 3.02(c) and shall fail to deposit in the Lower-Tier  Certificate Account
on or  before  11:00  A.M.  New  York  time  on  the  Business  Day  prior  to a
Distribution  Date funds in the amount  specified in clause (vii) of the related
Servicing Certificate,  the Trustee shall, pursuant to the terms of the Servicer
LOC,  make a proper  demand under such Servicer LOC that the Servicer LOC Issuer
pay as promptly  as  practicable  to the  Trustee for deposit in the  Lower-Tier
Certificate  Account an amount  equal to the lesser of (i) the  aggregate of all
Trust Interest,  Trust Principal  Payments,  Trust Insurance  Proceeds and Trust
Liquidation  Proceeds received by the Master Servicer or any Subservicer  during
the related Collection Period and (ii) any amount by which the aggregate of such
Trust Interest,  Trust Principal  Payments,  Trust Insurance  Proceeds and Trust
Liquidation  Proceeds  exceeds the total amount deposited by the Master Servicer
to the Lower-Tier  Certificate  Account with respect to such  Distribution  Date
(but in no event shall such amount exceed the Available Servicer LOC Amount).

         Section  4.04.   Distributions  on  the   Uncertificated   Lower-  Tier
Interests.  On each  Distribution  Date, each of the  uncertificated  Lower-Tier
Interests  shall receive  distributions  in respect of interest and principal as
follows:

                      (i) First, from the Interest  Remittance Amount on deposit
         in the Lower-Tier Certificate Account:

                               (A) to the Lower-Tier Interest A, the Amount
                      Available for Lower-Tier A Interest;

                               (B) to the  Lower-Tier  Interest  M,  the  Amount
                      Available for Lower-Tier M Interest; and

                               (C) to the  Lower-Tier  Interest  B,  the  Amount
                      Available for Lower-Tier B Interest;

                      (ii) Second, after the distributions described above, from
         amounts  relating only to the Principal  Collected Amount on deposit in
         the Lower-Tier Certificate Account;

                               (A) on each  Distribution  Date (a)  prior to the
                      Stepdown Date or (b) with respect to which a Trigger Event
                      is in effect, to the Lower-Tier

                                     - 55 -


<PAGE>



                      Interest  A, 100% of the  Principal  Collected  Amount for
                      such Distribution Date, until the Lower-Tier Interest A is
                      reduced to zero; and

                               (B) on each Distribution Date (a) on or after the
                      Stepdown Date and (b) so long as a Trigger Event is not in
                      effect,  to the  Lower-Tier  Interests,  in the  order  of
                      priority  set forth in Section  5.01(a)(ii)(B)  and to the
                      extent  of  the  Principal   Collected   Amount  for  such
                      Distribution Date.

The aggregate amount so distributed to the uncertificated  Lower- Tier Interests
in respect of principal  and interest for any  Distribution  Date is referred to
herein as the "Lower-Tier Distribution Amount."

                                    ARTICLE V

                  PAYMENTS AND STATEMENTS TO CERTIFICATEHOLDERS

         Section  5.01.   Distributions  from  Upper-Tier  Certificate  Account;
Writedowns.  (a) On each  Distribution  Date, the Trustee shall,  based upon the
information set forth in the Servicing Certificate relating to such Distribution
Date,  distribute  from the  Upper-Tier  Certificate  Account (and only from the
Upper-Tier Certificate Account) to the Holders of the Class A, Class M, Class B,
Class C or Class R Certificates of record on the related Record Date (other than
as provided in Section 10.01 respecting the final distribution in respect of the
Certificates)  by check or money order mailed to such  Certificateholder  at the
address  appearing in the  Certificate  Register,  or, upon written request by a
Certificateholder, by wire transfer (in the event such Certificateholder owns of
record  one or more Class A, Class M or Class B  Certificates  having  principal
denominations  aggregating  at  least  $5,000,000,  or owns a Class C or Class R
Certificate  and  has  given  the  Trustee,  at  least  10  days  prior  to such
distribution,  written  instruction for making such wire  transfer),  or by such
other means of payment as a  Certificateholder  and the Trustee shall agree, the
respective amounts set forth below and in the following order of priority:

                      (i) First, from the Interest  Remittance Amount on deposit
         in the Upper-Tier Certificate Account:

                               (A)  to the Class A Certificateholders, the
                      Amount Available for Class A Interest;

                               (B) to the Class M Certificateholders,  the Class
                      M Current Interest; and

                               (C) to the Class B Certificateholders,  the Class
                      B Current Interest.

                                     - 56 -


<PAGE>




                      (ii) Second, after the distributions  described in Section
         5.01(a)(i) above, from the Principal  Distribution Amount on deposit in
         the Upper-Tier Certificate Account:

                               (A) on each  Distribution  Date (a)  prior to the
                      Stepdown Date or (b) with respect to which a Trigger Event
                      is in effect,  to the Holders of the Class A Certificates,
                      100%  of  the  Principal   Distribution  Amount  for  such
                      Distribution  Date, until the Class A Certificate  Balance
                      is reduced to zero; and

                               (B) on each Distribution Date (a) on or after the
                      Stepdown Date and (b) as long as a Trigger Event is not in
                      effect, to the Holders of the Class A, Class M and Class B
                      Certificates,   in  the  order  of  priority  and  in  the
                      respective  amounts  set forth  below and to the extent of
                      the Principal  Distribution  Amount for such  Distribution
                      Date, as follows:

                               First,   the   lesser   of  (x)   the   Principal
                               Distribution Amount and (y) the Class A Principal
                               Distribution  Amount, to the holders of the Class
                               A  Certificates,  until the  Class A  Certificate
                               Balance has been reduced to zero;

                               Second,  the  lesser of (x) the excess of (i) the
                               Principal   Distribution  Amount  over  (ii)  the
                               amount  distributed to the holders of the Class A
                               Certificates  in clause First  immediately  above
                               and  (y)  the  Class  M  Principal   Distribution
                               Amount,   to  the   holders   of  the   Class   M
                               Certificates,   until  the  Class  M  Certificate
                               Balance has been reduced to zero;

                               Third,  the  lesser of (x) the  excess of (i) the
                               Principal  Distribution  Amount over (ii) the sum
                               of the amount  distributed  to the holders of the
                               Class A  Certificates  pursuant  to clause  First
                               immediately  above and the amount  distributed to
                               the holders of the Class M Certificates  pursuant
                               to clause  Second  immediately  above and (y) the
                               Class B  Principal  Distribution  Amount,  to the
                               holders  of the Class B  Certificates,  until the
                               Class B  Certificate  Balance has been reduced to
                               zero; and

                               Fourth, any amount of the Principal  Distribution
                               Amount   remaining   after   making  all  of  the
                               distributions in clauses First,  Second and Third
                               immediately above shall be

                                     - 57 -


<PAGE>



                               distributed as set forth in subparagraph (iii)
                               of this Section 5.01(a).

                               Notwithstanding the foregoing, (i) in the event
         that the Class A  Certificate  Balance  has been  reduced to zero,  all
         amounts of principal  that would have been  distributed to such Class A
         Certificates  shall be distributed to the Class M Certificates  and the
         Class B Certificates in the order set forth in clauses Second and Third
         immediately  above,  and (ii) in the event that the Class M Certificate
         Balance has been reduced to zero,  all amounts of principal  that would
         have been distributed to such Class M Certificates shall be distributed
         to the Class B Certificates.

                      (iii) with respect to any Monthly Excess Cashflow
Amount:

                      (A) to fund the Class A Unpaid Interest Shortfall,
                      if any;

                      (B) to fund the Extra  Principal  Distribution  Amount for
                      such Distribution Date;

                      (C) to fund the Class M Unpaid Interest Shortfall, if any;

                      (D) to fund the Class M Liquidated Loan Loss
                      Amortization Amount for such Distribution Date;

                      (E) to fund the Class B Unpaid Interest Shortfall, if any;

                      (F)      to fund the Class B Liquidated Loan Loss
                      Amortization Amount for such Distribution Date;

                      (G)   to   fund   a   distribution    to   the   Class   C
                      Certificateholders  equal to the lesser of (x) the balance
                      of any Monthly Excess  Cashflow Amount and (y) the Class C
                      Distribution Amount; and

                      (H) to the Class R Certificateholders, the remainder.

Amounts  distributed to Holders of a Class of Certificates  shall be distributed
to  them  in  accordance  with  the  Percentage  Interests  evidenced  by  their
respective Certificates.

         (b) On each Distribution Date, the Trustee shall allocate the excess of
the  Certificate  Principal  Balance over the Pool Balance as of the last day of
the immediately preceding

                                     - 58 -


<PAGE>



Collection Period to reduce the Class B and Class M Certificate  Balances in the
following order of priority:

                      (i)      to the Class B Certificates until the Class B
Certificate Balance is reduced to zero; and

                      (ii)     to the Class M Certificates until the Class M
Certificate Balance is reduced to zero.

         (c) Each distribution with respect to a Book-Entry Certificate shall be
paid to the  Depository,  which shall credit the amount of such  distribution to
the  accounts  of its  Depository  Participants  in  accordance  with its normal
procedures. Each Depository Participant shall be responsible for disbursing such
distribution to the  Certificate  Owners that it represents and to each indirect
participating  brokerage  firm (a  "brokerage  firm" or "indirect  participating
firm") for which it acts as agent.  Each brokerage firm shall be responsible for
disbursing funds to the Certificate Owners that it represents.  All such credits
and disbursements with respect to a Book-Entry Certificate are to be made by the
Depository and the Depository  Participants in accordance with the provisions of
the  Certificates.  None of the  Trustee,  any  Paying  Agent,  the  Certificate
Registrar,  the Depositor, the Originators or the Master Servicer shall have any
responsibility therefor except as otherwise provided by applicable law.

         Section  5.02.  Statements  to  Certificateholders.  On or prior to the
Business Day preceding each Distribution Date, the Master Servicer shall forward
to the Trustee for mailing by regular  mail to each Holder of a  Certificate,  a
statement setting forth:

                             (i)   the amount of such distribution to holders of
         the Class A Certificates allocable to principal;

                            (ii) the amount of such  distribution  to holders of
         the Class A  Certificates  allocable  to  interest,  any Class A Unpaid
         Interest  Shortfall due in respect of prior Distribution Dates included
         in such  distribution  and any such remaining  Class A Unpaid  Interest
         Shortfall after giving effect to such distribution;

                           (iii) the Class A Certificate Balance and the Class A
         Principal  Factor,  each after  giving  effect to the  distribution  of
         principal on such Distribution Date;

                            (iv) the amount of such  distribution  to holders of
         the Class M and Class B Certificates allocable to principal;

                             (v) the amount of such  distribution  to holders of
         the Class M and Class B Certificates allocable to interest,

                                     - 59 -


<PAGE>



         any Class M or Class B Unpaid  Interest  Shortfall  due in  respect  of
         prior  Distribution  Dates included in such  distribution  and any such
         remaining  Class M or Class B Unpaid  Interest  Shortfall  after giving
         effect to such distribution;

                            (vi) the  Class M and Class B  Certificate  Balances
         and the  Principal  Factors  in  respect  of the  Class  M and  Class B
         Certificates, each after giving effect to the distribution of principal
         on such Distribution Date;

                           (vii) the Pool Balance for the following Distribution
         Date and the number of outstanding  Home Equity Loans for the following
         Distribution Date;

                          (viii) the number and aggregate Trust Balances of Home
         Equity Loans as to which no payment of interest or  principal  has been
         received for a period of at least (a) one billing  cycle and (b) two or
         more billing cycles, respectively,  as of the end of the month in which
         the related Collection Period ends;

                            (ix) the amount of any  Liquidated  Home Equity Loan
         Losses,  the  applicable  Applied  Liquidated  Loan  Loss  Amount,  the
         applicable  Liquidated  Loan Loss  Amortization  Amounts and the Unpaid
         Liquidated  Loan Loss  Amounts for such  Distribution  Date,  including
         cumulative losses up to such date;

                             (x) the book value (within the meaning of 12 C.F.R.
         ss.571.13 or any comparable  provision) of the Trust  Percentage of any
         real estate, and the number of Mortgaged  Properties,  acquired through
         foreclosure or grant of a deed in lieu of  foreclosure  and held by the
         Trust Fund as of the last day of the related Collection Period;

                            (xi) whether a Trigger Event has occurred;

                           (xii) the Senior Enhancement Percentage;

                          (xiii) the Overcollateralization Amount and the
         Targeted Overcollateralization Amount;

                           (xiv)  the  Class A  Pass-Through  Rate,  the Class M
         Pass-Through  Rate and the Class B Pass-Through  Rate applicable to the
         distribution on the following Distribution Date;

                            (xv) the Principal  Distribution Amount,  separately
         stating  the Extra  Principal  Distribution  Amount,  if any,  for such
         Distribution Date;


                                     - 60 -


<PAGE>



                           (xvi) the Overcollateralization Amount for such
         Distribution Date;

                          (xvii) the Overcollateralization Release Amount for
         such Distribution Date;

                         (xviii) the Monthly Excess Cashflow Amount for such
         Distribution Date; and

                           (xix) the Senior Enhancement Percentage for such
         Distribution Date.

         In the case of information  furnished  pursuant to clauses (i) and (ii)
above,  the amounts  shall be expressed as a dollar  amount per Class A, Class M
and Class B Certificate,  as applicable,  with a $1,000  denomination.  Any such
statement furnished to a Class A, Class M or Class B  Certificateholder  may, if
requested  by  the  Master  Servicer,   omit   information   pertinent  only  to
Certificates of a Class not held by such Certificateholder.

         On each  Distribution  Date,  the Master  Servicer shall forward to the
Trustee  for  mailing  to each  Holder  of a Class R  Certificate  a copy of the
statement  or  statements  forwarded  to the  Holders  of  Certificates  on such
Distribution  Date.  The Master  Servicer  shall also forward to the Trustee for
mailing to each such Holder, and each of the Rating Agencies a statement setting
forth the amount of the  distribution  to each such Holder,  together  with such
other information as the Master Servicer deems necessary or appropriate.

         Within 90 days after the end of each calendar year, the Master Servicer
shall  forward to the Trustee for mailing by regular  mail to each Person who at
any  time  during  such  calendar  year  was  a  Certificateholder  a  statement
containing the applicable distribution  information provided pursuant to clauses
(i) and  (ii)  of this  Section  5.02,  aggregated  for  such  calendar  year or
applicable  portion  thereof  during which such Person was a  Certificateholder.
Such obligation of the Master Servicer shall be deemed to have been satisfied to
the extent that  substantially  comparable  information shall be provided by the
Master Servicer pursuant to any requirements of the Code. The Trustee shall have
no obligation  to mail to  Certificateholders  any  statement  required to be so
mailed  hereunder if the Master  Servicer has not provided such statement to the
Trustee.



                                     - 61 -


<PAGE>



                                   ARTICLE VI

                                THE CERTIFICATES

         Section  6.01.  The  Certificates.  The Class A  Certificates  shall be
substantially in the form set forth in Exhibit A, the Class M Certificates shall
be  substantially  in the form set forth in Exhibit B, the Class B  Certificates
shall be  substantially  in the  form  set  forth  in  Exhibit  C,  the  Class C
Certificates  shall be  substantially in the form set forth in Exhibit D and the
Class R Certificates  shall be substantially in the form set forth in Exhibit E.
Such  Certificates  shall,  on original  issue, be executed and delivered by the
Trustee to or upon the written order of the Depositor concurrently with the sale
and assignment to the Trustee of the Trust Fund. So long as the Class A, Class M
and Class B Certificates are Book-Entry Certificates, such Certificates shall be
evidenced  by (i) in the case of the Class A  Certificates,  three  Certificates
each  representing  $200,000,000  principal  amount  and  a  single  Certificate
representing  $136,017,000  principal  amount,  (ii) in the case of the  Class M
Certificates,  a single Certificate  representing  $36,000,000 principal amount,
and  (iii)  in the  case  of the  Class B  Certificates,  a  single  Certificate
representing  $28,000,000  principal  amount,  the beneficial  ownership of such
Certificates  to be held  through  Book-Entry  Certificates  in  minimum  dollar
denominations of $1,000 and integral dollar multiples in excess thereof.

         The  Class C and  Class R  Certificates  have  not been and will not be
registered  under the Securities Act or the securities  laws of any state of the
United  States.  Neither the Depositor,  the Master  Servicer nor the Trustee is
under any  obligation to register or qualify the Class C or Class R Certificates
under the Securities Act or any other  securities laws or to take any action not
otherwise required under this Agreement to permit the transfer of any Class C or
Class R Certificate without registration or qualification.

         The Certificates shall be executed by manual or facsimile  signature on
behalf of the Trust Fund by a Responsible  Officer of the Trustee.  Certificates
bearing the manual or facsimile  signatures of individuals who were, at the time
when such signatures  were affixed,  authorized to sign on behalf of the Trustee
shall bind the Trust Fund,  notwithstanding that such individuals or any of them
have ceased to be so authorized prior to the countersigning and delivery of such
Certificates  or did not hold such offices at the date of such  Certificate.  No
Certificate  shall be entitled to any benefit under this Agreement,  or be valid
for any purpose,  unless such Certificate shall have been manually countersigned
by  the  Trustee  substantially  in the  form  provided  for  herein,  and  such
countersignature upon any Certificate shall be conclusive

                                     - 62 -


<PAGE>



evidence,   and  the  only  evidence,   that  such  Certificate  has  been  duly
authenticated and delivered hereunder.  All Certificates shall be dated the date
of their countersignature.

         Section 6.02.  Registration  of Transfer and Exchange of  Certificates.
(a) The  Trustee  shall  cause  to be  kept  at the  Corporate  Trust  Office  a
Certificate Register in which, subject to such reasonable  regulations as it may
prescribe, the Trustee shall provide for the registration of Certificates and of
transfers and exchanges of  Certificates as herein  provided.  The Trustee shall
initially  serve  as  Certificate  Registrar  for  the  purpose  of  registering
Certificates and transfers and exchanges of Certificates as herein provided.

         Upon surrender for  registration  of transfer of any Certificate at any
office or agency of the  Trustee  maintained  for such  purpose  pursuant to the
foregoing paragraph and upon satisfaction of the conditions set forth below, the
Trustee shall execute,  countersign  and deliver,  in the name of the designated
transferee  or  transferees,  one or  more  new  Certificates  representing  the
applicable aggregate Percentage Interest.

         At the option of the Certificateholders,  Certificates may be exchanged
for other Certificates of a like Class in authorized  denominations (in the case
of the  Class A,  Class M and  Class B  Certificates)  or  aggregate  Percentage
Interests (in the case of the Class C or Class R  Certificates),  upon surrender
of the  Certificates to be exchanged at any such office or agency.  Whenever any
Certificates  are so  surrendered  for  exchange,  the  Trustee  shall  execute,
countersign and deliver the Certificates that the  Certificateholder  making the
exchange is entitled to receive.  Every Certificate presented or surrendered for
registration of transfer or exchange shall (if so required by the Trustee or the
Certificate  Registrar)  be duly  endorsed  by, or be  accompanied  by a written
instrument of transfer satisfactory to the Trustee and the Certificate Registrar
duly executed by, the Holder thereof or such Holder's  attorney duly  authorized
in writing.

         (b)  Except  as  provided  in  paragraph  (c)  below,   the  Book-Entry
Certificates  shall at all times remain registered in the name of the Depository
or its nominee and at all times: (i) registration of the Book-Entry Certificates
may not be  transferred by the Trustee  except to another  Depository;  (ii) the
Depository  shall maintain  book-entry  records with respect to the  Certificate
Owners  and  with  respect  to  ownership  and  transfers  of  such   Book-Entry
Certificates;  (iii)  registration  of ownership and transfers of the Book-Entry
Certificates  on the books of the  Depository  shall be governed  by  applicable
rules  established by the Depository;  (iv) the Depository may collect its usual
and customary fees, charges and expenses from its Depository  Participants;  (v)
the Trustee shall deal with the Depository,

                                     - 63 -


<PAGE>



Depository  Participants and indirect  participating firms as representatives of
the Certificate Owners of the Book-Entry Certificates for purposes of exercising
the rights of Holders under this Agreement,  and requests and directions for and
votes of such representatives shall not be deemed to be inconsistent if they are
made with respect to different Certificate Owners; and (vi) the Trustee may rely
and shall be fully  protected  in  relying  upon  information  furnished  by the
Depository  with respect to its  Depository  Participants  and  furnished by the
Depository Participants with respect to indirect participating firms and Persons
shown on the books of such  indirect  participating  firms as direct or indirect
Certificate Owners.

         All transfers by Certificate Owners of Book-Entry Certificates shall be
made in accordance with the procedures established by the Depository Participant
or  brokerage  firm  representing  such  Certificate   Owners.  Each  Depository
Participant shall only transfer Book-Entry Certificates of Certificate Owners it
represents or of brokerage  firms for which it acts as agent in accordance  with
the Depository's normal procedures.

         (c) If (i)(A) the Master  Servicer  advises the Trustee in writing that
the  Depository  is  no  longer  willing  or  able  to  properly  discharge  its
responsibilities as Depository and (B) the Master Servicer is unable to locate a
qualified successor,  (ii) the Master Servicer at its option advises the Trustee
in  writing  that it elects to  terminate  the  book-entry  system  through  the
Depository  or (iii) after the  occurrence  of an Event of Default,  Certificate
Owners representing  Percentage  Interests  aggregating not less than 51% of the
aggregate   Percentage   Interests  of  each  outstanding  Class  of  Book-Entry
Certificates  advise the  Trustee  and the  Depository  through  the  Depository
Participants in writing that the continuation of a book-entry system through the
Depository is no longer  desired by the  Certificate  Owners,  the Trustee shall
notify all Certificate Owners, through the Depository,  of the occurrence of any
such event and of the availability of definitive,  fully registered Certificates
(the "Definitive  Certificates") to Certificate Owners requesting the same. Upon
surrender  to the  Trustee of the  Book-Entry  Certificates  by the  Depository,
accompanied by registration  instructions  from the Depository for registration,
the Trustee shall issue the Definitive Certificates. Neither the Master Servicer
nor the Trustee  shall be liable for any delay in delivery of such  instructions
and may  conclusively  rely on,  and shall be  protected  in  relying  on,  such
instructions.  Upon the issuance of  Definitive  Certificates  the Trustee shall
recognize  the  Holders of the  Definitive  Certificates  as  Certificateholders
hereunder.

         No service  charge  shall be made for any  registration  of transfer or
exchange of Certificates, but the Trustee may require

                                     - 64 -


<PAGE>



payment of a sum by the Holders of such Certificates sufficient to cover any tax
or  governmental  charge that may be imposed in connection  with any transfer or
exchange of Certificates.

         All Certificates  surrendered for registration of transfer and exchange
shall be destroyed by the Trustee.

         (d) So long as  Definitive  Certificates  have  not  been  issued,  the
Depositor,  the Master Servicer and the Trustee shall not have any liability for
any aspect of the  records  relating  to or  payment  on account of  Certificate
Owners, for monitoring or restricting any transfer of beneficial  ownership in a
Book-Entry Certificate or for maintaining,  supervising or reviewing any records
relating to Certificate Owners.

         Section 6.03. Mutilated, Destroyed, Lost or Stolen Certificates. If (i)
any mutilated  Certificate is surrendered to the Trustee or the Trustee receives
evidence  to  its  satisfaction  of  the  destruction,  loss  or  theft  of  any
Certificate, and (ii) there is delivered to the Trustee, the Master Servicer and
the Certificate  Registrar such security or indemnity as may be required by them
to save each of them  harmless,  then,  in the absence of written  notice to the
Trustee or the Certificate  Registrar that such Certificate has been acquired by
a bona fide purchaser,  the Trustee shall execute,  countersign and deliver,  in
exchange  for or in lieu  of any  such  mutilated,  destroyed,  lost  or  stolen
Certificate,  a new Certificate of like tenor and Percentage Interest.  Upon the
issuance of any new Certificate under this Section 6.03, the Trustee may require
the payment of a sum  sufficient to cover any tax or other  governmental  charge
that may be imposed in relation  thereto and any other  expenses  (including the
fees and  expenses  of the  Trustee  and the  Certificate  Registrar)  connected
therewith.  Any duplicate Certificate issued pursuant to this Section 6.03 shall
constitute complete and indefeasible evidence of ownership in the Trust Fund, as
if originally issued,  whether or not the lost, stolen or destroyed  Certificate
shall be found at any time.

         Section 6.04.  Persons Deemed Owners.  Prior to due  presentation  of a
Certificate for registration of transfer,  the Master Servicer, the Trustee, the
Certificate  Registrar and any agent of the Master Servicer,  the Trustee or the
Certificate  Registrar  may treat the  Person in whose name any  Certificate  is
registered in the Certificate  Register as the owner of such Certificate for the
purpose of  receiving  distributions  pursuant to Section 5.01 and for all other
purposes  whatsoever,  and  none  of  the  Master  Servicer,  the  Trustee,  the
Certificate Registrar or any agent of any of them shall be affected by notice to
the contrary.

         Section 6.05.  Appointment of Paying Agent. The Trustee is empowered to
appoint a Paying Agent meeting the eligibility

                                     - 65 -


<PAGE>



requirements   set  forth  under   Section   9.06  for  the  purpose  of  making
distributions  to  Certificateholders  pursuant to Section  5.01;  provided that
prior to any such  appointment  (other  than the  appointment  of the Trustee as
Paying  Agent) the Trustee  shall first have  received a letter from each Rating
Agency to the effect that the  appointment  of such Paying Agent will not result
in the  reduction,  suspension  or  withdrawal  of the rating given the Class A,
Class M or Class B  Certificates  by such  Rating  Agency.  The  Trustee  hereby
initially  appoints  itself as Paying Agent.  In the event of any appointment by
the Trustee of a Person  other than itself as Paying  Agent,  on or prior to the
Business Day prior to the related  Distribution  Date, the Master  Servicer,  as
agent of the  Trustee,  shall,  to the extent  received by the Master  Servicer,
deposit or cause to be deposited with such Paying Agent a sum sufficient to make
the payments to Certificateholders in the amounts and in the manner provided for
in  Section   5.01,   such  sum  to  be  held  in  trust  for  the   benefit  of
Certificateholders.

         The Trustee  shall cause any Paying  Agent other than itself to execute
and deliver to the Trustee an  instrument in which such Paying Agent shall agree
with the Trustee  that such  Paying  Agent will hold all sums held by it for the
payment to Certificateholders in trust for the benefit of the Certificateholders
entitled  thereto  until such sums shall be paid to such  Certificateholders  or
withheld pursuant to the Code.

         Section  6.06.  Restrictions  on  Transfer  of  Class  M  and  Class  B
Certificates.  (a) The Class M and Class B  Certificates  shall be  assigned  or
transferred  only in accordance  with this Section 6.06.  Each Person who has or
who acquires any Ownership  Interest in a Class M or Class B Certificate that is
a Book-Entry  Certificate  shall be deemed by the  acceptance or  acquisition of
such Ownership  Interest to have made the representation set forth in clause (b)
below and otherwise to have agreed to be bound by the provisions of this Section
6.06.  Any  assignment and Transfer shall be made directly to the Person that is
the  principal  in the  transaction  and not to a  nominee  or  agent  for  such
principal.

         (b)  Each of  Class M and  Class B  Certificates  that is a  Definitive
Certificate shall state that the Transferee  thereof is deemed by the acceptance
or acquisition of such  Certificate to represent that such  Transferee is not an
employee  benefit plan or a  collective  investment  fund or  insurance  company
account which is treated as holding "plan assets"  subject to ERISA,  or section
4975 of the Code,  or a trustee or any other Person acting on behalf of any such
plan.

         (c) Any attempted or purported  Transfer of any Ownership Interest in a
Class M or Class B  Certificate  in violation of the  provisions of this Section
6.06 shall be absolutely null and void and shall vest no rights in the purported
Transferee. If any

                                     - 66 -


<PAGE>



purported  Transferee  shall become a Holder of a Class M or Class B Certificate
in violation of the provisions of this Section 6.06,  then, upon discovery by or
due  notification  of the  Trustee  that the  registration  of  Transfer of such
Ownership Interest in a Class M or Class B Certificate was not in fact permitted
by this Section 6.06, the last preceding Holder that is a permitted Holder shall
be  restored  to all  rights  as  Holder  thereof  retroactive  to the  date  of
registration  of Transfer of such  Ownership  Interest in the related Class M or
Class B Certificate.  Absent negligence or willful misconduct, the Trustee shall
be under no  liability  to any Person for any  registration  of  Transfer  of an
Ownership  Interest  in a Class M or  Class B  Certificate  that is in fact  not
permitted  by this Section  6.06 or for making any  distributions  in respect of
such Class M or Class B  Certificate  to the Holder  thereof or taking any other
action with respect to such Holder under the provisions of this Agreement.

         Section  6.07.  Restrictions  on  Transfer  of  Class  C  and  Class  R
Certificates.  (a) The Class C and Class R  Certificates  shall be  assigned  or
transferred  only in accordance  with this Section  6.07.  Such  assignment  and
Transfer  shall be made  directly  to the Person  that is the  principal  in the
transaction and not to a nominee or agent for such principal.

         (b) No  registration  of Transfer  of a Class C or Class R  Certificate
shall be made unless such Transfer is exempt from the registration  requirements
of the  Securities Act and any applicable  state  securities  laws or is made in
accordance  with the Securities Act and such laws. In the event  registration of
such a Transfer  is to be made  within  three years from the date of the initial
issuance of Certificates pursuant hereto, (i) the Trustee or the Master Servicer
may require a written Opinion of Counsel acceptable to and in form and substance
satisfactory  to the Master  Servicer that such Transfer may be made pursuant to
an exemption,  describing the applicable exemption and the basis therefor,  from
the  Securities Act and state  securities  laws or is being made pursuant to the
Securities  Act and such laws,  which Opinion of Counsel shall not be an expense
of the Trustee or the Master  Servicer,  and (ii) the Trustee  shall require the
Transferee  to  execute  an  investment  letter  acceptable  to and in form  and
substance  satisfactory to the Master Servicer certifying to the Trustee and the
Master Servicer the facts  surrounding such Transfer,  which  investment  letter
shall not be an expense of the Trustee or the Master  Servicer.  The Holder of a
Class C or Class R Certificate  desiring to effect such registration of Transfer
shall,  and does hereby agree to,  indemnify the Trustee and the Master Servicer
against any liability that may result if the Transfer is not so exempt or is not
made in accordance with such federal and state laws.

         (c) No  registration  of Transfer  of a Class C or Class R  Certificate
shall be made unless the Trustee shall have received

                                     - 67 -


<PAGE>



either (i) a representation  letter from the Transferee of such Class C or Class
R  Certificate,  acceptable  to and in form and  substance  satisfactory  to the
Master  Servicer,  to the effect that such Transferee is not an employee benefit
plan  subject  to ERISA or section  4975 of the Code,  or a trustee or any other
Person acting on behalf of any such plan, which representation  letter shall not
be an expense of the Trustee or the Master Servicer,  or (ii) in the case of any
such Class C or Class R Certificate presented for registration in the name of an
employee  benefit  plan  subject  to  ERISA  or  section  4975 of the  Code  (or
comparable provisions of any subsequent  enactments),  or a trustee or any other
Person acting on behalf of any such plan, an Opinion of Counsel  satisfactory to
the Master  Servicer to the effect that the  purchase or holding of such Class C
or Class R  Certificate  will not  result in the  assets of the Trust Fund being
deemed to be "plan assets" and subject to the prohibited  transaction provisions
as well as the  fiduciary  provisions of ERISA and the Code and will not subject
the  Trustee or the Master  Servicer  to any  obligation  in  addition  to those
undertaken in this Agreement,  which representation letter or Opinion of Counsel
shall not be an expense of the Trustee or the Master Servicer.

         (d) Each Person who has or who  acquires  any  Ownership  Interest in a
Class R Certificate  shall be deemed by the  acceptance or  acquisition  of such
Ownership Interest to have agreed to be bound by the following provisions and to
have  irrevocably   appointed  the  Master  Servicer  or  its  designee  as  its
attorney-in-fact  to negotiate the terms of any mandatory sale under clause (vi)
below and to execute  all  instruments  of Transfer  and to do all other  things
necessary  in  connection  with any such  sale,  and the  rights of each  Person
acquiring any Ownership  Interest in a Class R Certificate are expressly subject
to the following provisions:

                             (i) Each Person  holding or acquiring any Ownership
         Interest  in  a  Class  R  Certificate  shall  not  be  a  Disqualified
         Organization  and shall  promptly  notify the Master  Servicer  and the
         Trustee of any change or impending change in its status.

                            (ii) No Ownership  Interest in a Class R Certificate
         may be transferred  without the express written consent of the Trustee.
         In  connection  with  any  proposed  registration  of  Transfer  of any
         Ownership  Interest in a Class R Certificate,  the Trustee shall,  as a
         condition  to  such  consent,  require  delivery  to it,  in  form  and
         substance satisfactory to it, each of the following:

                               (A) an affidavit from the proposed  Transferee to
                      the  effect  that such  Transferee  is not a  Disqualified
                      Organization  and that it is not  acquiring  its Ownership
                      Interest in a Class R

                                     - 68 -


<PAGE>



                      Certificate that is the subject of the proposed
                      Transfer as a nominee, trustee or agent for any
                      Person who is a Disqualified Organization; and

                               (B) a covenant of the proposed  Transferee to the
                      effect that the proposed Transferee agrees to be bound and
                      to  abide by the  Transfer  restrictions  applicable  to a
                      Class R Certificate.

                           (iii)  Notwithstanding  the  delivery  of  the  items
         described in clause (ii) above, if a Responsible Officer of the Trustee
         has actual  knowledge  that the proposed  Transferee is a  Disqualified
         Organization,  no registration of Transfer of any Ownership Interest in
         a Class R Certificate  to such proposed  Transferee  shall be effected;
         provided that the Trustee shall have no obligation to determine whether
         any proposed Transferee is a Disqualified Organization.

                            (iv) Each Person  holding or acquiring any Ownership
         Interest in a Class R Certificate  shall agree (A) to require  delivery
         of the items  described  in clause (ii) above from any other  Person to
         whom such Person attempts to transfer any Ownership Interest in a Class
         R Certificate and (B) not to transfer any Ownership Interest in a Class
         R Certificate  or to cause the Transfer of any Ownership  Interest in a
         Class R Certificate to any other Person if it has actual knowledge that
         such Person is a Disqualified Organization.

                             (v) Any  attempted  or  purported  Transfer  of any
         Ownership  Interest  in a  Class  R  Certificate  in  violation  of the
         provisions of this Section 6.07 shall be  absolutely  null and void and
         shall  vest no rights in the  purported  Transferee.  If any  purported
         Transferee  shall become a Holder of a Class R Certificate in violation
         of the provisions of this Section 6.07,  then, upon discovery by or due
         notification  of the Trustee that the  registration of Transfer of such
         Ownership  Interest in a Class R Certificate  was not in fact permitted
         by  this  Section  6.07,  the  last  preceding  Holder  that  is  not a
         Disqualified  Organization  shall be  restored  to all rights as Holder
         thereof  retroactive  to the date of  registration  of Transfer of such
         Ownership  Interest in the  related  Class R  Certificate.  The Trustee
         shall be under no  liability  to any  Person  for any  registration  of
         Transfer of an Ownership  Interest in a Class R Certificate  that is in
         fact not permitted by this Section 6.07 or for making any distributions
         in respect of such Class R Certificate  to the Holder thereof or taking
         any other action with respect to such Holder  under the  provisions  of
         this Agreement  absent  negligence or willful  misconduct.  The Trustee
         shall be entitled to recover  from any Holder of a Class R  Certificate
         that was in fact a

                                     - 69 -


<PAGE>



         Disqualified   Organization   at  the  time  it   became   Holder   all
         distributions  made in respect of such  Class R  Certificate.  Any such
         distributions  so recovered  by the Trustee  shall be  distributed  and
         delivered by the Trustee to the last  preceding  Holder of such Class R
         Certificate that is not a Disqualified Organization.

                            (vi) If any Disqualified  Organization  acquires any
         Ownership  Interest  in a  Class  R  Certificate  in  violation  of the
         restrictions  in this Section 6.07, then the Master Servicer shall have
         the right,  without notice to the Holder of such Class R Certificate or
         any other Person  having an Ownership  Interest  therein,  to sell such
         Class R Certificate to a purchaser  selected by the Master  Servicer on
         such terms as the Master Servicer may choose. Such purchaser may be the
         Master  Servicer itself or any affiliate of the Master Servicer that is
         not a  Disqualified  Organization.  The  proceeds of such sale,  net of
         commissions  (which  may  include  commissions  payable  to the  Master
         Servicer or its  affiliates),  expenses and taxes due, if any,  will be
         remitted  by the Trustee to the last  preceding  Holder of such Class R
         Certificate that is not a Disqualified Organization, except that in the
         event  that the  Trustee  determines  that the  Holder of such  Class R
         Certificate may be liable for any amount due under this Section 6.07 or
         any  other  provisions  of this  Agreement,  the  Master  Servicer  may
         withhold a  corresponding  amount from such  remittance as security for
         such claim. The terms and conditions of any sale under this clause (vi)
         shall be determined in the sole discretion of the Master Servicer,  and
         it shall not be liable to any Person  having an  Ownership  Interest in
         such  Class  R  Certificate  as  a  result  of  its  exercise  of  such
         discretion.

         Section 6.08. Actions of Certificateholders.  (a) Any request,  demand,
authorization,  direction,  notice,  consent, waiver or other action provided by
this Agreement to be given or taken by Certificateholders may be embodied in and
evidenced by one or more  instruments of  substantially  similar tenor signed by
such  Certificateholders  in person or by agent duly  appointed in writing;  and
except  as  herein  otherwise  expressly  provided,  such  action  shall  become
effective when such  instrument or instruments are delivered to the Trustee and,
when required,  to the Depositor or the Master  Servicer.  Proof of execution of
any  such  instrument  or of a  writing  appointing  any  such  agent  shall  be
sufficient  for any purpose of this  Agreement  and  conclusive  in favor of the
Trustee,  the Depositor and the Master Servicer,  if made in the manner provided
in this Section.

         (b) The fact and date of the execution by any  Certificateholder of any
such  instrument  or writing  may be proved in any  reasonable  manner  that the
Trustee deems sufficient.


                                     - 70 -


<PAGE>



         (c) Any request,  demand,  authorization,  direction,  notice, consent,
waiver or other act by a  Certificateholder  shall  bind  every  Holder of every
Certificate  issued upon the  registration  of  transfer  thereof or in exchange
therefor or in lieu thereof, in respect of anything done, or omitted to be done,
by the  Trustee,  the  Depositor  or the Master  Servicer in  reliance  thereon,
whether or not notation of such action is made upon such Certificate.

         (d) The  Trustee  may  require  such  additional  proof  of any  matter
referred to in this Section 6.08 as it shall deem necessary.


                                   ARTICLE VII

                      THE MASTER SERVICER AND THE DEPOSITOR

         Section 7.01.  Liability of the Master Servicer and the Depositor.  The
Master Servicer shall be liable in accordance herewith only to the extent of the
obligations  specifically  imposed upon and  undertaken  by the Master  Servicer
herein.  The Depositor shall be liable hereunder only for its representation and
warranty in Section 2.08.

         Section  7.02.  Merger  or  Consolidation  of,  or  Assumption  of  the
Obligations  of, the Master Servicer and Depositor.  Any corporation  into which
the Master  Servicer  or the  Depositor  may be merged or  consolidated,  or any
corporation resulting from any merger,  conversion or consolidation to which the
Master Servicer or the Depositor shall be a party, or any corporation succeeding
to the business of the Master Servicer or the Depositor,  shall be the successor
of the Master Servicer or the Depositor,  as applicable  hereunder,  without the
execution  or filing of any paper or any  further  act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding.

         Section  7.03.  Limitation  on  Liability  of the Master  Servicer  and
Others.  Neither the Master Servicer,  the Depositor nor any of the directors or
officers or employees or agents of the Master Servicer or the Depositor shall be
under any liability to the Trust Fund or the  Certificateholders  for any action
taken or for refraining  from the taking of any action by the Master Servicer or
the  Depositor  in good  faith  pursuant  to this  Agreement,  or for  errors in
judgment;  provided,  however,  that this provision shall not protect the Master
Servicer,  the Depositor or any such Person  against any  liability  which would
otherwise  be  imposed  by reason  of  willful  misfeasance,  bad faith or gross
negligence in the  performance of duties of the Master  Servicer or by reason of
reckless  disregard of obligations and duties of the Master Servicer  hereunder.
The Master  Servicer,  the  Depositor and any director or officer or employee or
agent of

                                     - 71 -


<PAGE>



the Master  Servicer or the  Depositor may rely in good faith on any document of
any kind prima facie  properly  executed and submitted by any Person  respecting
any matters arising hereunder.  Subject to the second succeeding  sentence,  the
Master Servicer,  the Depositor and any director or officer or employee or agent
of the Master  Servicer or the Depositor  shall be indemnified by the Trust Fund
and held harmless against any loss,  liability or expense incurred in connection
with any legal action relating to this Agreement or the Certificates, other than
any loss,  liability or expense related to any specific Home Equity Loan or Home
Equity Loans  (except as any such loss,  liability or expense shall be otherwise
reimbursable  pursuant to this  Agreement)  and any loss,  liability  or expense
incurred by reason of willful misfeasance,  bad faith or gross negligence in the
performance  of  duties  hereunder  or  by  reason  of  reckless   disregard  of
obligations and duties hereunder.  Neither the Master Servicer nor the Depositor
shall be under any obligation to appear in, prosecute or defend any legal action
which is not incidental to duties to service the Home Equity Loans in accordance
with this  Agreement,  and which in its opinion may involve it in any expense or
liability;  provided,  however, that the Master Servicer or the Depositor may in
its sole  discretion  undertake  any such action which it may deem  necessary or
desirable in respect of this Agreement, and the rights and duties of the parties
hereto and the interests of the Certificateholders hereunder. In such event, any
loss,  liability or expense incurred in connection with any such action shall be
losses,  liabilities  and expenses of the Trust Fund and the Master  Servicer or
the Depositor,  as applicable,  shall be entitled to be reimbursed therefor only
from amounts  otherwise  distributable to Holders of the Class R Certificates on
any  subsequent  Distribution  Date (to the extent the Master  Servicer  has not
previously been reimbursed or indemnified therefor). The Master Servicer's right
to indemnity or  reimbursement  pursuant to this Section 7.03 shall  survive any
resignation or  termination  of the Master  Servicer with respect to any losses,
liabilities or expenses  arising prior to such  resignation  or termination  (or
arising from events that occurred prior to such resignation or termination).

         Section 7.04. Master Servicer Not to Resign.  Subject to the provisions
of Section 7.02, the Master  Servicer shall not resign from the  obligations and
duties hereby imposed on it except (i) upon  determination  that the performance
of  its  obligations  or  duties  hereunder  are  no  longer  permissible  under
applicable law or are in material  conflict by reason of applicable law with any
other activities  carried on by it or its subsidiaries or Affiliates,  the other
activities of the Master Servicer so causing such a conflict being of a type and
nature carried on by the Master  Servicer or its  subsidiaries  or Affiliates at
the  date  of  this  Agreement  or  (ii)  upon  satisfaction  of  the  following
conditions;  (a) the Master Servicer has proposed a successor master servicer to
the Trustee

                                     - 72 -


<PAGE>



in writing and such proposed successor servicer is reasonably  acceptable to the
Trustee;  (b) each Rating  Agency  shall have  delivered a letter to the Trustee
stating that the  appointment  of such  proposed  successor  master  servicer as
Master Servicer  hereunder will not result in the reduction or withdrawal of the
then-current  rating  of any  rated  Class of  Certificates;  and such  proposed
successor  master  servicer has agreed in writing to assume the  obligations  of
Master  Servicer  hereunder and the Master Servicer has delivered to the Trustee
an  Opinion  of  Counsel to the  effect  that all  conditions  precedent  to the
resignation of the Master  Servicer and the appointment of and acceptance by the
proposed successor master servicer have been satisfied;  provided, however, that
in the case of clause (i) above no such resignation shall become effective until
the  Trustee  or a  successor  Master  Servicer  shall have  assumed  the Master
Servicer's responsibilities and obligations hereunder in accordance with Section
8.02.  Any  such   resignation   shall  not  relieve  the  Master   Servicer  of
responsibility for any of the obligations specified in Sections 8.01 and 8.02 as
obligations  that survive the resignation or termination of the Master Servicer.
Any such  determination  permitting the resignation of the Master Servicer shall
be evidenced by an Opinion of Counsel to such effect delivered to the Trustee.

         Section 7.05. Delegation of Duties. In the ordinary course of business,
the Master Servicer at any time may delegate any of its duties  hereunder to any
Person,  including any of its  Affiliates,  who agrees to conduct such duties in
accordance  with  standards  comparable to those with which the Master  Servicer
complies  pursuant to Section 3.01. Such delegation shall not relieve the Master
Servicer of its liabilities and responsibilities with respect to such duties and
shall not  constitute  a  resignation  within the meaning of Section  7.04.  The
Master  Servicer  shall  provide each Rating Agency and the Trustee with written
notice prior to the delegation of any of its duties to any Person other than any
of the Master Servicer's Affiliates or their respective successors and assigns.

                                  ARTICLE VIII

                                     DEFAULT

         Section 8.01.  Events of Default.  If any one of the  following  events
("Events of Default") shall occur and be continuing:

                             (i) any  failure by the Master  Servicer to deposit
         in the Lower-Tier  Certificate  Account any deposit or enter any amount
         to the Home Equity Loan  Payment  Record  required to be made under the
         terms of this Agreement which continues unremedied for a period of five
         Business Days after the date upon which written  notice of such failure
         shall have been

                                     - 73 -


<PAGE>



         given to the Master Servicer by the Trustee,  or to the Master Servicer
         and the  Trustee  by  Holders  of  Certificates  of any Class  affected
         thereby, evidencing, as to such Class, Percentage Interests aggregating
         not less than 51%; or

                            (ii) failure on the part of the Master Servicer duly
         to observe or perform in any  material  respect any other  covenants or
         agreements of the Master  Servicer set forth in the  Certificates or in
         this Agreement,  which failure (x) materially and adversely  affect the
         rights of Certificateholders  and (y) continues unremedied for a period
         of 60 days  after the date on which  written  notice  of such  failure,
         requiring the same to be remedied,  shall have been given to the Master
         Servicer by the Trustee,  or to the Master  Servicer and the Trustee by
         the Holders of Certificates of any Class affected thereby,  evidencing,
         as to such Class,  Percentage Interests  aggregating not less than 51%;
         or

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

                            (iv)  the  consent  by the  Master  Servicer  to the
         appointment   of  a  conservator  or  receiver  or  liquidator  in  any
         insolvency, readjustment of debt, marshalling of assets and liabilities
         or similar  proceedings of or relating to the Master  Servicer or of or
         relating to substantially  all of its property,  or the Master Servicer
         shall admit in writing its inability to pay its debts generally as they
         become  due,  file a  petition  to  take  advantage  of any  applicable
         insolvency  or  reorganization  statute,  make  an  assignment  for the
         benefit  of  its  creditors,  or  voluntarily  suspend  payment  of its
         obligations; or

                             (v)  Total  Expected  Losses  exceed  7.50%  of the
         Cutoff Date Pool  Balance on or prior to the fifth  anniversary  of the
         Cut-off or 11.25% of the Cut-off  Date Pool  Balance on or prior to the
         tenth anniversary of the Cut-off Date;

then,  and in each and every such case, so long as an Event of Default shall not
have been remedied by the Master Servicer,  either the Trustee or the Holders of
Certificates  of any  Class  affected  thereby,  evidencing,  as to such  Class,
Percentage  Interests  aggregating  not less than 51%,  by notice  then given in
writing to the Master Servicer (and to the Trustee if given by

                                     - 74 -


<PAGE>



the Holders of Certificates)  may terminate all of the rights and obligations of
the Master  Servicer as master  servicer under this  Agreement,  on or after the
receipt by the Master Servicer of such written  notice,  all authority and power
of the  Master  Servicer  under  this  Agreement,  whether  with  respect to the
Certificates  or the Trust  Percentage  of the Home Equity  Loans or  otherwise,
shall pass to and be vested in the Trustee  pursuant  to and under this  Section
8.01; and, without limitation, the Trustee is hereby authorized and empowered to
execute and deliver,  on behalf of the Master Servicer,  as  attorney-in-fact or
otherwise, any and all documents and other instruments,  and to do or accomplish
all other acts or things necessary or appropriate to effect the purposes of such
notice of  termination,  whether to complete the transfer and endorsement of the
Trust Balance of each Home Equity Loan and related documents, or otherwise.  The
Master   Servicer  agrees  to  cooperate  with  the  Trustee  in  effecting  the
termination of the responsibilities and rights of the Master Servicer hereunder,
including,   without   limitation,   the   transfer   to  the  Trustee  for  the
administration  by it of all necessary  documentation  and all cash amounts that
shall at the time be held by the Master  Servicer and credited by it to the Home
Equity Loan Payment  Record,  or that have been deposited by the Master Servicer
in the Certificate  Accounts or thereafter  received by the Master Servicer with
respect to the Home Equity Loans. All reasonable  costs and expenses  (including
attorneys' fees) incurred in connection with  transferring the Mortgage Files to
the  successor  Master  Servicer  and  amending  this  Agreement to reflect such
succession as Master Servicer pursuant to this Section 8.01 shall be paid by the
predecessor  Master Servicer upon  presentation of reasonable  documentation  of
such costs and expenses.

         Section 8.02.  Trustee to Act;  Appointment  of  Successor.  (a) On and
after the time the Master Servicer receives a notice of termination  pursuant to
Section  8.01 or gives  notice of its  resignation  under  clause (i) of Section
7.04, the Trustee shall be the successor in all respects to the Master  Servicer
in its capacity as master servicer under this Agreement and the transactions set
forth or provided  for herein and shall be subject to all the  responsibilities,
duties and  liabilities  relating  thereto placed on the Master  Servicer by the
terms and provisions hereof;  provided,  however,  that the responsibilities and
duties of the  Master  Servicer  pursuant  to  Sections  2.02 and 2.04 shall not
terminate;  and,  provided,  further,  that any  liability of the Trustee in its
capacity  as  successor  master  servicer  shall be limited  to the extent  such
liability results from an inability to fulfill its  responsibilities  and duties
as  successor  master  servicer  due to any failure on the part of the  original
Master  Servicer to deliver the  documentation  and cash amounts  referred to in
Section 8.01 or otherwise  fulfill its  obligations  hereunder.  As compensation
therefor,  the  Trustee  shall be entitled  to such  compensation  as the Master
Servicer

                                     - 75 -


<PAGE>



would have been entitled to hereunder if no such notice of termination  had been
given, including,  without limitation,  any investment earnings on any Permitted
Investments  hereunder to which the Master  Servicer  would have been  entitled.
Notwithstanding  the above, the Trustee may, if it shall be unwilling so to act,
or shall,  if it is legally  unable so to act,  appoint,  or petition a court of
competent  jurisdiction  to appoint,  any  established  housing and home finance
institution  that is then  servicing a home equity loan portfolio and having all
licenses,  permits and approvals  required by applicable law, and a net worth of
not less than  $10,000,000 as the successor to the Master Servicer  hereunder in
the assumption of all or any part of the responsibilities, duties or liabilities
of the Master  Servicer  hereunder.  Pending  appointment  of a successor to the
Master  Servicer  hereunder,  unless the  Trustee is  prohibited  by law from so
acting,  the Trustee  shall act in such  capacity as  hereinabove  provided.  In
connection with such appointment and assumption, the successor shall be entitled
to receive  compensation out of payments on Home Equity Loans in an amount equal
to the  compensation  which the Master  Servicer  would  otherwise have received
pursuant to Section  3.08 (or such lesser  compensation  as the Trustee and such
successor  shall agree).  The Trustee and such successor shall take such action,
consistent  with this  Agreement,  as shall be necessary to effectuate  any such
succession.  The  appointment  of a successor  Master  Servicer,  including  the
Trustee,  shall not affect any liability of a predecessor  Master  Servicer that
may have arisen under this Agreement prior to its termination as Master Servicer
(including,  without  limitation,  any  deductible  under  an  insurance  policy
pursuant to Section 3.04), nor shall any successor  Master  Servicer,  including
the  Trustee,  be liable for any acts or  omissions  of any  predecessor  Master
Servicer or for any breach by such predecessor  Master Servicer or the Depositor
of any of their representations or warranties contained herein or in any related
document or agreement.

         (b) Any successor to the Master Servicer as master servicer,  including
the  Trustee,  shall,  during  the term of its  service as master  servicer  (i)
continue to service  and  administer  the Home  Equity  Loans for the benefit of
Certificateholders,  and, retain any amounts  representing  prepayment premiums,
fees or late  charge  penalties  or for  application  towards  taxes,  insurance
premiums,  assessments and similar items, and payments  representing interest in
excess of  interest  at the Net Loan Rate,  for the  benefit  of such  successor
master servicer and (ii) maintain in force (x) a policy or policies of insurance
covering  errors and omissions in the  performance of its  obligations as master
servicer hereunder and (y) a fidelity bond in respect of its officers, employees
and agents to the same extent as the Master Servicer is so required  pursuant to
Section 3.12.


                                     - 76 -


<PAGE>



         Section 8.03. Notification to Certificateholders.  Upon any termination
or  appointment of a successor to the Master  Servicer  pursuant to this Article
VIII or Section 7.04,  the Trustee shall give prompt  written  notice thereof to
Certificateholders  at their respective  addresses  appearing in the Certificate
Register and to each Rating  Agency at the  respective  address  provided to the
Trustee in writing.

         Section  8.04.  Waiver  of Past  Events  of  Default.  The  Holders  of
Certificates  evidencing not less than 51% of the aggregate Percentage Interests
may, on behalf of all Holders of  Certificates,  waive any default by the Master
Servicer in the performance of its obligations  hereunder and its  consequences,
except a  default  in making  any  required  deposits  to or  payments  from the
Certificate Accounts in accordance with this Agreement.  Upon any such waiver of
a past  default,  such  default  shall cease to exist,  and any Event of Default
arising  therefrom  shall be deemed to have been  remedied for every  purpose of
this  Agreement.  No such waiver shall extend to any subsequent or other default
or impair any right consequent thereon.

                                   ARTICLE IX

                                   THE TRUSTEE

         Section 9.01. Duties of Trustee.  The Trustee,  prior to the occurrence
of an Event of Default  and after the curing of all Events of Default  which may
have  occurred,  undertakes  to perform  such duties and only such duties as are
specifically  set forth in this  Agreement.  If an Event of Default has occurred
(which has not been cured) and is actually known to a Responsible  Officer,  the
Trustee  shall  exercise  such of the  rights  and  powers  vested in it by this
Agreement,  and use the same  degree of care and skill in their  exercise,  as a
prudent man would exercise or use under the  circumstances in the conduct of his
own affairs.

         The Trustee, upon receipt of all resolutions, certificates, statements,
opinions,  reports,  documents,  orders or other  instruments  furnished  to the
Trustee which are specifically  required to be furnished to the Trustee pursuant
to any provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement.

         No  provision  of this  Agreement  shall be  construed  to relieve  the
Trustee from liability for its own negligent  action,  its own negligent failure
to act or its own willful misconduct; provided, however, that:

                             (i) prior to the  occurrence of an Event of Default
         of  which a  Responsible  Officer  of the  Trustee  shall  have  actual
         knowledge, and after the curing of all such Events of Default which may
         have occurred, the duties and obligations

                                     - 77 -


<PAGE>



         of the Trustee shall be determined solely by the express  provisions of
         this  Agreement,  the  Trustee  shall  not be  liable  except  for  the
         performance  of such duties and  obligations  as are  specifically  set
         forth in this Agreement,  no implied  covenants or obligations shall be
         read into this Agreement against the Trustee and, in the absence of bad
         faith on the part of the Trustee, the Trustee may conclusively rely, as
         to the truth of the  statements  and the  correctness  of the  opinions
         expressed  therein,  upon any certificates or opinions furnished to the
         Trustee and conforming to the requirements of this Agreement;

                            (ii) the Trustee shall not be liable for an error of
         judgment  made in good faith by a  Responsible  Officer of the Trustee,
         unless  it  shall  be  proved  that  the  Trustee  was   negligent   in
         ascertaining the pertinent facts;

                           (iii) the Trustee shall not be liable with respect to
         any action  taken,  suffered or omitted to be taken by it in good faith
         in accordance  with the direction of the Holders of Certificates of any
         Class  affected  thereby,  evidencing,  as to  such  Class,  Percentage
         Interests  aggregating  not less than 51% relating to the time,  method
         and place of conducting any proceeding for any remedy  available to the
         Trustee,  or exercising any trust or power  conferred upon the Trustee,
         under this Agreement; and

                            (iv) the Trustee shall not be charged with knowledge
         of any failure by the Master Servicer to comply with the obligations of
         the Master Servicer referred to in clauses (i) and (ii) of Section 8.01
         unless a  Responsible  Officer of the  Trustee at the  Corporate  Trust
         Office obtains actual knowledge of such failure or the Trustee receives
         written notice of such failure from the Master  Servicer or the Holders
         of Certificates of any Class affected thereby,  evidencing,  as to such
         Class, Percentage Interests aggregating not less than 51%.

         The  Trustee  shall not be  required to expend or risk its own funds or
otherwise  incur  financial  liability in the  performance  of any of its duties
hereunder,  or in the  exercise  of any of its  rights  or  powers,  if there is
reasonable  ground for  believing  that the  repayment of such funds or adequate
indemnity  against such risk or liability is not  reasonably  assured to it, and
none of the provisions  contained in this  Agreement  shall in any event require
the Trustee to perform,  or be responsible for the manner of performance of, any
of the obligations of the Master  Servicer under this  Agreement,  except during
such time,  if any, as the Trustee shall be the successor to, and be vested with
the rights,  duties, powers and privileges of, the Master Servicer in accordance
with the terms of this Agreement.


                                     - 78 -


<PAGE>



         Section  9.02.  Certain  Matters  Affecting  the  Trustee.   Except  as
otherwise provided in Section 9.01:

                             (i) the Trustee may request and  conclusively  rely
         upon, and shall be protected in acting or refraining  from acting upon,
         any resolution,  Officer's Certificate,  certificate of auditors or any
         other certificate,  statement,  instrument,  opinion,  report,  notice,
         request,  consent,  order,  appraisal,  bond or other paper or document
         believed by it to be genuine and to have been  signed or  presented  by
         the proper party or parties;

                            (ii) the Trustee may  consult  with  counsel and any
         Opinion  of  Counsel  shall  be full  and  complete  authorization  and
         protection  in respect of any action taken or suffered or omitted by it
         hereunder in good faith and in reliance thereon;

                           (iii) the  Trustee  shall be under no  obligation  to
         exercise  any of the  rights or powers  vested in it by this  Agreement
         (except its obligation to act as successor Master Servicer  pursuant to
         Section  8.02),  or to  institute,  conduct  or defend  any  litigation
         hereunder or in relation hereto, at the request,  order or direction of
         any of the  Certificateholders,  pursuant  to the  provisions  of  this
         Agreement,  unless such  Certificateholders  shall have  offered to the
         Trustee  reasonable  security or indemnity against the costs,  expenses
         and liabilities which may be incurred therein or thereby;  the right of
         the  Trustee  to  perform  any  discretionary  act  enumerated  in this
         Agreement  shall not be construed as a duty,  and the Trustee shall not
         be  answerable  for  other  than  its  negligence  or bad  faith in the
         performance of any such act; nothing  contained herein shall,  however,
         relieve the Trustee of its obligations, upon the occurrence of an Event
         of Default  (which has not been cured),  to exercise such of the rights
         and powers vested in it by this  Agreement,  and to use the same degree
         of care and skill in their  exercise as a prudent man would exercise or
         use under the circumstances in the conduct of his own affairs;

                            (iv) the Trustee  shall not be liable for any action
         taken, suffered or omitted by it in good faith and believed by it to be
         authorized or within the discretion or rights or powers  conferred upon
         it by this Agreement;

                             (v) prior to the  occurrence of an Event of Default
         and after the curing of all Events of Default which may have  occurred,
         the Trustee shall not be bound to make any investigation into the facts
         or  matters   stated  in  any   resolution,   certificate,   statement,
         instrument, opinion, report, notice, request, consent, order, approval,
         bond or other paper or documents, unless requested in writing to do

                                     - 79 -


<PAGE>



         so  by  Holders  of  Certificates   of  any  Class  affected   thereby,
         evidencing, as to such Class, Percentage Interests aggregating not less
         than 51%;  provided,  however,  that if the payment within a reasonable
         time to the Trustee of the costs,  expenses or liabilities likely to be
         incurred by it in the making of such  investigation  is, in the opinion
         of the Trustee,  not reasonably  assured to the Trustee by the security
         afforded to it by the terms of this Agreement,  the Trustee may require
         reasonable  indemnity  against  such cost,  expense or  liability  as a
         condition  to such  proceeding.  The  reasonable  expense of every such
         examination  shall be paid by the  Master  Servicer  or, if paid by the
         Trustee,  shall be  reimbursed  by the  Master  Servicer  upon  demand.
         Nothing in this clause (v) shall  derogate  from the  obligation of the
         Master Servicer to observe any applicable law prohibiting disclosure of
         information regarding the Mortgagors;

                            (vi) the  Trustee  may  execute any of the trusts or
         powers  hereunder or perform any duties hereunder either directly or by
         or through agents or attorneys or a custodian; and

                           (vii) for  purposes  of this  Agreement,  the Trustee
         shall not be deemed  to have  knowledge  or notice of any event or fact
         until  such time as a  Responsible  Officer of the  Trustee  has actual
         knowledge of such event or fact or the Trustee  receives written notice
         of such  event or fact  from the  Master  Servicer  or the  Holders  of
         Certificates  of any Class  affected  thereby,  evidencing,  as to such
         Class, Percentage Interests aggregating not less than 51%.

         Section 9.03. Trustee Not Liable for Certificates or Home Equity Loans.
The recitals contained herein and in the Certificates  (other than the signature
and  countersignature  of the Trustee on the Certificates) shall be taken as the
statements of the Master Servicer, and the Trustee assumes no responsibility for
the  correctness  of the same.  The Trustee makes no  representations  as to the
validity or sufficiency of this Agreement or of the Certificates (other than the
signature and  countersignature  of the Trustee on the  Certificates)  or of any
Home Equity Loan or related  document.  The Trustee shall not be accountable for
the use or application by the Master  Servicer of any of the  Certificates or of
the proceeds of such  Certificates,  or for the use or  application of any funds
paid to the Master  Servicer  or any  Originator  in respect of the Home  Equity
Loans or deposited in or withdrawn from the  Certificate  Accounts by the Master
Servicer.  The Trustee shall at no time have any responsibility or liability for
or with respect to the legality,  validity and enforceability of any Mortgage or
any Home Equity  Loan,  or the  perfection  and  priority of any Mortgage or the
maintenance  of any such  perfection or priority,  or for or with respect to the
sufficiency  of the Trust Fund or its  ability to  generate  the  payments to be
distributed to Certificateholders

                                     - 80 -


<PAGE>



under this Agreement,  including,  without limitation, the existence,  condition
and ownership of any Mortgaged Property; the existence and enforceability of any
hazard  insurance  thereon (other than if the Trustee shall assume the duties of
the Master Servicer  pursuant to Section 8.02); the existence and content of any
Home Equity  Loan on any  computer or other  record  thereof  (other than if the
Trustee  shall  assume  the duties of the Master  Servicer  pursuant  to Section
8.02);  the validity of the assignment of any Home Equity Loan to the Trust Fund
or of any intervening assignment;  the completeness of any Home Equity Loan; the
performance  or  enforcement  of any Home Equity Loan (other than if the Trustee
shall assume the duties of the Master  Servicer  pursuant to Section 8.02);  the
compliance  by the  Depositor  or the  Master  Servicer  with  any  warranty  or
representation  made under this  Agreement  or in any  related  document  or the
accuracy of any such warranty or  representation  prior to the Trustee's receipt
of notice or other  discovery  of any  non-compliance  therewith  or any  breach
thereof;  any investment of monies by or at the direction of the Master Servicer
or any loss  resulting  therefrom,  it being  understood  that the Trustee shall
remain  responsible  for  any  Trust  Fund  property  that  it may  hold  in its
individual capacity; the acts or omissions of the Depositor, the Master Servicer
(other  than if the  Trustee  shall  assume the  duties of the  Master  Servicer
pursuant to Section 8.02),  any Subservicer or any Mortgagor;  any action of the
Master Servicer (other than if the Trustee shall assume the duties of the master
Servicer  pursuant to Section 8.02),  any  Subservicer,  or any custodian of the
Mortgage  Files  taken in the name of the  Trustee;  the  failure  of the Master
Servicer,  any  Subservicer,  or any  custodian of the Mortgage  Files to act or
perform  any duties  required of it as agent of the  Trustee  hereunder;  or any
action by the Trustee taken at the  instruction  of the Master  Servicer  (other
than if the Trustee shall assume the duties of the Master  Servicer  pursuant to
Section  8.02);  provided,  however,  that the  foregoing  shall not relieve the
Trustee of its obligation to perform its duties under this Agreement or from any
liability  for its  failure to so perform.  The  Trustee  shall not be liable or
accountable for the acts, omissions,  misconduct or negligence of any Originator
acting in its capacity as custodian of any Mortgage Files hereunder. The Trustee
shall have no responsibility for filing any financing or continuation  statement
in any  public  office at any time or  otherwise  to  perfect  or  maintain  the
perfection of any security  interest or lien granted to it hereunder (unless the
Trustee shall have become the successor  Master  Servicer) or to prepare or file
any  Securities and Exchange  Commission  filing for the Trust Fund or to record
this Agreement.

         Section  9.04.  Trustee  May  Own  Certificates.  The  Trustee  in  its
individual or any other capacity may become the owner or pledgee of Certificates
and  transact  banking  and  trust  business  with  the  Master  Servicer,   the
Originators and any of their

                                     - 81 -


<PAGE>



         affiliates,  with  the  same  rights  as it  would  have if it were not
Trustee.

         Section 9.05.  Master Servicer to Pay Trustee's Fees and Expenses.  The
Master  Servicer  covenants  and agrees to pay to the Trustee from time to time,
and the Trustee shall be entitled to, reasonable  compensation  (which shall not
be limited by any provision of law in regard to the compensation of a trustee of
an express trust) for all services rendered by it in the execution of the trusts
hereby  created and in the  exercise  and  performance  of any of its powers and
duties hereunder, and the Master Servicer will pay or reimburse the Trustee upon
its request for all reasonable expenses,  disbursements and advances incurred or
made by the Trustee in accordance  with any of the  provisions of this Agreement
(including the reasonable compensation and the expenses and disbursements of its
counsel,  agents and of all Persons not regularly in its employ) except any such
expense,  disbursement  or advance as may arise from its negligence or bad faith
or which is the responsibility of Certificateholders hereunder. In addition, the
Master Servicer and the Depositor, jointly and severally,  covenant and agree to
indemnify the Trustee, its officers,  directors, agents and employees, from, and
hold it harmless against, any and all losses,  liabilities,  damages,  claims or
expenses, including the costs and expenses of defending itself against any claim
or liability,  arising in connection with its  performance  hereunder other than
those  resulting from the  negligence or bad faith of the Trustee.  This Section
9.05 shall survive the  termination  of the indenture or earlier  resignation or
removal of the Trustee or Co-Trustee.

         Section  9.06.  Eligibility   Requirements  for  Trustee.  The  Trustee
hereunder shall at all times be a Person having its principal office in New York
or in the same state as that in which the initial  Trustee under this  Agreement
has its principal office and organized and doing business under the laws of such
State or the United  States of America,  authorized  under such laws to exercise
corporate  trust  powers,  having a  combined  capital  and  surplus of at least
$50,000,000  and  subject  to  supervision  or  examination  by federal or state
authority.  If such Person  publishes  reports of condition  at least  annually,
pursuant to law or to the requirements of the aforesaid supervising or examining
authority,  then for the purposes of this Section 9.06, the combined capital and
surplus of such Person shall be deemed to be its combined capital and surplus as
set forth in its most recent  report of condition so  published.  In case at any
time the Trustee shall cease to be eligible in accordance with the provisions of
this Section  9.06,  the Trustee  shall resign in the manner and with the effect
specified in Section 9.07.

         Section 9.07. Resignation or Removal of Trustee. The Trustee may at any
time resign and be discharged  from the trusts hereby  created by giving written
notice  thereof to the Master  Servicer and each Rating  Agency.  Upon receiving
such notice of

                                     - 82 -


<PAGE>



resignation,  the Master  Servicer  shall promptly  appoint a successor  Trustee
(which  successor  Trustee shall be reasonably  acceptable to the  Depositor) by
written  instrument,  in  duplicate,  one  copy of  which  instrument  shall  be
delivered to the resigning Trustee and one copy to the successor Trustee.  If no
successor  Trustee shall have been so appointed and having accepted  appointment
within 30 days after the giving of such  notice of  resignation,  the  resigning
Trustee may petition any court of competent  jurisdiction for the appointment of
a successor Trustee.

         If at any time the Trustee  shall  cease to be  eligible in  accordance
with the  provisions  of  Section  9.06 and shall fail to resign  after  written
request therefor by the Master Servicer,  or if at any time the Trustee shall be
legally  unable to act,  or shall be  adjudged a  bankrupt  or  insolvent,  or a
receiver of the Trustee or of its  property  shall be  appointed,  or any public
officer  shall  take  charge or control of the  Trustee  or of its  property  or
affairs for the purpose of rehabilitation, conservation or liquidation, then the
Master  Servicer  may remove the  Trustee.  If the Master  Servicer  removes the
Trustee under the authority of the immediately  preceding  sentence,  the Master
Servicer shall promptly  appoint a successor  Trustee (which  successor  Trustee
shall be reasonably  acceptable  to the  Depositor)  by written  instrument,  in
duplicate,  one copy of which  instrument  shall be  delivered to the Trustee so
removed and one copy to the successor Trustee.

         Any  resignation  or  removal  of  the  Trustee  and  appointment  of a
successor  Trustee  pursuant to any of the provisions of this Section 9.07 shall
not become effective until acceptance of appointment by the successor Trustee as
provided in Section 9.08.

         Section 9.08.  Successor  Trustee.  Any successor  Trustee appointed as
provided in Section 9.07 shall  execute,  acknowledge  and deliver to the Master
Servicer,  the Depositor and to its predecessor Trustee an instrument  accepting
such  appointment  hereunder,  and thereupon the  resignation  or removal of the
predecessor  Trustee shall become effective and such successor Trustee,  without
any further  act,  deed or  conveyance,  shall  become fully vested with all the
rights, powers, duties and obligations of its predecessor  hereunder,  with like
effect as if originally named as Trustee.  The Master Servicer,  the predecessor
Trustee and the successor Trustee shall execute and deliver such instruments and
do such other  things as may  reasonably  be  required  for fully and  certainly
vesting and confirming in the successor Trustee all such rights,  powers, duties
and obligations.

         Each  successor  Trustee  shall be entitled to receive  from the Master
Servicer  reasonable   compensation  for  services  rendered,  and  payment  and
reimbursement  for  reasonable  expenses,  disbursements  and advances,  as more
specifically set forth in

                                     - 83 -


<PAGE>



Section 9.05 hereof and  according  to the same  standard as provided in Section
9.05.

         No  successor  Trustee  shall  accept  appointment  as provided in this
Section 9.08 unless at the time of such acceptance such successor  Trustee shall
be eligible under the provisions of Section 9.06.

         Upon  acceptance of appointment  by a successor  Trustee as provided in
this Section 9.08,  the Master  Servicer  shall mail notice of the succession of
such Trustee  hereunder  to all Holders of  Certificates  at their  addresses as
shown in the  Certificate  Register.  If the Master  Servicer fails to mail such
notice within 10 days after acceptance of appointment by the successor  Trustee,
the successor Trustee shall cause such notice to be mailed at the expense of the
Master Servicer.

         Section 9.09. Merger or Consolidation of Trustee. Any Person into which
the Trustee may be merged or converted or with which it may be consolidated,  or
any Person  resulting from any merger,  conversion or consolidation to which the
Trustee shall be a party, or any Person  succeeding to all or substantially  all
of the corporate  trust  business of the Trustee,  shall be the successor of the
Trustee  hereunder,  provided such Person shall be eligible under the provisions
of Section 9.06, without the execution or filing of any paper or any further act
on the  part of any of the  parties  hereto,  anything  herein  to the  contrary
notwithstanding.

         Section  9.10.   Appointment   of   Co-Trustee  or  Separate   Trustee.
Notwithstanding  any other  provisions of this  Agreement,  at any time, for the
purpose of meeting any legal  requirements of any jurisdiction in which any part
of the Trust Fund or any  Mortgaged  Property  may at the time be  located,  the
Master  Servicer and the Trustee  acting  jointly shall have the power and shall
execute and deliver all  instruments to appoint one or more Persons  approved by
the Trustee to act as co-trustee or  co-trustees,  jointly with the Trustee,  or
separate trustee or separate trustees, of all or any part of the Trust Fund, and
to vest in such Person or Persons,  in such  capacity and for the benefit of the
Certificateholders,  such title to the Trust  Fund,  or any part  thereof,  and,
subject to the other  provisions  of this Section  9.10,  such  powers,  duties,
obligations,  rights and  trusts as the  Master  Servicer  and the  Trustee  may
consider  necessary or desirable.  The Master  Servicer  shall not  unreasonably
refrain  from  joining  with  the  Trustee  in  executing  and  delivering  such
instruments,  and  if  the  Master  Servicer  shall  not  have  joined  in  such
appointment  within 15 days after the receipt by it of a request so to do, or in
case an Event of Default  shall have  occurred  and be  continuing,  the Trustee
alone shall have the power to make such  appointment.  No co-trustee or separate
trustee  hereunder  shall be  required  to meet the  terms of  eligibility  as a
successor trustee under Section 9.06 and no

                                     - 84 -


<PAGE>



notice to  Certificateholders  of the  appointment of any co-trustee or separate
trustee shall be required  under Section 9.08.  The Trustee shall notify Moody's
of any appointment of a co-trustee or separate  trustee  hereunder.  The Trustee
shall remain  liable  hereunder  for any actions  delegated  to a co-trustee  or
separate  trustee  despite  such  delegation.   The  Master  Servicer  shall  be
responsible  for the  fees  of any  co-trustee  or  separate  trustee  appointed
hereunder.

         Every separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:

                             (i) all  rights,  powers,  duties  and  obligations
         conferred  or imposed  upon the Trustee  shall be  conferred or imposed
         upon and  exercised  or  performed  by the  Trustee  and such  separate
         trustee or co-trustee  jointly (it being  understood that such separate
         trustee or co-trustee is not authorized to act  separately  without the
         Trustee  joining in such act),  except to the extent that under any law
         of any  jurisdiction  in  which  any  particular  act or acts are to be
         performed  (whether as Trustee  hereunder or as successor to the Master
         Servicer hereunder), the Trustee shall be incompetent or unqualified to
         perform such act or acts,  in which event such rights,  powers,  duties
         and  obligations  (including  the holding of title to the Trust Fund or
         any portion  thereof in any such  jurisdiction)  shall be exercised and
         performed singly by such separate trustee or co-trustee,  but solely at
         the direction of the Trustee;

                            (ii) no trustee  hereunder  shall be held personally
         liable by reason of any act or omission of any other trustee hereunder;
         and

                           (iii) the  Master  Servicer  and the  Trustee  acting
         jointly  may at any  time  accept  the  resignation  of or  remove  any
         separate trustee or co-trustee, except that following the occurrence of
         an Event of Default that has not been cured,  the Trustee  acting alone
         may accept the  resignation  of or remove any  co-trustee  or  separate
         trustee.

         Any notice,  request or other  writing  given to the  Trustee  shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as  effectively  as if given to each of them.  Every  instrument  appointing any
separate  trustee or co-trustee shall refer to this Agreement and the conditions
of this Article IX. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred,  shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Trustee or separately, as
may be  provided  therein,  subject  to all the  provisions  of this  Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording

                                     - 85 -


<PAGE>



protection  to,  the  Trustee.  Every  such  instrument  shall be filed with the
Trustee and a copy thereof given to the Master Servicer.

         Any separate  trustee or co-trustee  may, at any time,  constitute  the
Trustee  its agent or  attorney-in-fact  with full power and  authority,  to the
extent not  prohibited  by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name.  If any separate  trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties,  rights,  remedies  and trusts shall vest in and be exercised by the
Trustee,  to the extent  permitted by law,  without the  appointment of a new or
successor trustee.

         Section 9.11. Tax Returns. The Trustee,  upon request, will furnish the
Master  Servicer with all such  information  as may be in the  possession of the
Trustee and reasonably  required in connection  with the  preparation of all tax
returns of the Trust Fund, and shall, if required by law, upon request,  execute
such returns.

         Section  9.12.   Trustee  May  Enforce  Claims  Without  Possession  of
Certificates.  All  rights of action  and claims  under  this  Agreement  or the
Certificates  may  be  prosecuted  and  enforced  by  the  Trustee  without  the
possession  of  any  of  the  Certificates  or  the  production  thereof  in any
proceeding relating thereto. Any such proceeding instituted by the Trustee shall
be  brought in its own name or in its  capacity  as  Trustee.  Any  recovery  of
judgment shall, after provision for the payment of the reasonable  compensation,
expenses,  disbursements and advances of the Trustee, its agents and counsel, be
for the  ratable  benefit  of the  Certificateholders  in  respect of which such
judgment has been recovered.

         Section  9.13.  Suits for  Enforcement.  In case an Event of Default or
other default by the Master Servicer or the Depositor  hereunder shall occur and
be  continuing,  the  Trustee,  in its  discretion,  may  proceed to protect and
enforce its right and the rights of the Certificateholders  under this Agreement
by a suit,  action or proceeding  in equity or at law or otherwise,  whether for
the  specific  performance  of any  covenant  or  agreement  contained  in  this
Agreement or in aid of the execution of any power  granted in this  Agreement or
for the  enforcement  of any other  legal,  equitable  or other  remedy,  as the
Trustee,  being  advised by counsel,  shall deem most  effectual  to protect and
enforce any of the rights of the Trustee or the Certificateholders.


                                     - 86 -


<PAGE>



                                    ARTICLE X

                                   TERMINATION

         Section  10.01.  Termination  Upon  Purchase by the Master  Servicer or
Liquidation  of All Home  Equity  Loans.  (a)  Subject  to  Section  10.02,  the
respective  obligations  and  responsibilities  of the Master  Servicer  and the
Trustee created hereby (other than the obligation of the Trustee to make certain
payments  to  Certificateholders  after  the  final  Distribution  Date  and the
obligations  of the  Master  Servicer  under  Section  9.05 and to send  certain
notices as hereinafter  set forth) shall terminate upon the last action required
to be taken by the  Trustee  on the final  Distribution  Date  pursuant  to this
Article X following  the earliest of (i) the purchase by the Master  Servicer of
all Home Equity  Loans and all  property  acquired in respect of any Home Equity
Loan  remaining  in the Trust Fund,  as  described  below,  (ii) the sale of the
assets of the Trust Fund as described  below or (iii) the final payment or other
liquidation  of the last Home  Equity  Loan  remaining  in the Trust Fund or the
disposition  of all  property  acquired  upon  foreclosure  or  deed  in lieu of
foreclosure of any Home Equity Loan; provided,  however,  that in no event shall
the trust created  hereby  continue  beyond the  expiration of 21 years from the
death of the last survivor of the  descendants  of Joseph P.  Kennedy,  the late
ambassador of the United  States to the Court of St.  James,  living on the date
hereof.

         (b) The Master  Servicer (i) may at its option purchase all Home Equity
Loans pursuant to clause (i) of Section 10.01(a) on any  Distribution  Date upon
which the Pool  Balance  immediately  prior to such  Distribution  Date shall be
equal to or less than ten  percent  (10%) of the Cut-off  Date Pool  Balance and
(ii) should the Trust  Balances of any Home Equity Loans remain  outstanding  on
the  Distribution  Date in September 2037 shall purchase all such Trust Balances
on such Distribution  Date, in each case at a price equal to the greatest of (x)
the  aggregate of the Loan Balances of the Home Equity Loans as of the first day
of the Collection  Period applicable to such final  Distribution  Date, plus one
month's  interest at the  applicable  Net Loan Rate on the Loan  Balance of each
Home Equity Loan (including any Foreclosed Home Equity Loans), (y) the aggregate
fair  market  value (as  determined  by the Master  Servicer  as of the close of
business on the third  Business Day next preceding the date upon which notice of
any such termination is furnished to  Certificateholders  pursuant to clause (c)
of this Section  10.01) of all of the assets of the Trust Fund,  and (z) the sum
of (1) the Class A Certificate Balance together with any Class A Unpaid Interest
Shortfall and interest  accrued during the related Accrual Period thereon at the
Class A Pass-Through Rate, (2) the Class M Certificate Balance together with any
Class M Unpaid  Interest  Shortfall  and  interest  accrued  during the  related
Accrual Period thereon at the Class M Pass-Through Rate and (3)

                                     - 87 -


<PAGE>



the  Class B  Certificate  Balance  together  with any  Class B Unpaid  Interest
Shortfall and interest  accrued during the related Accrual Period thereon at the
Class B  Pass-Through  Rate (the greatest of (x), (y) and (z) being  referred to
herein as the "Pool Purchase  Price").  In connection  with such  purchase,  the
Master  Servicer  shall  provide to the  Trustee the  certification  required by
Section  3.07 and the  Trustee  shall,  promptly  following  payment of the Pool
Purchase  Price,  execute  proper  instruments   acknowledging  termination  and
discharge  of this  Agreement.  Any  obligation  of the  Master  Servicer  to so
purchase  each Home Equity Loan as provided  herein  shall be solely that of the
original Master Servicer and shall survive any resignation or termination of the
original Master Servicer hereunder.

         If for any  reason  the  Master  Servicer  fails to make  the  purchase
required  by clause  (ii) of  Section  10.01(b),  then in  accordance  with such
procedures  as the  Trustee in its sole  judgment  shall deem  appropriate,  the
Trustee  shall  conduct an auction  (the "Final  Auction")  of the assets of the
Trust Fund  (other  than  amounts on deposit in the  Upper-Tier  and  Lower-Tier
Certificate  Accounts)  in  order to  effect a  termination  of the  Trust  Fund
promptly  thereafter.  The Master  Servicer or any Affiliate  thereof may bid at
such Final  Auction but shall not be  required to do so. The Trustee  shall sell
and  transfer  the assets of the Trust Fund,  without  recourse,  to the highest
bidder  therefor at the Final  Auction  and shall  deposit  the  purchase  price
therefor, less all expenses of the Final Auction,  including all reasonable fees
and expenses of any third parties  engaged by the Trustee to assist in the Final
Auction process, in the Lower- Tier Certificate Account.

         (c) Notice of any termination,  specifying the Distribution Date (which
shall be a date that  would  otherwise  be a  Distribution  Date) upon which the
Certificateholders  may surrender their  Certificates to the Trustee for payment
of the final  distribution  and  cancellation,  shall be given  promptly  by the
Trustee (upon receipt of written  directions  from the Master  Servicer,  if the
Master  Servicer is  purchasing  the assets of the Trust Fund,  which  direction
shall be received not later than the first day of the month  preceding the month
of such  final  distribution  date) by letter to  Certificateholders  mailed not
earlier  than the 15th day and not  later  than the 25th day of the  month  next
preceding the month of such final  distribution  specifying (i) the Distribution
Date  upon  which  final  distribution  of the  Certificates  will be made  upon
presentation  and  surrender  of  Certificates  at the  office  or agency of the
Trustee therein  designated,  (ii) the amount of any such final distribution and
(iii) that the Record Date otherwise applicable to such Distribution Date is not
applicable, distributions being made only upon presentation and surrender of the
Certificates  at the office or agency of the Trustee therein  specified.  In the
event written directions are delivered by the Master Servicer to

                                     - 88 -


<PAGE>



the Trustee as described in the preceding  sentence,  the Master  Servicer shall
deposit in the Lower-Tier Certificate Account on or before the Distribution Date
for such final distribution in immediately available funds an amount which, when
added to the amount on  deposit in the  Lower-Tier  and  Upper-Tier  Certificate
Accounts,  will be equal to the purchase  price for the assets of the Trust Fund
computed  as  above  provided.  Such  deposit  shall  be in lieu of the  deposit
otherwise  required to be made in respect of such  Distribution Date pursuant to
Section 4.02.

         (d) Upon  presentation and surrender of the  Certificates,  the Trustee
shall,  to the  extent of funds  available  in the  Lower-  Tier and  Upper-Tier
Certificate  Accounts  cause  to be  distributed  to  Certificateholders  on the
Distribution Date for such final  distribution in proportion to their respective
Percentage  Interests an amount equal to (i) in the case of Holders of the Class
A Certificates, the Class A Certificate Balance together with any Class A Unpaid
Interest  Shortfall plus interest  accrued during the related  Accrual Period at
the Class A Pass-Through  Rate on such amounts,  (ii) in the case of the Class M
Certificates,  the Class M Certificate  Balance together with any Class M Unpaid
Interest  Shortfall plus interest  accrued during the related  Accrual Period at
the Class M Pass-Through Rate on such amounts,  and (iii) in the case of Holders
of the Class B Certificates,  the Class B Certificate  Balance together with any
Class B Unpaid  Interest  Shortfall  plus  interest  accrued  during the related
Accrual  Period  at the Class B  Pass-Through  Rate on such  amounts.  Upon such
termination,  any amounts  remaining  on deposit in the  Upper-Tier  Certificate
Account  (other than the  amounts  retained to meet  claims)  after  application
pursuant to the preceding  sentence up to $25 million in the aggregate  shall be
distributed  to  Holders  of the Class C  Certificates  in  proportion  to their
respective  Percentage  Interests  and any  remainder  to Holders of the Class R
Certificates in proportion to their  respective  Percentage  Interests  therein.
Prior to the distribution referred to in the immediately preceding sentence, any
amounts  in the  Lower-Tier  Certificate  Account  shall be  transferred  to the
Upper-Tier Certificate Account. The distribution on such final Distribution Date
shall  be in  lieu of the  distribution  otherwise  required  to be made on such
Distribution Date in respect of each Class of Certificates.

         (e) In the event that all of the Certificateholders shall not surrender
their  Certificates  for final payment and  cancellation on or before such final
Distribution  Date,  the  Trustee  shall on such  date  cause  all  funds in the
Upper-Tier   Certificate  Account  not  distributed  in  final  distribution  to
Certificateholders  to be  withdrawn  therefrom  and  credited to the  remaining
Certificateholders  by depositing such funds in a separate escrow account (which
shall be an Eligible Account) for the benefit of such Certificateholders and the
Master  Servicer (if the Master  Servicer has  exercised its right to repurchase
the

                                     - 89 -


<PAGE>



assets of the Trust  Fund),  or the Trustee (in any other case) and shall give a
second written  notice to the remaining  Certificateholders  to surrender  their
Certificates for cancellation  and receive the final  distribution  with respect
thereto.  If, within the period then  specified in the escheat laws of the State
of New York after such notice, such amount remains unclaimed, the Holders of the
Class R Certificates  shall be entitled to all unclaimed  funds and other assets
which remain subject hereto and the Trustee upon transfer of such funds shall be
discharged  of any  responsibility  for such funds,  and the  Certificateholders
shall look to the Holder of the Class R Certificates for payment.

         Section 10.02. Additional Termination Requirements. (a) In the event of
a purchase by the Master  Servicer or sale of the Home Equity  Loans as provided
in Section  10.01(b),  the Trust Fund shall be terminated in accordance with the
following additional requirements, unless the Trustee has received an Opinion of
Counsel to the  effect  that the  failure  of the Trust Fund to comply  with the
requirements  of this  Section  10.02 will not (i) result in the  imposition  of
taxes on "prohibited  transactions" of the Trust Fund as defined in section 860F
of the Code, or (ii) cause either the Lower-Tier  REMIC or the Upper-Tier  REMIC
to fail to qualify as a REMIC at any time that any Certificates are outstanding:

                             (i) within 90 days prior to the final  Distribution
         Date,  Holders  of the  Class R  Certificates  shall  adopt,  as to the
         Lower-Tier  REMIC  and  the  Upper-Tier   REMIC,  a  plan  of  complete
         liquidation; and

                            (ii) at or after the time of adoption of such a plan
         of complete liquidation and at or prior to the final Distribution Date,
         the  Trustee  shall  sell all of the  assets of the  Trust  Fund to the
         Master Servicer for cash in an amount equal to the Pool Purchase Price;
         provided, however, that in the event that a calendar quarter ends after
         the time of adoption of such a plan of complete  liquidation  but prior
         to such final  Distribution Date, the Trustee shall not sell any of the
         assets of the Trust Fund prior to the close of that calendar quarter.

         (b) By its acceptance of a Class R Certificate, a Holder thereof hereby
agrees to adopt such a plan of complete  liquidation upon the written request of
the Master Servicer and to take such other action in connection therewith as may
be reasonably requested by the Master Servicer.

                                   ARTICLE XI

                            MISCELLANEOUS PROVISIONS


                                     - 90 -


<PAGE>



         Section  11.01.  Amendment.  This Agreement may be amended from time to
time by the Depositor,  the Master Servicer and the Trustee, with the consent of
any Servicer LOC Issuer if its rights are materially and adversely affected, but
without the consent of any of the Certificateholders,  to cure any ambiguity, to
correct or supplement any provisions herein or therein which may be inconsistent
with any other provisions  herein or therein,  as the case may be, or to add any
other  provisions  with  respect  to  matters or  questions  arising  under this
Agreement,   including   provisions  relating  to  the  issuance  of  Definitive
Certificates to Certificate Owners in the event that book-entry  registration of
the Certificates is no longer  permitted,  which shall not be inconsistent  with
the provisions of this Agreement; provided, however, that such action shall not,
as evidenced by an Opinion of Counsel,  adversely affect in any material respect
the  interests  of any  Certificateholder  or a letter from each  Rating  Agency
stating that such action will not result in a  downgrading  of the rating of any
rated Class of Certificates.

         This  Agreement may also be amended from time to time by the Depositor,
the Master  Servicer  and the  Trustee,  but  without  the consent of any of the
Certificateholders,  to  modify,  eliminate  or add to the  provisions  of  this
Agreement to such extent as shall be necessary to (i) maintain the qualification
of each of the Lower-Tier  REMIC and the  Upper-Tier  REMIC as a REMIC under the
Code or avoid,  or minimize the risk of, the  imposition of any tax on the Trust
Fund  under the Code that  would be a claim  against  the Trust  Fund's  assets,
provided that there shall have been delivered an Opinion of Counsel addressed to
the  Trustee to the effect  that such  action is  necessary  or  appropriate  to
maintain  such  qualification  or avoid any such tax or minimize the risk of its
imposition,  or (ii) prevent the Trust Fund from entering  into any  "prohibited
transaction"  as defined in section 860F of the Code  provided  that there shall
have been delivered an Opinion of Counsel addressed to the Trustee to the effect
that such  action is  necessary  or  appropriate  to prevent the Trust Fund from
entering into such prohibited transaction.

         This  Agreement may also be amended from time to time by the Depositor,
the Master  Servicer and the  Trustee,  with the consent of (x) any Servicer LOC
Issuer if its rights are  materially  and adversely  affected and (y) Holders of
the Certificates of each Class affected thereby,  evidencing,  as to such Class,
Percentage  Interests  aggregating  not less than 51%, for the purpose of adding
any provisions to or changing in any manner or eliminating any of the provisions
of  this   Agreement   or  of   modifying  in  any  manner  the  rights  of  the
Certificateholders;  provided,  however, that no such amendment shall (i) reduce
in any manner the amount of, or delay the timing of,  collections of payments on
Home  Equity  Loans  or  distributions  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

                                     - 91 -


<PAGE>



         consent to any such  amendment,  without  the consent of the Holders of
all Certificates then outstanding.

         At  least  three  Business  Days  prior  to the  execution  of any such
amendment requiring the consent of the  Certificateholders,  the Master Servicer
shall furnish  written  notification  of the substance of such  amendment to the
Rating  Agencies.  Promptly  after the execution of any such amendment made with
the consent of the Certificateholders, the Master Servicer shall furnish written
notification  of the substance of such amendment to each  Certificateholder  and
fully  executed  original  counterparts  of the  instruments  effecting any such
amendment to the Rating Agencies and any Servicer LOC Issuer.

         It shall not be necessary for the consent of  Certificateholders  under
this Section 11.01 to approve the particular  form of any proposed  amendment or
consent,  but it shall be sufficient if such consent shall approve the substance
thereof.   The  manner  of  obtaining   such  consents  and  of  evidencing  the
authorization of the execution thereof by Certificateholders shall be subject to
such reasonable  requirements as the Trustee may prescribe.  The Master Servicer
is  authorized  to  establish a record date for the purpose of  identifying  the
Certificateholders eligible to consent to any proposed amendment hereunder.

         Prior to the execution of any amendment to this Agreement,  the Trustee
shall be entitled to receive  and  conclusively  rely upon an Opinion of Counsel
stating that the execution of such  amendment is authorized or permitted by this
Agreement  and that all  conditions  precedent to the  execution and delivery of
such amendment have been satisfied.  The Trustee may, but shall not be obligated
to, enter into any such amendment that affects the Trustee's own rights,  duties
or immunities under this Agreement.

         Section 11.02.  Recordation of Agreement.  This Agreement is subject to
recordation in all appropriate  public offices for real property  records in all
the  counties  or other  comparable  jurisdictions  in  which  any or all of the
Mortgaged Properties are situated, and in any other appropriate public recording
office or elsewhere,  such recordation to be effected by the Master Servicer and
at its  expense if such  recordation  materially  and  beneficially  affects the
interests of Certificateholders.

         For the purpose of  facilitating  the  recordation of this Agreement as
herein  provided  and  for  other  purposes,  this  Agreement  may  be  executed
simultaneously in any number of counterparts,  each of which  counterparts shall
be deemed to be an original,  and such counterparts shall constitute but one and
the same instrument.

         Section 11.03. Limitation on Rights of Certificateholders. The death or
incapacity of any Certificateholder shall not

                                     - 92 -


<PAGE>



operate  to  terminate  this  Agreement  or the Trust  Fund,  nor  entitle  such
Certificateholder's  legal representatives or heirs to claim an accounting or to
take any action or  commence  any  proceeding  in any court for a  partition  or
winding up of the Trust Fund, nor otherwise  affect the rights,  obligations and
liabilities of the parties hereto or any of them.

         No  Certificateholder  shall have any right to vote (except as provided
in Sections 8.01,  9.01,  9.02,  11.01,  11.07 and this Section 11.03) or in any
manner otherwise  control the operation and management of the Trust Fund, or the
obligations  of the parties  hereto,  nor shall  anything  herein set forth,  or
contained in the terms of the Certificates, be construed so as to constitute the
Certificateholders  from time to time as partners or members of an  association;
nor shall any  Certificateholder  be under any  liability to any third person by
reason of any action  taken by the  parties to this  Agreement  pursuant  to any
provision hereof.

         No  Certificateholder of any Class shall have any right by virtue or by
availing  itself of any  provisions  of this  Agreement to  institute  any suit,
action or  proceeding  in equity or at law upon or under or with respect to this
Agreement,  unless  such  Holder  previously  shall have given to the  Trustee a
written  notice of  default  and of the  continuance  thereof,  as  hereinbefore
provided, and unless also the Holders of Certificates of such Class, evidencing,
as to such Class,  Percentage Interests aggregating not less than 51% shall have
made  written  request  upon the  Trustee  to  institute  such  action,  suit or
proceeding  in its own name as Trustee  hereunder  and shall have offered to the
Trustee such reasonable indemnity as it may require against the costs,  expenses
and liabilities to be incurred therein or thereby,  and the Trustee, for 60 days
after its receipt of such  notice,  request and offer of  indemnity,  shall have
neglected or refused to institute any such action, suit or proceeding;  it being
understood   and   intended,    and   being   expressly   covenanted   by   each
Certificateholder  with every other  Certificateholder  and the Trustee, that no
one or more Holders of Certificates  shall have any right in any manner whatever
by  virtue  or by  availing  itself  or  themselves  of any  provisions  of this
Agreement to affect, disturb or prejudice the rights of the Holders of any other
of the Certificates,  or to obtain or seek to obtain priority over or preference
to any other such Holder,  or to enforce any right under this Agreement,  except
in the manner herein  provided and for the equal,  ratable and common benefit of
all Certificateholders.  For the protection and enforcement of the provisions of
this Section 11.03,  each and every  Certificateholder  and the Trustee shall be
entitled to such relief as can be given either at law or in equity.

         Section  11.04.  GOVERNING  LAW. THIS  AGREEMENT  SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK

                                     - 93 -


<PAGE>



AND THE  OBLIGATIONS,  RIGHTS AND  REMEDIES  OF THE PARTIES  HEREUNDER  SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.

         Section  11.05.  Notices.  All  demands,   notices  and  communications
hereunder  shall be in  writing  and shall be deemed to have been duly  given if
personally  delivered at or mailed by certified mail, return receipt  requested,
to (a) in the case of the Depositor,  to Beneficial  Mortgage Services,  Inc. at
One Christina  Centre,  301 North Walnut  Street,  Wilmington,  Delaware  19801,
Attention: President, with a copy to the Corporate Secretary; (b) in the case of
the Master Servicer, to Beneficial Mortgage Corporation at One Christina Centre,
301 North Walnut Street, Wilmington,  Delaware 19801, Attention: President, with
a copy to the Corporate  Secretary;  and (c) in the case of the Trustee,  at the
Corporate  Trust Office,  or as to each party, at such other address as shall be
designated  by such party in a written  notice to each other  party.  Any notice
required  or  permitted  to be mailed to a  Certificateholder  shall be given by
first class mail, postage prepaid, at the address of such Holder as shown in the
Certificate  Register,  and to each  Rating  Agency  in the same  manner  at the
respective  address  provided to the  Trustee in  writing.  Any notice so mailed
within the time prescribed in this Agreement  shall be conclusively  presumed to
have been duly given, whether or not the Certificateholder receives such notice.

         Section 11.06.  Severability  of Provisions.  If any one or more of the
covenants,  agreements,  provisions or terms of this Agreement  shall be for any
reason whatsoever held invalid, then such covenants,  agreements,  provisions or
terms  shall be  deemed  severable  from the  remaining  covenants,  agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability  of the other provisions of this Agreement or of the Certificates
or the rights of the Holders thereof.

         Section  11.07.  Assignment.  Notwithstanding  anything to the contrary
contained  herein,  except as provided in Sections 7.02 and 7.04, this Agreement
may not be assigned by the Master Servicer  without the prior written consent of
Holders of Certificates of any Class affected  thereby,  evidencing,  as to such
Class, Percentage Interests aggregating not less than 66%.

         Section 11.08.  Certificates  Nonassessable and Fully Paid. The parties
agree that the Certificateholders shall not be personally liable for obligations
of the Trust Fund, that the beneficial  ownership  interests  represented by the
Certificates shall be nonassessable for any losses or expenses of the Trust Fund
or for  any  reason  whatsoever,  and  that  the  Certificates  upon  execution,
countersignature  and delivery  thereof by the Trustee  pursuant to Section 2.04
are and shall be deemed fully paid.


                                     - 94 -


<PAGE>



         Section  11.09.  Counterparts.  This  Agreement  may be executed in any
number  of  counterparts,  each of which so  executed  shall be  deemed to be an
original,  but all such counterparts  shall together  constitute but one and the
same instrument.

                                     - 95 -


<PAGE>



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

                                    BENEFICIAL MORTGAGE SERVICES, INC.,
                                    as Depositor



                                   By:
                                        ----------------------------------------
                                        Name:
                                        Title:

                                    BENEFICIAL MORTGAGE CORPORATION,
                                    as Master Servicer



                                   By:
                                        ----------------------------------------
                                        Name:
                                        Title:


                                   THE CHASE MANHATTAN BANK,
                                   as Trustee


                                   By:
                                        ----------------------------------------
                                        Name:
                                        Title:



                                  TEXAS COMMERCE BANK NATIONAL
                                  ASSOCIATION,
                                  as Co-Trustee



                                 By:
                                        ----------------------------------------
                                        Name:
                                        Title:



                                     - 96 -


<PAGE>



State of New York                 )
                                  )  ss.:
County of New York                )




         On the ____ day of  September,  1997 before me, a notary  public in and
for      the      state      of     New      York,      personally      appeared
_________________________________________,  known  to me who,  being  by me duly
sworn, did depose and say that he is the  __________________________________  of
Beneficial  Mortgage Services,  Inc., a corporation formed under the laws of the
State  of  Delaware,  being  among  the  parties  that  executed  the  foregoing
instrument;  and that he  signed  his  name  thereto  by  order of the  Board of
Directors of such corporation.





                                           -------------------------------------
                                                        Notary Public



[Notarial Seal]




<PAGE>



State of New York              )
                               )  ss.:
County of New York             )




         On the ____ day of  September,  1997 before me, a notary  public in and
for      the      state      of     New      York,      personally      appeared
_________________________________________,  known  to me who,  being  by me duly
sworn, did depose and say that he is the  __________________________________  of
Beneficial  Mortgage  Corporation,  a  corporation  formed under the laws of the
State  of  Delaware,  being  among  the  parties  that  executed  the  foregoing
instrument;  and that he  signed  his  name  thereto  by  order of the  Board of
Directors of such corporation.





                                          -------------------------------------
                                                         Notary Public



[Notarial Seal]




<PAGE>



State of New York              )
                               )  ss.:
County of New York             )




         On the ____ day of  September,  1997 before me, a notary  public in and
for      the      state      of     New      York,      personally      appeared
_________________________________________,  known  to me who,  being  by me duly
sworn,  did  depose  and  say  that  he is the  _________________  of The  Chase
Manhattan Bank, one of the parties that executed the foregoing  instrument;  and
that he signed his name thereto by order of the Board of Directors of said bank.





                                            ------------------------------------
                                                           Notary Public



[Notarial Seal]




<PAGE>


State of                       )
                               )  ss.:
County of                      )




         On the ____ day of  September,  1997 before me, a notary  public in and
for        the        state        of        ,        personally        appeared
_________________________________________,  known  to me who,  being  by me duly
sworn,  did depose and say that she is the  _________________  of Texas Commerce
Bank  National  Association,  one of the parties  that  executed  the  foregoing
instrument;  and  that she  signed  her name  thereto  by order of the  Board of
Directors of said bank.




                                          -------------------------------------
                                                          Notary Public



[Notarial Seal]


                                       A-1


<PAGE>


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